Court Opinion

ID: 4471457
Source: CourtListenerOpinion
Date Created: 2020-01-10 16:01:34.55616+00
Date Added: 2024-06-11T15:03:21.600539
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 18-3110
                        ___________________________

      International Union, United Automobile, Aerospace and Agricultural
        Implement Workers of America, AFL-CIO, and UAW Local 716

                       lllllllllllllllllllllPlaintiffs - Appellants

                                           v.

                                   Trane U.S. Inc.

                       lllllllllllllllllllllDefendant - Appellee
                                      ____________

                    Appeal from United States District Court
                 for the Western District of Arkansas - Ft. Smith
                                 ____________

                          Submitted: September 25, 2019
                             Filed: January 10, 2020
                                 ____________

Before LOKEN, COLLOTON, and KOBES, Circuit Judges.
                          ____________

LOKEN, Circuit Judge.

      In February 2017, Trane U.S. Inc. (“Trane”) announced that it would close its
manufacturing plant in Fort Smith, Arkansas. After discussions, Trane and Local 716
of the United Automobile Workers (“the Union”) signed a Memorandum of
Agreement extending the four-year collective-bargaining agreement (“CBA”) that
governed terms and conditions of plant employment to the earlier of the plant’s
closing or April 1, 2019. In May 2017, the Union submitted two grievances
regarding early retirement benefits for employees terminated as the result of the plant
closing. Trane denied the grievances, refused to submit them to arbitration, and the
Union filed this suit to compel arbitration or, in the alternative, to enforce the CBA’s
substantive terms. The plant closed on July 28, 2017, but any duty to arbitrate did not
expire with the CBA. See Garland Coal & Mining Co. v. United Mine Workers, 778
F.2d 1297, 1303 (8th Cir. 1985). The Union now appeals the district court’s order
denying the Union’s motion to compel arbitration of the grievances. Reviewing the
denial of a motion to compel arbitration de novo, we affirm in part, reverse in part,
and remand. IBEW v. GKN Aerospace N. Am., Inc., 431 F.3d 624, 626-27 (8th Cir.
2005) (standard of review).1

                      I. Governing Arbitrability Principles.

      The Union filed this action under Section 301 of the Labor Management
Relations Act, 29 U.S.C. § 185, to enforce the CBA and, as is common, sought an
order compelling Trane to arbitrate two unresolved grievances. Trane argues the
CBA’s arbitration provisions exclude these grievances. The principles we apply in
deciding whether to compel arbitration are well established:

      (1) arbitration is a matter of contract and may not be ordered unless the
      parties agreed to submit the dispute to arbitration; (2) unless the parties
      provide otherwise, courts decide the issue of whether the parties agreed

      1
       The parties voluntarily dismissed the Union’s alternative breach of contract
claim before appealing the order denying the motion to compel arbitration. We have
frequently criticized efforts to manufacture final order appellate jurisdiction. See
Clos v. Corr. Corp. of Am., 597 F.3d 925, 928 (8th Cir. 2010). However, in this case
we are satisfied that we would have jurisdiction over an interlocutory appeal under
Section 16(a) of the Federal Arbitration Act, 9 U.S.C. § 16(a). See IBEW v. Pub.
Serv. Co. of Colo., 773 F.3d 1100, 1106-07 (10th Cir. 2014); Pryner v. Tractor
Supply Co., 109 F.3d 354, 359 (7th Cir. 1997).

                                          -2-
      to arbitrate; (3) courts cannot weigh the merits of the grievance in
      determining whether the claim is subject to arbitration; and (4) when an
      arbitration clause exists in a contract, there is a presumption of
      arbitrability unless it is clear that the arbitration clause is not susceptible
      of an interpretation that covers the dispute.

Teamsters Local Union No. 688 v. Indus. Wire Prods., Inc., 186 F.3d 878, 881 (8th
Cir. 1999), citing AT & T Tech., Inc. v. Commc’ns Workers of Am., 475 U.S. 643,
648-50 (1986).

