23-634 Xerox v. Loc. 14A, Rochester Reg’l Joint Bd., Xerographic Div. Workers United
In the United States Court of Appeals For the Second Circuit _________________
August Term 2023 Argued: February 22, 2024 Decided: February 5, 2025
Docket No. 23-634
XEROX CORPORATION,
Petitioner-Appellee,
v.
LOCAL 14A, ROCHESTER REGIONAL JOINT BOARD, XEROGRAPHIC DIVISION WORKERS UNITED,
Respondent-Appellant.
_________________
Before: WESLEY, CHIN, and LEE, Circuit Judges. _________________
Xerox Corporation (“Xerox”) filed a petition, under Section 301 of the Labor Management Relations Act (“LMRA”), for injunctive and declaratory relief against Local 14A, Rochester Regional Joint Board, Xerographic Division Workers United (the “Union”). After the collective bargaining agreement between Xerox and the Union expired, Xerox terminated retiree benefits. The Union argued that Xerox could not unilaterally terminate vested benefits and sought to enforce the expired agreement’s arbitration provision. In its LMRA petition, Xerox sought to stay and enjoin arbitration. The United States District Court for the Western District of New York (Geraci, J.) granted Xerox’s petition, concluding that the Union’s grievance was not arbitrable under the parties’ expired collective bargaining agreement. The district court reasoned that the Union had failed to identify language in the agreement that could be understood to have promised vested benefits beyond the agreement’s expiration, and, regardless, the reservation-of-rights clause in plan documents barred an interpretation that benefits had vested.
On appeal, the Union argues that the district court erred. We agree. First, the Union identified language that could be reasonably understood as guaranteeing benefits beyond the contract’s expiration or as constituting deferred compensation. Second, the reservation-of-rights clause in plan documents did not conclusively bar an interpretation that benefits had vested. To discern the parties’ intent, the appropriate trier of fact would need to consult extrinsic evidence.
Accordingly, we VACATE the district court’s judgment and REMAND for further proceedings. _________________
FOR PETITIONER-APPELLEE: TODD R. SHINAMAN (Michael J. Lingle, on the brief), Nixon Peabody LLP, Rochester, NY.
FOR RESPONDENT-APPELLANT: MICHAEL DOLCE, Hayes Dolce, Buffalo, NY. _________________
WESLEY, Circuit Judge:
This appeal concerns the enforceability of an arbitration provision in an
expired collective bargaining agreement (“CBA”). For decades, Xerox and the
Union entered successive CBAs. That pattern has since ceased. In 2018, Xerox and
2 the Union entered what remains their most recent CBA. That CBA expired in 2021;
there has been no successor agreement.
After the 2018–21 CBA 1 expired, Xerox announced modifications to health
benefits provided to employees who retired before the CBA’s expiration. In
January 2022, Xerox made its modifications effective. By the Union’s count, Xerox
terminated retiree benefits for thousands of retirees and their families. Thereafter,
the Union filed a grievance and demanded arbitration, arguing that the benefits
had vested under a CBA and could not be terminated.
After denying the grievance and refusing arbitration, Xerox filed a petition
in the district court, under Section 301 of the LMRA, to stay and enjoin arbitration
and for declaratory relief. Xerox argued that, as a matter of law, the Union could
not enforce the 2018–21 CBA’s arbitration provision because it had expired. It
acknowledged that an expired CBA’s arbitration provision remains enforceable to
protect vested rights. But Xerox argued that, here, no retiree benefits had vested
as of the last CBA’s expiration. The Union disagreed, pointing to various
1 We refer to this CBA as a “contract” throughout this opinion. To the extent we make limited reference to any other labor agreements (i.e., prior CBAs), we refer to each using the title by which it appears in the record. See infra Section I.A.c. 3 provisions, including a survivor benefits’ clause that plan participation “shall
continue . . . until his or her death.” J. App’x at 199, 231. Xerox responded that the
provisions identified by the Union could not be understood as promising vested
benefits beyond the contract’s duration. Xerox also pointed to a reservation-of-
rights clause in plan documents, arguing that it precluded any interpretation that
the agreement had vested benefits.
The district court agreed with Xerox that the Union’s grievance was not
arbitrable, reasoning that the language identified by the Union could not be
understood to vest retiree benefits beyond the duration of the CBA, and,
regardless, the reservation-of-rights clause barred an interpretation that benefits
had vested.
The Union argues that the district court erred. We agree. The language
identified by the Union can be reasonably understood as guaranteeing benefits
beyond the contract’s expiration or as constituting deferred compensation. In
addition, the reservation-of-rights clause does not conclusively bar an
interpretation that benefits vested.
We therefore vacate the district court’s judgment and remand for further
proceedings.
4 BACKGROUND
I. Factual Background
A. The 2018–21 CBA
In 2018, Xerox and the Union entered their most recent CBA (“the 2018–21
CBA”). The CBA was extensive, covering numerous issues: hours of work, wages,
benefits, strikes, layoffs, seniority, retirement, grievance procedure, and
temporary layoffs, among other topics. Relevant here are the provisions on the
duration of the agreement, grievance procedure, and retirement.
a. Term of Agreement
The 2018–21 CBA became effective on June 11, 2018, and “continue[d] in
force and effect until and including September 30, 2021, and thereafter, from year
to year,” unless either party gave timely written notice “of its intention to have
this Agreement changed, altered, amended or terminated.” J. App’x at 77. The
parties later agreed to extend the CBA until November 30, 2021.
b. Grievance Procedure
The 2018–21 CBA set out a multi-step “Grievance Procedure” for unresolved
complaints, in which the last step was arbitration. At Steps 1, 2, and 3, the parties
would seek to resolve grievances via meetings and written communications. If a
5 grievance was “not satisfactorily settled at Step 3,” then (at Step 4) it could be
“appealed to arbitration” by timely written notice. J. App’x at 67.
c. Retirement
The 2018–21 CBA set forth eligibility requirements and the provision of
benefits for retirees and their dependents in “Schedule H.” Schedule H delineated
four types of benefits: Life Insurance, the Medical Care Plan, the Dental Plan, and
the Flexible Benefit Account. Schedule H described each of these benefits,
providing specific amounts for deductibles, out-of-pocket expenses, and
allowances, and detailing eligibility for coverage based on date of retirement
eligibility and date of retirement, covering employees yet to retire, as well as those
who had retired years earlier. However, Schedule H also stated that “[t]his
Schedule is intended as an outline only and the benefits described are subject to
the detailed terms and conditions of the actual plans or contracts, as well as to the
provisions of applicable state and federal laws.” J. App’x at 120.
