On its face, the Supreme Court's decision in M&G Polymers USA LLC v. Tackett is routine enough: the very pro-business Roberts Court reverses a lower court ruling that a group of retirees were contractually entitled to health care benefits for life. The majority opinion written by Justice Clarence Thomas is critical of a lower court precedent that it claims leans toward the vesting of retiree health care benefits. What a shame.
The Court's solution is traditional contract principles. Ok, fair enough. Let's start with the traditional contract principle of mutual consideration: the consideration provided by the employee is work, compensation is the consideration provided by the employer. Is there something else to the employer-employee relationship? Is it possible to consider retirement benefits as anything other than deferred compensation?
It is, according to the Supreme Court, although its explanation, shall we say, makes no sense:
In ERISA, Congress specifically defined plans that "result in a deferral of income by employees" as pension plans, and plans that offer medical benefits as welfare plans. Thus, retiree health care benefits are not a form of deferred compensation.
This assertion both misreads ERISA and abuses common sense. But if there are 5 votes for it on the Supreme Court, it just does not matter. The moon, it could be, is made of Green Cheese.
Robert L. Abell
www.RobertAbellLaw.com
