Thomas Temme, individually v. Bemis Company, Inc.

Hon. Theresa L. Springmann, United States District Judge å
for the Northern District of Indiana, sitting by designation.
In the
United States Court of Appeals
For the Seventh Circuit
No. 09-3374
THOMAS TEMME, individually and
as representative of a class of persons
similarly situated, et al.,
Plaintiffs-Appellants,
v.
BEMIS COMPANY, INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 2:08-CV-00090—J.P. Stadtmueller, Judge.
ARGUED FEBRUARY 22, 2010—DECIDED SEPTEMBER 13, 2010
Before KANNE and WILLIAMS, Circuit Judges, and
SPRINGMANN, District Judge.å
WILLIAMS, Circuit Judge. For over twenty years, a
small group of 62 retirees, former plant maintenance
workers and their spouses, have been receiving their

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2 No. 09-3374
health care coverage through Hayssen Manufacturing
Company (“Hayssen”) and its successor, Bemis Com-
pany, Inc. (“Bemis”) as a result of a 1985 Plant Closing
Agreement. In 2005, Bemis changed the insurance
provider of its medical plan and made changes to deduct-
ible and co-pay amounts related to medical care and
prescription drugs. In 2007, Bemis also informed the
retirees that it would no longer provide a prescription
drug benefit. The retirees then sued under the Labor-
Management Relations Act, 29 U.S.C. § 185(a), and the
Employee Retirement Income Security Act (“ERISA”), 29
U.S.C. § 1132, alleging that the 2005 and 2007 changes
breached the agreement negotiated by an employer and
a labor organization. The district court held that the
Plant Closing Agreement included no promise of lifetime
benefits to the retirees and granted summary judgment
to Bemis. However, we find that the parties’ agreement
was to provide lifetime benefits to retirees and remand
the case to the district court for further proceedings on
the question of whether Bemis breached its agreement
by making the changes to the retirees’ medical benefits.
I. BACKGROUND
Since Bemis prevailed on summary judgment, we
recount the facts in the light most favorable to the class
represented by Thomas Temme, the party against
whom the motion under consideration was decided.
Bassiouni v. F.B.I., 436 F.3d 712, 721 (7th Cir. 2006). Hayssen
and the United Automobile Aerospace and Agricultural
Implement Workers of America and its Local No. 1423

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No. 09-3374 3
Union (“the Union”) were parties to a series of collec-
tive bargaining agreements covering the production
and maintenance workers at the Hayssen facility in
Sheboygan, Wisconsin. The last collective bargaining
agreement negotiated between the parties was an agree-
ment covering the period from 1982 to 1985. When
this 1985 Collective Bargaining Agreement (“CBA”)
expired on June 30, 1985, a strike ensued. The strike
continued through the summer, and Hayssen eventually
decided to close its Sheboygan plant and relocate
its manufacturing operations.
In connection with this plant relocation, the parties
negotiated a Plant Closing Agreement (“Closing Agree-
ment”) with the goal of “embodying the full and
complete terms and conditions regarding the effects of
the termination of [Hayssen]’s manufacturing opera-
tions and the termination of employment for all em-
ployees represented by the Union.” The first three para-
graphs of the Closing Agreement terminated the em-
ployment relationship between union employees who
retained seniority under the CBA and Hayssen, termi-
nated the strike, and terminated the bargaining relation-
ship between Hayssen and the union. Paragraph 4 con-
cerned the termination of benefits. Paragraph 4(a)
modified the pension plan and provided for a “vested”
termination of the plan. Paragraph 4(b) referred to the
CBA and listed the fully satisfied obligations and claims
under the CBA. Paragraph 4(c) explained the calcula-
tion of severance pay and the necessity of executing
a release as a condition for receiving the severance pay.
Paragraph 5 contained a general statement releasing the

