It is probably ERISA's greatest "whodunit." Our story begins innocently enough, many years ago when an employer's cost of providing medical benefits was a pittance. Little cost meant little worry, and many employers did not think twice about promising their faithful employees "lifetime" medical benefits. Unfortunately, things changed. Medical care improved and people lived longer. While these developments are wonderful in themselves, they are economically disastrous when played out over many years and thousands of lives. Medical breakthroughs and technological innovations cost a lot of money. While medical premiums for active employees skyrocketed, the premiums for the medical care of retirees (who often live in the shipwreck of old age) went into hyperspace. Things got worse.

General Motors announced on February 1, 1993, that it was taking a $23 billion charge on its financial statement to reflect the current value of its retiree medical obligations. Further compounding these problems was an increasingly competitive global economy. For example, car parts made for generations in the Rust Belt were now being manufactured by low-cost producers located in Taipei or Timbuktu. It is little wonder that employers began to rethink their position on retiree medical benefits. Since these promises were in legal documents like summary plan descriptions or collective bargaining agreements, lawyers were called in to assist with this endeavor. When employers took action to change retiree medical plans, litigation frequently ensued. Enter Yard-Man.

Litigating Collective Bargaining for Retiree Medical-Benefit Disputes

Whether or not an employer has the right to change medical benefits for retired employees turns on what that employer has promised them. Retiree medical-benefit disputes are complicated because an employer's agreement to provide medical benefits is regulated by the Employee Retirement Income Security Act ("ERISA") and (in the case of collectively bargained-for retiree medical arrangements) by the Labor Management Relations Act ("LMRA"), Section 301.

When a collective bargaining agreement expires, the employer is ordinarily free to modify or terminate any retiree medical benefits provided under that collective bargaining agreement. In Litton Financial Printing Div., a Division of Litton Business Systems v. NLRB,[1] the Supreme Court explained that the layoff of 10 factory workers after the expiration of a collective bargaining agreement was not subject to the expired contract's grievance and arbitration procedure:

As with the obligation to make pension contributions in Advance Lightweight Concrete Co., other contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement. Exceptions are determined by contract interpretation. Rights which accrued or vested under the agreement will, as a general rule, survive termination of the agreement.

Further complicating this area is the fact that bargaining for retired employees is a permissive, rather than a mandatory, subject of collective bargaining (because retired employees are no longer members of the bargaining unit).[3] The law has developed differently in each circuit. A large part of the Midwest, including Ohio, was retiree-friendly from the start. Cases in the Circuit Courts of Appeal are all over the place about how to deal with retiree medical-benefit disputes. For example, the Seventh Circuit's en banc decision in Bidlack v. Wheelabrator Corp. established that an employee's entitlement to retiree medical benefits is presumed not to be vested. The Sixth Circuit has ruled, on the other hand, that retiree medical benefits are presumed to vest. Two Circuit Courts insist that express language be used to vest retiree medical benefits.[6] Three Circuit Courts make no presumptions. Simply put, whether collectively bargained-for retiree medical benefits vest will be determined as a matter of federal common law under the Taft-Hartley Act, Section 301, as interpreted by the federal circuit where the case is litigated.

One of the earliest Circuit Court of Appeals decisions to consider collectively bargained-for retiree medical benefits was perceived as announcing the following rule:

Retiree benefits are in a sense "status" benefits which, as such, carry with them an inference that they continue so long as the prerequisite status is maintained. Thus, when the parties contract for benefits which accrue upon achievement of retiree status, there is an inference that the parties likely inferred those benefits to continue as long as the beneficiary remains a retiree.

The facts in Yard-Man are familiar: The company tells the union it is shutting down a factory and will end the payment of retiree medical benefits on the last day of the collective bargaining agreement. The union sues, claiming the retiree medical benefits were "lifetime" benefits that cannot be terminated. The company responds that the contract is clear—no retiree benefits outlive the termination of the union contract. In Yard-Man, the key provision of the contract in dispute stated: "[w]hen the former employee has attained the age of 65 years then . . . [t]he [c]ompany will provide insurance benefits equal to the active group benefits . . . for the former employee and his spouse."

