Expiration of Agreement Doesn’t End Benefits
Former employees and their labor union filed a class action against an employer's successors seeking to enforce healthcare insurance benefits under a collective bargaining agreement (CBA) and alleging the termination of those benefits violated the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). The Seventh Circuit held the retirees and their families were entitled to lifetime healthcare benefits even though the healthcare agreement that had been negotiated by their union had expired. The CBA provided that covered individuals “shall not have such coverage terminated or reduced . . . notwithstanding the expiration of this Agreement, except as the Company and the Union may agree otherwise.” The court concluded the agreement “unambiguously” provided the retirees with vested healthcare benefits. The Court fortified its position stating that, even if the agreement was viewed to be ambiguous, the parties’ behavior provided enough extrinsic evidence to support the conclusion that the retiree benefits had vested.