Court Opinion

ID: 4016148
Source: CourtListenerOpinion
Date Created: 2016-07-15 17:00:30.971325+00
Date Added: 2024-06-11T12:17:41.148780
License: Public Domain

NOT PRECEDENTIAL

           UNITED STATES COURT OF APPEALS
                FOR THE THIRD CIRCUIT
               __________________________

                    No. 15-2941 and 15-3542
                 __________________________

BROCKWAY MOULD, INC., a Subsidiary of Ross International, Inc.
                         Appellant in No. 15-2941

                                v.

           UNITED STEEL PAPER AND FORESTRY
            RUBBER MANUFACTURING ENERGY
            ALLIED INDUSTRIAL AND SERVICE
            WORKERS INTERNATIONAL UNION;
        SERVICE WORKERS INTERNATIONAL UNION
                 on behalf of its LOCAL 71
                              Appellants in No. 15-3542
                 _____________________

         On Appeal from the United States District Court
             for the Western District of Pennsylvania
                 District Court No. 2-13-cv-01589
         District Judge: The Honorable David S. Cercone
                     _____________________

        Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                         July 11, 2016

    Before: SMITH, JORDAN, and RENDELL, Circuit Judges

                 (Opinion Filed: July 15, 2016)
                             _____________________

                                    OPINION
                             _____________________

SMITH, Circuit Judge.

      This appeal stems from a labor arbitration between Appellant Brockway

Mould, Inc. (“Brockway”) and Appellee United Steel, Paper and Forestry, Rubber,

Manufacturing, Energy, Allied Industrial and Service Workers International Union

on behalf of its Local 71 (“Union”). The Union filed grievances against Brockway

on behalf of fourteen of its members who were former employees of Brockway.

The Union claimed that, under the parties’ then-current collective bargaining

agreement, Brockway owed the aggrieved employees certain pension benefits

following the permanent closure of Brockway’s glass-mold manufacturing plant,

and that Brockway had refused to provide these benefits.             Following the

unsuccessful grievance process, and consistent with the parties’ bargaining

agreement, the dispute was submitted for binding arbitration. After the arbitrator

issued an award in the Union’s favor, Brockway brought an action in the District

Court to vacate the award. The District Court denied Brockway’s motion to vacate

the award and granted the Union’s motion to enforce the award. The court also


 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.

                                         2
denied the Union’s Motion for Specific Relief. For the reasons that follow, we will

affirm.

                  I. FACTUAL AND PROCEDURAL BACKGROUND

      Ross International, Inc. (“Ross”) entered into an asset purchase agreement

(“purchase agreement”) in January 1994 with Owens-Illinois, Inc. and Brockway

Glass Container, Inc.1 (collectively, “Owens”) whereby Ross purchased from

Owens a glass-mold plant called the Brockway Mould plant.2 As part of the

purchase agreement, Brockway did not purchase the assets from the Owens

pension plan. In conjunction with the purchase agreement, Brockway and Owens

entered into a Pension Agreement governing each parties’ obligations vis-à-vis the

pension benefits of the former Owens employees who became Brockway

employees when the deal was consummated (“transferred employees”). Under the

Pension Agreement, Owens agreed that it would be responsible for paying that

portion of the transferred employees’ pension benefits attributable to their years of

service with Owens prior to their transfer to Brockway. For its part, Brockway

agreed that the transferred employees’ years of employment with Owens would

count toward their “eligibility for and accrual of pension benefits” under the

1
 Brockway Glass Container, Inc. is a corporate entity unrelated to Appellant
Brockway.
2
  Brockway is a subsidiary of Ross and the operator of the plant from 1994 until its
closing in 2012. Hereinafter, we will refer to Ross and Brockway as “Brockway.”
                                         3
Brockway pension plan. Nevertheless, the Pension Agreement also made clear that

the amount payable to the transferred employees under the Brockway pension plan

“shall be offset on a dollar-for-dollar basis by the pension benefits properly

payable” to the transferred employees under the Owens pension plan, “or any

successor plan thereto.”3 App. 60.

