Jack Reese v. CNH American, LLC

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 09a0266p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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JACK REESE, FRANCES ELAINE PIDDE, JAMES

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CICHANOFSKY, ROGER MILLER, and GEORGE

NOWLIN, -

Plaintiffs-Appellees/Cross-Appellants, -

Nos. 08-1234/1302/1912

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>

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v.

CNH AMERICA LLC (f/k/a Case Corporation) -

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and CNH GLOBAL N.V., -

Defendants-Appellants/Cross-Appellees. -

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Appeal from the United States District Court

for the Eastern District of Michigan at Detroit.

No. 04-70592—Patrick J. Duggan, District Judge.

Argued: March 3, 2009

Decided and Filed: July 27, 2009

Before: RYAN, GIBBONS, and SUTTON, Circuit Judges.

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COUNSEL

ARGUED: Bobby R. Burchfield, McDERMOTT, WILL & EMERY LLP, Washington,

D.C., for Appellants. Roger J. McClow, KLIMIST, McKNIGHT, SALE, McCLOW &

CANZANO, P.C., Southfield, Michigan, for Appellees. ON BRIEF: Bobby R. Burchfield,

Jason Alan Levine, McDERMOTT, WILL & EMERY LLP, Washington, D.C., Norman C.

Ankers, HONIGMAN MILLER SCHWARTZ AND COHN LLP, Detroit, Michigan, for

Appellants. Roger J. McClow, KLIMIST, McKNIGHT, SALE, McCLOW & CANZANO,

P.C., Southfield, Michigan, for Appellees.

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OPINION

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SUTTON, Circuit Judge. At stake in this appeal is whether a collective bargaining

agreement (CBA) grants retirees lifetime health-care benefits upon retirement. Consistent

1

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with our precedents in this area, we hold that it does so. That conclusion, however, does not

resolve the scope of those benefits. Because the CBA and related documents do not say

anything about subsequent modifications to these benefits and because the application of the

relevant CBA provisions suggests that the parties contemplated reasonable modifications,

we remand the case to the district court to determine what types of changes are permitted.

I.

The Parties. CNH America LLC, formerly known as Case Corporation, makes

construction and agricultural equipment in Racine, Wisconsin. It was once a wholly owned

subsidiary of Tenneco, Yolton v. El Paso Tenn. Pipeline Co., 318 F. Supp. 2d 455, 459 (E.D.

Mich. 2003), but as part of a corporate restructuring, Tenneco sold its interest in the

company in a public offering in June 1994. Id. at 459–60.

The plaintiffs represent a class of retired Case employees and their spouses (who

retired from July 1, 1994 through November 12, 1999) and CNH employees and their

spouses (who retired from November 12, 1999 through November 1, 2004). Each employee

retired after the Tenneco reorganization in July 1994 but before November 1, 2004.

The 1998 CBA. In 1971, Case entered into a CBA with the United Automobile,

Aerospace and Agricultural Workers of America (“UAW”), in which Case agreed to provide

health-care insurance to its retired employees and their spouses who were “receiving

a J I Case Pension [or] a Spouse’s Pension.” JA 144. From 1974 through 1995, each CBA

(in three- or four-year terms) renewed this commitment in “substantially unchanged” form,

JA 91, and each CBA provided that employees did not have to pay premiums in order to

receive coverage.

Case and the UAW entered into the CBA that prompted this lawsuit in 1998, and it

lasted until May 2, 2004. Under the 1998 CBA, Case agreed that:

Employees who retire under the Case Corporation Pension Plan for Hourly

Paid Employees after 7/1/94, or their surviving spouses eligible to receive

a spouse’s pension under the provisions of that Plan, shall be eligible for the

Group benefits as described in the following paragraphs.

JA 1288; see also JA 1213 (noting that “[t]he group insurance plan agreed to between the

parties . . . is hereby made a part of this Agreement”). The next paragraphs listed “Medical”

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and “Prescription Drug” benefits available to all classes of covered retirees regardless of the

duration of their service before retirement. JA 1288–91. The CBA does not spell out what

“Medical” benefits are included; it just says that “[e]ligibility for specific coverage [will be]

based on each plan’s eligibility requirements.” JA 1290. “No contributions,” the CBA adds,

“are required for the Health Care Plans . . . .” JA 1291.

