United Steelworkers of America, AFL-CIO-CLC v. Kelsey-Hayes Company et al

Filing 20

ORDER denying 13 Motion to Compel Arbitration. Signed by District Judge Nancy G. Edmunds. (CHem)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

UNITED STEELWORKERS OF AMERICA,
AFL-CIO-CLC, RONALD STRAIT, and
DANNY O. STEVENS, for themselves and
others similarly situated,

Case No. 11-15497

Plaintiffs,

Honorable Nancy G. Edmunds

v.
KELSEY-HAYES COMPANY, TRW
AUTOMOTIVE, INC., and TRW
AUTOMOTIVE HOLDINGS CORP.,
Defendants.
/

OPINION AND ORDER DENYING DEFENDANT’S MOTION TO COMPEL
ARBITRATION

This matter comes before the Court on Defendants Kelsey-Hayes Company, TRW
Automotive, Inc., and TRW Automotive Holdings Corp.’s motion to compel arbitration. For
the reasons set forth below, Defendants’ motion is DENIED.
I.

Facts
A.

The Collective Bargaining Agreements

Plaintiffs United Steelworkers of America, AFL-CIO-CLC, Ronald Strait, and Danny
O. Stevens, for themselves and others similarly situated,1 and Defendants entered into a
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Plaintiffs label their Complaint as a “Class Action,” refer to the “proposed class”
throughout the Complaint, and argue that the plaintiffs should be treated as a class. In
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series of collective bargaining agreements (CBAs). (Compl. ¶ 10.) The CBAs promise
eligible retirees and former Union-represented Jackson plant employees lifetime Companypaid retirement healthcare at the levels and terms in effect during the effective dates of
those CBAs and at the time of the closing of the Jackson plant. (Id.) The February 10,
2003 CBA was in effect at the time the Jackson plant closed in 2006 (2003 CBA) and it
states that the healthcare that retiring employees had “at the time of retirement . . . shall
be continued thereafter” and that Defendants “shall contribute the full premium” for retirees,
their eligible family members, and surviving spouses. (2003 CBA, Art. XVII.)
The 2003 CBA also states, “No matter, respecting the provisions of the Pension Plan
or the Insurance Program . . . shall be subject to the grievance procedure established in
this Agreement.” (2003 CBA, Art. XVII.) The Insurance Program states, “No matter
respecting the Program . . . or any difference arising thereunder shall be subject to the
grievance procedure established in the Collective Bargaining Agreement between
[Defendants] and [Plaintiffs].” (2003 CBA, Supp. C, Sec. 9.) The previous CBAs, executed
in 1995 and 1999 contain identical language. The CBAs grievance procedures state that
an arbitrator “shall have the right to arbitrate grievances, except the Pension Plan, [and the]
Insurance Program.” (2003 CBA, Art. V, Sec. 3(d); 1999 CBA, Art. V, Sec. 3(d); 1995 CBA,
Art V, Sec. 3(d).)
B.

The Plant Shutdown Agreement

their request for relief, Plaintiffs request that this Court “certify this action as a class
action, appoint plaintiffs Strait and Stevens as class representatives, and appoint
plaintiffs’ counsel Legghio & Israel, P.C. as class counsel.” Plaintiffs have not, however,
filed a motion to certify the class, the issue has not been briefed, and this Court has not
ruled on the matter.
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On September 30, 2005, Plaintiffs and Defendants entered into the Plant Shutdown
Agreement (“PSA”), a negotiated agreement regarding terminating operations at the
Jackson facility. The PSA mandated that “any alleged violation of the Collective Bargaining
Agreement, and or this Plant Shutdown Agreement, will be subject to final and binding
arbitration in accordance with the Grievance Procedure set forth in Article V of the
Collective Bargaining Agreement.” (PSA ¶ 17.) It further states, “If any provision of the
Collective Bargaining Agreement is inconsistent with any provision of the Plant Shutdown
Agreement, the provisions of the Plant Shutdown Agreement shall govern.” (PSA ¶ 15.)
C.

