September 19, 2019
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. l:17-cv-05360 -
Thomas M. Durkin, Judge.
Sykes, Hamilton, and Brennan, Circuit Judges.
HAMILTON, CIRCUIT JUDGE.
Signode Industrial Group LLC assumed an obligation to pay
health-care benefits to a group of retired steelworkers and
their families. Signode then exercised its right to terminate
the underlying benefits agreement. When it terminated the
agreement, Signode also stopped providing the promised
benefits to the retired steel-workers and their families,
despite contractual language providing that benefits would
not be "terminated ... notwithstanding the
expiration" of the underlying agreement. This appeal
presents a single question of contract interpretation:
whether the agreement in question provided for vested
benefits that would survive the agreement's termination.
We hold that the contract provided for vested lifetime
benefits and affirm the district court's permanent
injunction ordering Sig-node to reinstate the retirees'
Factual and Procedural Background
language relevant to this dispute comes from a 1994 agreement
and its 2002 successor. First, we describe the two agreements
and their contexts, focusing on the disputed
"Continuation of Coverage" and "Term of this
Agreement" provisions. We then describe the events that
followed the execution of the 2002 agreement and led to this
The Riverdale Plant and the Pensioners'
Harold Stone and John Woestman worked for decades at the Acme
Packaging Corporation plant in Riverdale, Illinois. While
they worked at the Riverdale plant, they were represented by
the union-plaintiff-United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO-CLC.
January 1, 1994, Acme and the union entered into a
"Pensioners' and Surviving Spouses' Health
Insurance Agreement." The 1994 Pensioners' Agreement
provided health insurance benefits to retirees with at least
fifteen years of continuous service and to their families.
The Agreement's "Continuation of Coverage"
Any Pensioner or individual receiving a Surviving
Spouse's benefit who shall become covered by the Program
established by this Agreement shall not have such coverage
terminated or reduced (except as provided in this Program) so
long as the individual remains retired from the Company or
receives a Surviving Spouse's benefit, notwithstanding
the expiration of this Agreement, except as the Company and
the Union may agree otherwise.
next provision was titled "Term of this Agreement."
It read: "This Agreement shall become effective as of
January 1, 1994 and shall remain in effect until December 31,
1999 and thereafter subject to the right of either party on
120 days written notice served on or after September 1, 1999
to terminate this Agreement."
1994 Pensioners' Agreement remained in effect until 2002,
when Acme Packaging was going through bankruptcy. Acme
negotiated a settlement agreement with the union to ease some
of its financial obligations. As a part of the settlement,
Acme and the union replaced the 1994 Pensioners'
Agreement with a nearly identical successor called the 2002
Pensioners' Agreement. It left the Coverage Provision
intact and modified the Term Provision only to move the
earliest termination date back to February 29, 2004,
providing that the agreement "shall remain in effect
until February 29, 2004, thereafter subject to the right of
either party on one hundred and twenty (120) days written
notice served on or after November 1, 2003 to terminate the
'Pensioners' and Surviving Spouses' Health
Insurance Agreement.'" The 2002 Pensioners'
Agreement and the larger settlement of which it was a part
were approved by the bankruptcy court in February 2002, and
Acme Packaging emerged from bankruptcy in November 2002.
October 2003, defendant-appellant Illinois Tool Works (ITW)
acquired the Riverdale plant from Acme and assumed its
obligations under the 2002 Pensioners' Agreement. In
April 2004, ITW decided to close the plant permanently and
entered into an agreement with the union establishing the
terms of the closure. Operations ceased completely in August
2004. For over a decade after the plant closed, ITW continued
to administer the health insurance program pursuant to the
2002 Agreement, providing health-care coverage for Stone,
Woestman, other Riverdale retirees, and their families.
2014, ITW created a new entity, Signode Industrial Group LLC,
and transferred its obligations under the 2002
Pensioners' Agreement to Signode. It then sold Signode to
The Carlyle Group L.P. Signode continued to provide benefits
under the Agreement until August 2015, when it notified the
union that "effective January 1, 2016, the [health-care
program] and the Agreement will terminate and participants
will no longer be eligible for benefits thereunder." It
notified the beneficiaries the next day. The union protested
Signode's unilateral termination of benefits, citing the
"notwithstanding expiration" language of the 2002
Agreement. Signode ...