Justices toss permanent company payment of union retiree health benefits

WASHINGTON (PAI) – By a 9-0 vote, in yet another decision written by the U.S. Supreme Court’s most-right-wing justice, Clarence Thomas, the High Court tossed out union retirees’ right to continuing employer-paid health care benefits. Instead, the employer payment can last only during the duration of the contract that mandates them, the justices said.

The decision involved saw the Steel Workers defend hundreds of retirees from M&G Polymers, a now-foreign-owned West Virginia firm whose current and past workers are the union local’s members. M&G’s new owners said settled principles of contract law trumped the lifetime company payment of health care benefits. Thomas and the other justices agreed.

The case also overturns a 1982 U.S. Supreme Court ruling, Yard-Man, involving the Auto Workers, which appeared to give the green light to such continuing company health care benefit payments. Thomas said the 6th U.S. Circuit Court of Appeals in Cincinnati, which handled both the 1982 case and this one, got the whole issue wrong 33 years ago.

Yard-Man violates ordinary contract principles by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements,” Thomas wrote. “That rule has no basis in ordinary principles of contract law. And it distorts the attempt ‘to ascertain the intention of the parties,‘ ” meaning the company and the union.

Yard-Man’s assessment of likely behavior in collective bargaining is too speculative and too far removed from the context of any particular contract to be useful. And the court of appeals derived its assessment of likely behavior not from record evidence, but instead from its own suppositions about the intentions of employees, unions, and employers negotiating retiree benefits…. Although a court may look to known customs or usages in a particular industry to determine the meaning of a contract, the parties must prove those customs or usages” through affirmative evidence in any given case, Thomas added.

“The court of appeals also failed even to consider the traditional principle that courts should not construe ambiguous writings to create lifetime promises,” Thomas declared.

Justice Ruth Bader Ginsburg, writing for the four progressive justices, said when a “contract is ambiguous, a court may consider extrinsic evidence to determine the intentions” of the company and the union. “Contrary to M&G’s assertion, no rule requires ‘clear and express’ language to show that parties intended health-care benefits to vest. Constraints upon the employer after the expiration of a collective-bargaining agreement may be derived from the agreement’s ‘explicit terms,’ ” Ginsburg and her colleagues said.

“But they may arise as well from…implied terms of the expired agreement,” Ginsburg added. M&G’s agreement with the Steel Workers, which it had inherited from the firm’s former owner, Shell Oil, had expired.

When it gets the case back, the circuit court “should examine the entire agreement to determine whether the parties intended retiree health-care benefits to vest. Because the retirees have a vested, lifetime right to a monthly pension, a provision stating that retirees ‘will receive’ health-care benefits if they are ‘receiving a monthly pension’ is relevant…But the court must conduct that review without Yard-Man’s ‘thumb on the scale,’ ” Ginsburg warned.

Thomas’ ruling against union retirees came a week after the justices upheld yet another whistle-blower, in this case a Transportation Security Administration officer, whom the agency fired after he disclosed that for cost reasons, TSA pulled air marshals from some long-distance flights. The American Federation of Government Employees, which represents the TSA agents, sided with the whistle-blower in a friend-of-the-court brief. So did other unions.

The TSA said its rules barred disclosing “sensitive security information” and had the same force as a law does. It also declared that exposing the lack of air marshals on some planes – without specifying which flights – was “sensitive security information.”

Both the TSA officer’s lawyer and AFGE said equating TSA rules with law was wrong. “A bad decision could chill important, protected disclosures from not only federal air marshals but also from AFGE’s Transportation Security Officers, who provide front-line security for nearly all public air travel across the United States,” the union said.

Photo A member of the United Mine Workers of America holds up a sign in a protest Feb. 13, 2013, in St. Louis. Union protesters of bankruptcy proceeding said it jeopardizes pension and health care benefits for some 20,000 retirees and dependents.  |   AP Photo/Jeff Roberson


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Press Associates Inc. (PAI) is a union news service located in Washington, D.C. Mark Gruenberg is editor.

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