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

Abstract

The United States Supreme Court purported to apply "ordinary contract principles" in its decision reversing the Sixth Circuit Court of Appeals in M&G Polymers USA v. Tackett . The Sixth Circuit had held that plaintiffs, retired employees of M&G, were entitled to lifetime healthcare benefits under their union's agreement with M&G. According to the Supreme Court, the Sixth Circuit wrongly relied on a false set of "inferences" established in International Union v. Yard-Man, Inc. to find that "in the absence of extrinsic evidence to the contrary, the provisions of [the collective bargaining agreement] indicated an intent to vest retirees with lifetime benefits." The Supreme Court therefore remanded the case for a determination under "ordinary contract principles," 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 "ordinary contract principles." In doing so, the Article suggests how courts should proceed in contract cases like M&G. I will argue that "ordinary contract principles" should have led the Court, not to abandon what the Supreme Court called the "Yard-Man inferences," but to treat them as probative, along with all other evidence concerning the duration of healthcare benefits. Because of the Supreme Court's mistakes, its attempt to clear up the Sixth Circuit's treatment of the duration of retiree healthcare benefits undoubtedly failed. More litigation is likely inevitable.

Keywords: contract principles, inference, presumption, healthcare benefits, vesting of benefits, interpretation, gap filling, textualist, contextualist, agreement, collective bargaining agreement