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4 No. 09-3374
company from claims arising under the CBA and an
agreement that no requests would be made to Hayssen for
any benefits beyond that provided by the Closing Agree-
ment. Finally, Paragraph 6 stated that the Closing Agree-
ment is the full and complete agreement between the
parties, superseding and voiding any prior agreements
such as the CBA “except and only to the extent that
reference to the same may be necessary to effectuate the
provisions of this agreement.”
One provision in Paragraph 4 concerned medical bene-
fits. Because its meaning is the focus of the litigation
between the parties, we recite the language of para-
graph 4(d) in full:
(d) Health/Medical Benefits—Employees termi-
nated under the provisions of this agreement with
the exception of those eligible employees who
apply for retirement benefits by 12/31/85, will be
allowed to continue their present Blue Cross/
Blue Shield Medical coverage by paying the full
monthly premium for a period of 12 months (1/1/86
to 1/1/87) or until they become covered by another
medical insurance plan, whichever is sooner. If
such an employee is covered as a dependent
under another medical insurance plan, the Blue
Cross/Blue Shield plan would be the secondary
payer. If an individual becomes covered under
another plan within the 12 month period, his/her
eligibility under the Blue Cross/Blue Shield plan
will cease immediately and there will be no co-
ordination of benefits.

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No. 09-3374 5
The premium rates for such coverage are cur-
rently $72.50 per month for single coverage and
$178.14 per month for family coverage. These
premium rates have been historically reevaluated
by Blue Cross/Blue Shield on July 1 of each year.
Employees who elect to continue their Blue
Cross/Blue Shield coverage will also be subject
to paying whatever the full monthly premiums
are on 7/1/86. Employees electing to continue
medical coverage as described above must
submit by mail to the Company post marked by
the 10th of each month, a check or money order—
no cash—for the full monthly premium in effect.
If an employee fails to follow any part of the
procedure in the above paragraph without excep-
tion, i.e., meeting the 10th deadline, submitting
by mail or submitting a check or money order,
such employee’s eligibility to continue medical
coverage will cease immediately.
Retired Employee Medical Benefit
Individuals who attain age 60 and have at least
six years of continuous service by 12-31-85, and
who elect to commence their retirement benefits
by 12-31-85, will be eligible for the retired em-
ployee medical benefit. Individuals who attain
age 58 or 59 by 12-31-85 and who indicate by 12-31-
85, their intent to commence retirement benefits
by age 60 will be eligible for the retired employee
medical benefit. If an employee becomes eligible
for medical insurance coverage under another

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6 No. 09-3374
plan, the Blue Cross/Blue Shield plan will be-
come the secondary payer. If an individual is
covered as a dependent under another medical
insurance plan, then the Blue Cross/Blue Shield
plan would be the secondary payer.
The retirement benefit that the Closing Agreement
makes retirees eligible for is not delineated in the
Closing Agreement itself. In the CBA, however, two
provisions define the health insurance coverage. Section
9.01 of the CBA continues the “Hospital, Surgical and
Medical Insurance” to which employees are entitled
from the previous CBA, and adds some additional bene-
fits. These additional benefits, effective July 1, 1982, in-
clude “two (2) fifty dollar ($50.00) deductibles per
family per year” and “[o]ne hundred percent (100%)
coverage for physicians’ home and office calls and pre-
scription drugs after the deductibles are met.” In full,
the next section of the CBA provides:
9.02. Retired Employee Medical Benefit. The
medical benefit provided retirees, their spouses
and dependents shall be the same as defined in
Section 9.01, except that benefits are provided
under the “Medicare Carve-Out” program, sub-
ject to the terms of the master insurance contract.
In the event of the death of the retired employee,
their dependent spouse will retain coverage until
such time as they remarry or qualify for other
primary coverage.
The following conditions and terms apply
to eligibility for the Retired Employee Medical
Benefit:

