Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00677/USCOURTS-caed-2_06-cv-00677-0/pdf.json

Nature of Suit Code: 720
Nature of Suit: Labor Management Relations Act
Cause of Action: 28:185 Suit to Compel Arbitration

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

INTERNATIONAL BROTHERHOOD OF

ELECTRICAL WORKERS AFL-CIO,

LOCAL 1245,

NO. CIV. S-06-0677 WBS DAD

Petitioner,

v. MEMORANDUM AND ORDER RE: 

MOTION TO COMPEL ARBITRATION 

AND MOTION TO DISMISS

CITIZENS TELECOMMUNICATIONS

CO. OF CALIFORNIA, INC. dba

FRONTIER COMMUNICATIONS,

Respondent.

----oo0oo----

Pursuant to 29 U.S.C. § 185(a), petitioner

International Brotherhood of Electrical Workers AFL-CIO, Local

1245, filed this petition to compel respondent Citizens

Telecommunications Company of California, Inc. to arbitrate

unilateral changes in the retiree health benefits program. 

Petitioner bases its request on the terms of a collective

bargaining agreement (“CBA”) entered into between respondent and

petitioner. Currently before the court are (1) petitioner’s

motion to compel arbitration and (2) respondent’s motion to

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 1 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1)

(lack of subject matter jurisdiction). 

I. Factual and Procedural Background 

For the purpose of these motions, the parties do not

dispute the following facts. (Resp’t Mot. to Dismiss 1.) In

October, 2005, respondent sent a letter to its retirees regarding

medical benefits for the upcoming year. (Thomas Decl. Ex. B.) 

This letter informed retirees that in light of changes in

Medicare benefits, specifically the new prescription drug

coverage effective on January 1, 2006, the company had elected to

discontinue retiree medical coverage for former employees who are

Medicare-eligible. (Id.) The letter further informed retirees

that those who were not Medicare-eligible could still sign up for

respondent’s benefit plan, although as of January 1, 2006,

respondent would no longer subsidize the retiree medical premium. 

(Id.) 

Respondent notified petitioner of these changes on

November 17 and 30, 2005. (Pet. ¶ 8.) Shortly thereafter,

petitioner filed a grievance, No. 05-08, in which it alleged that

these “unilateral” changes to the retiree medical plan reduced

the overall level of benefits and thus violated the plain terms

of the CBA. (Id. ¶ 9; id. Ex. B.) The grievance called for

expedited arbitration of the dispute, also pursuant to the terms

of the CBA. Respondent refused, and continues to refuse, to

arbitrate the matter. (Id. ¶¶ 10, 12.)

The provisions at issue come from the CBA entered into

by respondent and petitioner on behalf of “all employees of the

Accounting, Data Processing, Commercial (Call Center), Plant

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 2 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

(including Engineering), and Traffic Departments throughout the

telephone system . . . of the Company.” (Id. ¶ 4; id. Ex. A at

2.) This agreement, effective from October 1, 2004 through

September 30, 2008, states in Article 24 (“Employee Benefit

Programs”) that:

The Citizens Utilities Medical Plan (including . . .

Retiree Medical) . . . shall be provided for all

eligible employees in accordance with the terms of said

plans. The Company may make changes, additions, or

deletions to these plans, and my drop or add plans,

provided:

(a) That the changes do not reduce the overall level of

benefits,

(b) The changes apply to a majority of Citizens

Utilities employees covered under such plan, and

(c) The Company provides the Union with no less than 60

days notice of any intended changes and meets to

discuss these changes with the Union.

. . . 

In the event that any dispute arises as to whether the

proposed change does or does not reduce the overall

level of benefits the dispute will be referred to

expedited arbitration without exhaustion of the

grievance procedure [described in Article 20]. 

(Id. Ex. A at 39-40 (Art. 24.1).) Under the subheading “Retiree

Medical Plan,” the CBA simply states that “Employees hired on or

before December 31, 1995 shall retain Citizens Retiree Medical

with prescriptions and retiree life insurance.” (Id. Ex. A at 40

(Art. 24.4).) 

Having failed to convince respondent to arbitrate the

dispute that has arisen with regard to these terms and the

proposed changes, petitioner filed this motion to compel

arbitration on April 13, 2006. In response, respondent does not

contend that the aforementioned modifications to the Retiree

Medical Plan do not constitute changes that would trigger the

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 3 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In a letter formally refusing petitioner’s request to 1

arbitrate the matter, respondent provided the following reasons

for its decision: (1) “the Union does not currently represent

these employees” and (2) the Union is not raising an issue

covered by the current CBA between the parties . . . .” (Pet.

Ex. C (Jan. 13, 2006 Letter from Thomas E. Gausden to Tom

Dalzell).) However, respondent did not oppose petitioner’s

motion to compel for the latter reason.

