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SCOTUS May Consider Circuit Split on Retirement Plan Vesting

As more and more employers in the United States are shying away from providing permanently vested benefits to their employees and retirees, a circuit split has erupted regarding the interpretation of ambiguous provisions governing collectively bargained retiree health care benefits. As is often the case when two U.S. courts of appeal reach conflicting answers to the same question, the Supreme Court may now need to intervene to settle the disparity.??

On February 20th, 2014 the U.S. Supreme Court was asked to review Tackett v. M&G Polymers, USA, LLC, and in particular, the following details:??

  • In Tackett, United States Court of Appeals for the Sixth Circuit found that a lack of a stated duration regarding a collectively bargained employee retirement plan raised the following presumption: that the plan was a vested right that cannot be renegotiated at a later date and that survives the duration of the collective bargaining agreement.??
  • The U.S. Court of Appeals for the Third Circuit takes the opposite stance, following the rule that collectively bargained retiree health plans are only vested when the collective bargaining agreement explicitly states so.??
  • Other circuits have taken positions that fall on various points of the spectrum in between these two extremes.??

The circuit split has made it so that the resolutions of litigation on this issue have been unacceptably determined by the location in which a particular case takes place, and that two cases with virtually identical facts may have diametrically opposed resolutions based purely upon geographic location. While the Supreme Court has not yet agreed to hear the case, employment law attorneys who handle employee benefits and collective bargaining issues in the Washington, DC metro area should watch with interest to see how this unfolds.

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