Bigham et al v Genz-Ryan Plumbing & Heating Co.
MEMORANDUM OPINION AND ORDER. 1. Plaintiffs' Motion for Summary Judgment Vacating the January 5, 2016 Arbitration Award (Doc. No. 43 ) is DENIED. 2. Genz-Ryan's Motion for Summary Judgment (Doc. No. 38 ) is GRANTED. Plaintiffs' Amended Complaint (Doc. No. 26 ) is DISMISSED WITH PREJUDICE. (Written Opinion) Signed by Judge Donovan W. Frank on 5/30/2017. (BJS)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
James Bigham, Robert Vranicar, Patrick
Welty, John Quarnstrom, Michael
Mitchell, Mike McCauley, Marcus Vitse,
Dave Holzer, and Jim Bowman as
Trustees of the Sheet Metal Workers’
Local 10 Pension Fund, and Sheet Metal
Workers Local 10 Pension Fund,
Civil No. 16-280 (DWF/SER)
OPINION AND ORDER
Genz-Ryan Plumbing & Heating Co.,
Benjamin D. Sandhal, Esq., Joseph D. Weiner, Esq., and Michael G. Congiu, Esq., Littler
Mendelson, PC, counsel for Employer.
Amy L. Court, Esq., Carl S. Wosmek, Esq., and Christy E. Lawrie, Esq., McGrann Shea
Carnival Straughn & Lamb, Chtd, counsel for Respondent.
After arbitration, Plaintiffs filed suit seeking an order vacating the arbitrator’s
order. Before the Court are the parties’ motions for summary judgment. (Doc. Nos. 38,
43.) For the reasons outlined below, the Court denies Plaintiffs’ Motion for Summary
Judgment Vacating the January 5, 2016 Arbitration Award and grants Defendant’s
Motion for Summary Judgment.
Defendant Genz-Ryan Plumbing & Heating Company retained a multi-employer
bargaining association (“SMARCA”) to negotiate with the Sheet Metal Workers’ Local
10 Union (the “Union”). Genz-Ryan, the Union, and SMARCA signed a collective
bargaining agreement that was in effect from May 1, 2005 to April 30, 2008. (The
“CBA.”) As part of the CBA, Genz-Ryan was required to contribute to the Union
members’ retirement fund. The retirement fund was operated by trustees. Plaintiffs in
this case are the fund and trustees. (Generally, the “Fund,” and the “Trustees.”)
The CBA expired on April 30, 2008, unless it was extended through a reopening
process. If the agreement was reopened, then the CBA would remain in effect until
“conferences relating thereto ha[d] been terminated by either party.” (Doc. No. 41
(“Congiu Decl.”) ¶ 1, Ex. 1 at 27.) On December 17, 2007 (five months before the
agreement expired), Genz-Ryan gave notice that it was revoking its agreement with
SMARCA to negotiate with the Union. Genz-Ryan intended to negotiate its own
separate contract with the Union. Despite this, on January 2, 2008, the Union gave notice
reopening the CBA. After that, Genz-Ryan reiterated its intent to negotiate a separate
contract, but SMARCA and the Union began negotiating a new collective bargaining
agreement without Genz-Ryan. SMARCA and the Union reached an agreement on
May 2, 2008; Genz-Ryan refused to join it.
After the CBA expired on April 30, 2008, Genz-Ryan notified the Fund that it
would no longer be contributing to the retirement fund. Because Genz-Ryan was exiting
the fund, Genz-Ryan faced a withdrawal liability for any unpaid vested benefits. When
Genz-Ryan asked in 2008, the Fund told Genz-Ryan that it had no withdrawal liability.
In March 2008, Genz-Ryan began negotiating with the Union for a separate,
non-SMARCA agreement. On June 25, 2008, Genz-Ryan declared negotiations were at
an impasse. The next day, Genz-Ryan made its final offer. The parties met two more
times, but never resolved (or even discussed) the issues that led to the impasse.
(Doc. No. 40 at 9.) The last meeting was on October 27, 2008. On October 28, 2008, the
Union e-mailed that it would rework the proposal and schedule another meeting. (See
Congiu Decl. ¶ 16, Ex. 16.) Genz-Ryan never responded to the October 28, 2008 e-mail,
nor did the Union ever follow up with a new proposal.