4

duty to arbitrate as specified in Article 24.1. Instead, 1

respondent argues only that petitioner lacks standing to

represent the interests of former employees who are no longer

members of the union. This defense to the motion to compel

arbitration is also the basis for respondent’s Rule 12(b)(1)

motion to dismiss. White v. Lee, 227 F.3d 1214, 1242 (9th Cir.

2000) (noting that 12(b)(1) is the proper vehicle for challenging

plaintiff/petitioner’s standing).

II. Discussion

A. Petitioner’s Standing to Compel Arbitration 

“Section 301(a) of the Labor Management Relations Act

([LMRA]), 29 U.S.C. § 185, grants a district court jurisdiction

to compel arbitration under a collective bargaining agreement.” 

Hotel & Rest. Employees, & Bartenders Union, Local 703 v.

Williams, 752 F.2d 1476, 1478 (9th Cir. 1985). The question for

the court to resolve is simply whether “the arbitration clause is

. . . susceptible of an interpretation that covers the asserted

dispute.” United Steelworkers of Am. v. Warrior & Gulf

Navigation Co., 363 U.S. 574, 582-83 (1960) (further noting that

doubts are to “be resolved in favor of coverage”). In other

words, the court’s role is limited to determining “questions of

arbitrability”--the “gateway dispute[s] about whether the parties

are bound by a given arbitration clause.” Howsam v. Dean Witter

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 4 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

Reynolds, Inc., 537 U.S. 79, 84 (2002). 

However, as in every federal case, the petitioner who

seeks a motion to compel arbitration must have standing to pursue

such relief. “Standing . . . focuses on the complaining party to

determine ‘whether the litigant is entitled to have the court

decide the merits of the dispute or of particular issues.’” Am.

Legal Found. v. FCC, 808 F.2d 84, 88 (D.C. Cir. 1987) (quoting

Warth v. Seldin, 422 U.S. 490, 498 (1975)). An individual, or an

organization on its own behalf, satisfies the standing

requirement by alleging (1) a concrete personal injury in fact

(2) that is “fairly traceable to the challenged action of the

[respondent]” and (3) likely to be redressed by the relief sought

from the court. Friends of the Earth v. Laidlaw Envtl. Servs.,

528 U.S. 167, 181 (2000) (citing Lujan v. Defenders of Wildlife,

504 U.S. 555, 560-61 (1992)). Under certain circumstances, even

when an organization has not suffered an injury in fact, it may

nonetheless sue on behalf of its members and those who “possess

all of the indicia of membership in [the] organization.” Hunt v.

Wash. State Apple Adver. Comm’n, 432 U.S. 333, 345 (1977); Am.

Legal Found., 808 F.2d at 89.

Typically, a union seeking to compel arbitration

pursuant to the terms of a CBA files a petition on behalf of its

members who are employees of the respondent employer. By its

terms, the LMRA establishes a properly recognized union’s

capacity to represent its member employees in such suits. See 29

U.S.C. § 185(b) (“Any such labor organization may sue or be sued

as an entity and in behalf of the employees whom it represents in

the courts of the United States.”); 29 U.S.C. § 159(a)

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 5 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In Allied Chemical, a factually similar case where an 2

employer unilaterally discontinued a retiree benefit plan when

Medicare was first established in the mid-1960s, the Court held

that an employer does not commit an unfair bargaining practice

when it circumvents the union and negotiates directly with

retirees. 404 U.S. at 188. The Court also observed that while a

union can bargain for retiree benefits if the employer agrees,

doing so does not saddle the union with a duty to represent

retirees in future negotiations regarding the bargained for

benefits. Id. at 182 & n.20. Instead, the Court suggested,

retirees can and should sue the employer directly for breach of

contract under section 301 when it unilaterally alters their

bargained for benefits. Id. at 182 (citing LRMA section 301, 29

U.S.C. § 185).

6

(establishing procedures for certifying a particular union as the

representative of a particular group of employees). The Supreme

Court has, however, held that retirees are not employees and are

not members of the union. See Allied Chem. & Alkali Workers of

Am., Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S.

157, 172 (1971) (“[Retirees] are not ‘employees’ within the

meaning of the collective-bargaining obligations of the Act . . .

.”) Additionally, retirees do not possess all the indicia of

membership. Compare Hunt, 432 U.S. at 344-45 (recognizing the

ability to elect an organization’s leadership as one indicator of

membership), with Allied Chem., 404 U.S. at 174 (recognizing that

the National Labor Relations Board (“NLRB”) has denied retirees

the right to vote in representation elections where unions are

selected). It follows then that a union cannot assume that it 2

has standing as an organization to represent retirees, despite

its ability to sue on behalf of member employees. 

