Amicus Curiae Brief — CNH Industrial N. v. v. Reese, 138 S. Ct. 761 (2018) (No. 17-515)

wen “OV-® -

AND Scott S. Harris,

BRIEFS Gam

No. 17-615

IN THE

Supreme Court of the United States

CNH INDUSTRIAL N.V. & CNH INDUSTRIAL

AMERICA, LLC,

Petitioners,

Vv.

JACK REESE; FRANCES ELAINE PIDDE; JAMES

CICHANOFSKY; ROGER MILLER; GEORGE NOWLIN,

Respondents.

On Petition For A Writ Of Certiorari To The

United States Court Of Appeals For The Sixth

Circuit

MOTION FOR LEAVE TO FILE AND BRIEF OF

THE ERISA INDUSTRY COMMITTEE AS

AMICUS CURIAE IN SUPPORT OF

PETITIONERS

JAMES GELFAND CHRISTOPHER LANDAU, P.C.

THE ERISA INDUSTRY CRAIG S. PRIMIS, P.C.

COMMITTEE K. WINN ALLEN

1400 L St., N.W. Counsel of Record

Suite 350 KIRKLAND & ELLIS LLP

Washington, D.C. 20005 6656 Fifteenth St., N.W.

(202) 789-1400 Washington, D.C. 20005

(202) 879-5000

winn.allen@kirkland.com

Counsel for Amicus Curiae

November 6, 2017

eee

WILSON-EPES PRINTING Co., INC. — (202) 788-0086 — WASHINGTON, D. C. 20002

MOTION FOR LEAVE TO FILE BRIEF AS

AMICUS CURIAE

Pursuant to Supreme Court Rule 37.2, the ERISA

Industry Committee (“ERIC”) respectfully moves for

leave to file the attached brief as amicus curiae in

support of petitioners. All parties were timely notified

of ERIC’s intent to file an amicus curiae brief.

Counsel for petitioners consented to the filing and

stated that a !otter of blanket consent to all amicus

briefs is on file with the Clerk of this Court. Counsel

for respondents did not consent to ERIC’s filing of an

amicus brief, therefore making this motion necessary.

ERIC is a nonprofit organization representing

many large sponsors of ERISA-covered healthcare

and other employee benefits plans. ERIC’s members

provide benefits to millions of active employees,

retired workers, and their families nationwide. ERIC

is interested in ensuring that employee benefits plans

are governed by clear, predictable rules, and it often

participates as amicus curiae in cases that may

impact employee benefits plan design or

administration. !

ERIC has collective experience not shared by the

parties, including experience regarding the

considerations surrounding employee benefits plans.

The arguments in this brief are intended to shed light

1 See, e.g., M&G Polymers USA, LLC v. Tackett, 136 S. Ct. 926

(2015); Conkright v. Frommert, 559 U.S. 506 (2010); AT&T Corp.

v. Hulteen, 556 U.S. 701 (2009); Kennedy v. Plan Adm’r for

DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009); LaRue v. De Wolff,

Boberg & Assocs., Inc., 652 U.S. 248 (2008); Gen. Dynamics Land

Sys., Inc. v. Cline, 640 U.S. 681 (2004); Black & Decker Disability

Plan v. Nord, 638 U.S. 822 (2003); Hughes Aircraft Co. v.

Jacobson, 526 U.S. 432 (1999); Lockheed Corp. v. Spink, 517 U.S.

882 (1996).

as

on the question presented in ways additional to the

detail already provided by petitioners’ advocacy.

Because ERIC believes that the attached brief would

assist the Court in resolution of this case, it asks that

the Court grant leave to file the attached brief as

amicus curiae.

Respectfully submitted,

JAMES GELFAND CHRISTOPHER LANDAU, P.C.

THE ERISA INDUSTRY CRAIG S. PRIMIS, P.C.

COMMITTEE K. WINN ALLEN

1400 L St., N.W. Counsel of Record

Suite 350 KIRKLAND & ELLIS LLP

Washington, D.C.20005 655 Fifteenth St., N.W.

(202) 789-1400 Washington, D.C. 20005

(202) 879-5000

winn.allen@kirkland.com

Counsel for Amicus Curiae

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURIAE ...000.0......0200.-0000000 1

INTRODUCTION AND SUMMARY OF

BITTE viniscisiioctdnicsiccieuapiiatbcninabaiidnimiiadiidainiaadibindmemnndaieneal 2

SET ae eee Re 6

I. The Sixth Circuit's post-Tackett Case Law Has

Created Uncertainty Regarding the Vesting of

Collectively Bargained Retiree Healthcare

A. The Interpretation of Collectively

Bargained Retiree Healthcare Plans is an

Issue of Great Importance to the Nation’s

aaah el aaa 6

B. Sixth Circuit Decisions Reached After

Tackett Undermine Predictability and

Attach Enormous Risks to Collectively

Bargained Retiree Healthcare Benefits......... 10

Il. The Decision Below Contradicts This Court's

Recent Decision in Tackett and Should be

A. Tackett Rejected The Yard-Man Inferences

And Instructed Lower Courts To Interpret

Collectively Bargained Retiree Healthcare

Provisions According To Ordinary Contract

alienate hea 14

B. The Decision Below is Plainly Incorrect

Under Tacketfts Ordinary Contract

SITTIN Canissitndoneenentcennsuniiniadigniniaeiubesessmnenibniantte 16

lv

C. The Sixth Circuit's Clear Error With

Respect To Recent Supreme Court Law

Warrants Summary Reversal. .......................