       The presumption of arbitrability does not “override[] the principle that a court
may submit to arbitration only those disputes that the parties have agreed to submit.”
The presumption applies “only where it reflects, and derives its legitimacy from, a
judicial conclusion that arbitration of a particular dispute is what the parties [to a
CBA] intended.” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 302-03
(2010) (quotation omitted). A particular grievance is excluded from arbitration “(1)
where the collective bargaining agreement contains an express provision clearly
excluding the grievance involved from arbitration; or (2) where the agreement
contains an ambiguous exclusionary provision and the record evinces the most
forceful evidence of a purpose to exclude the grievance from arbitration.” UAW v.
Gen. Elec. Co., 714 F.2d 830, 832 (8th Cir. 1983) (quotation omitted); see United
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (1960).

       The Union seeks to arbitrate grievances over the denial of two benefits the
CBA allegedly required Trane to provide to eligible employees after plant closure, a
“bridge” benefit and a temporary pension supplement benefit. The CBA is a lengthy,
complex contract. As will become clear, the grievances alleged violations of two
very different CBA provisions. Accordingly, we will separately address the
arbitrability of each grievance.

                                           -3-
                              II. The Bridge Benefit.

         The Complaint alleged that the parties agreed in Article XX of the CBA that
a laid-off worker would have one year to commence his or her pension without a
break in service, avoiding considerable reductions to his or her monthly pension
payments. The provisions of Article XX, entitled “Job and Income Security,”
governed the “severance pay” that an eligible employee was entitled to receive if
“employment is terminated because of plant closing.” In the Memorandum of
Agreement extending the CBA until the Fort Smith plant closed, Trane expressly
agreed that it would “follow the terms and conditions in Article XX with regards to
. . . severance pay.” The Complaint alleged that Trane nonetheless refused to comply
with the “bridge” benefit provided in Article XX, Section 2(b)(3) (¶ 166):

      (3) An eligible employee who will become eligible for optional
      retirement under the Pension Plan within one year [from termination
      because of plant closing] and who meets the conditions specified in Sub-
      paragraphs (i), (ii) and (iii) of Subsection (b)(1), may receive any
      Severance Pay to which he is entitled under Section 2, and later elect
      optional retirement when he reaches optional retirement age. His
      service would be protected until such age.

Article XIV, Section 1 (¶ 144) of the CBA provided that “[a]ny grievance which
involves the interpretation or application of this Agreement and which remains
unsettled after having been fully processed . . . shall be submitted to arbitration upon
written request of the Union.” The Complaint alleged that Trane’s refusal to provide
the bridge benefit violated Article XX, Section 2(b)(3), and that the dispute is
arbitrable under Article XIV, Section 1.

      Trane denied the grievance on the ground that an employee laid-off by the plant
closure could (1) elect to receive severance and continued medical benefits, in which
case employment was terminated, or (2) elect lack-of-work status, continue to accrue

                                          -4-
service, and receive the bridge benefit if he or she later elected optional (early)
retirement. All affected employees chose to take severance and continued medical
benefits, so they were not eligible for the bridge benefit. As the bridge benefit was
part of the Merged Hourly Pension Plan for Fort Smith hourly employees (the
“Plan”), which was not collectively bargained, Trane took the position that this
grievance was excluded from arbitration by Article XIV, Section 2(b), of the CBA:

      It is further specifically agreed that no arbitrator shall have any authority
      in questions involving . . . the establishment, administration,
      interpretation or application of any Company pension or insurance plan,
      except for agreed-upon benefit levels . . . .

       On appeal, the parties focus their appellate arguments on whether the district
court correctly interpreted the term “agreed-upon benefit levels” and in particular the
undefined word “levels.” We conclude the bridge benefit claim does not require us
to resolve that issue. See 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193, 1199 (8th Cir.
2008) (“Our task is to look past the labels the parties attach to their claims . . . and
determine whether they fall within the scope of the arbitration clause.”). The bridging
grievance, on its face, stated a claim that Trane violated a specific provision of the
CBA by not providing a bargained-for benefit, a benefit Trane reconfirmed in the
Memorandum of Agreement. Although the claim affects access to and the timing of
retirement benefits that are part of the Plan, in Article XX of the CBA the parties
bargained the manner in which the normal Plan benefits would be affected by a plant
shutdown. This grievance does not involve the interpretation of the Plan excluded
from arbitration by Article XIV, Section 2(b). It involves the interpretation of Article
XX, Section 2(b)(3), of the CBA and thus is arbitrable under Article XIV, Section 1.
This is confirmed by Trane’s grievance response to the Union’s local chairman:
“Article XX, Section 2. Paragraph 166(b)(3) is language that ‘protects’ service, i.e.,
preserves service. The language does not grant additional service.”