Plantiffs’ Claims

On December 15, 2011, Plaintiff filed a Complaint against Defendants. Plaintiffs
allege that Defendants have breached their obligation under the CBAs to provide the
individual plaintiffs and proposed class members with lifetime retiree benefits. Plaintiffs
allege that on January 1, 2012, Defendants unilaterally discontinued the TRW Retirement
Healthcare Plan and substituted individual retirement healthcare accounts in its place.
(Compl. ¶¶ 12-14.)
II.

Standard
In the context of a labor dispute, the Sixth Circuit has stated that “we begin with a

presumption that national labor policy favors arbitration.” United Steelworkers of Am. v.
Cooper Tire & Rubber Co., 474 F.3d 271, 277 (6th Cir. 2007). The issue of arbitrability
within the context of a labor dispute is guided by the four principles of AT&T Technologies,
Inc. v. Communications Workers, 475 U.S. 643 (1986); namely:
(1) a party cannot be forced to arbitrate any dispute that it has not obligated
itself by contract to submit to arbitration; (2) unless the parties clearly and
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unmistakably provide otherwise, whether a collective bargaining agreement
creates a duty for the parties to arbitrate a particular grievance is a question
for judicial determination; (3) in making this determination, a court is not to
consider the merits of the underlying claim; and (4) where the agreement
contains an arbitration clause, the court should apply a presumption of
arbitrability, resolve any doubts in favor of arbitration, and should not deny
an order to arbitrate unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers the
asserted dispute.
Int’l Union v. Cummins, Inc., 434 F.3d 478, 485 (6th Cir. 2006).
When there is a general or broad arbitration clause, “the presumption of arbitrability
[is] ‘particularly applicable,’ and only an express provision excluding a particular grievance
from arbitration or ‘the most forceful evidence of a purpose to exclude the claim from
arbitration can prevail.’” Teamsters Local Union No. 89 v. Kroger Co., 617 F.3d 899, 905
(6th Cir. 2010) (internal citation omitted). The presumption of arbitrability applies to
disputes over retirees’ benefits if the parties have contracted for such benefits and if there
is nothing in the agreements that specifically excludes the dispute from arbitration.
Cleveland Elec. Illuminating Co. v. Util. Workers Union, Local 270, 440 F.3d 809, 816 (6th
Cir. 2006).
Finally, “when the language is ambiguous or unclear, any doubts concerning the
scope of arbitrability should be resolved in favor of arbitration. Arbitration may not be
denied unless the party contesting arbitrability can establish with positive assurance that
the arbitration clause cannot be interpreted so as to cover the dispute at issue.” Int’l Bhd.
of Elec. Workers v. AT&T Network Sys., 879 F.2d 864 (6th Cir.1989) (internal citation
omitted).
III.

