PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MARY QUESENBERRY; PAUL E.
HOLLANDSWORTH; WALTER E.
VIERS; CURTIS L. COX; ROBERT K.
GOAD; SHIRLEY I. TOLBERT, on
behalf of themselves and all other
persons similarly situated;
INTERNATIONAL UNION, UNITED
AUTOMOBILE, AEROSPACE AND
AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA; UNITED
AUTO WORKERS 2069,
No. 10-1491
Plaintiffs-Appellees,
v.
VOLVO TRUCKS NORTH AMERICA
RETIREE HEALTHCARE BENEFIT PLAN;
VOLVO GROUP NORTH AMERICA,
LLC,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Virginia, at Abingdon.
James P. Jones, District Judge.
(1:09-cv-00022-jpj-pms)
Argued: May 13, 2011
Decided: July 11, 2011
Before WILKINSON, KING, and AGEE, Circuit Judges.
2 QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA
Affirmed by published opinion. Judge Wilkinson wrote the
opinion, in which Judge King and Judge Agee joined.
COUNSEL
ARGUED: Thomas Joseph Bender, Matthew John Hank,
LITTLER MENDELSON PC, Philadelphia, Pennsylvania, for
Appellants. Julia Penny Clark, BREDHOFF & KAISER,
PLLC, Washington, D.C., for Appellees. ON BRIEF: Kim-
berly M. Sanchez-Ocasio, BREDHOFF & KAISER, PLLC,
Washington, D.C.; Michael Nicholson, Michael F. Saggau,
Detroit, Michigan, for Appellees.
OPINION
WILKINSON, Circuit Judge:
The question in this case is whether a collective bargaining
agreement permitted Volvo to make unilateral changes to the
health benefits of retirees from its New River Valley assem-
bly plant after the agreement expired. After a jury determined
that the parties did not intend to grant Volvo that power, the
district court ordered the restoration of any health benefits lost
due to Volvo’s changes and enjoined Volvo from making
such modifications in the future. We conclude as a matter of
law that Volvo was not permitted to make unilateral modifica-
tions to the retirees’ health benefits after the expiration of the
collective bargaining agreement unless it followed the mecha-
nism agreed to by both parties in that agreement. Because
Volvo did not and could not employ that mechanism in this
case, we affirm.
I.
The collective bargaining agreement ("CBA") at issue here
was the latest in the long history of negotiations between
QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA 3
Volvo Group North America, LLC ("Volvo") and the union
representing workers at Volvo’s New River Valley assembly
plant ("NRV") in Pulaski County, Virginia. Employees and
retirees from NRV have been represented by the United Auto-
mobile, Aerospace, and Agricultural Workers of America
("UAW") and UAW Local 2069 (collectively, "the Union")
since the mid-1970s. Starting with the 1984 CBA and up
through the 2005 CBA, each collective bargaining agreement
provided that health benefits for pension-eligible employees
"will be continued into retirement with [Volvo] making the
full contribution." None of the agreements reserved a right for
Volvo to modify retiree health benefits unilaterally. Benefits
were subject to some changes, however, in subsequent bilat-
eral agreements. Three different CBAs in the 1990s provided
for health insurance coverage modifications (including both
increases and decreases in benefits, such as an increase in the
co-pay for prescription drugs) that applied both to active
employees and to retirees.
Volvo and the Union agreed to a new collective bargaining
agreement in 2005 that again provided for health benefits,
both for current employees and for employees who retired in
1988 and thereafter. That agreement crystallized the health
insurance coverage terms for retirees in two separate provi-
sions of the 2005 CBA’s Welfare Benefit Program, namely
the Coverage and Cost paragraphs. The former stated gener-
ally that Volvo would "continue coverage under the Volvo-
UAW health, dental and prescription drug programs" for
retiree participants "for the duration of this Agreement."
