Faust et al v. Avinmeritor, Incorporated

Filing 49

OPINION and ORDER granting defts' motion to dissolve injunction and enter judgment for defts 123 . Signed by District Judge Nancy G. Edmunds. (CBet)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

ROBERT COLE, et al.,
Case Nos. 03-73872, 04-73656
(Consolidated Oct. 18, 2005)

Plaintiffs,

Honorable Nancy G. Edmunds

v.
MERITOR, INC., f/k/a
ARVINMERITOR, INC., et al.,
Defendants.
/

OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO
DISSOLVE INJUNCTION AND ENTER JUDGMENT FOR DEFENDANTS [123]
I.

INTRODUCTION
Back in 2003 and 2004, the plaintiff retirees and their union, the International Union,

United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”),
brought the two above-captioned suits against their former employers, Defendant Meritor,
Inc. and its corporate predecessors (collectively “Meritor”),1 alleging that the retirees, their
surviving spouses, and their dependents (collectively “Retirees”) were entitled under a
series of collective bargaining agreements (“CBAs”) to lifetime healthcare benefits.2 On
December 22, 2005, this Court entered a preliminary injunction directing Meritor to reinstate
the Retirees’ healthcare benefits and resume paying the full cost of these benefits. See
Cole v. ArvinMeritor, Inc., 516 F. Supp.2d 850, 880 (E.D. Mich. 2005). The Court later
granted the Retirees’ motion for summary judgment as to liability, and awarded permanent
1

At the time these actions were brought, the principal corporate defendant was
ArvinMeritor, Inc., but this company was renamed Meritor, Inc. in 2011.
2

The 2003 and 2004 suits were consolidated in an order dated October 18, 2005.

injunctive relief in the Retirees’ favor as to their entitlement to lifetime healthcare benefits.
See Cole v. ArvinMeritor, Inc., 515 F. Supp.2d 791, 809 (E.D. Mich. 2006).
In each of these rulings, the Court relied in significant part on the Sixth Circuit’s
decision in International Union, United Automobile, Aerospace, & Agricultural Implement
Workers of America v. Yard-Man, Inc., 716 F.2d 1476, 1482 (6th Cir. 1983), which held that
“when the parties [to a CBA] contract for benefits which accrue upon achievement of retiree
status, there is an inference that the parties likely intended those benefits to continue as
long as the beneficiary remains a retiree.” See Cole, 516 F. Supp.2d at 865-66 (applying
this so-called “Yard-Man inference”); Cole, 515 F. Supp.2d at 797-99 (same). Similarly,
when the Sixth Circuit subsequently affirmed this Court’s award of summary judgment and
permanent injunctive relief in the Retirees’ favor, it determined that it was bound to apply
the inference recognized in Yard-Man and its progeny that, absent countervailing evidence,
retiree benefits are vested for life. See Cole v. ArvinMeritor, Inc., 549 F.3d 1064, 1069,
1073-74 (6th Cir. 2008).
Meritor timely sought rehearing of the Sixth Circuit’s decision, and the case remained
in a holding pattern for several years while the parties pursued settlement negotiations. In
the meantime, the law governing this litigation changed considerably when the Supreme
Court abrogated the Yard-Man line of cases. See M & G Polymers USA, LLC v. Tackett,
__ U.S. __, 135 S. Ct. 926, 935-37 (2015). Thus, when the parties’ negotiations reached
an impasse in 2016 and the Sixth Circuit restored Meritor’s petition for rehearing to its
active docket, the Court of Appeals found that due to “a sea change in the applicable law,”
this Court’s ruling in favor of the Retirees was “no longer sustainable.” Cole v. Meritor, Inc.,
855 F.3d 695, 696, 699 (6th Cir. 2017). The Sixth Circuit therefore reversed this Court’s
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judgment in the Retirees’ favor and remanded “for any further proceedings that might be
necessary.” Cole, 855 F.3d at 702.
In Meritor’s view, no such further proceedings are necessary. Instead, through the
present motion filed on July 19, 2017, Meritor requests that the Court dissolve its
permanent injunction and enter a judgment in Meritor’s favor. In support of this motion,
Meritor argues that in light of the Sixth Circuit’s rulings in this suit and in other cases
decided in the wake of Tackett, the Retirees can no longer viably claim that they were
granted healthcare benefits for life under the relevant terms of the CBAs negotiated by the
parties. In response, the Retirees concede that the Sixth Circuit conclusively resolved the
issue of “patent” CBA ambiguity in Meritor’s favor, but they contend that they should be
permitted to marshal evidence in support of a claim that there are “latent” ambiguities in the
relevant CBA provisions that, once resolved, would demonstrate their entitlement to lifetime
healthcare benefits.
On August 30, 2017, the Court heard oral argument on Meritor’s motion. For the
reasons stated more fully below, the Court GRANTS this motion, dissolves its permanent
injunction, and dismisses this case.
II.