CONCLUSION

Vv

TABLE OF AUTHORITIES

Page(s)

Cases

Amgen Inc. v. Harris,

136 S. Ct. 758 (2016) (per curiam)......................... 21

Cole v. ArvinMeritor, Inc.,

549 F.3d 1064 (6th Cir. 2008)..................ccccceeeeeeeee 18

Cole v. Meritor, Inc.,

855 F.3d 695 (6th Cir. 2017).................0..c. cee eens 4,11

Conkright v. Frommert,

559 U.S. 506 (2010) ........... 0... ccccececceeceeeeeeenes 9-10, 13

Fort Halifax Packing Co. v. Coyne,

AL TT ae 10

Gallo v. Moen Inc.,

813 F.3d 265 (6th Cir. 2016).................. 4, 11, 17, 20

Heimeshoff v. Hartford Life & Acc. Ins. Co.,

Be ey Ge i exscccecccncncianensscsesesonsssecccsonceseses 10

IUE-CWA v. Gen. Elec. Co.,

No. 4:15CV2301, 2017 WL 3219728

(N.D. Ohio July 28, 2017) .0.............ccccecccccccceeesoseeeees 7

Kerns v. Caterpillar Inc.,

144 F. Supp. 3d 963 (M.D. Tenn. 2015)................... 7

M&G Polymers USA, LLC v. Tackett,

135 S. Ct. 926 (2015)...................... 1-6, 10-11, 14-22

M&G Polymers USA, LLC v. Tackett,

See 2

McCoy v. Meridian Auto. Sys., Inc.,

390 F.3d 417 (6th Cir. 2005) .....0........... ccc ceececeees 19

Noe v. PolyOne Corp.,

520 F.3d 548 (6th Cir. 2008)...................00000000 18-19

vi

Pavan v. Smith,

137 S. Ct. 2075 (2017) (per curiam)....................... 21

Reese v. CNH Indus., N.V.,

854 F.3d 877 (6th Cir. 2017)............... 2-6, 11, 16-21

Rush Prudential HMO, Inc. v. Moran,

ae 10, 14

Smith v. Evening News Ass'n,

ee 3,9

Sprague v. Gen. Motors Corp.,

133 F.3d 388 (6th Cir. 1998) ...................cccccecceeeeeee 15

Tarrant Reg’? Water Dist. v. Herrmann,

BE Be Ge, Be GD crcccccecvescscccccscecccscccccccsescososes 19

UAW v. Kelsey-Hayes Co.,

854 F.3d 862 (6th Cir. 2017)................... 4, 10-11, 17

UAW v. Kelsey-Hayes Co.,

872 F.3d 388 (6th Cir. 2017)..... 2, 4-5, 11-14, 17, 22

UAW v. Yard-Man, Inc.,

716 F.2d 1476 (6th Cir. 1983)............. 2-6, 10, 12-22

Wood v. Detroit Diesel Corp.,

607 F.3d 427 (6th Cir. 2010) ...............c.ccccccceceecneeeeee 9

Yolton v. El Paso Tenn. Pipeline Co.,

435 F.3d 571 (6th Cir. 2006) ....................ccccccceeeeees 18

Zino v. Whirlpool Corp.,

47 F. Supp. 3d 561 (N.D. Ohio 2014)................... 7,9

Other Authorities

2017 Employer Health Benefits Survey,

KAISER FAMILY FOUND. AND HEALTH RESEARCH

& EDUC. TRUST,

http://files.kff.org/attachment/Report-Employer-

Health-Benefits-Annual-Survey-2017..................... 7

vii

Caruso, Anthony,

Statistics of U.S. Business Employment and

Payroll Summary:

2012, U.S. CENSUS BUREAU (Feb. 2015),

https://www.census.gov/content/dam/Census/

library/publications/2015/econ/g12-susb.pdf........... 7

Gladwell, Malcolm,

Overdrive: Who Really Rescued General Motors?,

THE NEW YORKER (Nov. 1, 2010),

EL a ET 8)

Health, United States, 2016:

With Chartbook on Long-Term Trends in Health,

U.S. CTRS. FOR DISEASE CONTROL,

Table 15 (May 2017),

https://www.cdc.gov/nchs/data/hus/hus16.pdf. ....... 8

How does UK healthcare spending compare

internationally?, OFFICE FOR NATIONAL STASTICS

(UNITED KINGDOM) (Nov. 1, 2016),

https://visual.ons.gov.uk/how-does-uk-healthcare-

spending-compare-internationally/. ........................ 8

Kontis, Vasilis, et al,

Future Life Expectancy in 35 Industrialised

Cou” tries: Projections with a Bayesian Model

Ensemble, THE LANCET (Feb. 21, 2017),

http://www.thelancet.com/journals/lancet/article/

PIIS0140-6736(16)32381-9/fulltext. ..................00000. 8

NHE Fact Sheet,

CTRS. FOR MEDICARE AND MEDICAID SERVS.,

https://www.cms.gov/research-statistics-data-and-

systeme/statistics-trends-and-

reports/nationalhealthexpenddata/nhe-fact-

sheet. html (last visited Nov. 11, 2017)................ 8,9

Ortman, Jennifer M.., et. al,

An Aging Nation: The Older Population in the

United States, U.S. CENSUS BUREAU (May 2014),

https://www.census.gov/prod/2014pubs/p25-

PIT dicchicnthddisstninsumiddideensedtieaniiaichsdddemtumtebidseubceaie 7

INTEREST OF AMICUS CURIAE'

ERIC is a nonprofit organization representing the

Nation’s largest sponsors of ERISA-covered pension,

healthcare, disability, and other employee benefits

plans. ERIC’s members provide benefits to millions of

active employees, retired workers, and their families

nationwide. ERIC often participates as amicus curiae

in cases that may impact employee benefits plan

design or administration.

