- Court: United States Supreme Court
- Area(s) of Law: Contract Law
- Date Filed: January 26, 2015
- Case #: 13-1010
- Judge(s)/Court Below: Thomas, J., delivered the opinion for a unanimous Court. Ginsburg, J., filed a concurring opinion, in which Breyer, Sotomayor, and Kagan, JJ., joined.
- Full Text Opinion
Petitioner and Respondent entered into a collectively bargained for pension and insurance agreement wherein Petitioner agreed to pay full healthcare benefits to Respondent retirees. The agreement allowed that the terms would be opened for renegotiation in three years, at which point Petitioner mandated that recipients of healthcare benefits be required to contribute to the insurance. Respondents filed suit, claiming that the initial agreement had created a vested interest in a lifetime contribution-free benefit.
The district court dismissed the case, and the circuit court reversed based on a prior decision where it decided, where there is no specified period for the duration of retiree benefits, the court could infer an intent to vest those benefits for the life of the retiree. On remand, the district court found in favor of Respondent. The Court of Appeals for the Sixth Circuit affirmed. Now the Supreme Court of the United States vacates and remands to the sixth circuit.
The Court holds that the decision needs to be made on ordinary principles of contract law. Despite the reasoning of the circuit court, ordinary principle of contract law would not allow the Court to infer the intent to vest lifetime benefits in collectively bargained for entitlement agreements. Ordinary principles of contract law maintain that collectively bargained for benefits should last for the duration of the agreement.