United States: Supreme Court Docket Report - May 5, 2014

On May 5, 2014, the Supreme Court granted certiorari in two cases of interest to the business community:

  • Labor Management Relations Act—Construction of Collective-Bargaining Agreements—Vesting of Retiree Health-Care Benefits
  • Telecommunications Act—Local Government Permitting for Wireless Service Facilities—Requirement that Denial be "In Writing"

Labor Management Relations Act—Construction of Collective-Bargaining Agreements—Vesting of Retiree Health-Care Benefits

The Labor Management Relations Act ("LMRA"), also known as the Taft-Hartley Act, permits labor organizations to bring claims against employers for violations of collective-bargaining agreements ("CBAs"). See 28 U.S.C. § 185. Employees and unions often enter into CBAs that provide the employees with health-care benefits upon retirement. If benefits are determined to have "vested" irrevocably in favor of the retiree, then the employer cannot modify or terminate the retiree's eligibility for those benefits even if the CBA itself terminates. The courts of appeals have been deeply divided over the interpretive rules that should be applied in LMRA cases to determine whether retiree health-care benefits provided under a CBA have vested. For example, they disagree over whether a CBA that is silent regarding the duration of health-care benefits should be construed to provide for continuation of benefits after termination of the CBA, or whether the CBA must include affirmative language to that effect if such vesting is to occur.

Today, the Supreme Court granted certiorari in M&G Polymers USA, LLC, et al., v. Tackett, No. 13-1010, to address the effect of a CBA's language about the duration of retiree health-care benefits on whether those benefits vest.

The respondents are retirees who worked for the predecessor-in-interest to petitioner M&G Polymers, and also the retirees' spouses and their labor union. After the company notified the retirees that a provision in a new CBA required them to contribute partially for the cost of their health benefits, the retirees filed a class action alleging that their benefits had vested under the CBA then in effect, and that they were therefore entitled to benefits for life without any contribution requirement. In an earlier round of litigation, the district court dismissed the claims, but the Sixth Circuit reversed, applying a presumption that benefits in a CBA vest in favor of retirees.

On remand, the district court concluded after a bench trial that the retirees' health benefits had vested, in light of language in the CBA referring to a "full Company contribution towards the cost of benefits." The company had contended that certain letters purportedly requiring the employees to contribute to health-benefit costs above a certain amount were part of the CBA. The district court concluded that they were not, and issued a permanent injunction reinstating the retirees' eligibility for lifetime health-care benefits. The Sixth Circuit affirmed, concluding that the district court did not clearly err in interpreting the CBAs that had been in effect before the company's announcement. The court of appeals agreed with the district court's "presumption that, in the absence of extrinsic evidence to the contrary, the agreements indicated an intent to vest lifetime contribution-free benefits" to the retirees.

M&G Polymers' petition for certiorari also presented a question under the Employee Retirement Income Security Act of 1974, but the Court limited its grant of certiorari to the question of how to interpret the CBA under the LMRA.

Whether health benefits have vested under a CBA may have a tremendous impact on anticipated costs and future bargaining flexibility for an employer with a unionized work force. The resolution of this case—which will clarify the interpretive standard that courts apply to determine whether health-care benefits have vested—will therefore be significant to all such employers.

Absent extensions, which are likely, amicus briefs in support of petitioner or in support of neither party will be due on June 26, 2014, and amicus briefs in support of the respondents will be due on July 28, 2014.


Telecommunications Act—Local Government Permitting for Wireless Service Facilities—Requirement that Denial be "In Writing"

Section 332(c)(7)(B)(iii) of the Telecommunications Act of 1996 ("the Act") requires that a local government's decision to deny a request to construct or modify a "personal wireless service facility"—such as a cellular tower—be "in writing and supported by substantial evidence contained in a written record." The Supreme Court granted certiorari today in T-Mobile South, LLC v. City of Roswell, Georgia, No. 13-975, to decide whether a local government can satisfy that statutory requirement with a letter or other document stating that a party's application has been denied but offering no reasons for the denial.

In 2010, petitioner T-Mobile South, LLC ("T-Mobile") applied to the city government of Roswell, Georgia, for a permit to construct a cellular tower on a vacant parcel of land. At a public hearing on the application, members of the city council expressed a variety of concerns about the application, which ranged from perceived aesthetic problems with the proposed tower to questions about whether the tower would be capable of providing power for 911 services. The city council unanimously voted to deny T-Mobile's application and notified the company of the decision in a letter sent two days later. The letter stated that T-Mobile's application had been denied and indicated how to obtain the minutes of the city council hearing, but the letter itself did not indicate any rationale for the council's decision.

The Eleventh Circuit held that this letter satisfies the Act's "in writing" requirement, because the letter advised the company of the denial in writing and referred to the record of the public hearing, which record contained "all of the reasons for the [City Council's] action."  731 F.3d 1213, 1219-20. In so holding, the court expressly rejected the reasoning of the First, Sixth, Seventh, and Ninth Circuits, which have held that the Act requires that the "writing" informing a party that its application has been denied be separate from the general administrative record and itself contain a sufficiently detailed explanation for the denial to permit a reviewing court to determine whether the local government's rationale is supported by substantial evidence.

The question of which interpretation of Section 332(c)(7)(B)(iii) is correct is important to companies in the wireless industry, which frequently apply to local governments across the country for permits to construct or modify cellular towers. The statutory requirement that a local government denying such an application produce a document, separate from the administrative record, that clearly explains the basis for the denial facilitates efficient judicial review of permitting decisions. Relaxing that statutory requirement would make it more difficult for wireless companies to obtain prompt judicial review of permit denials and would thus impede companies' efforts to build out their networks and meet the growing demand for personal wireless services.

Absent extensions, which are likely, amicus briefs in support of petitioner or in support of neither party will be due on June 26, 2014, and amicus briefs in support of respondent will be due on July 28, 2014.

Today, the Supreme Court also invited the Solicitor General to file a brief expressing the views of the United States in one case of interest to the business community:

Federal National Mortgage Ass'n v. Sundquist, No. 13-852: The question presented is whether a state can restrict a national bank's exercise of its fiduciary powers in connection with real property in that state if the bank is authorized to act as a fiduciary by the Comptroller of the Currency and not prohibited from doing so by the (different) state in which the bank is "located" under 12 U.S.C. § 92a and 12 C.F.R. § 9.7.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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