International Union, United Automobile and Aerospace Agricultural Implement Workers of America, UAW et al v. Mahle Engine Components USA, Inc. et al
OPINION; Order and Judgment to issue; signed by Judge Janet T. Neff (Judge Janet T. Neff, clb)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
INTERNATIONAL UNION, UNITED
AUTOMOBILE AND AEROSPACE
WORKERS OF AMERICA, UAW, et al.,
Case No. 1:11-cv-463
HON. JANET T. NEFF
MAHLE ENGINE COMPONENTS USA,
This pension dispute was filed by the International Union, United Automobile and Aerospace
Agricultural Implement Workers of America, UAW (“the UAW”) and twenty of its members who
were employed by Defendant Mahle Engine Components USA, Inc. Now pending before the Court
are the parties’ cross-motions for summary judgment (Dkts 95 & 104). Having conducted a PreMotion Conference in this matter and having now fully considered the parties’ written briefs,
statement of undisputed material facts and accompanying exhibits, the Court finds that the relevant
facts and arguments are adequately presented in these materials and that oral argument would not
aid the decisional process. See W.D. Mich. LCivR 7.2(d). For the reasons that follow, the Court
determines that Plaintiffs’ motion is properly denied and Defendant’s motion is properly granted.
Each of the individual Plaintiffs was an hourly employee at a piston ring manufacturing
facility that included several buildings located in Muskegon, Michigan (“the Facility”) (Dkt 87,
Stipulated Uncontested Facts [SUF] ¶ 1). At all relevant times to this litigation, Plaintiffs were
members of the bargaining unit represented by the UAW (id. ¶ 2). The Facility was initially owned
and operated by Sealed Power Corporation, which became SPX Corporation (“SPX”) (id. ¶ 3). Each
individual Plaintiff worked for SPX at the Facility for over 18 years, until February 7, 1997 (id. ¶
4). SPX and the UAW agreed to a pension plan, entitled Pension Agreement on Amended and
Restated Sealed Power Technologies Limited Partnership Pension Plan at Muskegon (“1993 SPX
Pension Plan”) (id. ¶ 5, Stipulated Ex. C). The 1993 SPX Pension Plan provided for supplemental
retirement benefits for employees with 30 years of service or 85 points (id. ¶ 6).
In 1996, SPX sold the Facility to Dana Corporation (“Dana”) (SUF ¶ 7). On February 7,
1997, Dana took control of the Facility and each Plaintiff became an employee of Dana on that date
(SUF ¶ 8). When SPX sold the Facility to Dana, none of the individual Plaintiffs were eligible to
retire and receive pension benefits based on their work at the Facility (id. ¶ 9). During the transition
from SPX to Dana, Dana and the UAW executed an Agreement between Dana and the UAW and
its Local 637, Muskegon Operations, dated December 19, 1996 (“1996 Dana Assumption
Agreement”) (id. ¶ 10, Stipulated Ex. D). Shortly after taking control of the Facility, Dana
established a pension plan, entitled the Dana Corporation–Muskegon Plant Hourly Employees
Pension Agreement, effective January 1, 1998 (“1998 Dana Pension Plan”) (id. ¶ 12, Stipulated Ex.
G). Each individual Plaintiff worked for Dana at the Facility from February 7, 1997, until March
8, 2007 (id. ¶ 11).
On May 2, 1997, SPX sent an Explanation of Pension Allocation Letter to Plaintiffs
explaining the pension allocation (“SPX Letters”) (SUF ¶ 13, Stipulated Ex. E). None of the
individual Plaintiffs are currently receiving pension benefits from SPX, nor have they received any
pension benefits from SPX since their retirement from Defendant (id. ¶ 14). SPX is not a party to
On Saturday, April 10, 2004, the UAW provided to Dana a “60-Day Notice to Employer”
(“UAW 60-day Notice”) (SUF ¶ 17, Stipulated Ex. I). Dana amended the pension plan and
instituted the Dana Corporation–Muskegon Plant Hourly Employees Pension Agreement, effective
July 14, 2004 (“2004 Dana Pension Plan”) (id. ¶ 15, Stipulated Ex. K).
