CNH Industrial N. v. v. Reese , 200 L. Ed. 2d 1 ( 2018 )

Cite as: 583 U. S. ____ (2018) 1
Per Curiam
SUPREME COURT OF THE UNITED STATES
CNH INDUSTRIAL N.V., ET AL. v. JACK REESE, ET AL.
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
No. 17–515. Decided February 20, 2018
PER CURIAM.
Three Terms ago, this Court’s decision in M&G Poly-
mers USA, LLC v. Tackett, 574 U. S. ___ (2015), held that
the Court of Appeals for the Sixth Circuit was required to
interpret collective-bargaining agreements according to
“ordinary principles of contract law.” Id., at ___ (slip op.,
at 1). Before Tackett, the Sixth Circuit applied a series of
“Yard-Man inferences,” stemming from its decision in
International Union, United Auto, Aerospace, & Agricul-
tural Implement Workers of Am. v. Yard-Man, Inc., 716 F.
2d 1476 (1983). In accord with the Yard-Man inferences,
courts presumed, in a variety of circumstances, that
collective-bargaining agreements vested retiree benefits
for life. See Tackett, 574 U. S., at ___–___ (slip op., at 7–
10). But Tackett “reject[ed]” these inferences “as incon-
sistent with ordinary principles of contract law.” Id., at
___ (slip op., at 14).
In this case, the Sixth Circuit held that the same Yard-
Man inferences it once used to presume lifetime vesting
can now be used to render a collective-bargaining agree-
ment ambiguous as a matter of law, thus allowing courts
to consult extrinsic evidence about lifetime vesting. 854
F.3d 877, 882–883 (2017). This analysis cannot be
squared with Tackett. A contract is not ambiguous unless
it is subject to more than one reasonable interpretation,
and the Yard-Man inferences cannot generate a reason-
able interpretation because they are not “ordinary princi-
ples of contract law,” Tackett, supra, at ___ (slip op., at 14).
Because the Sixth Circuit’s analysis is “Yard-Man re-born,
2 CNH INDUSTRIAL N. V. v. REESE
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re-built, and re-purposed for new adventures,” 854 F.3d,
at 891 (Sutton, J., dissenting), we reverse.
I
A
This Court has long held that collective-bargaining
agreements must be interpreted “according to ordinary
principles of contract law.” Tackett, 574 U. S., at ___ (slip
op., at 7) (citing Textile Workers v. Lincoln Mills of Ala.,
353 U.S. 448, 456–457 (1957)). Prior to Tackett, the Sixth
Circuit purported to follow this rule, but it used a unique
series of “Yard-Man inferences” that no other circuit ap-
plied. 574 U. S., at ___ (slip op., at 7). For example, the
Sixth Circuit presumed that “a general durational clause”
in a collective-bargaining agreement “ ‘says nothing about
the vesting of retiree benefits’ ” in that agreement. Id., at
___–___ (slip op., at 9–10) (quoting Noe v. PolyOne Corp.,
520 F.3d 548, 555 (CA6 2008)). If the collective-
bargaining agreement lacked “a termination provision
specifically addressing retiree benefits” but contained
specific termination provisions for other benefits, the Sixth
Circuit presumed that the retiree benefits vested for life.
Tackett, supra, at ___–___ (slip op., at 7–8) (citing Yard-
Man, supra, at 1480). The Sixth Circuit also presumed
vesting if “a provision . . . ‘tie[d] eligibility for retirement-
health benefits to eligibility for a pension.” 574 U. S., at
___ (slip op., at 10) (quoting Noe, supra, at 558).
This Court’s decision in Tackett “reject[ed] the Yard-
Man inferences as inconsistent with ordinary principles of
contract law.” 574 U. S., at ___ (slip op., at 14). Most
obviously, the Yard-Man inferences erroneously “refused
to apply general durational clauses to provisions govern-
ing retiree benefits.” 574 U. S., at ___ (slip op., at 12).
