That Collective Bargaining Agreement contained the following clauses: 1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SPALDING AUTOMOTIVE, INC. :

 : CIVIL ACTION

v. :

: NO. 04-5975

U.A.W. LOCAL 1612 :

SURRICK, J. MAY 31, 2006

MEMORANDUM & ORDER

Presently before the Court are Plaintiff Spalding Automotive, Inc.’s Motion For

Summary Judgment (Doc. No. 10) and Defendant U.A.W. Local 1612’s Motion For Summary

Judgment (Doc. No. 11). For the following reasons, Plaintiff’s Motion will be denied and

Defendant’s Motion will be granted.

I. BACKGROUND

The facts here are entirely undisputed and are fully set forth in the Arbitration Award at

the core of this dispute. (Stipulated Rec. at Ex. 1.) Plaintiff Spalding Automotive, Inc.

manufactures automotive parts for original equipment manufacturers, such as General Motors. 

(Id. at 4.) Defendant is a labor organization which represents the production and maintenance

employees at Plaintiff’s plant in Bensalem, Pennsylvania. (Id.) The parties formerly operated

under a contract known as the “December 1, 1995 to November 30, 2000 Collective Bargaining

Agreement.” Under this Agreement, Plaintiff established a 401(k) plan for its employees. 

Participants were entitled to contribute up to 10% of their total salary to this plan. In addition,

Plaintiff agreed to match participating employees’ contributions, initially at a rate of 10% and

then at a rate of 20% beginning December 1, 1997. (Id. at 4-5.) 1

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 1 of 12
The Company shall match 10 percent of the employee’s contribution,

effective December 1, 1996.

. . .

The Company’s matching contribution shall be increased to 20 percent of

the employee’s contribution, effective December 1, 1997.

(Stipulated Rec. at Ex. 1, pp. 4-5.) 

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In 2000, the parties commenced negotiations for a new Collective Bargaining Agreement

(“CBA”), which would be in effect from December 1, 2000 to November 30, 2005. During

negotiations, the issues discussed included changes to the 401(k) plan, including measures to

increase employee participation. (Id. at 5.) Defendant speculated that participation might

increase if Plaintiff agreed to raise the rate at which it matched contributions (the “matching

rate”). In its initial list of written proposals, Defendant recommended that the matching rate be

increased from 20% to 50% of employee contributions. (Id.)

As negotiations continued, the parties narrowed their differences to a few major issues,

among them the 401(k) plan. At some point, Defendant rejected a proposal that would have

substantially reduced the rate at which Plaintiff made matching contributions to the plan. Later,

Wes Keuhnle, the COO and chief negotiator for Plaintiff, proposed that Plaintiff’s matching

contribution be equal to “50% percent [sic] of the first five percent (5%) of the employee’s

contribution.” (Id. at 6, 7; Stipulated Rec., Ex. 2 at 33.) This proposal, combined with a

substantial wage increase and more extensive health insurance coverage, was adopted by the

parties in the final economic package and became part of the new CBA.

In the years 2001 and 2002, Plaintiff calculated its match to the 401(k) plan by

multiplying each employee’s contribution by 5% and then by 50%, so that Plaintiff’s effective

matching rate equaled 2.5%. (Stipulated Rec. at Ex. 1, p. 6.) During the summer of 2003,

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 2 of 12
 Defendant’s interpretation, while not entirely obvious from the text of this letter, can be 2

inferred based on the calculations attached by DiClementi. (Stipulated Rec. at Ex. 8.) In

particular, DiClementi’s hypothetical examples did not address the situation where the

employee’s contribution exceeds 5% of his total salary. Based on the attached calculations,

however, it is clear that Defendant agrees that contributions in excess of the “first 5%” of salary

were be eligible for matching. (Id.)

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employee Leonard Wierman complained to Kuehnle that Plaintiff was not properly calculating

its matching contribution to Wierman’s account. Eventually, Wierman brought his complaint to

the attention of Michael P. Glenning, the Union’s President. (Id. at 7.) On August 13, 2003,

Glenning submitted a grievance letter to Kuehnle, in which he complained that “the employer

matching contribution has been under funded.” (Stipulated Rec. at Ex. 5.) In a second letter,

sent October 10, 2003 by Vice-President Anthony DiClementi, the Union explained that it

understood the terms of the CBA to require Plaintiff to match 401(K) contributions at a rate of

50%, but that contributions in excess of 5% of an employee’s yearly salary were not eligible for

matching. (Stipulated Rec. at Ex. 8.) Defendant argued that Plaintiff should have contributed 2

$25,974.32 to the 401(k) plan during 2002, while actual matching contributions that year

amounted to only $2,060.23. (Id.)