On March 3, 2006, Dana filed for relief under Chapter 11 of the Bankruptcy Code (SUF
¶ 18). When Dana filed for bankruptcy, none of the individual Plaintiffs were eligible to retire and
receive pension benefits based on their work at the Facility (id. ¶ 19). None of the individual
Plaintiffs are currently receiving pension benefits from Dana, nor do they ever expect to receive
pension benefits from Dana (id. ¶ 16). Dana is also not a party to this case.
Dana sold certain assets under § 363 of the Bankruptcy Code, including its Engine Products
Group, to MAHLE gmbH (SUF ¶ 20). Dana and MAHLE gmbH executed a Stock and Asset
Purchase Agreement (“SAPA”), dated December 1, 2006 (id., Stipulated Ex. N). Section 10.3 of
the SAPA identified the “Assumed Benefit Plans” (id. ¶ 21). The plans related to the Facility
Dana Corporation Muskegon, Michigan Plan Hourly Employees Pension Plan
(“2004 Dana Pension Plan”);
Dana Corporation Muskegon, Michigan Plant Supplemental Unemployment Benefit
Muskegon UAW Supplemental Insurance Agreement; and
Perfect Circle—UAW, Muskegon, Michigan Group Health Plan
(id., Stipulated Ex. O). Section 4.17(a) of the SAPA provided that Schedule 4.17(a) was a list of
each labor or collective bargaining agreement to which Dana or one of its Subsidiaries was a party
(id. ¶ 22). Section 4.17(a) listed “Agreement, Dana Corporation Perfect Circle Division Muskegon
Operations with UAW Local 637 International Union Dated July 16, 2004” (id., Stipulated Ex. P).
On December 4, 2006, Dana filed a motion to approve the sale of its Engine Products Group
to Defendant (“Proposed Sale Order”) (SUF ¶ 23, Stipulated Ex. Q). On February 8, 2007, the
UAW filed a “Limited Objection” (id. ¶ 24, Stipulated Ex. R). On February 23, 2007, the
bankruptcy court issued its Order (A) Authorizing the Sale of Assets and Stock Relating to the
Debtor’s Engine Products Group Free and Clear of All Liens, Claims, Interests and Encumbrances,
(B) Authorizing the Assumption and Assignment of Certain Executory Contracts and Leases in
Connection Therewith, and (C) Granting Related Relief, approving the sale of Dana’s Engine
Products Group to Defendant (“Sale Order”) (id. ¶ 25, Stipulated Ex. S).
When Defendant took over the Facility on March 9, 2007, none of the individual Plaintiffs
were eligible to retire and receive pension benefits based on their work at the Facility (SUF ¶ 26).
Defendant executed a Second Amendment to the Dana Corporation Muskegon Plant Hourly
Employees Pension Agreement, which amended the 2004 Dana Pension Plan to change the name
to MAHLE Muskegon Plant Hourly Employees Pension Plan (“Second Amendment to 2004 Dana
Pension Plan”) (id. ¶ 27, Stipulated Ex. L). The amendment was effective March 7, 2007 (id.).
On March 9, 2007, Defendant and the UAW executed the Proposal for Assumption of
General Agreement between Dana Perfect Circle Muskegon Operations, the UAW and its Local 637,
Memorandum of Agreement Engineering Test Line, and Addendum to Memorandum of Agreement
(“2007 MAHLE CBA Assumption Agreement”) (SUF ¶ 28, Stipulated Ex. U). Also on March 9,
2007, Defendant and Dana executed the Assumed Pension Benefit Plans Assumption Agreement
for the Dana Corporation Muskegon, Michigan Plan Hourly Employees Pension Plan (“2007
MAHLE Pension Assumption Agreement”) (id. ¶ 29, Stipulated Ex. V).
SPX has denied each Plaintiff’s request for early retirement pension benefits (SUF ¶ 30).
