Justia U.S. Supreme Court Opinion Summaries

Minnesota law provides that “the dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse,” Minn. Stat. 524.2–804. If an insurance policyholder does not want that result, he may rename the ex-spouse as beneficiary. Sveen and Melin were married in 1997. Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his children from a prior marriage as contingent beneficiaries. The marriage ended in 2007. The divorce decree did not mention the insurance policy. Sveen did not revise his beneficiary designations. After Sveen died in 2011, Melin and the Sveen children claimed the insurance proceeds. Melin argued that because the law did not exist when the policy was purchased, applying the later-enacted law violated the Contracts Clause. The Supreme Court reversed the Eighth Circuit, holding that the retroactive application of Minnesota’s law does not violate the Contracts Clause. The test for determining when a law crosses the constitutional line first asks whether the state law has “operated as a substantial impairment of a contractual relationship,” considering the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. If such factors show a substantial impairment, the inquiry turns to whether the state law is drawn in a “reasonable” way to advance “a significant and legitimate public purpose.” Three aspects of Minnesota’s law, taken together, show that the law does not substantially impair pre-existing contractual arrangements. The law is designed to reflect a policyholder’s intent and to support, rather than impair, the contractual scheme. The law is unlikely to disturb any policyholder’s expectations at the time of contracting, because an insured cannot reasonably rely on a beneficiary designation staying in place after a divorce. Divorce courts have wide discretion to divide property upon dissolution of a marriage. The law supplies a mere default rule, which the policyholder can easily undo. View "Sveen v. Melin" on Justia Law

In 1998, CNH agreed to a collective-bargaining agreement (CBA), providing health care benefits under a group benefit plan to “[e]mployees who retire under the . . . Pension Plan.” “All other coverages,” such as life insurance, ceased upon retirement. The group benefit plan was “made part of ” the CBA and ran concurrently with it. The agreement contained a general durational clause stating that it would terminate in 2004 and stated that it “dispose[d] of any and all bargaining issues, whether or not presented during negotiations.” When the agreement expired, a class of CNH retirees sought a declaration that their health care benefits vested for life. In 2015, while their lawsuit was pending, the Supreme Court decided “Tackett,” requiring interpretation of CBAs according to “ordinary principles of contract law.” The Sixth Circuit concluded that the 1998 agreement was ambiguous and that extrinsic evidence supported lifetime vesting. The Supreme Court reversed. The Sixth Circuit erred in finding that the agreement was ambiguous based on a presumption, from pre-Tackett precedent, that lifetime vesting was inferred whenever “a contract is silent as to the duration of retiree benefits” and in declining to apply the general duration clause. Such inferences are inconsistent with ordinary principles of contract law. A contract is not ambiguous unless it is subject to more than one reasonable interpretation. View "CNH Industrial N. V. v. Reese" on Justia Law

Kentucky ruling that authority to bind a principal to arbitration must be explicitly stated in power of attorney violated the Federal Arbitration Act.When the patients moved into Kindred’s nursing home, their relatives used powers of attorney to complete necessary paperwork, including an agreement that any claims arising from the patient’s stay at Kindred would be resolved through binding arbitration. After the patients died, their estates filed suits alleging that Kindred’s substandard care had caused their deaths. The trial court denied Kindred’s motions to dismiss. The Kentucky Supreme Court affirmed, finding the arbitration agreements invalid because neither power of attorney specifically entitled the representative to enter into an arbitration agreement. Because the Kentucky Constitution declares the rights of access to the courts and trial by jury to be “sacred,” the court reasoned, an agent could deprive her principal of such rights only if expressly provided in the power of attorney. The U.S. Supreme Court reversed. The Kentucky Supreme Court’s clear-statement rule violates the Federal Arbitration Act, 9 U.S.C. 2, by singling out arbitration agreements for disfavored treatment. The Act preempts any state rule that discriminates on its face against arbitration or that covertly accomplishes the same objective by disfavoring contracts that have the defining features of arbitration agreements. The FAA is concerned with both the enforcement and initial validity of arbitration agreements. View "Kindred Nursing Centers, L. P. v. Clark" on Justia Law