The Cost paragraph then fleshed out some of the particu-
lars, including the limits on Volvo’s financial obligations
under the Coverage paragraph. Volvo’s liability for retiree
health insurance expenses was limited to an average cost of
$13,606 per year for each non-Medicare-eligible retiree and
$3,292 for each Medicare-eligible retiree. To resolve the
problems posed by potential costs in excess of those caps,
Volvo agreed to create a Voluntary Employees’ Beneficiary
4 QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA
Association (VEBA) trust, to which it was required to contrib-
ute a total of $3.943 million, including $1.585 million on the
last day of the 2005 CBA’s term in 2008. Of that amount,
Volvo in 2005 projected that only $400,000 would be neces-
sary for cumulative above-cap costs until the agreement’s
expiration on January 31, 2008. The VEBA assets were to be
held "for the exclusive purpose of paying all costs incurred by
Retiree Participants under the Volvo Plan that exceed the lim-
its set forth above."
The Cost paragraph then described a negotiated mechanism
to deal with healthcare costs too burdensome even for the
VEBA trust. In the event that the VEBA trust was projected
to be exhausted within a calendar year, Volvo and the UAW
were required to meet to discuss how to reduce healthcare
costs. If those negotiations proved unsuccessful, Volvo could
charge each retiree for any costs over the caps according to
a formula set forth in the Cost paragraph. The provision did
not specify any other relief for Volvo in the event that the
costs of health benefits proved overly burdensome.
The Cost provision initially contained a durational limit
like the Coverage provision, but this was deleted at the
request of the UAW. Volvo later claimed that this deletion
was to prevent redundancy with similar language in the Cov-
erage provision, but a contemporaneous Volvo email did not
explain the deletion under this theory. The Union, however,
had requested its deletion on the grounds that such a limita-
tion would destroy the effectiveness of the VEBA trust, which
it understood to survive the expiration of the agreement.
At the start of the collective bargaining negotiations that
ultimately led to the 2008 CBA, Volvo announced that it
would not engage in negotiations regarding retiree health ben-
efits and that it intended to restructure those benefits unilater-
ally. Volvo did not claim at that point that the VEBA trust
was projected to be exhausted within one year. In response,
NRV employees went on strike for approximately seven
QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA 5
weeks in early 2008, after which the parties agreed on another
collective bargaining agreement on March 17, 2008. The 2008
CBA does not contain a negotiated plan of health benefits for
employees who retired before March 17, 2008, and on
December 31, 2008, Volvo announced that it would unilater-
ally restructure retiree coverage, effective March 1, 2009 for
non-Medicare-eligible retirees and July 1, 2009 for Medicare-
eligible retirees. This restructuring included new deductibles,
increased co-payments and co-insurance, and a new monthly
premium for non-Medicare-eligible retirees. Volvo also termi-
nated coverage for Medicare-eligible retirees and replaced
their insurance with a $3500 annual health reimbursement
account.
On January 21, 2009, plaintiffs filed a complaint under sec-
tion 301 of the Labor Management Relations Act (LMRA)
and section 502(a) of the Employee Retirement Income
Security Act (ERISA) on behalf of a class of several hundred
retirees who had retired before the 2008 CBA’s effective date.
The retirees sought a permanent injunction preventing Volvo
from making any unilateral modifications to retiree health
benefits in the future, and an award of the health benefits the
retirees would have already received but for Volvo’s unilat-
eral changes.
The district court denied Volvo’s motion to strike the jury
demand for the retirees’ LMRA § 301 claim, concluding that
it sounded in law rather than equity. The court concluded that
the ERISA claim was equitable, however, and later made its
own judgment on the ERISA issue under Fed. R. Civ. P. 52.
After trial, the court submitted the LMRA claim to the jury to
decide whether it was the joint intent of Volvo and the Union
that retiree health insurance benefits could not be unilaterally
changed by Volvo after the expiration of the 2005 CBA.
The jury found in favor of the retirees, and the district court
entered judgment on the LMRA claim, stating that "Volvo
and the Volvo Plan are hereby permanently enjoined from
6 QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA
unilaterally terminating or modifying the health care benefits
provided to the Class and are directed and required to restore
such benefits to the extent of any unilateral changes previ-
ously made." The district court later awarded the retirees
attorneys’ fees and ruled in their favor on the ERISA claim
as well.