This refusal “distort[ed] the text of the agreement and
conflict[ed] with the principle of contract law that the
written agreement is presumed to encompass the whole
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agreement of the parties.” Ibid.
The Yard-Man inferences also incorrectly inferred life-
time vesting whenever “a contract is silent as to the dura-
tion of retiree benefits.” 574 U. S., at ___ (slip op., at 14).
The “traditional principle,” Tackett explained, is that
“ ‘contractual obligations will cease, in the ordinary course,
upon termination of the bargaining agreement.’ ” Id., at
___ (slip op., at 13) (quoting Litton Financial Printing
Div., Litton Business Systems, Inc. v. NLRB, 501 U.S.
190, 207 (1991)). “[C]ontracts that are silent as to their
duration will ordinarily be treated not as ‘operative in
perpetuity’ but as ‘operative for a reasonable time.’ ” 574
U. S., at ___ (slip op., at 13) (quoting 3 A. Corbin, Corbin
on Contracts §553, p. 216 (1960)). In fact, the Sixth Cir-
cuit had followed this principle in cases involving noncol-
lectively bargained agreements, see Sprague v. General
Motors Corp., 133 F.3d 388, 400 (1998) (en banc), which
“only underscore[d] Yard-Man’s deviation from ordinary
principles of contract law.” Tackett, supra, at ___ (slip op.,
at 13).
As for the tying of retiree benefits to pensioner status,
Tackett rejected this Yard-Man inference as “contrary to
Congress’ determination” in the Employee Retirement
Income Security Act of 1974 (ERISA), 88 Stat. 891. 574
U. S., at ___ (slip op., at 11). The Sixth Circuit adopted
this inference on the assumption that retiree health bene-
fits are “ ‘a form of delayed compensation or reward for
past services,’ ” like a pension. Id., at ___ (slip op., at 4)
(quoting Yard-Man, supra, at 1482). But ERISA distin-
guishes between plans that “resul[t] in a deferral of in-
come,” §1002(2)(A)(ii), and plans that offer medical bene-
fits, §1002(1)(A). See Tackett, 574 U. S., at ___ (slip op., at
11). Tackett thus concluded that this and the other “infer-
ences applied in Yard-Man and its progeny” do not “repre-
sent ordinary principles of contract law.” Id., at ___ (slip
op., at 10).
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B
Like Tackett, this case involves a dispute between retir-
ees and their former employer about whether an expired
collective-bargaining agreement created a vested right to
lifetime health care benefits. In 1998, CNH Industrial
N. V. and CNH Industrial America LLC (collectively,
CNH) agreed to a collective-bargaining agreement. The
1998 agreement provided health care benefits under a
group benefit plan to certain “[e]mployees who retire
under the . . . Pension Plan.” App. to Pet. for Cert. A–116.
“All other coverages,” such as life insurance, ceased upon
retirement. Ibid. The group benefit plan was “made part
of ” the collective-bargaining agreement and “r[an] concur-
rently” with it. Id., at A–114. The 1998 agreement con-
tained a general durational clause stating that it would
terminate in May 2004. Id., at A–115. The agreement
also stated that it “dispose[d] of any and all bargaining
issues, whether or not presented during negotiations.”
Ibid.
When the 1998 agreement expired in 2004, a class of
CNH retirees and surviving spouses (collectively, the
retirees) filed this lawsuit, seeking a declaration that their
health care benefits vested for life and an injunction pre-
venting CNH from changing them. While their lawsuit
was pending, this Court decided Tackett. Based on Tack-
ett, the District Court initially awarded summary judg-
ment to CNH. But after reconsideration, it awarded
summary judgment to the retirees. 143 F. Supp. 3d 609
(ED Mich. 2015).