ANALYSIS
The disposition of Meritor’s present motion turns entirely on the proper interpretation

of the Sixth Circuit’s recent decision reversing this Court’s judgment and remanding “for any
further proceedings that might be necessary.” Cole, 855 F.3d at 702. Accordingly, the
Court begins its analysis with an examination of the Court of Appeals’ ruling. This decision,
in turn, relies substantially on Gallo v. Moen Inc., 813 F.3d 265 (6th Cir. 2016), another
Sixth Circuit ruling issued in the wake of the Supreme Court’s opinion in Tackett. As stated
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in Cole, the Sixth Circuit panel in Gallo was called upon “for the first time” to “interpret[] a
specific CBA according to the contract principles espoused” by the Supreme Court in
Tackett, and the application of these “ordinary principles of contract law” led the Gallo court
to “conclude that the CBA before the court was unambiguous in not vesting retiree
healthcare benefits for life.” Cole, 855 F.3d at 699 (citing Gallo, 813 F.3d at 273-74).
Turning to this case, the panel in Cole found that “the facts of Gallo are materially
indistinguishable from the facts before us,” and that it therefore was bound to “reach the
same conclusion.” Cole, 855 F.3d at 699. The court explained:
The Gallo court faced an identical issue: whether a series of CBAs entitled a
class of retirees to lifetime healthcare benefits. Gallo’s CBA contained terms
stating that healthcare benefits for retirees “will be provided,” “will be covered,”
and would “[c]ontinue.” [Gallo, 813 F.3d] at 269. These provisions were
determined not to be specific enough to override the CBA’s general durational
clause and, therefore, the healthcare benefits did not vest for life. Id. The Gallo
court held that “[a]bsent a longer time limit in the context of a specific provision,
the general durational clause supplies a final phrase to every term in the CBA.”
Id. In making that determination, this court did not look “beyond the contract’s
four corners” and ruled that, because the contract was unambiguous, the
consideration of extrinsic evidence was inappropriate. Id. at 273-74.
In this case, the 1968 CBA and every subsequent CBA provided that retiree
healthcare benefits “shall be continued.” There is no language in Exhibit B to the
1968 CBA that provides a specific expiration date for those benefits. All of the
CBAs, however, included a general durational clause that terminated the
agreement after three years. See, e.g., Article XVIII, 1968 CBA; Article XIX of
the 2000 CBA. In addition, Exhibit B to each CBA had its own durational clause,
identical in wording to that previously quoted from Section 8 of the 1968 CBA,[3]
that explicitly tied healthcare benefits to the continuing existence of the CBA in
question.
The “shall be continued” language in Exhibit B is thus not sufficient to vest

