International Chemical Workers Union Council v. PPG Industries, Inc.

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
6-14-2007
Locals 45C 776C v. PPG Ind Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-2275
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
Nos. 06-2275, 06-2278 and 06-2491
____________
INTERNATIONAL CHEMICAL WORKERS
UNION COUNCIL OF THE UNITED FOOD AND
COMMERCIAL WORKERS UNION AND ITS LOCALS 45C AND 776C,
Appellant No. 06-2275
UNITED STEELWORKERS OF AMERICA,
AFL-CIO-CLC, a labor organization,
Appellant No. 06-2278
LOCAL LODGE 470 OF DISTRICT 161
INTERNATIONAL ASSOCIATION OF MACHINISTS
AND AEROSPACE WORKERS, AFL-CIO,
Appellant No. 06-2491
v.
PPG INDUSTRIES, INC.
____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Nos. 01-cv-01751, 01-cv-01601 and 01-cv-02110)
District Judge: Honorable David S. Cercone
____________
Submitted Under Third Circuit LAR 34.1(a)
May 17, 2007
Before: FISHER and ROTH, Circuit Judges, and RAMBO,* District Judge.
*
The Honorable Sylvia H. Rambo, United States District Judge for the Middle
District of Pennsylvania, sitting by designation.
(Filed: June 14, 2007 )
____________
OPINION OF THE COURT
____________
FISHER, Circuit Judge.
This appeal consists of three related cases against PPG Industries, Inc. (“PPG”).
The Appellants, unions 1 that represent employees of PPG, challenge the District Court’s
grant of summary judgment in favor of PPG. For the reasons that follow, we will affirm.
I.
As we write only for the parties, who are familiar with the factual context and the
procedural history of the case, we will set forth only those facts necessary to our analysis.
In 2001, PPG sent a letter to thousands of its retired employees stating that it intended to
reduce/modify retiree health benefits. The medical benefits had been negotiated under
various, expired collective bargaining agreements (“CBAs”) between the Appellants and
PPG.2 The Appellants filed grievances claiming that PPG could not modify/reduce retiree
1
The Appellants in No. 06-2275 are International Chemical Workers Union
Council of the United Food and Commercial Workers Union, and its Locals 45C and
776C. The Appellant in No. 06-2278 is United Steelworkers of America, AFL-CIO-CLC.
The Appellant in No. 06-2491 is Local Lodge 470 of District 161, International
Association of Machinists and Aerospace Workers, AFL-CIO.
2
The terms of the medical benefits programs are provided in a Group Insurance
Plan or Group Benefits Plan (“GIP”). The parties agree that the GIPs are incorporated
into the CBAs.
2
medical benefits, and sought arbitration under the terms of the CBAs.3 PPG refused to
process the grievances and to arbitrate. The Appellants then filed suit in the District
Court under section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C.
§ 185. The complaints alleged that PPG violated the terms of expired CBAs.
The parties filed cross-motions for summary judgment on the issue of arbitration.
The unions claimed that PPG was obligated to arbitrate the issue of whether PPG could
modify/reduce retiree benefits. PPG argued that it was necessary for the District Court to
determine whether the benefits had vested before it could determine the issue of
arbitrability. According to PPG, the benefits were non-vested benefits granted under
expired CBAs and, thus, were not subject to arbitration. The Appellants claimed there
was sufficient evidence of vesting to enable them to at least survive summary judgment.
The Magistrate Judge recommended that summary judgment be entered in favor of
PPG. After the Appellants filed objections, the District Court adopted the Magistrate’s
recommendations and entered summary judgment in favor of PPG. It determined that the
medical benefits were not vested and that PPG was not required to arbitrate the
grievances. This timely appeal followed.
II.
We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the District Court’s
orders granting summary judgment de novo. See Kneipp v. Tedder, 95 F.3d 1199, 1204
3
All of the relevant CBAs included broad arbitration provisions.
3
(3d Cir. 1996). We apply the same standard employed by the District Court, and view the
facts in the light most favorable to the Appellants. See Moore v. City of Philadelphia,
461 F.3d 331, 340 (3d Cir. 2006).
III.
The Appellants claim that the District Court erred by deciding whether the benefits
were vested in order to determine whether the dispute was arbitrable. They argue that the
District Court improperly reached the merits of the underlying claim, when it should have
only decided the arbitration issue. Although the law in this area is somewhat unclear, we
believe it was necessary for the District Court to consider whether the benefits vested in
order to make the determination of whether the dispute was arbitrable.