Amicus seeks to ensure that voluntary employee

benefits plans remain a workable feature of the

American employment landscape. It advocates for

policies that allow its members to offer benefits

effectively, efficiently, and uniformly across the

country. Here, amicus and its members have an

interest in ensuring that collectively bargained retiree

healthcare benefits are governed by predictable and

uniform legal principles. Because the decision below

conflicts with those of other Courts of Appeals, with

other decisions within the Sixth Circuit, and with this

Court’s prior decision in M&G Polymers USA, LLC v.

Tackett, 135 S. Ct. 926, 937 (2015), amicus has an

interest in obtaining this Court’s review to restore

uniformity in the law. In addition, amicus has an

interest in ensuring that employers’ retiree

healthcare obligations are enforced consistently with

the text of the agreements in which those benefits are

offered, and that employer obligations are not

1 Pursuant to this Court’s Rule 37.6, amicus states that no

counsel for a party authored this brief in whole or in part, and

that no person or entity other than amicus, ita members, or

counsel made a monetary contribution intended to fund the

preparation or submission of this brief.

2

unpredictably expanded in ways that increase the

risks of agreeing to such benefits in the first place.

INTRODUCTION AND SUMMARY OF

ARGUMENT

This Court should grant the netition for certiorari

and summarily reverse the decision below. That

decision misapplies the rules of _ contract

interpretation this Court set forth in M&G Polymers

USA, LLC v. Tackett, 135 S. Ct. 926, 937 (2015), re-

opens the circuit split that case tried to “suture[]

shut,” Reese v. CNH Indus., N.V., 854 F.3d 877, 890

(6th Cir. 2017) (Sutton, J., dissenting), and forms part

of a series of Sixth Circuit cases judges on that court

now admit are “in irreconcilable conflict.” UAW uv.

Kelsey-Hayes Co., 872 F.3d 388, 390—91 (6th Cir. 2017)

(Griffin, J., dissenting from denial of rehearing en

banc). Because the Sixth Circuit, by repeatedly

denying requests for en banc review, appesrs

unwilling or unable to bring its cases into conformity

with this Court’s precedent, and because the Sixth

Circuit has an outsized impact on this important area

of federal law, the question presented requires this

Court’s review.

Just over three years ago, this Court granted

certiorari to resolve a circuit split regarding the

interpretative rules that should apply in determining

whether retiree healthcare benefits vest for life under

a collective bargaining agreemient. See M&G

Polymers USA, LLC v. Tackett, 134 S. Ct. 2136 (2014)

(granting certiorari in part). The Sixth Circuit, in a

series of cases starting with UAW v. Yard-Man, Inc.,

716 F.2d 1476 (1983), had adopted a number of special

inferences that tended to imply lifetime healthcare

benefits when the contract on its face made no such

3

promise. Those so-called “Yard-Man inferences” were

not applied by any other Court of Appeals. Resolving

that circuit conflict presented an important issue of

federal law, given Congress’s longstanding “policy of

having the administration of collective bargaining

contracts accomplished under a uniform body of

federal substantive law.” Smith v. Evening News

Assn, 371 U.S. 195, 200 (1962).

In Tackett, this Court unanimouely “reject[ed] the

Yard-Man inferences as inconsistent with ordinary

principles of contract law.” Tackett, 135 S. Ct. at 937.

Emphasizing “the rule that contractual provisions

ordinarily should be enforced as written,” the Court

abrogated the various rules of construction the Sixth

Circuit routinely had used to imply vested benefits.

Id. at 933, 937 (internal quotation marks omitted).

The Court also set forth a number of “traditional

principles” of contract law for courts to apply in

determining the duration of retiree healthcare

benefits, including that “contractual obligations will

cease, in the ordinary course, upon termination of the

bargaining agreement,” id. at 937, and that “courts

should not construe ambiguous writings to create

lifetime promises,” id. at 936.

Tackett should have ended this case. Despite the

Court’s clarity, it did not. In the decision below, the

Sixth Circuit resurrected the Yard-Man inferences,

using them to find that a collective bargaining

agreement was ambiguous with respect to the

duration of retiree healthcare benefits. Reese, 854

F.3d at 882-83. The Sixth Circuit then resolved that

purported ambiguity in favor of lifetime vesting—just

as it did in Yard-Man itself. Id. at 883.

4

That decision merits review, and summary

reversal, for at least two reasons.

First, the Sixth Circuit’s decision revives the

untenable uncertainty and circuit conflict that

prompted review in Tackett. It “abrad[es] an inter-

circuit split,” id. at 890 (Sutton, J., dissenting), as

“every other court in the country would [have]

handle[d] this case differently,” id. at 893 (describing

the Circuit split). In addition, the decision below

furthers an intractable intra-circuit split. Some Sixth

Circuit cases have faithfully followed Tackett. See

Gallo v. Moen Inc., 813 F.3d 265, 267 (6th Cir. 2016);

Cole v. Meritor, Inc., 855 F.3d 695, 699 (6th Cir. 2017).

Others, such as the decision below, have sought to

resuscitate the Yard-Man inferences and perpetuate

a regime in which the Sixth Circuit's approach to

these cases is badly “out of step” with those of other

circuits. See Reese, 854 F.3d at 882—83, 893; UAW uv.

Kelsey-Hayes Co., 854 F.3d 862, 868-71 (6th Cir.

2017). The result is “a mess” of cases in “irreconcilable

conflict.” Kelsey-Hayes, 872 F.3d at 390-91 (Griffin,

J., dissenting from denial of rehearing en banc).

Because forum shopping and the Sixth Circuit's

geography lead to “numerous retiree healthcare cases

within [its] jurisdiction,” id. at 392, this intra-circuit

uncertainty assumes outsized significance.