As to the Medical Care Plan, Schedule H identified three categories of
coverage: employees who had reached retirement eligibility before 1989 would
receive coverage as described in the 1980–83 Labor Agreement; employees who
were not retirement-eligible before 1989 and who retired between 1989 and 1994
6 would receive coverage as described in the 1989–92 Labor Agreement, with some
modifications; and employees who were not retirement eligible before 1989 and
retired after 1994 would receive a “Benefits Allowance.”
These three coverage categories corresponded to three different plans: (1)
the Xerox Medical Care Plan for Retired Employees (the “Old Plan”); (2) the Xerox
Retiree Health Care Plan (the “New Plan”); and (3) the Xerox Corporation Retiree
Health Reimbursement Plan (the “HRA Flex Plan” or “HRA Plan”). This three-
plan scheme for retiree medical care benefits had originated decades earlier but
had been part of each successive CBA since. The specific plan documents detailing
the three medical care plans were amended and restated over the years; the most
recent versions in the record, and on which both parties rely, are from 2016.
The 2016 Amendment and Restatement for both the Old Plan and the New
Plan stated that retirees and eligible dependents would continue participating in
their respective plans until the retiree ceased paying contributions or being a
retiree, and, upon a retiree’s death, their spouse or domestic partner, provided
they continued making contributions, would continue as a plan participant “until
his or her death.” J. App’x at 199, 231. The 2016 Amendment and Restatement for
7 each of the three plans—the Old Plan, the New Plan, and the HRA Flex Plan—also
contained reservation-of-rights clauses.
B. Post-Expiration Events
The 2018–21 CBA expired on November 30, 2021; the parties have not
entered a successor agreement.
In December 2021, shortly after the 2018–21 CBA expired, Xerox announced
that it was going to modify health benefits for individuals who retired before the
CBA’s expiration. Thereafter, the Union submitted a “Grievance Report,”
claiming that Xerox’s plan would “modify and/or terminate benefits which had
accrued and/or vested under the agreement, causing numerous violations of the
CBA, including but not limited to violations of Article VIII and any other
applicable provisions.” J. App’x at 187. (Article VIII of the 2018–21 CBA was the
section on benefits, which incorporated Schedule H on Retirement.)
Xerox rejected the Union’s grievance, concluding that the “grievance is
without merit because neither the main body of the [CBA] nor the plan documents
incorporated in it by reference contain clear and unambiguous language sufficient
to vest benefits for life under well-established legal precedent.” J. App’x at 9.
8 The Union sought to arbitrate. Xerox declined, noting that the CBA had
expired, and therefore “there is no arbitration provision currently in effect.” J.
App’x at 10. The Union replied with a “Notice of Intent to Arbitrate,” demanding
that Xerox submit to arbitration.
In the meantime, Xerox implemented its plan to modify retiree benefits. By
the Union’s count, more than 2,000 retirees and relatives lost their health and life
insurance benefits as a result.
II. Procedural Background
Upon receiving the Union’s “Notice of Intent to Arbitrate,” Xerox turned to
the district court. Xerox filed a petition, under Section 301 of the LMRA, and a
9 motion, both seeking to enjoin and permanently stay the arbitration, and
requesting declaratory relief. 2
Xerox argued that the Union could not arbitrate its grievance, as a matter of
law, because the 2018–21 CBA’s arbitration provision expired with the CBA, and
the grievance did not involve “any action taken by Xerox that infringes upon any
right that accrued or vested under the CBA.” J. App’x at 11. According to Xerox,
the 2018–21 CBA “lacks clear and unambiguous language sufficient to vest any
benefits for the life of the retiree,” and, in any event, the incorporated plan
documents contained “clear and unequivocal reservation of rights language
permitting Xerox to amend, suspend, or terminate the plan at any time and for any
reason.” Id.
2 Under Section 301(a) of the LMRA, district courts have jurisdiction over “[s]uits for violation[s] of contracts between an employer and a labor organization.” 29 U.S.C. § 185(a). However, a party need not allege a violation by the opposing party to properly invoke Section 301(a) jurisdiction. Black-Clawson Co., Paper Mach. Div. v. Int’l Ass’n of Machinists Lodge 355, Dist. 137, 313 F.2d 179, 181 (2d Cir. 1962). As here, Section 301(a) jurisdiction lies over an action that “alleges compliance with the contract and requests protection by declaratory judgment against improper demands for arbitration.” Id. at 182; cf. Textron Lycoming Reciprocating Engine Div., Avco Corp. v. United Auto., Aerospace & Agric. Implement Workers of Am., Int’l Union, 523 U.S. 653, 658 (1998) (holding that Section 301(a) jurisdiction “does not lie” when the party bringing suit “neither alleges that [the other party] has violated the contract, nor seeks declaratory relief from its own alleged violation”). 10 Xerox also argued, among other things, that there was “no valid agreement
to arbitrate any grievance brought by the Union on behalf of retirees” because the
2018–21 CBA’s “Grievance Procedure” only covered “employees,” not retirees. J.
App’x at 11.
The Union filed an answer, moved to dismiss Xerox’s petition, and cross-
moved to compel arbitration and for injunctive relief pending resolution of
arbitration. The Union argued that plan documents, including the 2016
Restatements of the Old Plan and the New Plan, “contain[ed] language ‘capable of
reasonably being interpreted’ as vesting language, and the dispute must be
resolved by the trier of fact.” J. App’x at 942. The Union pointed to the participant
eligibility and “surviving spouse” clauses, arguing that they promised benefits for
the retiree until the retiree died or got another job, and promised benefits for
eligible surviving dependents until their death. The Union also argued that the
pre-65 “Benefits Allowance” was “fixed under the contract but as yet unsatisfied.”
J. App’x at 948. As to the reservation-of-rights language, the Union argued that it
had not been incorporated into the 2018–21 CBA because “the CBA is an
independent source of retiree benefits and employer contributions to those
benefits.” J. App’x at 956.
11 The district court granted Xerox’s petition and motion to stay arbitration
and for declaratory relief, and denied the Union’s motions. The district court
agreed with Xerox that “the retiree health benefits did not vest pursuant to the
CBA and, thus, [Xerox]’s modification of those benefits after the expiration of the
CBA is not subject to the CBA’s arbitration provision.” Xerox Corp. v. Loc. 14A,
Rochester Reg’l Joint Bd., No. 22-CV-6219-FPG, 2022 WL 17822137, at *5 (W.D.N.Y.
Dec. 20, 2022).