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No. 09-3374 7
a. The employee must be “retired” and must
meet the conditions of a Retired Employee as
defined in the Hayssen Retirement Plan and/or
Pension Agreement, whichever applies.
b. Must enroll in Medicare Plans A and B when
the employee becomes eligible.
Following the closing of its Sheboygan plant, Hayssen
provided its retirees, both those who retired before the
plant closing and those who were added to the retiree
pool by the Closing Agreement, with medical benefits
at the levels defined by the CBA. Bemis acquired
Hayssen in 1996, and continued to provide retirees
with these medical benefits. In the fall of 2004, Bemis
notified the retirees that effective January 1, 2005, the
plan would be offered under CIGNA (instead of Blue
Cross/Blue Shield) and that the deductibles would be
raised to $250 from the $50 listed in § 9.01 of the CBA.
In the fall of 2006, Bemis notified the retirees that effec-
tive January 1, 2007, the medical plan would eliminate
all prescription drug coverage.
Thomas Temme, representing the class of retirees who
received the retiree medical benefit through the Closing
Agreement, brought this class action suit alleging that
Bemis breached its agreement to provide retirees with
vested welfare benefits. The district court certified the
class, and designated Thomas Temme and his wife,
Shirley Temme, as class representatives. Both parties
moved for summary judgment, and the district court
granted summary judgment to Bemis. The plaintiffs
appeal.

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8 No. 09-3374
II. ANALYSIS
A. A lifetime retiree medical benefit was the parties’
intent.
We review the district court’s grant of summary judg-
ment de novo, with the familiar standard that summary
judgment should be granted if there is no genuine
issue of material fact and the record shows that the
law entitles the moving party to judgment. Chaklos v.
Stevens, 560 F.3d 705, 710 (7th Cir. 2009).
The parties dispute whether they intended to create
a lifetime entitlement to health benefits in their agree-
ment. To resolve this contract dispute, we look to the
labor contract in question and apply federal principles
of contract construction. Cherry v. Auburn Gear, Inc., 441
F.3d 476, 481-82 (7th Cir. 2006); Bland v. Fiatallis N. Am.,
Inc., 401 F.3d 779, 783 (7th Cir. 2005); Diehl v. Twin Disc,
Inc., 102 F.3d 301, 305 (7th Cir. 1996). A contract’s meaning
is a matter of law; where there is no contractual am-
biguity, there is no need for extrinsic evidence and no
factual dispute that precludes summary judgment. Diehl,
102 F.3d at 305. When interpreting contracts, terms
are given their “ordinary and popular” meaning, GCIU
Employer Retirement Fund v. Chi. Tribune Co., 66 F.3d 862,
865 (7th Cir. 1995), the document is “read as a whole
with all its parts given effect,” and related documents
are read together. Bland, 401 F.3d at 783. The contract
language is ambiguous if there is more than one rea-
sonable interpretation of it, and only if the ambiguity
is not clarified elsewhere in the document will a court
resort to extrinsic evidence of the parties’ intent. Id. at 784.

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No. 09-3374 9
Here, there are two potentially relevant documents
that make up the agreement between the parties: the
Closing Agreement and the last collective bargaining
agreement negotiated between the parties. Because of
this, we must consider, in addition to general contract
principles, whether a right to lifetime health benefits is
granted to retired workers by a terminated collective
bargaining agreement. See Rossetto v. Pabst Brewing Co.,
Inc., 217 F.3d 539, 541 (7th Cir. 2000) (listing cases con-
sidering the question of “when a right to health
benefits that is granted to retired workers by a collec-
tive bargaining agreement . . . survives the termination
of the agreement.”). Under ERISA, employee benefit
plans are classified as either welfare benefit plans or as
pension plans. 29 U.S.C. §§ 1002(1), 1002(2)(A). Pen-
sion plans, which provide benefits to employees upon
retirement or termination, are subject to strict vesting
requirements. 29 U.S.C. § 1051. In comparison, welfare
benefits such as health care coverage only vest in a
lifetime entitlement if the plan contract specifically pro-
vides for it. 29 U.S.C. § 1051(1); see also Bland, 401 F.3d
at 783; Diehl, 102 F.3d at 305. Because employers are not
legally required to vest welfare benefits, and because
vested benefits are forever unchangeable, there is a pre-
sumption against vesting if the plan language is silent.
Bidlack v. Wheelabrator Corp., 993 F.2d 603, 606-07 (7th Cir.
1993) (en banc). But, this is a default rule that exists only
if the contract is silent, and it disappears in the face of
objective evidence or ambiguity in the parties’ intent.
Bland, 401 F.3d at 784; Rossetto, 217 F.3d at 544 (“If there
is some positive indication of ambiguity, something to

