The Court of Appeals for the Sixth Circuit recently affirmed the decision of a federal trial court that an employer-defendant is liable as a successor under collective bargaining agreements (CBAs) for certain vested retiree health care benefits, even though the employer was never a party to those CBAs. Those benefits included company-paid health insurance and/or Medicare Part B premium reimbursements.

The retirees were bargaining-unit employees at a window manufacturing plant that changed hands multiple times. The Sixth Circuit ruled the trial court did not err in finding that the employer-defendant is the successor in interest to the CBAs, in part because court papers filed by the employer-defendant in other litigation included admissions that the employer-defendant was a successor in interest. Those admissions were confirmed by other documentary evidence, including a “due diligence” memorandum.

The Sixth Circuit also ruled that the employees’ rights to retiree health care benefits had vested for certain employees. Among other things, the employer-defendant argued that the CBAs incorporated by reference the reservation-of-rights language in the summary plan descriptions (SPDs), which gave the employer the right to amend the plans under which the retiree health care benefits were provided. Because the CBAs only made an ambiguous reference to a “booklet and policy” and did not include any explicit language of incorporation, the Sixth Circuit ruled that the federal trial court did not err in rejecting the defendants’ incorporation-by-reference argument, ultimately ruling that certain employees’ rights to retiree health care benefits had vested. (Bender v. Newell Window Furnishing Inc., 6th Cir. 2012)