UAW v. Kelsey-Hayes Co. ( 2017 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 17a0223p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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INTERNATIONAL UNION, UNITED AUTOMOBILE, ┐
AEROSPACE AND AGRICULTURAL IMPLEMENT │
WORKERS OF AMERICA (UAW); JAMES WARD; │ No. 15-2285
MARSHALL HUNT; RICHARD GORDON, >
│
Plaintiffs-Appellees, │
│
v.
│
KELSEY-HAYES COMPANY; TRW AUTOMOTIVE │
HOLDINGS CORPORATION; NORTHROP GRUMMAN │
SYSTEMS CORPORATION, │
Defendants-Appellants. │
┘
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 2:11-cv-14434—Julian A. Cook, District Judge.
Decided and Filed: September 22, 2017
Before: GILMAN, GIBBONS, and STRANCH, Circuit Judges.
GIBBONS, J. (pp. 2–3), delivered a concurrence to the denial of rehearing en banc.
SUTTON, J. (pg. 4), delivered a concurrence to the denial of rehearing en banc. GRIFFIN, J.
(pp. 5–9), delivered a dissent to the denial of rehearing en banc, in which GILMAN, J., joined.
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ORDER
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The court received a petition for rehearing en banc. The original panel has reviewed the
petition for rehearing and concludes that the issues raised in the petition were fully considered
upon the original submission and decision on the cases. The petition then was circulated to the
full court.1 Less than a majority of the judges voted in favor of rehearing en banc.
Therefore, the petition is denied. Judge Gilman would grant rehearing for the reasons
stated in his dissent, and also joins Judge Griffin’s dissent.
1
Judge White recused herself from participation in this ruling.
1
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 2
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CONCURRENCE
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GIBBONS, Circuit Judge, concurring. This case is one of three cases with related issues
in which opinions were filed, by cooperation of all three panels, on the same date. No poll was
requested in the other cases. At the core of each case is interpretation of the particular collective
bargaining agreement (CBA) at issue in that case. Resolution in each case depended on the
examination of the agreement’s terms. In my view, the factual differences between the cases
determined the outcomes. Because the facts dictated the results, the cases can be reconciled.
The global issue of retiree health care guarantees is not presented here. The issue in this
case is whether the CBA at issue provided comprehensive lifetime healthcare benefits for
covered retirees and their surviving spouses. The answer to that question depended on a close
examination of the provisions of the CBA, the history of the parties, and evidence that supported
a finding that the UAW and Kelsey-Hayes “understood the language in the 1998 CBA to create
lifetime healthcare benefits for Detroit plant retirees.” Kelsey-Hayes, 854 F.3d at 869. The
panel majority noted, “[s]pecifically, Kelsey-Hayes has both acted in a manner that supports
finding vested healthcare rights and provided retiree plaintiffs with additional written
documentation that their healthcare was for life.” Id. This sort of factual focus hardly presents a
question of exceptional importance.
The interpretation of Gallo v. Moen, Inc., 813 F.3d 265 (6th Cir. 2016), is the issue
separating the majority and dissents in Kelsey-Hayes and Reese v. CNH Industrial N.V., 854 F.3d
877 (6th Cir. 2017). From my perspective, Gallo represents a clear application of the Supreme
Court’s message in M & G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015), followed up
in Tackett v. M & G Polymers USA, LLC, 811 F.3d 204 (6th Cir. 2016) (Tackett III), to apply
ordinary contract principles. The Gallo panel looked to the language of that particular CBA and
also to the absence of certain language, following the Supreme Court’s caution in Tackett: “when
a contract is silent as to the duration of retirement benefits, a court may not infer that the parties
intended those benefits to vest for life.” Tackett, 135 S. Ct. at 937; Gallo, 813 F.3d at 268.