On May 14, 2008, the Union filed an NLRB charge against Genz-Ryan. Based on
the charge, the NLRB then filed a complaint against Genz-Ryan alleging that Genz-Ryan
had failed to abide by the CBA during the negotiations after April 30, 2008. (Congiu
Decl. ¶ 1, Ex. 1 at 3 ¶ 10.) On November 18, 2008—mere weeks after the parties last
met—an ALJ held a hearing on the NLRB complaint. In that litigation, Genz-Ryan
argued that it was no longer bound by the CBA. The ALJ agreed and found that the CBA
terminated after April 30, 2008. The union appealed, and the parties settled.
Additionally, on July 23, 2008, the Fund and the Trustees filed a lawsuit against
Genz-Ryan in the District of Minnesota seeking to recoup unpaid contributions for fringe
benefits. Trustees of the Sheet Metal Local No. 10 Control Bd. Trust Fund v. Genz-Ryan
Plumbing & Heating Co., Civ. No. 08-4752, 2009 WL 2171001 (D. Minn. July 17,
2009). Genz-Ryan argued that it had no unpaid contributions because it had paid the
fringe benefits through April 30, 2008. The Fund and Trustee argued that the CBA
continued after April 30, 2008, because the parties had reopened negotiations.
Genz-Ryan argued, however, that the negotiation conferences had ended at the latest on
October 27, 2008, which terminated the agreement. Genz-Ryan would have liability only
if the agreement remained in effect into 2009. The parties both moved for summary
judgment on a few issues, including when the agreement terminated. Id. at *3.
Judge Richard H. Kyle denied summary judgment on the issue of when the
agreement terminated. In his order, Judge Kyle noted that it seemed that conferences had
continued after October 27, 2008, because the parties had not intended for that meeting to
be their last. Id. at *8. But the court also observed that by the time of the summaryjudgment order (July 2009), the parties had never again met, which “seem[ed] to indicate
that conferences are now terminated.” Id. The court, however, could not identify an
exact date, which would need to be decided at trial. Specifically, the court found, “[A]
genuine issue of material fact remains as to when conferences terminated after April 30,
After the order, the parties settled but expressly reserved the issue of withdrawal
liability. (Congiu Decl. ¶ 1, Ex. 1 at 64.) The settlement agreement also provided that
the withdrawal liability was not affected by the settlement or the dismissal of either the
NLRB case or the federal one. (Id. at 68.)
On March 27, 2012, the Trustees determined that Genz-Ryan withdrew from the
CBA in 2009. As a result, Genz-Ryan’s withdrawal liability grew from $0 to nearly
$900,000. (Id. at 72.) On April 16, 2013 (over a year later), the Fund wrote to
Genz-Ryan with its determination. The letter did not identify a precise date of
withdrawal or when conferences had concluded. (See id. at 73.) On May 24, 2013,
Genz-Ryan wrote back stating that its withdrawal liability was zero because it withdrew
in 2008. (Id. at 81.) Genz-Ryan reiterated its position on July 18, 2013. (Id. at 83.) On
September 10, 2013, the Fund wrote back stating merely that it disagreed with
Genz-Ryan on the withdrawal date. (Id. at 86.)
On October 29, 2013, Genz-Ryan sought to arbitrate the issue. The arbitrator
determined that Genz-Ryan withdrew at the latest on October 27, 2008. Genz-Ryan,
therefore, had no withdrawal liability. The Fund and Trustees sought to have this Court
vacate or modify the determination. The parties now cross move for summary judgment.
(Doc. Nos. 38, 43.)
Summary judgment is appropriate 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). Courts must view the evidence, and the inferences that may be
reasonably drawn from the evidence, in the light most favorable to the nonmoving party.
Weitz Co., LLC v. Lloyd’s of London, 574 F.3d 885, 892 (8th Cir. 2009). However,
“[s]ummary judgment procedure is properly regarded not as a disfavored procedural
shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed
‘to secure the just, speedy, and inexpensive determination of every action.’” Celotex
Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed. R. Civ. P. 1).