Analysis
Defendants argue that Plaintiffs’ claims are improperly before this Court because
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Plaintiffs obligated themselves by contract to submit to arbitration in the PSA. Defendants
argue that the PSA contains a broad arbitration clause, covering any alleged violation of
the CBA or PSA and that the PSA does not contain an “express provision” that would
exclude the issue of retiree healthcare from arbitration. Defendants specifically state in
their motion that “plaintiffs claims are subject to mandatory arbitration unless they can point
to an express provision excluding a particular grievance from arbitration.” Here, Plaintiffs
have done exactly that.
The arbitration provision of the PSA states “any alleged violation of the Collective
Bargaining Agreement, and or this Plant Shutdown Agreement, will be subject to final and
binding arbitration in accordance with the Grievance Procedure set forth in Article V of the
Collective Bargaining Agreement.” The Grievance Procedure in Article V of the CBA
specifically states that the arbitrator “shall have the right to arbitrate grievances, except the
Pension Plan, [and the] Insurance Program.”
Plaintiffs’ argue that the PSA should be read according to its plain language, which
explicitly states that alleged violations are subject to arbitration in accordance with a
procedure that has explicitly excluded the Pension Plan and Insurance Program.
Defendants argue that this has the impermissible effect of making the mandatory arbitration
provision in the PSA superfluous and, in effect, makes “any violation of the CBA or PSA
handled strictly pursuant to Article V of the CBA.”
But the language of the PSA explicitly states that any violation is subject to
arbitration in accordance with the Grievance Procedure in Article V of the Collective
Bargaining Agreement. Defendant may not like the results of the plain language of the
PSA, but the language itself is clear and unambiguous. This Court agrees with Defendants
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that the presumption of arbitrability applies to disputes over retirees’ contracted-for benefits.
That presumption does not apply, however, where there is something in the agreements
that specifically excludes the dispute from arbitration. In this case, the arbitration clause
specifically refers to a provision that excludes the dispute from arbitration.
Defendants rely on three cases with similar facts to the ones in this case as support
for their position that Plaintiffs should be compelled to go to arbitration. This Court will
examine those cases in turn.
In Burcicki v. Newcor, Inc., the district court ruled that Plaintiffs’ claims were subject
to arbitration, pursuant to the dispute resolution provision of the agreement between the
union and employer in that case. Burcicki v. Newcor, Inc., No. 02-cv-70230-DT, 2010 U.S.
Dist. LEXIS 27353 (E.D. Mich. March 23, 2010) (Rosen, J.).

The Burcicki Dispute

Resolution provision stated:
All disputes or claims arising out of any alleged violation of the CBA, its
modifications as contained herein, and this Termination Agreement will be
resolved by arbitration in accordance with the voluntary arbitration rules of
the American Arbitration Association. The decisions of the arbitrator shall be
final and binding. Expenses of the arbitrator shall be shared equally. Any
dispute or claim hereunder must be submitted to arbitration within thirty (30)
calendar days of either parties' written, final answer to the dispute raised by
the other party, or it shall be waived.
Burcicki, 2010 U.S. Dist. LEXIS 27353, at *27 (emphasis added).
The arbitration provision in the PSA in this case is readily distinguishable from the
arbitration provision in Burcicki. Unlike this case, Burcicki’s arbitration clause is not subject
to a provision of another agreement that explicitly exempts pension and insurance disputes.
The Burcicki language explicitly mandates that all disputes or claims will be resolved by
arbitration in accordance with the voluntary arbitration rules of the American Arbitration

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Association. If that were the language in the PSA in this case, Plaintiffs’ claims would be
subject to arbitration. The arbitration provision in this case, however, is subject to the
grievance procedure in the CBA.
Defendant also relies on UAW v. Kelsey-Hayes Co., currently pending in another
court in the Eastern District of Michigan. UAW v. Kelsey-Hayes Co., No. 11-14434 (Cook,
J.). In an order issued on January 5, 2012, the court in UAW found that the plaintiffs’
claims were subject to arbitration. Id. at Doc. 41. In that case, however, the broad
arbitration clause of UAW’s Termination Agreement states:
In the event the Union shall have any dispute or disagreement concerning the
interpretation and application of this Agreement, the sole and exclusive
recourse of the Union is to submit any dispute or disagreement in writing to
the Company within thirty (30) days after the Union shall reasonably have
become aware of the existence of any such dispute or disagreement. Within
ten (10) days of receipt of the written document, the Company and the Union
shall meet to attempt to resolve the matter. Should the meeting fall to
resolve the matter, arbitration shall be conducted in accordance with the
labor arbitration rules of the American Arbitration Association. The cost of the
arbitrator's fee shall be borne equally by each side. The arbitrator cannot add
to, subtract from, or modify the terms of this Agreement. The decision of the
arbitrator shall be final and binding and enforceable in any court of competent
jurisdiction or appealable in accordance with the applicable standards of
federal law.
UAW, Doc. 14, ¶ 20 (emphasis added).
That arbitration clause, unlike the one in this case and similar to Burcicki, is not
subject to any provision in another agreement between the parties. In fact, earlier in
UAW’s Termination Agreement, it states that the collective bargaining agreement between
the parties “shall be deemed to have terminated . . . without further liability under the [CBA]
except for the specific obligations expressly set forth in this Agreement.” UAW, Doc. 14-3,
¶ 2.

