Labor & Employment Law Daily Wrap Up, PENSION AND BENEFIT PLANS—7th Cir.: Retirees granted class action certification on ERISA claim, summary judgment on employer liability reversed, (Aug 17, 2026)

By Ronald Miller, J.D.

The “[v]esting of health-care benefits is determined according to ordinary principles of contract law.”

Pre-1993 retirees of Alcoa were properly granted a motion for certification of a class action challenging the employer’s decision to transition the retirees from their old healthcare plans to a new health reimbursement plan, ruled the Seventh Circuit. Alcoa had challenged the district court’s determination that the retirees satisfied the elements of commonality and typicality and also contended that the district court erred in certifying the class under Rule 23(b)(2). However, the appeals court found that the district court erred when it judicially estopped Alcoa from disavowing any obligation to provide lifetime healthcare benefits to pre-1993 retirees based on statements it made in Curtis. Accordingly, the appeals court reversed the district court’s grant of partial summary judgment as to liability of the employer (Kaiser v. Alcoa USA Corp., No. 25-1627 (7th Cir. Aug. 14, 2026)).

Healthcare benefits. Unlike pension plans, ERISA does not require that retiree healthcare benefits be vested. Such benefits will generally “cease, in the ordinary course, upon termination of the bargaining agreement.” At the same time, “[e]mployers, employees, and unions are free … to provide that healthcare benefits will survive the underlying agreement, so that promised lifetime benefits will indeed survive for a lifetime.” Accordingly, the “[v]esting of healthcare benefits is determined according to ordinary principles of contract law.”

Vesting. To determine whether the retiree health benefit that a CBA provides vests (that is, survives the expiration of the agreement), the court looks to the CBA to see if it contains express or implied terms that provide for vesting. In those cases where “the contract is ambiguous—due to either a patent or latent ambiguity—extrinsic evidence may be considered in determining whether the parties in-tended benefits to vest.”

Scope of benefits. Since 1968, Alcoa has negotiated a number of CBAs with unions from at least 48 different facilities. In those CBAs, Alcoa promised certain healthcare benefits to retirees, their spouses, and their dependents. The scope of these benefits is governed by the particular CBA in effect at the facility where the retiree worked at the time of retirement.

The CBAs all state that Alcoa will provide healthcare benefits to retirees and prohibit the company from diminishing them unilaterally. But none of the CBAs expressly defined the duration of such benefits, and the CBAs themselves have all expired.

Transition plan. Until August 2020, Alcoa had been providing lifetime healthcare benefits to workers who had retired before June 1, 1993, along with their spouses and dependents. In August 2020, Alcoa announced it would transition the pre-1993 retirees from their old healthcare plans to a new health reimbursement plan beginning on January 1, 2021. Under this new arrangement, the employer could terminate the retiree healthcare benefits “at any time.”

Class action. Believing this new plan unilaterally reduced healthcare benefits for pre-1993 retirees in violation of the CBAs, the retirees filed this class action lawsuit. The retirees sought to enjoin Alcoa’s implementation of the new plan. In the retirees’ view, by failing to honor the provisions of the CBAs, Alcoa violated LMRA § 301 and ERISA § 502(a). On February 11, 2022, the retirees moved for class certification, and the district court granted the motion.

The parties filed cross-motions for summary judgment, and on March 25, 2024, the district court, relying on judicial estoppel, entered partial summary judgment in the retirees’ favor, finding Alcoa liable for breaching its contracts to provide healthcare benefits. The district court concluded that Alcoa could not contradict what it had said in Curtis v. Alcoa, Inc., No. 3:06-cv-448 (E.D. Tenn.), aff’d., 525 F. App’x 371 (6th Cir. 2013), and agreed with the retirees that Alcoa had promised vested lifetime retiree healthcare benefits in the relevant CBAs and had breached the agreements by unilaterally reducing these benefits.

On March 28, 2025, the district court issued an order declaring that the class members were “entitled to lifetime healthcare benefits from Alcoa” and granted a permanent injunction requiring Alcoa to “promptly reinstate and maintain for the lifetime of all class members the fixed group health and prescription drug benefit plan … provided to class members before January 1, 2021.”

Alcoa appealed the district court’s class certification order and its reliance on judicial estoppel to grant partial summary judgment as to liability.

Class certification. To obtain class certification, plaintiffs must satisfy Rule 23(a) and (b) by a preponderance of the evidence. Here, Alcoa challenged the district court’s determination that the retirees satisfied the elements of commonality and typicality. The employer also contended that the district court erred in certifying the class under Rule 23(b)(2).

Commonality. Rule 23(a)(2) requires the existence of “questions of law or fact common to the class.” Here, the district court identified the following question as being common to the class: “Whether Alcoa first gained the power to unilaterally terminate benefits after 1993.” Alcoa relied heavily on the fact that the putative class members were subject to different CBAs depending on when and where they worked. However, the employer conceded that none of the CBAs expressly limited the duration of retiree healthcare benefits in any fashion.

