Brockway Mould Inc v. United Steel Paper and Forestr, et al

Filing

NOT PRECEDENTIAL OPINION Coram: SMITH, JORDAN and RENDELL, Circuit Judges. Total Pages: 13. Judge: SMITH Authoring. [15-2941, 15-3542]

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Date Filed: 07/15/2016

NOT PRECEDENTIAL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)

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_____________________
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.
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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.”
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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.”
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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.
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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
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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

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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.
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“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

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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
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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.
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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.
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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.

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