INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW) et al v. TRW Inc.

Filing 94

ORDER denying #85 defendants' Motion for Summary Judgment, and granting in part #86 plaintiffs' Motion for Summary Judgment and Permanent Injunction. Signed by District Judge George Caram Steeh. (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

INTERNATIONAL UNION, UNITED
AUTOMOBILE, AEROSPACE AND
AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA (UAW), et al.,
Plaintiffs,
Case No. 11-CV-14434
vs.
HON. GEORGE CARAM STEEH
KELSEY-HAYES COMPANY, et al.,
Defendants.
________________________________/
ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY
JUDGMENT [DOC. 85], AND GRANTING IN PART PLAINTIFFS’ MOTION
FOR SUMMARY JUDGMENT AND PERMANENT INJUNCTION [DOC. 86]
This is a class action case brought by plaintiff retirees alleging breach of
collective bargaining agreement (“CBA”) under Section 301 of the Labor-Management
Relations Act (“LMRA”), 29 U.S.C. §185, and for breach of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. §1001, et seq., and breach of fiduciary duty in
violation of ERISA. Plaintiff International Union, United Automobile, Aerospace, and
Agricultural Implement Workers of America (“UAW” or “Union”) sues for breach of the
CBA under LMRA Section 301. The plaintiff class was previously certified by the court.
[Doc. 92].
In 1998 defendant Kelsey-Hayes entered into a CBA with the UAW which
represented the employees of its Detroit manufacturing plant. The 1998 CBA provided
comprehensive healthcare coverage to its retirees and their surviving spouses. In 2001,
Kelsey-Hayes closed its Detroit manufacturing plant and negotiated the Plant Closing
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Agreement with the Union. The Plant Closing Agreement addressed benefits provided
to retirees, the effect of the Plant Closing Agreement on previous CBAs, and a method
for resolving disputes arising out of the agreement. The named plaintiffs before the
court today each retired prior to the Detroit plant’s closure on April 17, 2001.
Kelsey-Hayes continued to provide healthcare benefits under the terms of the
1998 CBA for ten years after the plant closed. In September 2011, Kelsey-Hayes
announced plans to terminate retiree participation in the retiree healthcare plan and
required retirees to purchase individual plans for Medicare supplemental insurance paid
for out of company funded Health Reimbursement Accounts (“HRA”).
In October 2011, the retirees filed this suit alleging breach of the CBAs under
Section 301 of the LMRA and violation of an ERISA benefit plan against Kelsey-Hayes
and TRW Automotive Holdings Corp. (“TRW”), and breach of fiduciary duty under
ERISA against TRW. The complaint also alleges that Northrop Grumman is liable for
damages as the successor to TRW, Inc. if TRW or Kelsey-Hayes terminate the plan or
otherwise reduce retiree benefits.
Kelsey-Hayes and TRW moved for an order to compel arbitration relying on the
Plant Closing Agreement’s general arbitration clause. Defendant Northrop Grumman
filed a separate motion to compel arbitration. The district court (J. Cook) initially granted
the motions to compel arbitration in their entirety. Upon reconsideration, the district
court reversed itself in part, finding that a subset of plaintiffs - those who had retired
prior to the plant closing in 2001 - could not be bound by the terms of the Plant Closing
Agreement because their rights had already vested under the 1998 CBA. The 1998
CBA provides that any healthcare-related disputes are exempt from otherwise

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applicable provisions requiring disputes to be resolved through arbitration.
Kelsey-Hayes appealed, and the Sixth Circuit (Rogers, Griffin, Donald) affirmed,
holding that the employees who retired prior to the 2001 Plant Closing Agreement did
not consent to the terms of the Plant Closing Agreement and could not be compelled to
arbitrate under provisions contained in that agreement. UAW v. Kelsey-Hayes, 557
Fed. Appx. 532 (6th Cir. 2014).