It is clear that the expiration of a CBA does not automatically extinguish the
parties’ duty to arbitrate. See Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery
Workers Union, 430 U.S. 243, 251 (1977). Rather, the duty to arbitrate disputes that arise
under the contract continues even after expiration of the CBA. See id. In Litton
Financial Printing Division v. National Labor Relations Board, 501 U.S. 190 (1991), the
Supreme Court explained that its holding in Nolde applied “only where a dispute has its
real source in the contract.” Id. at 205. A dispute regarding an expired CBA has its real
source in the contract when “it involves facts and occurrences that arose before
expiration, where an action taken after expiration infringes a right that accrued or vested
under the agreement, or where, under normal principles of contract interpretation, the
4
disputed contractual right survives expiration of the remainder of the agreement.” Id. at
205-06.
Whether arbitration is required and what issues are subject to arbitration are
questions to be determined by the court, “and a party cannot be forced to arbitrate the
arbitrability question.” Id. at 208-09 (internal quotation marks and citations omitted).
Although there is a presumption in favor of arbitration when a CBA contains a broad
arbitration clause, the presumption should not be applied “wholesale in the context of an
expired [CBA], for to do so would make limitless the contractual obligation to arbitrate.”
Id. at 209. When a court is asked to determine whether a duty to arbitrate exists, it
“cannot avoid that duty because it requires [it] to interpret a provision of a [CBA].” Id.We agree with our sister courts that have held that a court may need to decide the
merits of the underlying claim in order to decide arbitrators’ jurisdiction. See Indep. Lift
Truck Builders Union v. Hyster Co., 2 F.3d 233, 236 (7th Cir. 1993); United Parcel Serv.,
Inc. v. Union de Tronquistas de Puerto Rico, 426 F.3d 470, 473-74 (1st Cir. 2005); Int’l
Bhd. of Elec. Workers v. GKN Aerospace N. America, Inc., 431 F.3d 624, 628-29 (8th
Cir. 2005).4 However, there is some conflict between the courts as to whether a court
4
We recognize that the Supreme Court’s holding in Litton is at odds with its
decision in Nolde, which suggested that a court should not address the merits of the
underlying claim. See, e.g., Luden’s Inc. v. Local Union No. 6 of the Bakery,
Confectionery & Tobacco Workers’ Int’l Union of America, 28 F.3d 347, 353-54 (3d Cir.
1994). We did not need to resolve the tension in Luden’s, but we expressed a reluctance
to follow the decisions of other courts which treated Litton as impliedly overruling Nolde.
Id. at 354. This case requires us to resolve the tension, and we choose to accept the duty
5
should actually rule on the merits of the underlying claim. The United States Court of
Appeals for the Seventh Circuit stated that “[i]f the court must, to decide the arbitrability
issue, rule on the merits, so be it.” Hyster, 2 F.3d at 236. The United States Courts of
Appeals for the First and Eighth Circuits, however, have held that a court should not
decide the merits as long as it is possible that an arbitrator could reasonably determine
that the dispute arose under the contract. See U.P.S., 426 F.3d at 474; GKN, 431 F.3d at
628. It is unnecessary for us to weigh in on this question because as discussed below we
do not believe that the retiree medical benefits provided under the CBAs could reasonably
be interpreted to have vested. As the Appellants claim that this dispute is arbitrable based
on the vesting of the retiree health benefits, it was proper for the District Court to
consider whether the benefits vested.5
We now must consider whether the benefits vested or could possibly be interpreted
to have vested. The interpretation of a CBA or plan document is a question of law. See
U.A.W. v. Skinner Engine Co., 188 F.3d 130, 138 (3d Cir. 1999). The Appellants “bear[]
dictated by Litton. We must determine the question of arbitrability, even if that requires
us to consider the underlying claim.
5
We do not address the Appellants’ claim that an implied-in-fact CBA existed in
this case because they failed to raise that argument in their opening briefs. “An issue is
waived unless a party raises it in its opening brief, and for those purposes a passing
reference to an issue . . . will not suffice to bring that issue before this court.” Laborers’
Int’l Union of N. America v. Foster Wheeler Corp., 26 F.3d 375, 398 (3d Cir. 1994)
(internal quotation marks and citations omitted). Because we do not consider the implied-
in-fact CBA argument, we will deny the Appellee’s motions to file sur-reply briefs to
address this argument.