II.
To determine whether an employer must provide benefits
to its retirees after the expiration of the relevant collective
bargaining agreement, we look to the familiar foundation of
contract law, namely "the parties’ intent as expressed in their
agreement." Keffer v. H.K. Porter Co., 872 F.2d 60, 62 (4th
Cir. 1989). Whether the parties intended the employer’s obli-
gation to provide benefits to survive the collective bargaining
agreement therefore "is primarily a question of contract inter-
pretation." Dist. 29, United Mine Workers v. Royal Coal Co.,
768 F.2d 588, 590 (4th Cir. 1985). And "as with any contract
interpretation, we begin by looking at the language of the
agreement for any clear manifestation of the parties’ intent."
Keffer, 872 F.2d at 62.
III.
Volvo strenuously argues that the language of the 2005 col-
lective bargaining agreement unambiguously forecloses any
obligation to provide retiree health benefits after its expira-
tion. It points specifically to durational language in the Cover-
age paragraph as evidence of the parties’ allegedly clear
intent. That paragraph states in part that Volvo "will continue
coverage under the [Volvo Plan] for the duration of this
Agreement." Were the Cost paragraph not in the agreement,
Volvo would have a compelling point. See Royal Coal, 768
F.2d at 592 (concluding that the durational language in the
collective bargaining agreements at issue absolved the
employer of its obligation to provide health benefits beyond
the term of the agreements). But the view that this one phrase
QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA 7
in this particular collective bargaining agreement conclusively
resolves the issue of when Volvo’s duty to provide retiree
health benefits ends faces several difficulties.
A.
For starters, Volvo’s argument that the durational clause
terminates its obligation to provide retiree health benefits fails
to take account of the 2005 CBA in its entirety and the Cost
paragraph in particular. We must construe contracts "as a
whole," Gresham v. Lumbermen’s Mut. Cas. Co., 404 F.3d
253, 260 (4th Cir. 2005), and the Cost paragraph makes no
sense unless it operates as a limitation on Volvo’s right to
modify benefits beyond the term of the agreement. Specifi-
cally, the Cost paragraph of this collective bargaining agree-
ment contains a negotiated mechanism that explicitly limits
Volvo’s ability to make unilateral changes.
The Cost paragraph, which provides for the VEBA trust in
order to pay for costs in excess of the agreed-upon coverage
limits, allows Volvo to make one relatively minor change to
retirees’ health benefits under certain conditions. The only
unilateral change Volvo may make is to charge the retirees a
monthly premium to cover costs in excess of the agreed lim-
its, and that premium is determined by formula. Even then,
Volvo cannot make changes unless the VEBA is projected to
be exhausted within one year and Volvo and the Union are
unable to agree on benefits reductions to reduce the premium
costs which Volvo pays for the employees.
It is almost inconceivable, however, that this negotiated
mechanism would be triggered during the scope of the 2005
CBA. First of all, Volvo itself projected that the trust would
not be exhausted until 2014, some nine years after an agree-
ment that was contracted to last only three. More importantly,
Volvo was required to make a $1.585 million contribution to
the VEBA on the very last day of the 2005 CBA’s term. It
would be almost impossible to project the VEBA to run out
8 QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA
during the 2005 CBA when roughly 40% of the trust’s corpus
was to be deposited on that final day, and Volvo does not con-
tend that either party contemplated that unlikely scenario. To
contend that the VEBA and its negotiated mechanism were
good only until the expiration of the 2005 CBA thus requires
an overactive imagination.
We find further support for the conclusion that the negoti-
ated mechanism—and therefore the obligation to provide
retiree health benefits—extends beyond the expiration of the
2005 CBA in the fact that the Cost paragraph, unlike the Cov-
erage paragraph, does not contain any language that might
imply a durational limitation. To the contrary, the Cost para-
graph states that Volvo "will pay the cost of continued cover-
age under the Volvo Plan for Retiree Participants." This
provision was initially drafted with the qualification that it
was "for the duration of this Agreement," but the Union
requested that it be removed because it would render the
$1.585 million VEBA deposit on the last day of the 2005
CBA a nullity. Volvo complied with this request, and we will
not read any durational language back into this paragraph.