The district court reasoned that the “references to a retiree’s ‘death’” in the
Old Plan and New Plan were insufficient to infer that retiree benefits “vested for
life.” Id. at *4. It noted that the “use of a retiree’s actuarily calculated life
expectancy” to determine benefits under the HRA Plan did “not show an intent to
vest such a benefit” because the “life expectancy language is but one of several
factors used to calculate a retiree’s benefit allowance under the HRA [P]lan.” Id.
Moreover, “in the absence of ‘clear and express’ [vesting] language,” the inclusion
12 of “‘reservation of rights’ language” supported the conclusion that the dispute was
not arbitrable. 3 Id. at *5. The district court entered judgment for Xerox.
The Union timely moved to alter the judgment pursuant to Federal Rule of
Civil Procedure 59(e), arguing that this Court’s decision in Local Union 97, IBEW v.
NRG Energy, Inc., 53 F.4th 42 (2d Cir. 2022) was an intervening change in
controlling law. The court denied the Union’s Rule 59(e) motion, concluding that
NRG Energy had “at most, clarified the legal standard,” and confirming that it had
applied that standard: its prior decision had determined that the Union “did not
meet its burden of identifying ‘written language capable of reasonably being
interpreted’ to create a promise to vest.” J. App’x at 1109. This appeal followed.
DISCUSSION
I. Legal Standards
Because “an expired contract has by its own terms released all its parties
from their respective contractual obligations,” an expired CBA, like any expired
contract, is generally unenforceable. Litton Fin. Printing Div., Litton Bus. Sys., Inc.
3 The district court also concluded that declaratory relief was warranted, stating that (1) the CBA “did not vest lifetime retiree health benefits past the duration of the CBA”; (2) there was “no existing agreement to arbitrate the issues or claims set forth in [the Union]’s arbitration request”; and (3) the Union’s grievance was “not arbitrable under the now- expired CBA.” Xerox, 2022 WL 17822137, at *5. 13 v. NLRB, 501 U.S. 190, 206 (1991). However, “structural provisions relating to
remedies and dispute resolution—for example, an arbitration provision—may in
some cases survive in order to enforce duties arising under the contract.” Id. at
208. In Litton, the Supreme Court explained that
[a] post[-]expiration grievance can be said to arise under the contract only where it involves facts and occurrences that arose before expiration, where an action taken after expiration infringes a right that accrued or vested under the agreement, or where, under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement.
Id. at 205–06.
When a party claims that a right vested under a CBA, “[i]n this Circuit, to
reach a trier of fact, an employee does not have to ‘point to unambiguous language
to support a claim. It is enough to point to written language capable of reasonably
being interpreted as creating a promise on the part of the employer to vest the
recipient’s benefits.’” Am. Fed’n of Grain Millers v. Int’l Multifoods Corp., 116 F.3d
976, 980 (2d Cir. 1997) (alterations adopted) (quoting Schonholz v. Long Island Jewish
Med. Ctr., 87 F.3d 72, 78 (2d Cir. 1996)). In other words, when the CBA’s language
is “reasonably susceptible to interpretation as a promise” to vest, the “ultimate
determination . . . should be left to a trier of fact, likely assisted by extrinsic
14 evidence to clarify the meaning of th[e] ambiguous language.” Devlin v. Empire
Blue Cross & Blue Shield, 274 F.3d 76, 84–85 (2d Cir. 2001).
If a party successfully points to written language capable of reasonably
being interpreted as vesting benefits and also argues that its vesting claim is
arbitrable, then the trier of fact to which the vesting claim would proceed is the
arbitrator. As our former colleague Judge Pooler once noted, courts “need not
determine the merits to find that the grievance is arbitrable.” NRG Energy, 53 F.4th
at 55. 4 Rather, courts need decide only whether the union identified “written
4 In NRG Energy, this Court examined not only the enforceability of an expired arbitration provision, but also the scope of an arbitration provision, or whether it applies to the type of dispute at issue. 53 F.4th at 50–55. In considering the scope issue, NRG Energy applied a two-step framework, classifying the arbitration clause as broad or narrow, and if broad, applying a presumption of arbitration. Id. at 49–50. Xerox argues that “there is good reason to doubt that NRG Energy’s application of a presumption withstands scrutiny under Supreme Court precedent.” Appellee’s Br. at 22. Xerox points us to Local Union 97, IBEW v. Niagara Mohawk Power Corp., 67 F.4th 107, 113 (2d Cir. 2023) (per curiam), in which this Court clarified our standard for invoking a presumption of arbitrability in light of the Supreme Court’s decision in Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287 (2010). To the extent Niagara Mohawk’s clarification is relevant to this case, it relates to Xerox’s secondary argument that, regardless of post-expiration enforceability, the CBA’s grievance procedure did not apply to retirees—an argument the district court did not yet reach, and one which we do not address here. For now, we are concerned only with whether language in the CBA could be reasonably interpreted to have vested benefits, such that its arbitration provision could be enforced post-expiration. In these circumstances, applying a presumption of vesting would amount to applying a presumption of arbitrability. But we do not apply a presumption of vesting; rather, we apply ordinary principles of contract interpretation. See infra at 16–18. 15 language capable of reasonably being interpreted as creating a promise on the part
of the employer to vest the recipient’s benefits.” Id. (quoting Devlin, 274 F.3d at
83). If so, then the underlying vesting claim proceeds to the arbitrator—as the trier
of fact—to conclusively resolve whether benefits had vested, consulting extrinsic
evidence if necessary. See id.
Of course, if the written language of the agreement is not capable of
reasonably being interpreted to vest benefits, then the vesting dispute is done. In
concluding that the dispute is not arbitrable, the court necessarily decides the
underlying merits of the vesting claim. As the Supreme Court explained in Litton,
if the CBA’s language “cannot be said to create a right that vested or accrued
during the term of the Agreement,” 501 U.S. at 210, then the court’s “decision that
the dispute does not arise under the Agreement does, of necessity, determine
that . . . the employees lacked any vested contractual right,” id. at 210 n.4.
Ordinary principles of contract law come into play in determining whether
the language in question is capable of being reasonably interpreted to vest benefits.
See M & G Polymers USA, LLC v. Tackett, 574 U.S. 427, 435 (2015); CNH Indus. N.V.
v. Reese, 583 U.S. 133, 139 (2018) (per curiam). In Tackett, the Supreme Court clarified
that courts must “interpret [CBA]s . . . according to ordinary principles of contract
16 law, at least when those principles are not inconsistent with federal labor policy.”