Employers struggling to understand the scope of

their obligations, moreover, have little hope that the

Sixth Circuit will fix these problems on its own. Three

of the Sixth Circuit’s contradictory decisions were

released on the same day “by cooperation of all three

panels.” Jd. at 388 (Gibbons, J., concurring in denial

of rehearing en banc). Parties in all three cases

petitioned for rehearing en banc. All three petitions

5

were denied. Concurring in one denial, Judge Sutton

explained that despite the fact that “[b]y nearly every

measure, this case deserves en banc review,” such

review would likely be fruitless, as “there is good

reason to fear that a majority of the en banc court

would fail to agree on a majority view.” Id. at 389—90.

Absent action by this Court, therefore, the

uncertainties created by the Sixth Circuit will persist

indefinitely.

Second, the Sixth Circuit's decision below is

plainly incorrect under Tackett. The collective

bargaining agreements in this case never promised

that retiree healthcare benefits would be provided for

life. To the contrary, each contract contained a

durational clause that limited all benefits in the

contract (not otherwise extended or shortened) to the

term of the agreement. Because nothing in the retiree

healthcare provisions of this contract suggested that

those benefits were subject to a different time limit,

the durational clause controlled and the company’s

obligation to provide retiree healthcare benefits

expired when the contract expired.

The Sixth Circuit reached a contrary conclusion

only by applying the same Yard-Man inferences this

Court previously rejected. It refused to apply the

general durational clause to retiree healthcare

benefits, Reese, 854 F.3d at 882, an approach Tackett

rejected as “distort[ing] the text of the agreement” and

“conflict[ing] with ordinary principles of cont>act law,”

135 S. Ct. at 936. It also found that purported

“silence” in the contract as to the duration of retiree

healthcare benefits “further[ed]” ambiguity, Reese,

854 F.3d at 882, despite Tacketi’s clear instruction

that “when a contract is silent as to the duration of

6

retiree benefits, a court may not infer that the parties

intended those benefits to vest for life,” 136 S. Ct. at

937 (emphasis added). And it relied on the fact that

“healtlicare benefits were tied to pension eligibility,”

Reese, 854 F.3d at 882-83, even though Tackett

rejected that same logic as one of several ways in

which “Yard-Man and its progeny affected the

outcome” in that case, 135 S. Ct. at 937.

This Court should therefore grant the petition and

summarily reverse the decision below. Such review is

needed to bring certainty to an area of law critical to

employers and retirees, both in and apart from the

Sixth Circuit, and to enforce Tackett’s clear command

that collective bargaining agreements be read

according to “ordinary principles of contract law,” 135

S. Ct. at 937.

ARGUMENT

I. The Sixth Circuit’s post-Tackett Case Law

Has Created Uncertainty Regarding the

Vesting of Collectively Bargained Retiree

Healthcare Benefits.

A. The Interpretation of Collectively

Bargained Retiree Healthcare Plans is an

Issue of Great Importance to the Nation’s

Employers.

Retiree healthcare plans remain highly significant

for many large employers. A recent survey of the

Kaiser Family Foundation found that approximately

25% of employers with 200 or more employees offer

some form of retiree health benefits.2 While public-

2 See 2017 Employer Health Benefits Survey, KAISER FAMILY

FOUND. AND HEALTH RESEARCH & EDUC. TRUST, at 173,

7

sector and non-profit employers are most likely to

offer benefits, 11% of large for-profit enterprises also

do so, and retiree benefits grow more common with

workforce size and union participation.’ Indeed,

employers provide collectively bargained retiree

healthcare benefits to millions of people each year.‘

These employers include numerous well-known

companies with large workforces, including

Caterpillar, Whirlpool, General Electric, and many

others.®

Covering so many employees is an increasingly

expensive endeavor. Rising costs are partly

attributable to the fact that the United States is an

aging country. While 9.8 percent of our population

was over age 65 in 1970, that figure reached 13

percent in 2010, and will exceed 20 percent by 2030.®

Over 43 million Americans were over 65 years old in

http://files.kff.org/attachment/Report-Employer-Health-Benefits

-Annual-Survey-2017.

3 Id.

* See Anthony Caruso, Statistics of U.S. Business Employment

and Payroll Summary: 2012, U.S. CENSUS BUREAU, at 1 (Feb.

20165), https://www.census.gov/content/dam/Census/library/publ

ications/2015/econ/g12-susb.pdf (noting that 59.9 million people

worked in private sector companies with 500+ employees in

2012).

5 See, eg., Kerns v. Caterpillar Inc., 144 F. Supp. 3d 963, 965

(M.D. Tenn. 2015); Zino v. Whirlpool Corp., 47 F. Supp. 3d 561,

566 (N.D. Ohio 2014): "7/E-CWA v. Gen. Elec. Co., No.

4:16CV2301, 2017 WL £2! at *3 (N.D. Ohio July 28, 2017).

® Jennifer M. Ortma» ~.. al, An Aging Nation: The Older

Population in the Unitea States, U.S. CENSUS BUREAU, at 2-3

(May 2014), httpe://www .census.gov/prod/20 1 4pube/p25-

1140.pdf.

8

2012. By 2060, over 8&3 million will be.’ Life

expectancies are also climbing. While life expectancy

at birth hovered around 70 in 1960 and 1970,

Americans born in 2015 are projected to live an

average of 78.8 years. And while 65-year olds had an

average further life expectancy of 15.2 years in 1960,

similar individuals now survive 19.4 years. These

numbers will likely continue to improve, with

longevity expected to incrementally increase through

2030. 1°

The per-person cost of medical care in the United

States is also strikingly high. In 2015, the United

States spent an estimated $9,990 per person on health

care,!! more than twice the per-capita outlays in the

United Kingdom.'2 Those costs are unlikely to go

down: American healthcare expenditures, and their

7 Id. at 16.

® Health, United States, 2016: With Chartbook on Long-Term

Trends in Health, U.S. CTRS. FOR DISEASE CONTROL, at 116,

Table 15 (May 2017), https://www.cdc.gov/ncha/data/hus/hus16

pdf.