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Like Burcicki, then, UAW can be readily distinguished from this case because the
arbitration clauses in those cases are not subject to another agreement between the parties
that explicitly limits the disputes that are subject to arbitration.
Finally, Defendant relies on Audia v. Newcor, Inc., where the same court that
decided Burcicki ruled that there was no basis in the plaintiffs’ submissions to depart from
or distinguish its ruling in Burcicki from the case at hand. Audia v. Newcor, Inc., No. 1010209, 2010 U.S. Dist. LEXIS 74604 (E.D. Mich. July 23, 2010) (Rosen, J.).

The

agreement containing the arbitration clause in Audia states:
The Union and Company agree that neither will commence any action or
proceeding in any court or before any tribunal concerning alleged rights
which arise from the sale of the Company unless such disputes concern
interpretation, application of specific terms contained[] herein, or performance
of the specific terms of this agreement. Should any such legitimate disputes
occur, they shall be resolved using the Arbitration procedure outlined in
Paragraph 8 of the [1993 CBA].
Audia, 2010 U.S. Dist. LEXIS 74604, at *12 (emphasis added).
At first glance, this arbitration provision seems to unequivocally mandate arbitration
for all grievances, just as the arbitration provision in Burcicki did. Audia’s arbitration
provision, however, like the arbitration provision in this case, indicates that the disputes
shall be resolved using the arbitration procedure outlined in the CBA. Paragraph 8 of the
CBA in Audia states, in relevant part, “The Arbitrator shall not be empowered to rule upon
any issue arising under the Retirement Income Plan or the Supplemental Unemployment
Benefit Plan.” (Audia 2003 CBA, Sec. IV(8)(C)(4).)2
2

Paragraph 8 as a whole, reads:
8. A. If the Company's decision is not acceptable to the Union, the Union may
request the grievance be submitted to binding arbitration within five working
days after receipt of the Company's decision.
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The arbitration provision in Audia, then, like the one in this case, is subject to a
provision in the CBA that explicitly exempts certain disputes from the arbitration procedure.
Acknowledging that differences in the arbitration provisions could distinguish the cases
from one another, the Audia court stated:
[t]his case might potentially be distinguishable from Burcicki on the ground
that the arbitration provision here, unlike the one in Burcicki, might not call for
arbitration of the particular dispute being pursued by Plaintiffs. Notably,
however, Plaintiffs have not advanced such an argument, nor do they even
attempt to identify any material difference between the language of the MOA
in this case and the Termination Agreement in Burcicki that might warrant
different outcomes in the two cases. Rather, Plaintiffs evidently have elected
to forgo any effort to distinguish Burcicki on this ground.
Audia, 2010 U.S. Dist. LEXIS 74604, at *11.
The court continued, “In any event, left to its own devices, the Court cannot say that
the arbitration provisions in this case and in Burcicki are sufficiently distinguishable to
dictate a different result here.” Id. There is no indication, however, that the court in Audia
examined paragraph 8 of the 1993 CBA, to which the arbitration provision referred, instead
relying solely on the similar language of arbitration clauses.
Having examined the provision of the CBA to which Audia’s arbitration provision is
subject, this Court disagrees that the Audia and Burcicki arbitration provisions are