574 U.S. at 435. Courts cannot “plac[e] a thumb on the scale in favor of vested
retiree benefits.” Id. at 438. Rather, there must be “record evidence” supporting
that inference. Id. at 439. And “when a contract is silent as to the duration of
retiree benefits, a court may not infer that the parties intended those benefits to
vest for life.” Id. at 442.
In Reese, the Supreme Court again emphasized that courts must “apply
ordinary contract principles” when evaluating whether a CBA vested benefits. 583
U.S. at 139. There, the Sixth Circuit had “found ambiguity” by “erroneously
presum[ing] lifetime vesting from silence.” Id. at 137–39. The Court explained
that “when a contract is ambiguous, courts can consult extrinsic evidence to
determine the parties’ intentions,” but a CBA is “not ambiguous unless, after
applying established rules of interpretation, it remains reasonably susceptible to
at least two reasonable but conflicting meanings.” Id. at 139 (alteration adopted)
(internal quotation marks omitted). Mere silence is insufficient to find ambiguity.
Id. at 140.
To enforce an expired CBA’s arbitration provision premised on the CBA’s
promise of vested benefits, we therefore require specific language, not simple
17 silence, that can be reasonably interpreted, under ordinary principles of contract
law, as a promise to vest. There is no blanket presumption of vesting. See, e.g.,
NRG Energy, 53 F.4th at 55; Devlin, 274 F.3d at 84, 85; Multifoods, 116 F.3d at 980. If
we determine that the matter is arbitrable, then the arbitrator, as the trier of fact,
makes the ultimate determination as to whether benefits vested, consulting
extrinsic evidence if necessary. See NRG Energy, 53 F.4th at 55; Devlin, 274 F.3d at
83.
We review a district court’s interpretation of a contract, including an expired
CBA, de novo. Kelly v. Honeywell Int’l, Inc., 933 F.3d 173, 178 (2d Cir. 2019). “[W]e
first consider whether the [C]BA contains language vesting retiree . . . benefits. If
so, we consider whether other contractual provisions—such as a reservation of
rights clause—defeat vesting.” Id. at 179.
18 II. Vesting Language
The Union identified language or incorporated language in the 2018–21
CBA capable of reasonably being interpreted as creating a promise on the part of
Xerox to vest retiree benefits. 5 The district court erred in concluding otherwise.
A. Durational Language in the Old Plan and New Plan
Although contractual obligations generally cease upon termination of the
CBA, parties may provide that “certain benefits continue after the agreement’s
expiration.” Tackett, 574 U.S. at 442 (quoting Litton, 501 U.S. at 207). To support a
claim that an agreement promised vested benefits that would extend past the
contract’s expiration, a party may point to written language that “tie[s] the benefits
that a recipient will receive to that recipient’s lifetime or to an indefinite duration.”
Kelly, 933 F.3d at 180. “For example, contractual language stating that retirees’ life
insurance benefits will remain at a stated level ‘for the remainder of their lives’ can
5 Xerox and the Union disagree about which of their past CBAs and plan documents the Union may rely upon in seeking to identify vesting language. Xerox argues that only the language in the 2018–21 CBA (and incorporated plan documents) are properly considered in this dispute, while the Union contends that we should also consider the language of earlier expired CBAs (and incorporated plan documents). Because we conclude that the Union identified language in the 2018–21 CBA (and incorporated plan documents) that could be reasonably interpreted to vest benefits, we need not and do not resolve whether the Union could also rely on language in earlier documents, either principally or as extrinsic evidence. 19 reasonably be interpreted to ‘create a promise to vest lifetime life insurance
benefits.’” Id. (alteration adopted) (quoting Devlin, 274 F.3d at 85).
Here, the Union identified the following language in the 2016 Amendment
and Restatement for both the Old Plan and New Plan, which the parties agree was
incorporated by reference in Schedule H of the CBA:
[E]ach Retiree . . . continues participation in the Plan . . . until the earlier of the date on which the Retiree ceases to pay the contributions . . . or the close of business on the day the Retiree ceases to be a Retiree . . . .
J. App’x at 197 (emphasis added); see also J. App’x at 199, 224, 229.
In the event of the death of a Retiree while a Participant under this Plan . . . the Eligible Dependent Spouse or domestic partner of such Retiree shall continue as a Participant in the Plan until his or her death.
J. App’x at 199, 231 (emphasis added). The Union argued that these clauses vested
benefits by guaranteeing them until an event that could occur after the 2018–21
CBA’s expiration, namely when the Retiree ceases to pay the contributions, ceases
to be a Retiree, or when the Retiree’s surviving spouse or domestic partner dies.
This Court has previously considered similar, but not identical, language.
In Joyce v. Curtiss-Wright Corp., 171 F.3d 130 (2d Cir. 1999), we considered language
providing for the “‘termination’ of retiree insurance upon a retiree’s ‘death or
20 attaining the age at which he becomes or could become eligible for Medicare.’” Id.
at 134. We concluded that this language could not “reasonably be read as binding
[the employer] to vest the benefits at issue.” Id. The retirees had “fail[ed] to
identify language that affirmatively operates to imply vesting.” Id. at 135.
By contrast, in Kelly, we had “little trouble” concluding that a bargaining
agreement contained “affirmative lifetime language.” 933 F.3d at 180. There, we
concluded that language providing that “retired employees and surviving spouses
shall continue to receive” medical coverage “for the life of the retiree or surviving
spouse” showed “the parties’ intent to secure medical coverage for qualifying
retirees’ lifetimes.” Id. (emphasis omitted).
The language the Union identified here is capable of reasonably being
interpreted as a promise to vest benefits. Joyce and Kelly turned on whether there
was “affirmative” language that implied vesting. Joyce, 171 F.3d at 135; Kelly, 933
F.3d at 180. This distinction explains why the negative implication that benefits
would “terminate upon death” failed to indicate vesting in Joyce, while the
affirmative implication that benefits “shall continue for life” did point to vesting in
Kelly.
21 It follows that, in this case, the affirmative language stating that a surviving
spouse “shall continue” as a plan participant “until” death, and that living retirees
“continue” as participants “until” they stop contributing or being retirees, could
be reasonably interpreted as vesting benefits beyond the CBA’s expiration. As in
Kelly, this language could be read to affirmatively “assign a specific duration to
retirees’ medical coverage that extends beyond the duration of the contract[].” 933
F.3d at 183.
