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Sixth Circuit Enforces Consent Decree in Benefits Case

Posted in Recent Cases

In Shy v. Navistar International Corp., the Sixth Circuit affirmed the district court’s decision enforcing a 1993 consent decree over employee benefits.  Specifically, the district court held that Navistar could not substitute the Medicare D program for the prescription drug plan described in the consent decree, and it held that Navistar had to retroactively reinstate the benefit from the agreement. 

 One interesting aspect of the Court’s opinion is its introduction of perhaps a new standard of review.  The Court recognized that, in reviewing the interpretation of the consent decree by the district court that crafted the judgment, the standard of review is actually a “deferential de novo.”  What that means may be better left to the imagination,  but the Court recognized that some deference was due the district court’s decision given that he oversaw and approved the original decree.  This holding, however, could have significant repercussions in any litigation arising out of a consent decree, because the Court has indicated its inclination to grant the district court some deference in those cases. 

 On the merits, the Court made short work of Navistar’s arguments, finding that it was not authorized to substitute the Medicare Part D program for the prescription drug benefit provided for in the benefit plan that arose from the consent decree.  When Navistar objected based on the Court’s awarding class damages without an adequate evidentiary record, the Sixth Circuit found that the district court acted within his equitable authority in fashioning a remedy that would put the participants in the situation that they would have been in but for the change in interpretation of the plan.   The Court also rejected Navistar’s argument that an evidentiary hearing was required to be held because it found prior factual findings by the district court laid the necessary predicate to support the remedy order.