As per the terms of the CBA, the grievance was eventually submitted to arbitration for a

final and binding decision. (Stipulated Rec. at Ex. 2, p. 10.) The arbitrator, Lawrence S.

Coburn, issued an Opinion and Award on December 3, 2004. (Stipulated Rec. at Ex. 1.) Coburn

reviewed Article 38 of the CBA, which reads, in pertinent part:

Section 4.

Employees shall be entitled to contribute up to 10 percent of their total salary into

the 401(k) plan.

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 3 of 12
 Coburn suggests that the Agreement could have simply stated that “matching 3

contribution shall be decreased to 2.5% of the employee’s contribution, effective December 1,

2001.” (Ex. 1 at 13-14.)

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Section 5.

The Company shall match 50% percent [sic] of the first five percent (5%) of the

employee’s contribution, effective December 1, 2001.

(Stipulated Rec. at Ex. 2, p. 33.) He concluded the language in Section 5 was “not so clear.” If a

decreased matching rate were actually intended, Coburn questioned the ambiguity arising from

the CBA’s failure to clearly announce this impending decrease, as well as its statement of the

purported new rate as the product of two percentages, rather than as a single figure. He also

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pointed to the inclusion of the word “first” in Section 5, which would be superfluous under

Plaintiff’s interpretation. (Id. at 14.) Upon comparison to clauses in the preceding Agreement,

Coburn found limited validity in Plaintiff’s proposed interpretation. According to Coburn:

[I]f the Company intended the ambiguous language of Article 38, Section 5 to

constitute such a drastic reduction in its matching contribution (from 20% to

2.5%), it was required to do either of two things: (1) make it clear by so stating in

plain language; or (2) explain its interpretation of the ambiguous language across

the table.

(Id. at 15.) Plaintiff had done neither. As such, “the wording, context and bargaining history of

Section 5 compel[led] the conclusion that the Company is required to pay into each employee’s

Plan account 50% of the first 5% of gross wages contributed[.]” (Id. at 13.) Plaintiff was

required to make the plan whole for the years 2001, 2002, and 2003 by recalculating its

contribution based on this formula. (Id. at 18.)

On December 22, 2004, Plaintiff filed a Complaint in this Court, seeking to vacate

Coburn’s Arbitration Award. Defendant subsequently filed a counterclaim for enforcement of

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 4 of 12
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the Arbitration Award. (Doc. No. 4 at 5-7.) Currently before us are the parties’ cross-motions

for summary judgment.

II. LEGAL STANDARD

Summary judgment is appropriate “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a judgment as a

matter of law.” Fed. R. Civ. P. 56(c). A genuine issue of material fact exists only when “the

evidence is such that a reasonable jury could return a verdict for the non-moving party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party moving for summary

judgment bears the initial burden of demonstrating that there are no facts supporting the

nonmoving party’s legal position. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). Once

the moving party carries this initial burden, the nonmoving party must set forth specific facts

showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); Matsushita Elec. Indus. Co.

v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (explaining that the nonmoving party “must do

more than simply show that there is some metaphysical doubt as to the material facts”).

III. LEGAL ANALYSIS

It is well settled that the scope of judicial review of arbitration awards under collective

bargaining agreements is both highly deferential and extremely limited. See United

Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 36 (1987); W.R. Grace & Co. v. Local

259, Int’l Union of the United Rubber Workers, 461 U.S. 757, 764 (1983); Stroehmann Bakeries,

Inc. v. Local 776, Int’l Brotherhood of Teamsters, 969 F.2d 1436, 1441 (3d Cir. 1992). Where a

collective bargaining agreement includes an arbitration clause, “it is assumed that the parties

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bargained for a grievance resolution procedure in which an arbitrator would interpret the

agreement,” rather than a court sitting in judgment. Brentwood Med. Assocs. v. United Mine

Workers of Am., 396 F.3d 237, 240 (3d Cir. 2005). Unfettered judicial review risks invalidating

this bargain while also undermining the federal “objective of settling labor disputes by

arbitrators expert in industrial practices and customs.” Stroehmann Bakeries, 969 F.2d at 1441

(citing United Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596 (1960)).

As a result, we must enforce an arbitration award as long as it “draws its essence from the

collective bargaining agreement,” meaning the award’s “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.” Enterprise Wheel, 363 U.S. at 597, quoted in News Am. Publ’ns, Inc.

v. Newark Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990); Brentwood Med.