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As stated earlier in the Sixth Circuit’s opinion, section 8 of Exhibit B to the 1968 CBA
provided that “[t]his [Insurance] Agreement and [Insurance] Program as modified and
supplemented by the [Insurance] Agreement shall continue in effect until the termination
of the Collective Bargaining Agreement of which this is a part.” Cole, 855 F.3d at 699.
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the retirees with healthcare benefits for life. As stated in Gallo, “[i]f Tackett tells
us anything, . . . it is that the use of the future tense without more — without
words committing to retain the benefit for life — does not guarantee lifetime
benefits.” Id. at 271. Like the CBAs at issue in Gallo, the CBAs between the
UAW and Meritor made commitments for “approximately three-year terms —
well short of commitments for life.” Id. at 269.
The CBAs also contained durational clauses that supplied a concrete date
of expiration for retiree healthcare benefits. These durational clauses give
meaning to the promise that healthcare benefits “shall be continued.” That is,
Meritor guaranteed healthcare benefits only until the expiration of the final CBA,
nothing more. See id. This result is in line with the ordinary principles of
contract law, which dictate that “contractual obligations will cease, in the ordinary
course, upon termination of the bargaining agreement.” Id. at 279 (quoting
Tackett, 135 S. Ct. at 937).
Cole, 855 F.3d at 700.
In Meritor’s view, the Sixth Circuit’s reasoning precludes any further inquiry before this
Court, and instead dictates that the Court must dissolve its injunction and enter judgment
in Meritor’s favor. The Retirees, in contrast, read the above-quoted passage as applying
only “some ‘ordinary’ contract principles, but not all.” (Retirees’ 8/8/2017 Response Br. at
6.) In particular, they maintain that the Sixth Circuit examined the pertinent CBA provisions
only for “patent” ambiguities — that is, ambiguities in the contract language itself — but not
“latent” ambiguities — i.e., contract language that appears “clear on its face to an
uninformed reader,” but would “cause someone knowledgeable about the real-world
context of the agreement to realize that it might not mean what it says and that it is possible
to interpret the [language] in more than one way.” (Id. at 11 (internal quotation marks and
citation omitted).) Accordingly, the Retirees seek an opportunity to introduce “objective
extrinsic evidence” — e.g., evidence of the parties’ bargaining history, their course of
dealings, Meritor’s corporate practices and past performance, and other evidence of the
parties’ conduct that reflects their understanding of the meaning of their agreements — in
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an effort to establish the existence of latent ambiguities in the seemingly clear language of
the relevant CBA provisions. (See id. at 11-14.)
The Court agrees with Meritor that the Sixth Circuit’s decision forecloses any such
examination of extrinsic evidence to identify contractual ambiguities, whether patent or
latent. Most notably, the Retirees proposed such an evidentiary inquiry in the Sixth Circuit
proceedings, arguing that “the promise of lifetime retiree healthcare benefits is confirmed
by the ‘contractual context.’” Cole, 855 F.3d at 700. The court rejected the Retirees’
various appeals to evidence of “contractual context” as bearing on the proper interpretation
of the parties’ agreements, explaining that this evidence did not “alter[] the conclusion that
the CBAs are unambiguous in not vesting retiree healthcare benefits for life.” 855 F.3d at
700. The Sixth Circuit then concluded:
Because the language of the 2000 CBA is unambiguous, no basis for going
beyond the contract’s four corners exists. Legally, that is the end of the matter
....
. . . [T]he first and best way to divine the intent of the parties is from the four
corners of their contract and from traditional canons of contract interpretation.
The language in the 2000 CBA, as interpreted by the ordinary principles of
contract law, is unambiguous in not vesting retiree healthcare benefits for life.
To rule otherwise would be inconsistent with Gallo, which reached the same
conclusion based on a materially indistinguishable series of CBAs.
855 F.3d at 701-02 (internal quotation marks and citations omitted). This definitive ruling
leaves no room for argument that the Retirees should be permitted to offer extrinsic
evidence for some purpose not considered by the Court of Appeals, or that some “ordinary
principles of contract interpretation” remain unexplored in the wake of the Sixth Circuit’s
decision.
The dissenting opinion in Gallo lends further support to this conclusion. Judge
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Stranch faulted the majority in that case for “declin[ing] to address the bulk of the extrinsic
evidence presented by” the plaintiff retirees, and opined that this extrinsic evidence should
be brought to bear in resolving ambiguities in the parties’ contract that were revealed upon
examination of the “background understandings of the parties” and affirmative evidence of
“known customs or usages in a particular industry.” Gallo, 813 F.3d at 275-76 (Stranch,
J., dissenting) (internal quotation marks and citations omitted). This, of course, is precisely
the inquiry that the Retirees here invite this Court to undertake.4 The majority in Gallo,
however, eschewed the plaintiffs’ appeals to “background understandings” that should
inform a proper reading of the parties’ agreements, and also declined the plaintiffs’
invitation to consider extrinsic evidence of the parties’ purported intent to grant lifetime
healthcare benefits to retirees of the defendant employer. See Gallo, 813 F.3d at 272-73.
The court instead explained:
The first and best way to divine the intent of the parties is from the four corners
of their contract and from traditional canons of contract interpretation. That
language and these canons offer no evidence of any intent to fix these benefits
permanently into the future. Absent ambiguity from this threshold inquiry, no
basis for going beyond the contract’s four corners exists.
Gallo, 813 F.3d at 273-74. This Court, like the Sixth Circuit panel that heard this case,
must necessarily follow the lead of the Gallo majority, and not the views advanced in the
dissenting opinion.