A Letter of Understanding concerning the “[c]ost of [h]ealthcare [c]overage”

supplemented the 1998 CBA. JA 1304. “[O]ver the term of the 1998 labor agreement,” it

said, “employees and retirees who are enrolled in a Company offered HMO, PPO or other

plan will not have to pay any additional employee contributions above those which may be

required for enrollment in the Case Network Plan (if any).” Id. The letter added that Case

was “responsible for the retention of HMOs, PPOs and other health care delivery

mechanisms during the [CBA’s] term,” and that Case could “terminate” a provider giving

inadequate coverage and adopt a “replacement plan [that] will provide comparable benefits

and access to the type of plan it replaces,” provided that the new plan satisfied “the UAW’s

standards regarding access and quality.” Id.

The Wisconsin case. On February 11, 2004, CNH filed a declaratory judgment

action against the UAW in the United States District Court for the Eastern District of

Wisconsin. It sought a declaration that the post-reorganization retirees were not entitled to

lifetime health-care benefits under the 1998 CBA and that it could “modify or terminate” the

retirees’ benefits “at its discretion” at the end of the CBA. JA 1513. The district court

dismissed the action in August 2004 because ERISA does not give a plan fiduciary the right

to seek an order clarifying its plan obligations and because the Labor-Management Relations

Act, 29 U.S.C. § 141 et seq., does not create a cause of action in the absence of a claim that

a CBA has been violated.

The Reese case. On February 18, 2004, a group of former employees, who retired

from the company between 1994 and 2004, as well as spouses of such employees, filed the

present case in the Eastern District of Michigan, seeking a declaration that they were entitled

to lifetime health-care benefits, an injunction requiring CNH to “maintain the level of retiree

health care benefits currently in effect” and damages for injuries the retirees might sustain

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if the benefits were terminated. JA 1533. In February 2005, the district court denied CNH’s

motion to transfer the case to the Eastern District of Wisconsin.

In August 2007, the district court granted the retirees’ motion for summary judgment,

concluding that the 1998 CBA unambiguously granted lifetime health-care benefits to the

retirees. In a separate opinion filed the same day, the district court granted CNH’s motion

to strike the retirees’ demand for a jury trial, concluding that there is no Seventh Amendment

right to a jury trial for ERISA or LMRA claims. The district court also awarded $1.4 million

in attorney’s fees to the retirees. See 29 U.S.C. § 1132(g); Reese v. CNH Global N.V., No.

04-70592, 2008 WL 2546936, at *5 (E.D. Mich. June 20, 2008).

The Yolton case. One more layer of complication exists: There is a parallel lawsuit

involving the same types of claims under different CBAs against two successors in interest

to CNH—CNH America and El Paso Tennessee Pipeline Co. Yolton v. El Paso Tenn.

Pipeline Co., 435 F.3d 571, 574 (6th Cir. 2006). In December 2002, a group of former

employees of Tenneco and Case, all of whom had retired before July 1, 1994, filed a class

action against CNH America and El Paso. Yolton, 318 F. Supp. 2d at 459–60, 464. In

December 2003, the United States District Court for the Eastern District of Michigan issued

a preliminary injunction, reasoning that the retirees were likely to succeed on the merits of

their claim that the 1990 CBA gave them a right to lifetime health-care benefits. Id. at 471,

476. The court thus ordered the employer to continue to provide the benefits during the

litigation. Id. at 460, 471, 473. In 2006, the Sixth Circuit upheld the preliminary injunction,

Yolton, 435 F.3d at 585, and the case is currently pending in front of Judge Duggan, the same

judge who is handling the present dispute.

II.

CNH first challenges the district court’s refusal to transfer the case to the Eastern

District of Wisconsin. “For the convenience of parties and witnesses, in the interest of

justice, a district court may transfer any civil action to any other district or division where

it might have been brought.” 28 U.S.C. § 1404(a). As the permissive language of the

transfer statute suggests, district courts have “broad discretion” to determine when party

“convenience” or “the interest of justice” make a transfer appropriate. Only when the district

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court “clearly abuse[s] its discretion” in balancing these considerations will we reverse.

Phelps v. McClellan, 30 F.3d 658, 663 (6th Cir. 1994).

In resolving the motion, the court considered six factors: “the convenience of the

parties and witnesses,” the accessibility of evidence, “the availability of process” to make

reluctant witnesses testify, “the costs of obtaining willing witnesses,” “the practical problems

of trying the case most expeditiously and inexpensively” and “the interests of justice.” JA

76; see Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30 (1988); Moses v. Bus. Card

Express, Inc., 929 F.2d 1131, 1136–37 (6th Cir. 1991). And it kept in mind that, “unless the

balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be

disturbed.” Cf. Dowling v. Richardson-Merrell, Inc., 727 F.2d 608, 612 (6th Cir. 1984); JA

76.