The moving party bears the burden of showing that there is no genuine issue of
material fact and that it is entitled to judgment as a matter of law. Enter. Bank v. Magna
Bank, 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must demonstrate the
existence of specific facts in the record that create a genuine issue for trial. Krenik v. Cty.
of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). A party opposing a properly supported
motion for summary judgment “may not rest upon the mere allegations or denials of his
pleading, but must set forth specific facts showing that there is a genuine issue for trial.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
Standard of Review of Arbitrator’s Decisions
Courts review an arbitrator’s legal decisions de novo, but will defer to the
arbitrator’s factual determination unless they are rebutted by “a clear preponderance of
the evidence.” 29 U.S.C. § 1401(c); see also Union Asphalts & Roadoils, Inc. v.
MO-KAN Teamsters Pension Fund, 857 F.2d 1230, 1233 (8th Cir. 1988). This means
that the arbitrator’s factual findings will be overturned only if they are clearly erroneous.
Cent. States, Se. & Sw. Areas Pension Fund v. Nitehawk Exp., Inc., 223 F.3d 483, 488
(7th Cir. 2000). This same standard applies to mixed questions of fact and law. Id.
Plaintiffs claim that the arbitrator erred in two ways. First, the arbitrator failed to
find that Judge Kyle’s order was preclusive on the issue that conferences continued after
October 27, 2008. Second, the arbitrator erred by finding that conferences terminated at
the latest on October 27, 2008.
Collateral Estoppel of Judge Kyle’s Order
Plaintiffs argue that the arbitrator erred by failing to give preclusive effect to
Judge Kyle’s conclusion that conferences continued past October 27, 2008. Collateral
estoppel precludes a party from re-litigating finally adjudicated issues. Under Minnesota
law, collateral estoppel applies when:
(1) [T]he issue was identical to one in a prior adjudication; (2) there was a
final judgment on the merits; (3) the estopped party was a party or in privity
with a party to the prior adjudication; and (4) the estopped party was given
a full and fair opportunity to be heard on the adjudicated issue.
State v. Lemmer, 736 N.W.2d 650, 659 (Minn. 2007). Here, Judge Kyle did not make a
final determination that negotiations continued beyond October 27, 2008. Indeed, the
court explicitly stated that a genuine issue of material fact remained regarding when
conferences concluded after April 30, 2008. Genz-Ryan Plumbing & Heating Co., 2009
WL 2171001, at *8. Thus, Judge Kyle’s order is not entitled to preclusive effect on the
issue of when conferences terminated. Plaintiffs have therefore failed to show the
arbitrator erred by not applying collateral estoppel to Judge Kyle’s order.
October 27, 2008 Withdrawal Date
Plaintiffs also argue that even if collateral estoppel does not apply, the arbitrator
nonetheless erred by finding that conferences terminated by October 27, 2008. The
arbitrator found that the terms of the CBA continued after April 30, 2008, until
conferences terminated. But the arbitrator also concluded that terminating conferences
did not require “any magic words.” (Doc. No. 46, Ex. 4 at 61.) Instead, the parties could
just stop conferring. The arbitrator found that Genz-Ryan properly declared an impasse
of negotiations in June 2005, and then met with the Union twice after the impasse. The
arbitrator concluded that the two meetings did not break the impasse because the parties
did not resolve the known deal-breaker issues. (Id. at 62.) Thus, the arbitrator found that
conferences terminated no later than October 27, 2008, based on: (1) Genz-Ryan
declaring an impasse on June 25, 2008; (2) the last meeting occurring on October 27; and
(3) that after October 27, “at no time did either party actively communicate with the other
about negotiating a contract that differed from the Employer’s self-imposed one.” (Id. at
The arbitrator rejected Plaintiffs’ contention that conferences continued after
October 27, 2008. In the arbitration, Plaintiffs submitted three bases for concluding that
conferences terminated in July 2009. Plaintiffs relied on: (1) the fact that Judge Kyle’s
order denying summary judgment was issued in July 2009; (2) the Union’s October 28,
2008 e-mail stating that the Union hoped to continue negotiations, and the belief of
Genz-Ryan’s co-owner Jon Ryan that Genz-Ryan was obligated to negotiate into 2009;
and (3) the fact that payments from settling the fringe-benefit and NLRB cases were
credited until July 2009. (Id. at 45-46.)