      Shortly after Brockway assumed control of the plant, Owens amended its

pension plan to eliminate enhanced pension benefits in the event of a permanent

plant closure.   Then, in 1996, Brockway and the Union entered into a new

collective bargaining agreement (“CBA”).4 In Article 18 of the CBA, which deals

with pensions, Brockway agreed to provide such a plant-closure benefit:

      When [Brockway] elects to close a plant . . . permanently, an
      employee under age sixty (60) whose employment is terminated as a
      result of such closing . . . may retire and receive a pension benefit . . .
      provided he has thirty (30) or more full years of credited service at the
      date of such closing, or . . . is at least age fifty-five with at least ten
      (10) or more full years of credited service at the date of such closing
      ....

3
  Take, for example, a transferred employee who is eligible under the Brockway
pension plan for a benefit of $1,500 per month based on his combined years of
eligible employment, first at Owens, then at Brockway. If, under the Owens
pension plan, that employee would be eligible for a benefit of $500 per month,
then, according to the Pension Agreement between Brockway and Owens,
Brockway was on the hook for only $1,000 per month.
4
  Although the 1996 CBA expired in 1999, subsequent collective bargaining
agreements between Brockway and the Union are, at least for purposes of this
dispute, identical to the 1996 CBA. Therefore, we will henceforth refer to these
agreements as “the CBA.”

                                          4
App. 103.

      As part of the negotiations leading up to the CBA, Brockway drafted a letter

(“Brockway letter” or “letter”) that was ultimately incorporated into the CBA as an

exhibit. The letter “attempted to set forth . . . a very basic clarification” of the

Pension Agreement, discussed above, between Owens and Brockway, in order to

“hel[p the Union] understand the operation of Article 18, Pensions since the sale of

the [plant].”   App. 120; see also App. 181 (2011 CBA).          In clarifying “the

operation of Article 18” of the CBA, the letter explained that transferred

employees “received credited service under the [Owens pension plan] through the

sale date of January 3, 1994,” which is the closing date of the purchase agreement

between Brockway and Owens, and that thereafter Brockway “became responsible

for any future credited service to these employees.” App. 120. The letter then

noted that “the credited service these [transferred] employees earned under the

[Owens pension plan] is credited under the [Brockway pension plan], provided it

has not been canceled by a break in service.” App. 120.      However, “no service

would be credited and no benefits would be computed on either overlapping or

duplicative periods of service. The ultimate pension benefit to be provided to these

employees shall come in part from the [Owens pension plan] and in part from the

[Brockway pension plan].” App. 120-21.

                                         5
      Brockway permanently closed the plant in October 2012. Following the

closure, it denied the applications for pension benefits of fourteen transferred

employees because, even though each of them had at least thirty years of credited

service between Owens and Brockway, none had reached the age of fifty-five. The

Union’s grievances on behalf of the employees were unsuccessful, so the matter

was referred for arbitration. Brockway argued during the arbitration hearing that

eligibility for the plant-shutdown benefit was conditioned on the employees’ being

at least fifty-five years old upon the date of the plant closure. Brockway also

argued that, even if the employees were entitled to the plant-shutdown benefit,

under the offset provision of the Pension Agreement, Brockway was obligated to

pay for only those pension benefits accruing since the sale of the plant to

Brockway in 1994.

      The arbitrator, Richard W. Dissen, rejected both of Brockway’s contentions.

First, he concluded that under the plain language of the plant-shutdown provision

in the CBA, employees with thirty or more years of credited service are entitled to

the benefit, regardless of age. And because each of the aggrieved employees had

accumulated at least thirty years of credited service prior to the shutdown, the

arbitrator determined that these employees qualified for the benefit. Second, he

concluded that Brockway was liable for the entire plant-shutdown pension benefit.

In the arbitrator’s view, the agreement governing the relationship between

                                        6
Brockway and the Union was the CBA, not the Pension Agreement, and the CBA

did not contain any provision limiting Brockway’s obligation to only that portion

of pension benefits accrued during employment with Brockway.              Therefore,

Brockway was obligated to cover the full benefit.

      Brockway filed suit in the District Court seeking to vacate that portion of the

arbitrator’s decision and award holding Brockway liable for the full amount of the

aggrieved employees’ pension benefit.5        The Union also filed a “Motion for

Specific Relief” under Federal Rule of Civil Procedure 60(a) (the “Rule 60(a)

Motion”), which sought an order from the court specifically commanding

Brockway to honor its pension obligations as established by the arbitrator’s award.

