The Sixth Circuit affirmed a district court’s decision granting a permanent injunction in favor of M&G Polymers, USA LLC retirees who sought vested lifetime health care benefits. Tackett v. M&G Polymers USA, LLC, 6th Cir., No. 12-3329, Aug. 12, 2013. In December 2006, M&G announced that it would begin requiring retirees to contribute to the cost of their health benefits. Certain retirees commenced a lawsuit, arguing that the changes violated ERISA because “the promise of a ‘full Company contribution towards the cost of [health care] benefits’ in the CBAs provided them with a vested right to receive health care benefits in retirement without making any contributions.” M&G argued that a series of side letters that purported to allow the company to cap its contributions to the retirees’ health benefits applied to the CBAs because: (i) the side letters had been consistently agreed to with the union since 1991; (ii) internal union conversations indicated that some union members believed the side letters applied; and (iii) the SPD explicitly set forth a contribution cap. Nevertheless, the Court found that the side letters did not apply, in part because separate, collectively bargained “Pension, Insurance and Service Award Agreements,” which were distributed to all class members and described the benefits they could expect to receive, did not contain any “capping” language. The Court also found that the side letters had not been distributed to all of the class members.
The Court also rejected plaintiffs’ cross-appeal. Plaintiffs had argued that the district court erred by ordering retirees who were previously enrolled in the pre-2007 plan to be enrolled in the current plan. The Court reasoned that retirees’ whose health benefits are vested may be subject to “reasonable changes” in benefits, provided the changes are “reasonable in light of changes in health care.” According to the Court, the 2007 changes to the health care plan, which included an “increase in the maximum out-of-pocket limit from $500 to $4,000 per family,” were not unreasonable.