Kelly v. Honeywell International, Inc., No. 17-675 (2d Cir. 2019)
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Where a collective bargaining agreement contains unambiguous language vesting welfare benefits, the agreement's general durational clause does not prevent those benefits from vesting. The Second Circuit held that the effects bargaining agreement (EBA) unambiguously vested medical coverage for retirees who retired prior to the expiration of the EBA. Therefore, the court affirmed the district court's judgment in favor of union retirees who retired prior to the expiration of the EBA and their surviving spouses, and its order permanently enjoining Honeywell from terminating medical coverage for those union retirees and their surviving spouses.
The court held that the EBA was ambiguous as to whether medical coverage for union retirees who retired after the EBA expired and their surviving spouses vested. Nonetheless, the court held that the Post‐Expiration Plaintiffs have presented a sufficiently serious question as to the merits and satisfied the remaining requirements for a preliminary injunction to issue. Accordingly, the court affirmed the district court's order preliminarily enjoining Honeywell from terminating the Post‐Expiration Plaintiffs' medical benefits and remanded for further proceedings
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17-675(L) Kelly v. Honeywell Int'l, Inc. 17 675(L) Kelly v. Honeywell Int’l, Inc. 1 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ____________________ 2 3 4 5 August Term, 2018 6 7 8 (Argued: December 5, 2018 Decided: August 7, 2019) 9 Docket Nos. 17 675(L), 17 2075(CON) 10 11 ____________________ 12 13 14 15 DAVID KELLY, RICHARD NORKO, ANNETTE DOBBS, and PETER DELLOLIO, for themselves and others similarly situated, 16 Plaintiffs Appellees, 17 18 v. 19 20 21 HONEYWELL INTERNATIONAL, INC., 22 Defendant Appellant.1 23 24 ____________________ 25 26 27 Before: CABRANES, POOLER, and DRONEY, Circuit Judges. 28 Defendant Appellant Honeywell International, Inc. (“Honeywell”) appeals 29 30 from the February 28, 2017, judgment and order of the District Court for the 1 The Clerk of Court is directed to amend the caption as above. 1 District of Connecticut (Vanessa L. Bryant, J.) granting summary judgment to 2 union retirees who retired before June 6, 1997, and their surviving spouses and 3 permanently enjoining Honeywell from terminating their medical benefits. 4 Honeywell also appeals from the June 27, 2017, order of the same court 5 preliminarily enjoining Honeywell from terminating medical benefits to union 6 retirees who retired after June 6, 1997, and their surviving spouses. 7 The parties contest two issues in these consolidated appeals: (1) whether 8 an effects bargaining agreement (“EBA”) requires Honeywell to provide lifetime 9 medical coverage to union retirees and their surviving spouses and (2) if so, 10 whether union retirees who retired after that EBA expired (i.e., after June 6, 1997) 11 and their surviving spouses are also entitled to lifetime medical coverage. As to 12 the first issue, we AFFIRM the judgment and order of the district court and hold 13 that, where a collective bargaining agreement contains unambiguous language 14 vesting welfare benefits, the agreement’s general durational clause does not 15 prevent those benefits from vesting. As to the second issue, we AFFIRM the 16 order of the district court preliminarily enjoining Honeywell from terminating 17 medical coverage for retirees who retired after the EBA expired and their 18 surviving spouses because there is a sufficiently serious question as to whether 2 1 an ambiguous term in the agreement entitles such retirees and their surviving 2 spouses to lifetime medical coverage. 3 Affirmed and remanded for further proceedings. ____________________ 4 BRIAN T. ORTELERE, Morgan Lewis & Bockius LLP (Donald L. Havermann, Sean M. McMahan, Abbey M. Glenn, on the brief), Philadelphia, PA, for Defendant Appellant. 5 6 7 8 9 WILLIAM WERTHEIMER, Bingham Farms, MI, for Plaintiffs Appellees. 10 11 12 Thomas Meiklejohn, Livingston, Adler, Pulda, Meiklejohn & Kelly, PC (on the brief), Hartford, CT, for Plaintiffs Appellees. 13 14 15 17 POOLER, Circuit Judge: 18 19 from the February 28, 2017, judgment and order of the District Court for the 20 District of Connecticut (Vanessa L. Bryant, J.) granting summary judgment to 21 union retirees who retired before June 6, 1997, and their surviving spouses and 22 permanently enjoining Honeywell from terminating their medical benefits. 23 Honeywell also appeals from the June 27, 2017, order of the same court 16 Defendant Appellant Honeywell International, Inc. (“Honeywell”) appeals 3 1 preliminarily enjoining Honeywell from terminating medical benefits to union 2 retirees who retired after June 6, 1997, and their surviving spouses. 