Defendants moved to stay this litigation pending the Supreme Court’s ruling in
M&G Polymers USA, LLC v. Tackett. In that case, the Supreme Court took up the issue
of how to interpret silence concerning the duration of retiree health-care benefits when
construing collective bargaining agreements. This court agreed to stay this litigation,
and the Supreme Court issued its opinion on January 26, 2015. Tackett, 135 S.Ct. 926
(2015). The parties re-filed their motions for summary judgment, and re-briefed their
arguments to incorporate the Supreme Court’s decision.
FACTS
The plaintiffs are medicare-eligible retirees who worked at a Detroit automotive
plant owned by Kelsey-Hayes from 1992 until 2000. The plaintiffs were production and
maintenance employees, and were represented for collective bargaining purposes by
the UAW. The last of a series of CBAs was negotiated in 1998, which incorporated two
separate documents covering insurance benefits, referred to as Supplement H and
Supplement H-1.
There are many entities involved in the history of the Detroit facility. KelseyHayes owned and operated the facility from 1992 until 2000. The UAW represented the
production and maintenance workers at the Detroit facility prior to its closure in 2001.
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Lucas Varity was the parent corporation of Kelsey-Hayes from 1996 to 1999. Lucas
Varity sold its assets to TRW, Inc., a competitor, who was the parent corporation of
Kelsey-Hayes from 1999 until 2002. Kelsey-Hayes remained the owner of the plant
until American Commercial Industries (ACI) purchased the Detroit facility from TRW,
Inc. in 2000 and owned it until 2001. ACI assumed the UAW CBA existing at the time of
the acquisition. Kelsey-Hayes retained the right to re-assume operation of the facility if
ACI became insolvent, which it did. Kelsey-Hayes took financial responsibility for the
Detroit operation in October 2000, while ACI retained ownership of the facility and the
CBA with the UAW. The plant closed in 2001.
In connection with the closing of the Detroit facility, the UAW negotiated a Plant
Closing Agreement with ACI. TRW Inc. was a party to the agreement as Kelsey-Hayes’
parent. The UAW waived all claims against these entities on behalf of its members.
The only qualification to the waiver was that the closing agreement did not extinguish
pension or retiree health care obligations owed by ACI or TRW, Inc., to the extent that
either entity had any such obligations “under applicable law and benefit plans (including
those provisions contained in collective bargaining agreements).” (Release, para. 5).
In 2002, Northrop Grumman acquired TRW, Inc. Northrop Grumman sold a
portion of the former TRW, Inc.’s automotive assets to a private equity firm. These
assets were then conveyed to a new business known as TRW Automotive Holdings
Corp. (TRW). TRW went public in 2004 and is the present parent entity of KelseyHayes. The name TRW is an asset purchased from Northrop Grumman; there is no
historical relationship with or continuity from the prior TRW Inc. entity. The defendants
in this case are Kelsey-Hayes, TRW and Northrop Grumman.
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Since the Detroit plant closed and the 1998 CBA expired, retirees have
experienced a number of changes in their health insurance coverage. In 2007, KelseyHayes changed insurance carriers from Blue Cross Blue Shield of Michigan to Meritain,
and in 2009 from Meritain to Humana. No individual or entity objected to these
changes.
Changes in Medicare benefits and regulations over the years led to private
companies offering “Medigap” plans, which cover costs not covered by Parts A, B and D
(prescription drugs). Tax-free Health Reimbursement Accounts (HRA) also became
available to pay the cost of so-called gap coverage. On September 14, 2011 Kelsey
Hayes sent letters to retirees and surviving spouses explaining that beginning January
1, 2012, it was establishing HRAs for all retirees over the age of 65 and their eligible
dependents, in lieu of the group insurance plan under which they previously were
covered. Kelsey-Hayes contributed $15,000 to each participant’s HRA in 2012 and
$4,800 to each participant in 2013 and 2014. A retiree and spouse would have a
combined three-year total of $49,200 in HRA funds. Kelsey-Hayes has made no
assurances of funding the HRAs beyond 2014. In the Summary Plan Description (SPD)
explaining the HRAs, Kelsey-Hayes declared it “may, at any time” “decrease or
eliminate the amount that is allocated to your HRA account each year” and “reserves
the right to amend, modify, suspend, replace or terminate any of its plans, policies or
programs (including the HRA), in whole or in part, at any time and for any reason.”
