Kosa et al v. International Union United Automobile, Aerospace and Agricultural Implement Workers of America, Local 659 et al

Filing 72

OPINION AND ORDER denying 68 Motion for Sanctions; granting in part and denying in part 58 Motion for Summary Judgment. Signed by District Judge Patrick J. Duggan. (MOre)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

LAWRENCE KOSA, et al.,
Plaintiffs,
vs.
INTERNATIONAL UNION UNITED
AUTOMOBILE, AEROSPACE &
AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA, LOCAL 659,
INTERNATIONAL UNION UNITED
AUTOMOBILE, AEROSPACE &
AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA,

Civil Action No.
13-CV-11786
Honorable Patrick J. Duggan

Defendants.
____________________________________/
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND DENYING
DEFENDANTS’ MOTION FOR SANCTIONS
I. INTRODUCTION
This is a labor dispute brought under the Labor Management Relations Act
(“LMRA”), 29 U.S.C. § 141 et seq., the National Labor Relations Act (“NLRA”),
29 U.S.C. § 151 et seq., and Michigan law. The remaining 200 Plaintiffs are
former employees or retirees of Automotive Component Carrier, LLC, the entity
that purchased the truck fleet operations of General Motors Corporation (“GM”) in
April 1996.

The remaining Defendants are: (1) International Union United

Automobile, Aerospace & Agricultural Implement Workers of America, Local 659
(“Local 659”), the exclusive bargaining representative of Plaintiffs, and (2)
International Union United Automobile, Aerospace & Agricultural Implement
Workers of America (“International Union”), an agent of Local 659 (collectively,
“UAW”).

Plaintiffs’ principal claim is that UAW breached its duty of fair

representation under the LMRA and the NLRA by giving Plaintiffs erroneous
information regarding their contractual right to transfer back, or “flow back,” to
GM following their transfer from GM to ACC in April 1996.
Now before the Court are two motions, both filed by UAW: a motion for
summary judgment and a motion for sanctions pursuant to Federal Rule of Civil
Procedure 11. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court will decide the
motions without oral argument. For the reasons that follow, the Court will grant in
part and deny in part the summary judgment motion and deny the motion for
sanctions.
II. BACKGROUND
In April 1996, ACC and GM executed an Asset Purchase Agreement (“1996
Asset Purchase Agreement”) in which ACC agreed to purchase GM’s truck fleet
operations, known as “NAO-T.” UAW Ex. 1 at ACC 0001254. As part of the
agreement, ACC agreed to hire existing GM NAO-T employees.

2

Id.

Those

employees – the ones who transferred from GM to ACC at the time of the sale –
are referred to by the parties as either “Transferred Employees” or “Red Dots.”
Under a separate Contract for Transportation Services executed by GM and
ACC on the same day as the Asset Purchase Agreement (“1996 Contract for
Transportation Services”), GM agreed to subsidize ACC’s contractual obligation to
provide GM-level (i.e., first-tier) wages and benefits to Red Dots. UAW Ex. 3 at
ACC 0001364-65.
In September 1996, GM, International Union, and ACC executed a contract
entitled “Memorandum of Understanding Regarding the Impact on Employees of
the Sale of NAO Transportation Fleet Business Unit,” hereinafter “1996 MOU.”
UAW Ex. 4. The contract requires ACC to employ Red Dots and assume their GM
seniority status. Id. at UAW 000215-16. The contract also contemplates the rehiring (i.e., “flow back”) of Red Dots by GM at a later date. Under the heading
“Re-Employment by GM,” the 1996 MOU provides that Red Dots “will be eligible
for future employment at GM plants on the same basis as laid-off GM-UAW
employees pursuant to the provisions of Appendix ‘A’ of the GM-UAW National
Agreement,” “as openings occur,” if they “make[] written application to GM on or
before September 14, 1997.” Id. at UAW 000216. The flow-back provision
applies only to “Transferred Employees” (i.e., Red Dots), defined in the agreement
as “certain [NAO-T] hourly employees who are transferred to [ACC] . . . as of the
3

effective date of the sale [of GM’s NAO-T unit to ACC],” and it gives them a right
to flow back to GM only if there is a spot available and if they apply by the
deadline. Id. at UAW 000214, 000216. Local 659’s union shop chair, Rick Toldo,
testified that he discouraged Red Dots from flowing back to GM because they
would take a pay cut by doing so and because, with one exception, “[n]one of [the
EBU employees] wanted to go back.” Toldo Dep. at 47-48.
In February 1997, ACC and UAW entered into an agreement (“1997
Agreement”) that extended GM-level first-tier wages and benefits to employees
hired by ACC after it purchased GM’s NAO-T unit. UAW Ex. 8. The employees
hired during the term of the 1997 ACC-UAW agreement are referred to by the
parties as “Yellow Dots.” Red Dots and Yellow Dots are collectively known as the
“Existing Business Unit” (“EBU”). All EBU employees – both Red Dot and
Yellow Dot – received first-tier wages and benefits; however, as indicated above,
the 1996 MOU by its explicit terms conferred flow back rights only to Red Dots.
All 200 remaining Plaintiffs in this case were EBU employees; thirty-seven Red
Dots and 163 Yellow Dots.
In subsequent years, ACC and UAW entered into additional agreements
establishing wages and benefits for new ACC hires. An agreement executed in
1998 created reduced or second-tier wages and benefits for new employees hired
by ACC during the term of that agreement, and a 2003 agreement created further
4

reduced or third-tier wages and benefits for employees hired during the term of that
agreement. Employees receiving second-tier wages and benefits under the 1998
agreement are referred to by the parties as the “New Business Unit (“NBU”), and
employees receiving third-tier wages and benefits under the 2003 agreement are
referred to as the “Progressive Business Unit” (“PBU”).
In February 2004, GM and ACC entered into a Contract for Transportation
Services (“2004 Contract for Transportation Services”) in which ACC agreed to
offer retirement packages to all EBU employees – that is, both Red Dots and
Yellow Dots – who were then eligible for retirement. UAW Ex. 22 at ACC
0001182. In addition, the agreement required GM to either: (a) offer employment,
as GM jobs became available but no later than January 31, 2009, to EBU
employees who were not eligible for retirement or declined to accept the retirement
package offered by ACC, or, (b) for any EBU employee not offered GM
employment, remain responsible for its obligations to EBU employees under the
1996 Asset Purchase Agreement, 1996 MOU, and 1997 Agreement, including the
obligation to subsidize their first-tier wages and benefits.1 Id. By its terms, the