The key question is whether the district court properly applied those factors. On one

side of the ledger, several considerations favored a transfer: CNH is headquartered in

Wisconsin, the CBA negotiations took place there, CNH administers the health-care plans

there, most of the class members live in Wisconsin and few class members live in Michigan,

all of which suggests that Wisconsin is the most convenient forum for the parties and

witnesses. On top of that, CNH stores its documents in Wisconsin, which means that a

Wisconsin forum would make it easier to obtain access to the evidence.

On the other side of the ledger: The case was assigned to the same Michigan trial

judge who had handled the Yolton case (and was still handling the case), giving him a leg

up on the legal and factual issues presented, and suggesting that the objectives of trying the

case expeditiously and inexpensively would benefit from a Michigan forum. There also is

much to be said from an interests-of-justice perspective for applying the same law to both

cases rather than Sixth Circuit law to one case and Seventh Circuit law to the other.

The answer to this question, as an original matter, is not self-evident. The locus of

the dispute, the key parties and the location of most of the evidence favor Wisconsin. But

at the same time, it makes sense to resolve the health benefits of both sets of retirees—both

of whom worked in the same plant for the same effective employer—under the same circuit

law and in front of the same district court judge. In the end, the issue turns on the standard

of review. Compelling considerations favor both parties’ positions, making it difficult to say

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that the district court would have abused its discretion had he picked either location as the

more appropriate forum. The court, in short, had authority to keep the case.

III.

Turning to the merits, we face two questions: Did Case in the 1998 CBA agree to

provide health-care benefits to retirees and their spouses for life? And, if so, does the scope

of this promise permit CNH to alter these benefits in the future?

A.

In answering these questions, we have several ground rules. First, we give fresh

review to the district court’s summary judgment ruling—that the “plain language” of the

contract conveyed an “intent to grant lifetime retiree health insurance coverage to retirees,”

JA 109—and we draw all factual inferences in favor of the party opposing summary

judgment: CNH. See Cline v. BWXT Y-12, LLC, 521 F.3d 507, 509 (6th Cir. 2008).

Second, we assess promises to pay retirement benefits differently depending on the

type of obligation involved. ERISA makes a promise to pay a covered “pension” binding

at retirement, 29 U.S.C. § 1053(a), but it exempts “employee welfare benefit plans” from this

requirement, see id. § 1051(1). Thus, while ERISA heavily regulates promises to provide

pension benefits, health benefits are purely a matter of contract—permitting a company to

guarantee health benefits for life or to make them changeable, or even terminable, at the will

of the company. See Noe v. PolyOne Corp., 520 F.3d 548, 552 (6th Cir. 2008); Sprague v.

Gen. Motors Corp., 133 F.3d 388, 400 (6th Cir. 1998).

Third, we assess health-care-benefit promises differently depending on whether the

contract stemmed from a CBA or not. When the health plan was not collectively bargained,

we require a clear statement before we will infer that an employer meant to promise health

benefits for life. “Because vesting of welfare plan benefits is not required by law, an

employer’s commitment to vest such benefits is not to be inferred lightly; the intent to vest

must be found in the plan documents and must be stated in clear and express language.”

Sprague, 133 F.3d at 400 (internal quotation marks omitted).

When the health plan stems from a CBA, by contrast, we apply “ordinary principles

of contract interpretation” to determine whether benefits have vested, see Yolton, 435 F.3d

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at 580, and to the extent we put a thumb on the scales in this setting, it favors vesting.

Although we do not apply a “legal presumption that benefits vest” and although we require

plaintiffs to bear the burden of proving that vesting has occurred, we apply an “inference”

that “it is unlikely that [welfare benefits] would be ‘left to the contingencies of future

negotiations,’” so long as we can find either “explicit contractual language or extrinsic

evidence indicating” an intent to vest benefits. Yolton, 435 F.3d at 580 (quoting UAW v.

Yard-Man, Inc., 716 F.2d 1476, 1482 (6th Cir. 1983)). The precise weight of the Yard-Man

“inference,” we appreciate, is elusive. “[S]tanding alone,” on the one hand, this factor is

“insufficient to find an intent to create interminable benefits.” Yard-Man, 716 F.2d at 1482;

see Yolton, 435 F.3d at 579–80; Maurer v. Joy Techs., Inc., 212 F.3d 907, 917 (6th Cir.