Still, the question in this case was not actually

decided by the Supreme Court in Allied Chemical. The Court held

only that an employer does not have a duty under the terms of the

LRMA to bargain collectively with the duly recognized

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 6 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The difference between Allied Chemical and this case 3

stems from the structure of the LRMA. The act divides

responsibility for labor relations management and entrusts the

NLRB with responsibility for identifying unfair labor practices,

as defined by statute. Meanwhile, “[t]he district court is

vested with limited jurisdiction pursuant to section 301 of the

[LMRA]” to resolve “‘[s]uits for violation of contracts between

an employer and a labor organization representing employees in an

industry affecting commerce.’” Amalgamated Clothing & Textile

Workers Union, AFL-CIO v. Facetglas, Inc., 845 F.2d 1250, 1252

(4th Cir. 1988) (quoting 29 U.S.C. § 185(a)) (emphasis added). 

Allied Chemical involved a union’s claim that unilateral changes

to retiree benefits as agreed to in the CBA constituted an unfair

labor practice. In contrast, the instant action involves a

union’s purely contractual claim that the employer violated the

express terms of its CBA with the union.

7

representative of its employees before initiating “a unilateral

mid-term modification of a permissive term such as retirees’

benefits.” Id. at 188. It did not address the circumstances

under which a union can act to enforce the terms of a CBA entered

into by the union and an employer. See Textile Workers of Am., 3

AFL-CIO, Local 129 v. Columbia Mills, Inc., 471 F. Supp. 527,

530-31 (N.D.N.Y. 1978) (“Here, unlike [in Allied Chemical], the

issue is not whether the Company must bargain with the Union over

the benefits of retired employees, but rather whether the Company

did, in fact, contractually commit itself to provide continuous

insurance coverage for retirees for the duration of their natural

lives.”).

Likewise, neither the Ninth Circuit nor its district

courts have faced the issue presented here. Consequently, the

parties provide authority from other circuits that have dealt

with the matter in a variety of ways. On one end of the

spectrum, the Third Circuit has held that “under accepted

contract principles the union has a legitimate interest in

protecting the rights of the retirees and is entitled to seek

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 7 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Respondent urges the court to ignore Canron entirely 4

because, unlike later cases from other circuits, Canron did not

address whether the union had the consent of the retirees to file

suit on their behalf. (Resp’t Reply 3 n.1.) However, contrary

to respondent’s arguments, the logical inference to be drawn from

Canron’s failure to mention whether the union had the consent of

the retirees to sue on their behalf is that this was not a

relevant factor that influenced the outcome of the case. 

8

enforcement of the applicable contract provisions.” United

Steelworkers v. Canron, 580 F.2d 77, 80-81 (3d Cir. 1978); see 4

also UAW v. Yard-Man, 716 F.2d 1476, 1486 (6th Cir. 1983) (noting

in dicta that “[a]s a signatory to the contract [the union] could

bring an action for the third party beneficiary retirees.”); see

also Anderson v. Alpha Portland Indus., Inc., 752 F.2d 1293, 1296

(8th Cir. 1985) (recognizing in dicta that even when retiree

benefits are at stake, if a union chooses to represent the

retirees, “an employer may not refuse to arbitrate its

contractual obligations with the union”). However, the bulk of

authority addressing the issue has adopted a rule whereby

“retirees are free to make a union their agent [for taking their

claims to arbitration] if they so choose.” Rossetto v. Pabst

Brewing Co., Inc., 128 F.3d 538, 540 (7th Cir. 1997) (emphasis

added); Cleveland Elec. Illuminating Co. v. Util. Workers Union

of Am., 440 F.3d 809, 817 (6th Cir. 2006) (upholding the district

court’s decision which required the union to “obtain the consent

of the retirees before proceeding to arbitration”); Int’l Ass’n

of Machinists & Aerospace Workers Local Lodge 2121 AFL-CIO v.

Goodrich Corp., 410 F.3d 204, 212 (5th Cir. 2005) (holding that a

union has standing under section 301 to represent retirees who

expressly authorized the union to do so); Schweizer Aircraft

Corp. v. Local 1752, Int’l Union, United Auto., Aerospace &

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 8 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

Agric. Implement Workers of Am., 29 F.3d 83, 87 (2d Cir. 1994)

(expressing doubt that a union has standing to assert the rights

of individual retirees in a dispute with a former employer);

Paper, Allied-Indus., Chem. & Energy Workers Int’l Union v. UCAR

Carbon Co., Inc., 368 F. Supp. 2d 548, 551 (N.D. W.Va. 2005).

Regardless of the volume of cases requiring retiree

consent, however, the Ninth Circuit, like the Third in Canron,

has recognized that unions have an “undeniable interest[] in

seeing that negotiated benefits are paid in accordance with the

terms of collective bargaining contracts . . . .” Rehmar v.