1

The pertinent language from the 2004 Contract for Transportation Services
provides:
After the Effective Date [February 1, 2004], any such EBU Employee
who is not eligible for retirement or who does not accept the
retirement package from ACC will be offered active employment by
GM as jobs become available . . . with the goal that all offers to such
5

agreement expired on January 31, 2009; however, the agreement provided that if
any Yellow Dot employee had not been offered employment with GM by January
31, 2009, the contract will remain in effect “until such time as all such ‘yellow dot’
EBU Employees have returned to GM, retired, or have been converted to PBU
Employees.” Id. at 0001186.
As mentioned, EBU employees received wages and benefits that were
subsidized by GM.

Toldo testified that from 1996 to 2009, GM constantly

attempted to “get rid of” EBU employees and “put them back” in GM plants
because GM was paying $26 million per year to subsidize the wages and benefits
of EBU employees and “wanted out of the subsidy.”

Toldo Dep. at 49-50.

Although UAW “[dragged] their feet” and “didn’t let it happen,” id. at 50, GM and

EBU Employees will be completed within 18 months after [February
1, 2004], but in no event later than the expiration of the term of this
Agreement [January 31, 2009]. For those remaining EBU Employees
that are not offered employment by GM . . . during . . . the term of this
Agreement, GM agrees that it shall remain responsible for (i) its
obligations for such EBU Employees (“red dot” and “yellow dot”
only) under the [1997 Agreement], the [1996 Asset Purchase
Agreement], and the [1996 MOU]; and (ii) its obligations for the
Labor Surcharge and Management Fees related to such EBU
Employees (“red dot” only). If any such EBU Employee declines
GM’s offer of employment or fails the new hire screening, then he or
she will immediately no longer be classified as an EBU Employee, but
rather will be classified as a “PBU Employee” subject to the terms and
conditions of the Progressive Business Unit Collective Bargaining
Agreement.
UAW Ex. 22 at ACC 0001182.
6

ACC eventually began discussing the implementation of a “special attrition plan”
(“SAP”) to reduce the number of EBU employees receiving subsidized first-tier
wages and benefits.
Toldo explained in his deposition the process governing the implementation
of SAPs and his involvement in that process. Toldo testified that he was not
involved in SAP negotiations, although he “knew [they] were going on” because
he would receive drafts of proposed SAPs in “sort of a backdoor” fashion from “an
inside source at ACC.” Id. at 52, 102, 107-08. Toldo testified that he would
become involved in the process only after GM, ACC, and UAW agreed and
finalized the terms of a SAP, at which time Toldo’s job was to “take [it] to the
membership” and “recommend [its] approval.” Id. at 102-04. According to Toldo,
UAW “wouldn’t have told [him] anything” about SAP negotiations between GM,
ACC, and UAW while they were occurring. Id. at 108.
Three SAPs were discussed in 2008, but none of them were finalized and
implemented. UAW Exs. D-F. Each proposed SAP, the latest of which is dated
October 13, 2008, included various retirement and buy-out/buy-down options for
EBU employees. One such option available in all three SAPs proposed in 2008
would have allowed EBU employees with a certain level of seniority to
“voluntarily quit” their position at ACC, sever all ties with ACC and GM, and

7

forgo rights to retiree healthcare benefits, in exchange for a lump-sum payment of
$140,000. Id.
The next year, GM, ACC, and UAW finalized and implemented a SAP,
hereinafter the “2009 SAP.” A Memorandum of Understanding regarding the
2009 SAP was signed by all three parties in May 2009. UAW Ex. 13. Michael
Grimes, who was then the assistant director for the GM department at UAW, was
involved in the negotiation of the 2009 SAP and testified that GM told ACC at the
beginning of May 2009 that GM would no longer continue subsidizing the first-tier
wages and benefits of EBU employees, and that this news led the parties to
negotiate and implement the 2009 SAP. Grimes Dep. at 10, 52-53, 55, 79-80.
According to Grimes, “the goal [of UAW] was to basically get the best [it] could
get from GM.” Id. at 55.
Three options were offered to EBU employees under the 2009 SAP: (1)
immediate retirement with GM medical coverage, a cash payment of $20,000 or
$45,000 (depending on skill level), and a $25,000 vehicle voucher; (2) voluntary
resignation with no GM medical coverage, a cash payment of $45,000, and a
$25,000 vehicle voucher; or (3) reduction to the third-tier benefits and wages
available to PBU employees with a $20,000 cash payment and $25,000 vehicle
voucher. UAW Ex. 13 at UAW 001434. Clearly, the retirement and buy-out/buydown options available in the 2009 SAP were significantly less favorable to EBU
8

employees than the proposed retirement and buy-out/buy-down options that would
have been available to EBU employees had any of the three draft SAPs in 2008
been implemented. Alan Schwartz, the general director of labor relations for GM,
testified that the amount of incentive money that GM was willing to offer
decreased at the end of 2008 and beginning of 2009 because GM was impacted by
the economic crisis and downturn in the second half of 2008, and “that’s when . . .
the . . . CEOs went to Washington” and “the fact that companies were asking for
money from the government put a crimp on a lot of spending and a lot of things
that went on at GM.” Schwartz Dep. at 7, 47, 65.
Notably, the 2009 SAP did not list flow back to GM as an option for EBU
employees, although the 2009 SAP specifies that Red Dots “have contractual flow
back rights to GM,” while Yellow Dots “have no flow back rights to GM.”2 UAW