In concluding that the language here is capable of reasonably being
interpreted to promise vested benefits that extend beyond the CBA’s expiration,
we find support from our sister circuits. The Fifth and Eighth Circuits have
described “until death” language as “highly probative of [an] intent to vest
benefits.” Int’l Ass’n of Machinists & Aerospace Workers v. Masonite Corp., 122 F.3d
228, 232 (5th Cir. 1997) (quoting Anderson v. Alpha Portland Indus., Inc., 836 F.2d
1512, 1518 (8th Cir. 1988)); see also Tackett, 574 U.S. at 444 (Ginsburg, J., concurring)
(confirming that relevant to determining “whether the parties intended retiree
health-care benefits to vest” would be a “‘survivor benefits’ clause instructing that
if a retiree dies, her surviving spouse will continue to receive the retiree’s health-
22 care benefits until death or remarriage” (alterations adopted) (internal quotations
omitted)).
Similarly, the Fourth and Ninth Circuits have reasoned that “where a CBA
links eligibility for a particular right ‘to an event that would almost certainly occur
after the expiration of the agreement’—e.g., turning 65 or becoming eligible for
Medicare—such linkage ‘signals the parties’ intent to continue retirement health
benefits notwithstanding expiration.’” Alday v. Raytheon Co., 693 F.3d 772, 785 (9th
Cir. 2012) (quoting Quesenberry v. Volvo Trucks N. Am. Retiree Healthcare Benefit
Plan, 651 F.3d 437, 441 (4th Cir. 2011) (alteration adopted)); see also Poore v. Simpson
Paper Co., 566 F.3d 922, 924, 927 (9th Cir. 2009) (holding that where “coverage
would continue until the retiree ‘became eligible for Medicare, attained age 65, or
until death, whichever occurs first,’” the retirees “stated at least a colorable claim
that they have a right to benefits which survived the expiration of the remainder
of the agreement” (alterations adopted)).
Xerox points us to Grove v. Johnson Controls, Inc., 694 F. App’x 864 (3d Cir.
2017), and Crown Cork & Seal Co. v. Int’l Ass’n of Machinists & Aerospace Workers,
501 F.3d 912 (8th Cir. 2007). But in those cases, the Third and Eighth Circuits
merely concluded that the language “continues until your death” was not
23 “necessarily” or “explicit[ly]” vesting language, and thus did not consider, as we
do here, whether other language in the contract rendered a vesting interpretation
unreasonable. Grove, 694 F. App’x at 868 (“[T]he phrases referring to a retiree’s
‘death’ are not necessarily durational in nature . . . .”); Crown Cork, 501 F.3d at 918
(holding that the provision promising coverage “until death” was “not explicit
vesting language”). Only after considering other language in the agreements did
those courts conclude that the “continues until your death” language had failed to
vest lifetime benefits. Crown Cork, 501 F.3d at 918; Grove, 694 F. App’x at 869–70;
see also Cherry v. Auburn Gear, 441 F.3d 476, 483–86 (7th Cir. 2006) (similarly
reasoning that other contract terms may reveal that “lifetime benefits” were not
“vested benefits”).
Even the Sixth Circuit, perhaps the greatest skeptic of the idea that language
that “promises to ‘continue’ providing benefits” amounts to a promise of vested
benefits beyond the contract’s duration, recognizes the possibility that it may.
Cooper v. Honeywell Int’l Inc., 884 F.3d 612, 620 (6th Cir. 2018). In Cooper, the Sixth
Circuit considered language providing that benefits would continue “until age 65”
and emphasized that “when a CBA provision promises to ‘continue’ providing
benefits, we can assume only it guarantees benefits until the agreement expires,
24 nothing more.” Id. (alteration adopted) (internal quotation marks omitted).
However, the Sixth Circuit clarified that there was “no hard-and-fast rule that a
provision cannot delineate eligibility for retiree benefits during the CBA’s
operation and also serve to vest benefits beyond the CBA’s duration,”
acknowledging that there could be “clues . . . from the CBA supporting that
intent.” Id.
To be sure, we do not understand any circuit to have suggested that
promising to continue benefits until death, or some other future event, is absolute
or always vesting language. Nor do we today. Our task is only to see if it is a
reasonable conclusion. Here, providing coverage that will “continue until death,”
or until some other event likely to occur after the CBA’s expiration, can be
reasonably, though not necessarily, interpreted to promise vested benefits that
extend beyond the CBA’s expiration.
B. Deferred Compensation in the HRA Flex Plan
The Union also argued that language in the CBA’s description of the HRA
Flex Plan was capable of being reasonably interpreted to have vested benefits,
during the term of the 2018–21 CBA, that remained yet unsatisfied. Schedule H
25 provided that for certain “Pre-65 retirees,” the “Benefits Allowance” consisted of
the “Basic Allowance” and the following:
To the Basic Allowance will be added a Service Component in an amount equal to $20 times total years of service with the Company up to a maximum of 30 years and a LifeCycle Assistance Program Component based on the employee’s forfeited balance in the LifeCycle Assistance Program spread over the retiree’s expected lifetime using accepted actuarial assumptions (this amount will be included in the retiree’s Benefits Allowance each year).
J. App’x at 121. The Union argued that this provision provided for a “Benefits
Allowance” that accrued or vested during the term of 2018–21 CBA because it
increased with additional years of service and could be the result of having chosen
to save a benefit for retirement instead of spending it while employed. We
conclude that the Union’s interpretation is a reasonable one.
The Supreme Court has recognized that a benefit or pay may “constitute[] a
form of deferred compensation that created a right that vested or accrued during
the term of the agreement.” NRG Energy, 53 F.4th at 50. In Nolde Brothers v. Local
No. 358, Bakery & Confectionery Workers Union, 430 U.S. 243 (1977), the Supreme
Court held that a “[u]nion’s claim for severance pay under the expired collective-
bargaining agreement is subject to resolution under the arbitration provisions of
that contract.” Id. at 255. The union had argued that the severance pay was “in
26 the nature of ‘accrued’ or ‘vested’ rights, earned by employees during the term of
the contract on essentially the same basis as vacation pay, but payable only upon
termination of employment.” Id. at 248. Notable support for “the [u]nion’s
position that severance pay was nothing more than deferred compensation” was
“[t]he fact that the amount of severance pay to which an employee [was] entitled
under the collective-bargaining agreement varie[d] according to the length of his
employment and the amount of his salary.” Id. at 248 n.4.
By contrast, in Litton, the Supreme Court rejected a union’s attempt to
characterize a layoff provision as deferred compensation. 501 U.S. at 209–10.
