1-Hour Program

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Overview

February 24, 2015, 2:00 p.m. - 3:00 p.m.

In 1983, the Sixth Circuit drew an inference that retiree health benefits are unlikely to be left up to future negotiations.  Some have referred to this inference as the Yard-Man presumption, referring to the 1983 case that first set forth the inference.  The effect of the Yard-Man presumption, where applied, has been to favor the conclusion that retiree health benefits agreed to in a collective bargaining agreement are vested for life.  

In the case of M&G Polymers USA, LLC v. Tackett, decided last month on January 26, the Supreme Court has stepped in to consider the Yard-Man inference.  In Tackett, the Sixth Circuit had relied on Yard-Man and its rationale to affirm the district court's holding that the Tackett plaintiffs were entitled to lifetime benefits.   

In Tackett, the Court declined to recognize the Yard-Man inference as valid.  Rather, after being harshly critical of the Sixth Circuit's approach, the Court unanimously vacated the decision of the Sixth Circuit, ruling that the Yard-Man inference is "inconsistent with ordinary principles of contract law."  Thus, the Court remanded the case for the application of ordinary principles of contract law. 

The Court's resounding rejection of Yard-Man may not be overly surprising.  In the recent Dudenhoeffer case (involving investment in employer stock by an employee stock ownership plan), the Court refused to accept the decades-old non-statutory “Moench presumption” in favor of plan fiduciaries, and now Tackett rejects the non-statutory Yard-Man inferences that had been drawn by the Sixth Circuit dating back to 1983.   

Questions remain, however, and the details of the correct analytical framework for the analysis after Tackett may not be entirely clear.  Justice Ginsburg, in a concurrence joined in by three other justices, specifically eschews the conclusion that clear and express language is necessary to show that benefits were intended to vest, and states further that vesting may arise from implied terms.  The concurrence also encourages an examination of the entire agreement in question, and identifies certain provisions of potential interest, while ultimately agreeing with the majority that the inquiry must proceed without Yard-Man's "thumb on the scale" in favor of the retirees.   

Please join attorneys from both sides of the Tackett case for a discussion of its background and impact.  Included on the panel will be J. Penny Clark of Bredhoff & Kaiser, PLLC and Allyson N. Ho of Morgan, Lewis & Bockius LLP, who represented the plaintiffs and the defendant, respectively, before the Supreme Court in Tackett.  The discussion will be moderated by Andrew L. Oringer of Dechert LLP, who has hosted our series of Hot Topic Briefings on various ERISA cases as they are decided.   

Topics to be addressed will include: 

  • A discussion of the Yard-Man inference and how it developed over time.  
  • A summary of the background and decision in Tackett.  
  • A discussion of how Tackett may be decided on remand, and what Tackett may mean to pending and future litigation involving retiree health benefits.

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