2

Although the 1996 MOU confers flow back rights only to Red Dots, the 2004
Contract for Transportation Services offered the possibility of something that
appears to be similar to flow back for all EBU employees (both Red and Yellow
Dots) who either were not then eligible for retirement or declined the retirement
package offered by ACC at the time. However, the 2004 Contract for
Transportation Services does not grant Yellow Dots a contractual right to flow
back to GM; rather, it requires GM to either offer employment to non-retiring
Yellow Dots, or continue subsidizing the wages and benefits of non-retiring
Yellow Dots until they have returned to GM, retired, or converted to PBU
employees. By contrast, the 1996 MOU grants Red Dots a contractual right to
flow back contingent on the Red Dot submitting an application by the deadline and
there being an opening. Therefore, the statement in the 2009 SAP that Yellow
Dots “have no flow back rights to GM” is not inaccurate.
9

Ex. 13 at UAW 001433. However, the 2009 SAP contains the following provision
addressing GM’s obligation to employ Yellow Dot employees:
All EBU Yellow Status Employees will be given an opportunity to
make application to be considered for employment at GM based upon
their longest unbroken seniority at ACC. Eligible employees will be
considered after all GM collectively bargained contractual obligations
have been satisfied. Eligible employees will be considered for
employment with GM based upon their current seniority date from an
integrated list of eligible employees from other agreements. Specific
guidelines will be made available within 30 days following the
signing of the agreement.
Id. at UAW 001434-35. Toldo testified that has “no idea” why the 2009 SAP did
not offer EBU employees a fourth option allowing them to flow back to GM and
that, as far as he knew, no one from UAW pushed to include flow back as a fourth
option in the 2009 SAP. Toldo Dep. at 52-53, 60, 62. Toldo further testified that
at the time the 2009 SAP was implemented, he believed that Red Dots “absolutely”
had the right to apply to flow back to GM regardless of whether the 2009 SAP was
implemented and regardless of which of the three options EBU employees chose
under the 2009 SAP, and that there was “some dispute” as to whether Yellow Dots
had flow back rights. Id. at 123-27, 129. Grimes held a different view. He
testified that Red Dots who selected options one or two under the 2009 SAP
(retirement or voluntary resignation) gave up their flow back rights and that only
Red Dots choosing option three (i.e., the buy-down to PBU status) remained
eligible to flow back to GM. Grimes Dep. at 61, 68.
10

In June 2009, ACC and UAW sent a copy of the 2009 SAP to EBU
employees, along with an election form. UAW Ex. 14. The cover letter explains
GM’s then-dire financial situation and that ACC and UAW were required to
negotiate the 2009 SAP so that GM would receive the government support
necessary to allow it to restructure and continue operations. Id. The cover letter
also announced that an information meeting would be held regarding the 2009 SAP
later in the month, and that representatives of UAW and ACC would be present to
explain it and answer questions.

Id. David Lerew, ACC’s director of labor

relations, attested that the continued financial viability of ACC depended on the
implementation of the 2009 SAP: “Given the discontinuation of the GM subsidy
and the unavailability of other sources of revenue for ACC to replace the
discontinued GM subsidy, ACC would not have been financially viable in the short
or long term had the 2009 . . . SAP not been approved and implemented.” UAW
Ex. 2 ¶ 2.
Grimes testified that UAW generally “does not want” to pursue agreements
with GM that involve the loss of first-tier wages and benefits to EBU employees.
Grimes Dep. at 100, 102. Rather, Grimes explained that UAW would rather stall
such agreements to allow EBU employees to continue making first-tier wages and
benefits for as long as possible:
When we [UAW and GM] go into these discussions, a lot of things
happen, and if [GM] [doesn’t] pursue it, there’s a lot of offers made
11

during bargaining and especially when we’re dealing with buying
people down and doing different things that we don’t want to do
anyway. We don’t want that. We don’t want to buy people down.
So if we can delay it or if it stalls or [GM] [doesn’t] bring it up for a
year or two, good. We don’t want to do it anyway.
Id. at 100.
The members of Local 659 were asked to vote whether to ratify the 2009
SAP. Toldo Dep. at 118; McEntire Dep. at 33. As mentioned, an information
meeting took place on June 7, before the vote. The record is disputed with regard
to what was said by UAW officials at the meeting regarding the following three
issues: (1) whether EBU employees had the right to flow back to GM; (2) whether
UAW officials told EBU employees that they would never see the inside of a GM
plant; and (3) whether UAW officials told EBU employees that ACC would shut
down in the event EBU employees did not ratify the 2009 SAP.
With regard to the first issue, Plaintiff Tony Short, a Red Dot, testified that
Toldo told EBU employees at the meeting “that we did not have return rights back
to the [GM] plant.” Short Dep. at 17-19. Short also testified that Bob Eldridge,
the benefits representative for UAW, told him that his only options were the three
offered in the 2009 SAP. Id. at 14. Scott LaFave, a Red Dot, also testified that
Eldridge told him that “go[ing] back to the plant” was “not an option.” LaFave
Dep. at 31. However, Toldo was adamant during his deposition that he always
believed that Red Dots had flow back rights to GM even after the 2009 SAP was
12

ratified. Toldo Dep. at 57-58, 126. Moreover, Plaintiff Elton Waggoner, another
Red Dot who attended the meeting, testified that no one at the meeting stated that
EBU employees did not have flow back rights; rather, according to Waggoner,
EBU employees were told that flow back to GM was not possible because there
were “no jobs available [at GM] at the moment.” Waggoner Dep. at 28-29.
Conversely, Short testified that UAW representatives did not “say anything about
[there being] no jobs [at GM].” Short Dep. at 19.
With regard to the second issue, James Holland, a Yellow Dot, testified that
both Toldo and Robert McEntire, Local 659’s district committeeman, said at the
meeting that EBU employees would never see the inside of a GM plant. Holland
Dep. at 54-58. Lawrence Kosa, a Yellow Dot, and Leonard Cross, also a Yellow
Dot, similarly testified that Toldo and/or McEntire made a statement to the effect
that EBU employees would never see the inside of a GM plant. Kosa Dep. at 100;
Cross Dep. at 53. However, McEntire and Toldo both testified that they did not
make that statement at the meeting. McEntire Dep. at 40, 56; Toldo Dep. at 174.
Moreover, Plaintiff Joseph Rice, a Red Dot, testified that he did not recall anyone
saying that EBU employees would not see the inside of a GM plant. Rice Dep. at
31.
A similar dispute exists regarding the third issue – whether UAW officials
told EBU employees at the information meeting that ACC would shut down if the
13

2009 SAP was not ratified. McEntire and Toldo both testified that they never
heard anyone say this at the meeting. McEntire Dep. at 55-56; Toldo Dep. at 133.
However, Holland and Cross testified that the statement was made by Lerew,
ACC’s director of labor relations. Holland Dep. at 51-52; Cross Dep. at 59.
In addition, a question was asked at the meeting about why EBU employees
did not receive a $140,000 buy-out offer like the ones included in the SAPs that
were drafted but never implemented in the preceding year.