There, the agreement provided that “in case of layoffs, lengths of continuous
service will be the determining factor if other things such as aptitude and ability
are equal.” Id. at 209. The union in Litton argued that this consideration of
seniority “create[d] a form of earned advantage, accumulated over time, that can
be understood as a special form of deferred compensation for time already
worked.” Id. The Supreme Court disagreed, explaining that the layoff order “was
to be determined primarily with reference to ‘other factors such as aptitude and
ability,’” which “do not remain constant, but change over time,” and “cannot be
27 said to vest or accrue or be understood as a form of deferred compensation.” Id.
at 210.
Here, we conclude that the “Benefits Allowance” provision is capable of
being reasonably interpreted as “constitut[ing] a form of deferred compensation
that created a right that vested or accrued during the term of the agreement.” NRG
Energy, 53 F.4th at 50. The allowance is increased by a “Service Component” that
equals $20/year of service, with a 30-year cap. Thus, as with the severance pay
considered in Nolde, the “Benefits Allowance” to which an eligible pre-65 retiree is
“entitled under the collective-bargaining agreement varies according to the length
of his employment.” See 430 U.S. at 248 n.4.
Also added was the “LifeCycle Assistance Program Component,” which
consisted of the remaining balance in the employee’s “LifeCycle” account,
disbursed yearly based on their actuarial life expectancy. Because the “LifeCycle”
account was a benefit available during employment, but could be used for
retirement if the employee retired before age 65, we conclude that it too could be
reasonably viewed as deferred compensation for work already performed.
The district court, however, rejected the Union’s “contention that the use of
a retiree’s actuarily calculated life expectancy” vested benefits, reasoning that the
28 “life expectancy language is but one of several factors used to calculate a retiree’s
benefit allowance under the HRA plan.” Xerox, 2022 WL 17822137, at *4. Xerox
agrees.
We agree that an agreement’s use of an actuarial calculation of life
expectancy, alone, does not suggest a promise to vest lifetime benefits. But this
fails to confront the Union’s argument here. The Union views the “Benefits
Allowance” for pre-65 retirees as the severance pay in Nolde, emphasizing that it
was dependent on the retiree’s years of service, as well as on benefits that a retiree
earned and saved while employed.
The district court was also correct to observe that the allowance had
multiple components. But here, the only other component was the simple addition
of another fixed-dollar amount set by the CBA. The order of layoffs in Litton was
not deferred compensation because it primarily considered factors that “cannot be
measured on some universal scale, but only by matching an employee to the
requirements of an employer’s business at that time.” 501 U.S. at 210. Unlike
Litton’s layoff provision, the allowance’s incorporation of years of employment or
remaining unused benefits was not conditional, discretionary, or based on a
subjective assessment.
29 Because the total “Benefits Allowance” for pre-65 retirees varies based on
length of employment and a balance of benefits that accrued during employment,
we conclude that it is capable of being reasonably understood as deferred
compensation that vested during the term of the 2018–21 CBA. 6
III. Reservation-of-Rights Language
The 2016 Amendment and Restatement for each of the three plans—the Old
Plan, the New Plan, and the HRA Flex Plan—contained the following reservation-
of-rights clause:
The Company specifically reserves the right to amend, suspend or terminate the Plan described herein at any time and for any reason.
6 The Union also argues that the retiree life insurance provision could be reasonably interpreted to have vested life insurance benefits for life. The district court did not explicitly consider this argument, apparently because it was not raised below, or at least before the district court had entered judgment. In any event, we disagree. The Union relies on NRG Energy, which this Court decided shortly before the district court entered judgment. In NRG Energy, this Court concluded that a union’s dispute over “‘grandfathered’ life insurance” was arbitrable under an expired agreement because it could be reasonably interpreted as a promise to vest life insurance benefits. 53 F.4th at 54–55. Here, though, the life insurance provision does not include the term “grandfathered” or any other durational language. The Union’s argument relies solely on the nature of life insurance, in that it is not payable until death. NRG Energy does not help. NRG Energy was clear that “other than the word ‘grandfathered’ there [was] no specific durational language indicating that the life insurance benefit vests for life.” Id. at 55. By the Union’s logic, a grant of life insurance for a limited duration could nevertheless be interpreted to extend beyond that duration. Under ordinary principles of contract law, this cannot be. 30 J. App’x at 206, 238, 279. The district court agreed with Xerox that, even if the
2018–21 CBA could otherwise be interpreted to vest benefits, this reservation-of-
rights clause barred a conclusion that benefits vested. We are not convinced.
This Court has considered how a reservation-of-rights clause affects the
possibility that an employer still promised vested benefits, but not in
circumstances quite like these. 7 In Multifoods, we considered a union’s argument
that the summary plan description (“SPD”) for a welfare benefits plan had
provided vested retiree benefits. 116 F.3d at 982–83. Because the parties had CBAs
stating that the employer would provide medical insurance to retirees and that the
“SPD supplied the terms of that coverage,” the retirees’ Section 301 claims arising
out of the CBAs would “succeed or fail based on the language of the SPD.” Id. at
982. Ultimately, we concluded “that the SPD could not reasonably be interpreted
as promising vested benefits.” Id. (Unlike this case, the union identified no
affirmative durational language or anything suggesting deferred compensation.)
7 In Kelly, we considered a company’s argument that “a benefit-specific cancellation clause . . . prevent[ed] the retirees’ medical benefits from vesting and [was] the functional equivalent of a reservation of rights clause.” 933 F.3d at 180. But we concluded that the cancellation clause did not in fact reserve the company’s right to terminate or amend benefits. Id. at 182. 31 Although this conclusion was “sufficient to dispose of [the] plaintiffs’
argument, we note[d] that the SPD also expressly reserved [the employer]’s right
to ‘terminate’ the plan,” and observed “that if an employer has not promised
vested benefits in a SPD, and the employer expressly reserves the right to
terminate the plan in the SPD, benefits promised in the SPD are not vested.” Id.
We noted, however, that we were “not faced with the question of how a document
should be interpreted when it includes a general statement that all the benefits
provided under the plan could be amended or terminated but also includes
specific terms which could reasonably be interpreted as promising vested retiree
benefits.” Id. at 982–93. Because the SPD “could not reasonably be interpreted as
promising vested benefits,” we did not address “whether a specific promise of
vested benefits can be defeated by a general reservation of the right to amend or
terminate a plan.” Id. at 983.
Later, in Abbruscato v. Empire Blue Cross & Blue Shield, 274 F.3d 90 (2d Cir.