The Sixth Circuit found this language to be ambiguous: "The language ‘will provide insurance benefits equal to the active group' could reasonably be construed, if read in isolation, as either solely a reference to the nature of retiree benefits or as an incorporation of some durational limitation as well." Due to this ambiguity, the Sixth Circuit said that to determine "whether retiree insurance benefits continue beyond the expiration of the collective bargaining agreement depends upon the intent of the parties." It then detailed seven rules courts should use to examine extrinsic evidence to divine the parties' intent:

  1. Traditional rules for interpreting contracts should be applied in a manner consistent with federal labor policies.
  2. The court should first look to the explicit language of the contract for clear manifestations of intent.
  3. Explicit language should be viewed in light of the context that gives rise to its inclusion.
  4. Each contract provision should be interpreted as part of an integrated whole.
  5. The contract's terms should be construed so as to render none nugatory and avoid illusory promises.
  6. Where ambiguities exist, the court may look to other words and phrases in the contract for guidance.
  7. The court should review the interpretation ultimately derived from its examination of the language, context, and other indicia of intent for consistency with federal labor policy.

The mischief in Yard-Man's reasoning is the way in which it points to the use of extrinsic evidence before examining the actual words of the contract. By pre-supposing and inferring an "intent to vest" retiree medical benefits, Yard-Man made the express words of almost every contract ambiguous. The "inference of vesting" shifted to the employer the burden of disproving that it vested retiree medical benefits.

All of the circuits employ approaches similar to the Yard-Man rules described above when examining the relevant contractual provisions. Whether a collective bargaining agreement vests medical benefits is, of course, a question of contract interpretation. The language of the parties' agreements is examined in detail to determine whether the intent to provide unchangeable retiree medical benefits has been unambiguously expressed. In making this determination, the core issue is whether the parties intended to vest retiree medical benefits or whether they intended to tie those benefits to the duration of the collective bargaining agreement. The contractual provisions that receive the most attention typically include clauses that define eligibility for retiree medical benefits, the termination of coverage, the reservation of the right to amend or terminate the plan, and durational provisions. The court often finds the agreement between the parties to be comprised of a series of documents, including the collective bargaining agreements, summary plan descriptions, and enrollment forms used by the parties over the course of many years. The conduct of the company's representatives may also show an intent to vest retiree medical benefits.

After considering the evidence, the Yard-Man court ruled that retiree medical benefits were intended to outlive the collective bargaining agreement. And after the Sixth Circuit indicated that it favored the vesting of retiree medical benefits, a plague of plaintiffs' cases descended upon the federal district courts within the Circuit. Within a short time, some Sixth Circuit cases began to expand this "rule": "This court has recognized that normally retiree benefits are vested." Yet other Sixth Circuit decisions were more circumspect about the alleged "Yard-Man" inference. While the vitality of the Yard-Man inference has waxed and waned within the Sixth Circuit over the past 20 years, in its most recent decision, Yolton v. El Paso Tennessee Pipeline Co., the Sixth Circuit appears to have finally killed off the Yard-Man inference:

This [c]ourt has never inferred an intent to vest benefits in the absence of either explicit contractual language or extrinsic evidence indicating such an intent. Rather, the inference functions more to provide a contextual understanding about the nature of labor-management negotiations over retirement benefits. That is, because retirement health care benefits are not mandatory or required to be included in an agreement, and because they are "typically understood as a form of delayed compensation or reward for past services" it is unlikely that they would be "left to the contingencies of future negotiations." Yard-Man, 716 F.2d at 1481–82 (citations omitted). If other contextual factors so indicate, Yard-Man simply provides another inference of intent. All that Yard-Man and subsequent cases instruct is that the Court should apply ordinary principles of contract interpretation.

Applying "ordinary principles of contract interpretation," coupled with the instruction that courts are never to infer an intent to vest benefits, brings the Sixth Circuit's approach to collectively bargained-for retiree medical benefits much closer to the views of the other circuits (discussed below). The Yolton court effectively ruled that it is the plaintiff's burden to prove an employer intended to vest retiree medical benefits.

Litigating ERISA-Regulated Retiree Medical Disputes

The seminal case dealing with the rights of salaried employees to unchangeable lifetime retiree medical benefits began as a dispute at General Motors. The four basic ERISA theories of recovery asserted by the General Motors plaintiffs (described below) are the same four theories salaried retirees continue to advance.

The reasons retiree medical claims fare worse under ERISA than the LMRA are many. The enactment of ERISA required Congress to strike a balance between employee rights and available employer resources. The ERISA statute draws a distinction between two types of employee benefit plans: welfare benefit plans and pension benefit plans.Unlike pension benefits that are subject to stringent vesting requirements under ERISA, welfare benefits, such as retiree medical benefits, are vested only if so provided by contract. Retiree medical benefits are defined as employee welfare benefits. To vest an employee benefit means to make that benefit nonforfeitable. The Supreme Court has explained that benefits provided by an ERISA-regulated welfare benefit plan do not usually vest.] In passing ERISA, Congress determined that requiring employers to provide vested employee welfare benefits "would seriously complicate the administration and increase the cost of plans whose primary function is to provide retirement income."