3 The parties contest two issues in these consolidated appeals: (1) whether 4 an effects bargaining agreement (“EBA”) requires Honeywell to provide lifetime 5 medical coverage to union retirees and their surviving spouses and (2) if so, 6 whether union retirees who retired after that EBA expired (i.e., after June 6, 1997) 7 and their surviving spouses are also entitled to lifetime medical coverage. As to 8 the first issue, we AFFIRM the judgment and order of the district court and hold 9 that, where a collective bargaining agreement contains unambiguous language 10 vesting welfare benefits, the agreement’s general durational clause does not 11 prevent those benefits from vesting. As to the second issue, we AFFIRM the 12 order of the district court preliminarily enjoining Honeywell from terminating 13 medical coverage for union retirees who retired after the EBA expired and their 14 surviving spouses because there is a sufficiently serious question as to whether 15 an ambiguous term in the agreement entitles such retirees and their surviving 16 spouses to lifetime medical coverage. 4 BACKGROUND 1 2 This case concerns the medical benefits of workers who retired after 3 October 28, 1994, from an army plant in Stratford, Connecticut, and the medical 4 benefits of their surviving spouses.2 The retirees in these consolidated appeals 5 were members of the United Automobile, Aerospace and Agricultural 6 Implement Workers of America (“UAW” or “Union”), Local 1010 and Local 376. 7 These local chapters entered into several agreements regarding employee and 8 retiree benefits with Textron Corporation (“Textron”), the owner and operator of 9 the Stratford plant between 1984 and 1994. In the waning months of 1993, Textron began negotiating a sale of the 10 11 Stratford plant to AlliedSignal, Inc. (“AlliedSignal”). AlliedSignal conditioned its 12 purchase of the Stratford plant on Textron reaching a satisfactory collective 13 bargaining agreement with the local UAW to replace the parties’ expiring 14 agreements. Accordingly, Textron and the local UAW negotiated a new 15 collective bargaining agreement while Textron was in talks to sell the plant to 16 AlliedSignal. For ease of reference, henceforth wherever we refer to “retirees,” we also refer to their surviving spouses. 5 2 I. The Collective Bargaining Agreements 1 Textron and the UAW ultimately negotiated—and AlliedSignal 2 3 approved—three agreements:3 a Collective Bargaining Agreement (“CBA”), a 4 supplemental Group Insurance Agreement (“Supplemental Agreement”), and an 5 EBA, which specifically concerns “the financial and economic impact and effects 6 of a potential sale of assets” to AlliedSignal, App’x at 344, 374. The substance of 7 the three agreements and their durational clauses are of particular relevance to 8 this appeal. A. The EBA 9 The parties negotiated an EBA in part due to the UAW’s concern that 10 11 AlliedSignal would close the Stratford plant upon purchase and transfer 12 operations to a different plant. The EBA therefore covers such topics as pensions, 13 severance packages, transition bonuses, and other considerations for employees 14 who might be laid off as a consequence of AlliedSignal’s acquisition of the plant. Textron actually entered three separate agreements with UAW Local 1010 and three separate agreements with UAW Local 376, for a total of six agreements. Textron’s agreements with the two locals are identical in the aspects material to the questions presented, and the forthcoming analysis therefore applies equally to both sets of agreements. 6 3 1 Of particular importance here, the EBA outlines medical benefits for union 2 retirees as follows: All past and future retired employees and surviving spouses shall continue to receive . . . full medical coverage as provided in the . . . Group Insurance Agreement, as now in effect or as hereafter modified by the parties for the life of the retiree or surviving spouse. 3 4 5 6 7 App’x at 345, 375. The parties agreed that the EBA was “effective as of May 30, 8 1994, and [would] remain in effect until midnight on June 6, 1997, but not 9 thereafter unless renewed or extended in writing by the parties.” App’x at 359, 10 391. 11 B. The CBA 12 The parties explicitly incorporated the EBA as a supplemental agreement 13 to the CBA. The CBA concerns, inter alia, medical insurance benefits for union 14 members. The CBA, like the EBA, also contains a durational clause: 15 16 17 18 19 20 21 Except as otherwise provided herein, this Agreement shall become effective as of May 30, 1994 and shall remain in effect up to and including June 6, 1997 and shall automatically renew itself from year to year thereafter unless written notice to terminate or amend the Agreement is given by either party to the other at least sixty (60) days prior to its expiration or any annual renewal thereof. App’x at 309, 318 (alterations omitted). 7 1 C. The Supplemental Agreement 2 The CBA incorporates the Supplemental Agreement in order to provide a 3 description of “[t]he details and levels of the Group Insurance benefits” specified 4 in the CBA. App’x at 306, 316. The Supplemental Agreement describes the 5 medical benefits and plan options available to eligible employees and retirees 6 and conditions the benefits provided for therein on the continued existence of the 7 CBA. App’x at 329, 339 (“If the Collective Bargaining Agreement is canceled in 8 whole or in part benefits hereunder will immediately cease.”). The Agreement 9 also contains a durational clause that is nearly identical to the CBA’s durational 10 11 12 clause. II. Asset Sale In July 1994, AlliedSignal agreed to assume the 1994 collective bargaining 13 agreements and Textron’s obligations thereunder as of the date it acquired the 14 Stratford plant (ultimately in October 1994). AlliedSignal subsequently 15 terminated the agreements at the earliest permissible opportunity, June 6, 1997. 