Winnett v. Caterpillar, Inc.

Decision Date27 January 2009
Docket NumberNo. 07-6275.,07-6275.
Citation553 F.3d 1000
PartiesGary T. WINNETT, et al., Plaintiffs-Appellees, v. CATERPILLAR, INC., Defendant-Appellant.
CourtU.S. Court of Appeals — Sixth Circuit

ARGUED: Joseph J. Torres, Winston & Strawn, LLP, Chicago, Illinois, for Appellant. William T. Payne, Stember, Feinstein, Doyle & Payne, LLC, Pittsburgh, Pennsylvania, for Appellees. ON BRIEF: Joseph J. Torres, Columbus R. Gangemi, Jr., Winston & Strawn, LLP, Chicago, Illinois, for Appellant. William T. Payne, John E. Stember, Pamina Grace Ewing, Stember, Feinstein, Doyle & Payne, LLC, Pittsburgh, Pennsylvania, Elizabeth Ann Alexander, Lieff, Cabraser, Heimann & Bernstein, Nashville, Tennessee, Michael M. Mulder, Meites, Mulder, Mollica & Glink, Chicago, Illinois, Jay E. Sushelsky, AARP Foundation Litigation, Washington, D.C., for Appellees. Phillip A. Kilgore, Brian D. Black, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Diane M. Soubly, Seyfarth Shaw, LLP, Boston, Massachusetts, Donald L. Havermann, Daniel P. Bordoni, John F. Ring, Morgan, Lewis & Bockius, LLP, Washington, D.C., for Amici Curiae.

Before: MARTIN, ROGERS, and SUTTON, Circuit Judges.

MARTIN, J., delivered the opinion of the court, in which SUTTON, J., joined. ROGERS, J. (p. 1012), delivered a separate opinion concurring in all but Part II.A.


BOYCE F. MARTIN, JR., Circuit Judge.

Plaintiffs are retired workers from Defendant Caterpillar. They argue that Caterpillar breached its promise to provide lifetime retiree medical benefits at no cost when it began charging them for a portion of their medical care. Most of their claims turn on whether a 1988 collective labor agreement provided workers with a right to no-cost retiree medical benefits that vested as soon as the worker became eligible for retirement or a pension. We hold that it did not. Accordingly, we REVERSE and REMAND for further proceedings.


The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) represents Caterpillar workers and negotiates labor contracts on their behalf. These contracts include central labor agreements and related benefits agreements. The workers here retired between the time that the 1988 Central Labor Agreement expired in 1991 and when Caterpillar and the UAW agreed to a successor agreement in 1998. The workers want the lifetime no-cost retiree medical benefits offered under the 1988 Central Labor Agreement.

The 1988 Central Labor Agreement itself did not describe retiree medical benefits. Rather, a separate document, "Benefits Plans under the 1988 Collective Bargaining Agreement," contained an insurance plan agreement and appended group insurance plan describing the terms of retiree medical benefits.1 And Caterpillar also issued a 1988 Summary Plan Description.2 But none of the documents discussed explicitly when the right to retiree medical benefits vested.

The 1988 Collective Labor Agreement was set to expire on October 1, 1991, but the parties agreed to extend it while they continued negotiations. The extension ended on November 3, when UAW workers began striking at some Caterpillar facilities. On March 31, 1992, Caterpillar told the UAW that effective April 6, it would implement portions of its final contract offer—including health care network provisions—applicable to active and retired employees. In response, the UAW filed an unfair labor practices charge with the National Labor Relations Board, which investigated and determined that Caterpillar was entitled to declare and implement the proposed changes. On November 20, following more unsuccessful negotiations, Caterpillar advised the UAW that, effective December 1, it would unilaterally and retroactively implement caps on the amount Caterpillar would pay for retiree health coverage for employees who retired after January 1, 1992. The UAW did not challenge the second announced implementation as it had the one announced March 31.

Caterpillar and the UAW did not reach a comprehensive successor collective labor agreement until 1998. It became effective on March 16. The 1998 Group Insurance Plan included health care network provisions. The parties disagree on whether the 1998 Collective Labor Agreement and Insurance Plan Agreements ratified the retiree health cost caps Caterpillar had unilaterally instituted in 1992. Caterpillar issued a summary plan description in 1999 that provided for caps on benefits.

Caterpillar also agreed to contribute $35 million to a voluntary employee benefits association designed to pay expenses incurred by post-January 1, 1992 retirees and their dependents above the caps unilaterally implemented in 1992. In 2002, 2003, and 2004, Caterpillar mailed letters to retirees advising them that once the voluntary employee benefits association funds were depleted, those retirees would be required to pay their health care coverage costs exceeding the cap.

