Accuride Erie, L.P. v. International Union, Automobile, Aerospace & Agricultural Implement Workers

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
12-11-2007
Accuride Erie LP v. Local 1186
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-4007
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_________
No. 06-4007
_________
ACCURIDE ERIE, L.P.,
a limited partnership,
Appellant
v.
INTERNATIONAL UNION, AUTOMOBILE,
AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS
OF AMERICA, LOCAL UNION 1186,
a voluntary unicorporated association
_________
Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 05-cv-00169E)
District Judge: Honorable Sean J. McLaughlin
_________
Submitted Pursuant to Third Circuit LAR 34.1(a)
October 31, 2007
BEFORE: RENDELL and NYGAARD, Circuit Judges,
and McCLURE,* District Judge
(Filed: December 11, 2007)
_________
OPINION OF THE COURT
_________
McCLURE, District Judge.
*
The Hon. James F. McClure, Jr., Senior Judge, United States District Court for the
Middle District of Pennsylvania, sitting by designation.
Appellant Accuride Erie, L.P. (“Accuride”) filed a complaint against appellee, the
International Union, United Automobile, Aerospace & Agricultural Implement Workers of
America, Local Union 1186 (“Union’) seeking to vacate a labor arbitration award. After cross
motions for summary judgment were filed, the district court denied Accuride’s motion and
granted the Union’s motion, thus confirming the arbitration award. Accuride argues that the
district court erred in granting summary judgment in favor of the Union because the arbitrator’s
award did not derive its essence from the parties’ collective bargaining agreement. For the
reasons provided below, we will affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 1997, Accuride acquired a manufacturing plant from Kaiser Aluminum Corporation
(“Kaiser”) whose hourly employees were represented by the Union. Pursuant to a transitional
agreement, Union members were hired to fill positions at Accuride. Some of these union
members were eligible to retire under a benefits plan by Kaiser that included retiree medical
benefits. The parties entered into a collective bargaining agreement on May 1, 1997 which gave
members of the Union a one-time irrevocable election to receive either the Kaiser retiree medical
benefits or coverage under a medical plan for active Accuride employees (“1997 CBA”). In
1998, the parties entered into another CBA extending the 1997 agreement through August of
2003 (“1998 CBA”).
On February 16, 2001, the Union submitted a grievance on behalf of an employee and his
spouse who had previously elected Kaiser retiree medical benefits. The spouse had been denied
coverage under Kaiser’s retiree medical plan and then had sought coverage under the Accuride
medical plan. Accuride denied coverage based on the irrevocable election that had been made
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by the employee. On September 26, 2003, arbitrator Paul Gerhart ruled that the employee had
irrevocably opted out of the Accuride medical plan and that Accuride’s decision to deny
coverage was correct (“Gerhart Award”).
In September of 2003, a new CBA was reached which did not mention anything about
the former Kaiser employees who had previously elected the Kaiser retiree medical benefits
(2003 CBA). The only mention of medical benefits in the entire CBA is in Article 32 and states
that Accuride will provide “eligible employees” with medical benefits. Article 32 also states that
“[t]he specific terms of these benefits are set forth in the benefits plan and the insurance
contract” and that “[t]he benefits plan and the insurance contract are the controlling documents.”
Article 5 pertains to grievances and requires a grievance to be submitted “within 14 calendar
days of the occurrence giving rise to the grievance.” Finally, the Memorandum of Settlement
associated with the 2003 CBA contains a zipper clause that states that:
Settlements, side agreements (written or unwritten), memoranda of understanding,
letters of understanding, past practices, grievances settlements, and any other like
items that existed on or before August 31, 2003 are terminated. To the extent the
parties desire to continue any settlements, side agreements (written or unwritten),
memoranda of understanding, letters of understanding, past practices, grievances
settlements, and any other like items, they have been reduced to writing and
included in this Memorandum of Settlement or the [Collective Bargaining
Agreement].
In April of 2004, Accuride learned that Kaiser had filed an action in bankruptcy court to
terminate its retiree medical benefits program. Accuride notified the Union, who responded by
demanding that Accuride provide medical coverage for the former Kaiser employees who had
elected to receive Kaiser retiree medical benefits. The parties met on May 13 and 14, 2004 to
discuss proposals to provide benefits to the affected employees. At these meetings, Accuride
rejected the Union’s request to include the affected employees in the Accuride medical plan.