9 Id.

10 Vasilis Kontis, et al, Future Life Expectancy in 35

Industrialised Countries: Projections with a Bayesian Model

Ensemble, THE LANCET (Feb. 21, 2017),

http://www.thelancet.com/journals/lancet/article/PIIS0140-

6736(16)3238 1-9/fulltext.

\| NHE Fact Sheet, CTRS. FOR MEDICARE AND MEDICAID SERVS.,

https://www.cms.gov/research-statistics-data-and-systems/statis

tics-trends-and-reports/nationalhealthexpenddata/nhe-fact-

sheet. html (last visited Nov. 11, 2017).

12 How does UK healthcare spending compare internationally?,

OFFICE FOR NATIONAL STASTICS (UNITED KINGDOM) (Nov. 1,

2016), https://visual.ons.gov.uk/how-does-uk-healthcare-spendi

ng-compare-internationa|!y/.

9

implications for employers, are projected to grow

faster than inflation through 2025.'*

In an era of aging populations and ever-increasing

healthcare costs, employers must be able to

predictably determine when retiree healthcare

benefits provided in a collective bargaining agreement

vest for life and when they do not. Indeed, the

financial consequences of that question are

staggering. The cost of providing lifetime healthcare

benefits can easily exceed tens or hundreds of millions

of dollars. See, e.g., Wood v. Detroit Diesel Corp., 607

F.3d 427, 428-429 (6th Cir. 2010) (CEO testifying that

vested retiree healthcare liabilities “could have

bankrupted the company”); Zino v. Whirlpool Corp.,

47 F. Supp. 3d 561, 565 (N.D. Ohio 2014) (noting $169

million present value of benefits in controversy). Such

costs are substantially higher for those companies

with hundreds of thousands of retirees.'4

Given the significant costs potentially at stake,

Congress has long maintained a “policy of having the

administration of collective bargaining contracts

accomplished under a uniform body of federal

substantive law.” Smith, 371 U.S. at 200. Uniform,

predictable rules may “avoid a patchwork of different

interpretations of a plan . . . that covers employees in

different jurisdictions,” Conkright v. Frommert, 559

U.S. 506, 517 (2010), and reduce “considerable

inefficiencies, which the employer might choose to

offset by lowering benefits levels,” Fort Halifax

‘8 NHE Fact Sheet, note 11, supra.

14 Malcolm Gladwell, Overdrive: Who Really Rescued General

Motors?, THE NEW YORKER (Nov. 1, 2010), http://goo.gl/yLxTpC

(noting that, as of 2007, General Motors had around 517,000

retirees).

10

Packing Co. v. Coyne, 482 U.S. 1, 10 (1987).

Understanding which obligations are vested, and

which terminate when a contract expires, is thus vital

to employers’ willingness to continue offering retiree

health benefits in an _ increasingly complex

marketplace.

For similar reasons, Congress has put a special

emphasis on enforcing the written terms of ERISA

welfare benefits plans—such as plans that provide for

retiree healthcare benefits, see Tackett, 135 S. Ct. at

933. “[Flocus on the written terms of the plan is the

linchpin of a system that is not so complex that

administrative costs, or litigation expenses, unduly

discourage employers from offering ERISA plans in

the first place.” Heimeshoff v. Hartford Life & Acc.

Ins. Co., 134 S. Ct. 604, 612 (2013) (brackets and

internal quotation marks omitted). By “assuring a

predictable set of liabilities,” Congress meant to

“inducfe] employers to offer benefits,” Rush

Prudential HMO, Inc. v. Moran, 536 U.S. 355, 379

(2002), despite not requiring them to do so, Conkright,

559 U.S. at 616.

B. Sixth Circuit Decisions Reached After

Tackett Undermine Predictability and

Attach Enormous Risks to Collectively

Bargained Retiree Healthcare Benefits.

The decision below undermines predictability and

uniformity by creating a circuit split between the

Sixth Circuit and the rest of the country. See Pet. 18—

19. Here, as well as in Kelsey-Hayes, the Sixth Circuit

resurrected the Yard-Man inferences, used them to

find a collective bargaining agreement ambiguous,

and relied on extrinsic evidence to find a right to

lifetime healthcare benefits nowhere mentioned in the

11

plain text of the contract. As Judge Sutton explained,

“every other circuit in the country” would have

reached a different result—namely, that the contract

unambiguously limited retiree healthcare benefits to

the duration of the agreement. Reese, 854 F.3d at 888

(Sutton, J., dissenting). The Sixth Circuit has thus

“abrad[ed] an inter-circuit split” and fallen “out of

step” with the rest of the country. Jd. at 890, 893.

The decision below also creates severe internal

confusion within the Sixth Circuit itself. Though it

and Kelsey-Hayes held that benefits vested for life,

other Sixth Circuit cases interpreting similar

contracts have followed Tackett and held that retiree

healthcare benefits did not vest for life. See Gallo, 813

F.3d at 269-70; Cole, 855 F.3d at 699-702. In fact, the

decision below Kelsey-Hayes, and Cole form a trio of

cases all released on April 20, 2017—two going one

way, the third going another. The Sixth Circuit

intentionally released those opinions on the same day,

Kelsey-Hayes, 872 F.3d at 388 (Gibbons, J., concurring

in denial of rehearing en banc), presumably because it

was fully aware that those decisions were in

irreconcilable conflict, and it wanted to avoid any

single decision having first-in-time precedential

status over any other. As a consequence, Sixth Circuit

case law is now “a mess,” id. at 390 (Griffin, J.,

dissenting from denial of rehearing en banc), and the

confusion has metastasized through numerous

confused district court decisions throughout the

circuit, Pet. 24—25.