16 Nonetheless, the company continued to provide union retirees with medical 17 benefits without interruption. 8 On September 30, 1998, AlliedSignal closed production at the Stratford 1 2 plant and moved operations to a nonunionized plant in Phoenix, Arizona, and a 3 plant in South Carolina. Shortly thereafter, in 1999, AlliedSignal acquired 4 Honeywell, and the company assumed the Honeywell name. 5 Now doing business as Honeywell, the company continued to provide 6 medical coverage to union retirees until years later, when, in December 2015, 7 Honeywell undertook a review of its collective bargaining agreements in light of 8 the Supreme Court’s decision in M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 9 926 (2015). Following the review, Honeywell announced that it intended to 10 terminate retiree medical coverage on December 31, 2016. Nevertheless, as of this 11 writing, and pursuant to injunctive orders from the district court, Honeywell has 12 continued to provide medical coverage to the retirees.4 III. 13 The retirees brought suit over Honeywell’s decision to terminate their 14 15 Procedural History medical coverage, claiming they were entitled to medical coverage for their Honeywell briefly stopped providing medical coverage for retirees who retired after the EBA expired. The district court subsequently ordered Honeywell to restore medical coverage to these retirees. 9 4 1 lifetimes. Taking a complex path to the disposition of these claims, the district 2 court ultimately (1) awarded summary judgment and a permanent injunction to 3 retirees who retired before the EBA expired (“Pre Expiration Plaintiffs”) and (2) 4 preliminarily enjoined Honeywell from terminating medical benefits for retirees 5 who retired after the EBA expired (“Post Expiration Plaintiffs”). DISCUSSION 6 7 Honeywell now appeals from the district court’s grant of summary 8 judgment to the Pre Expiration Plaintiffs, which required Honeywell to provide 9 medical coverage to the Pre Expiration Plaintiffs for their lifetimes, and the 10 district court’s order preliminarily enjoining Honeywell from terminating 11 medical coverage to the Post Expiration Plaintiffs. 12 13 I. Standard of Review The appealed from injunctive orders turn on the interpretation of a 14 contract, which presents “a legal question . . . reviewed de novo.” Capital Ventures 15 Int’l v. Republic of Argentina, 552 F.3d 289, 293 (2d Cir. 2009). We review the 16 district court’s “ultimate decision” to issue an injunction for abuse of discretion. 17 Goldman, Sachs & Co. v. Golden Empire Schs. Fin. Auth., 764 F.3d 210, 214 (2d Cir. 18 2014). 10 II. 1 2 The Pre Expiration Plaintiffs Are Entitled to Lifetime Medical Coverage Honeywell primarily offers two reasons that the EBA’s promise that “[a]ll 3 4 past and future retired employees and surviving spouses shall continue to 5 receive . . . full medical coverage . . . for the life of the retiree or surviving 6 spouse,” App’x at 345, 375, does not vest retiree medical coverage. 5 First, 7 Honeywell argues that the general durational clauses in the EBA and CBA and a 8 cancellation provision in the Supplemental Agreement prevent retiree medical 9 benefits from vesting. Second, Honeywell contends that a cancellation provision 10 in the Supplemental Agreement operated as the functional equivalent of a 11 reservation of rights clause, enabling Honeywell to unilaterally terminate 12 medical benefits when it terminated the CBA. The retirees counter that 13 Honeywell’s contractual promise to provide medical coverage “for the life of the 14 retiree or surviving spouse,” App’x at 345, 375, is affirmative lifetime language 15 that can only be interpreted to vest medical coverage for retirees and is thus 16 unaffected by the durational language in the EBA or Supplemental Agreement. Because we base our decision on principles of general contract interpretation, we do not reach Honeywell’s arguments that the district court erred by finding retiree medical benefits vested because they were tied to pension benefits. 11 5 1 The retirees also point to extrinsic evidence and Honeywell’s performance of the 2 contract as support for their interpretation. 3 A. Legal Framework 4 It is “the general rule . . . that an employee welfare benefit plan is not 5 vested and that an employer has the right to terminate or unilaterally to amend 6 the plan at any time.” Joyce v. Curtiss Wright Corp., 171 F.3d 130, 133 (2d Cir. 1999) 7 (internal quotation marks omitted). The employer may, however, “contract[] to 8 vest employee welfare benefits.” Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 9 72, 77 (2d Cir. 1996). “[I]f an employer promises vested benefits, that promise 10 will be enforced.” Am. Fed. of Grain Millers, AFL CIO v. Int’l Multifoods Corp., 116 11 F.3d 976, 980 (2d Cir. 1997). We therefore look to Honeywell’s contracts with the 12 Union—the EBA, CBA, and Supplemental Agreement—to determine if 13 Honeywell intended to vest medical benefits. Schonholz, 87 F.3d at 78; see also 14 Joyce, 171 F.3d at 134. 15 “We interpret collective bargaining agreements, including those 16 establishing ERISA plans, according to ordinary principles of contract law, at 17 least when those principles are not inconsistent with federal labor policy.” M&G 18 Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 (2015). While the Supreme Court 12 1 has embraced “the traditional principle that contractual obligations will cease, in 2 the ordinary course, upon termination of [a] bargaining agreement,” it has 3 emphasized that “[t]hat principle does not preclude the conclusion that the 4 parties intended to vest lifetime benefits for retirees.” Id. at 937 (internal 5 quotation marks omitted). The parties are therefore free to include “explicit 6 terms that certain benefits continue after the agreement’s expiration” without 7 violating this principle. Id. (internal quotation marks omitted); see also CNH 8 Indus. N.V. v. Reese, 138 S. Ct. 761, 766 (2018) (“If the parties meant to vest health 9 care benefits for life, they easily could . . . sa[y] so in the text.”). 10 Applying this basic framework, we first consider whether the EBA 11 contains language vesting retiree medical benefits. E.g., Abbruscato v. Empire Blue 12 Cross & Blue Shield, 274 F.3d 90, 97 98 (2d Cir. 2001). If so, we consider whether 13 other contractual provisions—such as a reservation of rights clause—defeat 14 vesting. E.g., id. 15 B. Lifetime Language 16 For the retirees to be entitled to summary judgment on their claim that 17 their welfare benefits vested, they must identify specific written language that 18 promises lifetime benefits. See Int’l Multifoods, 116 F.3d at 980 (“[I]f a document 13 1 unambiguously indicates whether retiree medical benefits are vested, the 2 unambiguous language should be enforced.”); cf. Devlin v. Empire Blue Cross & 3 Blue Shield, 274 F.3d 76, 84 (2d Cir. 2001) (requiring plaintiffs to “first identify 4 specific written language that is reasonably susceptible to interpretation as a 5 promise” in order to oppose a motion for summary judgment (internal quotation 6 marks omitted)). The written language must tie the benefits that a recipient will 7 receive to that recipient’s lifetime or to an indefinite duration. For example, 8 contractual language stating that retirees’ life insurance benefits will remain at a 9 stated level “for the remainder of their lives” can reasonably be interpreted to 10 “creat[e] a promise to vest lifetime life insurance benefits.” Devlin, 274 F.3d at 85 11 (emphasis omitted) (internal quotation marks omitted).6 Such language 12 constitutes affirmative lifetime language because it measures the duration of a 13 retiree’s benefits by the retiree’s lifetime. Id.; see also Diehl v. Twin Disc, Inc., 102 14 F.3d 301, 306 (7th Cir. 1996) (finding provision that retired employees would The Devlin Court also concluded that language stating “that ‘retired employees, after completion of twenty years of full time permanent service and at least age 55 will be insured’” could reasonably be interpreted as affirmative lifetime language based on unilateral contract principles. Devlin, 274 F.3d at 84. 14 6 1 receive benefits “for the lifetime of the pensioner” constituted “explicit and 2 seemingly unambiguous” lifetime language). 3 We have little trouble concluding that the language in the EBA constitutes 4 affirmative lifetime language. The EBA declares that “[a]ll past and future retired 5 employees and surviving spouses shall continue to receive . . . full medical 6 coverage . . . as now in effect or as hereafter modified by the parties for the life of 7 the retiree or surviving spouse.” App’x at 345, 375 (emphasis added). The plain 8 text of the EBA therefore manifests the parties’ intent to secure medical coverage 9 for qualifying retirees’ lifetimes. 10 C. Effect of Durational Language on Benefit Vesting 11 Because we conclude that the EBA contains language vesting retiree 12 medical benefits, we must now consider whether the durational clauses of the 13 agreements between Honeywell and the UAW prevent the above quoted 14 language from vesting retiree medical benefits. We first address Honeywell’s 15 argument that the Supplemental Agreement contains a cancellation clause that is 16 the functional equivalent of a reservation of rights clause and then consider the 17 effect of the EBA’s and CBA’s general durational clauses. 