Kelsey-Hayes has been able to provide insurance coverage through the HRAs at
a substantially lower cost than a group insurance plan. With the funds provided by
Kelsey-Hayes, the retirees can purchase the most comprehensive medicare

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supplemental insurance available as well as cover virtually anything left over from
Medicare Parts A and B. Plaintiffs argue that the 1998 CBA provided them with a
vested, lifetime right to unalterable retiree health insurance. According to plaintiffs, the
HRAs shift company costs, administrative responsibilities and expenses, and financial
risks to retirees and violate the 1998 CBA, the Plant Closing Agreement and ERISA.
The UAW and Kelsey-Hayes went to arbitration on the claims of the post-closing
retirees. Arbitrator Paul Glendon granted the UAW’s motion for summary judgment and
injunctive relief on January 18, 2013. The Award directs that Kelsey-Hayes “forthwith
shall rescind” the 2012 changes and “reinstate” and “restore” the “coverages” in force
before 2012. The Award concludes that the 1998 CBA promised retirees “the vested
right” to the “medical plan coverages” “for their lifetimes,” and that Kelsey-Hayes
breached the 1998 CBA by imposing the HRAs.
ANALYSIS
I. Background
“Section 301 of the LMRA provides a federal right of action for ‘violations of
contracts between an employer and a labor organization representing employees.’”
Moore v. Menasha Corp., 690 F.3d 444, 450 (6th Cir. 2012) (citing 29 U.S.C. § 185).
Further, “the LMRA claim also creates a derivative ERISA claim, because the disputed
healthcare benefits were agreed upon pursuant to a union negotiated contract.” Id.
(citing Schreiber v. Philips Display Components Co., 580 F.3d 355, 363 (6th Cir. 2009)).
The core issues are “whether the retirement health care benefits vested for life” and
whether they are “fully funded” by the employer. Yolton v. El Paso Tennessee Pipeline
Co., 435 F.3d 571, 574 (6th Cir. 2006).
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“Retiree healthcare-benefit plans, such as those involved here, are
welfare-benefit plans; vesting only occurs if the parties so intended when they executed
the applicable labor agreements.” Cole v. ArvinMeritor, 549 F.3d 1064, 1069 (6th Cir.
2008). “[A]n employer that contractually obligates itself to provide vested healthcare
benefits renders that promise ‘forever unalterable.’ ” Moore, 690 F.3d at 450 (citing
Sprague v. GMC, 133 F.3d 388, 400 (6th Cir. 1998)); see also Noe v. PolyOne Corp.,
520 F.3d 548, 564 (6th Cir. 2008) (“[I]t is not the prerogative of the judiciary to rewrite
contracts in order to rescue parties from their ‘improvident commitments.’ ”); Allied
Chemical Workers v. PPG Co., 404 U.S. 157, 182 n. 20 (1971) (“[V]ested retirement
rights may not be altered without the pensioner's consent.”); Yolton, 435 F.3d at 578
(“the employer's unilateral modification or reduction of [vested] benefits constitutes a
LMRA violation.”). Unilateral modification of vested healthcare is unlawful, even where
the employer is motivated to reduce costs.
A. 1998 Collective Bargaining Agreement
1. Promises Regarding Healthcare
Article III of Supplement H-1 addresses Health Care Benefits. Section 1 of
Article III provides for the establishment of health care coverages, including hospital,
surgical, medical and prescription drugs, hearing aids, dental, vision, and substance
abuse. Section 5 is entitled “Continuance of Health Care Coverages Upon Retirement,”
and subsection (a) provides: “The Health Care Coverages an employee has under this
Article at the time of retirement shall be continued for such employees who retire under
the following provisions of Article II of the Kelsey-Hayes Hourly Rate Employees Within
a Bargaining Unit Pension Plan . . . .” The promise of “continuance” of health care
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coverage is made to surviving spouses of employees or retired employees in section 6.