SPX will pay each Plaintiff the deferred vested retirement benefit after he reaches the normal
retirement age of 65 (id. ¶ 31). In contrast, all of the individual Plaintiffs receive retirement benefits
from Defendant (id. ¶ 32). For purposes of determining eligibility, Defendant includes each
individual Plaintiff’s years of service for SPX, Dana and MAHLE (id.). For purposes of determining
the pension benefit amount, Defendant includes each individual Plaintiff’s combined years of service
for only Dana and MAHLE (id.). Each Plaintiff worked for SPX between 18 and 19 years (id. ¶ 33).
Each Plaintiff worked for Dana for 10.1 years (id.). Plaintiffs worked for Defendant for as little as
3 months or as long as 21 months (id.). All of the individual Plaintiffs have timely received from
Defendant these pension benefits, as described, since their effective retirement dates (id. ¶ 34).
Defendant did not enter into any contract with SPX (id. ¶ 35).
On May 5, 2011, Plaintiffs initiated this lawsuit, a purported class action, alleging claims
under the Labor Management Relations Act (LMRA), 29 U.S.C. § 141 et seq. (Count I) and the
Employee Retiree Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. (Count II). On August
1, 2011, Plaintiffs filed a First Amended Complaint (Dkt 10). This Court conducted a Pre-Motion
Conference with counsel in February 2013 and issued a briefing schedule on the parties’ proposed
dispositive motions (Dkt 66).1 The parties filed their motion papers in July 2013. Plaintiffs filed
Deciding the parties’ cross-motions for summary judgment before resolving a class
certification motion from Plaintiffs is, in this Court’s opinion, in the interest of overall efficiency.
See FED. R. CIV. P. 23(c)(1) (requiring only that courts decide motions for class certification “at an
their Motion for Summary Judgment (Dkt 95), to which Defendant filed a response (Dkt 105),
Plaintiffs filed a reply (Dkt 112), and Defendant filed a sur-reply (Dkt 114). Defendants filed their
Motion for Summary Judgment (Dkt 104), to which Plaintiffs filed a response (Dkt 112) and
Defendant filed a reply (Dkt 114).
A. Standard of Review
Summary judgment is properly granted “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P.
56(a). The party moving for summary judgment has the initial burden of showing that no genuine
issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Street v. J.C.
Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989). Once the moving party has made such a
showing, the burden is on the nonmoving party to demonstrate the existence of an issue to be
litigated at trial. Slusher v. Carson, 540 F.3d 449, 453 (6th Cir. 2008). The court must view the
evidence and draw all reasonable inferences in favor of the nonmoving party. Id. The central issue
is “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.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 251-52 (1986).
This case turns on the fact that Defendant entered into a “free and clear” sale, i.e., a sale “free
and clear of any interest in such property of an entity other than the estate.” 11 U.S.C. § 363(f). The
early practicable time”); 7AA CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE
& PROCEDURE § 1785.3 (3d ed. 2013) (“The time at which the court finds it appropriate to make its
class-action determination may vary with the circumstances of the particular case.”).
Sixth Circuit Court of Appeals has held that the effect of a bankruptcy court’s order approving the
sale of a debtor’s assets free and clear of any interest or claims that could be brought against the
bankrupt estate is “to extinguish [the claimant’s] claim unless it was expressly assumed by [the
purchaser] as part of the purchase agreement.” Al Perry Enters., Inc. v. Appalachian Fuels, LLC,
503 F.3d 538, 541 (6th Cir. 2007).
Similarly, ERISA includes a writing requirement, 29 U.S.C. § 1022(a), to ensure that “every
employee may, on examining the plan documents, determine exactly what his rights and obligations
are under the plan,” Sprague v. Gen. Motors Corp., 133 F.3d 388, 402 (6th Cir. 1998) (quoting
Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995)), and to lend predictability and
certainty to employee benefit plans, id. (citing Gable v. Sweetheart Cup Co., Inc., 35 F.3d 851, 857
(4th Cir. 1994)). While there is no requirement in ERISA regulations that the terms of an ERISA
plan be contained in a single document, “[f]or the terms of another document to be incorporated by
reference into the document executed by the parties, the reference must be clear and unequivocal,
and must be called to the attention of the other party, he must consent thereto, and the terms of the
incorporated document must be known or easily available to the contracting parties.” Rinard v.