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On May 31, 2004, Kaiser terminated its retiree medical benefits with the approval of the
bankruptcy court. On June 8, 2004, the Union submitted a grievance demanding that Accuride
provide medical coverage for the affected employees. Accuride denied the grievance at every
stage of the grievance process, reasoning that the elections made by the Kaiser retirees were
irrevocable. Accuride also determined that the grievance was untimely because it was not filed
within fourteen days of the occurrence giving rise to the grievance as required by the 2003 CBA.
The grievance was then heard by arbitrator Robert Creo. Arbitrator Creo ruled that the
affected employees’ elections in 1997 did not preclude the receipt of benefits under the 2003
CBA. He reasoned that the 2003 CBA required Accuride to provide benefits to all “eligible
employees” and that the irrevocable election was terminated by the 2003 CBA. He also ruled
that the grievance was timely because the occurrence giving rise to the grievance was the
termination of benefits that occurred on May 31, 2004. Finally, he ruled that the Gerhart award
was not binding on the current arbitration because it arose under a previous agreement and under
different circumstances.
The district court found that the arbitrator’s award drew its essence from the 2003 CBA
and upheld the award. Specifically, the district court found that the arbitrator relied on the
language in the 2003 CBA that Accuride would provide benefits to all “eligible employees” and
the absence of any language incorporating the elections from the previous CBA in determining
that the elections did not survive the 2003 CBA. Similarly, the district court found that the
arbitrator relied on the 2003 CBA in determining that the grievance was timely because the
arbitrator determined that the date of the occurrence under the 2003 CBA was the date Kaiser
actually terminated the benefits. Finally, the district court found that the arbitrator correctly
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found that he was not bound by the Gerhart award based on his finding that the elections did not
survive the 2003 CBA. Therefore, the district court granted the Union’s motion for summary
judgment and dismissed the case. This appeal followed.
II. JURISDICTION AND STANDARD OF REVIEW
The district court had jurisdiction pursuant to section 301(a) of the Labor Management
Relations Act, 29 U.S.C. § 185. Because the district court entered final judgment against
Accuride, we have jurisdiction pursuant to 28 U.S.C. § 1291. Our review is plenary, and we
apply the same standard as the district court in reviewing the arbitration award. Exxon Shipping
Co. v. Exxon Seamen's Union, 73 F.3d 1287, 1291 (3d Cir.1996).
The United States Supreme Court has consistently held that courts exercise a narrow and
deferential role in reviewing arbitration awards arising from labor disputes. Pennsylvania Power
Co. v. Local Union No. 272, Intern. Broth. of Elec. Workers, AFL-CIO, 276 F.3d 174, 178 (3d
Cir. 2001) (citing United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 36,
108 S. Ct. 364, 98 L. Ed. 2d 286 (1987) and W.R. Grace & Co. v. Local Union 759, Int'l Union of
the United Rubber, Cork, Linoleum and Plastic Workers of Am., 461 U.S. 757, 764, 103 S. Ct.
2177, 76 L. Ed. 2d 298 (1983)). The rationale for this limited role is to encourage the arbitration
of labor disputes and not undermine them by excessive court intervention on the merits of an
award. Id. (quoting United Steelworkers of Am. v. Enterprise Wheel and Car Corp., 363 U.S.
593, 597, 80 S. Ct. 1358, 4 L. Ed. 2d 1424 (1960)).
In light of this policy of encouraging arbitration awards, there is a strong presumption in
their favor. Id. (citing Newark Morning Ledger Co. v. Newark Typographical Union Local 103,
797 F.2d 162, 165 (3d Cir.1986)). The court must uphold an award that “draws its essence from
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the collective bargaining agreement.” United Steelworkers, 363 U.S. at 597. An award draws its
essence from a collective bargaining agreement if “its interpretation can in any rational way be
derived from the agreement, viewed in light of its language, its context, and any other indicia of
the parties’ intention.” Brentwood Medical Associates v. United Mine Workers of America, 396
F.3d 237, 240 (3d Cir. 2005) (citing United Transp. Union Local 1589 v. Suburban Transit
Corp., 51 F.3d 376, 379-80 (3d Cir. 1995)) (emphasis in original). Thus, we should not vacate
an award simply because we would have reached the opposite conclusion had we been the
original arbitrator. See Citgo Asphalt Refining Co. v. Paper, Allied-Indus., Chem. & Energy
Workers Int'l Union Local No. 2-991, 385 F.3d 809, 816 (3d Cir.2004) (citation omitted).