                                          -5-
       Plant shutdown and severance pay disputes are routinely covered by a CBA’s
broad arbitration clause. See Local 198, United Rubber Workers v. Interco, Inc., 415
F.2d 1208, 1210-11 (8th Cir. 1969). In these circumstances, even if the interplay
between Article XX of the CBA and Trane’s Plan makes the exclusion in Article
XIV, Section 2(b), arguably ambiguous, we cannot conclude that “the record evinces
the most forceful evidence of a purpose to exclude the [bridge benefit] grievance from
arbitration.” Gen. Elec., 714 F.2d at 832. In making this decision, we of course do
not consider the merits of Trane’s contrary interpretation of Article XX, Section
2(b)(3). That is the task of the arbitrator.

               III. The Temporary Pension Supplement Benefit.

      The Complaint alleged “that the parties agreed in collective bargaining that
workers who commence their pension payments before age 60 have the right to
receive a [pension] supplement once they turn 60,” an agreement “incorporated by
reference in Article XXVI of the [CBA and] set forth in the amended language in the
Summary Plan Description.” The Complaint alleged that Trane “disagreed with
UAW’s position” and sought arbitration of the issue.

       Article XXVI of the CBA is entitled “Issues of General Application.” In
Article XXVI, Section 1 (¶ 202), the parties agreed:

      This Agreement, the 2013-2017 Settlement, the 2013-2017 Wage
      Agreement and the 2013-2017 Pension and Insurance Agreement . . . are
      intended to be and shall be in full settlement of all issues which were the
      subject of collective bargaining negotiations in 2013. Consequently, it
      is agreed that none of such issues may be reopened or otherwise made
      the subject of collective bargaining during the term of this Agreement
      and there shall be no strike or lockout in connection with any such issue
      or issues.

                                         -6-
       In the above-referenced Pension and Insurance Agreement (“PIA”), Trane and
the Union agreed “to accept” during the term of the PIA the pension benefits set forth
in the Plan. The Plan was not collectively bargained and is governed by the
Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1003 et seq.
Neither the terms of the PIA nor Article XXVI of the CBA made the Plan itself part
of the CBA. Therefore, cases holding arbitrable disputes over CBA terms that
incorporated ERISA plan terms do not govern whether this dispute is arbitrable under
Article XIV of the CBA. See, e.g., United Steelworkers v. Phillips 66 Co., 839 F.3d
1198 (10th Cir. 2016) (failure to comply with CBA agreement to pay 80% of plan
premiums).

       The PIA was a side agreement that was not made an appendix to the CBA. As
a side agreement, the PIA’s terms must be addressed to determine whether disputes
under the PIA are covered by the CBA’s arbitration provisions. See United
Steelworkers v. Duluth Clinic, 413 F.3d 786, 789-90 (8th Cir. 2005). In the PIA,
Trane agreed “to accept the benefits as and to the extent described” in the attached
Plan documents during the term of the PIA. Article XXVI of the CBA incorporated
that agreement, making disputes over whether Trane breached the PIA by unilaterally
modifying Plan benefits arbitrable under Article XIV, as other courts have held in
comparable cases. See Bakery Workers Local Union No. 362-T v. Brown &
Williamson Tobacco Corp., 971 F.2d 652, 655 (11th Cir. 1992).

      In this case, the Union’s Complaint alleged that Trane refused to provide a
temporary pension supplement benefit “set forth in the amended language in the
Summary Plan Description.” The Summary Plan Description (“SPD”) is a Plan
document whose interpretation and relationship to the Plan terms it summarizes are
governed by ERISA, not by the Labor Management Relations Act. See 29 U.S.C.
§§ 1022, 1024(b)(2); Jobe v. Med. Life Ins. Co., 598 F.3d 478, 481-86 (8th Cir.
2010). Although the SPD alleged in the Complaint contained a description of the
temporary early retirement supplement benefit provided in the Plan, Attachment 1 to

                                         -7-
the PIA was an abbreviated version of the Plan SPD, described as a “Summary of
Pension Plan Components.” Thus, the Union’s claim as pleaded was not based on the
CBA or on the PIA and its attachments. It was based on a Plan document, the SPD,
not on the collectively bargained CBA and PIA.