Article I, Section 1(b) addresses company contributions for health care
coverages. Retired employees are addressed in subparagraph (7), which provides that
the company shall contribute the full premium or subscription charge for health care
coverage continued in accordance with Article III, Section 5.
2. Duration Provisions
The 1998 CBA contained a duration provision wherein the agreement continued
through February 1, 2002, provided that if neither party gave notice of termination, the
agreement would continue from year to year. Notice to terminate had to be in writing,
and given six months in advance of termination. The agreement could be modified by
agreement of the parties. (1998 CBA, Article XVI).
The 1998 CBA incorporated a Supplemental Insurance Program, providing that
Supplement H was “part of this Agreement and subject to all provisions of this
Agreement.” (1998 CBA, Article XIV). Supplement H, in turn, adopted the “Supplement
H-1" insurance program. Supplement H expressly adopted the same expiration date as
the 1998 CBA. (Suppl H, Section 10). In this way, the 1998 CBA and the insurance
supplements made it clear that they were subject to the CBA’s duration clause.
3. Modification Provisions
The ability to make modifications to healthcare benefits is addressed in several
provisions. Supplement H-1, Article III, Section 1(f) provides for the Replacement or
Supplementation of Plan Coverages: “If, in its judgment, the Company considers it
advisable in the interest of the eligible primary enrollees another arrangement may be
substituted for all or part of the coverages referred to in subsection (a) above.”
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Appendix A to Supplement H-1 also addressed Kelsey-Hayes’ right to change
benefits:
F. Changes in the Health Care Benefits
Any rate of payment by the enrollee and any other terms and
conditions of Article III may be changed at any time by the Company.
Reasonable notice of such changes will be furnished to enrollees and/or
affected parties as necessary.
From time to time additional coverages may be provided or existing
coverages withdrawn by the Company. In either event, adequate notice
shall be given to the enrollees by the carrier(s).
Supplement H, Section 1 contains a mutual agreement clause, as well as a
provision dictating how conflicts between Supplement H (Agreement) and Supplement
H-1 (Program) should be resolved. The first paragraph states that if there is a conflict
between the provisions of Supplement H and Supplement H-1, the provisions of
Supplement H take precedence as necessary to eliminate such conflict. The second
paragraph provides that defendants cannot unilaterally modify the health benefits
provided for in the CBA, that defendants would need the agreement of the union to
make changes to benefits, and that such new benefits must be “as closely related as
possible and of equivalent value” to those originally provided:
The Company will establish an amended insurance program,
hereinafter referred to as the “Program”, a copy of which is attached
hereto as Supplement H-1 and made a part of this Agreement to the
extent applicable to the employees represented by the Union and covered
by this Agreement as if fully set out herein, modified and supplemented,
however, by the provisions hereinafter. In the event of any conflict
between the provisions of the Program and the provisions of this
Agreement, the provisions of this Agreement will supersede the provisions
of the Program to the extent necessary to eliminate such conflict.
In the event the initiation of any benefit or benefits described in
Article III of the Program does not prove practicable or is not permitted by
the plans under which coverages are provided on the dates stipulated in
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such Article III, the Company in agreement with the union will provide new
benefits and/or coverages as closely related as possible and of equivalent
value to those not provided.
B. Detroit Plant Closing Agreement
1. Termination
In connection with the closing of the Detroit facility, the UAW, ACI and TRW Inc.
negotiated a plant closing agreement in which they agreed to terminate the CBA
approximately one year prior to the date contemplated in the 1998 CBA. The closing
agreement provided: The [1998 CBA] . . . between the Company and the Union shall be
deemed to have terminated as of April 30, 2001 without further liability under the [1998
CBA] except for the specific obligations expressly set forth in this Agreement.” (Closing
Agreement, ¶2).
2. Exceptions
The closing agreement deemed the 1998 CBA terminated, but excepted
obligations expressly set forth in the closing agreement itself. The closing agreement
contained a release for all claims, obligations and liabilities. (Closing Agreement ¶1).