2000). But, on the other, it must mean something or else there would be no point in having

it. In the end, it may come to nothing more than this: a nudge in favor of vesting in close

cases. See Yolton, 435 F.3d at 579–80.

In applying these principles here, we face one question that is relatively

straightforward under our case law (did the benefits “vest”?) and one that is not (what does

vesting mean in this context?).

B.

Did the employees’ right to lifetime health-care benefits vest upon retirement? Past

is prologue in answering this question, because one of our cases—Yolton—arose from a

nearly identical CBA. The Yolton CBA said that “[e]mployees who retire under the Case

Corporation Pension Plan for Hourly Paid Employees, or their surviving spouses eligible to

receive a spouse’s pension under the provisions of that Plan, shall be eligible” to receive

health-care benefits, JA 813, and added that “the Company shall pay the full premium cost

of the above coverages,” JA 815. The 1998 CBA in today’s case provided that

“[e]mployees who retire under the Case Corporation Pension Plan for Hourly Paid

Employees after 7/1/94, or their surviving spouses eligible to receive a spouse’s pension

under the provisions of that Plan, shall be eligible for” health-care benefits, JA 1288, and

added that “[n]o contributions are required for the Health Care Plans,” JA 1291.

Promise for promise, the two sets of commitments are effectively identical. That is

not surprising: The Yolton CBA involved retirees who worked at the same plant as today’s

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retirees and concerned an employer that was different in name—Case’s former parent

company, Tenneco—but in few other meaningful ways. We start, then, by considering how

Yolton dealt with a similar plan.

At issue in Yolton was whether this court should affirm a preliminary injunction

preventing the employer from terminating or significantly modifying health-care benefits for

previously retired employees. The employees all took retirement before 1994 and were

covered by the 1990 CBA with Tenneco. When El Paso (Tenneco’s new parent company)

threatened to terminate or significantly modify the health benefits of the retirees, they sought

a preliminary injunction to prevent the change.

In gauging the parties’ prospects on the merits, the court construed the language of

the CBA as likely creating a right to lifetime health-care benefits upon retirement. See

Yolton, 435 F.3d at 583. It first relied on the fact that the company’s benefits plans tied

eligibility for pension benefits to eligibility for health-care benefits. Noting that this “tying”

consideration had played a “key” role in a vesting-of-health-benefits determination in an

earlier case, the court reasoned that it “demonstrate[s] an intent to provide lifetime benefits.”

435 F.3d at 580, 584–85; see Golden v. Kelsey-Hayes Co., 73 F.3d 648, 656–57 (6th Cir.

1996) (affirming a preliminary injunction based in part on a district court’s conclusion that

“[CBA] provisions . . . which tie retiree and surviving spouse eligibility for health insurance

coverage to eligibility for vested pension benefits” demonstrate an intent to vest health

benefits); see also Noe, 520 F.3d at 558–59; McCoy v. Meridian Auto. Sys., Inc., 390 F.3d

417, 422 (6th Cir. 2004).

Other aspects of the 1990 CBA, Yolton determined, also suggested an intent to create

lifetime benefits. For example, some benefits were subject to express durational limitations

while retiree health benefits were not, prompting the court to conclude that “the inclusion

of specific durational limitations in other provisions . . . suggests that retiree benefits, not so

specifically limited, were intended to survive.” Yolton, 435 F.3d at 582 (quoting Yard-Man,

716 F.2d at 1481–82). And the Yolton court also pointed to language in the summary plan

descriptions saying that “continued coverages will be the same as those that were in effect

on the day preceding your retirement.” Id. at 583.

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Yolton supports the district court’s conclusion that the 1998 agreement granted

retirees a right to lifetime health benefits. Like Yolton: this case involves a CBA; it involves

a health-care benefits plan with identical language concerning entitlement to benefits upon

retirement; it ties eligibility for health benefits to eligibility for a pension; it does not contain

a specific durational clause while other benefits provisions in the CBA contain such clauses,

see JA 1285-86; and above all it concerns employees who worked in virtually identical

circumstances (apparently making the same products in the same plant) to the Yolton

employees before each group retired.

Yes, Yolton was a preliminary injunction decision, and, yes, that means only the

retirees’ likelihood of success on the merits was at issue, not their actual success on the

merits as in the case of a decision granting summary judgment in their favor. But in view

of the common language between the plans and the centrality of the tying rationale in

Yolton’s merits determination and in cases before and since, it seems appropriate to treat

these two groups of like-situated employees in like ways.