According to

McEntire, Toldo responded to the question by explaining that he received many
SAP “offers” but that the only one that mattered was the one that had been agreedupon and implemented (i.e., the 2009 SAP). McEntire Dep. at 32-35. Toldo did
not deny saying this. In his deposition, Toldo testified that he misspoke at the
meeting if he used the word “offer,” as “they really weren’t offers” and, if he used
that word, “that was wrong” because they were merely “discussions going on
between [the] parties” that did not materialize into an agreement. Toldo Dep. at
102-03, 106-07. Grimes testified that “there’s a lot of different offers that come
across the table [during SAP negotiations] that don’t get [acted] on” and “[t]hat’s
just the way it is.” According to Grimes, “[i]f [UAW] took the first offer that GM
gave us in bargaining, our members would die of a cardiac attest.” Grimes Dep. at
102-03.

14

On June 10, 2009, EBU employees voted to ratify the 2009 SAP and, in the
subsequent days, made their selections among the three available options. UAW
Ex. 15. McEntire testified that UAW urged EBU employees to ratify the 2009
SAP because of the economic climate at the time and GM’s impending
bankruptcy: “Yeah, we all felt it was in the best interest of the drivers to ratify the
SAP based on the economic climate and the things that were happening, and with
[GM’s] bankruptcy.” McEntire at 39-40, 42. In addition, McEntire testified that
he thought the chances of EBU employees going back to GM were “pretty slim
based on the climate that we were in,” but that if somebody said that EBU
employees would “never see the inside of a GM plant,” that would person would
be “mistaken.” Id. at 40-41. Toldo also felt that GM’s impending bankruptcy
would likely adversely affect the jobs of EBU employees. Toldo testified that his
view at the time, whether ultimately “right or wrong,” was that GM’s imminent
bankruptcy threatened the jobs of all EBU employees and that it would be “better
[for EBU employees] to get something than nothing” or “not know” and “roll[] the
dice.” Toldo Dep. at 127-29. Although Toldo testified that he “absolutely” did not
believe that EBU employees would never see the inside of a GM plant, he urged
ratification of the 2009 SAP because he “didn’t want to take the chance on losing
500 jobs.” Id. at 127-28.

15

Following ratification, EBU employees made their selections among the
three available options and returned their election forms.

UAW Ex. 15.

In

November 2009, Plaintiff Kosa, on behalf of himself and other EBU employees,
initiated internal grievance proceedings that were ultimately unsuccessful. UAW
Ex. 18.
Plaintiffs filed the present lawsuit on April 20, 2013, naming four
Defendants: ACC, GM, Local 659, and International Union. ACC and GM have
been dismissed – ACC by stipulation and GM by motion to dismiss. In its decision
granting GM’s motion to dismiss, the Court observed that “Plaintiffs fail to
identify any contractual provision creating a duty that GM owed to them and
allegedly breached” and, consequently, held that “Plaintiffs fail to state a § 301
breach of contract claim against GM.” Kosa v. Int’l Union, No. 13-CV-11786,
2013 WL 6631531, at *7-8 (E.D. Mich. Dec. 17, 2013).
Three claims remain against UAW: a hybrid § 301 claim under the LMRA,
a breach of duty of fair representation claim under the NLRA, and a fraud claim
under Michigan law. UAW filed a motion for summary judgment on July 10,
2015, and a motion to sanctions pursuant to Rule 11 on August 26, 2015.
III. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56 instructs courts to “grant summary
judgment if the movant shows that there is no genuine dispute as to any material
16

fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A court assessing the appropriateness of summary judgment asks “whether
the evidence presents a sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a matter of law.” Amway
Distribs. Benefits Ass’n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S. Ct. 2505,
2512 (1986)).
IV. ANALYSIS
A. Count I: Hybrid § 301 Claim
A hybrid § 301 action “comprises two causes of action.” DelCostello v. Int’l
Bhd. of Teamsters, 462 U.S. 151, 164, 103 S. Ct. 2281, 2290 (1983). The first is a
suit against the employer for breach of the collective bargaining agreement; the
second is a suit against the union for breach of its duty of fair representation. Id.
Although “[t]he employee may . . . sue one defendant and not the other. . . . the
case he must prove is the same whether he sues one, the other, or both.” Id. at 165,
103 S. Ct. at 2291. In other words, to prevail on a hybrid § 301 claim, a plaintiff
must show both that the employer breached the collective bargaining agreement,
and that the union breached its duty of fair representation; failure to demonstrate
either is fatal to a hybrid § 301 claim. Hines v. Anchor Motor Freight, Inc., 424
U.S. 554, 570-71, 96 S. Ct. 1048, 1059 (1976).
17

As mentioned, the Court previously granted GM’s motion to dismiss,
holding that “Plaintiffs fail[ed] to state a § 301 breach of contract claim against
GM.” Kosa, 2013 WL 6631531, at *8. In light of this holding, which is the law of
the case, Plaintiffs cannot succeed on one of the two elements that comprise their
hybrid § 301 claim.3 Accordingly, the Court will grant summary judgment to
UAW with regard to Plaintiffs’ hybrid § 301 claim. However, the viability of
Plaintiffs’ separate duty of fair representation claim against UAW is not affected
by the Court’s resolution of the hybrid § 301 claim. See Breininger v. Sheet Metal
Workers Int’l Ass’n Local Union No. 6, 493 U.S. 67, 80-83, 110 S. Ct. 424, 433-34
(1989) (duty of fair representation action under NLRA does not require
concomitant claim against employer for breach of contract).