There is an exception to the release as follows: “any obligation of the Company or TRW
with respect to any pension plan or payments to retirees for retiree health care, life
insurance, or short or long term disability benefits, shall be governed by applicable law
and benefit plans (including those provisions contained in collective bargaining
agreements) and are not released by this Agreement.” (Closing Agreement ¶5).
The closing agreement also provided that employees eligible to retire as of the
date of the closure (May 31, 2001) will be “eligible to participate in the medical plan and
life insurance plan for retirees provided by Kelsey Hayes Co.” (Closing Agreement ¶7).
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The closing agreement gave some employees “one year of additional credited and
vesting service” and provided that if the “additional year allows them to retire under the
terms of the Detroit Hourly [Pension] Plan, they will be eligible to receive retiree medical
and life insurance benefits.” (Closing Agreement ¶8).
II. Yard-Man and Tackett
For over three decades, the leading Sixth Circuit case on retiree benefits was
UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983). The issue in that case was
whether the right to collectively bargained for insurance benefits survives the expiration
of the agreement in which they were bargained. The court explained that “whether
retiree insurance benefits continue beyond the expiration of the collective bargaining
agreement depends on the intent of the parties,” and that “traditional rules of contractual
interpretation are applied” to determine whether the parties so intended. Id. at 1479. In
discerning the parties’ intent, courts were instructed to first look to the language of the
CBA, which was to be construed consistently with the entire document. If the language
was ambiguous, courts could then refer to extrinsic evidence to determine the parties’
intent. Id. at 1480; see also Moore v. Menasha Corp., 690 F.3d 444, 451 (6th Cir.
2012); USW v. Kelsey-Hayes Co., 750 F.3d 546, 551 (6th Cir. 2014).
The so-called Yard-Man inference stated that “when the parties 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.” Id. at 1482. Subsequent cases clarified that the Yard-Man inference was not a
legal presumption that shifts the burden to the employer to disprove that benefits
vested. USW, 750 F.3d at 552 (citations omitted). Rather, “in close cases, ‘[a] court
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may find vested rights ‘under a CBA even if the intent to vest has not been explicitly set
out in the agreement.’‘” Id. (citations omitted).
The Supreme Court granted certiorari in another Sixth Circuit case, M&G
Polymers USA, LLC v. Tackett, 561 F.3d 478 (6th Cir. 2009), to resolve an
inconsistency in the circuit courts over how to interpret health care benefit provisions in
collective bargaining agreements. In Tackett, the retirees’ former employer announced
that it would begin requiring retirees to contribute to the cost of their health care
benefits. The retirees sued, alleging that the employer had promised to provide lifetime
contribution-free health care benefits for them, their surviving spouses, and their
dependents. This promise was contained in a pension agreement entered at the same
time as the master collective bargaining agreement. The retirees argued that the
employer had created a vested right to lifetime health care benefits that continued
beyond the expiration of the agreement. The Sixth Circuit applied the Yard-Man
inference, finding “it unlikely that [the Union] would agree to language that ensures its
members a ‘full Company contribution,’ if the company could unilaterally change the
level of contribution.” Id. at 490.
In its review of Tackett, the Supreme Court found that the Yard-Man inference
“violates ordinary contract principles by placing a thumb on the scale in favor of vested
retiree benefits in all collective-bargaining agreements.” 135 S.Ct. 926, 935 (2015).
The Court rejected the Yard-Man inference because it was based on “suppositions”
about “all” collective bargaining. Id. The Court reasoned that the inference distorts any
attempt “to ascertain the intention of the parties.” Id. (citing 11 Williston § 30:2, at 18).
“Yard-Man’s assessment of likely behavior in collective bargaining is too speculative

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and too far removed from the context of any particular contract to be useful in discerning
the parties’ intention.” Id. The Court recognized that a court may look to known
customs or usages in a particular industry to determine the meaning of a contract, but
the parties must prove such customs or usages using affirmative evidentiary support in
a given case. Id.