In arguing that the two cases should be treated differently, CNH relies on a 2000

Summary Plan Description (SPD) of the health plan, which warned that “[a]n amendment

or termination of the . . . benefit plans may affect . . . the coverage[]” of retirees. JA 1438

(emphasis added). A 1999 SPD was to the same effect. As CNH sees it, even if the 1998

CBA created a right to lifetime benefits, the retirees are estopped from seeking any such

relief by their acceptance of the 1999 and 2000 SPDs, which described the benefits as

terminable at CNH’s will. There is some case law in support of this notion. If an employer

includes “unqualified reservation-of-rights language” in an SPD to the effect that the

employer has a “unilateral right . . . to terminate coverage,” and if a union fails to grieve or

object to such language, then such reservation-of-rights language “prevent[s] retiree benefits

from vesting” even if the SPD was distributed after the effective date of the CBA. Prater

v. Ohio Educ. Ass’n, 505 F.3d 437, 444 (6th Cir. 2007); see Maurer, 212 F.3d at 919. But

there is an exception. No divesting occurs when the SPD contains language reminding

readers that “the contracts represent the full commitments between the parties” because a

union cannot fairly be expected to protest when the SPD makes it clear that the CBA, not the

SPD, controls a conflict. See Prater, 505 F.3d at 444–45.

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The exception applies. The 2000 SPD reminded readers that, “[i]f there is any

variance between the contents of this handbook and the official plan documents and labor

agreements, those documents or agreements will govern.” JA 1438. And the 1999 SPD

contains a similar warning: “Our responsibilities to you,” warned the company, “as well as

the conditions of your coverage with us, are defined in the documents that make up your

contract.” JA 1383. This qualifying language precludes CNH from maintaining that it had

the unilateral right to terminate benefits.

CNH next focuses on an historical feature of this case that, as best as we and the

parties can tell, has no parallel in Yolton. The 1998 CBA purported to cover future retirees

as well as retirees who had previously left the company during the 1990 and 1995 CBAs, and

it made material alterations to the health benefits of these prior retirees. Why should we treat

the 1998 CBA as creating vested rights, CNH points out, if the company had the right to alter

the health benefits of employees who had retired under the similarly worded 1990 and 1995

CBAs and if indeed the 1998 made material alterations to their benefits? This is a good

question. But it does not go to vesting—at least as our cases, including Yolton, have used

the term. It instead goes to a related, more difficult question—what does vesting mean in

this setting?—a question to which we now turn.

C.

What does vesting mean in this context? Much of our case law in this area draws

heavily on an analogy between pension and health-care benefits. It is a useful analogy in one

sense because both settings deal with retirement benefits, both benefits often are for life and

retirees legitimately depend heavily on both benefits in view of the reality that many

employees, upon retirement, will not be able to supplement their retirement income in

meaningful ways and will not be able to obtain other employer-related health benefits.

But it is not a perfect analogy. The value of a pension benefit, whether defined or

undefined, is clear cut—a matter of concrete dollars and cents, fairly measurable as a matter

of principal or income stream before retirement, at retirement or after retirement. Vested

health-care benefits are another matter. Employers do not send their active or retired

employees a monthly account itemizing the value of their health-care benefits. And with

good reason: What would it say? What could it say?

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The language of health-care provisions, as the 1998 CBA illustrates, generally does

not contain the kind of precision that characterizes a pension plan. “Employees,” it says,

“who retire under the Case Corporation Pension Plan for Hourly Paid Employees after

7/1/94, or their surviving spouses eligible to receive a spouse’s pension under the provisions

of that Plan, shall be eligible for” health-care benefits. JA 1288. It is one thing to say that

this kind of language, when tied to eligibility for a pension plan, prevents an employer from

terminating the benefits—which we have held here. It is quite another to say that an

employer may not alter the benefits in any way, particularly when the parties have a history

of doing just that and when common experience suggests that health-care plans invariably

change over time, if not from year to year. See Diehl v. Twin Disc, Inc., 102 F.3d 301, 309

(7th Cir. 1996) (distinguishing a promise to provide “lifetime insurance benefits” from

“decid[ing] precisely what those benefits are”).