After restating Brockway’s arguments, the District Court concluded that the

arbitrator’s “decision unquestionably ‘draws its essence’ from the CBA,” App. 19,

and therefore denied Brockway’s motion to vacate and granted the Union’s motion

to enforce the arbitration award. However, the court denied the Union’s Rule 60(a)

Motion because the court’s earlier order – denying Brockway’s motion to vacate

and granting the Union’s motion to enforce the award – already provided the

Union the relief it was seeking. Both parties then filed timely notices of appeal.

                  II. JURISDICTION AND STANDARD OF REVIEW

                                          7
      The District Court had jurisdiction pursuant to 29 U.S.C. § 185 and 9 U.S.C.

§ 10. We exercise jurisdiction under 9 U.S.C. § 16(a)(1)(D) and 28 U.S.C. § 1291.

“When reviewing a district court’s denial of a motion to vacate an arbitration

award, we review its legal conclusions de novo and its factual findings for clear

error.” Hamilton Park Health Care Ctr. Ltd. v. 1199 SEIU United Healthcare

Workers E., 817 F.3d 857, 861 (3d Cir. 2016) (quotation marks and citation

omitted). We review the District Court’s decision to deny the Union’s Rule 60(a)

Motion for an abuse of discretion. Pfizer Inc. v. Uprichard, 422 F.3d 124, 129 (3d

Cir. 2005).

                                 III. ANALYSIS

      Brockway contends that the arbitrator “exceeded [his] powers,” 9 U.S.C.

§ 10(a)(4), by issuing an award requiring Brockway to pay the full amount of the

aggrieved employees’ pension benefits instead of allowing Brockway to offset the

amount owed based on Owens’ obligations under the Pension Agreement. The

Union, for its part, argues that it was error for the District Court to deny the

Union’s Rule 60(a) Motion. We will discuss each issue in turn.

                                        A

5
  Brockway initially also sought to vacate the arbitrator’s decision concerning the
employees’ eligibility vel non for the plant-shutdown benefit, but later withdrew
this issue from the District Court’s consideration.

                                        8
      “There is a strong presumption under the Federal Arbitration Act in favor of

enforcing arbitration awards.” Brentwood Med. Assocs. v. United Mine Workers of

Am., 396 F.3d 237, 241 (3d Cir. 2005) (internal citation omitted). In reviewing

such awards, we apply an “extremely deferential standard, the application of which

is generally to affirm easily the arbitration award.” Hamilton Park, 817 F.3d at

861 (internal quotation marks and citation omitted). We must answer the question

“whether the arbitrator’s conclusion is supported, in any way, by a rational

interpretation of the [CBA],” Brentwood Med. Assocs., 396 F.3d at 241 (emphasis

added), or, put another way, whether the award “draws its essence” from the CBA,

Nat’l Ass’n of Letter Carriers, AFL-CIO v. U.S.P.S., 272 F.3d 182, 185 (3d Cir.

2001). In determining whether the award is rationally based on an interpretation of

the CBA, we must “resist the urge to conduct de novo review of the award on the

merits.” Brentwood Med. Assocs., 396 F.3d at 241.

      Brockway argues that the arbitrator “rewrote the parties’ agreement” when

he concluded that Brockway was obligated to pay the aggrieved employees their

full pension under the plant-shutdown provision. Specifically, Brockway claims

that the parties’ CBA contained “no provision . . . that requires Brockway to give

credit for past service the employees had with Owens in the calculation of its

                                        9
pension obligation.”6 Appellant’s Br. 22. Indeed, according to Brockway, the

Brockway letter plainly absolves Brockway of any obligation to cover the portion

of plant-shutdown benefits attributable to the aggrieved employees’ time at Owens.

See App. 120-21 (“The ultimate pension benefit to be provided to these employees

shall come in part from the [Owens pension plan] and in part from the [Brockway

pension plan].”).