DIRECTV and its customers entered into service agreements that included a binding arbitration provision with a class-arbitration waiver. It specified that the entire arbitration provision was unenforceable if the “law of your state” made class-arbitration waivers unenforceable. The agreement also declared that the arbitration clause was governed by the Federal Arbitration Act, 9 U.S.C. 2. After California customers entered into the agreement, the Supreme Court held that California’s rule invalidating class-arbitration waivers was preempted by the Federal Act. When California customers sued, the trial court denied DIRECTV’s request to order the matter to arbitration. The California Court of Appeal affirmed, finding the entire arbitration provision unenforceable under the agreement because the parties were free to refer in the contract to California law as it would have been absent federal preemption. The U.S. Supreme Court reversed. The California court’s interpretation does not place arbitration contracts “on equal footing with all other contracts,” as required by the Act. California courts would not interpret contracts other than arbitration contracts the same way. The language the court used to frame the issue focused only on arbitration. View "DIRECTV, Inc. v. Imburgia" on Justia Law

M&G purchased the Point Pleasant Polyester Plant in 2000 and entered a collective bargaining agreement and a related Pension, Insurance, and Service Award Agreement with the union, providing that certain retirees, surviving spouses, and dependents, would “receive a full Company contribution towards the cost of [health care] benefits”; that such benefits would be provided “for the duration of [the] Agreement”; and that the Agreement would be subject to renegotiation in three years. After the expiration, M&G announced that it would require retirees to contribute to the cost of their health care benefits. Retirees sued, alleging that the 2000 Agreement created a vested right to lifetime contribution-free health care benefits. On remand, the district court ruled in favor of the retirees; the Sixth Circuit affirmed. The Supreme Court vacated and remanded, noting that welfare benefits plans are exempt from the Employee Retirement Income Security Act, 29 U.S.C. 1051(1), 1053, 1081(a)(2), 1083, and applying ordinary principles of contract law. The Court stated that Sixth Circuit precedent distorts ordinary principles of contract law, which attempt to ascertain the intention of the parties, “by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements.” The Sixth Circuit did not consider the rules that courts should not construe ambiguous writings to create lifetime promises and that “contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.” View "M&G Polymers USA, LLC v. Tackett" on Justia Law

Northwest terminated plaintiff’s membership in its frequent flyer program. A provision in the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Plaintiff claimed that Northwest breached its contract by revoking his membership without valid cause and violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations. The district court dismissed, holding that the Airline Deregulation Act of 1978 pre-empted the breach of the duty of good faith and fair dealing claim. The Ninth Circuit reversed, finding that claim “too tenuously connected to airline regulation to trigger” ADA pre-emption. A unanimous Supreme Court reversed. The Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge contractual obligations that the parties voluntarily adopted. The Act prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to [an air carrier’s] price, route, or service,” 49 U.S.C. 41713(b)(1). The phrase “other provision having the force and effect of law” includes state common-law rules like the claimed implied covenant. Exempting common-law claims would disserve the Act’s central purpose: to eliminate federal regulation of rates, routes, and services so they could be set by market forces. Northwest’s program connects to “rates” by awarding credits redeemable for tickets and upgrades, thus eliminating or reducing ticket prices. It also connects to “services,” i.e., access to flights and higher service categories. Because the implied covenant claim sought to enlarge contractual agreement, it is pre-empted. Under controlling Minnesota law, parties may not contract out of the implied covenant; when state law does not authorize parties to free themselves from the covenant, a breach of covenant claim is pre-empted. Participants in frequent flyer programs can protect themselves by avoiding airlines with poor reputations and enrolling in more favorable rival programs; the Department of Transportation has authority to investigate complaints about frequent flyer programs. The Court also noted that the plaintiff did not appeal his breach of contract claim. View "Northwest, Inc. v. Ginsberg" on Justia Law

Union-affiliated benefit funds sued Haluch to collect benefits contributions required to be paid under federal law, plus attorney’s fees and costs, which were obligations under a federal statute and the parties’ collective bargaining agreement. The district court issued an order on June 17, on the merits of the contribution claim, and a separate ruling on July 25, on the motion for fees and costs. The Funds appealed on August 15. Haluch argued that the June 17 order was a final decision under 28 U.S.C. 1291, so that notice of appeal was not filed within the 30-day deadline. The First Circuit acknowledged that an unresolved fee issue generally does not prevent judgment on the merits from being final, but held that no final decision was rendered until July 25 because entitlement to fees and costs under the CBA was an element of damages and thus part of the merits. The Supreme Court reversed, finding the appeal of the June 17 decision untimely. The Funds’ claim that contractual attorney’s fees provisions are always a measure of damages failed. There is no justification for different jurisdictional effect based solely on whether an asserted right to fees is based on contract or statute. View "Ray Haluch Gravel Co. v. Cent. Pension Fund of Operating Eng'rs & Participating Emp'rs" on Justia Law