15 1 2 1. The “Cancellation” Clause in the Supplemental Agreement Honeywell argues that the Supplemental Agreement contains a provision 3 under which Honeywell can cancel medical benefits, and therefore retiree 4 medical benefits in the EBA cannot vest. Specifically, Honeywell points to a 5 clause in the Supplemental Agreement that states: “If the Collective Bargaining 6 Agreement is canceled in whole or in part benefits hereunder will immediately 7 cease.” App’x at 329, 339 (alterations omitted). According to Honeywell, this 8 provision of the Supplemental Agreement is a benefit specific cancellation clause 9 that prevents the retirees’ medical benefits from vesting and is the functional 10 equivalent of a reservation of rights clause. We do not agree that the clause 11 permits Honeywell to cancel retiree medical benefits for three reasons. 12 First, the EBA expressly prohibits Honeywell from unilaterally cancelling 13 retiree medical benefits, as Honeywell now claims the Supplemental Agreement 14 allows. The EBA promises retirees lifetime medical coverage “as provided in the 15 Pension Plan and Group Insurance Agreement, as now in effect or as hereafter 16 modified by the parties.” App’x at 345, 375 (emphasis added). In order to modify 17 retiree benefits, both parties must agree. This provision thereby prohibits 18 Honeywell from unilaterally cancelling retiree medical benefits. We therefore 16 1 decline to read the “cancellation” clause as explicitly limiting the duration of 2 benefits. 3 Second, the Supplemental Agreement does not clearly reserve Honeywell’s 4 rights to amend retirees’ medical benefits because the “cancellation” clause 5 primarily functions to tie the Supplemental Agreement to the CBA. This 6 interpretation of the “cancellation” clause is unavoidable when one considers the 7 relationship between the CBA and the Supplemental Agreement. The CBA states, 8 “The details and levels of the Group Insurance benefits . . . specified are more 9 fully described and incorporated in the Supplemental Agreement covering 10 Insurance.” App’x at 306, 316. This clause signals that the Supplemental 11 Agreement cannot function as a standalone agreement—that is, without the 12 CBA. The cancellation clause in the Supplemental Agreement, then, merely 13 articulates that if the CBA were cancelled, the Supplemental Agreement would 14 not continue; it does not provide an alternative means to terminate benefits. 15 In addition, the Supplemental Agreement’s “cancellation” clause bears 16 little resemblance to cancellation language that this Court has previously found 17 reserves a company’s right to amend benefits. Those clauses are explicit in 18 stating the employer’s right to cancel or amend benefits. For example, in 17 1 Abbruscato v. Empire Blue Cross & Blue Shield, this Court considered a summary 2 plan description stating, “The company expects and intends to continue the 3 Plans in your Benefits Program indefinitely, but reserves its right to end each of 4 the Plans, if necessary. The company also reserves its right to amend each of the 5 Plans at any time.” 274 F.3d at 98 (internal quotation marks omitted) (emphasis 6 omitted). We held that this language prevented benefits from vesting because the 7 language “clearly informed employees that . . . benefits were subject to 8 modification.” Id. at 99. Similarly, in International Multifoods Corp., we held that a 9 collective bargaining agreement stating, “During the term of this Agreement 10 there shall be no reduction in the schedule of benefits,” precluded medical 11 benefits from vesting because it clearly suggested that after the term of the 12 agreement, the company could reduce benefits. 116 F.3d at 981 (emphasis 13 omitted) (internal quotation marks omitted). These clauses unmistakably 14 manifested the parties’ intent to allow the employer to unilaterally modify 15 benefits and communicated that possibility to plan participants. 16 In contrast, the clause Honeywell relies on to defeat the EBA’s lifetime 17 language merely identifies a scenario in which the Supplemental Agreement will 18 no longer be effective—it does not permit Honeywell to unilaterally amend the 18 1 retirees’ benefits. The clause is best understood as a recognition that the 2 Supplemental Agreement was not an independent source of obligations, and we 3 will not construe that clause to defeat the parties’ clear intent to vest retiree 4 medical benefits. 5 Third and finally, we note that, despite Honeywell’s attempt to present 6 out of circuit authority to support its interpretation, no court of appeals has 7 considered a conditional clause like that in the Supplemental Agreement to be a 8 cancellation clause. In the cases on which Honeywell relies, the courts 9 determined that the contracts at issue did not contain any affirmative lifetime 10 language, and the courts therefore relied on general durational provisions to set 11 the lifespan of welfare benefits. See Barton v. Constellium Rolled Prods. Ravenswood, 12 LLC, 856 F.3d 348, 352 53 (4th Cir. 2017) (declining to find lifetime language 13 where contract “state[d] that the retiree health benefits ‘shall remain in effect for 14 the term of this . . . Labor Agreement’”); Cole v. Meritor, Inc., 855 F.3d 695, 700 15 (6th Cir. 2017) (finding “‘shall be continued’ language . . . not sufficient to vest 16 the retirees with healthcare benefits for life”). Because these cases concern the 17 application of durational clauses in contracts without affirmative lifetime 19 1 language, they do not shed light on the interaction of affirmative lifetime 2 language and provisions that could be construed to temporally limit benefits. 