Watkins et al v. Honeywell International Inc.
Order: Defendant's motion to dismiss (Doc. 15 ) be, and the same hereby is, granted. Plaintiffs' motion for summary judgment and permanent or preliminary injunction (Doc. 21 ) be, and the same hereby is, deemed moot. Judge James G. Carr on 12/16/16.(C,D)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
Ann Watkins, et al.,
Case No. 3:16CV01925
Honeywell International, Inc.,
This is a class action arising out of defendant Honeywell International Inc.’s (Honeywell)
decision to terminate retiree healthcare benefits. Plaintiffs Ann Watkins and James Ulciny represent
all retirees whom that decision affects, all of whom formerly were represented by Local 533 of the
Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW or
Union). That local was the plaintiffs’ collective bargaining representative at Honeywell’s nowclosed plant in Fostoria, Ohio. At issue in this case is a provision in the last UAW-Honeywell
collective bargaining agreements (CBA) relating to healthcare benefits for retirees and their spouses,
eligible dependents, and surviving spouses.
Claiming that the CBAs guaranteed lifetime healthcare benefits, plaintiffs challenge
Honeywell’s unilateral modification of benefits as a breach of contract and violation of the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq.
Jurisdiction is proper under 28 U.S.C. § 1331.
Pending is defendant’s motion to dismiss, (Doc. 15), which plaintiffs oppose. (Doc. 19).
For the reasons that follow, I grant defendant’s motion to dismiss.1
Defendant Honeywell owned and operated the Fostoria plant from 1973 until 2011.2
Throughout that period, the UAW negotiated a series of different CBAs, each governing employment
terms and conditions, including retiree healthcare benefits.3 Each CBA was effective for a specific
time frame–typically three years. At the end of the designated period, the ensuing CBA followed.
The last negotiated CBA (“2009 CBA”) terminated in 2011–the same year Honeywell sold
the Fostoria plant. There has been no successor CBA between Honeywell and Fostoria employees
or retirees since 2011.
Like previous Honeywell-UAW CBAs, the 2009 CBA incorporated an Insurance Program
that, among other things, provided Fostoria retirees the opportunity to enroll in healthcare plans, to
which defendant agreed to make certain monetary contributions. With respect to healthcare benefits
for retired employees, the Insurance Program states, “The continued coverage to which retired
employees are entitled will be only the hospital-surgical-medical-drug-dental-hearing aid coverages
Also pending is plaintiffs’ motion for summary judgment and permanent or, in the
alternative, preliminary injunction seeking to prevent Honeywell from terminating the healthcare
benefits at issue as of 11:59 p.m. on December 31, 2016. (Doc. 21). Because I grant defendant’s
motion to dismiss, plaintiffs’ motion is moot.
Previously, Ford Motor Company owned the Fostoria plant. In 1967, Ford and UAW
negotiated fully-paid retiree healthcare benefits. Those benefits were in a separate document–the
Insurance Program–which the 1976 CBA and each later CBA incorporated by reference. In 1973,
defendant (then Bendix) bought the Fostoria plant from Ford and assumed the Ford-UAW CBA.
Each retiree in the class retired under one of the Honeywell-UAW CBAs dating back to the
1970s. With respect to the language governing retiree healthcare benefits, for purposes of this
opinion, I quote the 2009 CBA–the last effective CBA–and the 1976 Insurance Program.
as described in Section 1 above.” (Doc. 19, Ex. 2) (emphasis added). The Insurance Program also
provided healthcare benefits for retirees’ eligible dependents and surviving spouses.
Although the 2009 CBA expired in 2011, Honeywell’s underwriting of retiree healthcare
benefits for Fostoria retirees has continued as if the 2009 CBA were still in effect. This continued
for more than four years.
In December, 2015, however, Honeywell ultimately decided to terminate its contributions
beginning January 1, 2017. The company notified Fostoria retirees of its decision by letter dated
December 28, 2015; thereby, according to Honeywell, it provided plaintiffs with adequate notice to
enable them to obtain replacement healthcare coverage.
In addition to notice of the intended termination, defendant provided plaintiffs with
information about available healthcare options and resources for obtaining coverage.