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10 No. 09-3374
Paragraph 2 of the closing agreement states: 1
Other Benefits. As of the date of this agreement, the
Company has fully satisfied its obligations and all
claims under the [CBA] for the following benefits:
Health and Accident Insurance—Section 9.03
Dental Insurance—Section 9.04
Vision Care—Section 9.10
Survivor Income/Transition Benefits—Section 9.06
(continued...)
make you scratch your head . . . the presumption falls
out.”).
As an initial argument, Bemis takes the position that
the Closing Agreement is the contract in full, and
the only document to analyze. This document, Bemis
argues, is unambiguous and so there is no need to look
to anything contained in the extrinsic CBA. Paragraph
4(d) of the Closing Agreement provides that retirees
and soon-to-be retirees are “eligible for the retired em-
ployee medical benefit.” Nowhere in the Closing Agree-
ment is there a definition or explanation of this “retired
employee medical benefit.” In Bemis’s reading then,
the language in the closing agreement promises no
benefit, let alone a lifetime benefit; it only states that
certain people are “eligible” for an undefined benefit. We
must remember, however, that all related documents
are read together, Bland, 401 F.3d at 783, and the closing
agreement references the CBA at multiple places.
First, Paragraph 4(b) refers to the CBA when listing
satisfied obligations, and the section defining the retired
employee medical benefit is notably not on this list.1

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No. 09-3374 11
(...continued) 1
These benefits ceased on July 1, 1985, and the Company
has no further obligation for claims against it.
Section 9.03, Health and Accident Insurance, is not in the record,
but it refers to a different benefit than the sections contested
here, § 9.01, Hospital, Surgical and Medical Insurance, and
§ 9.02, Retired Employee Medical Benefit.
Furthermore, the Closing Agreement states it shall be the
full and complete agreement and supersede the “labor
Contract, pension and insurance agreements, except and
only to the extent that reference to the same may be necessary
to effectuate the provisions of this agreement.” Plant Closing
Agreement ¶ 6 (emphasis added). These references
show an intent for the CBA and Closing Agreement to be
read together. Contrary to Bemis’s argument, the CBA
is not extrinsic evidence, but a necessary document in
gaining a complete understanding of the agreement
between Bemis and the retirees. Only by reading the
CBA can meaning be given to the “retired employee
medical benefit” for which retirees are eligible.
Reading the Closing Agreement in conjunction with
the CBA clarifies the ambiguity caused by reading the
Closing Agreement on its own. The common sense
reading of the two documents is that the “retired em-
ployee medical benefit” referred to in the Closing Agree-
ment is defined by the CBA’s “Retired Employee
Medical Benefit” provision. Section 9.02, the Retired
Employee Medical Benefit, describes the level of cov-
erage by stating that the “medical benefit provided

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12 No. 09-3374
retirees, their spouse and dependents shall be the same”
as defined in § 9.01, which describes the Hospital,
Surgical and Medical Insurance provided to current
employees. Bemis argues that this is not enough to
create a lifetime benefit. Neither the Closing Agreement
nor the CBA use duration terms such as “lifetime” or
“vest” when discussing medical benefits, and Bemis
argues the parties knew how to vest benefits as it
used the word “vested” in relation to pension benefits.
However, the lack of an explicit vesting term is not deter-
minative. We have previously rejected the position that
“magic words” or unequivocal contract language must
state that lifetime benefits were being created. Bidlack, 993
F.2d at 607; see also Bland, 401 F.3d at 784. And, we have
on multiple occasions noted that before the rising cost
of health benefits in the 1980s, little attention may
have been given to language affecting a possible future
change in benefits. Bland, 401 F.3d at 783 (citing Bidlack,
993 F.2d at 613 (Cudahy, J., concurring)).
Moreover, there are straightforward indications of
the parties’ intent to create lifetime benefits. In Zielinski v.
Pabst Brewing Company, we observed that a presumption
against vesting is a natural fit with collective bargaining
agreements because they are short-term agreements,
and not presumed to create rights that continue past
their termination date. 463 F.3d 615, 617-18 (7th Cir.
2006). We compared that with a shutdown agreement,
and found that applying the presumption in the context
of a long-term contract without an end date was less
persuasive. Id. at 618. The contract here differs from a
typical collective bargaining agreement in the same
way: the parties were aware they were establishing and