The Sixth Circuit has proven unwilling or unable

to resolve this uncertainty. Parties in all three of the

April 20 cases filed petitions for rehearing en banc

seeking to bring clarity to Sixth Circuit law. All three

12

petitions were denied. In a candid opinion, Judge

Sutton explained why: though “[a]n intra-circuit split

accompanied by an inter-circuit divide followed by

lack of conformity to a Supreme Court decision

normally warrants en banc review,” in these cases, en

banc review would likely “lead to nothing gained” as

“there is a real possibility that we would not have nine

votes for any one ... approach[.]” Kelsey-Hayes, 872

F.3d at 390 (Sutton, J., concurring). In the absence of

en banc review, only this Court can resolve this inter-

and intra-circuit confusion.

Review by this Court is particularly important

because the Sixth Circuit’s muddled precedents inflict

an outsized harm given the number of retiree

healthcare cases that are litigated in that jurisdiction.

Dissenting from one denial of review en banc, Judge

Griffin explained:

It is no secret that a combination of

several factors—including the number of

unionized workforces (and retirees)

within our Circuit, the various economic

downturns in several of the

manufacturing sectors that led to

corporate restructuring and the cutting

of benefits, and our pro-retiree Yard-

Man inference—has led to the

maintenance of numerous retiree

healthcare cases within our jurisdiction.

Id. at 392 (Griffin, J., dissenting from denial of

rehearing en banc). Covering Michigan, Ohio,

Kentucky, and Tennessee, the Sixth Circuit

encompasses much of the country’s industrial

heartland, and is home to many employers, retirees,

and union headquarters. As a result, a seemingly

13

endless stream of retiree healthcare cases have been

litigated in that jurisdiction. The problem has been

exacerbated by forum shopping: parties who know

that the text of their contracts will be read to bar their

claims in other circuits have rationally chosen to file

suit in the Sixth Circuit whenever possible. One need

look no further than this case for an example.

Respondents “counter-sued in the Eastern District of

Michigan, even though [petitioner] had no employees

or facilities within the Sixth Circuit.” Pet. 5. Given

the Sixth Circuit’s geography and parties’ temptation

to forum shop, it is no surprise that “countless” cases

are presently “percolating” in that Circuit’s district

courts, see Kelsey-Hayes, 872 F.3d at 392 (Griffin, J.,

dissenting from denial of rehearing en banc).

The uncertainty created by the Sixth Circuit's

resuscitation of the Yard-Man inferences is

untenable. Employers now face the very real

possibility that the outcome of a case will turn largely

on where suit is brought or on which line of Sixth

Circuit law a panel chooses to follow. The stakes,

moreover, are exceptionally high: A finding of lifetime

healthcare benefits can increase costs by hundreds of

millions of dollars for employers with even reasonably

sizeable retiree populations, imposing a burden for

which those employers neither bargained nor

prepared, and one that can risk the financial health of

entire enterprises. See Part I.A.

Faced with such enormous and uncertain risks,

present and future companies may rationally choose

not to offer retiree healthcare benefits at all, and thus

avoid these dangers altogether. See Conkright, 559

U.S. at 517 (noting that “a patchwork of different

interpretations of a plan” “would introduce

14

considerable inefficiencies in benefit program

operation” and “might lead those employers with

existing plans to reduce benefits, and those without

such plans to refrain from adopting them”). Such a

result would undermine “ERISA’s policy of inducing

employers to offer benefits by assuring a predictable

set of liabilities.” Rush Prudential HMO, 536 U.S. at

379.

This Court’s guidance is thus needed to restore

the uniform interpretation Tackett so clearly sought

to impose. By reanimating the Yard-Man inferences,

the Sixth Circuit has once again clouded retiree

healthcare benefits with uncertainty. And by refusing

to resolve that uncertainty via en banc review on three

recent occasions, with judges going so far as to

acknowledge conflict and yet further lament that the

Circuit appears unable to agree on a majority view,

Kelsey-Hayes, 872 F.3d at 390 (Sutton, J., concurring

in denial of rehearing en banc), the Sixth Circuit has

demonstrated that only this Court can bring

predictability to this area of law. The petition for

certiorari should accordingly be granted.

II. The Decision Below Contradicts This Court’s

Recent Decision in Tackett and Should be

Summarily Reversed.

A. Tackett Rejected The Yard-Man

Inferences And Instructed Lower Courts

To Interpret Collectively Bargained

Retiree Healthcare Provisions According

To Ordinary Contract Principles.

The Sixth Circuit’s confusion is not a result of this

Court’s lack of clarity. In Tackett, the Court took

pains to reject not just the holding then under review,

nor even just Yard-Man’s general theory that courts

15

should put “a thumb on the scale in favor of’ vesting.

Tackett, 135 S. Ct. at 935. Rather, the Court also

examined and rejected a whole series of particularized

Yard-Man rules of construction, abrogating “the

inferences applied by Yard-Man and its progeny.” Id.;

see also id. at 933 (“[T]he Court of Appeals applied the

Yard-Man inferences . . . . As we now explain, those

inferences conflict with ordinary principles of contract

law.”); id. at 937 (“We reject the Yard-Man inferences

as inconsistent with ordinary principles of contract

law.”).

In place of the discredited Yard-Man inferences,

the Court identified several ordinary principles of

contract law to guide interpretation of collective

bargaining agreements going forward. First, the

Court reiterated “the rule that contractual provisions

ordinarily should be enforced as written” and that

“the written agreement is presumed to encompass the

whole agreement of the parties.” Jd. at 933, 936

(internal quotation marks omitted). Second, it held

that courts must not “refuse[] to apply general

durational clauses to provisions governing retiree

benefits,” but should rather “consider the traditional

principle that contractual obligations will cease, in the

ordinary course, upon termination of the bargaining

agreement.” Id. at 936—37 (internal quotation marks

omitted). Third, the Court emphasized “the

traditional principle that courts should not construe

ambiguous writings to create lifetime promises,” id. at

936, and cited approvingly to authorities requiring

“clear and express language” before finding a benefit

to have vested for life, id. at 937 (quoting Sprague v.

