The Fourth Circuit Court of Appeals affirmed a district court's decision to enjoin Volvo Group North America, Inc. (Volvo) from making unilateral changes to retiree health benefits after a collective bargaining agreement (CBA) expired unless it followed the CBA's requirements. The CBA prevented Volvo from changing retiree health benefits until a $3.9 million Voluntary Employees Beneficiary Association (VEBA) trust that was used to pay health benefit costs exceeding certain stated annual limits was projected to be exhausted within a one-year period. The CBA also required Volvo to negotiate with the retirees' union to bring down costs. If these negotiations were unsuccessful, then Volvo could make certain limited changes to benefits.
The court held that none of the CBA's conditions were satisfied when Volvo modified the retiree health benefits. The court also found that the CBA's cost provision contemplated that the requirement would remain in effect past the CBA's expiration. The court stated that the CBA's cost provision operates as a limit on Volvo's right to modify benefits beyond the term of the CBA, based in part on the fact that it did not contain any durational limiting language