In 2004, Caterpillar and the UAW agreed on a successor Insurance Plan Agreement which provided that, on a going forward basis, Caterpillar would share in the "above the cap" costs on a 40/60 basis. In 2005, Caterpillar announced its intention to begin charging health care premiums for the class members. But in 2006 Caterpillar announced it would waive premiums for any existing surviving spouses. At the time of the district court's decision, Caterpillar was not actually charging surviving spouses premiums.

Plaintiffs filed this suit under Section 301(a) of the Labor-Management Relations Act,3 and Sections 502(e) and (f) of the Employee Retirement Income Security Act4 asking for injunctive relief and an order declaring that they are entitled to the no-cost retiree medical benefits described under the 1988 labor agreements. The district court later certified a main class and three subclasses. This interlocutory appeal concerns only the claims of workers who: (1) began working for Caterpillar before the 1988 Collective Labor Agreement expired; and (2) were pension and retirement eligible prior to January 1, 1992; and (3) who retired on or after January 1, 1992 but before March 16, 1998. These workers retired during the period when there was no collective labor agreement in force.

Caterpillar argued that the court lacked subject-matter jurisdiction over Plaintiffs' LMRA and ERISA claims because the 1988 Collective Bargaining Agreement was expired by the time Plaintiffs retired. It maintained that the court could not determine rights under an expired contract, and there was thus not a "contract" or "plan" which Caterpillar could have violated with respect to workers who retired after its expiration. The district court rejected this challenge, and concluded that the right to the retiree medical benefits "vested when the employees attained retirement or pension eligibility," even for those who continued working after becoming retirement-eligible. Winnett v. Caterpillar, 496 F.Supp.2d 904, 922 (M.D.Tenn.2007).

Caterpillar then asked the district court to certify for interlocutory appeal: "[W]hether the court has subject-matter jurisdiction over plaintiffs' LMRA Section 301 and ERISA claims." The district court granted the motion, observing that the jurisdictional question turns "on purely the legal issue of whether the plaintiffs' rights to retirement medical benefits could vest under the 1988 labor contracts while they were active, union-represented employees," and finding "substantial ground for difference of opinion" on: (1) whether retirement benefits vest upon eligibility for retirement or upon actual retirement, and (2) whether the inference that "parties likely intended [retiree] benefits to continue as long as the beneficiary remains a retiree" applies to active, in-service employees.


The parties initially square off over whether Rule 12(b)(6) or Rule 12(b)(1) governs Caterpillar's motion to resolve this case on the pleadings. Generally speaking, Rule 12(b)(6) permits a defendant to seek relief on the ground that a cause of action fails as a matter of law, regardless of whether the plaintiff's factual allegations are true or not, while Rule 12(b)(1) permits a defendant to seek relief on the ground that the court has no subject-matter jurisdiction over the dispute. That distinction is usually relatively easy to administer. Not so, however, in Section 301 claims: In a series of cases, we have held that a failure to state a claim under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a), creates a jurisdictional defect. See Bauer v. RBX Indus., 368 F.3d 569, 578 (6th Cir.2004); Adcox v. Teledyne, Inc., 21 F.3d 1381, 1386 (6th Cir.1994); Heussner v. Nat'l Gypsum Co., 887 F.2d 672, 676 (6th Cir.1989). Because the Supreme Court has recently clarified that this kind of shortcoming affects only the merits of the claim, not the district court's subject-matter jurisdiction over it, Arbaugh v. Y & H Corp., 546 U.S. 500, 515-16, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006), we take this opportunity to clarify our case law on the issue.

In Arbaugh, the Supreme Court considered whether Congress, by permitting Title VII discrimination suits only against employers with more than fifteen employees, 42 U.S.C. § 2000e-2(a)(1), had intended to limit the subject-matter jurisdiction of the federal courts or merely to list one element of a Title VII cause of action. 546 U.S. at 503, 126 S.Ct. 1235. Noting that "subject-matter jurisdiction ... and the essential ingredients of a federal claim" are "sometimes confused or conflated," id. (internal quotation marks omitted), the court faulted the many "drive-by jurisdictional rulings" that label the elements of a cause of action as "jurisdictional" without attention either to indicia of Congressional intent or to the consequences of such a ruling. Id. at 511, 126 S.Ct. 1235 (internal quotation marks omitted). Attempting to clarify this area of the law, Arbaugh announced a "readily administrable...

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