The dispute between the parties is easy to state: plaintiffs claim that the 2009 CBA confirmed
vesting of lifetime healthcare benefits for the beneficiaries on the employee’s retirement; the
company claims that the 2009 CBA obligated it to provide such coverage only for the term of that
contract. The plaintiffs claim the defendant’s attempt unilaterally to end healthcare coverage
breaches the CBA. The defendant, in turn, contends it is only doing what the CBA expressly allows
it to do.
Both parties focus, and properly so, on the “duration” provisions of the 2009 CBA. The
relevant language is two-fold.
First, the Insurance Program expressly stated that it was effective “[f]or the duration of this
Agreement” (emphasis added): a plain statement meaning the duration of the 2009 CBA. (Doc. 19,
Second, the 2009 CBA–as did prior CBAs–included a three-year express general durational
provision under which the CBA expired on a date certain. Specifically, the 2009 CBA stated, “This
Agreement shall continue in full force and effect until 11:59 PM, October 31, 2011.” (Doc. 19, Ex.
On August 1, 2016–about seven months after defendant provided its written notice of
termination–plaintiffs filed this lawsuit. Plaintiffs allege that defendant, through the 2009 CBA,
which, in their view, stood as part of an unbroken and continuing sequence of CBAs, contractually
bound itself to provide lifetime retiree healthcare benefits. Termination of that coverage, plaintiffs
assert, indefensibly breaches that contractual commitment and their rights under ERISA.
Plaintiffs seek a declaration that defendant’s forthcoming termination of retiree healthcare
breaches its cumulative contractual obligations and an injunction mandating compliance with its
contractual and statutory responsibilities to maintain lifetime healthcare coverage. Plaintiffs also
seek damages for any and all losses incurred as a result of defendant’s allegedly wrongful conduct,
as well as any other compensatory, punitive, and exemplary damages I deem appropriate.
Standard of Review
A complaint must contain a “short and plain statement of the claim showing the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2).
To survive a motion to dismiss under Rule 12(b)(6), the complaint “must contain sufficient
factual matter, accepted as true, to state a claim that is plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
In ruling on a motion to dismiss, I may consider “the Complaint and any exhibits attached
thereto, public records, items appearing in the record of the case and exhibits attached to defendant’s
motion to dismiss so long as they are referred to in the Complaint and are central to the claims
contained therein.” Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008).4
In response to plaintiffs’ claim of entitlement to lifetime healthcare benefits, defendant argues
plaintiffs are claiming a benefit to which they simply are not entitled. Emphasizing the significance
of recent Supreme Court and Sixth Circuit decisions, Honeywell advances a core contention: namely,
that durational terms in the 2009 CBA and its predecessors are unambiguous and fail to create vested
entitlement to lifetime healthcare benefits.
The foundation for Honeywell’s defense to plaintiff’s claims is the Supreme Court’s decision
in M & G Polymers USA, LLC, et al., v. Tackett, — U.S. —, 135 S. Ct. 926, 933 (2015), which
specifically (and emphatically) overruled UAW v. Yard-Man, Inc., 716 F.2d 1476 (1983), and its provesting analysis in a series of retiree healthcare benefit cases in our Circuit.
Under the Yard-Man approach, courts, typically finding contractual language ambiguous,
applied inferences that routinely resulted in conclusions that CBAs promised lifetime healthcare
benefits. Tackett, supra, — U.S. at —, 135 S. Ct. at 933. According to the Tackett Court, the YardMan methodology and its inferences conflicted with ordinary contract principles, thereby
impermissibly “placing a thumb on the scale in favor of vested retiree benefits in all collectivebargaining agreements.” Id. at —, 135 S. Ct. at 935.
Plaintiffs’ complaint expressly refers to the 2009 CBA and defendant’s termination letters,
and they are the basis for plaintiffs’ breach of contract claim. Therefore, I may consider them.
The Supreme Court further stated that Yard-Man and its progeny “distort the text of the
agreement and conflict with the principle of contract law that the written agreement is presumed to
encompass the whole agreement of the parties.” Id. at —, 135 S. Ct. at 936. The Court specifically
rejected the Yard-Man inferences as contrary to ordinary contract law principles. Id. at —, 135 S.