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No. 09-3374 13
settling claims for employees in a permanent and en-
during fashion.
That the parties were permanently settling claims in
the Closing Agreement seems particularly true when
comparing the clauses dedicated to medical benefits for
terminated employees and retired employees. In dis-
cussing the health and medical benefits granted to em-
ployees terminated by the Closing Agreement, it states
that employees can “continue their present Blue Cross/
Blue Shield Medical coverage by paying the full monthly
premium for a period of 12 months (1/1/86 to 1/1/87) or
until they become covered by another medical insurance
plan, whichever is sooner.” It contains an ending date,
and also provides for several circumstances in which the
eligibility will “cease immediately” such as not paying
premiums or being covered under another plan. The
Closing Agreement also explicitly applies this time-
limited benefit to all employees, “with the exception of
those eligible employees who apply for retirement
benefits by 12/31/85.”
In stark contrast, the description of the retiree benefit
contains no ending date, and it does not “cease immedi-
ately” upon qualification for another plan. Instead, the
company plan becomes a “secondary payer.” Moreover,
the corresponding CBA provision provides that “in the
event of the death of a retired employee,” the “dependent
spouse will retain coverage until such time as they
remarry or qualify for other primary coverage,” strongly
implying that retired employees (and their spouses) are
covered until death. See Rossetto, 217 F.3d at 545

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14 No. 09-3374
(“[A]n employer might want to specify a time limit short
of death for dependent benefits yet feel no similar need
to limit the duration of retirees’ benefits.”).
Bemis also argues that the plaintiffs have signed re-
leases waiving all claims arising under the CBA. Upon
each employee’s termination, a document was signed
releasing all claims under the previous CBA, and Bemis
argues this includes any rights secured by § 9.02. A
better understanding of the general release is that it
relinquished any claim under the CBA that was not
separately secured by the Closing Agreement; that the
Closing Agreement secured the right to a lifetime
benefit, but that the CBA defined the scope of the right.
The release specifically lists an amount of payment re-
ceived by each signee. The payment is the “total pay
due” for payments such as severance, unused vacation
pay and holidays. It also specifically lists “premium
payments for continued medical coverage either as a
terminated employee or a future retiree.” A thorough
reading of the release undercuts Bemis’s argument. The
release acknowledges that terminated employees and
retirees will continue to receive medical coverage, but
releases Bemis from making any more premium pay-
ments for that coverage.
The language contained in the Closing Agreement
clearly entitles retirees to an eligibility for a specific
medical benefit. The retirees represented in this action
were eligible for these retiree medical benefits, and
elected to commence their retirement benefits by the
date indicated in the Closing Agreement. The benefit

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No. 09-3374 15
was defined by §§ 9.01-.02 of the CBA, which promised
retirees’ benefits to the level of those given to current
employees, and specifically detailed added benefits
effective July 1, 1982. The Closing Agreement was ne-
gotiated with the purpose of creating enduring rights,
had no termination date, and no method through
which retiree benefits could end. We find that the
parties intended to grant retirees a lifetime entitlement
to medical benefits and reverse the district court’s grant
of summary judgment to Bemis on this issue.
B. The district court must determine whether Bemis
breached its agreement.
Bemis also argues that even if the parties intended to
create a lifetime retiree employee medical benefit,
Bemis is not in breach of its agreement to provide this
benefit. Bemis argues it had reserved the right to modify
or terminate benefits at any time as § 9.01 and § 9.02 state
that the benefits are subject to the terms and conditions
of an “insurance contract.” Bemis claims that the master
insurance contract to which the CBA refers has an
explicit reservation of rights stating that the employer
can modify the conditions of the plan as long as it gives
written notification to the other party, and that it gave
the required notice here. See, e.g., Bland, 401 F.3d at 786;
Vallone v. CNA Fin. Corp., 375 F.3d 623, 633 (7th Cir.
2004). In Vallone, we observed that a reservation-of-
rights clause could mean that even an unambiguous
term such as “lifetime” could mean “good for life
unless revoked or modified.” Vallone, 375 F.3d at 633.