Which takes us to the nub of this case: Whatever these words mean, the parties’

actions and a common understanding of welfare benefits confirm that the company’s health-

care benefits are not akin to black-and-white pension benefits that cannot be diminished by

one cent once they have vested. As CNH points out, no party to this case—the union, the

employer, the retirees—viewed the benefits in this way. The 1998 CBA not only set the

rules for employees who retired during the next six years of that CBA; it also reset the rules

for employees who retired after July 1, 1994, which is inconsistent with the notion that the

1990 and 1995 CBAs (using the same language as the 1998 CBA, compare JA 813, 1040

with JA 1288) created unalterable, irreducible health benefits. The 1994–1998 retirees were

not asked to consent to this change, and they did not consent to it. And as Yard-Man makes

clear and as later cases confirm, a union does not represent retired employees when it

bargains a new contract for its employees. UAW v. Gen. Motors Corp., 497 F.3d 615,

626–27 (6th Cir. 2007); see Yard-Man, 716 F.2d at 1482. Notably, Yolton did not deal with

any of these issues when it determined that the retirees had a likelihood of success on their

claimed entitlement to lifetime health benefits. See 435 F.3d at 578–85.

No doubt, the resetting of health-care benefits for previously retired employees might

not concern anyone if each change upgraded the existing package of benefits. That sort of

change would not break any promises to provide irreducible benefits for life. But that is not

what happened here. The 1998 CBA, among other changes, created a Managed Health Care

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Network Plan for past and future retirees. In other words, it imposed managed care on all

of them, which represented a reduction in the effective choices of coverage available for all

retirees and the coverage actually provided to many, if not most, of them. Managed care

plans were not popular when they were introduced because they often restricted the

availability of “discretionary or elective” services. See Robert F. Rich & Christopher T. Erb,

The Two Faces of Managed Care Regulation & Policymaking, 16 Stan. L. & Pol’y Rev. 233,

234–35, 237–39 (2005). Such plans usually control costs by covering only a limited network

of providers, id. at 262, a type of limitation against which covered insureds often rebel, see

id. at 267–68 (describing the broad adoption of state legislative reforms designed to curb

restrictions on provider access), and against which the UAW had rebelled when negotiating

earlier CBAs, see, e.g., JA 2197.

Preferred provider organization (PPO) plans—such as the ones made applicable to

retirees under the 1998 CBA, see JA 1167—allow insureds to use out-of-network providers,

but they provide lowered coverage for such care. See Amy B. Monahan, The Promise and

Peril of Ownership Society Health Care Policy, 80 Tul. L. Rev. 777, 789–90 (2006). Pre-

1998 retirees thus saw their coverage downgraded in at least one respect: Unlike the prior

plan, under which they could choose any doctor without suffering a financial penalty, see

Anne Maltz, Health Insurance Fundamentals, 774 PLI Litig. 213, 235 (2008), they generally

had to pay more for choosing an out-of-plan doctor. It may be possible, to be sure, that this

reduction in the end benefitted some retirees in view of other improvements to the plan. See

JA 1167 (describing “improvements sought by the Union” that were included in the new

plans, including “full coverage (after modest co-pays)” for listed services such as “MRI and

CAT scans” and “[h]ospice care in approved facility”). But no evidence shows that the

change favored all retirees.

Other clues support this interpretation. Consistent with the parties’ practices, nothing

in the text of the 1998 CBA said that health-care coverage would be fixed and irreducible

into perpetuity for all employees who retired under it. At best, under our cases, it established

a right to lifetime health-care benefits, but not benefits that could not change from CBA to

CBA. A letter of understanding, signed by the contracting parties, points in the same

direction. Addressing the “Cost of Healthcare Coverage,” it said that, “over the term of the

1998 labor agreement,” retirees “who enrolled in a Company offered HMO, PPO or other

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plan” would not be required to pay “any additional employee contributions above those

which may be required for enrollment in the Case Network Plan.” JA 1304 (emphasis

added). Why ensure that no “additional” contributions would be required if the retirees’

benefits were locked in by the 1998 CBA or an earlier CBA? And why limit the promise to

“the term of the 1998 labor agreement” if the parties intended to create “fully paid lifetime

retiree health care benefits” that could never be “reduce[d]”? JA 33.

The letter of understanding also shows that the parties, quite understandably,

contemplated replacing some managed care providers with others at some point in the future.

Given the realities of managed care, in which a new plan may fail to cover providers or

services that an old plan had covered, the retirees had no basis for assuming that each

replacement plan would at best improve, or at worst precisely maintain, the level of care

provided to each individual retiree. A plan that permits the substitution of managed care

providers is one that envisions making tradeoffs in the future that may negatively impact

some retirees, if not all retirees, and one that is inconsistent with unalterable and irreducible

health benefits—particularly those analogized to vested pension benefits. That is why the

CBA—unless it says otherwise—should be construed to permit modifications to benefits

plans 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. Zielinski v. Pabst Brewing Co., 463 F.3d 615, 619,

620 (7th Cir. 2006); see also Diehl, 102 F.3d at 310 (examining a CBA creating vested

benefits and concluding that “we see nothing to indicate that the Shutdown Agreement

established a right to a particular insurance carrier, or even to a particular plan”).

