Poore v. Simpson Paper Company
Filed September 22, 2008
Ninth Circuit Court of Appeal
Cite as 05-36060

Retiree Denied ERISA Benefits as Terminated CBA Defeated Vested Right

Evergreen Mill is owned and operated by Simpson Paper Company. The company (Simpson) had a collective bargaining agreement (CBA) with the Association of Western Pulp and Paper Workers. Clayton Poore worked under the CBA until he took early retirement.

The CBA provided, among others, that early retirees could continue medical coverage that existed at their retirement and the mill “could change their coverage at annual open enrollments on the basis as active employees”. According to the terms, such coverage shall continue until death or age 65.

In addition, the CBA also reserved to Simpson the right to change welfare plan benefits subject to negotiation with the union.

Poore continued to receive medical coverage as a retiree when Simpson closed the mill for economic reasons in 1996. A closure agreement, which terminated the CBA, was negotiated by the company and the union to which Poore belonged.

The negotiated closure agreement provided for retirement health benefits for those then retiring from the active workforce, but did not refer to those who had already retired. In 2004, the company stopped providing retirement health benefits.

As a result, Poore and the other employees filed a suit under the Employee Retirement Income Security Act (ERISA), alleging, “Simpson breached its duties by terminating benefits without the union’s agreement or bargaining to impasse”.

The lawsuit also asserted breach of contract claims under the Labor Management Relations Act (LMRA), arguing that Simpson violated its obligations under the CBAs.

The district court granted summary judgment to Simpson, concluding that Poore had no vested right to the benefits he sought.

Poole sought an appeal to the verdict.

On review, the Ninth Circuit court of appeal dismissed the petition, holding that it lacked subject matter jurisdiction.

The court noted that the parties did not question jurisdiction, but that it had an independent obligation to ensure its existence.

The court found that the district court correctly concluded that Poore’s health benefits were not vested, because in both the CBA and closure agreement, it has the right to change plan benefits at any time, subject to negotiation with the union.

Simpson’s duty to negotiate was not the same as a duty to secure consent. Thus, Poore did not control his continued receipt of benefits.

Further, the CBA in its last effect had two important provisions:

• It specified that all health care participants were subject to the same level of contributions as active employees


• that Simpson was only obligated to pay for retiree health benefits to the same extent that it paid for active employees’ benefits under the same health care plan changes

Thus, none of the rights of retirees to benefits was “unalterable or irrevocable, but rather subject to change by Simpson”.

Still further, the court noted that since Poore’s claim under the expired CBA was not vested, and because his contractual rights no longer existed, his claim for health benefits were “insufficient to invoke LMRA jurisdiction”.

The Ninth Circuit court of appeals dismissed an appeal, noting that it lacked subject matter jurisdiction to review their claims. The court therefore ruled that early retirees covered by a union contract lacked standing under the Employee Retirement Income Security Act because they had no vested rights to retirement health benefits, and therefore their contractual rights to benefits no longer existed.