The Supreme Court admonished the Sixth Circuit for failing to consider the
traditional principle that courts should not construe ambiguous writings to create lifetime
promises. Id. at 936 (citing 3 A. Corbin, Corbin on Contracts §553, p. 216 (1960)
(explaining that contracts that are silent as to their duration will ordinarily be treated not
as “operative in perpetuity” but as “operative for a reasonable time.”)). Similarly, the
Sixth Circuit failed to consider the traditional principle that “contractual obligations will
cease, in the ordinary course, upon termination of the bargaining agreement.” Id. at 937
(quoting Litton Financial Printing Div. v. NLRB, 501 U.S. 190, 207 (1991)). But these
principles do “not preclude the conclusion that the parties intended to vest lifetime
benefits for retirees.” Id. Litton holds that CBA expiration does not end “obligations
already fixed under the contract but as yet unsatisfied,” that rights “accrued or vested”
will “as a general rule, survive [CBA] termination,” that post-expiration rights may arise
from “the express or implied terms of the expired agreement,” and that whether
obligations survive CBA expiration is “determined by contract interpretation.” 501 U.S.
at 203, 206-07. Therefore, a collective bargaining agreement may provide in explicit
terms that certain benefits continue after the agreement’s expiration, but 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. Id.

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Tackett instructs courts reviewing provisions of collective bargaining agreements
to apply ordinary contract principles to determine the intent of the parties. If there is an
ambiguity as to the duration of benefits, the court may look to customs or usages in the
industry to determine the meaning of contract terms and the parties’ intent, as long as
there is affirmative evidentiary support for such customs or usages.
III. Interpretation of Contract Language
A. Contract Principles
Post-Tackett, the law makes clear that in order for benefits provided for in a CBA
to survive the expiration of the agreement, the parties’ intent must be clearly stated.
The 1998 CBA at Article III, Section 5(a), entitled “Continuance of Health Care
Coverages Upon Retirement,” promises the healthcare coverages an employee has “at
the time of retirement shall be continued.” Similar promises of “continuance” are made
to retirees’ surviving spouses. These promises contrast with the limited promises to
other employees in the same CBA, e.g., employees on layoff (healthcare continues “up
to 12 consecutive months”), off for disability (healthcare continues to “a maximum of the
employee’s years of seniority”), and fired or quit (healthcare ends on the “last day” of
the termination month). This shows that when the parties intended to make certain
benefits of a limited duration, they expressly provided as much in the contract. It is
against that background that the parties could have, but did not, provide that retiree
healthcare would commence at retirement and end upon the expiration of the CBA or at
some other determinable time.
As the Tackett court recognized, the CBA’s general duration clause is not
necessarily inconsistent with the “express or implied” terms that may promise “that
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certain benefits continue after the agreement’s expiration.” Tackett, 135 S.Ct. at 937
(citing Litton, 501 U.S. at 203, 207). All collectively-bargained vested benefits are
promised in limited-duration CBAs with general duration clauses. The court must read
the 1998 CBA as a whole and give effect to both the general duration clauses governing overall CBA expiration - and the specific promises of “retiree health care” and
“retiree medical” made in the 1998 CBA and 2001 closing agreement. “[W]ell-founded
principles of contract law establish that ‘specific terms and exact terms are given greater
weight than general language’” and “separately negotiated or added terms are given
greater weight than standardized terms.” Royal Ins. Co. v. Orient Overseas Container
Line Ltd., 525 F.3d 409, 420 (6th Cir. 2008).
The Plant Closing Agreement terminated the 1998 CBA as of the April 30, 2001
plant closing “except for” identified “specific obligations” including “any obligation. . . with
respect to . . . payments to retirees for retiree health care.” (Plant Closing Agreement
¶¶ 2, 5). The Plant Closing Agreement also provided that employees eligible to retire as
of the closing would “participate in” and “be eligible to receive retiree medical” benefits.