Assocs., 396 F.3d at 241. Moreover, “[a] court may not overrule an arbitrator simply because it

disagrees with the arbitrator’s construction of the contract, or because it believes its

interpretation of the contract is better than that of an arbitrator.” News Am. Publ’ns, 918 F.2d at

24 (internal citations omitted). Rather, “[a]s long as the arbitrator has arguably construed or

applied the contract, the award must be enforced, regardless of the fact that a court is convinced

that [the] arbitrator has committed a serious error.” Id. “Only where there is a ‘manifest

disregard of the agreement, totally unsupported by principles of contract construction and the

law of the shop, may a reviewing court disturb the award.’” Id. (quoting NF&M Corp. v. United

Steelworkers of Am., 524 F.2d 756, 759 (3d Cir. 1975) (internal quotations omitted)); see also

Exxon Shipping v. Exxon Seamen’s Union, 993 F.2d 357, 360 (3d Cir. 1993).

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 6 of 12
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In this case, Plaintiff contends that the relevant provisions of the CBA unequivocally

establish a 2.5% matching rate. (Doc. No. 10 at 10.) According to Plaintiff, the language in

Article 38, Section 5 of the CBA is “plain and unambiguous” and thus no room exists for its

interpretation or construction. (Doc. No. 10 at 11 (citing Williston, Interpretation and

Construction of Contracts § 30:4 at 37).) Plaintiff argues that Coburn’s decision to construe the

clause in favor of Defendant therefore represents a manifest disregard of Article 5, Section 11 of

the CBA. (Doc. No. 10 at 10.) Section 11 provides that “[t]he arbitrator shall have no authority

to add to, subtract from, modify or change any of the terms of this Agreement.” (Stipulated Rec.

at Ex. 2, p. 10.)

Under Pennsylvania law “[a] contract is ambiguous if it is reasonably or fairly

susceptible of different constructions and is capable of being understood in more senses than one

and is obscure in meaning through indefiniteness of expression or has a double meaning.” Beta

Spawn, Inc. v. FFE Transp. Servs., 250 F.3d 218, 227 (3d Cir. 2001); see also Diamond v.

Lundy, 177 F. Supp. 2d 371, 378 (E.D. Pa. 2001), aff’d sub nom. Lundy v. Hochberg, 79 Fed.

App’x 503 (3d Cir. 2003). Plaintiff is correct that a finding of ambiguity in a contract must be

made on “an objective basis.” (Doc. No. 10 at 11 (quoting Williston § 30:4 at 51-54).) 

However, while Plaintiff focuses on the confined wording of Section 5, this determination

actually requires one to look beyond the “detached section of the contract” under review. 

Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123, 1130 n.31 (3d Cir. 1969). Other

considerations include: “(1) the surrounding circumstances, prior to negotiations, all relevant

incidents bearing on the intent of the parties; (2) who prepared the instrument; (3) the relative

bargaining position of the parties; (4) the doctrine of practical construction; and (5) the main

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 7 of 12
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purpose of the contract.” Id. (citing Williston § 600A); see also Diamond, 177 F. Supp. 2d at

378 (“A party may introduce extrinsic evidence to show that a provision of the contract is

ambiguous, but that evidence must show ‘the parties’ linguistic reference,’ not merely the

parties’ subjective expectations.”).

In this case, Coburn reviewed the CBA based on Plaintiff’s proffered interpretation. He

looked at Article 38, Section 4, the immediately preceding clause, which permits contributions

up to 10% of an employee’s total salary, as well as the previous CBA, which enunciated the

matching rate as a single percentage. He also considered Sections 4 and 5 of the current CBA in

light of the “bargaining that preceded the final language proposed” by Plaintiff, particularly the

rejection of a proposal to increase the matching rate to a flat 50% without any cap. (Stipulated

Rec. at Ex. 1, p. 14.) Based on these permissible considerations, Coburn concluded that the

language of the CBA was indeed ambiguous.

Upon finding Section 5 ambiguous, Coburn was faced with ascertaining its proper

interpretation. A contract’s construction must be sensible, Operative Bricklayer’s Union No. 64

v. Bricklayer’s Local Union No. 1, 45 F.R.D. 429, 431 (E.D. Pa. 1968), and must result in a

meaning which “a reasonably intelligent person would accord it.” Crispin Co. v. Del. Steel Co.,

283 F. Supp. 574, 576 (E.D. Pa. 1968). The most important step in arriving at the appropriate

construction is a “determination of the real intention of the parties.” Ludwig Honold Mfg., 405

F.2d at 1131. Here, Coburn determined that the presence of the word “first” in Section 5, when

viewed together with Section 4, supported Defendant’s interpretation of the CBA. Coburn

determined that the phrase “‘first’ five percent is juxtaposed against the full 10% of salary that

an employee may contribute into the plan. When Sections 4 and 5 are read together, it becomes

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 8 of 12
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clear that just as the 10% is a percentage of total salary, the ‘first’ five percent also refers to a

percentage of total salary.” (Stipulated Rec. at Ex. 1, p. 14.) This reading certainly makes sense. 