3 The EBA prohibits unilateral modification of retiree benefits and the 4 “cancellation” clause in the Supplemental Agreement is not a reservation of 5 Honeywell’s right to terminate or amend those benefits. We thus conclude that 6 the disputed clause in the Supplemental Agreement does not prevent retiree 7 benefits from vesting. 8 2. The EBA and CBA Durational Clauses 9 We also reject Honeywell’s arguments that the general durational clauses 10 in the EBA and CBA prevent retiree medical benefits from vesting primarily for 11 two reasons. First, the Supreme Court has specifically noted that when an 12 agreement provides for lifetime benefits, the expiration of that agreement does 13 not prevent welfare benefits from vesting. Second, if any more reason were 14 necessary, reading the durational clauses in the EBA and CBA to prevent vesting 15 would violate ordinary contract principles by rendering the lifetime language in 16 the EBA superfluous. 17 18 The Supreme Court has concluded that, while “contractual obligations will cease, in the ordinary course, upon termination of [a] bargaining agreement,” 20 1 there are exceptions to this general rule. Litton Fin. Printing Div., a Div. of Litton 2 Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 207 (1991). The Court explicitly reserved one 3 such exception: “[r]ights which accrued or vested under the agreement will, as a 4 general rule, survive termination of the agreement.” Id. Decades later in Tackett, 5 the Supreme Court reiterated that, although obligations typically cease when a 6 contract terminates, “[t]hat principle does not preclude the conclusion that the 7 parties intended to vest lifetime benefits for retirees.” Tackett, 135 S. Ct. at 937. 8 Indeed, in considering the effect of durational clauses on welfare benefits, the 9 Supreme Court has instructed that, “when an agreement does not specify a 10 duration for health care benefits in particular,” courts “simply apply the general 11 durational clause.” Reese, 138 S. Ct. at 766 (emphasis added). The necessary 12 implication is that where an agreement does specify a duration—e.g., a retiree’s 13 lifetime—for a particular benefit, that durational language applies to that benefit 14 despite a general durational clause. 15 The EBA contains affirmative language stating that retiree medical benefits 16 will continue “for the life of the retiree or surviving spouse.” App’x at 345, 375. 17 The contract provides a specific duration for retiree medical benefits that, for 18 retirees who survived the agreement’s expiration, exceeded the duration of the 21 1 agreement. As such, the durational clause did not prevent medical benefits from 2 vesting, and Honeywell has an obligation to provide medical coverage to the 3 union retirees for their lifetimes. 4 This interpretation is the only plausible interpretation that “gives a 5 reasonable, lawful, and effective meaning to all the terms.” Restatement (Second) of 6 Contracts § 203. Under this well settled principle, “[w]e must avoid an 7 interpretation of an agreement that renders one of its provisions superfluous.” 8 United States v. Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 9 AFL CIO, 970 F.2d 1132, 1136 (2d Cir. 1992). We therefore will adopt a reasonable 10 interpretation of a contract that gives independent meaning to each term. 11 Honeywell’s suggestion that the phrase “for the life of the retiree or 12 surviving spouse,” App’x at 345, 375, actually means “for the life of the retiree or 13 surviving spouse while the EBA, CBA, and Supplemental Agreement are 14 effective” would render the lifetime language surplusage. By way of example, if 15 we were to delete “for the life of the retiree or surviving spouse” from the 16 disputed provision, it would then read, “All past and future retired employees 17 and surviving spouses shall continue to receive . . . full medical coverage as 18 provided in the . . . Group Insurance Agreement, as now in effect or as hereafter 22 1 modified by the parties.” See App’x 345, 375. In such a scenario, the agreement’s 2 durational clause would fill in how long the retired employees would “continue 3 to receive” medical coverage, see App’x 345, 375—that is, for the duration of the 4 EBA, so long, of course, as they remained alive during that time. If Honeywell’s 5 interpretation of the contract were correct, then the language “for the life of the 6 retiree or surviving spouse” would add no meaning to the clause. Such an 7 interpretation runs afoul of traditional contract principles, and we instead 8 interpret the language “for the life of the retiree or surviving spouse” to assign a 9 specific duration to retirees’ medical coverage that extends beyond the duration 10 11 of the contracts. We therefore conclude that the EBA contains unambiguous language 12 promising eligible retirees lifetime medical coverage. Because the EBA contains 13 plain, affirmative language tying benefits to the lifetime of the recipient, the 14 contracts’ general durational clauses do not prevent those benefits from vesting. 