(Plant Closing Agreement ¶¶ 7,8). It would be illogical to interpret the closing
agreement as ending the obligation to provide retirees health care benefits since some
employees only became eligible for such benefits by retiring at the plant closing. This
negotiated promise of future retiree health care is contractual proof that the parties
specifically intended that retiree health care survives the 1998 CBA expiration and the
plant closing. See Temme v. Bemis Co., 622 F.3d 730, 735-37, 739 (7th Cir. 2010)
(holding that a plant closing CBA, “read together” with an expired CBA, promised
retirees, and employees retiring at the closing, “lifetime entitlement to medical benefits”;

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the closing CBA excepted “retirement benefits” from its release and set “no termination
date” or “method through which retiree benefits could end.”)
The Plant Closing Agreement is clear that the company’s obligations regarding
payments for retiree health care survive the plant closing and the expiration of the 1998
CBA. Defendants point out that Article II, Section F of Appendix A to Supplement H-1 of
the Insurance Program provides that the company can unilaterally change “any rate of
payment by the enrollee” as well as any “terms and conditions” of Article III, Health Care
Benefits. This clause is offered as evidence of the parties’ intent that the company
could alter retiree healthcare benefits as well as employee contributions. However, the
clause must be read in conjunction with the entire CBA, as well as the Plant Closing
Agreement. First, retiree health care was “perpetuated” by the Plant Closing
Agreement, which excepted company obligations with respect to payments to retirees
for retiree health care. Second, the CBA provides that in the event of any conflict
between the provisions of H and H-1, the provisions of H supersede those of H-1 to the
extent necessary to eliminate such conflict. Supplement H Section I contains a mutual
agreement clause barring any changes to health care benefits and coverages absent
union agreement. Union agreement was not sought or given for Kelsey Hayes’ HRA
plan. In order to eliminate conflict between the provision permitting the company to
make unilateral changes to retiree health care and the provision requiring mutual
agreement, the mutual agreement clause prevails.
In Sprague v. General Motors Corp., 133 F.3d 388 (6th Cir. 1998), the contract
provided that retirees would receive insurance coverage “for life.” Yet, the Sixth Circuit
still held that such language could not overcome the employer’s reservation of the right

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to terminate this coverage. Sprague, 133 F.3d at 401. The facts in Sprague are
distinguishable because in this case the parties negotiated that the retiree health care
benefits “shall be continued” in the absence of mutual agreement as to benefits and
coverages by the company and the union. In addition, company obligations with
respect to retiree health care were specifically excepted from termination in the Plant
Closing Agreement.
The foregoing discussion leads the court to the conclusion that the parties’ intent
was clearly manifested in the language of the 1998 CBA and the Plant Closing
Agreement that retiree health care benefits were intended to survive the expiration of
the CBA providing such benefits as well as the plant closing.
Having found no ambiguity as to the intended duration of retiree health care
benefits under the two CBAs, Tackett instructs that extrinsic evidence should not be
considered by the court.
B. Preclusion Doctrines
The UAW and Kelsey-Hayes arbitrated whether the closing retirees have lifetime
health insurance under the Plant Closing Agreement, and whether Kelsey-Hayes
breached the Plant Closing Agreement and the relevant portions of the 1998 CBA
incorporated therein. Arbitrator Glendon ruled that the 1998 CBA promises retirees
vested health insurance for their lifetimes, that this obligation was incorporated into the
Plant Closing Agreement, and that the HRAs were not permissible or reasonable
substitutes for the promised insurance absent union agreement. Therefore, KelseyHayes was found to have breached the Plant Closing Agreement and the relevant
portions of the 1998 CBA. Plaintiffs argue that the Glendon Award must be given
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preclusive effect as it was a final and binding decision on the merits, it involved the
same parties, it arose at Kelsey-Hayes’ insistence, and all of the retirees are identicallysituated (except for the timing of their retirements which triggered the arbitration forum
for the closing retirees only).