Coburn properly found that this reading explained both the use of the word “first” and the

otherwise awkward language of Section 5. Moreover, this interpretation was understandable in

light of Defendant’s desire to increase the matching rate to 50% and Plaintiff’s reluctance to

accept that proposal. Under Defendant’s version, the matching rate is increased to 50%, but

matching contributions are capped in that they are not applied to employee contributions in

excess of 5% of an employee’s salary. In addition, Coburn ultimately concluded that “the

language, ‘the first five percent (5%) of the employee’s contribution,’ is not an unreasonable

contraction of ‘the first five percent (5%) of salary contributed by the employee.’ In fact,

because of the presence of the word ‘first,’ this interpretation is the only reasonable

interpretation of the language.” (Stipulated Rec. at Ex. 1, p. 15.) 

Plaintiff claims that this Arbitration Award lacks a rational basis. (Doc. No. 10 at 14.) 

Plaintiff agrees that the phrase “the first five percent (5%) of the employee’s contribution” is a

reasonable contraction of the phrase “the first five percent (5%) of salary contributed by the

employee,” but argues that both are equivalent to five percent of the amount contributed from the

employee’s salary. As such, Plaintiff avers that the Award in favor of Defendant is irrational. 

Put simply, two interpretations exist: the 50% matching rate applies to either (1) 5% of salary or

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 9 of 12
 Calculation of Possible 401(K) Matching Contributions:

4

Year 20% Match

(prior CBA)

50% Match

(Union’s

negotiation

proposal)

Company’s

Proposed

Interpretation

(2.5% Match)

Union’s

Proposed

Interpretation

(50% Rate;

First 5% of

Salary)

2001 $ 15,444.32 $ 38,610.80 $ 1,930.45 $ 24,328.87

2002 $ 16,481.85 $ 41,204.64 $ 2,060.23 $ 25,974.32 

2003 $ 14,297.67 $ 35,744.17 $ 1,787.21 $ 23,171.78

Total $ 46,223.84 $ 115,559.61 $ 5,777.89 $ 73,474.97

(Raw data from Stipulated Rec. at Exs. 13-15.)

 We also note that “ambiguity in an opinion accompanying an award is not a reason for 5

determining that an award is unenforceable as beyond the scope of the arbitrator’s authority.” 

UPS, Inc. v. Int’l Brotherhood of Teamsters, 55 F.3d 138, 141 (3d Cir. 1995).

10

(2) 5% of contributions. Plaintiff, of course, favors the latter. Although the Opinion may have 4

been more clearly phrased, this dispute involves the parsing of close contractual language, and

the Award certainly cannot be said to lack a rational basis. Given the context of the Opinion, it 5

is evident that in writing “first five percent (5%) of salary contributed by the employee,” Coburn

was referring to the first interpretation—5% of the employee’s salary. Plaintiff’s argument is

without merit.

We are satisfied that Coburn’s Opinion and Award is well-reasoned and in accordance

with basic legal principles of contract interpretation. In performing his review of the disputed

contract language, it cannot be said Coburn demonstrated “manifest disregard of the agreement”

or that his finding of ambiguity was “totally unsupported by principles of contract construction

and the law of the shop.” See NF&M Corp., 524 F.2d at 759. It is clear that this Award is, in

some rational way, derived from the CBA that governed the parties’ relationship. See

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 10 of 12
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Brentwood Med. Assocs., 396 F.3d at 241. In order to avoid future confusion, and litigation, the

parties would be advised to more carefully draft their next collective bargaining agreement. 

Nonetheless, vacatur of Arbitrator Coburn’s Opinion and Award is not appropriate at this

juncture.

Accordingly, Plaintiff’s Motion will be denied and Defendant’s Motion will be granted. 

An appropriate Order follows.

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 11 of 12
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SPALDING AUTOMOTIVE, INC. :

 : CIVIL ACTION

v. :

: NO. 04-5975

U.A.W. LOCAL 1612 :

MEMORANDUM & ORDER

AND NOW, this 31 day of May, 2006, upon consideration of Plaintiff’s Motion For st

Summary Judgment (Doc. No. 10) and Defendant’s Motion For Summary Judgment (Doc. No.

11), it is ORDERED that Plaintiff’s Motion is DENIED and Defendant’s Motion is GRANTED. 

Plaintiff is directed to comply with the terms of the Opinion and Award entered December 3,

2004 by Arbitrator Lawrence S. Coburn, AAA Case No. 14 300 00870 04.

IT IS SO ORDERED.

 

BY THE COURT:

/s R. Barclay Surrick

_________________________

R. Barclay Surrick, Judge

Case 2:04-cv-05975-RBS Document 14 Filed 05/31/06 Page 12 of 12