The Court now

addresses Plaintiffs’ stand-alone duty of fair representation claim, which is the
subject of Count II of Plaintiffs’ second amended complaint.
B. Count II: Breach of Duty of Fair Representation
1. Law
Plaintiffs’ duty of fair representation claim is brought under § 9(a) of the
NLRA, which is codified at 29 U.S.C. § 159(a). “Section 9(a) of the National
Labor Relations Act, by virtue of its grant of exclusive representation status to a
3

In the section of their response brief devoted to the breach of contract aspect of
their hybrid § 301 claim, Plaintiffs do not argue that ACC breached any contract,
much less one between it and UAW. See Pls.’ Resp. to Mot. for Summ. J. at 2730.
18

union over employees that make up a bargaining unit, creates a duty of fair
representation on the representative union.” Pratt v. United Auto., Aerospace &
Agric. Implement Workers of Am., 939 F.2d 385, 388 (6th Cir. 1991). To prevail
on a breach of duty of fair representation claim, a plaintiff must show that the
union’s actions were “arbitrary, discriminatory, or in bad faith.” Merritt v. Int’l
Ass’n of Machinists & Aerospace Workers, 613 F.3d 609, 619 (6th Cir. 2010); see
also Vaca v. Sipes, 386 U.S. 171, 177, 87 S. Ct. 903, 910 (1967) (union has
“obligation to serve the interests of all members without hostility or discrimination
toward any, to exercise its discretion with complete good faith and honesty, and to
avoid arbitrary conduct”). The duty of fair representation “applies in all contexts
of union activity, including contract negotiation, administration, enforcement, and
grievance processing.” Merritt, 613 F.3d at 619.
“[A] union’s actions are arbitrary only if, in light of the factual and legal
landscape at the time of the union’s actions, the union’s behavior is so far outside a
‘wide range of reasonableness’ as to be irrational.” Air Line Pilots Ass’n, Int’l v.
O’Neill, 499 U.S. 65, 67, 111 S. Ct. 1127, 1130 (1991) (quoting Ford Motor Co. v.
Huffman, 345 U.S. 330, 338, 73 S. Ct. 681, 686 (1953)). To show that the union
breached its duty of fair representation by engaging in discrimination, a plaintiff
must “adduce substantial evidence of discrimination that is intentional, severe, and
unrelated to legitimate union objectives.” Amalgamated Ass’n v. Lockridge, 403
19

U.S. 274, 301, 91 S. Ct. 1909, 1925 (1971). Finally, “[a] union acts in bad faith
when it acts with an improper intent, purpose, or motive encompassing fraud,
dishonesty, and other intentionally misleading conduct.” Merritt, 613 F.3d at 619
(internal quotation marks, ellipses, brackets, and citation omitted).
In addition, the Supreme Court has instructed courts to review union action
under a highly deferential standard, cognizant that union officials are not lawyers,
and avoid judging a union’s actions with the benefit of hindsight. See O’Neill, 499
U.S. at 78, 111 S. Ct. at 1135 (“Any substantive examination of a union’s
performance . . . must be highly deferential, recognizing the wide latitude that
negotiators

need

for

the

effective

performance

of

their

bargaining

responsibilities.”); Marquez, 525 U.S. at 45-46, 119 S. Ct. at 300 (“[T]he union
[has] room to make discretionary decisions and choices, even if those judgments
are ultimately wrong.”); Garrison v. Cassens Transp. Co., 334 F.3d 528, 539 (6th
Cir. 2003) (“When reviewing a union representative’s actions or omissions, we
must never lose sight of the fact that union agents are not lawyers, and as a general
proposition, cannot be held to the same standard as that of licensed
professionals.”); Black v. Ryder/P.I.E. Nationwide, Inc., 15 F.3d 573, 584 (6th Cir.
1994) (“[M]ere negligence or poor judgment on the part of the union will not
support a claim of unfair representation.”).

“In order to successfully defend

against a motion for summary judgment on a duty of fair representation claim, the
20

plaintiff must point the court to evidence in the record” supporting the conclusion
that the union’s actions were arbitrary, discriminatory, or in bad faith. Merritt, 613
F.3d at 619.
2. Application
Plaintiffs allege in their second amended complaint that UAW breached its
duty of fair representation principally4 in the following three ways:
 By concealing and turning down the $140,000 buyout offers proposed by
GM and/or ACC in the three draft SAPs in 2008. See Second Am. Compl.
¶¶ 24-25, Pls.’ Resp. to Mot. for Summ. J. at 30-31.
 By telling EBU employees in mid-2009, at the time they were considering
whether to ratify the 2009 SAP, that they had no right to flow back to GM,
and by failing to ensure that that a flow back option was available in the
2009 SAP. See Second Am. Compl. ¶¶ 19-21; Pls.’ Resp. to Mot. for
Summ. J. at 32-33.
 By providing EBU employees with erroneous information at the June 7,
2009 information meeting about the 2009 SAP, namely, that EBU
employees would never see the inside of a GM plant and that ACC would
shut down if the 2009 SAP was not ratified. See Second Am. Compl. ¶¶ 1920, Pls.’ Resp. to Mot. for Summ. J. at 32-33.
4

Plaintiffs’ response to UAW’s motion for summary judgment contains references
to numerous allegations of wrongdoing by UAW. However, the three principal
allegations that form the basis for Plaintiffs’ breach of duty of fair representation
claim are the three listed by the bullet points below. The remaining allegations
referenced in Plaintiffs’ brief opposing summary judgment do not support
Plaintiffs’ claim that UAW breached its duty of fair representation for one or more
of the following reasons: (1) the allegation is unsupported by record evidence; (2)
the allegation is not included in the second amended complaint; (3) the allegation,
even if true, is an insufficient basis on which a reasonable factfinder could find that
UAW breached its duty of fair representation; (4) Plaintiffs do not cite authority
supporting their argument that the allegation amounts to a breach of UAW’s duty
of fair representation.
21