Plaintiffs also argues estoppel with regard to Judge Gadola’s decision in Golden
v. Kelsey-Hayes Co., 954 F.Supp. 1173 (E.D. Mich. 1997), and Judge Drain’s decision
in USW v. Kelsey-Hayes Co., 943 F.Supp.2d 747 (E.D. Mich. 2013). The Golden case
addressed virtually identical CBA terms governing UAW retirees from Kelsey-Hayes’
plants, finding that “shall be continued” and “continuance”, when referring to health
insurance, warranted judgment for the retirees solely on that “express contract
language.” 954 F.Supp. at 1188. Judge Drain applied the findings in Golden, stating
that Kelsey-Hayes was “barred from relitigating the meaning of the CBA terms by the
doctrine of collateral estoppel.” USW, 943 F.Supp.2d at 755.
This court believes it is inadvisable, as well as unnecessary, to address plaintiffs’
preclusion arguments because all of the decisions referred to by plaintiff were made
before the Supreme Court issued its opinion in Tackett. Even if the Glendon Award,
Golden and USW did not expressly rely on Yard-Man, they were decided when YardMan was the law in this circuit. Giving pre-Tackett decisions preclusive effect could
have the effect of perpetuating the Yard-Man inference. See C.I.R. v. Sunnen, 333 U.S.
591, 720 (1948); Disabled American Veterans v. C.I.R., 942 F.2d 309, 313 (6th Cir.
1991) (Collateral estoppel will not apply where there has been a significant change in
the legal atmosphere).
The same reasoning weighs against applying the so-called Carbon Fuel doctrine,

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which stands for the proposition that earlier judicial interpretations of CBA terms
become part of those terms if not later altered by the parties’ agreement. Carbon Fuel
Co. v. UMWA, 444 U.S. 212, 222 (1979). The theory is that if the interpretations do not
reflect the parties’ intent, they had sufficient opportunity to clarify their actual intent in
subsequent CBAs. Id.
III. Breach of Fiduciary Duty
In count three, plaintiffs allege a breach of fiduciary duty against TRW as
administrator of the employee welfare benefit plan in violation of section 409 of ERISA,
29 U.S.C. § 1109. The court reserves judgment, and will address the issue should it
become necessary in the future.
IV. Defendant Northrop Grumman’s Motion for Summary Judgment
Plaintiffs allege Northrop Grumman has successor liability to TRW, Inc., prior
parent corporation of Kelsey-Hayes and party to the Plant Closing Agreement. Northrup
Grumman acquired TRW, Inc. in 2002, after the Plant Closing Agreement had been
entered. Plaintiffs alleges that Northrop Grumman was responsible for the liabilities of
TRW, Inc. as a successor corporation, and in 2001, TRW, Inc. promised to honor “any
obligation . . . with respect to . . . payments to retirees for retiree health care” in the
Plant Closing Agreement.
A successor corporation generally is not responsible for its predecessors’
liabilities unless they are expressly assumed. NLRB v. Burns Int’l Sec. Servs., 406 U.S.
272, 286-88 (1972). The court does not have sufficient evidence before it to determine
successor liability, and therefore reserves its judgment on the issue at this time.

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CONCLUSION
Judgment is entered for the plaintiffs, retirees and UAW, under Rule 56 for
breach of the CBAs under Section 301 of the LMRA and Section 502(a)(1)(B) of ERISA,
and the following permanent injunction is entered pursuant to Rule 65(d):
A. Defendants must comply with ERISA and their 1998 and 2001 CBA retiree
healthcare obligations;
B. Defendants must promptly restore the status quo ante;
C. Defendants must provide the promised health insurance at no premium cost
to class members, for the lifetime of each class member;
D. Defendant must promptly take such action as necessary to identify, account
for, and make whole class members for the expenses incurred by class members due to
defendants’ unilateral changes; and
E. The court retains jurisdiction over the remaining issues in this case, as well as
any post-judgment matters and issues of implementation and enforcement of the court’s
judgment and permanent injunction.
Dated: September 17, 2015
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
September 17, 2015, by electronic and/or ordinary mail.
s/Marcia Beauchemin
Deputy Clerk

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