is that an employer can unilaterally modify retiree healthcare to accommodate economic even when the contracting parties made an agreement which insulate the did not “realities” employer from those If is read broadly—if it is not limited to its and Reese “realities.” “context” are witnessing the demise of foundational tenets of American contract law. “facts”—we Vested Contract Rights Cannot Be Altered Without Retiree Consent The majority departs from and 30 years of Reese II Pittsburgh Plate Glass, Yard-Man, Sixth Circuit precedent. Under retirement rights may not be Pittsburgh Plate Glass, “vested altered without the pensioner’s consent.” Under benefits vested upon the Yard-Man, “once employee’s retirement, are interminable.” says: benefits have vested, then retirees Maurer “If must agree before the benefits can be modified, even by a subsequent CBA between the employer and active employees.” As suggests, a CBA may address vicissitudes” Loral “future by allowing the employer to change vested benefits on agreement” or with union “mutual but an arrangement” must be to” in the CBA vesting; changes in before “consent,” “such “agreed vested benefits be imposed unilaterally by the employer or by the courts.” “cannot When post-IPO (Reese) retirees retired under the 1990 and 1995 CBAs, their rights vested in exactly the same manner as the rights of the pre-IPO (Yolton) retirees. Those vested rights, whatever they were, could not be altered without consent of the individual retirees, even by a subsequent agreement of the active employees and CNH, and certainly not by CNH its “on own.” Bilateral Contracts Are Subject Only To Bilateral Modification Once mutually agreed upon by contracting parties, mutual agreement is required to modify a bilateral contract. In Judge Sutton recited the traditional rule that existing Prater, “an contract cannot be unilaterally modified.” He wrote that this rule applies equal force to “with collective-bargaining agreements.” In Judge Sutton applied this general contract rule in Prater,
is that an employer can unilaterally modify retiree healthcare to accommodate economic “realities” even when the contracting parties made an agreement which did not insulate the employer from those “realities.” If Reese is read broadly—if it is not limited to its “context” and “facts”—we are witnessing the demise of foundational tenets of American contract law. Vested Contract Rights Cannot Be Altered Without Retiree Consent The Reese II majority departs from Pittsburgh Plate Glass, Yard-Man, and 30 years of Sixth Circuit precedent. Under Pittsburgh Plate Glass, “vested retirement rights may not be altered without the pensioner’s consent.” Under Yard-Man, benefits “once vested upon the employee’s retirement, are interminable.” Maurer says: “If benefits have vested, then retirees must agree before the benefits can be modified, even by a subsequent CBA between the employer and active employees.” As Loral suggests, a CBA may address “future vicissitudes” by allowing the employer to change vested benefits on “mutual agreement” or with union “consent,” but “such an arrangement” must be “agreed to” in the CBA before vesting; changes in vested benefits “cannot be imposed unilaterally by the employer or by the courts.” When post-IPO (Reese) retirees retired under the 1990 and 1995 CBAs, their rights vested in exactly the same manner as the rights of the pre-IPO (Yolton) retirees. Those vested rights, whatever they were, could not be altered without consent of the individual retirees, even by a subsequent agreement of the active employees and CNH, and certainly not by CNH “on its own.” Bilateral Contracts Are Subject Only To Bilateral Modification Once mutually agreed upon by contracting parties, mutual agreement is required to modify a bilateral contract. In Prater, Judge Sutton recited the traditional rule that “an existing contract cannot be unilaterally modified.” He wrote that this rule applies “with equal force to collective-bargaining agreements.” In Prater, Judge Sutton applied this general contract rule in
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