ERISA also contains a statutory command that the written terms of the ERISA plan document will govern any dispute about the plan's benefits. For example, in Sprague v. General Motors Corp., the court considered the challenge of Robert Sprague and 113 other salaried retirees as to the legality of the changes to General Motors' retiree medical plan. Annual deductibles and copays were to be increased. The thrust of Mr. Sprague's complaint was that General Motors had promised to provide retirees with lifetime medical coverage entirely at General Motors' expense. According to Mr. Sprague, once he retired, his lifetime medical benefits vested and General Motors had no right to change them. Four arguments were teed up by Mr. Sprague in support of his claim to unchangeable retiree medical benefits: 1) the unilateral contract theory; 2) the bilateral contract theory; 3) the estoppel theory; and 4) the breach-of-fiduciary-duty theory. The Sixth Circuit rejected all four.

The Unilateral Contract Theory

In his unilateral contract theory, Mr. Sprague contended that General Motors made the following promise at various times and in various plan descriptions: "Your basic health-care coverages will be provided at General Motors' expense for your lifetime." Most of the same booklets, however, also put plan participants on notice of General Motors' right to amend, modify, or terminate the retiree medical plan at any time. Under Mr. Sprague's unilateral contract theory, even an express reservation of the right to amend or terminate a retiree medical plan self-destructs once an employee retires.

Quoting the Supreme Court's decision in Curtiss-Wright Corp. v. Schoonejongen, the Sixth Circuit explained that employers "are, of course, generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans." A retiree medical plan is a welfare benefit plan under ERISA. As vesting of welfare plan benefits is not required by ERISA, an employer's commitment to vest those benefits is not to be lightly inferred; the intent to vest "must be found in plan documents and must be stated in clear and express language." Sprague, 133 F.3d at 400. Thus, under ERISA, the Sixth Circuit held that it is the plaintiff's burden to prove an employer's intent to vest retiree medical benefits.

The Bilateral Contract Theory

Between 1974 and 1988, General Motors offered to its salaried employees a series of early-retirement incentive programs. According to the plaintiffs, the statements General Motors made in connection with these early-retirement incentive programs, and the documents the early retirees signed, created binding bilateral contracts. These contracts, the plaintiffs asserted, vested their retiree medical benefits and were enforceable either as modifications to the health plan or as separate ERISA plans themselves.

The Sixth Circuit made short shrift of this argument:

Congress intended that plan documents and [summary plan descriptions] exclusively govern an employer's obligations under ERISA plans . . . . Therefore, the "clear terms of a written employee benefit plan may not be modified or superseded by oral undertakings on the part of the employer." . . . "Neither can we accept the argument that the plan was modified or superseded either by the written statements of acceptance" signed by some of the named plaintiffs or by the written representations received by some from GM. "That the defendants' statements were made in writing is irrelevant as they do not profess to be plan amendments." . . . The statements of acceptance were not ERISA plans themselves.

The Estoppel Theory

Mr. Sprague's estoppel theory was simple: 1) General Motors had represented to him, both orally and in writing, that he would receive lifetime medical benefits; 2) he reasonably relied upon General Motors' representations by continuing to work for General Motors up to the time of his retirement; and 3) he detrimentally relied on General Motors' promise because he was now receiving diminished retiree medical benefits and could no longer work for another employer to earn satisfactory coverage.

The estoppel theory, however, was presumptively dead on arrival, as the Sixth Circuit had already rejected this same theory in Musto v. American General Corp.

The Breach-of-Fiduciary-Duty Theory

Mr. Sprague's last theory sprang from the Supreme Court's decision in Varity Corp. v. Howe, where the Court held that an employer acted in a fiduciary capacity when making misrepresentations to its employees about their employee benefit plans. Mr. Sprague argued that General Motors failed to affirmatively disclose that it might reduce retiree medical benefits and thus breached its fiduciary duty to early-retirement plan participants. The Sixth Circuit found, however, that Mr. Sprague could not prove this negative:

A breach of fiduciary duty claim could not survive because no court of appeals has imposed fiduciary liability for failing to disclose information that is not required to be disclosed. At least three circuits have held that there is no fiduciary duty to disclose plan changes and benefits or even the termination of a plan before those actions become official. A fortiori, there can be no fiduciary duty to disclose the [possibility] of a future change in benefits. [Citations omitted.]