Plaintiffs filed a putative collective action under the Fair Labor Standards Act, seeking backpay for time spent donning and doffing pieces of protective gear required by the employer because of hazards at its steel plants. The employer argued that the time, otherwise compensable under the Act, is noncompensable under its collective bargaining agreement with plaintiffs’ union. Under 29 U.S.C. 203(o), parties may collectively bargain over whether “time spent in changing clothes ... at the beginning or end of each workday” must be compensated. The district court granted the employer partial summary judgment. The Seventh Circuit and Supreme Court affirmed, concluding that the protective gear constitutes “clothes,” even if integral and indispensable to the work. Whether one exchanges street clothes for work clothes or simply layers one over the other may be a matter of purely personal choice, and section 203(o) should not be read to allow workers to opt into or out of its coverage at random or at will when another reading is textually permissible. Although safety glasses, earplugs, and a respirator do not fit the interpretation of “clothes,” the relevant question is whether the period at issue can, on the whole, be fairly characterized as “time spent in changing clothes or washing.” In this case, time spent donning and doffing safety glasses and earplugs was minimal. View "Sandifer v. United States Steel Corp." on Justia Law

Northwest terminated plaintiff’s membership in its frequent flyer program. A provision in the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Plaintiff claimed that Northwest breached its contract by revoking his membership without valid cause and violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations. The district court dismissed, holding that the Airline Deregulation Act of 1978 pre-empted the breach of the duty of good faith and fair dealing claim. The Ninth Circuit reversed, finding that claim “too tenuously connected to airline regulation to trigger” ADA pre-emption. A unanimous Supreme Court reversed. The Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge contractual obligations that the parties voluntarily adopted. The Act prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to [an air carrier’s] price, route, or service,” 49 U.S.C. 41713(b)(1). The phrase “other provision having the force and effect of law” includes state common-law rules like the claimed implied covenant. Exempting common-law claims would disserve the Act’s central purpose: to eliminate federal regulation of rates, routes, and services so they could be set by market forces. Northwest’s program connects to “rates” by awarding credits redeemable for tickets and upgrades, thus eliminating or reducing ticket prices. It also connects to “services,” i.e., access to flights and higher service categories. Because the implied covenant claim sought to enlarge contractual agreement, it is pre-empted. Under controlling Minnesota law, parties may not contract out of the implied covenant; when state law does not authorize parties to free themselves from the covenant, a breach of covenant claim is pre-empted. Participants in frequent flyer programs can protect themselves by avoiding airlines with poor reputations and enrolling in more favorable rival programs; the Department of Transportation has authority to investigate complaints about frequent flyer programs. The Court also noted that the plaintiff did not appeal his breach of contract claim. View "Northwest, Inc. v. Ginsberg" on Justia Law

Plaintiffs filed a putative collective action under the Fair Labor Standards Act, seeking backpay for time spent donning and doffing pieces of protective gear required by the employer because of hazards at its steel plants. The employer argued that the time, otherwise compensable under the Act, is noncompensable under its collective bargaining agreement with plaintiffs’ union. Under 29 U.S.C. 203(o), parties may collectively bargain over whether “time spent in changing clothes ... at the beginning or end of each workday” must be compensated. The district court granted the employer partial summary judgment. The Seventh Circuit and Supreme Court affirmed, concluding that the protective gear constitutes “clothes,” even if integral and indispensable to the work. Whether one exchanges street clothes for work clothes or simply layers one over the other may be a matter of purely personal choice, and section 203(o) should not be read to allow workers to opt into or out of its coverage at random or at will when another reading is textually permissible. Although safety glasses, earplugs, and a respirator do not fit the interpretation of “clothes,” the relevant question is whether the period at issue can, on the whole, be fairly characterized as “time spent in changing clothes or washing.” In this case, time spent donning and doffing safety glasses and earplugs was minimal. View "Sandifer v. United States Steel Corp." on Justia Law