CA1: Understanding Coffin v. Bowater

Since I didn’t have time last week to look at Coffin v. Bowater, Nos. 06-1964, 06-2101, here is my view of it.  This case deals with the liability of a parent company for the retirement benefits owed to former employees of its subsidiary which it bought in 1992 and later sold in 1999.  The sale agreement, included a clause in which “Bowater explicitly retained responsibility for the pensions of GNP workers who had retired between 1992 and the date of sale”  After the sale, in 2003, “Bowater consolidated its benefit plans under an umbrella plan whose coverage did not extend to [the] retirees.”  As such, even transactional lawyers need to take notice.  The plaintiffs make not only ERISA claims, but also under the Management Relations Act, 29 U.S.C. § 141 ("LMRA"), arguing that Bowater's denial of benefits breached collective two different bargaining agreements ("CBA"s).  While the District Court is affirmed on a mixed grant of summary judgment, what the District Court did is not particularly relevant.

If you really like justice, you will keep reading.

The rejects the argument that there is an automatic termination of an ERISA plan when a subsidiary is sold.  Instead, ERISA’s procedural requirements must still be complied with to terminate an ERISA plan.  Likewise the sale documents didn’t comport with ERISA’s requirements.  Not only did they lack specific “magic words” but they also didn’t include any non-magic words.

However, regarding the consolidation of plans in 2003, there is a bit of a different issue.  The court acknowledges that there is a ongoing issue regard the proper standard of review under Denmark v. Liberty Life Assurance Co., 481 F.3d 16, 19 (1st Cir. 2007) (our coverage here).  However, in interpreting the documents, the First finds that even under a de novo standard, the Bowater’s interpretation to be more persuasive. There is some bull in there about how the arguments made regarding the correct way to interpret it were not valid. 

The court resolves the labor law issues by saying that the plaintiffs have not provided a good reason to introduce extrinsic evidence.  The First appears to be clarifying some kind of specialized parol evidence rule that I am not quite familiar with – but referring to a Seventh Circuit case.

Stephen Rosenberg comments here.