Ct. at 934-37.
The proper approach, according to Tackett, is to apply ordinary contract principles when
interpreting CBAs. Id. at —, 135 S. Ct. at 933. Simply put, the parties’ intentions, as expressed in
the contract at issue, control–just as they do with an ordinary contract. Id.
The Court of Appeals also failed even to consider the traditional principle that courts
should not construe ambiguous writings to create lifetime promises. . . . Similarly,
the Court of Appeals failed to consider the traditional principle that “contractual
obligations will cease, in the ordinary course, upon termination of the bargaining
agreements.” Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB
501 U.S. 190, 207, 111 S. Ct. 2215, 115 L.Ed.2d 177 (1991). That principle does not
preclude the conclusion that the parties intended to vest lifetime benefits for retirees.
Indeed, we have already recognized that “a collective-bargaining agreement [may]
provid[e] in explicit terms that certain benefits continue after the agreement’s
expiration.” Ibid. 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. at —, 135 S. Ct. at 936-37 (internal citation omitted) (alterations in original).
Because the Sixth Circuit had relied on Yard-Man, the Supreme Court remanded for the court
“to review the agreements at issue under the correct legal principles.” Id. at —, 135 S. Ct. at 937.5
After Tackett, in Gallo v. Moen, Inc., 813 F.3d 265, 268-69 (6th Cir. 2016), the Sixth Circuit
held the CBAs at issue did not provide for unalterable, lifetime healthcare benefits. In light of
On remand, the Sixth Circuit summarized its interpretation of the Supreme Court’s decision in
Tackett and ultimately remanded the case, instructing the district court to “use ordinary principles of contract
law” to determine whether the agreements created vested lifetime benefits. Tackett v. M&G Polymers USA,
LLC, 811 F.3d 204, 210 (6th Cir. 2016).
Tackett, according to the Sixth Circuit, ordinary contract principles “require[d] the conclusion that
no vesting occurred.” Id. at 274.
Reviewing the language of the most recent CBA, as well as prior CBAs, the court in Gallo
concluded there was nothing committing the defendant to provide lifetime benefits. Id. at 269. The
absence of such promise in the CBAs themselves was fatal to plaintiffs’ claims: in the court’s view,
plaintiffs were asserting a contractual right as to which the parties had neither bargained nor agreed.
Id. (“That is what matters, and that is where the plaintiffs fall short.”). While the defendant in Gallo
may have, at one time, desired to provide healthcare to retirees throughout the duration of retirement,
“the question [was] whether the two parties signed a contract to that effect[, and] [n]othing of the
sort appear[ed] in the collective bargaining agreements.” Id.
Along with the absence of an express promise, the court emphasized the fact that every CBA
was framed as a three-year agreement. Id. Stating a court “should not expect to find lifetime
commitments in time-limited agreements,” the court held “[w]hen a specific provision of the CBA
does not include an end date, we refer to the general durational clause to determine that provision’s
termination.” Id. (internal citation omitted).
The contracts at issue in Gallo, like, to some extent, the CBAs in this case, include such
terms as “continued” to modify “benefits” and language such as “will be provided” and “will be
covered.” Id. The plaintiffs in that case, like the plaintiffs here, argued that “continued” language
manifested an intent to provide lifetime benefits. Id. Disagreeing, the court held that the general
durational clause governed; the “continued” and related provisions merely “guarantee[d] benefits
until the agreement expire[d], nothing more.” Id. (emphasis in original).
In reaching this result, the Sixth Circuit noted that “[in] overruling Yard-Man, . . . Tackett
does not create a clear-statement rule in the other direction. It instead eliminates the use of
inferences and implications not grounded in ‘ordinary principles of contract law’ and explains the
kinds of tools properly deployed in this setting.” Id. at 274. With this remark in mind, I interpret
the CBAs at issue in this case.
Here, the dispositive question is whether, applying ordinary contract principles, I can find
the contractual language on which Honeywell relies–namely the three-year duration provision–is
ambiguous or not ambiguous.