For their part, the retirees relied on a latent ambiguity as to whether Alcoa could unilaterally terminate the healthcare benefits of pre-1993 retirees. They contended that the existence of this latent ambiguity can be proved with evidence common to the class.

The retirees highlight statements by Alcoa’s lead labor negotiator during the 1993 CBA negotiations. He affirmed that during the 1993 negotiations, he “believe[d] the state of the law was we couldn’t touch” the healthcare benefits of a former employee who had retired prior to the 1993 negotiations. In addition to this unequivocal testimony, the retirees point out that Alcoa did not even try to unilaterally decrease healthcare benefits for pre-1993 retirees until January 1, 2021. Thus, the retirees cleared the low threshold bar for commonality.

Typicality. Next, Alcoa contested the district court’s finding of typicality under Rule 23(a)(3). In the district court’s view, the named plaintiffs’ claims were identical to those of the putative class. The district court reasoned that all the claims arose from a singular event: Alcoa’s decision to terminate the old insurance plan. Because Alcoa acknowledged that all CBAs are silent as to the duration of benefits, the district court’s finding of Rule 23(a)(3) typicality was well within its discretion.

Rule 23(b)(2). Alcoa next argued that the district court erred by certifying the class under Rule 23(b)(2) rather than Rule 23(b)(3). The district court proceeded under Rule 23(b)(2) here be-cause, in its view, “[t]he putative class seeks relief that would provide identical relief to each class member. In terminating the retirees’ old healthcare benefits, Alcoa acted identically to each class member.” Moreover, “the remedy sought by the class for Alcoa’s action is a declaration and an injunction regarding Alcoa’s contractual authority to modify benefits.”

Alcoa took issue with this approach, noting that the retirees had previously sought monetary damages and certification under Rule 23(b)(3). The appeals court observed that the employer was correct that the retirees had sought certification under Rule 23(b)(3), but they also requested certification under Rule 23(b)(2) as an alternative. Furthermore, the district court entered a permanent injunction ordering Alcoa to reinstate the lifetime group health and prescription drug benefit plan provided to class members before January 1, 2021. The district court also ordered the creation of a claims process whereby class members could request reimbursement for health and prescription drug expenses incurred from January 1, 2021.

Affirming the district court’s holding, the Seventh Circuit concluded that the monetary relief the retirees requested was incidental to the declaratory relief because, once the district court laid out the terms of the plan, the computation of monetary damages “will just be a matter of laying each class member’s pension-related employment records alongside the text of the reformed plan and computing the employee’s entitlement by subtracting the benefit already credited to him from the benefit to which the reformed plan document entitles him.”

Thus, the district court did not abuse its discretion in certifying the proposed class pursuant to Rule 23(b)(2).

Summary judgment. Turning to the district court’s summary judgment ruling, rather than evaluating the merits of the retirees’ claims, the court judicially estopped Alcoa from disavowing any obligation to provide lifetime healthcare benefits to pre-1993 retirees based on statements the company made in Curtis.

Judicial estoppel “bars a party from prevailing on a position in court and then taking the opposite position at a different stage or in new proceedings.”

In 1993, Alcoa faced increasing costs for funding retiree healthcare benefits, both as a result of increasing healthcare costs generally and new accounting rules. It approached the unions with a proposal to cap healthcare expenditures for its retirees. The unions accepted a cap on retiree healthcare benefits for those who retired after June 1, 1993, in exchange for higher pensions and 401(k) benefits. The cap went into effect on January 1, 2007.

A group of retirees who had retired after June 1, 1993, sued Alcoa. They argued that they were entitled to lifetime, uncapped retiree healthcare benefits. Ultimately, the district court in Curtis found for Alcoa. The appeals court in Curtis affirmed that the retirees had lifelong healthcare benefits, but were subject to a cap.

Here, the district court cited several statements made by Alcoa during the Curtis litigation, believing them to directly contradict the positions taken by Alcoa in this case. Considering the context of Alcoa’s prior statements upon which the district court relied, the Seventh Circuit concluded that the doctrine of judicial estoppel did not bar Alcoa from contesting the merits in this case. Accordingly, the appeals court reversed the grant of partial summary judgment as to liability in the retirees’ favor.

The case is No. 25-1627.

Judge: Lee, J.

Attorneys: Joel R. Hurt (Feinstein Doyle Payne & Kravec) for Lynnette J. Kaiser, United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC and Aluminum Trades Council of Wenatchee, Washington AFL-CIO. Bijan Aboutorabi (Jones Day) for Alcoa USA Corp. and Retirees Group Benefit Plan for Certain Hourly Employees of Alcoa USA Corp.

Companies: United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC; Aluminum Trades Council of Wenatchee, Washington AFL-CIO; Alcoa USA Corp.; Retirees Group Benefit Plan for Certain Hourly Employees of Alcoa USA Corp.

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