B.
Despite these difficulties, Volvo relies heavily on our deci-
sion in District 29, United Mine Workers v. Royal Coal Co.
in its argument that the durational language in the Coverage
provision is dispositive. In that case, we interpreted two
sequential collective bargaining agreements which stated that
"[t]he benefits provided [by the employer] shall be guaranteed
during the term of this Agreement" by that employer. 768
F.2d at 590; see also id. at 591. We held that "Royal’s obliga-
tion to provide health benefits and life insurance coverage to
its retired and disabled coal miners . . . does not extend
beyond the expiration of those Agreements." Id. at 592. But
the Royal Coal CBAs contained nothing analogous to the
negotiated mechanism in this agreement, which is meaning-
less if it does not extend past the expiration of the CBA.
QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA 9
Royal Coal thus does not control the interpretation of this
contract.
The bargain that Volvo and the Union adopted in 2005 is,
however, analogous to the collective bargaining agreement
addressed in Keffer v. H.K. Porter Co. There, this Court con-
strued an agreement that provided for retiree health benefits
until those retirees were eligible for Medicare. 872 F.2d at 62.
We found, not unlike in this case, that linking eligibility for
those benefits to an event that would almost certainly occur
after the expiration of the agreement signaled the parties’
intent to continue retirement health benefits notwithstanding
expiration. Id. at 63.
Even more importantly, we found that the parties had quali-
fied the continuation of those benefits by stating that they
would continue until the expiration date "and thereafter, sub-
ject to negotiations between the Company and the Union." Id.
We noted the effect of this language was that "while the bene-
fits continue ‘thereafter,’ the parties may renegotiate to alter
them or perhaps eliminate them altogether. But such action
requires bilateral participation in the alteration or elimination
of the benefits; it does not allow for unilateral action as Porter
contends." Id.
The 2005 collective bargaining agreement between Volvo
and the Union produced just this sort of arrangement. Modifi-
cations to retiree health benefits are permissible, even without
the consent of each retiree. But Volvo cannot modify or ter-
minate those benefits unless the conditions set forth in the
Cost paragraph are met. In particular, Volvo must wait until
the VEBA trust is projected to be exhausted within one year,
and then must negotiate a plan with the Union to bring health
costs down. Only if those negotiations fail or if the Union
refuses to bargain may Volvo modify retiree health benefits
by charging the retirees for excess healthcare costs according
to a formula already determined by the parties in the 2005
CBA. Because none of those conditions were even plausibly
10 QUESENBERRY v. VOLVO TRUCKS NORTH AMERICA
present when Volvo modified the benefits at issue in this case,
the district court was correct to order Volvo to restore the
benefits affected by Volvo’s unilateral changes.*
IV.
If this were an employee welfare benefit plan that Volvo
had voluntarily established under ERISA, Volvo’s contention
that the benefits do not extend past the term of the agreement
would be much different. See Gable v. Sweetheart Cup Co.,
35 F.3d 851 (4th Cir. 1994). But because it is a collective bar-
gaining agreement we are construing, the question is simple:
what did the parties jointly intend? Here, the Cost provision
clearly contemplates a mechanism that remains active beyond
the expiration date of the agreement and therefore as a matter
of law operates as a limitation on Volvo’s right to modify
retiree health benefits unilaterally. We accordingly affirm the
judgment of the district court.
AFFIRMED
*Volvo also argues that the retirees’ ERISA claim fails and that the
retirees were not entitled to a jury trial on the LMRA claim. However,
because we have already determined that the retirees are entitled to the
relief they received below as a matter of law based on their LMRA claim,
and because we "can affirm on any basis fairly supported by the record,"
Eisenberg v. Wachovia Bank, N.A., 301 F.3d 220, 222 (4th Cir. 2002), we
see no reason to overturn the judgment. We note that the district court
awarded attorneys’ fees to appellees, and given the intertwined nature of
the various claims asserted, we see no basis to disturb the award in the cir-
cumstances herein presented.