The Sixth Circuit affirmed in relevant part. 854 F.3d,
at 879. The court began by noting that the 1998 agree-
ment was “silent” on whether health care benefits vested
for life. Id., at 882. Although the agreement contained a
general durational clause, the Sixth Circuit found that
clause inconclusive for two reasons. First, the 1998
agreement “carved out certain benefits” like life insurance
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“and stated that those coverages ceased at a time different
than other provisions.” Ibid.; see App. to Pet. for Cert. A–
116. Second, the 1998 agreement “tied” health care bene-
fits to pension eligibility. 854 F.3d, at 882; see App. to
Pet. for Cert. A–116. These conditions rendered the 1998
agreement ambiguous, according to the Sixth Circuit,
which allowed it to consult extrinsic evidence. 854 F.3d,
at 883. And that evidence supported lifetime vesting.
Ibid. The Sixth Circuit acknowledged that these features
of the agreement are the same ones it used to “infer vest-
ing” under Yard-Man, but it concluded that nothing in
Tackett precludes this kind of analysis: “There is surely a
difference between finding ambiguity from silence and
finding vesting from silence.” 854 F.3d, at 882.1
Judge Sutton dissented. See id., at 887–893. He con-
cluded that the 1998 agreement was unambiguous be-
cause “the company never promised to provide healthcare
benefits for life, and the agreement contained a durational
clause that limited all of the benefits.” Id., at 888. Judge
Sutton noted that, in finding ambiguity, the panel major-
ity relied on the same inferences that this Court proscribed
in Tackett. See 854 F.3d, at 890–891. But ambiguity, he
explained, requires “two competing interpretations, both
of which are fairly plausible,” id., at 890, and “[a] forbid-
den inference cannot generate a plausible reading,” id., at
891. The panel majority’s contrary decision, Judge Sutton
concluded, “abrad[ed] an inter-circuit split (and an intra-
circuit split) that the Supreme Court just sutured shut.”
Id., at 890.2
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1 After accepting the retirees’ reading of the 1998 agreement, the
Sixth Circuit remanded for the District Court to reconsider the reason-
ableness of CNH’s proposed modifications to the health care benefits.
See 854 F.3d 877, 884–887 (2017). CNH does not challenge that
determination, and we express no view on it.
2 By “intra-circuit split,” Judge Sutton was referring to the Sixth
Circuit’s earlier decision in Gallo v. Moen Inc., 813 F.3d 265 (2016).
6 CNH INDUSTRIAL N. V. v. REESE
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II
The decision below does not comply with Tackett’s direc-
tion to apply ordinary contract principles. True, one such
principle is that, when a contract is ambiguous, courts can
consult extrinsic evidence to determine the parties’ inten-
tions. See 574 U. S., at ___ (GINSBURG, J., concurring)
(slip op., at 1) (citing 11 R. Lord, Williston on Contracts
§30:7, pp. 116–124 (4th ed. 2012) (Williston)). But a con-
tract is not ambiguous unless, “after applying established
rules of interpretation, [it] remains reasonably susceptible
to at least two reasonable but conflicting meanings.” Id.,
§30:4, at 53–54 (footnote omitted). Here, that means the
1998 agreement was not ambiguous unless it could rea-
sonably be read as vesting health care benefits for life.
The Sixth Circuit read it that way only by employing the
inferences that this Court rejected in Tackett. The Sixth
Circuit did not point to any explicit terms, implied terms,
or industry practice suggesting that the 1998 agreement
vested health care benefits for life. Cf. 574 U. S., at ___
(GINSBURG, J., concurring) (slip op., at 2). Instead, it
found ambiguity in the 1998 agreement by applying sev-
eral of the Yard-Man inferences: It declined to apply the
general durational clause to the health care benefits, and
then it inferred vesting from the presence of specific ter-
——————
That decision concluded that a collective-bargaining agreement did not
vest health care benefits for life, relying on the general durational
clause and rejecting the same inferences that the Sixth Circuit invoked
here. See id., at 269–272. The conflict between these decisions, and
others like them, has led one judge in the Sixth Circuit to declare that
“[o]ur post-Tackett case law is a mess.” International Union, United
Auto, Aerospace & Agricultural Implement Workers of Am. v. Kelsey-
Hayes Co., 872 F.3d 388, 390 (2017) (Griffin, J., dissenting from denial
of rehearing en banc). To date, the en banc Sixth Circuit has been
unwilling (or unable) to reconcile its precedents. See ibid. (Sutton, J.,
concurring in denial of rehearing en banc) (agreeing that this conflict
“warrants en banc review” but voting against it because “there is a real
possibility that we would not have nine votes for any one [approach]”).