       The PIA expressly provided that “the terms of insurance and pension benefits
are governed by the terms of the actual plan document, Summary Plan Description
or insurance policy, and not this Agreement.” More importantly, Paragraph 5 of the
PIA expressly excluded this type of dispute from arbitration under the CBA:

      The eligibility of employees and their rights to benefits are fixed by the
      respective employee benefit plans. Covered employees shall look to
      such plan documents or insurance policy and to the Summary Plan
      Descriptions issued to each covered employee regarding all rights to
      benefits, payments and appeals to claims. Questions regarding claims
      or the administration of the plan shall not be subject to the provisions
      of Article XII and XIV of the Labor Agreement.

This exclusion is more focused and less ambiguous than the more general exclusion
in Article XIV, Section 2(b), of the CBA. And it is controlling because, quite
logically as a matter of contract interpretation, “parties may exclude disputes arising
under a side agreement from arbitration should they include a statement to that effect
in the arbitration clause of the CBA or in the side agreement itself.” United
Steelworkers v. Cooper Tire & Rubber Co., 474 F.3d 271, 279 (6th Cir. 2007)
(emphasis added; citation omitted). Here, Trane and the Union agreed to an
unambiguous express exclusion in Paragraph 5 of the PIA. Therefore, their dispute
over the proper interpretation of the temporary early retirement supplement benefit
in Trane’s Plan is not arbitrable under Article XIV of the CBA. This dispute must be
resolved under the exclusive remedial provisions mandated by ERISA. See 29 U.S.C.
§ 1133; 29 C.F.R. § 2560.503-1.

                                         -8-
       For the foregoing reasons, the order of the district court denying the Union’s
motion to compel arbitration of the bridge grievance is reversed; the order denying
the Union’s motion to compel arbitration of the temporary pension supplement
benefit grievance is affirmed; and the case is remanded for such further proceedings
not inconsistent with this opinion as may be appropriate.

COLLOTON, Circuit Judge, concurring in the judgment in part and dissenting in part.

       According to the Union, “[t]his case turns on four words: the parties’
agreement to arbitrate pension disputes over ‘agreed-upon benefit levels.’”
Appellant’s Br. 9. The company, Trane U.S., agrees: “The Union correctly states that
this case turns on four words: ‘agreed-upon benefit levels.’” Appellee’s Br. 21. The
court, however, declines to resolve the issue decided by the district court and
presented by the parties. The opinion instead advances interpretations and
applications of agreements that were not argued by the parties or addressed by the
district court. On the view that “appellate courts do not sit as self-directed boards of
legal inquiry and research, but essentially as arbiters of legal questions presented and
argued by the parties before them,” Carducci v. Regan, 714 F.2d 171, 177 (D.C. Cir.
1983) (Scalia, J.), I would decide the question presented and affirm the order and
judgment of the district court.

       The Union brought this action to compel arbitration over two grievances with
the company. The collective bargaining agreement between the parties provides in
Article XIV, § 2(b), that “no arbitrator shall have any authority in questions . . .
involving the establishment, administration, interpretation or application of any
Company pension plan or insurance plan, except for agreed-upon benefit levels.” The
district court concluded that both grievances involve the “application” of a company
pension plan. R. Doc. 29, at 5. The parties do not dispute this conclusion on appeal,
and neither does the court in so many words. (The court says only that the first
grievance does not involve “interpretation” of a pension plan.) Rather, the parties

                                          -9-
accept that the grievances involve “application” or “administration” of the pension
plan, and join issue on whether the disputes concern “agreed-upon benefit levels”
such that they are subject to arbitration.