6
the burden of proving by a preponderance of the evidence, that the employer intended the
welfare benefits to vest.” Id. at 138-39 (internal quotation marks and citation omitted).
Because an employer is not required to vest such benefits, a determination of vesting “is
not to be inferred lightly and must be stated in clear and express language,” and this
principle applies regardless of the particular type of plan document at issue. Id. at 139
(internal citations omitted).
The Appellants claim that the plain language of the CBAs and the GIPs expressly
provide vested retiree medical benefits. However, the language in the relevant documents
in this case is quite similar to the language we examined in Skinner.6 For example, some
of the provisions state that PPG “will provide” retiree health benefits or that such benefits
“may be continued” or “will continue.” As in Skinner, “[i]t cannot be said that the
phrases clearly and expressly indicate vesting.” 188 F.3d at 141. Although some of the
terms provide that coverage will be provided to the surviving spouse of a retiree until the
spouse remarries or dies, this is not durational language that qualifies these terms. Id.(explaining that durational language such as “‘will continue for the life of the retiree’ or
that the they ‘shall remain unalterable for the life of the retiree’” would clearly and
6
The parties made memorandums of agreement (“MOAs”) after they negotiated
terms, but before they entered into a CBA. At least one of the MOA’s used language to
suggest that the spouses of retirees were entitled to lifetime benefits. However, the
MOAs were not incorporated into the CBAs. As the CBAs indicated that they were the
final and complete agreement between the parties, the MOAs do not reflect the final
intent of the parties. Therefore, the MOAs are not relevant to our analysis.
7
expressly indicate vesting). The CBAs all included termination provisions which
provided that the terms of the CBA remained in effect until the expiration of the CBA. In
Skinner, we explained that reading provisions related to retiree medical benefits in
conjunction with termination provisions could suggest that the benefits only continued
until the end of the CBA’s term. Id.7 It cannot be said that the language of the CBAs and
the GIPs unambiguously vested the retiree health benefits.
The Appellants also claim that, even if the plain language is not clear, the relevant
provisions of the CBAs and the GIPs create an ambiguity which precludes the granting of
summary judgment. The determination of whether a CBA or other plan document
provision is ambiguous is a question of law. Id. at 142. The Appellants contend, as did
the appellants in Skinner, that phrases such as “will continue” or “shall provide” could be
interpreted to mean that PPG would pay for health benefits for the lifetime of a retiree.
See id. After considering the parties’ arguments, we do not believe that this is a
reasonable interpretation of the phrases when they are read in the appropriate contexts.
We also can consider extrinsic evidence in determining whether the CBAs and
GIPs are ambiguous. Id. at 145. However, extrinsic evidence cannot be used to create
7
The Appellee also claims that durational provisions it inserted into GIPs
beginning in the 1980s are clear evidence that it did not intend for the benefits to vest.
The Appellants claim that the provisions were unilaterally inserted, they protested the
inclusion, and that the provisions are ineffective. It is unnecessary for us to resolve this
argument as we believe that it is clear that the Appellants did not meet their burden of
proving that the benefits vested without consideration of the durational provisions.
8
ambiguity. Id. In this case, the Appellants rely on the facts that PPG continued to
provide insurance to retirees during strikes and letters PPG sent to retirees that explained
the scope of health benefits as extrinsic evidence that the benefits vested.
Although this evidence could suggest an intent for the retiree benefits to vest,
“extrinsic evidence should be carefully circumscribed.” Id. at 146. There is no
ambiguous contractual language, and we will not allow such evidence to create an
ambiguity where none exists. The phrases regarding retiree health benefits in this case
“are simply not susceptible to more than one reasonable interpretation, and they do not
somehow render the CBAs incomplete or ambiguous.” Id.Viewing all reasonable inferences in favor of the Appellants, there is not sufficient
evidence for the unions to survive summary judgment.8 Therefore the District Court
properly determined that the retiree benefits did not vest.
IV.
For the foregoing reasons, we will affirm the District Court’s grant of summary
judgment in favor of PPG.
8
We have fully considered all of the remaining arguments raised by the parties and
find them to be without merit.
9