2001), we considered a contractual vesting claim brought by retirees under the
Employee Retirement Income Security Act of 1974 (“ERISA”), arising solely out of
plan documents and communications, not a CBA. One group of retirees relied on
a single SPD. Confronted with “SPD language that both appears to promise
32 lifetime life insurance coverage . . . and clearly reserves [the employer]’s right to
amend or terminate such coverage,” we decided the question left open in
Multifoods. Id. at 99. “Because the same document that potentially provided the
‘lifetime’ benefits also clearly informed employees that these benefits were subject
to modification, we conclude[d] that the language contained in the [SPD] [was]
not susceptible to an interpretation that promises vested lifetime life insurance
benefits.” Id.
However, another group of retirees relied on materials that were
“susceptible to interpretation as a promise of vested benefits.” Id. at 98. Like the
SPD, these materials included both a provision of lifetime benefits and a reservation
of rights, but, unlike the SPD, the reservation-of-rights provisions were not
“unambiguous.” Id. For example, the “Voluntary Separation Opportunity
Program” (“VSOP”) provided for a “lifetime” life insurance benefit, but also
“reserve[d] the right to amend and/or terminate the VSO Program at any time for
any purpose.” Id. at 97. We concluded that this reservation did not
“unambiguously reserve[] [the employer]’s right to reduce the life insurance
benefits provided by the VSOP.” Id. at 98. Instead, we reasoned that “this
language [was] capable of being interpreted to mean that [the employer] merely
33 reserved the right to change the program for those individuals who have not
already retired under the terms described, not the right to alter the described
benefits for those individuals who had retired under those terms.” Id.
Here, if the Union’s vesting claim arose exclusively out of the plan
Restatements, our reasoning in Abbruscato would likely dictate that the
reservation-of-rights clause barred an interpretation that other language in the
same Restatement promised vested benefits. As with the SPD in Abbruscato, the
reservation-of-rights is unambiguous within the Restatement itself—it clearly
states that Xerox can “amend, suspend or terminate the Plan described herein at any
time and for any reason.” J. App’x at 206, 238, 279 (emphasis added); see
Abbruscato, 274 F.3d at 98–99 (considering SPD clause providing that the company
“reserves its right to amend each of the Plans at any time” (emphasis omitted)).
But the Union’s claim that its retirees are entitled to vested benefits does not
arise solely out of the plan Restatements; rather, the Union argues that its retirees
are entitled to vested benefits under the CBA. In relation to a bargained-for
agreement—which outlined retiree benefits that would be “subject to the detailed
terms and conditions of the actual plans or contracts”—the reservation-of-rights
clause in the plan Restatements—permitting Xerox to nevertheless modify or
34 terminate “the Plan described herein at any time and for any reason”—fails to
remain unambiguous. J. App’x at 120, 206, 238, 279.
The district court and Xerox point us to cases in other circuits. But reviewing
those cases confirms our conclusion that the combination of language we have
here, in these circumstances, is ambiguous. The varying reasoning from our sister
circuits indicates that there are a number of different ways to read a plan’s
reservation-of-rights clause consistently with a CBA, and here, it is unclear which
of these interpretations the parties intended.
For starters, some circuits have concluded that CBA language cannot be
interpreted to guarantee vested benefits past the CBA’s expiration when an
incorporated plan document includes a reservation-of-rights clause. In Cooper,
cited by the district court, the Sixth Circuit considered a union’s claim that a
collective bargaining agreement had promised benefits beyond the agreement’s
expiration, until age 65. 884 F.3d at 614. The Sixth Circuit rejected the claim,
concluding that a reservation-of-rights clause in an incorporated medical plan was
“manifestly inconsistent with vesting” because “by definition, vested benefits may
not be unilaterally terminated.” Id. at 621. The Sixth Circuit chose to read the
reservation-of-rights clause “consistently with the CBA,” which, according to the
35 Sixth Circuit, meant that the employer “retains the right to terminate retiree
healthcare benefits, but only after the expiration of the [CBA].” Id.
In Crown Cork, the Eighth Circuit reasoned that a plan’s reservation-of-rights
provision defeated a union’s claim that a survivor benefits’ clause, promising that
benefits would continue until death, had vested benefits in a collective bargaining
agreement. 501 F.3d at 918. And in Grove, the Third Circuit concluded that “‘broad
and unequivocal’ reservation of rights clauses require us to resolve the vesting
analysis in the company’s favor,” and therefore, even assuming that “phrases
referring to an [a]ppellant’s ‘death’ are durational in nature, the collective
bargaining agreements’ ‘reservation of rights clauses overcome the promise of
lifetime benefits.’” 694 F. App’x at 869 (alterations adopted) (quoting In re Unisys
Corp. Retiree Med. Benefit “ERISA” Litig., 58 F.3d 896, 903-04 & n.11 (3d Cir. 1995)).
The Fifth Circuit, however, has exercised greater caution, recognizing that
“a reservation-of-rights clause in a plan document, which allows a company to
amend or terminate a plan at any time, cannot vitiate contractually vested or
bargained-for rights.” Hunter v. Berkshire Hathaway, Inc., 829 F.3d 357, 363 (5th Cir.
2016) (internal quotation marks omitted). “To conclude otherwise would allow
the company to take away bargained-for rights unilaterally.” Id. The Fifth
36 Circuit’s observation originated in a case like that here—a union argued that
retiree benefits had vested under a CBA where there was “until death” language
in an incorporated benefits agreement, while the employer relied on a plan
document’s reservation-of-rights clause to argue that the benefits were not vested.
Masonite, 122 F.3d at 233. In Masonite, the Fifth Circuit reasoned that “[i]n the
absence of the CBAs, the Plan’s reservation-of-rights clause granting the company
the right to amend or terminate the Plan might well end the inquiry in the
company’s favor. A reservation-of-rights clause in a plan document, however,
cannot vitiate contractually vested or bargained-for rights.” Id. The Fifth Circuit
concluded that the “until death” language was ambiguous as to vesting, and
consideration of extrinsic evidence of intent was necessary. Id. If the agreement
had in fact “vested retiree benefits,” then the reservation-of-rights clause could not
“divest retired employees of those benefits.” Id.
Like the Fifth Circuit, the Ninth Circuit has recognized the complexity of
trying to square a reservation-of-rights clause, permitting unilateral modification
and termination, with a bargained-for agreement. The Union points us to Alday v.
Raytheon, 693 F.3d 772 (9th Cir. 2012), in which the Ninth Circuit concluded that a
CBA had incorporated plans’ reservation-of-rights provisions only with respect to
37 some, but not all, aspects of the benefit scheme. Id. at 795. Because the clauses
referred only to the “Plan” and “Benefit Program,” and not the CBAs, their scope
was “limited to the Plans and incorporated Benefit Programs.” Id. at 791. The
Ninth Circuit concluded that “[t]he CBAs leave the designation of the precise
medical benefits provided, and the procedures for obtaining them, to the Plans,
and the Plans permit the Employer to modify the Plans accordingly.” Id. at 791–
92. But the Plan provisions did not affect, because they did “not purport to affect,
the contribution obligations imposed by the CBAs.” Id. at 791.
