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The Supreme Court’s Application of \u27Ordinary Contract Principles\u27 to the Issue of the Duration of Retiree Healthcare Benefits: Perpetuating the Interpretation/Gap-Filling Quagmire

By Robert A. Hillman


The United States Supreme Court purported to apply \u22ordinary contract principles\u22 in its decision reversing the Sixth Circuit Court of Appeals in M\u26G Polymers USA v. Tackett . The Sixth Circuit had held that plaintiffs, retired employees of M\u26G, were entitled to lifetime healthcare benefits under their union\u27s agreement with M\u26G. According to the Supreme Court, the Sixth Circuit wrongly relied on a false set of \u22inferences\u22 established in International Union v. Yard-Man, Inc. to find that \u22in the absence of extrinsic evidence to the contrary, the provisions of [the collective bargaining agreement] indicated an intent to vest retirees with lifetime benefits.\u22 The Supreme Court therefore remanded the case for a determination under \u22ordinary contract principles,\u22 and without the benefit of the inferences, what the parties’ intentions were with respect to the duration of retiree healthcare benefits. This Article documents the various errors of the Supreme Court in applying \u22ordinary contract principles.\u22 In doing so, the Article suggests how courts should proceed in contract cases like M\u26G. I will argue that \u22ordinary contract principles\u22 should have led the Court, not to abandon what the Supreme Court called the \u22Yard-Man inferences,\u22 but to treat them as probative, along with all other evidence concerning the duration of healthcare benefits. Because of the Supreme Court\u27s mistakes, its attempt to clear up the Sixth Circuit\u27s treatment of the duration of retiree healthcare benefits undoubtedly failed. More litigation is likely inevitable

Topics: M\u26G Polymers USA v. Tackett, Contract principles, Collective bargaining agreements, Vesting of benefits, Retiree healthcare benefits, Contracts, Labor and Employment Law
Publisher: Scholarship@Cornell Law: A Digital Repository
Year: 2017
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