In Gallo, the pertinent facts were the presence of a general-duration clause, coupled with the
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 3
absence of any provision extending the contract beyond its end date. If Gallo is regarded as
simply another case whose resolution depended on examination of a factual record and
application of old and tested contract construction principles, there is no conflict at all among our
cases. The only tension arises from viewing Gallo as more than a factual precedent and making
it a legal precedent for dissimilar cases. My position, set out in section III.B of the Kelsey-Hayes
majority, is that Gallo by its terms does not have the meaning suggested by the dissents in
Kelsey-Hayes and Reese but is merely a case where the contract was unambiguous and did not
vest benefits for life. If one takes Gallo beyond that and treats it as articulating a more generally
applicable legal principle, it likely conflicts with Tackett III, which is the earlier case and
controls.
Even though there was a general duration clause in the 1998 CBA between the parties in
Kelsey-Hayes, other language created ambiguity about what the parties intended. Cole v.
Meritor, Inc., 855 F.3d 695, 699 (6th Cir. 2017) by contrast, has facts the opinion called
“indistinguishable” from those in Gallo, making Gallo an appropriate factual precedent for that
case. And Judge Gilman’s dissent in Kelsey-Hayes is based on an evaluation of that case as also
being factually indistinguishable from Gallo, a point with which the majority disagreed.
I share Judge Sutton’s concern that rehearing this case en banc would not yield any
productive results. A difference of opinion about whether one case is factually similar to another
is not good fodder for en banc review. The differing results in our cases are a natural byproduct
of a necessarily factual inquiry. There is no issue of exceptional importance and no other basis
for en banc review. For these reasons, I concur in the denial of en banc review.
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 4
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CONCURRENCE
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SUTTON, Circuit Judge, concurring. By nearly every measure, this case deserves en
banc review. Distinct perspectives on the lifetime vesting of healthcare benefits in time-limited
collective bargaining agreements led us to release three opinions on the same day that face in
different directions. See Cole v. Meritor, Inc., 855 F.3d 695 (6th Cir. 2017); Reese v. CNH
Indus. N.V., 854 F.3d 877 (6th Cir. 2017); UAW v. Kelsey Hayes, 854 F.3d 862 (6th Cir. 2017).
As I see it, some of those decisions are inconsistent with M&G Polymers USA, LLC v. Tackett,
135 S. Ct. 926 (2015), and some of them contrast with the approach our sister circuits have taken
on the same issue, see Noe v. PolyOne Corp, 520 F.3d 548 (6th Cir. 2008) (Sutton, J., dissenting)
(collecting cases).
An intra-circuit split accompanied by an inter-circuit divide followed by lack of
conformity to a Supreme Court decision normally warrants en banc review. But in this instance
there is good reason to fear that a majority of the en banc court would fail to agree on a majority
view. One of the three cases mentioned above, Reese, illustrates the problem. In that case, three
judges reached three different conclusions on the same issue. One view was that the collective
bargaining agreement was ambiguous and extrinsic evidence resolved that ambiguity as a matter
of law in favor of unalterable lifetime benefits for the retirees. Reese, 854 F.3d at 887 (Donald,
J., concurring). A second view was that a lifetime promise existed but was subject to reasonable
alteration by the employer. Id. at 878–87 (Gibbons, J.). A third view was that the promise was
limited by the six-year term of the collective bargaining agreement. Id. at 887–93 (Sutton, J.,
dissenting). With 16 judges on the en banc court, there is a real possibility that we would not
have nine votes for any one of these three approaches. That may explain why the deadlines for
requesting en banc review in the other two cases released on April 20 all passed without a
request for a poll. Something ventured in this instance likely would lead to nothing gained.
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 5
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DISSENT
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GRIFFIN, Circuit Judge, dissenting.
I respectfully dissent from the denial of the petition for rehearing en banc.
Two years ago, the Supreme Court emphatically rejected our Yard-Man1 approach to
resolving whether collective bargaining agreements vest retirees with a right in a lifetime of
healthcare benefits. See M & G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015). Instead
of “placing a thumb on the scale in favor of vested retiree benefits” under Yard-Man, the
Supreme Court instructed that courts are to interpret CBAs “according to ordinary principles of
contract law.” See id. at 930, 933, 935.