Rather, an award should only be vacated if there is no support in the record for the arbitrator’s
determination or if the arbitrator demonstrates a manifest disregard for the agreement entirely
unsupported by principles of contract construction. Exxon Shipping Co. v. Exxon Seamen's
Union, 993 F.2d 357, 360 (3d Cir.1993) (quoting News America Publications v. Newark
Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990)).
III. DISCUSSION
Accuride presents three arguments why the arbitrator’s award should be vacated. First, it
argues that the award exceeded the arbitrator’s authority because the irrevocable elections
survived the expiration of the 1998 CBA and therefore the award did not draw its essence from
the CBA. Second, it takes issue with the arbitrator’s conclusion that the grievance was timely.
Finally, it argues that the arbitrator ignored the final and binding nature of the Gerhart award
from 2003.
A. Effect of the Irrevocable Elections
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The arbitrator determined that the 2003 CBA did not mention the previous irrevocable
elections and that the agreement specifically stated that Accuride would provide “eligible
employees” with medical benefits. He reasoned that the parties could have easily incorporated
the elections from the previous agreement into the 2003 CBA but did not do so. Furthermore, he
found that there was no language in the 2003 CBA to support an argument that the prior
elections made the Kaiser retiree’s “ineligible.”
We reiterate that our review of the arbitrator’s decision is very narrow and deferential.
The critical question is whether the decision drew its essence from the CBA, not whether we
would have reached the same conclusion if we reviewed the case in the first instance. We
believe that the arbitrator’s conclusion that the previous elections did not survive the 2003 CBA
was a rational interpretation of the agreement. The absence of any mention of the previous
elections in the 2003 CBA, the ease with which such a mention could have been placed, and the
zipper clause in the Memorandum of Settlement which explicitly negates all past agreements, all
weigh in favor of concluding that the elections did not survive the 2003 CBA. Therefore, we
will affirm the district court’s decision on this issue.
B. Timeliness
The 2003 CBA contains a provision which requires a grievance to be submitted “within
14 calendar days of the occurrence giving rise to the grievance.” The arbitrator concluded that
the grievance was timely because the date of the occurrence was May 31, 2004, the date that
Kaiser terminated its medical plans with the approval of the bankruptcy court, and the grievance
was filed on June 8, 2004. Accuride argues that the appropriate date is May 13 or 14, 2004, the
dates the Union unsuccessfully sought coverage from the Kaiser retirees from Accuride. Again,
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we believe the arbitrator’s decision drew its essence from the CBA. The arbitrator determined
that the date the medical plans were terminated was the “occurrence giving rise to the
grievance.” It makes sense to us that this date be used as the “occurrence” because if the
medical plans were ultimately not terminated, there would be no harm to the Kaiser retirees and
we doubt the grievance would have even been filed. It is not as though the arbitrator selected an
entirely arbitrary date or completely ignored the fourteen day time limitation. Therefore, we
agree with the district court and will not disturb the arbitrator’s ruling that the grievance was
timely.
C. Effect of the Previous Arbitration
Accuride’s final argument is that the arbitrator ignored the final and binding nature of the
Gerhart award. The arbitrator concluded that the Gerhart award occurred under a different CBA
and under a different set of circumstances. We agree. The Gerhart award interpreted the 1998
CBA, which extended the 1997 CBA containing the irrevocable elections. The controlling
document in the instant case is the 2003 CBA. Furthermore, we note that the arbitrator’s ruling
that the Gerhart award was not binding was clearly based on his conclusion that elections from
the previous CBA were not incorporated into the 2003 CBA, and we have already held that this
conclusion drew its essence from the 2003 CBA. It would make no sense to require an arbitrator
to be bound by a previous arbitration which applied a clause from a previous contract which the
arbitrator has validly found is no longer part of the current contract. Therefore, we affirm the
decision of the district court on this issue as well.
IV. CONCLUSION
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Because the arbitrator’s conclusions that the elections from the previous CBA were no
longer part of the 2003 CBA, that the grievance was timely filed, and that the Gerhart award was
not binding all drew their essence from the 2003 CBA, we will affirm the district court’s ruling
and uphold the award.
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