As discussed, the Court must determine, using the standards and rules outlined
above, whether a reasonable factfinder could conclude that UAW’s actions or
inactions were arbitrary, discriminatory, or in bad faith. The Court addresses each
allegation in turn.
Plaintiffs contend that UAW breached its duty of fair representation when it
failed to inform EBU employees of $140,000 buy-out “offers” in 2008 and “turned
down” those offers. Pls.’ Resp. to Mot. for Summ. J. at 30. However, Plaintiffs’
argument is unpersuasive for two reasons. First, there is no evidence that 2008
SAP proposals that included the $140,000 buyout were, in fact, “offers” that (1)
should have been brought to the attention of Local 659’s membership, and (2) were
rejected and/or ultimately not implemented due to the actions of UAW. Toldo
explained in his deposition that his job was to bring SAPs to the attention of Local
659 membership only after they have been accepted by all parties, and that the
three 2008 SAP proposals had not been accepted by all parties and were therefore
not “offers,” even if he had mistakenly used that term to describe them: “[T]hey
really weren’t offers, they weren’t offers but I did use that term and that was wrong
to use that.

There were discussions going on between those parties [GM,

International Union, and ACC]” that “had not reached the stage yet where there
were agreements.” Toldo Dep. at 102-03, 106-07. The record does not shed light
on why the three SAP proposals in 2008 did not materialize into agreements, nor is
22

there evidence suggesting that the draft SAPs were ultimately not implemented due
to the actions of any UAW official. Therefore, Plaintiffs’ contention that UAW
breached its duty of fair representation by failing to bring the 2008 SAP proposals
to the attention of Local 659 membership and by rejecting those proposals is
unsupported by the evidence.
Second, even if the record contained evidence on which a reasonable
factfinder could rely to conclude that the actions of UAW officials impeded the
implementation of the three draft SAPs in 2008, or even that UAW did not press
hard enough to implement those proposals, Plaintiffs’ argument that such actions
would constitute a breach of UAW’s duty of fair representation would still fail.
The Supreme Court has instructed lower courts not to second-guess union action
with the benefit of hindsight:
[T]he union [has] room to make discretionary decisions and choices,
even if those judgments are ultimately wrong. In [Air Line Pilots
Association, International v. O’Neill], for example, the union had
negotiated a settlement agreement with the employer, which in
retrospect proved to be a bad deal for the employees. The fact that the
union had not negotiated the best agreement for its workers, however,
was insufficient to support a holding that the union’s conduct was
arbitrary. A union’s conduct can be classified as arbitrary only when
it is irrational, when it is without a rational basis or explanation.
Marquez, 525 U.S. at 45-46, 119 S. Ct. at 300 (citations to O’Neill omitted). Here,
Grimes testified that UAW’s general strategy was to not accept “the first offer that
GM gave us in bargaining,” and to “stall[]” or “delay” the implementation of
23

agreements involving the loss of first-tier wages and benefits to EBU employees.
Grimes Dep. at 100-103. There is no evidence suggesting that these strategies
were “irrational” or employed in “bad faith,” which is the standard governing
Plaintiffs’ claim that UAW breached its duty of fair representation by “turning
down” the 2008 SAP proposals. See O’Neill, 499 U.S. at 67, 111 S. Ct. at 1130.
There is, however, evidence suggesting that UAW should have, in
retrospect, pressed for the implementation of the 2008 SAP proposals, as the
options available in those proposals were more favorable to EBU employees than
the options available in subsequent proposals. But there is no evidence suggesting
that UAW could have known this at the time. Schwartz testified that the amount of
incentive money that GM was willing to offer in SAPs did not decrease until “near
the end of 2008 into 2009 . . . when . . . the . . . CEOs went to Washington in
December of 2008” and “the fact that companies were asking for money from the
government put a crimp on a lot of spending and a lot of things that went on at
GM.” Schwartz Dep. at 65. Moreover, according to Grimes, GM did not threaten
to stop subsidizing the first-tier wages and benefits of EBU employees until the
beginning of May 2009, at which time the parties started negotiating the 2009 SAP
and UAW’s goal was to “get the best [it] could from GM.” Grimes Dep. at 52-53,
55, 79-80. Therefore, at the time UAW allegedly “turned down” the favorable
$140,000 buy-out offers, UAW did not know that GM’s future financial
24

circumstances would prevent it from offering better options later. While UAW’s
purported decision to reject draft SAPs containing the $140,000 buy-out offer was
“ultimately wrong,” Supreme Court precedent does not allow this Court to review
the decision with the benefit of hindsight. See Marquez, 525 U.S. at 45-46, 119 S.
Ct. at 300.
For these reasons, the Court rejects Plaintiffs’ argument that UAW breached
its duty of fair representation in its handling of the three 2008 draft SAPs.
Plaintiffs next argue that UAW breached its duty of fair representation by
failing to advise EBU employees before they voted to ratify the 2009 SAP that
they had the option, derived from the 1996 MOU (for Red Dots) and the 2004
Contract for Transportation Services (for Yellow Dots), to flow back to GM, and
by telling EBU employees that they did not have flow back rights. Plaintiffs also
fault UAW for not doing more to ensure that the flow back option was included as
an option in the 2009 SAP.
However, as explained by UAW in its brief, and the Court agrees, only Red
Dots had flow back rights. Plaintiffs do not argue that the 1996 MOU conferred
flow back rights to Yellow Dots, nor could they.

The 1996 MOU grants

conditional flow back rights only to the class of GM workers “who [were]
transferred [from GM] to [ACC] . . . as of the effective date of the sale [of GM’s
NAO-T unit to ACC],” UAW Ex. 4 at UAW 000214, in other words, to Red Dots.
25

Instead, Plaintiffs contend that the 2004 Contract for Transportation Services
conferred flow back rights to Yellow Dots. But that agreement required GM to
either offer employment to non-retiring Yellow Dots by a certain date, or continue
subsidizing the employee’s wages and benefits “until such time as all such ‘yellow
dot’ EBU Employees have returned to GM, retired, or have been converted to PBU
Employees.”

UAW Ex. 22 at UAW 0001182, 0001186.