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

16

B. The Decision Below is Plainly Incorrect

Under Tackett’s Ordinary Contract

Principles.

Application of Tacketi’s principles should have

made “quick work of this case.” Reese, 854 F.3d at 888

(Sutton, J., dissenting). The parties’ 1998 collective

bargaining agreement lacked any specific written

promise that the company would provide retiree

healthcare benefits for life. To the contrary, “the

agreement contained a durational clause that limited

all of the benefits and burdens of the contract (not

otherwise extended or shortened) to the six-year term

of the agreement.” Jd. In addition, the contract made

expressly clear that the Group Benefit plan—which

included retiree healthcare benefits—‘run{s]

concurrently with” the collective bargaining

agreement, far short of commitment for life. See Pet.

App. 114-115. Under this plain text, the parties

unambiguously did not agree to lifetime benefits, and

those benefits should have “cease[d], in the ordinary

course, upon termination of the bargaining

agreement.” Tackett, 135 S. Ct. at 937.

Yet the Sixth Circuit determined otherwise.

Despite no textual indication of intent to permanently

vest retiree healthcare benefits, the court held the

agreement ambiguous, Reese, 854 F.3d at 882-83, and

further held that extrinsic evidence “indicate[s] that

[petitioner], the retirees, and the retirees’ spouses,

intended and expected that the healthcare benefits

provided were vested for life,” id. at 883.

The lower court was able to reach that flawed

conclusion only by relying upon the same Yard-Man

inferences that this Court rejected in Tackett. First,

the Sixth Circuit disregarded the contract’s general

17

durational clause. It reasoned that because other

provisions of the agreement contained more particular

durational clauses, it could not “presume that the

general-durational clause . . . says everything about

the parties’ intentions.” Id. at 882. The Sixth Circuit

deployed similar reasoning in Kelsey-Hayes, where it

found that “[t]he use of three different types of

durational language for specific provisions within the

agreement contributes further to the ambiguity.” 854

F.3d at 872. This logic is straight from Yard-Man,

which held that “[vJariations in language used in

other durational provisions of [an] agreement may

... provide inferences of intent useful in clarifying a

provision whose intended duration is ambiguous,” 716

F.2d at 1480.

But Tackett explicitly rejected “look[ing] to other

provisions of [an] agreement” in order to infer from

durational limits on different benefits an intent to

vest retiree healthcare benefits for life. See 135 S. Ct.

at 934. It “disagree[d]” that this reasoning is

consistent with “ordinary principles of contract law,”

id. at 935, and held that refusal to apply a general

durational clause to provisions governing retiree

benefits “distort[s] the text of the agreement,” id. at

936. Judge Sutton later explained that this is because

general durational clauses “provide a baseline or

default rule” applicable to all provisions in a contract,

unless a given provision contains “more specific limits

relevant to” it. See Gallo, 813 F.3d at 271. “Absent a

longer time limit in the context of a specific provision,

the general durational clause supplies a final phrase

to every term in [a collective bargaining agreement]:

‘until this agreement ends.” Jd. at 269. Thus, the fact

that retiree healthcare provisions contain no specific

time limitation, while other provisions do, proves only

18

that the general durational clause applies—not that

such benefits are guaranteed for life.

Second, the decision below reasoned that the

parties’ contract was “silent on whether the benefits

continue past the termination date of the agreement,”

and held that “this silence, rather than resolving

ambiguity, furthers it.” Reese, 864 F.3d at 882. This

reasoning too is progeny of Yard-Man, which held that

“the nature of [retiree] benefits . . . provides another

inference of intent” “when the collective bargaining

agreement is silent,” 716 F.2d at 1482. It is also

typical of Yard-Man’s successors, which held that

when durational limits were silent as to retiree

healthcare benefits, they were inapplicable to those

benefits. See, e.g., Noe v. PolyOne Corp., 520 F.3d 548,

554 (6th Cir. 2008) (quoting Yolion v. El Paso Tenn.

Pipeline Co., 485 F.3d 571, 681 (6th Cir. 2006)

(‘[A]bsent specific durational language referring to

retiree benefits themselves, courts have held that the

general durational language says nothing about those

retiree benefits.”)); Cole v. ArvinMeritor, Inc., 549

F.3d 1064, 1074 (6th Cir. 2008) (“[A] durational

limitation must include a specific mention of retiree

benefits in order to apply to such benefits.”).

Tackett forcefully rejected this reasoning. It

explicitly held that “when a contract is silent as to the

duration of retiree benefits, a court may not infer that

the parties intended those benefits to vest for life.”

136 S. Ct. at 937, and further rejected cases that had

“requirjed) a contract to include a specific durational

clause for retiree health care benefits to prevent

vesting,” id. at 936. It explained instead that courts

must “consider the traditional principle that [they]

should not construe ambiguous writings to create

19

lifetime promises,” id., and noted that “contractual

obligations will cease, in the ordinary course, upon

termination of the bargaining agreement.” Id. at 937;

cf. Tarrant Reg’ Water Dist. v. Herrmann, 133 S. Ct.

2120, 2133 (2013) (if a significant concession is alleged

in a contract, “we would expect a clear indication of

such [and] not inscrutable silence”).