      We will uphold the arbitrator’s award as it is clear that he drew the essence

of his award from the parties’ CBA. He first noted that under the CBA Brockway

was required to pay pension benefits, including the plant-shutdown benefit, based

on the employees’ years of credited service.      The arbitrator then pointed to

Brockway’s agreement in the CBA to count the transferred employees’ years of

service at Owens in determining eligibility for other pension benefits (such as

vacation entitlements and severance payments), and from this he inferred

Brockway’s obligation to count the employees’ time at Owens in determining their

eligibility for the plant-shutdown benefit.7 The arbitrator also fully appreciated

6
 This is not to say that Brockway was under no obligation to credit the employees’
service at Owens in determining eligibility vel non for pension benefits under the
Brockway pension plan. Indeed, Brockway concedes this point on appeal, as it
appears to have done before the arbitrator as well.
7
  In concluding that Brockway had agreed to count employees’ service at Owens in
determining eligibility for pension benefits under the Brockway pension plan, the
arbitrator appears to have ignored a clearer piece of evidence – the Brockway
letter, which was incorporated into the CBA. See App. 120 (“[T]he credited
                                        10
that in relying on the language in the Brockway letter stating that part of each

transferred employee’s pension benefits would be paid from the Owens pension

plan, Brockway was really relying on the Pension Agreement and its offset

provision.8 And inasmuch as the Pension Agreement was not part of the CBA –

but was instead between Brockway and Owens – the arbitrator concluded that the

Pension Agreement did not bind the Union, and that Brockway could not avoid

service these [transferred employees] earned under the [Owens pension plan] is
credited under the [Brockway pension plan] . . . .”). Nevertheless, a much stronger
piece of evidence is found in the nature of Brockway’s argument before the
arbitrator that the aggrieved employees were not entitled to the plant-shutdown
benefit in the first place: Brockway never suggested that these employees simply
had not accumulated the requisite thirty years of credited service, arguing instead
that they were disqualified because they were not yet fifty-five years old. If
Brockway actually believed (and there is no indication that it did) that these
employees’ years at Owens did not count towards the credited service requirement,
it would have been an obvious argument to make since, at the time of the plant’s
closure, these employees had been working for Brockway for less than twenty
years.
8
  Although the Union generally contests the relevance of the terms of the Pension
Agreement to this dispute (given that the Pension Agreement was not part of the
CBA), it argues that, even under the Pension Agreement, Brockway is not entitled
to an offset. As the Union notes, the offset provision in the Pension Agreement
allows Brockway to reduce the amount of pension benefits it provides a given
transferred employee by the amount “properly payable” under the Owens pension
plan. Because the Owens pension plan no longer provides for any plant-shutdown
benefits, the argument goes, no amount is “properly payable” under that plan, so
Brockway would not get any offset anyway. See also App. 60 (offset provision
specifying that the Owens pension plan under which “properly payable” pension
benefits are to be determined includes “any successor plan thereto”). Nevertheless,
because the arbitrator did not appear to rely on this reasoning to support his award,
neither do we rely on it in upholding that award.

                                         11
satisfying its obligations based solely on the nondescript Brockway letter. It is of

no moment whether we think the arbitrator’s interpretation of the CBA (including

the Brockway letter) was correct; Brockway got what it bargained for, “a

procedure in which an arbitrator would interpret the agreement.” Nat’l Ass’n of

Letter Carriers, 272 F.3d at 185. That is enough for us.

                                         B

      The Union’s Rule 60(a) Motion asked the District Court to “expressly” issue

“an order directing the Company” to comply with the arbitrator’s award requiring

Brockway “to provide any unpaid pension benefits and to reimburse grievants for

out-of-pocket healthcare expenses.” Appellee’s Br. 26. According to the Union,

by denying this motion, “the District Court risks allowing the Company to avoid

remedying its unlawful non-compliance with the arbitration award.” Id. at 27.

      Rule 60(a) of the Federal Rules of Civil Procedure provides, in relevant part,

that “[t]he court may correct a clerical mistake or a mistake arising from oversight

or omission whenever one is found in a judgment, [or] order.” Fed. R. Civ. P.

60(a). In denying the motion, the District Court explained that the relief the Union

was seeking was already “set forth” in the arbitration award that the court had

already ordered enforced.    The court obviously determined that there was no

mistake in the judgment, and we cannot conclude that its determination was an

abuse of discretion.

                                        12
                                IV. CONCLUSION

      We will affirm the District Court’s order denying Brockway’s motion to

vacate the arbitration award and granting the Union’s motion to enforce the award,

as well as the order denying the Union’s Rule 60(a) Motion.

                                       13