Xerox urges us to conclude that the 2018–21 CBA’s incorporation of the
plans’ “detailed terms and conditions” included the “reservation of rights,” and
that the reservation “appl[ied] to the benefits ‘outlined’ in the CBA,” such that it
eliminates an interpretation that benefits vested. Appellee’s Br. at 36. But Xerox
fails to explain why we should equate the ability to modify or terminate “the Plan
described herein” with the ability to modify or terminate benefits outlined, or
incorporated as “terms and conditions,” in the CBA. J. App’x at 120, 206, 238, 279.
Moreover, accepting Xerox’s preferred interpretation of the reservation-of-rights
clause would suggest that, even during the term of the 2018–21 CBA, Xerox could
have terminated bargained-for retiree benefits. The language does say “at any
38 time and for any reason.” J. App’x at 206, 238, 279. This would suggest that the
CBA’s promise of retiree benefits was illusory, meaning Xerox’s performance
under the CBA was purely a function of whim. See 3 R. Lord, Williston on Contracts
§ 7:7 (4th ed. 2024) (describing illusory promises).
In general, courts “avoid constructions of contracts that would render
promises illusory because such promises cannot serve as consideration for a
contract.” Tackett, 574 U.S. at 440. We share the Fifth Circuit’s hesitancy to
understand “a reservation-of-rights clause in a plan document, which allows a
company to amend or terminate a plan at any time, [to] vitiate contractually vested
or bargained-for rights.” Hunter, 829 F.3d at 363 (internal quotation marks omitted).
To be sure, it may be possible to collectively bargain for a “privilege that
could be unilaterally abrogated at the employer’s discretion.” Alday, 693 F.3d at
790 n.20; see also Tackett, 574 U.S. at 441 (“[A] promise that is ‘partly’ illusory is by
definition not illusory.”). For example, in United Mine Workers v. Brushy Creek Coal
Co., 505 F.3d 764 (7th Cir. 2007), the Seventh Circuit considered a CBA promising
benefits “for life” and a plan’s reservation-of-rights clause, and concluded that the
union had bargained for “lifetime” retiree benefits that could be terminated by the
employer at any time. Id. at 767. The Seventh Circuit explained that “[t]erminable
39 benefits for life are benefits that go on regardless of the age of the worker or how
long ago he retired, but that cease if the plan conferring those benefits ends.” Id.
But in Brushy Creek, the CBA had explicitly stated that “the specific
provisions of the plans will govern in the event of any inconsistencies between the
general description and the plans.” Id. Here, the CBA does not contain a similarly
“broad subordination clause.” See Alday, 693 F.3d at 790 n.20 (noting that a CBA
could provide for a “privilege that could be unilaterally abrogated at the
employer’s discretion,” either “explicitly or through a broad subordination clause
such as the one in Brushy Creek,” but declining to “read such an authorization into
a CBA when it does not appear there”).
For its part, the Union suggests that it never agreed to the incorporation of
the reservation-of-rights clause. But just as we are not convinced that we may
simply conclude that the reservation-of-rights clause was incorporated wholesale
to allow unilateral termination of retiree benefits at any time, we are not convinced
that we may simply conclude that the reservation-of-rights clause was not
incorporated at all. Perhaps one of these interpretations is correct, but overall, we
are confronted with ambiguity. There are numerous reasonable ways to interpret
the language and terms we have here, and it is unclear from the language alone
40 which of these interpretations the parties intended. See Reese, 583 U.S. at 139
(noting that a contract is ambiguous if “[it] remains reasonably susceptible to at
least two reasonable but conflicting meanings”).
Because the reservation-of-rights clause merely states that Xerox can modify
or terminate “the Plan described herein,” we could surmise, as did the Ninth
Circuit when faced with similar language, that the clause could plausibly be
interpreted to mean that Xerox may “modify the benefits plans so long as such
modifications are reasonably commensurate with the benefits originally provided
under the CBA.” Alday, 693 F.3d at 788 n.18. Another possible interpretation is
that suggested by the Sixth Circuit—that Xerox could modify or terminate the
plans, but only after the CBA’s expiration. See Cooper, 884 F.3d at 621. And yet
another possible interpretation is that suggested by the Fifth Circuit and our
reasoning in Abbruscato—that Xerox could modify or terminate the plans at any
time, but not benefits that had already accrued or vested. See Hunter, 829 F.3d at
363; Masonite, 122 F.3d at 233; Abbruscato, 274 F.3d at 98. In this scenario, the clause
could be interpreted to mean that Xerox “merely reserved the right to change” the
Plan “for those individuals who ha[d] not already retired under the terms
described, not the right to alter the described benefits,” either in the text of the
41 CBA itself or as incorporated, “for those individuals who had retired under those
terms.” Abbruscato, 274 F.3d at 98.
A more specific CBA or reservation-of-rights clause could have clarified the
parties’ intent. But here, how a court would know, without consulting extrinsic
evidence, that the parties intended one of these reasonable interpretations and not
another is unclear to us. See Tackett, 574 U.S. at 438–39 (cautioning against
assessments “too speculative and too far removed from the context of any
particular contract to be useful in discerning the parties’ intention”).
In sum, we cannot read this CBA and say with certainty whether or not the
parties intended vested retiree benefits. We conclude, however, that the Union
has identified language capable of being reasonably interpreted to promise vested
benefits that extend beyond the CBA’s duration, or that constitute deferred
compensation, and we are not persuaded that the broad reservation-of-rights
clause in the plan Restatements resolves the ambiguity. To discern the parties’
intent here, consulting extrinsic evidence of intent may be necessary. If the
Union’s grievance is indeed arbitrable, this would be a task for the arbitrator. 8
8 Because we conclude that the Union identified language capable of being reasonably interpreted to have vested retiree benefits, we vacate the district court’s judgment. We
42 CONCLUSION
For the reasons set forth above, we VACATE the district court’s judgment
and REMAND for further proceedings.
therefore need not and do not reach the Union’s additional argument that the district court’s entry of declaratory judgment was procedurally improper. As previously noted, we also decline to reach Xerox’s alternative argument that the CBA’s grievance procedure cannot be invoked by retirees. See supra at 15 n.4. On remand, the district court may consider this and any other remaining issues in the first instance. 43