International Union v. Kelsey-Hayes Co. , 557 F. App'x 532 ( 2014 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File No: 14a0171n.06
No. 12-1824
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
INTERNATIONAL UNION, UNITED ) FILED
AUTOMOBILE, AEROSPACE AND ) Mar 03, 2014
AGRICULTURAL IMPLEMENT WORKERS ) DEBORAH S. HUNT, Clerk
OF AMERICA (UAW); JAMES WARD; )
MARSHALL HUNT; AND RICHARD )
GARDEN, )
)
Plaintiffs-Appellees, )
)
v. ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
KELSEY-HAYES COMPANY; TRW ) COURT FOR THE EASTERN
AUTOMOTIVE HOLDINGS ) DISTRICT OF MICHIGAN
CORPORATION; AND NORTHROP )
GRUMMAN SYSTEMS CORPORATION, )
)
Defendants-Appellants, )
)
TRW, INC., aka TRW AUTOMOTIVE, )
)
Defendant. )
)
) OPINION
Before: ROGERS, GRIFFIN and DONALD, Circuit Judges.
1
BERNICE BOUIE DONALD, Circuit Judge. The Kelsey-Hayes Company (“Kelsey-
Hayes” or “the Company”)1 appeals an order of the district court partially denying its motion to
compel arbitration. For the reasons below, we AFFIRM the decision of the district court.
I.
In 1998, Kelsey-Hayes entered into a collective bargaining agreement (“CBA”)
[hereinafter, the “1998 CBA”] with the International Union, United Automobile, Aerospace, and
Agricultural Implement Workers of America (“UAW” or “the Union”), which represented the
employees of its Detroit manufacturing plant. The 1998 CBA provided comprehensive
healthcare coverage to its retirees and their surviving spouses; it also specified that any
healthcare-related disputes would be exempt from otherwise applicable provisions requiring
disputes to be resolved through arbitration. (See 1998 CBA, art. XIV, art. V § 4, Supp. “H” and
“H-1”).
In 2001, Kelsey-Hayes closed its Detroit manufacturing plant, and negotiated a General
Release and Termination Agreement [hereinafter, the “Plant Closing Agreement”] with the
Union. The Plant Closing Agreement released Kelsey-Hayes from most—but not all—of its
obligations under earlier CBAs. Healthcare benefits that had been negotiated under the 1998
CBA remained intact and were incorporated by reference into the 2001 Plant Closing
Agreement. The 2001 Agreement also included a general arbitration provision of broad
applicability, providing that any disputes arising with the Union would be resolved through
arbitration:
1
Kelsey-Hayes Company and its parent company, TRW Automotive Holdings Corp.,
were acquired by Northrop Grumman in 2002. All three are named defendants in this case,
referred to collectively and interchangeably, as “the Company” hereinafter.
2
In the event the Union shall have any dispute or disagreement concerning the
interpretation and application of this Agreement, the sole and exclusive recourse
of the Union is to submit any dispute or disagreement in writing to the Company
within thirty (30) days after the Union shall reasonably have become aware of the
existence of any such dispute or disagreement. Within ten (10) days of receipt of
the written document, the Company and the Union shall meet to attempt to
resolve the matter. Should the meeting fail to resolve the matter, arbitration shall
be conducted in accordance with the labor arbitration rules of the American
Arbitration Association.
(2001 Plant Closing Agreement, ¶20).
Following the execution of the 2001 Plant Closing Agreement, Kelsey-Hayes continued
to provide health care benefits in compliance with the terms of the 1998 CBA for approximately
ten years. In September 2011, however, retirees received letters informing them of a change to
their healthcare. The letters announced that the Company planned to terminate their participation
in its retiree healthcare plan and require them to purchase individual plans for Medicare
supplemental insurance with HRA-funding instead.
II.
In October 2011, the retirees filed this suit under Section 301 of the Labor Management
Relations Act (“LMRA”), 29 U.S.C. § 185, alleging violations of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), (a)(3), and claiming that the
Company’s plan breached the terms of the 2001 Plant Closing Agreement and the terms of the
1998 CBA incorporated therein.
Kelsey-Hayes moved for an order to compel arbitration, relying on the 2001 Plant
Closing Agreement’s general arbitration clause. Plaintiffs opposed the motion, arguing that
healthcare disputes were explicitly removed from arbitration under the 1998 CBA’s anti-
arbitration provision.
3
The district court initially granted the motion to compel arbitration in its entirety, finding
that the 2001 Plant Closing Agreement “extinguished” the 1998 CBA anti-arbitration clauses.