Smith, 555 F.2d 1362 (9th Cir. 1977). To fully vindicate this

interest, unions need the ability to file suit for violations of

the terms of the CBAs they enter into, regardless of who benefits

from the union’s attempt to reinstate those terms. See United

Food & Commercial Workers Int’l Union, AFL-CIO v. Alpha Beta Co.,

736 F.2d 1371, 1375 (9th Cir. 1984) (rejecting the employer’s

argument that a dispute is not arbitrable because the people

impacted by the alleged violation of the CBA were no longer part

of the bargaining unit). Thus, a determination that petitioner

lacks standing to safeguard the rights of retirees specifically

provided for in the terms of a CBA would appear to be

inconsistent with the Ninth Circuit’s understanding of the role

and purpose of unions. 

Additionally, accepted principles of contract law

provide further support for petitioner’s standing in this case. 

Significantly, “[a] promise in a contract creates a duty in the

promisor to the promisee to perform the promise even though he

also has a similar duty to an intended beneficiary.” Restatement

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 9 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Were it not for 29 U.S.C. § 185, petitioner’s ability 5

to file suit for violation of the terms of a CBA on employees’

behalf would be questionable. Compare Restatement (Second) of

Agency § 363 (1957) (“An agent who makes a contract on behalf of

a principal cannot maintain an action thereon in his own name on

behalf of the principal . . . .”), with 29 U.S.C. § 185(a)-(b)

(“Suits for violation of contracts between an employer and a

labor organization representing employees . . . may be brought in

any district court of the United States” and a labor organization

representing these employees “may sue or be sued as an entity and

in behalf of the employees whom it represents . . . .”).

10

(Second) of Contracts § 305(1) (1981). The fact that the

retirees themselves might have an arguably duplicative cause of

action against the employer is thus, pursuant to third-party

beneficiary law, not determinative of the petitioner-union’s

right to file suit for a respondent-employer’s alleged breach of

bargained for terms affecting retirees. Furthermore, because the

promisee-employees, who actually entered into the CBA with the

employer through their bargaining agent, have an enforcement

right, the union, pursuant to the authority given to it in 29

U.S.C. § 185(b), has standing to assert that right. See NLRB v. 5

Cummer-Graham Co., 279 F.2d 757, 759 (5th Cir. 1960) (recognizing

that “[l]abor organizations . . . act in a representative

capacity and on behalf of the employees [who] are the real

parties in interest.”). An employer cannot bargain for terms in

an existing CBA, terms that may have been negotiated at the

expense of other benefits, and then unilaterally abandon them by

claiming that the parties that actually entered into the

agreement lack standing to enforce it.

At no time has respondent argued that the dispute over

the changes in the Retiree Medical Plan is not a matter for

arbitration pursuant to the terms of the CBA that it entered into

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 10 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

with petitioner. Instead, respondent has only argued that

petitioner lacks standing to enforce the terms of the CBA. 

Because the court has rejected this proposition and herein holds

that petitioner can challenge respondent’s “unilateral”

adjustment of retiree benefits, an order compelling respondent to

arbitrate the matter is warranted.

B. Attorneys’ Fees

Petitioner, who will be awarded the relief sought by

this motion, has also requested attorneys’ fees. “[A]bsent

contractual or statutory authorization, a prevailing litigant

ordinarily may not collect attorneys’ fees.” Int’l Union of

Petroleum & Indus. Workers v. W. Indus. Maint., Inc., 707 F.2d

425, 428 (9th Cir. 1983). Still, the court may award fees “when

the losing party has acted in bad faith, vexatiously, wantonly,

or for oppressive reasons.” Id. (quotation omitted). 

Additionally, because federal policy favors arbitration, a less

demanding “without justification” standard applies in cases

involving refusals to arbitrate. United Food & Commercial

Workers Union v. Alpha Beta Co., 736 F.2d 1371, 1382-83 (9th Cir.

1984) (holding that an “award of fees is appropriate when a party

frivolously or in bad faith refuses to submit a dispute to

arbitration or appeals from an order compelling arbitration”).

Given the lack of any controlling authority on the

issue presented by the parties and the discord among appellate

courts on the matter, the court can hardly say that respondent’s

refusal to arbitrate has been in bad faith or without

justification. Consequently, attorneys’ fees for this motion to

compel arbitration are not warranted. 

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 11 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

IT IS THEREFORE ORDERED that petitioner’s motion to

compel arbitration be, and the same hereby is, GRANTED. 

IT IS FURTHER ORDERED that respondent’s motion to

dismiss be, and the same hereby is, DENIED.

IT IS FURTHER ORDERED that petitioner’s motion for

attorneys’ fees be, and the same hereby is, DENIED.

DATED: May 17, 2006

Case 2:06-cv-00677-WBS-DAD Document 19 Filed 05/18/06 Page 12 of 12