       The district court ruled that the grievances do not involve “agreed-upon benefit
levels” within the meaning of this agreement. Both grievances concern whether
employees are eligible to receive certain benefits—an early retirement supplement or
subsidized early retirement payments based on an extra year of service credit after a
plant closure. The district court reasoned that in benefits plan administration, an
administrator generally must make only two determinations: whether a claimant is
eligible for a benefit and, if so, in what amount. The court rejected the Union’s
position that the two eligibility disputes in this case involved “agreed-upon benefit
levels,” because it “would encompass the entirety of plan administration and allow
the reservation to swallow the exclusion.” R. Doc. 29, at 5.

       The district court arrived at the better reading of the disputed provision. A
“benefit level” is different from a “benefit right.” The term “level” is narrower and
more specific; one court aptly observed that “it is hard to construe a ‘level’ as
anything other than a particular monetary benefit supplied by the Company.”
Kennametal Inc. v. United Steelworkers, 262 F. Supp. 2d 663, 669 (W.D. Va. 2003).
“Benefit levels” does not include the discrete question of eligibility for a benefit in
the first place.

       The two grievances at issue in this case concern eligibility for benefits. They
address whether and, if so, when certain employees are eligible to receive a benefit
under the pension plan. They do not concern particular amounts or “levels” of
benefits provided to eligible employees under the early retirement provisions of the
pension plan. As such, the grievances do not involve a claim about “agreed-upon
benefit levels,” and they are not subject to arbitration under Article XIV, § 2(b) of the
collective bargaining agreement.

                                          -10-
       The court’s decision to venture beyond the issue decided in the district court
and presented by the parties on appeal unnecessarily raises the potential for error or
unintended consequences. Proceeding without the “assistance of counsel which the
system assumes,” Carducci, 714 F.2d at 177—that is, without briefing and argument
on the questions decided—not only raises questions about “altering the character of
our institution,” id., but also “entails the risk of an improvident or ill-advised opinion
on the legal issues tendered.” McBride v. Merrell Dow & Pharm., Inc., 800 F.2d
1208, 1211 (D.C. Cir. 1986). The court’s authority to “look past the labels the parties
attach to their claims . . . and determine whether they fall within the scope of the
arbitration clause,” 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193, 1199 (8th Cir. 2008),
is not a general license to raise arguments not advanced by the parties in arbitration
cases. It is a more modest duty to consider whether the substance of a plaintiff’s
claims, however labeled, falls within the scope of an arbitration clause when the
defendant so argues. Id. at 1198-99 (accepting 3M’s argument that the “arbitration
clause is broad, . . . and that all of Amtex’s claims come with the scope of Article
4D”).

       On the first grievance in this case, the court reverses the district court based on
an application of Article XIV of the collective bargaining agreement that the Union
did not seek. The court applies the general arbitration provision of Article XIV, § 1,
and apparently rejects sub silentio the parties’ agreement that these grievances
involve application or administration of the pension plan, and are thus excluded from
arbitration under the more specific provision of Article XIV, § 2(b)—unless they
involve “agreed-upon benefit levels.” On the second grievance, the court affirms the
refusal to compel arbitration, but goes beyond the company’s position by declaring
that Paragraph 5 of the Pension and Insurance Agreement precludes arbitration of
claims involving administration of the pension plan, without regard to whether the
claims involve “agreed-upon benefit levels.” Although neither party sought these
determinations, the contractual relationship is now governed by the rulings.

                                          -11-
       Even if the parties might have overlooked or eschewed promising arguments
in favor of their positions, there is no good cause for the court to raise new issues in
this case. The ultimate question is only whether the Union is entitled to compel
arbitration of two particular grievances. Arbitration is strictly a matter of contract.
No statute or common law rule by itself requires that these grievances be arbitrated.
“Parties can waive their contractual right to arbitration even if their agreement to
arbitrate is valid and enforceable.” Schultz v. Verizon Wireless Servs., LLC, 833 F.3d
975, 978 (8th Cir. 2016). A decision resolving the question presented—whether these
grievances involve “agreed-upon benefit levels” within the meaning of this
agreement—would not foreclose either party from advancing a different ground for
arbitration in future proceedings. But a decision rendered sua sponte about other
complex contractual provisions fixes the meaning of the agreements without input
from the parties, and perhaps even contrary to the parties’ shared understanding of
their own agreements. I would limit our consideration to the question presented and
affirm the judgment.
                         ______________________________

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