B. The Arbitrator shall be selected in accordance with the rules of the
American Arbitration Association. The expenses of the Arbitrator shall be
shared equally by both parties.
C. The Arbitrator shall not be empowered to:
1. add to or subtract from, to disregard or to modify any of the terms
of this Agreement;
2. hear or determine any issue involving wage rates or rates for new
classifications;
3. hear or determine any issue involving health and safety;
4. rule upon any issue arising under the Retirement Income Plan or
the Supplemental Unemployment Benefit Plan.
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indistinguishable. Had the plaintiffs in Audia argued that its arbitration provision was
distinguishable from the one in Burcicki, this Court believes the Audia court would have
examined the language of the CBA and found that the arbitration provision in Audia
excluded grievances pertaining to the Retirement Income Plan or the Supplemental
Unemployment Benefit Plan, as specifically excluded in paragraph 8 of the 1993 CBA.
Instead, the Court agreed with the defendants, “finding no basis in Plaintiffs’ submissions
to depart from or distinguish its ruling from Burcicki.” Id. at *10-11 (emphasis added).
As stated above, in this case, the PSA’s arbitration clause specifically states that
alleged violations are subject to arbitration in accordance with the grievance procedure in
the CBA, which specifically exempts the pension plan and insurance program. If the parties
intended for the PSA to mandate arbitration for alleged violations of the pension plan and
insurance program, this could have been done, as it was in Burcicki and UAW. For the
reasons stated above, however, this Court cannot find that Plaintiffs intended to obligate
themselves by contract to submit to arbitration grievances pertaining to the Pension Plan
or Insurance Program.
Although this Court finds that Plaintiffs did not obligate themselves in the PSA to
submit its pension and insurance grievances to arbitration, it is worth noting that even if the
PSA did mandate arbitration for those grievances, it would not be binding on those who
retired before September 30, 2005, when the PSA became effective.
Courts have consistently held that the retirement healthcare and pension rights
under a CBA are considered to be vested at the time of retirement. See, e.g., Cole v.
ArvinMeritor, Inc., 516 F. Supp. 2d 850, 867, 869 (E.D. Mich. 2005); Golden v. KelseyHayes Co., 73 F.3d 648 (6th Cir. 1996). An employer may not unilaterally diminish or
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restrict such vested rights. Allied Chem. Workers v. PPG Co., 404 U.S. 157, 182 n.20
(1971) (“[u]nder established contract principles, vested retirement rights may not be altered
without the pensioner’s consent”); Yolton v. El Paso Tennessee Pipeline Co., 435 F.3d 571,
578 (6th Cir. 2006) (citation omitted) (once healthcare benefits vest, “the employer’s
unilateral modification or reduction of those benefits constitutes a LMRA violation”); UAW
v. Yard-Man, Inc., 716 F.2d 1476, 1482, n.8 (6th Cir. 1983) (the union and the employer
“may not…bargain away retiree benefits which have already vested”).

Subsequent

agreements between the union and the employer cannot lawfully to amend or terminate the
benefits that are already vested to the retirees. Bender v. Newell Window Furnishings, Inc.,
725 F. Supp. 2d 642, 660 (W.D. Mich. 2010).
In this case, then, those employees who retired before the 2005 PSA became
effective, are not subject to any terms in the agreement that diminish their already vested
rights. The rights of those employees who retired before the 2005 PSA became effective
are determined by the language of the CBA, which specifically excludes insurance and
pension disputes from arbitration.
This Court finds that the PSA did not alter the exclusion from arbitrability of those
disputes, but even if it did, the PSA could not diminish the vested rights of those employees
who retired before its implementation. Moreover, Plaintiffs have presented evidence that
over 88% of the plaintiffs in this case retired before September 30, 2005, when the PSA
took effect, indicating that the vast majority of the plaintiffs are not subject to any limitation
or alteration of benefits that the PSA caused.
IV.

Conclusion
For the foregoing reasons, Defendants’ motion to compel arbitration is DENIED.
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s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: May 30, 2012
I hereby certify that a copy of the foregoing document was served upon counsel of record
on May 30, 2012, by electronic and/or ordinary mail.
s/Carol A. Hemeyer
Case Manager

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