15 Accordingly, the district court properly granted summary judgment to the Pre 16 Expiration Plaintiffs and permanently enjoined Honeywell from terminating the 17 Pre Expiration Plaintiffs’ medical benefits. 23 1 2 3 III. The Post Expiration Plaintiffs Are Entitled to a Preliminary Injunction We must next consider whether the EBA also entitles the Post Expiration 4 Plaintiffs to lifetime medical benefits. This question requires us to determine 5 whether the term “[a]ll . . . future retired employees and surviving spouses,” App’x 6 at 345, 375 (emphasis added), refers to (1) employees who retired while the EBA 7 was in effect or (2) employees who retired at any point, including after the EBA 8 was no longer in effect. In support of the first interpretation, Honeywell argues 9 that once the EBA was terminated, the agreement could not engender new 10 obligations to new retirees. The Post Expiration Plaintiffs argue that under basic 11 principles of contract interpretation, the term “future” unambiguously refers to 12 all eligible employees who subsequently retired from the plant, so long as they 13 were employed at the time the EBA was in effect. The Post Expiration Plaintiffs 14 also present extrinsic evidence supporting their interpretation of the term. 15 For a preliminary injunction to issue, the movant must establish “(1) either 16 (a) a likelihood of success on the merits or (b) sufficiently serious questions going 17 to the merits to make them a fair ground for litigation and a balance of hardships 18 tipping decidedly in the movant’s favor, and (2) irreparable harm in the absence 24 1 of the injunction.” Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 116 2 (2d Cir. 2009) (citation omitted) (internal quotation marks omitted). The parties 3 do not dispute that the balance of hardships tips decidedly in the Post Expiration 4 Plaintiffs’ favor. Nor do they dispute that “the threatened termination of benefits 5 such as medical coverage . . . obviously raise[s] the spectre of irreparable injury,” 6 Whelan v. Colgan, 602 F.2d 1060, 1062 (2d Cir. 1979). We concur that the balance of 7 hardships tips in favor of the Post Expiration Plaintiffs and that the Post 8 Expiration Plaintiffs would face irreparable harm absent a preliminary 9 injunction; therefore, we consider below only whether these Plaintiffs have 10 presented a sufficiently serious question going to the merits. 11 A. The Meaning of the Term “Future Retired Employees” 12 We start from the premise that absent language suggesting otherwise, the 13 EBA should not be interpreted to generate new obligations after its expiration. 14 Tackett, 135 S. Ct. at 937. Pursuant to this principle, Honeywell’s interpretation of 15 the term “future retired employees,” App’x at 345, 375, to refer to retirees who 16 retired after the EBA came into effect but before the EBA expired is plausible. 17 18 However, the EBA’s unqualified use of the term “future” prevents the straightforward application of this principle. As the Supreme Court has noted, 25 1 “constraints upon the employer after the expiration date of a collective 2 bargaining agreement . . . may arise . . . from the express or implied terms of the 3 expired agreement itself.” Litton Fin. Printing Div., 501 U.S. at 203; see also Tackett, 4 135 S. Ct. at 938 (Ginsburg, J., concurring). Thus, the parties can contract around 5 the general principle that a contract’s obligations end when the contract expires, 6 and the use of the term “future retired employees” could reasonably reflect the 7 parties’ intent to do so here. App’x at 345, 375. 8 9 Interpreting the term “future” as calling for an indefinite duration that exceeds the duration of the EBA is particularly plausible in light of the 10 anticipatory purpose of the EBA. As the EBA explicitly states, the parties entered 11 into this agreement to resolve “the financial and economic impact and effects of a 12 potential sale of assets.” App’x at 344, 374 (emphasis added). Thus, the drafting 13 parties were keenly aware of the EBA’s forward looking nature, and they drafted 14 the EBA to offset future loss of employment and benefits. Viewing the agreement 15 in context and given the lack of qualifying language, we find it plausible that the 16 parties used the term “future” to refer to all future retirees who were at least 17 employed, if not retired, while the EBA was in effect. As such, the Post 26 1 Expiration Plaintiffs have presented a second plausible interpretation of the 2 contract provision. 3 Because both parties have proffered conflicting, reasonable interpretations 4 of the term “future retired employees,” App’x at 345, 375, we conclude that the 5 EBA is ambiguous as to the Post Expiration Plaintiffs. See Collins v. Harrison Bode, 6 303 F.3d 429, 433 (2d Cir. 2002) (“Contract language is ambiguous if it is capable 7 of more than one meaning when viewed objectively by a reasonably intelligent 8 person who has examined the context of the entire integrated agreement.” 