Plaintiffs fail to

acknowledge that GM had a choice among two options, only one of which
involved the possibility of employment with GM, instead asserting that the
agreement “guaranteed all EBU Employees . . . jobs with GM.” Pls.’ Resp. to
Mot. for Summ. J. at 5. Plaintiffs’ interpretation of the agreement is not supported
by the contract language, nor do Plaintiffs explain why they believe their
interpretation is correct. Because Yellow Dots did not have flow back rights, they
were not harmed by UAW’s failure to advise them about such rights.

See

Matthews v. Milwaukee Area Local Postal Workers Union, AFL-CIO, 495 F.3d
438, 441 (7th Cir. 2007) (to prevail on breach of duty of fair representation claim,
plaintiff must show harm resulting from union’s breach).

Therefore, the 163

Yellow Dot Plaintiffs cannot establish that UAW breached its duty of fair
representation by failing to advise them of a flow back option, as that option was
not available to them. Accordingly, UAW is entitled to summary judgment with

26

regard to the claims of the 163 Yellow Dots that UAW failed to advise them of a
flow back option.
This leaves the claims of the thirty-seven Red Dots Plaintiffs.
attested that three of the thirty-seven retired before 2009.

Lerew

UAW Ex. 2 ¶ 4.

Because those three Plaintiffs could not have been harmed by UAW’s purported
failure to advise them of their flow back rights in mid-2009, UAW is entitled to
summary judgment with regard to the flow back-related claims of those three
Plaintiffs.
This leaves thirty-four remaining Plaintiffs, all of whom were Red Dots that
had not retired prior to 2009.

In construing the evidence in the light most

favorable to Plaintiffs, the non-moving parties, the Court finds sufficient evidence
in the record to support their position that UAW officials informed them that they
did not have the right to flow back to GM. See Short Dep. at 17-19 (testifying that
EBU employees were told that they did not have flow back rights); LaFave Dep. at
31 (testifying that he was told that “go[ing] back to the plant” was “not an
option”).

The Court also finds sufficient evidence in the record on which a

reasonable factfinder could rely to conclude that this advice was erroneous
because, first, the 2009 SAP itself provides that Red Dots “have contractual flow
back rights to GM,” UAW Ex. 13 at UAW 001433; second, there is nothing in the
record establishing that the thirty-four remaining Red Dot Plaintiffs could not have
27

attempted to flow back to GM instead of, or in addition to, selecting one of the
three options available in the 2009 SAP; and third, UAW does not argue that the
remaining Red Dot Plaintiffs lacked the ability to attempt to flow back to GM
instead of, or in addition to, selecting one of the three options available in the 2009
SAP.5
If the factfinder believes that a UAW official told the thirty-four remaining
Red Dot Plaintiffs that they did not have the right to pursue the possibility of
flowing back to GM, it could reasonably conclude that UAW acted arbitrarily in
breach of its duty of fair representation. The Court is cognizant that union officials
cannot be held to the same standards as licensed professionals and that mere
negligence or poor judgment does not amount to a breach of a union’s duty of fair
representation. However, the record contains evidence on which a reasonable
factfinder could rely to conclude that UAW officials told the remaining thirty-four
Red Dot Plaintiffs erroneous information about their rights and options at the time
5

As discussed, Red Dots had the right to flow back, subject to there being an open
position, only if they “[made] written application to GM on or before September
14, 1997.” UAW Ex. 4 at UAW 000216. UAW cites evidence for the proposition
that “very, very few applications” were submitted by the deadline. UAW Br. at 12
(citing Schwartz Dep. at 25). However, the record contains contrary evidence, see
McEntire Dep. at 15 (testifying that “lots of us” completed applications by the
September 14, 1997 deadline), and, in any event, the record is unclear as to
whether any – and, if so, which – of the thirty-four remaining Red Dot Plaintiffs
submitted an application by the September 14, 1997 deadline. In construing the
evidence in the light most favorable to Plaintiffs, and in light of the absence of any
contrary evidence, the Court assumes for the present purposes that the thirty-four
remaining Red Dot Plaintiffs submitted timely applications.
28

they were contemplating whether to ratify the 2009 SAP. Tony Short testified that
Toldo told EBU employees at the information meeting on June 7, 2009 “that we
did not have return rights back to the [GM] plant,” and that Bob Eldridge told him
that his only options were the three offered in the 2009 SAP. Short Dep. at 14, 1719. Scott LaFave also testified that Eldridge told him that “go[ing] back to the
plant” was “not an option.” LaFave Dep. at 31. However, it is undisputed that
Red Dots who applied by the deadline had flow back rights that they could have
exercised in mid-2009, subject to there being an open position. If the factfinder
believes this testimony, it could conclude that UAW irrationally advised Plaintiffs
that they lacked rights that they clearly enjoyed. Accordingly, the Court will deny
summary judgment with regard to the claims of the thirty-four remaining Red Dot
Plaintiffs that they were misinformed about their ability to pursue flow back.
Finally, Plaintiffs contend that UAW breached its duty of fair representation
by providing EBU employees with erroneous information at the June 7 information
meeting about the 2009 SAP.

Plaintiffs complain mainly about purported

statements that were made at the meeting to the effect that ACC would soon shut
down if EBU employees did not vote to ratify the 2009 SAP and EBU employees
would never see the inside of a GM plant. Plaintiffs contend that these statements
were untrue when made and that they induced them to vote in favor of ratifying the
2009 SAP. While the record is disputed as to whether these statements were made
29

and by whom, the Court construes the evidence in the light most favorable to
Plaintiffs and assumes for the present purposes that the statements were made by
UAW officials.
Even if they were made by UAW officials, the statements do not amount to a
breach of UAW’s duty of fair representation given the economic circumstances at
the time. The record contains uncontroverted evidence that ACC would have, in
fact, been in serious trouble had the 2009 SAP not been implemented. According
to David Lerew, ACC’s director of labor relations, “ACC would not have been
financially viable in the short or long term had the 2009 . . . SAP not been
approved and implemented” because “rejection of the 2009 . . . SAP would have
made it impossible to continue the operation of ACC without debilitating and
unacceptable losses.” UAW Ex. 2 ¶ 2. The record contains no contrary evidence
suggesting that UAW officials knew that ACC would have remained financially
viable without implementation of the 2009 SAP.

