Reese v. CNH Indus. N.V., Civil Action No. 04-CV-70592

Decision Date28 September 2015
Docket NumberCivil Action No. 04-CV-70592
CourtU.S. District Court — Eastern District of Michigan
PartiesJACK REESE, et al., Plaintiffs, v. CNH INDUSTRIAL N.V., et al., Defendants.

Honorable Patrick J. Duggan


This matter is before the Court on remand, for a second time, from the United States Court of Appeals for the Sixth Circuit. In August 2007, the Court granted summary judgment to Plaintiffs on their claim that they are entitled to irreducible retiree healthcare benefits from Defendants that survive the expiration of the pertinent collective bargaining agreement ("CBA"), which expired in 2004. See Reese v. CNH Global N.V., No. 04-CV-70592, 2007 WL 2484989 (E.D. Mich. Aug. 29, 2007). The Sixth Circuit affirmed the Court's holding that Plaintiffs are entitled to some healthcare benefits that survive the expiration of the CBA, holding that Defendants may not terminate all healthcare benefits for retirees, butdetermined that the scope of the benefits can be reasonably altered. The Reese I panel remanded the action to this Court to determine how and in what circumstances benefits may be altered. See Reese v. CNH Am. LLC, 574 F.3d 315 (6th Cir. 2009) ("Reese I").

On remand, this Court again granted summary judgment to Plaintiffs, concluding that Defendants could not unilaterally change the level of retiree benefits. See Reese v. CNH Global N.V., No. 04-CV-70592, 2011 WL 824585 (E.D. Mich. Mar. 3, 2011). Defendants once again appealed and the Sixth Circuit reversed, holding that Defendants can unilaterally reduce retiree benefits as long as the changes are reasonable. See Reese v. CNH Am. LLC, 694 F.3d 681 (6th Cir. 2012) ("Reese II"). The Sixth Circuit remanded for a determination whether the changes proposed by Defendants satisfy the reasonableness criteria that the panel articulated in Reese II.

Back in this Court for the third time, the parties filed cross-motions for summary judgment addressing the reasonableness of Defendants' proposed changes (ECF Nos. 419 & 423). Plaintiffs argue that the proposed changes are unreasonable; Defendants argue the opposite. In addition, Plaintiffs filed a motion to strike the declarations of two defense experts (ECF No. 428), which were submitted in support of Defendants' motion for summary judgment. The Court held oral argument on these motions on February 3, 2015.

Three weeks after oral argument, Defendants filed a second motion for summary judgment, arguing that Plaintiffs are not entitled to any healthcare benefits lasting beyond the expiration of the CBA in light of the United States Supreme Court's decision in M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015), which was issued earlier this year during the pendency of these second remand proceedings. Defendants contend that the conclusion of this Court and the Sixth Circuit that Defendants may not terminate retiree healthcare benefits is no longer viable in light of Tackett.

Defendants' second summary judgment motion is fully briefed and the Court will dispense with oral argument. See E.D. Mich. LR 7.1(f)(2). For the reasons that follow, the Court agrees with Defendants that the previous determination that Plaintiffs are entitled to healthcare benefits lasting beyond the expiration of the CBA is no longer correct in light of Tackett. Constrained by the Supreme Court's decision, the Court has no choice but to grant Defendants' second summary judgment motion. Because Plaintiffs' retiree healthcare benefits do not survive the expiration of the CBA in light of Tackett, the Court does not consider whether Defendants' proposed changes to those benefits are reasonable, as that issue is now moot. Accordingly, the Court will deny as moot the parties' cross-motions for summary judgment and Plaintiffs' motion to strike.

A. Factual

The factual background of this case is well-known to the parties and the Court and is not repeated here. The reader is directed to the citations contained in the opening two paragraphs of this Opinion and Order for a detailed recitation of the facts.