If the CBA’s language is clear and unambiguous, “its meaning is to be ascertained in
accordance with its plainly expressed intent.” Tackett, supra, — U.S. at —, 135 S. Ct. at 933
(internal citation and quotation marks omitted). At that point, the parties’ intent, as discernable in
unambiguous language, controls. Id.
Only, however, where the parties use ambiguous language, so that their intent is obscure and
uncertain, may I look to extrinsic evidence to figure out what the parties actually had in mind. Id.
at —, 135 S. Ct. at 938 (Ginsburg, J., concurring).
In other words, Tackett and Gallo mandate reading the CBAs as written without resort to
Yard-Man inferences or, unless pertinent language is ambiguous, recourse to extrinsic evidence. In
other words, I may turn to extrinsic evidence only if ambiguity makes it necessary to do so to
understand the parties’ intent and the meaning of the contract.
Though the fit between Tackett and Gallo and this case is not perfect, those cases and their
holdings are more than sufficiently congruent to lead–and in my view, inescapably so–to the
conclusion that the pertinent language in this case is clear and expresses an unambiguous intent and
agreement that the benefits were assured only for three years, not for life.6
First, and most importantly, “nothing in this or any of the other CBAs says that [Honeywell]
committed to provide unalterable healthcare benefits to retirees and their spouses for life.” Gallo,
supra, 813 F.3d at 269. So it is here: nothing in the CBAs affirmatively states that Honeywell
committed itself to provide healthcare benefits for life to the Insurance Program’s beneficiaries.
Given the unequivocal command of Gallo, that the relevant inquiry is “whether the two parties
signed a contract to that effect,” id., the absence of an express promise of unalterable, lifetime
healthcare benefits anywhere in the CBAs “is what matters, and that is where the plaintiffs fall
Second, “not only do the CBAs fail to say that [Honeywell] committed to provide unalterable
healthcare benefits for life to retirees, everything they say about the topic was contained in a threeyear agreement.” Id. (emphasis in original). Here, each CBA contained a general durational clause,
providing a specific expiration date for “This Agreement.” (Doc. 19, Ex. 1). Further, the
CBAs–through the incorporated Insurance Program–likewise expressly indicated that healthcare
benefits continue only “[f]or the duration of this Agreement” (emphasis added),7 which duration, per
the general durational clause, was three years. (Doc. 19, Ex. 2). The opinion in Tackett was
I also take note of Judge Paul Borman’s recent decision in Sloan v. BorgWarner, Inc., 2016 WL
7107228 (E.D. Mich.). I reviewed that decision and find Judge Borman’s analysis, although focused, most
appropriately, on the Tackett and Gallo decisions, to be both persuasive and in line with those cases and my
own analysis in this case.
As noted above, the specific durational language, “for the duration of this Agreement” refers to the
“Insurance Program,” of which the healthcare benefits are part. Thus, this specific durational language
applies to all benefits contained in the Insurance Program, including healthcare benefits.
clear–general durational clauses apply to provisions governing retiree benefits. — U.S. at —, 135
S. Ct. at 936. Thus, the unambiguous contractual language in each CBA bound the parties for three
years only. This is, with respect to healthcare benefits, “well short of commitments for life.” Gallo,
supra, 813 F.3d at 269.
Further, “while the authors of the CBAs opted not to say that retiree healthcare benefits were
vested for life, they explicitly vested pension benefits for qualifying retirees.” Id. at 270. Here
too–the CBAs in this case expressly vest pension benefits for life. According to the Sixth Circuit,
“[t]he difference in language demands a difference in meaning,” and “the explicit guarantee of
lifetime benefits in some provisions and not others means something.” Id.; see also UAW v. Skinner
Engine Co., 188 F.3d 130, 144 (3d Cir. 1999).