Summary

Whether or not there is an agreement to vest retiree medical benefits turns on the language contained within the ERISA plan, its related documents, the employer's conduct concerning these benefits, and any underlying collective bargaining agreement. In many circuits, if the language in a collective bargaining agreement states that retiree medical benefits are to be provided "during the term of the agreement" or can be otherwise amended or terminated, then the benefits are not vested.[36] Moreover, "all courts agree that if a document unambiguously indicates whether retiree medical benefits are vested, the unambiguous language should be enforced. To support a claim in a few circuits on the issue of whether a retiree has received vested retirement benefits, a retiree does not have to point to unambiguous language in the labor contract. "It is enough to point to written language capable of reasonably being interpreted as creating a promise on the part of the employer to vest the recipient's benefits." The courts are guided by general principles of contract interpretation. For instance, all courts agree that if a document unambiguously indicates the employer promised that retiree medical benefits are vested, the unambiguous language should be enforced according to its terms.[39] The circuits disagree, however, as to the proper interpretation of documents containing ambiguous language. While all circuits will admit extrinsic evidence to elucidate ambiguities, they differ as to the burdens, presumptions, and thresholds that they apply

What follows is a brief survey of each circuit's approach to interpreting ambiguous references to retiree medical benefits in ERISA plan documents and collective bargaining agreements.

First Circuit. The First Circuit has rejected Yard-Man's "inference." It will consider extrinsic evidence to ascertain the intent of the parties without applying any presumption favoring vesting.[40] As the First Circuit explained in NSTAR:

We fear that the use of presumptions may interfere with the correct interpretation, under normal LMRA rules, of the understanding reached by the parties. Secondly, the use of presumptions may also be inconsistent with the dynamics of bargaining set up under the National Labor Relations Act, 29 U.S.C. §§ 151–169, and the LMRA. Third, Congress could easily have created interpretive presumptions by statute had it cared to do so. The text of the LMRA does not contain any statutory presumptions.

Employees bear the burden of proving that their retiree medical benefits are vested and cannot be changed by the company.

In Senior, the plaintiff retirees contended that their company's Early Retirement Program agreement ("ERP") promised lifetime dental benefits. The parties' underlying collective bargaining agreement, however, contained a reservation by the company of its right to change benefits at any time. In its analysis, the court considered the parties' "related agreements, the practices in the company, and the custom and usage as to retiree dental benefits" as extrinsic evidence.[43] The court also announced a rule that "a claim for benefits based on a labor agreement under the LMRA . . . creates no presumption regarding vesting."[44] The court reasoned that the parties negotiated the ERP with the provisions of the collective bargaining agreement in mind; therefore, the employees knew that the benefits in the ERP were subject to termination at any time.

Second Circuit. The Second Circuit has not adopted the Yard-Man "inference," but has developed its own approach. To reach a trier of fact, an employee need not prove an express promise of lifetime medical benefits by the employer. Rather, "it is enough [to] point to written language capable of reasonably being interpreted as creating a promise on the part of [the employer] to vest [the recipient's] benefits."[45] Such a showing of ambiguity triggers the introduction of extrinsic evidence.

Where a document contains language that could constitute a promise of lifetime medical benefits but contains a general amendment provision, the Second Circuit will not automatically rule in favor of the employer.[46] Rather, the court considers the totality of the communications between the parties to ascertain their intent.

Third Circuit. In the Third Circuit, an employee cannot prevail on a claim for vested welfare benefits unless he or she identifies a clear and express statement by the employer promising such benefits.[47] The "clear and express statement" standard announced in Skinner applies regardless of whether the benefits are provided under a collective bargaining agreement, summary plan description, or other document.[48] This substantial burden on employees renders the Third Circuit an employer-friendly forum, at least when compared to the Second Circuit.

The Skinner opinion explicitly announces the Third Circuit's rejection of the employee-friendly inference announced in UAW v. Yard-Man.[49] The court reasoned that the Yard-Man inference contradicts congressional intent. Adopting an inference in favor of vesting is disharmonious with Congress's specific choice not to provide for the vesting of employee welfare benefits under ERISA.