Eastern Co., 978 F.2d 265, 269 n.3 (6th Cir. 1992) (quoting 17A C.J.S. Contracts § 299).
Here, despite the labyrinth of agreements necessarily identified to state the facts in this case,
the Stock and Asset Purchase Agreement identifies only four plans related to the Facility that
Defendant assumed, to wit: (1) the 2004 Dana Pension Plan, (2) the Dana CBA, (3) the Muskegon
UAW Supplemental Insurance Agreement, and (4) the Perfect Circle—UAW, Muskegon, Michigan
Group Health Plan (Dkt 87 at ¶ 21, Stipulated Ex. O). Plaintiffs argue that Defendant assumed a
“general body of pension obligations” (Dkt 96 at 24), but there is no generality or ambiguity about
which pension and collective bargaining agreements that Defendant assumed when it purchased the
Plaintiffs also argue that the 2004 CBA does not “preclude an examination of the extrinsic
evidence to determine the intent of the parties” (Dkt 112 at 16). According to Plaintiffs, the
language of the 2004 CBA can “plausibly” be read to include “either the 1996 Dana Assumption
Agreement (or some of its terms) or an agreement to continue some of the terms” (Dkt 112 at 1112). Specifically, Plaintiffs seek to have Defendant bear the obligation arising from a sentence
within the 1996 Dana Assumption Agreement that Plaintiffs isolate and characterize as a “pension
protection promise” (Dkt 96 at 4 n.1, 20), which provides that “in no event will such allocation of
liability result in the curtailment or reduction of benefits as proscribed in the Collective Bargaining
Agreements” (Stipulated Ex. D at 2).2 Plaintiffs argue that certain “extrinsic evidence shows that
the pension protection promise contained in the 1996 Dana Assumption Agreement “became a part
of the 1993-98 contract; was carried forward when Dana and the UAW negotiated agreements in
1998, 2001 and 2004; and was never removed from the collectively bargained agreements assumed
by MAHLE both as part of the SAPA and the 2007 MAHLE Assumption Agreement with the
UAW” (Dkt 96 at 22). However, as Defendant ably demonstrates in its cross-motion papers, it did
not assume the 1996 Dana Assumption Agreement, and Plaintiffs’ arguments for its inclusion lack
Plaintiffs do not assert in this case that Defendant has failed to comply with the obligations
set forth in the 2004 CBA, which provides that “Employee’s Past Service shall not be taken into
account in determining the amount of the employee’s pension benefits” (Dkt 90-1 at Page ID#1213,
Stipulated Ex. K at § 3.1(b)).
According to Plaintiffs, “when [Defendant] bought this ongoing operation it simply stepped
into the shoes of Dana and now must be responsible for the pension protection promise contained
in the 1996 Dana Assumption Agreement” (Dkt 96 at 30). However, as Defendant points out,
successor liability was expressly excluded in this bankruptcy sale (Dkt 105 at 41, n.19). The Sale
Order provides that “except as otherwise specifically provided herein or in the Agreement, MAHLE
shall not be liable for any Claims against the Debtors or any of their predecessors or affiliates, and
MAHLE shall have no successor or vicarious liabilities of any kind or character” (Dkt 92-2 at Page
ID#1761, Stipulated Ex. S at ¶ 23).
Moreover, the 1996 Dana Assumption Agreement was not incorporated by reference in the
2004 Dana CBA that Defendant assumed. “Terms are incorporated by reference into a CBA ‘where
the underlying contract makes clear reference to a separate document, the identity of the separate
document may be ascertained, and incorporation of the document will not result in surprise or
hardship.’” Teamsters Local Union No. 783 v. Anheuser-Busch, Inc., 626 F.3d 256, 262 (6th Cir.