Our post-Tackett case law is a mess, largely due to different panels’ interpretations of two
such “ordinary principles” identified in Tackett: “courts should not construe ambiguous writings
to create lifetime promises” and “‘contractual obligations will cease, in the ordinary course, upon
termination of the collective bargaining agreement.’ . . . [W]hen 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 936–37 (citation omitted).
Five different panels (comprised of eleven total judges on our court in various
combinations) have considered Tackett in published matters. First, upon Tackett’s remand from
the Supreme Court, we expounded upon what constitutes “ordinary principles,” and even
incorporated additional principles suggested by Justice Ginsburg in her Tackett concurrence.
Tackett v. M & G Polymers USA, Inc., 811 F.3d 204, 208–09 (6th Cir. 2016) (“Tackett III”)
(citing Tackett, 135 S. Ct. at 937–38 (Ginsburg, J., concurring)). Leveraging these (especially
latter) elucidations, we opined that courts “cannot presume that the absence of such specific
[durational] language [referring to retiree benefits themselves], by itself, evidences an intent not
to vest benefits or that a general durational clause says everything about the intent to vest.” Id. at
1
UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983).
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 6
209. But despite these overarching pronouncements, we did not substantively address the CBA
at issue; we remanded the matter to the district court for consideration in the first instance. Id. at
206.
We have applied these “ordinary principles” from Tackett and Tackett III in four
published cases. See Reese v. CNH Indus. N.V., 854 F.3d 877 (6th Cir. 2017); UAW v. Kelsey-
Hayes, 854 F.3d 862 (6th Cir. 2017); Cole v. Meritor, Inc., 855 F.3d 695 (6th Cir. 2017); and
Gallo v. Moen, Inc., 813 F.3d 265 (6th Cir. 2016). In my view, these decisions are in
irreconcilable conflict regarding how courts are to view durational clauses. Indeed, each
produced separate and spirited writings on that issue—a dissent in Reese by Judge Sutton, a
dissent in Kelsey-Hayes by Judge Gilman, a “reluctant” concurrence in Cole by Judge White, and
a dissent in Gallo by Judge Stranch.
We issued Gallo a few weeks after Tackett III. “First and foremost,” we noted, nothing
in the CBA there committed the employer to provide healthcare benefits for life. 813 F.3d at
269. Relatedly, and in no uncertain terms, we highlighted the juxtaposition of this lack of a
commitment with the CBA’s express durational limitation: a CBA’s general durational clause
“supplie[s] a concrete date of expiration,” and “[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. That is to say, commitments to provide retirees healthcare in the form of “will
be provided,” “will be covered,” and “continued” healthcare—without specific durational
language—“guarantee benefits until the agreement expires, nothing more.” Id.; see also id. at
271–72. For these and other reasons, we held—over Judge Stranch’s dissent—the employees’
benefits were not vested. 18 U.S.C. § 2255.
Enter our trio of cases issued on April 20 of this year: Cole, Kelsey-Hayes, and Reese.
Issued first, Cole found Gallo to be “legally indistinguishable”—the CBA “provided that retiree
healthcare benefits ‘shall be continued,’” it did not “provide[] a specific expiration date for those
benefits,” and “explicitly tied healthcare benefits to the continuing existence of the CBA in
question.” 855 F.3d at 700. Given this, and the CBA’s general durational clause, we found the
CBA to be “unambiguous in not vesting retiree healthcare benefits for life.” Id. Judge White
“reluctantly concur[red],” writing that she disagreed with Gallo but was bound by its holding.
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 7
Id. at 702 (White, J., concurring). We denied the appellees’ petition for rehearing en banc on
June 23, 2017.