If a document contains both a promise for lifetime medical benefits and a clause reserving the employer's right to amend or terminate the plan, the reservation-of-rights clause trumps.[50] The document is not rendered ambiguous simply because both types of language are present.

Fourth Circuit. The Fourth Circuit does not follow Yard-Man. In two 1985 cases, the Fourth Circuit stated: "Employer obligations and employee rights, under a collective bargaining agreement, do not survive the expiration of the agreement absent a clear intention of the parties." The Fourth Circuit also requires a clear and express statement providing for vested retiree medical benefits.] Because such benefits constitute "extra-ERISA commitments, courts may not lightly infer the existence of an agreement" to provide them.

The Fourth Circuit in Gable (an ERISA case) found that the relevant plan included language promising lifetime benefits as well as a clause reserving the employer's right to amend the plan. Rather than holding that the presence of both clauses created an ambiguity, the Gable court found that an employer's explicit reservation of a right to amend in the official plan document was more than enough to defeat the employee's claim that his or her retiree medical benefits were unchangeable. The court explained that if it held that "other communications could nullify [the] express written [amendment clause], plan documents would no longer serve to ensure predictability as to employers' future liabilities."

The Fourth Circuit's approach to collectively bargained-for retiree medical benefits is to first look "at the language of the agreement for any clear manifestation of the parties' intent." "[T]he intended meaning of even the most explicit language can, of course, only be understood in light of the context which gave rise to its inclusion." In Keffer v. H.K. Porter Co., the Circuit Court explained that it was obliged to apply the federal common law of labor policyto resolve a collectively bargained retiree medical-benefit dispute. To interpret an ambiguous collective bargaining agreement, the Keffer court indicated it must "consider the scope of other related collective bargaining agreements, as well as the practice, usage and custom pertaining to all such agreements."

A district court within the Fourth Circuit recently rejected a lawsuit by the United Steelworkers claiming that retiree medical benefits were unchangeable. Mr. Chapman claimed ACF Industries' decision to require him to pay a monthly premium and its reduction of the lifetime maximum benefit provided violated LMRA Section 301. The district court found the language in the collective bargaining agreement to be ambiguous. It then reviewed the language in all of the employee benefit agreements between the parties. It found that an insurance agreement dealing with life insurance benefits made it clear that a retiree's life insurance benefit was unchangeable. No similar language could be found with respect to retiree medical-benefit coverage. Had the parties intended the health benefits to vest and continue unchanged after the applicable insurance agreement expired, the language describing retiree medical benefits would have been the same as that found in the life insurance agreement.

Fifth Circuit. This circuit joins the Third and Fourth Circuits in requiring employees to identify clear and express statements promising vested welfare benefits. The Fifth Circuit, however, follows a familiar pattern in examining whether collectively bargained-for retiree medical benefits are vested.[62] In Int'l Ass'n of Machinists and Aerospace Workers, Woodworkers Division v. Masonite Corp., the court found an insurance agreement ambiguous (incorporated by the collective bargaining agreement) that stated retiree medical benefits would be provided "until the death of the retired employee." However, Masonite had also expressly reserved the right in the ERISA plan document to amend or terminate the plan. The court noted that in the absence of a collective bargaining agreement between the parties, the "reservation-of-rights clause granting the company the right to amend or terminate the [p]lan might well end the inquiry in the company's favor."[63] The court recognized, however, that "a reservation-of-rights clause in a plan document . . . cannot vitiate contractually vested or bargained-for rights. To conclude otherwise would allow the company to take away bargained-for rights unilaterally."[64] Several Fifth Circuit decisions have criticized the Yard-Man inference to the extent that it can be read as supporting a presumption in favor of vesting, but they stop short of fully rejecting it.

Sixth Circuit. See the discussion of Yard-Man, Yolton, and Sprague above.

Seventh Circuit. Thanks to Judge Posner, the rules pertaining to retiree medical benefits are clearly discernible in the Seventh Circuit. His opinion in Rosetto v. Pabst Brewing Company contains a succinct summary of the applicable rules that the court applies today.

First, if a collective bargaining agreement is completely silent on the duration of health benefits, a retiree's entitlement to them expires with the agreement. If, however, the plaintiff can show by objective evidence that the agreement is latently ambiguous, then he is entitled to a trial as to the meaning of the agreement. Therefore, the "presumption against vesting . . . kicks in only if all the court has to go on is silence."