Third, and finally, the decision below found

ainbiguity because “healthcare benefits were tied to

pension eligibility.” Reese, 854 F.3d at 882. The court

reasoned that this “create[s] an ambiguity about the

parties’ intentions” and “allows a court to explore the

extrinsic evidence to discover what the parties

actually intended.” Jd. at 882-83. This strategy arose

in Yard-Man’s progeny, which routinely relied on the

tying of pension and healthcare eligibility as evidence

of vesting. See, e.g., Noe, 520 F.3d at 558 (“[L]anguage

in an agreement that ties eligibility for retiree health

benefits to eligibility for a pension indicates an intent

to vest the health benefits.”); McCoy v. Meridian Auto.

Sys., Inc., 390 F.3d 417, 422 (6th Cir. 2005) (“Yard-

Man recognized an inference that ‘status’ benefits,

including retiree benefits, continue as long as the

status is maintained .... Because the Supplemental

Agreement ties eligibility for retirement-health

benefits to eligibility for a pension, in other words,

there is little room for debate that the retirees’ health

benefits vested upon retirement.”).

The Court in Tackett, however, rejected this

inference as well. The Court termed it “inconsistent

with ordinary principles of contract law,” and singled

it out as a way in which “Yard-Man and its progeny

affected the outcome.” 135 S. Ct. at 937. As Judge

Sutton later explained:

20

Tackett rejected this kind of “tying”

analysis as a relic of a misdirected frame

of reference ... . It is not surprising that

CBAs address pension and healthcare

benefits for retirees. And it is not

surprising that the CBAs make

pensioner status a condition of receiving

healthcare benefits. But neither one of

these features of the CBAs means that

retirees will get those benefits for as long

as they earn a pension.

Gallo, 813 F.3d at 272.

In short, all of the reasons the Sixth Circuit gave

for finding ambiguity in the collective bargaining

agreement were explicitly rejected by this Court in

Tackett. How, then, did the Sixth Circuit justify its

departure from this Court’s precedent?

The answer appears to lie in what the Sixth Circuit

asserts is a difference between “infer[ing]} vesting” and

“finding ambiguity.” Reese, 854 F.3d at 882. The

court acknowledged that it could “not infer vesting

from silence,” but nonetheless said it could “find

ambiguity ... partially from ... silence.” Jd.

Similarly, although the court admitted that

“lijnferring vesting from tying alone violates Tackett,”

it declared that “[flinding an ambiguity from tying”

“moves us closer to ... discovering the parties’ true

intentions.” Reese, 854 F.3d at 883 (emphasis added).

In the court's view, though the Yard-Man inferences

could no longer create vesting, they could create

am biguity about vesting.

But in order for a contract to be ambiguous, there

must be “two competing interpretations, both of which

are fairly plausible readings of the language.” Id. at

21

890 (Sutton, J., dissenting). And inferences that are

inconsistent with ordinary principles of contract law

are, by definition, incapable of creating such a

plausible interpretation. “A forbidden inference

cannot generate a plausible reading.” Jd. at 891. And

without that plausible alternative reading, the

contract in this case cannot be found ambiguous.

The Sixth Circuit’s continuing use of Yard-Man

inferences to find ambiguity in textually plain

contracts is thus “Yard-Man re-born, re-built, and re-

purposed for new adventures,” id. at 890—91, and it

flatly contradicts this Court’s jurisprudence.

C. The Sixth Circuit’s Clear Error With

Respect To Recent Supreme Court Law

Warrants Summary Reversal.

Summary reversal is appropriate when the “the

law is settled and stable, the facts are not in dispute,

and the decision below is clearly in error.” Pavan v.

Smith, 137 S. Ct. 2075, 2079 (2017) (per curiam)

(Gorsuch, J., dissenting). It is especially appropriate,

moreover, when a court of appeals fails to apply—or

balks at fully applying—recent Supreme Court

precedent. See, e.g., Amgen Inc. v. Harris, 136 S. Ct.

758, 760 (2016) (per curiam) (“consider[ing] for the

second time the Ninth Circuit’s determination that

respondent stockholders’ complaint states a claim

against petitioner fiduciaries for breach of the duty of

prudence” under ERISA, and summarily vacating

that determination because “the Ninth Circuit did not

correctly apply” the Court’s first decision).

Here, despite this Courts clear guidance in

Tackett, the Sixth Circuit read a collective bargaining

agreement as somehow promising retiree healthcare

benefits for life despite a clear durational clause and

22

the absence of any textual! indication of lifetime

vesting. It did so by using Yard-Man inferences that

this Court painstakingly rejected and by refusing to

apply ordinary principles of contract interpretation

that Tackett elucidated. Such a clear error warrants

this Court’s summary reversal.

Summary reversal is necessary, moreover, as the

question presented by the petition is both greatly

important and unlikely to resolve on its own. So long

as Sixth Circuit law remains muddled and in conflict

with other circuits, companies within and outside the

Sixth Circuit will face the uncertain risk that a panel

will impose on them obligations that can cost tens or

hundreds of millions of dollars—obligations that they

never agreed to bear. And because “there is good

reason to fear that a majority . . . would fail to agree

on a majority view,” Kelsey-Hayes, 872 F.3d at 390

(Sutton, J., concurring in denial of rehearing en banc),

the Sixth Circuit appears unlikely to resolve this issue

itself.

CONCLUSION

For the foregoing reasons, this Court should grant

the petition for certiorari, summarily reverse the

decision below, and remand for judgment to be

entered in favor of Petitioners.

23

November 6, 2017 Respectfully submitted,

JAMES GELFAND CHRISTOPHER LANDAU, P.C.

THE ERISA INDUSTRY CRAIG S. PRIMIS, P.C.

COMMITTEE K. WINN ALLEN

1400 L St., N.W. Counsel of Record

Suite 350 KIRKLAND & ELLIS LLP

Washington, D.C. 20005 655 Fifteenth St., N.W.

(202) 789-1400 Washington, D.C. 20005

(202) 879-5000

winn.allen@kirkland.com