I agree, particularly in light of ERISA’s differing default vesting rules for pension benefits,
on the one hand, and healthcare benefits, on the other. That statute provides that pension benefits
automatically vest on retirement. 29 U.S.C. § 1053(a). Not so for healthcare benefits: those do not
vest automatically. See Reese v. CNH Am. LLC, 574 F.3d 315, 321 (6th Cir. 2009) (“[H]ealth
benefits are purely a matter of contract–permitting a company to guarantee health benefits for life
or to make them changeable, or even terminable, at the will of the company.”). Thus, if the parties
here intended healthcare benefits to vest on retirement, they would have taken care to include express
vesting language, as they did for pension benefits, to ensure that healthcare benefits would vest on
retirement. That the parties did not do so further evidences they did not intend or agree to the vesting
of lifetime retiree healthcare benefits.
There is, to be sure, a distinguishing fact between this case and Gallo–namely, that there, but
not here, the CBA included a reservation-of-rights clause in the company’s favor. In Gallo, the court
concluded such a clause evidences an intent not to create vested lifetime benefits. 813 F.3d at 270.
The Sixth Circuit queried, “How can one simultaneously say that healthcare benefits are ‘vested’ but
may be ‘cancel[ed]’ by the employer?” Id. (alteration in original).
I respond in two ways.
First, the court in Gallo did not base its conclusion solely on the inclusion of a reservation-ofrights clause. Rather, that clause was merely one of several considerations the court used in its
application of ordinary contract principles to interpret the agreements. So too here.
The opening line of the court’s analysis in Gallo makes that point clear: “First and foremost,
nothing in this or any of the other CBAs says that Moen committed to provide unalterable healthcare
benefits to retirees and their spouses for life. That is what matters, and that is where the plaintiffs
fall short.” Id. at 269 (first emphasis in original; second emphasis added). This is the main pillar
of the court’s opinion; the rest adds buttressing. Without it, though, the court’s conclusion could and
would still stand.
Second, a reservation-of-rights clause may allow a party not only to terminate benefits, but
also to enhance them. In effect, such a clause looks in more than one direction.8 Thus, inclusion of
I understand and accept the plaintiffs’ contention, made more than once at oral argument,
that for profit corporations are not charities and tend typically to operate principally for the benefit
of their shareholders. On the other hand, Honeywell continued to underwrite retiree healthcare
benefits after the 2009 CBA expired. Thus, it could be viewed as having exercised the reservationof-rights clause in favor of the retirees even though any obligation to do so under the CBA no longer
existed. In any event, regardless of the company’s motive, intent, or understanding of its obligations,
the continuation of benefits was, in view of the conclusion I reach here, something that the contract
did not require it to do.
In any event, for me to accept the plaintiffs’ argument that Honeywell’s continuation of
benefits–its course of performance–manifests its intent when it signed the CBA, I would have to
bypass the bedrock doctrine that a court considers extrinsic evidence of intent only after it finds the
pertinent contract provision or provisions ambiguous. They are not, and I neither need nor can look
elsewhere to interpret the CBA.
a reservation-of-right clause does not ipso facto support, much less compel, a finding of vesting. In
this case, the clause cannot be read in insolation but must, as must all the CBA’s provisions, be read
as part of a whole. Mastro Plastics Corp. v. NLRB, 350 U.S. 270, 279 (1956). In sum: inclusion of
a reservation-of-rights clause favoring the company is a distinction between this case and Gallo, but
it makes no difference in my overall analysis and ultimate conclusion. Simply put, a reservation-ofrights clause is not necessary for me to conclude the CBAs clearly and unambiguously do not
provide lifetime retiree healthcare benefits
For the foregoing reasons, I, as the court in Gallo did, conclude that plaintiffs here seek to
enforce a “right to healthcare benefits for life” based on “contracts [that] never make that
commitment.” 813 F.3d at 269. Because defendant is not contractually bound to provide plaintiffs
with lifetime healthcare benefits, its forthcoming termination of such benefits does not breach any
of its obligations under its contracts with the UAW.
It is, accordingly, hereby,
Defendant’s motion to dismiss (Doc. 15) be, and the same hereby is, granted; and
Plaintiffs’ motion for summary judgment and permanent or preliminary injunction
(Doc. 21) be, and the same hereby is, deemed moot.
/s/ James G. Carr
Sr. U.S. District Judge
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