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16 No. 09-3374
If the master insurance contract contained an express
reservation of rights, it is possible that Hayssen could
have drastically modified the level of benefits provided
to its employees while the CBA controlled the terms of
the relationship between Hayssen and its employees. But,
the fact that a final closing agreement incorporated or
relied on language in a previous collective bargaining
agreement does not mean it adopted, unmodified, any
language in any underlying insurance contract. Cf. Diehl,
102 F.3d at 306-07 (“[T]he Shutdown Agreement itself
was an independent contract, supported by separate
consideration and capable of modifying or supplanting
prior contractual arrangements.”). If the parties in-
tended lifetime medical benefits for retirees, then that
promise could have abrogated any right Bemis may have
had to terminate coverage under its master insurance
contract. Moreover, as proof that this reservation of
rights clause existed, Bemis points to a 1990 insurance
contract and “deduces” that the relevant 1984 master
contract included the same reservation of rights. Haber-
man Aff. ¶¶ 4-6. The 1984 contract itself however, is not
the record. Temme disputes the existence of any such
clause in the relevant contract. Pl.’s Br. in Resp. to Def.’s
Motion for Summ. J. at 12-13. Whether the 1984 master
insurance contract included a reservation-of-rights
clause and whether the parties intended the clause—if
any exists—to be abrogated or modified by the vested
nature of the medical benefits are issues to be decided
by a factfinder.
These factual disputes do not help us answer the ques-
tion of what benefits the retirees are entitled to, and
whether Bemis breached that agreement through its

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No. 09-3374 17
actions in 2005 and 2007. This is a question best resolved
by a factfinder in the first instance. See Zielinski, 463 F.3d
at 621; Diehl, 102 F.3d at 309. The plaintiffs argue that
although they understand that some benefits might have
to be modified, the specific benefits laid out in the
CBA must remain exactly the same. This would mean,
by today’s standards, an extremely generous 100% pre-
scription drug coverage and $50 per year deductibles, as
well as a perhaps low maximum “Major Medical” payout
amount of $500,000. More likely, the parties intended
that Bemis would continually provide medical coverage
to retirees at a level “substantially commensurate” with
the benefits provided under the CBA, but with some
freedom to impose cost-saving measures that did not
substantially reduce benefits. See Diehl, 102 F.3d at 310
(“[W]e see nothing to indicate that the Shutdown Agree-
ment established a right to a particular insurance carrier,
or even to a particular plan . . . . We therefore would read
the Shutdown Agreement as requiring [defendant] to
expend reasonable efforts to secure coverage at a level
substantially commensurate with the benefits provided
under the 1983 Insurance Agreement.”). The language in
the CBA and Closing Agreement also reflect this likely
intent—the CBA discusses newly added benefits effec-
tive in 1982 and states that retiree benefits are subject to
a “Medicare Carve-out” program; and the Closing Agree-
ment discusses the yearly re-evaluation of premium
prices by the medical plan. Because Temme insists on
the coverage provided for in the CBA, and Bemis
insists that no coverage is required, neither party has
explained the impact of the exact changes in the plan

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18 No. 09-3374
or their significance upon the retirees’ vested rights to
insurance coverage. As we did in Diehl and Zielinski,
we remand the case to the district court for further pro-
ceedings. Our discussion in those cases should offer
significant guidance for the district court as it moves
forward in determining the precise nature of the mod-
ifications that were implemented in 2005 and 2007, and
whether the plaintiffs can meet the burden of demon-
strating that the changes brought their benefits below a
level reasonably commensurate with the coverage they
had enjoyed for the period of time between 1985 and
2005. Zielinski, 463 F.3d at 619-21; Diehl, 102 F.3d at 310-11.
III. CONCLUSION
The language in the Closing Agreement regarding the
eligibility of the retirees to a medical benefit, read in
conjunction with the CBA, shows the parties intended
for the retirees to enjoy a lifetime entitlement to medical
benefits. Additional determinations need to be made
with respect to the level of entitled benefits and whether
Bemis’s 2005 and 2007 changes infringed on the retirees’
vested rights. We REVERSE the grant of summary judg-
ment to Bemis, and REMAND this case for further pro-
ceedings consistent with this opinion.
9-13-10

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