CNH Industrial N. V. v. Reese

In CNH Industrial N.V. v. Reese, the U.S. Supreme Court on February 20, 2018, summarily reversed a Sixth Circuit decision favoring retired employees. The retirees, led by Jack Reese, had sued CNH Industrial under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act, claiming that their collective bargaining agreement provided vested lifetime health insurance benefits. The Sixth Circuit applied an inference that general durational clauses in the agreement intended benefits to vest for life. The Supreme Court found this approach directly contradicted the ordinary contract principles mandated by its prior ruling in M&G Polymers USA, LLC v. Tackett. It held that courts cannot infer vesting from silence or ambiguity; contractual language must clearly and expressly grant lifetime benefits. The case was remanded for further proceedings consistent with Tackett.

The Supreme Court granted certiorari, vacated the judgment of the U.S. Court of Appeals for the Sixth Circuit, and remanded the case. The Court held that the lower court erred by relying on inferences rather than applying ordinary contract interpretation standards requiring clear and express vesting language.

Whether a collective bargaining agreement’s general durational clause can be interpreted to infer vested lifetime retiree health benefits, or whether explicit contractual language is required under ordinary contract principles.

The ruling reinforced strict contractual interpretation for retiree welfare benefits under collective bargaining agreements. By disallowing inferences of vested lifetime benefits, the decision significantly limited future retiree claims, requiring explicit language in contracts. It solidified the precedent set in Tackett, impacting labor relations, corporate liability for legacy benefits, and the financial security expectations of unionized retirees nationwide.