Nor do the statements of company representatives to retirees show that these benefits

were unalterable as a matter of law. One retiree, indeed, was told that his health benefits

may be “change[d] in a future UAW contract.” JA 1450. And the statements made to other

retirees do not support an unbending construction of the CBA—and certainly do not do so

as a matter of law. A 1992 retiree was told that his “insurance benefits [would] remain in

effect as long as [he was] living,” JA 891, and a retiree’s wife reports that, in 1997, a Case

representative told her that if her husband were to die she “would continue to get . . . health

insurance for the rest of [her] life” and that the coverage “wouldn’t cost [her] anything,” JA

1463. But all of this is consistent with lifetime benefits subject to reasonable changes. That

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the benefits “wouldn’t cost anything” was true through the end of the CBA, and the

representation at any rate was made during the term of the 1995 CBA. We know that the

contracting parties viewed the 1995 CBA’s benefits as subject to some changes because they

changed them. The retirees point us to no other extrinsic evidence that is contemporaneous

with the 1998 CBA and that clearly establishes a promise of lifetime benefits that can never

vary.

This conclusion makes sense not only in the narrow circumstances of this case but

also within the broader context of ERISA, which contemplated just this sort of flexibility.

Congress chose not to impose a one-size-fits-all concept of welfare-benefit vesting, unlike

the specific rules applicable to pension benefits:

With regard to an employer’s right to change medical plans, Congress

evidenced its recognition of the need for flexibility in rejecting the automatic

vesting of welfare plans. Automatic vesting was rejected because the costs

of such plans are subject to fluctuating and unpredictable variables.

Actuarial decisions concerning fixed annuities are based on fairly stable

data, and vesting is appropriate. In contrast, medical insurance must take

account of inflation, changes in medical practice and technology, and

increases in the costs of treatment independent of inflation. These unstable

variables prevent accurate predictions of future needs and costs.

Moore v. Metro. Life Ins. Co., 856 F.2d 488, 492 (2d Cir. 1998). For these reasons,

Congress concluded that “[t]o require the vesting of these ancillary benefits would seriously

complicate the administration and increase the cost of plans whose primary function is to

provide retirement income.” H.R. Rep. No. 93-807 (1974), reprinted in 1974 U.S.C.C.A.N.

4639, 4670, 4726; S. Rep. No. 93-383 (1973), reprinted in 1974 U.S.C.C.A.N. 4639, 4890,

4935. The matter, then, was left to employers, employees and unions to handle by contract.

All of this requires us to modify the district court’s judgment. “Plaintiffs are entitled

to vested lifetime retiree health care benefits,” it concluded, “as provided for in the labor

agreements in effect at the time of their or their deceased spouses’ retirement.” JA 111. To

the extent this ruling indicates that the retirees have a vested right to receive health care

benefits for life, it is consistent with Yolton and our other cases. But to the extent it suggests

that these benefits must be maintained precisely at the level provided for in the 1998 CBA,

it is not supported by the 1998 CBA, extrinsic evidence provided by the parties or common

sense. CNH, in short, cannot terminate all health-care benefits for retirees, but it may

Nos. 08-1234/1302/1912 Reese, et al. v. CNH America LLC, et al. Page 15

reasonably alter them. With this guidance, we leave it to the district court 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.

IV.

The retirees cross-appeal the district court’s determination that they do not have the

constitutional right to a jury trial on their claims for declaratory and injunctive relief. As

they acknowledge, we have held that the Seventh Amendment does not guarantee a jury trial

in ERISA and LMRA cases because the relief is equitable rather than legal, and we did so

in the context of nearly identical claims to the ones filed here. See Bittinger v. Tecumseh

Prods. Co., 123 F.3d 877, 882–83 (6th Cir. 1997); Golden, 73 F.3d at 660–63.