Therefore, a reasonable

factfinder could not find that UAW coerced Plaintiffs into ratifying the 2009 SAP,
in violation of the duty of fair representation, by maliciously or arbitrarily telling
EBU employees that ACC would shut its doors in the event the 2009 SAP was not
ratified.
Similarly, Plaintiffs point to no evidence on which a reasonable factfinder
could rely to conclude that UAW officials breached their duty of fair
30

representation by telling EBU employees that they would never see the inside of a
GM plant. To show that the statement was made in violation of UAW’s duty of
fair representation, Plaintiffs must present evidence of “bad faith,” or “an improper
intent, purpose, or motive encompassing fraud, dishonesty, and other intentionally
misleading conduct.” Merritt, 613 F.3d at 619 (internal quotation marks, ellipses,
brackets, and citation omitted). Plaintiffs admit in their brief that “it is not clear
what the defendants’ motives were for lying and steering the members toward
ratifying the [2009] SAP,” Pls.’ Resp. to Mot. for Summ. J. at 32, and have
presented no evidence that the UAW official who allegedly told EBU employees
that they would never see the inside of a GM plant harbored a malicious motive.
Although the record would support the conclusion that the view that EBU
employees would never see the inside of a GM plant was “mistaken,” McEntire
Dep. at 40-41, controlling case law counsels that “mere negligence or poor
judgment on the part of the union will not support a claim of unfair
representation.” Black, 15 F.3d at 584. Given the economic climate at the time
and the fact that the continued financial viability of the “single customer” on which
ACC was “substantially dependent” was uncertain, UAW Ex. 2 ¶ 2, it was not
unreasonable for UAW officials to project that EBU employees would never see
the inside of a GM plant. McEntire testified that he thought the chances of EBU
employees going back to GM were “pretty slim based on the climate that we were
31

in,” McEntire Dep. at 40-41, and Toldo shared a similar outlook, see Toldo Dep. at
127-28 (testifying that he thought EBU employees should ratify the 2009 SAP
because he “didn’t want to take the chance on losing 500 jobs.”). In light of the
bleak circumstances at the time and the absence of evidence indicative of bad faith,
the Court concludes that a reasonable factfinder could not find that UAW breached
its duty of fair representation by telling EBU employees that they would never see
the inside of a GM plant.
C. Count III: Fraud Under Michigan Law
In Count III of their second amended complaint, Plaintiffs allege that UAW
is liable for fraud under Michigan law because it
knowingly made misrepresentation[s] before and during negotiations
for the 2009 . . . SAP, which fraudulently induced plaintiffs to ratify
the SAP and sign up for one of three options that did not include the
flow-back rights guaranteed to plaintiffs under the 1996 MOU, and
which misled the plaintiffs to plaintiffs’ detriment, causing damages.
Second Am. Compl. ¶ 71. Therefore, the factual basis for Plaintiffs’ fraud claim is
the same at the factual basis for their duty of fair representation claim under the
NLRA. As such, UAW contends that Plaintiffs’ state law fraud claim is preempted
by the NLRA.
State law claims based on the same facts as a federal fair representation
claim are preempted by federal labor law:
The doctrine of preemption is firmly established in labor law. The
duty of fair representation relates to an area of labor law which has
32

been so fully occupied by Congress as to foreclose state regulation.
Whether union conduct constitutes a breach of the duty of fair
representation is a question of federal law. The fact that an action for
failure to fairly represent a member may be brought in a state court is
beside the point. Regardless of the forum in which the claim is
presented, the case is controlled by federal law.
Maynard v. Revere Copper Prods., Inc., 773 F.2d 733, 735 (6th Cir. 1985)
(citations omitted); see also Burklow v. Baskin-Robbins USA, Co., 274 F. Supp. 2d
899, 906 (W.D. Ky. 2003) (“[W]here a plaintiff’s state law tort claim is based upon
the same factual allegations as his federal claim for breach of the duty of fair
representation, the state claim is effectively preempted by federal labor law.”).
Because Plaintiffs’ state law fraud claim and federal breach of fair representation
claim share the same factual basis, the state law fraud claim is preempted by the
NLRA.
Plaintiffs urge the Court to apply the preemption framework discussed in
Alongi v. Ford Motor Co., 386 F.3d 716, 724 (6th Cir. 2004), and CNH American
LLC v. International Union, 645 F.3d 785, 790 (6th Cir. 2011). However, those
cases did not involve breach of duty of fair representation claims against the union.
Therefore, the preemption standard articulated in those cases is not relevant here.
V. CONCLUSION
For the reasons discussed above, UAW’s motion for summary judgment is
GRANTED IN PART and DENIED IN PART as follows: GRANTED as to
Plaintiffs’ hybrid § 301 claim; GRANTED as to Plaintiffs’ fraud claim under
33

Michigan law; GRANTED as to the breach of duty of fair representation claim
asserted by the Yellow Dot Plaintiffs; GRANTED as to the breach of duty of fair
representation claim asserted by the three Red Dot Plaintiffs who retired before
2009; DENIED as to the breach of duty of fair representation claim asserted by the
remaining thirty-four Red Dot Plaintiffs. In addition, UAW’s motion for sanctions
is DENIED.6
SO ORDERED.

Dated: October 2, 2015

s/PATRICK J. DUGGAN
UNITED STATES DISTRICT JUDGE

Copies to:
Counsel of Record

6

In its sanctions motion, UAW seeks Rule 11 sanctions against Plaintiffs’ attorney
for allegedly violating his duty to perform an adequate pre-filing inquiry into the
factual and legal basis for this lawsuit and for allegedly violating his ongoing
obligation to reevaluate whether the case is well grounded in fact and law. UAW
seeks compensation from Plaintiffs’ attorney “for the unnecessary expense
incurred in having had to defend this baseless lawsuit.” Mot. for Sanctions at 2.
However, the Court does not view this lawsuit as “baseless” inasmuch as it
concludes that UAW is not entitled to a full grant of summary judgment. Because
Plaintiffs’ attorney has not engaged in sanctionable conduct, UAW’s motion for
sanctions is denied.
34