Opinion ID: 429477
Heading Depth: 1
Heading Rank: 1

Heading: introduction

Text: 1 In this case we are confronted with the competing tensions of access to the courts and arbitration. The issue presented is whether an arbitration award on a grievance under a collective bargaining agreement is res judicata of an Employee Retirement Income Security Act (ERISA) claim arising out of the same facts. A related issue is whether exhaustion of arbitration procedures for contractual grievances is required prior to bringing a statutory claim under section 510 of ERISA. The district court held that the arbitration award on a contractual grievance adverse to former employees of the Continental Can Company barred their ERISA claims against their former employer. We reverse and remand. FACTS AND PROCEEDINGS BELOW 2 The plaintiffs are former employees (employees) of the Continental Can Company (Continental) who were laid off from the company's Los Angeles plant between 1976 and the present. 1 The employees' union representative, United Steel Workers of America (Union), filed a grievance on March 5, 1980 alleging that Continental's layoff of these employees and its correspondent shift of production to other plants violated various provisions of the collective bargaining agreement. The agreement mandates final and binding arbitration of contractual disputes. The Union pursued the grievance to arbitration. The arbitrator denied the grievance, concluding that Continental's conduct was in response to changing market conditions and did not violate the collective bargaining agreement. 3 On August 13, 1981 the Union filed a second grievance. This was identical to the first grievance, but covered the period subsequent to the arbitrator's decision. No disposition has been rendered in this grievance. 4 The employees then commenced this action. Their complaint alleges that Continental violated section 510 of ERISA, 29 U.S.C. Sec. 1140, by laying employees off to prevent them from obtaining the number of years of continuous service required to qualify for Continental's Employee Pension Benefit Plan and Employee Welfare Plan. 5 These plans fall within the coverage of ERISA. See 29 U.S.C. Sec. 1003(a)(1), (2). Section 510 of ERISA provides in pertinent part that: 6 [i]t shall be unlawful ... to discharge, fine, suspend, expel, discipline, or discriminate against a participant or a beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under [an employee benefit plan]. 7 29 U.S.C. Sec. 1140. 8 This statutory claim arises from the same events that spurred the contractual grievance--Continental's laying off employees and shifting production work from its Los Angeles plant which resulted in the laid-off employees not being recalled to work. The district court granted Continental's motion for summary judgment, holding that the arbitrator's decision on the contractual claim is res judicata of the employees' ERISA claim. This dismissal came before the plaintiffs were able to pursue any discovery.