Great-West Life & Annuity Co. v. Knudson, 534 U.S. 204 (2002), the retirees

respond, represents intervening authority that allows us to reconsider these decisions. But

Knudson, first and foremost, is not a Seventh Amendment case. It dealt with whether an

action “seek[ing] . . . to impose personal liability . . . for a contractual obligation to pay

money-relief” falls within § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), which authorizes

suits for “appropriate equitable relief.” See Knudson, 534 U.S. at 209–10. The Court’s

conclusion—that such claims were not covered by § 502(a)(3) because they were legal in

nature, not equitable, see id. at 210, 220–21—does not undermine our prior decisions.

Golden, for example, acknowledged that “a monetary award, generally, is a form of legal

relief,” 73 F.3d at 661, before concluding that in health-care benefits cases like this one, any

backward-looking relief is at best “incidental” in comparison to the primary goal of ensuring

injunctive access to health-care benefits in the future, id. Knudson, by contrast, did not

involve forward-looking relief but only “reimbursement . . . for past medical treatment,” 534

U.S. at 208–09, leaving the Court no opportunity to say, much less hold, anything that would

lead us to second guess Golden. What is more, the retirees offer no tenable response to

CNH’s argument that, because CNH continued to fund their benefits pending this lawsuit,

they have no right to seek any damages based on its past conduct, further undermining the

analogy to Knudson. Golden and Bittinger remain the law of this circuit and require us to

reject the retirees’ jury-trial argument.

Nos. 08-1234/1302/1912 Reese, et al. v. CNH America LLC, et al. Page 16

V.

CNH challenges the district court’s award of $1,426,948.75 in attorney’s fees and

$55,430.09 in costs to the retirees, Reese, 2008 WL 2546936, at *5, a matter that receives

abuse-of-discretion review, Gaeth v. Hartford Life Ins. Co., 538 F.3d 524, 528 (6th Cir.

2008). In CNH’s view, the retirees may not reap the benefits of ERISA’s fee-shifting

provision, 29 U.S.C. § 1132(g)(1), because they “litigated (and won) this case purely on

LMRA grounds,” Appellant Fee Br. at 11. But, as the district court noted, the retirees have

pursued their rights under the LMRA and ERISA. Reese, 2008 WL 2546936, at *2. And

that is appropriate because, “[i]f the parties intended to vest benefits” and there is a breach

of the agreement, “there is an ERISA violation as well as an LMRA violation.” Maurer, 212

F.3d at 914.

CNH insists that, if the retirees had filed this action solely under ERISA, the Sprague

standard would have applied, and the retirees would have lost because they would not have

been able to point to “clear and express language” in the 1998 CBA granting lifetime

benefits. Sprague, 133 F.3d at 400. This argument begins from a false premise, however.

The Yard-Man test applies to claims for benefits that arise out of a CBA, and Sprague is

limited to cases in which an employer “unilaterally instituted a retiree benefit program.”

Maurer, 212 F.3d at 917. We have never suggested that we would apply Sprague if a

plaintiff had proceeded only under an ERISA theory in claiming benefits under a CBA; nor

have we ever upheld an LMRA claim while denying a parallel ERISA claim. In light of our

longstanding practice of treating LMRA and ERISA claims involving CBAs in an identical

manner, CNH’s argument—supported only by precedents that do not involve a CBA, see,

e.g., Sengpiel v. B.F. Goodrich Co., 156 F.3d 660, 668 (6th Cir. 1998)—does not show that

Sprague would apply had the retirees filed a stand-alone LMRA claim.

One point, however, does deserve attention on remand. The district court’s award

of fees relied in part on its conclusion that the retirees “prevailed on the dispositive issue in

this case,” see Reese, 2008 WL 2546939, at *3, which meant that one of the factors in the

fee-shifting analysis, “the relative merits of the parties’ positions,” see Gaeth, 538 F.3d at

534, favored their fee claim. That is no longer so. While the plaintiffs have succeeded in

showing that they are entitled to lifetime benefits, they have not shown that they are entitled

Nos. 08-1234/1302/1912 Reese, et al. v. CNH America LLC, et al. Page 17

to unchangeable benefits. See JA 33 (suggesting that the retirees viewed any

“modif[ication]” of their benefits as a breach of the CBA). At least part of the rationale for

the fee award, then, may no longer be sound. Because the decision to award fees is placed

in the sound discretion of the district court, not our court, see 29 U.S.C. § 1132(g); Moon v.

Unum Provident Corp., 461 F.3d 639, 642 (6th Cir. 2006), and because it remains to be seen

how the court will handle the merits issues on remand, we vacate the fee award and will

allow the district court to decide in the first instance what award is appropriate in the context

of its final decision.

VI.

For these reasons, we affirm in part and reverse in part and remand for further

proceedings.