See Cole, 855 F.3d at 702 (White, J., concurring) (expressing

disagreement with the ruling in Gallo, but recognizing that “if the CBA in Gallo
unambiguously provided for the termination of health-care benefits upon the termination

4

Indeed, Judge Stranch, like the Retirees here, expressly appealed to the concept of
“latent ambiguity” as supporting the position of the plaintiff retirees in Gallo. 813 F.3d at
276 n.2 (Stranch, J., dissenting).
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of the CBA, the instant agreement does so as well, given that the duration clause in Section
8 of the instant agreement is more specific than the clause in Gallo”).
At the August 30 hearing on Defendants’ present motion, however, counsel for
Plaintiffs suggested that even if the issue of lifetime retiree healthcare benefits has been
finally resolved in the wake of the Sixth Circuit’s decision, this appellate ruling does not
foreclose the Court from conducting further proceedings on the discrete question of
Plaintiffs’ entitlement to reimbursement of Medicare Part B premiums. In Plaintiffs’ view,
because Defendants did not separately address this issue in their Sixth Circuit petition for
rehearing, and because the Court of Appeals likewise failed to separately consider whether
the different CBA provisions governing healthcare benefits and Medicare premium
reimbursement might warrant different readings of these two contractual promises, the
Court remains free to inquire whether the relevant CBA provisions addressing Medicare
premium reimbursement, when construed under ordinary contract principles, provide for
full reimbursement of these premiums for a retiree’s lifetime.
As a threshold matter, it bears emphasis that Plaintiffs raised this issue for the first
time at the August 30 hearing, and did not so much as mention it — much less present a
supporting argument of any sort — in either their response to Defendants’ motion or their
submissions to the Sixth Circuit following the appellate court’s recent ruling. Thus, Plaintiffs
have forfeited this argument, and the Court need not consider it. See Howe v. City of
Akron, 801 F.3d 718, 742-43 (6th Cir. 2015); Lamson & Sessions Co. v. Peters, No. 124193, 576 F. App’x 538, 543 (6th Cir. Aug. 13, 2014).
In any event, the Court sees nothing in the language of the relevant CBA provisions
that would lead to the result propounded by Plaintiffs at the August 30 hearing — namely,
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that despite the Sixth Circuit’s holding that the promise of retiree healthcare benefits is
subject to the durational clauses set forth in each CBA and its Exhibit B, see Cole, 855 F.3d
at 700, the promise of Medicare premium reimbursement is exempt from these clauses.
Rather, as revealed in the Court’s detailed survey of the pertinent CBA language in its
preliminary injunction decision, just as a provision in Exhibit B-1 to the CBA states that
healthcare coverage for retirees “shall be continued,” another provision in this same exhibit
similarly states that a “retiree who is enrolled for Medicare coverage . . . will, while so
enrolled, receive a monthly benefit equivalent to the premium then in force.” Cole, 516 F.
Supp.2d at 856-57 (internal quotation marks and citations omitted). Accordingly, in
awarding the preliminary injunctive relief sought by Plaintiffs — i.e., the reinstatement of
Defendants’ obligation to “pay[] the full cost of health benefits for [the plaintiff] retirees,” 516