Cite as: 583 U. S. ____ (2018) 7
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mination provisions for other benefits and the tying of
health care benefits to pensioner status.
Tackett rejected those inferences precisely because they
are not “established rules of interpretation,” 11 Williston
§30:4, at 53–54. The Yard-Man inferences “distort the
text of the agreement,” fail “to apply general durational
clauses,” erroneously presume lifetime vesting from si-
lence, and contradict how “Congress specifically defined”
key terms in ERISA. Tackett, 574 U. S., at ___–___ (slip
op., at 11–14). Tackett thus rejected these inferences not
because of the consequences that the Sixth Circuit at-
tached to them—presuming vesting versus finding ambi-
guity—but because they are not a valid way to read a
contract. They cannot be used to create a reasonable
interpretation any more than they can be used to create a
presumptive one.
Tellingly, no other Court of Appeals would find ambigu-
ity in these circumstances. When a collective-bargaining
agreement is merely silent on the question of vesting,
other courts would conclude that it does not vest benefits
for life.3 Similarly, when an agreement does not specify a
duration for health care benefits in particular, other
courts would simply apply the general durational clause.4
And other courts would not find ambiguity from the tying
of retiree benefits to pensioner status.5 The approach
taken in these other decisions “only underscores” how the
——————
3 See, e.g., International Union, United Auto, Aerospace & Agricul-
tural Implement Workers of Am. v. Skinner Engine Co., 188 F.3d 130, 147
(CA3 1999); Joyce v. Curtiss-Wright Corp., 171 F.3d 130, 135 (CA2
1999); Wise v. El Paso Natural Gas Co., 986 F.2d 929, 938 (CA5 1993);
Senn v. United Dominion Industries, Inc., 951 F.2d 806, 816 (CA7
1992).
4 See, e.g., Des Moines Mailers Union, Teamsters Local No. 358 v.
NLRB, 381 F.3d 767, 770 (CA8 2004); Skinner Engine Co., 188 F.3d,
at 140–141.
5 See, e.g., id., at 141; Joyce, supra, at 134; Anderson v. Alpha Port-
land Industries, Inc., 836 F.2d 1512, 1517 (CA8 1988).
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decision below “deviat[ed] from ordinary principles of
contract law.” Tackett, supra, at ___ (slip op., at 13).
Shorn of Yard-Man inferences, this case is straightfor-
ward. The 1998 agreement contained a general durational
clause that applied to all benefits, unless the agreement
specified otherwise. No provision specified that the health
care benefits were subject to a different durational clause.
The agreement stated that the health benefits plan “r[an]
concurrently” with the collective-bargaining agreement,
tying the health care benefits to the duration of the rest of
the agreement. App. to Pet. for Cert. A–114. If the parties
meant to vest health care benefits for life, they easily
could have said so in the text. But they did not. And they
specified that their agreement “dispose[d] of any and all
bargaining issues” between them. Id., at A–115. Thus,
the only reasonable interpretation of the 1998 agree-
ment is that the health care benefits expired when the
collective-bargaining agreement expired in May 2004.
“When the intent of the parties is unambiguously ex-
pressed in the contract, that expression controls, and the
court’s inquiry should proceed no further.” Tackett, supra,
at ___ (GINSBURG, J., concurring) (slip op., at 1) (citing 11
Williston §30:6, at 98–104).
* * *
Because the decision below is not consistent with Tack-
ett, the petition for a writ of certiorari and the motions for
leave to file briefs amici curiae are granted. We reverse
the judgment of the Court of Appeals and remand the case
for further proceedings consistent with this opinion.
It is so ordered.