With storm clouds threatening in the northeast, the Supreme Court cast a ray of sunlight for employers today by rejecting the use of a problematic inference in adjudicating claims for retiree benefits brought pursuant to collective bargaining agreements. For many years, the Sixth Circuit has been applying the so-called "Yard-Man" inference, named after the decision in 1983 in which it was first crafted. Pursuant to this inference, a collective bargaining agreement with ambiguous terms regarding the duration of a promise of retiree welfare benefits is presumed to contractually "vest" the retirees in these benefits, such that they cannot be removed after the expiration of the agreement. In a unanimous opinion, the Court held that the Yard-Man inference was inconsistent with the application of ordinary principles of contract law and that the inference improperly placed a thumb on the scale in favor of vested retiree rights. In so holding, the Court vacated the Sixth Circuit's opinion, which had upheld a finding for the retirees following a bench trial, and remanded the case for the Sixth Circuit to apply ordinary principles of contract law in the first instance. The case is M&G Polymers USA, LLC v. Tackett, 2015 WL 303218 (U.S. Jan. 26, 2015).
Supreme Court Announces "Wipe-Out" of Yard-Man Presumption in Advance of Storm
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