F. Supp.2d at 880 — the Court did not separately analyze the two promises in Exhibit B-1
to provide retiree healthcare benefits and reimburse retirees for their Medicare premiums.
Instead, the Court applied the very same reasoning — including, most notably, the YardMan inference — to determine that Defendants were bound by each of these promises to
pay the promised healthcare benefits for the lifetimes of the retirees and their surviving
spouses. 516 F. Supp.2d at 866-67. It surely follows that the Sixth Circuit’s recent ruling
operates across the board to reverse this Court’s findings, leaving no room for the Court
to revisit the CBA language or extrinsic evidence bearing upon either healthcare benefits
or Medicare premium reimbursement.
In a final effort to avoid this result, the Retirees observe that the Sixth Circuit notably
did not instruct this Court to enter a judgment in Meritor’s favor, but instead held open the
possibility that further proceedings “might be necessary.” Cole, 855 F.3d at 696, 702. This
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stands in contrast to the decision in Gallo, where the Sixth Circuit unambiguously directed
the district court “to enter judgment for the defendant.” Gallo, 813 F.3d at 274. Admittedly,
the Court of Appeals could have been more clear in explaining why further proceedings
“might be necessary” in this case. Yet, this element of uncertainty in the appellate court’s
instructions, standing alone, cannot overcome the Sixth Circuit’s unambiguous ruling that
the series of CBAs entered into by the parties, “as interpreted by the ordinary principles of
contract law,” do not grant lifetime healthcare benefits to Meritor’s retirees. Cole, 855 F.3d
at 702.
The Court recognizes and appreciates that the unusual procedural circumstances of
this case might give rise to misgivings about the outcome here, where the Retirees are now
forced to surrender a favorable ruling they apparently had secured many years ago, and
where the Court of Appeals was able to revisit its 2008 decision only because of protracted
settlement negotiations that kept the case alive until the law of this Circuit was overturned.
Indeed, there are some who believe that the Supreme Court’s decision in Tackett has
resulted in an overly drastic course correction in Sixth Circuit law, replacing the Yard-Man
inference with a rule that unduly favors employers. See Gallo, 813 F.3d at 275 (Stranch,
J., dissenting); Cole, 855 F.3d at 702 (White, J., concurring) (recognizing that “Yard-Man
is dead,” but lamenting that Gallo “has installed duration clauses as the new absolute
determiner of intent, regardless of the actual intent of the parties”). Yet, regardless of these
considerations, the Court’s obligation is to act in accordance with the decision of the Court
of Appeals, and this ruling dictates that the Court’s injunction must be dissolved and that
this case must be dismissed.
III.

CONCLUSION
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For these reasons,
The Court hereby GRANTS Defendants’ July 19, 2017 motion to dissolve injunctions
and enter judgment for Defendants [123].
SO ORDERED.

s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: September 6, 2017
I hereby certify that a copy of the foregoing document was served upon counsel of record
on September 6, 2017, by electronic and/or ordinary mail.
s/Carol J. Bethel
Case Manager

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