Kelsey-Hayes and Reese fell the other way. In the latter, and over Judge Sutton’s dissent,
we distinguished Gallo “because the parties in this case carved out certain benefits, such as life
insurance and healthcare insurance, and stated that those coverages ceased at a time different
than other provisions of the CBA. True, this provision says only that healthcare coverage
continues past the date of retirement and is silent on whether the benefits continue past the
termination date of the agreement. But, when read in conjunction with the whole instrument, as
Tackett III commands, this silence, rather than resolving ambiguity, furthers it. We cannot, and
should not, presume that the general-durational clause here says everything about the parties’
intentions.” Reese, 854 F.3d at 882. We then went on to find ambiguity on the basis of the
CBA’s tying of benefits to achievement of pensioner status, id. at 882–83, and concluded Tackett
III mandated that we not “rely[] exclusively on the general-durational clause to resolve this
matter.” Id. at 883. Importantly, we highlighted significant tension between Tackett III and
Gallo:
To the extent that Tackett III and Gallo are in conflict—a dispute about which
reasonable minds may differ—Tackett III, being first in time, must govern. To so
hold is not an endorsement of Tackett III’s reasoning nor is it an indictment of
Gallo’s; rather, it simply demonstrates adherence to this court’s precedent.
Id. at 833 n.2. We denied both parties’ petitions for rehearing en banc on August 28, 2017.
In the former, and over Judge Gilman’s dissent, we distinguished Gallo because, unlike
there, the CBA at issue in Kelsey-Hayes “barred unilateral modification.” 854 F.3d at 868, 871–
72. This distinguishing factor, along with the CBA’s “use of three different types of durational
language for specific provisions within the agreement”—but none with respect to healthcare
benefits—led us to conclude the CBA was “ambiguous as to the duration of healthcare benefits”
and therefore permitted the use of extrinsic evidence to find an intent to vest benefits. Id. at 872;
see also id. at 868–69.
In my view, we should grant rehearing en banc in Kelsey-Hayes in order to secure the
uniformity of our decisions post-Tackett. Fed. R. App. P. 35(a)(1). As set forth above and in
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 8
Judge Gilman’s panel dissent, our published decisions conflict regarding the weight we give the
plain language of a collective bargaining agreement’s durational limitations. Kelsey-Hayes,
854 F.3d at 873–77 (Gilman, J., dissenting). Simply put, Gallo, Cole, Reese, and Kelsey-Hayes
cannot all be correct. We should also take this opportunity to decide the precedential value (if
any) of Tackett III—there is reasonable debate as to whether its entire discussion is dicta, id. at
873–74, whether it conflicts with Gallo, Reese, 854 F.3d at 883 n.2, and whether it is
inconsistent with Tackett in and of itself as Justice Ginsburg’s concurring ruminations adopted
by the Tackett III court were not expressly adopted by the Tackett majority.
Additionally, we should grant rehearing en banc because the issue of retiree healthcare
guarantees presents a question of exceptional importance. Fed. R. App. P. 35(a)(2). It is no
secret that a combination of several factors—including the number of unionized workforces (and
retirees) within our Circuit, the various economic downturns in several of the manufacturing
sectors that led to corporate restructuring and the cutting of benefits, and our pro-retiree Yard-
Man inference—has led to the maintenance of numerous retiree healthcare cases within our
jurisdiction. There are at least four active cases currently on appeal to our court, see IUE-CWA
v. GE, No. 17-3885; Zino v. Whirlpool, No. 17-3851/3860; Fletcher v. Honeywell, No. 17-3277;
and Watkins v. Honeywell Int’l, Inc., No. 17-3032, not to mention countless others percolating in
various district courts. District judges, litigants, and subsequent panels need authoritative and
non-conflicting guidance, and results should not depend upon the composition of the three-judge
panel.
Finally, that we may not secure a majority rationale for how to approach retiree health
benefits post-Tackett should have no bearing on whether to consider this matter en banc. Right
now, our case law is one of contradiction and confusion in an area of the law that demands
consistency and clarity. Were we to rehear Kelsey-Hayes en banc, the worst we could do is to
maintain this disparate status quo. We should at least try, especially because this is a problem
unique to us. No other circuit utilized the Yard-Man presumption, and as a result, no other
circuit has struggled with applying Tackett. Thus, I fear our passing on this petition for rehearing
en banc will be the last word in this matter for a long time, and our decisions will remain in
conflict.
No. 15-2285 UAW v. Kelsey-Hayes Co. Page 9
For these reasons, I would grant rehearing en banc and therefore respectfully dissent.
ENTERED BY ORDER OF THE COURT
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Deborah S. Hunt, Clerk