B. Procedural

This case was filed in February 2004, almost twelve years ago. In August 2007, this Court granted summary judgment in favor of Plaintiffs, holding that they are entitled to irreducible lifetime healthcare benefits under the terms of the CBA in effect at the time of their retirement ("1998 CBA").1

On appeal, a panel of the Sixth Circuit consisting of Judges Sutton, Gibbons, and Ryan affirmed this Court's holding that Plaintiffs are entitled to lifetime healthcare benefits under the 1998 CBA. However, the panel raised an issue that was not addressed by the parties, that being: "What does vesting mean" in the context of this case? Reese I, 574 F.3d at 321. The panel determined that, while the CBA is properly interpreted to prohibit the altogether elimination of retiree healthcare benefits, there is nothing in the CBA evincing a promise to forever maintain lifetime benefits at the same level. Because the panel found nothing in the CBA preventing Defendants from altering benefits, so long as they did not entirely eliminate them, it looked to other evidence to determine whether the parties intended the level of benefits to remain the same forever.2

Examining other evidence, the panel concluded that the parties did not view the promised benefits as forever unalterable. To reach that conclusion, the panel relied principally on one special fact or "historical feature" of this case. Specifically, the panel found that the 1998 CBA modified the healthcare benefits available to prior retirees who retired under earlier CBAs, without the consent of the prior retirees and in a manner that disadvantaged the prior retirees. In light of this factual finding, the panel concluded that it must have been the understanding of the parties that the 1998 CBA, which included the same language as the earlier CBAs, created lifetime healthcare benefits that could be unilaterally reduced without the consent of the retirees. Crucial to the panel's conclusion that the parties viewed the benefits as subject to possible future unilateral reduction was the panel's determination that the benefits of prior retirees had been unilaterally reduced in the past; the panel acknowledged that, had the benefits been improved in the past without the consent of the prior retirees, "[t]hat sort of change would not break any promises to provide irreducible benefits for life." Reese I, 574 F.3d at 325. Critically, however, this Court never made the crucial factual finding that benefits had been reduced in the past. Rather, that factual determination was made in the first instance by the Reese I panel - a clear encroachment on the factfinding function of this Court. See Pullman-Standard v. Swint, 456 U.S. 273, 291-92, 102 S. Ct. 1781, 1791-92 (1982) ("[F]actfinding is the basic responsibility of districtcourts, rather than appellate courts, and . . . the Court of Appeals should not have resolved in the first instance [a] factual dispute which had not been considered by the District Court." (internal quotation marks and citation omitted)).

Based in large part on the "historical feature" discussed above, the Reese I panel concluded that "CNH . . . cannot terminate all health-care benefits for retirees, but it may reasonably alter them." 574 F.3d at 327. In particular, the panel held that the 1998 CBA "permit[s] modifications . . . that are 'reasonably commensurate' with the benefits provided in the 1998 CBA, 'reasonable in light of changes in health care' and roughly consistent with the kinds of benefits provided to current employees." Id. at 326 (quoting Zielinski v. Pabst Brewing Co., 463 F.3d 615, 619, 620 (7th Cir. 2006)). The panel then remanded the matter "to decide how and in what circumstances CNH may alter such benefits - and to decide whether it is a matter amenable to judgment as a matter of law or not." Id. at 327.

In this Court's view, the panel sent conflicting messages regarding one aspect of its decision. Relying on its own factfinding - principally, the finding that prior retiree benefits had been downgraded in the past without the consent of the prior retirees - the panel seemingly concluded that the 1998 CBA permitted unilateral reductions to retiree healthcare benefits. However, Judge Sutton's concurrence to the panel's order denying Plaintiffs' motion for rehearingsignificantly confused matters.3 Using language suggesting an intent to speak on behalf of the panel and offering insight into what the panel envisioned during the remand proceedings, Judge Sutton wrote:

Plaintiffs also protest our assessment of the factual record arguing that the prior retirees approved the changes to their benefits or at the least that they helped them overall. But this argument overlooks the posture of this case - summary judgment - in which the inferences run in favor of the party that lost below: CNH. On remand, the parties are free to develop evidence on this point. That evidence may show that plaintiffs should win as a matter of law because the prior retirees either approved the changes or they did not diminish the nature of the benefits package that existed upon retirement. Or it may show that CNH should be allowed to make reasonable modifications to the health-care benefits of retirees, consistent with the way the parties have interpreted and implemented prior CBAs containing similar language.

Reese v. CNH Am. LLC, 583 F.3d 955, 956 (6th Cir. 2009) (Sutton, J., concurring).4 The parties and this Court were, therefore, given permission to "develop the evidence" on whether "the prior retirees . . . approved the changes" and on whether the previous modifications "diminished the nature of the [priorretirees'] benefits package" - the special fact on which the panel relied to reach the...

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