Disputes over health benefits for union retirees must be decided based on ordinary principles of contract law, the U.S. Supreme Court announced for the second time in three years.

The justices Feb. 20 once again rejected the U.S. Court of Appeals for the Sixth Circuit's way of handling these disputes, which they said was rooted in inferences and assumptions and not the text of the applicable collective bargaining agreements. The result is a victory for CNH Industrial, which was sued for its attempt to modify the health-care benefits it provides for union retirees.

"The justices thought the result was pretty clear," said Ballard Spahr Partner Steven W. Suflas. "I think the real surprise is that the Sixth Circuit was so dogged in trying to create inferences to generate lifetime retiree health benefits."

"In the '90s and the first decade of this century, there was a lot of litigation over retiree health benefits, but that train has kind of left the station at this point. This seems to be the caboose at the end of this litigation train."

"The Supreme Court is giving you very clear mileposts, and they're really looking for express terms that say these benefits are vested or these benefits extend beyond the expiration date of the collective bargaining agreement," he said. "Absent that terminology, these claims will not be viable."

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