Site last updated: Friday, April 26, 2024

Log In

Reset Password
MENU
Butler County's great daily newspaper

Court alters playing field for retiree health benefits

The Yard-Man goeth, and that could be bad news for labor unions and their minions of retirees receiving free health benefits for life — or at least they thought they had earned those benefits for life.

The United States Supreme Court this week cast doubt on the future of old union contracts, ruling that promises of lifetime health benefits are not “vested” rights unless they are spelled out in “clear and express language.”

In the process, the court threw out a 30-year-old convention known as the “Yard-Man presumption,” named after the company that won a 1998 labor case — which had been decided, ironically, by the same appeals court whose decision was nullified this week by the Supreme Court.

Specifically, the court set aside a ruling by the Sixth Circuit Court of Appeals in Cincinnati that determined the Point Pleasant Polyester Plant in Apple Grove, W.Va., was obligated to provide life medical benefits for free, even though previous labor contracts never bound the company to do so.

M&G Polymers USA bought the plant in 2000 and six years later announced it would require retirees to contribute to the cost of their health care benefits. The retirees sued, saying they had been promised free health care for life.

The case made its way to the Sixth District Court of Appeals, which ruled in favor of the retirees in 2013, relying on its 1983 decision that had created the Yard-Man Presumption.

Under the Yard-Man presumption, courts treat health-care benefits as vested unless the contract includes clear language to the contrary.

But implied law is just sloppy law, according to Justice Antonin Scalia.

“Both sides knew it was left unaddressed,” Scalia said, “so, you know, whoever loses deserves to lose for casting this upon us when it could have been said very clearly in the contract. Such an important feature. So I hope we’ll get it right, but, you know, I can’t feel bad about it.”

Justice Clarence Thomas was more blunt. In his majority opinion, Justice Thomas chided the Sixth Circuit Court for “placing a thumb on the scale in favor of vested retired benefits.”

Federal law already protects retirees’ vested benefits when their contract specifically promises them, Thomas wrote, adding, “Courts should not construe ambiguous writings to create lifetime promises.”

Justice Thomas further wrote that for 30 years Yard-Man has been applied “indiscriminately across industries” including automobiles, electronics and steel. His observation underscores the potential immensity of the ruling.

The case now returns to the Sixth Circuit, along with instructions to use ordinary principles of contract interpretation.

The unanimous ruling could signal a presumption by the court that it expects a reversal of the appeal court’s decision. But since this case is about presumption, maybe not.

In a concurring opinion, Justice Ruth Bader Ginsburg urged the appeals court to weigh other factors, including the fact that retirees had vested pensions under the contract.

Whatever the Sixth District Court decides, it will have far-reaching implications. The case deserves continued close scrutiny.

More in Our Opinion

Subscribe to our Daily Newsletter

* indicates required
TODAY'S PHOTOS