9 (internal quotation marks omitted)). We therefore turn to the parties’ proffered 10 extrinsic evidence to determine whether the evidence can definitively resolve the 11 ambiguity. See Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 12 F.3d 1091, 1095 (2d Cir. 1993) (“[I]f ambiguity exists, then extrinsic evidence of 13 the parties’ intent may be looked to as an aid to construing the contractual 14 language.”). 15 B. 16 The extrinsic evidence does not provide a clear indication of the parties’ The Extrinsic Evidence 17 intent because it also supports conflicting interpretations. The evidence 18 simultaneously (and unexpectedly) suggests that Honeywell interpreted the EBA 27 1 to provide medical coverage for employees who retired after the EBA expired 2 and that the Union interpreted the EBA to provide medical coverage for only 3 employees who retired while the EBA was in effect. The conflicting evidence 4 cannot be harmonized without further fact development. 5 There is compelling extrinsic evidence that, from 1997 to 2015, Honeywell 6 interpreted the EBA to require it to provide medical coverage for retirees who 7 retired after the EBA expired. First and foremost, until 2015, Honeywell provided 8 medical coverage without interruption for Stratford plant retirees who retired 9 after the EBA expired. Second, Honeywell’s correspondence with named plaintiff 10 David Kelly—who retired from the Stratford plant in 1998, after the EBA 11 expired—is illustrative of Honeywell’s previous interpretation of the EBA. On 12 June 9, 1998, Honeywell’s predecessor sent a letter to Kelly stating that “he and 13 his spouse [we]re eligible for lifetime retiree medical coverage.” App’x at 127. 14 When, several years later, Honeywell sent another letter to UAW retirees, 15 including Kelly, that claimed to reserve the company’s rights to amend retiree 16 medical benefits, Kelly objected that Honeywell had not reserved its right to 17 amend his medical benefits. Honeywell subsequently sent a correction letter to 18 UAW retirees, informing them that Honeywell had not “reserve[d] the right to 28 1 modify, change, or terminate . . . medical benefits negotiated by a collective 2 bargaining unit.” App’x at 150 (emphasis omitted). This is powerful evidence 3 that Honeywell understood the EBA to confer lifetime medical benefits to 4 retirees who retired after the EBA expired. 5 However, the extrinsic evidence in the record also contains documentary 6 evidence that conflicts with Honeywell’s performance and statements to retirees. 7 The district court considered a summary that the former Union president 8 (coincidentally, Kelly) drafted to convey details of the EBA to UAW members. 9 That summary stated, “The following benefits will be provided to all Local 1010 10 employees and retirees who are laid off or retire during this agreement.” Local 11 1010 UAW Decision & Effects Agreement Summary at 1, Kelly v. Honeywell Int’l, 12 Inc., No. 3:16 cv 543 VLB (D. Conn. July 8, 2016) (emphasis added). This 13 contemporaneous summary suggests that the UAW previously understood that 14 the EBA did not vest lifetime benefits for retirees who retired after the agreement 15 terminated. 16 The union summary contradicts Honeywell’s past performance, and, 17 because it is not the province of this court to weigh competing evidence, see 18 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), at this juncture we cannot 29 1 resolve which evidence supports the correct interpretation. We therefore 2 conclude that the extrinsic evidence does not clearly resolve the parties’ intent as 3 to the meaning of the term “future retired employees,” App’x at 345, 375. Despite 4 this ambiguity, the Post Expiration Plaintiffs have raised “sufficiently serious 5 questions going to the merits to make them a fair ground for litigation.” Faiveley 6 Transp., 559 F.3d at 116 (internal quotation marks omitted). The equities tip 7 decidedly in the Post Expiration Plaintiffs’ favor, and the Post Expiration 8 Plaintiffs would be irreparably harmed absent a preliminary injunction, see 9 Whelan, 602 F.2d at 1062. We therefore affirm the order of the district court 10 preliminarily enjoining Honeywell from terminating the Post Expiration 11 Plaintiffs’ medical benefits. CONCLUSION 12 13 The EBA unambiguously vested medical coverage for retirees who retired 14 prior to the expiration of the EBA. We AFFIRM the district court’s judgment in 15 favor of union retirees who retired prior to the expiration of the EBA and their 16 surviving spouses and its order permanently enjoining Honeywell from 17 terminating medical coverage for those union retirees and their surviving 18 spouses. The EBA is ambiguous as to whether medical coverage for union 30 1 retirees who retired after the EBA expired and their surviving spouses vested. 2 Nonetheless, the Post Expiration Plaintiffs have presented a sufficiently serious 3 question as to the merits and satisfied the remaining requirements for a 4 preliminary injunction to issue. We therefore AFFIRM the district court’s order 5 preliminarily enjoining Honeywell from terminating the Post Expiration 6 Plaintiffs’ medical benefits and REMAND for further proceedings consistent 7 with this opinion. 31
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