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Breach of Collective Bargaining Agreement

On May 21st, 2012 in Alday v. Raytheon Co., (US Court of Appeals – Ninth Circuit, No.08-16984), the court held that the Employment Retirement Income Security Act (ERISA) allows for a cause of action to plan participants or the beneficiaries for recovery of benefits under a plan. The court also held that the Labor Management Relations Act (LMRA) creates a federal cause of action for breach of collective bargaining agreements.

In Alday, the plaintiffs were retirees who had previously worked for Raytheon. Prior to 1999, Raytheon had entered into several collective bargaining agreements (CBA's) that provided that Raytheon would provide health insurance for eligible employees. Another CBA in 2003 limited Raytheon's contributions towards future retirees' healthcare. The district court granted summary judgment for the retirees.

The circuit court affirmed the district court's holding, that both the ERISA and LMRA allow for a cause of action to recover benefits under a plan and for breach of collective bargaining agreements. In this case, the court applied normal contract interpretation principles found that the retirees' right to premium-free health insurance did not expire because there was a specific time frame listed.

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