2010) (quoting Int’l Ass’n of Machinists & Aerospace Workers v. ISP Chems., Inc., 261 F. App’x
841, 848 (6th Cir. 2008)). The 1996 Dana Assumption Agreement is not even mentioned in the 126page 2004 Dana CBA, which, conversely, indicates that “[a]ny former Agreements between the
parties which conflict with or are inconsistent with this Agreement are nullified by this Agreement”
(Dkt 89-5 at Page ID#1165, Stipulated Ex. J at ¶ 43). Indeed, Defendant asserts that it first obtained
a copy of the 1996 Dana Assumption Agreement when it was served as an exhibit with the
Complaint in this action (Dkt 105 at 8).
Plaintiffs attempt to frame the question at bar as whether Defendant can establish that the
parties intended to “strip away” the 1996 pension protection promise from the agreements that
Defendant assumed (Dkt 96 at 20). However, Defendant is not required to demonstrate what, if
anything, was “stripped away” over the years by pre-sale conduct, nor do these facts permit this
Court to consider extrinsic evidence of negotiations and intentions. The pivotal question is what did
Defendant assume in the free-and-clear sale, and the undisputed facts demonstrate that Defendant
did not assume the 1996 Dana Assumption Agreement and concomitantly did not assume the
“pension protection promise” contained therein.
Even assuming arguendo that Plaintiffs could establish that Defendant assumed the 1996
Dana Assumption Agreement when it purchased certain stock and assets of Dana, Defendant also
properly argues that Plaintiffs’ reliance on the 1996 Dana Assumption Agreement document is
misplaced, for several reasons that independently preclude relief for Plaintiffs from this Defendant.
First, Defendant is not a party to the 1996 document. Only Dana and the UAW and its Local 637
entered into this document (Dkt 88-4 at Page ID#872). Second, for the reasons this Court previously
expressed, Defendant did not assume the 1996 document when it purchased the Facility in 2006.
Third, the document, on its own terms, expired July 24, 1998 (Dkt 88-4 at Page ID#874). Fourth,
as previously noted, the 2004 Dana CBA expressly nullified “[a]ny former Agreements between the
parties which conflict with or are inconsistent with this Agreement” (Dkt 89-5 at Page ID#1165,
Stipulated Ex. J at ¶ 43).
Last, and most critical, the 1996 document does not support finding a breach by this
Defendant. Section III of the 1996 document, which is the section containing the sentence Plaintiffs
characterize as the “pension protection promise,” provides the following:
III. Group Insurance, SUB, and the Pension Plan will continue with the current
eligibility requirements and benefit levels. Additionally, all scheduled benefit level
changes, if any, will be effective as proscribed by the above-referenced plans. The
liability for such benefits or portions thereof will be the responsibility of the
Predecessor and/or Dana Corporation as determined by the provisions of the Sales
Agreement by and between Dana Corporation and Sealed Power Technologies, L.P.,
which includes the Muskegon Operations. However, in no event will such allocation
of liability result in a curtailment or reduction of benefits as proscribed by the
Collective Bargaining Agreement and its Supplements.
(Dkt 88-4 at Page ID#873, Stipulated Ex. D at 3). As Defendant points out, the language neither
contemplates nor addresses the obligations of a third-party purchaser, which are the circumstances
at bar (Dkt 105 at 9, 12).
In sum, Defendant did not assume the 1996 Dana Assumption Agreement, and even if it did,
the agreement would not support a claim that Defendant has breached any obligation to Plaintiffs.
Defendant’s liability to Plaintiffs, if any, is limited to those obligations arising under the 2004 Dana
Pension Plan and the 2004 Dana CBA. Defendant is therefore entitled to judgment as a matter of
law on Plaintiffs’ claims in this case.
For the foregoing reasons, Plaintiffs’ Motion for Summary Judgment (Dkt 95) is DENIED
and Defendant’s Motion for Summary Judgment (Dkt 104) is GRANTED. An Order will be entered
consistent with this Opinion. Further, as the Order resolves all pending claims in this case, a
Judgment will also be entered.
DATED: October 22, 2013
/s/ Janet T. Neff
JANET T. NEFF
United States District Judge
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