Upon reconsideration, however, the district court reversed itself in part, finding that not all of the
Plaintiffs’ rights were governed by the 2001 Plant Closing Agreement. Specifically, the district
court concluded that a subset of the Plaintiffs—those who had retired prior to the plant closing in
2001—could not be bound by the terms of the Plant Closing Agreement, because their rights had
already vested under the 1998 CBA:
[T]he Plant Closing Agreement cannot alter the rights of those retirees who had
already retired, and whose rights had already vested, prior to the execution of this
document. . . . [The Plaintiffs who chose to retire] prior to the signing of this Plant
Closing Agreement are not bound by it. See Allied Chemical and Alkali Workers
of America, Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 181,
n. 20 (1971) (“[u]nder established contract principles, vested retirement rights
may not be altered without the pensioner's consent”); Prater v. Ohio Education
Association, 505 F.3d 437, 444 (6th Cir. 2007) (subsequent agreement between
union and employer does not permit employer to amend or terminate retiree
benefits that have already vested). Therefore, the now-challenged Order must be
modified. Hence, those Plaintiffs who retired prior to April 17, 2001 cannot be
required to arbitrate their claims because their benefits and interests are governed
by the 1998 CBA.
Kelsey-Hayes filed a timely notice of appeal, arguing that all of the Plaintiffs, including
those who retired prior to the execution of the 2001 Plant Closing Agreement, were bound by its
general arbitration clause. The appeal raised several other issues which were voluntarily
dismissed by the time we heard oral arguments in this case. The only remaining issue is whether
employees of the Kelsey-Hayes manufacturing plant who retired prior to the plant closing in
2001 and before the subsequent execution of the Plant Closing Agreement incurred any
obligation to arbitrate their dispute over retiree healthcare benefits, pursuant to the general
arbitration clause contained in the 2001 Plant Closing Agreement.
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III.
This Court reviews a district court’s conclusions of law regarding whether to compel
arbitration de novo. Watson Wyatt & Co. v. SBC Holdings, Inc., 513 F.3d 646, 649 (6th Cir.
2008); see also Teamsters Local Union No. 89 v. Kroger Co., 617 F.3d 899, 904 (6th Cir. 2010);
United Steelworkers of Am. v. Cooper Tire & Rubber Co., 474 F.3d 271, 277 (6th Cir. 2007);
Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 311 (6th Cir. 2000).
It is well-established that parties cannot be compelled to arbitrate a dispute unless they
are contractually bound to do so by a valid and enforceable prior agreement. Cooper, 474 F.3d at
277 (“[A] party cannot be forced to arbitrate any dispute that it has not obligated itself by
contract to submit to arbitration.” (citation omitted)); see also IAM v. AK Steel Corp., 615 F.3d
706, 711 (6th Cir. 2010) (“[A]rbitration is . . . a matter of contract between the parties. . . . [T]he
parties [must] have agreed to submit to arbitration.”). A dispute is not arbitrable if the parties’
agreement “specifically excludes” the subject matter of that dispute from arbitration. Cleveland
Elec. Illuminating Co. v. Utility Workers, 440 F.3d 809, 816 (6th Cir. 2006) (“[A] union and an
employer may arbitrate retirement healthcare disputes only ‘if there is nothing in the agreement
that specifically excludes the dispute from arbitration,’ and then only with the retirees’
‘consent.’”); see also Cooper, 474 F.3d at 279 (“[P]arties may exclude disputes arising under a
side agreement from arbitration should they include a statement to that effect in the arbitration
clause of the CBA or in the side agreement itself.”); UFCW v. Fresh Mark, 81 F.App’x. 23, 28
n.3 (6th Cir. 2003) (“[P]arties routinely exclude individual claims for benefits from general CBA
arbitration and grievance procedures.”).
Here, the Kelsey-Hayes employees who retired prior to the 2001 Plant Closing
Agreement were no longer members of the Union at the time of the plant closing and were not
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represented by the Union in the negotiation or execution of the Plant Closing Agreement. It is
well established that when a union negotiates with an employer, the union represents only active
employees, and it does not represent the interests of retirees absent their consent. See Allied, 404
U.S. at 181 n. 20 (“Since retirees are not members of the bargaining unit, the bargaining agent is
under no statutory duty to represent them in negotiations with the employer.”); Amos v. PPG
Indus., Inc., 699 F.3d 448, 453 (6th Cir. 2012). The Kelsey-Hayes employees who retired prior
to the 2001 Plant Closing Agreement thus did not consent to the terms of the Plant Closing
Agreement and cannot be compelled to arbitrate under provisions contained in that agreement.
IV.
Accordingly, we AFFIRM the district court’s order.
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