Second, if an agreement unambiguously states that the entitlement expires with the agreement, the plaintiff loses as a matter of law unless he can show a latent ambiguity. If he can, he is again entitled to a trial.[68] Third, if there is language in the agreement to suggest a grant of lifetime benefits, and the suggestion is not negated by the agreement read as a whole, the plaintiff is entitled to trial. The plaintiff is therefore not required to identify a clear and express statement promising lifetime benefits; rather, he need only show "suggestive language" that creates a patent ambiguity as to vesting.

Though this was not mentioned in the summary of rules, Judge Posner declined to apply different presumptions to the collective bargaining agreements and ERISA plans.

Eighth Circuit. The Eighth Circuit explicitly rejected the Yard-Man inference in Anderson v. Alpha Portland Industries, finding it "not at all inconsistent with labor policy to require plaintiffs to prove their case without the aid of gratuitous inferences."

The existence, however, of "an agreement or other demonstration of employer intent to vest benefits" is sufficient to trigger the introduction of extrinsic evidence. Any promise to provide vested benefits must be incorporated in some fashion into the formal written ERISA plan or SPD documents.

The court has repeatedly held that an unambiguous reservation-of-rights clause, without more, is sufficient to defeat a claim that welfare benefits are vested.[74] Sloppy language is always a problem. Where the reservation-of-rights clause is ambiguous, or where it conflicts with other plan provisions (such as language promising vesting), the Eighth Circuit (like all of the circuits) considers extrinsic evidence to ascertain what the parties intended.

Ninth Circuit. The Ninth Circuit recognizes that normally lifetime welfare benefits are "extra-ERISA commitments [and] must be found in the plan documents."[75] If, however, retiree medical coverage constitutes a vested benefit under a collective bargaining agreement, that benefit cannot be ended without the retirees' consent. Where a collective bargaining agreement unambiguously limits medical benefits to the term of the agreement, no benefits are vested.

A recent opinion from the Northern District of California provides additional insight into the Ninth Circuit's treatment of retiree medical benefits. In Angotti v. Rexam, Inc., the court noted that medical benefits that are unambiguously limited to the term of a collective bargaining agreement do not survive the expiration of that agreement. However, "a CBA that does not unambiguously limit medical benefits to the term of the agreement does not result in presumptively vested benefits. Nor does such an ambiguous collective bargaining agreement result in a presumption against vested benefits.

Tenth Circuit. There is no inference of vesting because no presumptions about vesting of retiree medical benefits apply in the Tenth Circuit.[81] As with the Third, Fourth, and Fifth Circuits, the Tenth Circuit requires the plaintiff to identify a clear and express statement of vesting within the plan or related documents in order to prevail. The presence of a clear and unambiguous reservation-of-rights clause is sufficient to negate an implied promise of vested benefits.

Eleventh Circuit. There is no Yard-Man inference in the Eleventh Circuit. "Because federal labor policy neither favors nor disfavors the vesting of retirees' health benefits, United Paper Workers International Union v. Champion International, 908 F.2d 1252, 1256 (5th Cir. 1990); Anderson v. Alpha Portland Industries, 836 F.2d 1512, 1517 (8th Cir. 1988), we apply traditional rules of contract interpretation."[84] The Eleventh Circuit ruled in an ERISA case that a plaintiff must establish that "the plan at issue is at least ambiguous with respect to the relevant benefits for which he claims entitlement" before extrinsic evidence will be considered.

As in the Third and Fourth Circuits, a document containing both a reservation-of-rights clause and language promising benefits is not treated as ambiguous. Rather, an unambiguous reservation-of-rights clause trumps other promissory language and will bar the introduction of extrinsic evidence.

Conclusion

While the Sixth Circuit's recent decision in Yolton, supra, provides significant new comfort to employers, the uncertainty about Yard-Man's legacy remains. With no lingering "inference of vesting," retiree medical disputes will begin again with the language found in each contract. If a court finds ambiguity in the terms of a collective bargaining agreement or in the ERISA plan documents, the extrinsic-evidence race will begin. It is a race where employers too often find themselves shackled to the memories of self-interested retirees.

To avoid the quicksand of extrinsic evidence, employers must be vigilant about how they make promises about medical benefits. All statements made about these benefits should be reviewed for clarity and consistency. Populating enrollment forms, summary plan descriptions, plan documents, and collective bargaining agreements with a reservation of the right to amend, modify, or terminate the plan is clearly the best medicine. Plan fiduciaries and plan administrators should be mindful of the importance of the reservation of the right to amend or terminate a plan and perhaps consider using prepared scripts in answering recurring questions about retiree medical benefits.