The arbitrator found the Plaintiffs’ bases meritless. The arbitrator noted that even
the Fund’s own minutes show that the Trustees were “dubious about the conclusion . . ..”
(Id. at 59.) First, the arbitrator rejected the notion that Judge Kyle’s order denying
summary judgment could be used to support the Fund’s determination of when
conferences terminated. (Id. at 59.) Second, the arbitrator rejected that the e-mail
extended the CBA because the parties had failed to overcome the deal-breaker issues that
led to the impasse. Similarly, the Union never followed through on its offer in the e-mail
to rework the proposal. Last, the arbitrator concluded that the accounting of settlement
payments could not support a July 2009 withdrawal date in part because the settlement
agreement provided that it would not affect withdrawal liability. 1 (Id. at 57.)
On review, Plaintiffs principally argue that the arbitrator made three errors:
(1) the arbitrator failed to give the proper deference to the Fund’s determination that
Genz-Ryan withdrew in July 2009; (2) even if the arbitrator deferred to the Fund, the
arbitrator erred by finding that Genz-Ryan overcame that deference; and (3) the evidence
does not support a finding that conferences terminated on October 27, 2008.
First, Plaintiffs argue that the arbitrator did not give the proper deference to the
Fund’s factual determination. Under 29 U.S.C. § 1401(a)(3)(A), a fund’s factual
Plaintiffs argue that the arbitrator erred when it considered Genz-Ryan’s argument
that the settlement payments could not provide a credible basis for the July 2009
withdrawal date because Genz-Ryan waived any argument about the settlement
agreement. Genz-Ryan had argued to the arbitrator that the settlement agreement
“prevented” a 2009 withdrawal date, but then abandoned this argument. (Doc. No. 45
at 10.) Then, when Plaintiffs argued that the settlement agreement supported a 2009
withdrawal date, Genz-Ryan argued that the settlement agreement by its terms could not
affect the withdrawal date. Plaintiffs argue that the arbitrator erred by considering
Genz-Ryan’s argument. Genz-Ryan, however, did not waive this argument when it
abandoned the argument that the settlement agreement precluded a 2009 withdrawal date.
The arguments are distinct. Thus, Plaintiffs’ waiver argument fails.
determinations are “presumed correct unless the party contesting the determination shows
by a preponderance of the evidence that the determination was unreasonable or clearly
erroneous.” The Supreme Court has interpreted this provision to mean that “the burden
[is] on the employer to disprove a challenged factual determination by a preponderance.”
Concrete Pipe & Prod. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508
U.S. 602, 629 (1993). All this standard asks of the employer is to show “that a finding of
fact was more probably wrong than not.” See id. at 625.
Here, the arbitrator correctly stated the legal standard. (Doc. No. 46, Ex. 4 at 56.)
But the withdrawal date is not a purely factual issue. Instead, the withdrawal date
presents a mixed question of fact and law. Concrete Pipe & Prod. of Cal., Inc., 508 U.S.
at 630. The arbitrator correctly identified the issue as a mixed question and explained
that determining the withdrawal date required him to determine when the parties reached
an impasse in negotiations and when conferences ended. (Doc. No. 46, Ex. 4 at 56.)
According to the arbitrator, these issues were not entitled to deference because they were
“predicted on legal and credibility determinants.” (Id.) On review, the Court concludes
that the arbitrator applied the correct amount of deference to Plaintiffs’ factual
determinations. The arbitrator identified the correct standard of review and correctly
noted that the withdrawal date was a mixed question of fact and law, which is not entitled
to the statutory presumption. Thus, Plaintiffs have failed to show that the arbitrator erred
by applying the wrong legal standard.
Next, Plaintiffs argue that the arbitrator erred by concluding that Genz-Ryan
overcame the statutory deference. In rejecting the Fund’s purported bases, the arbitrator
had to make a number of factual and credibility determinations. A court will not overturn
those determinations without a showing of clear error. Here, Plaintiffs have failed to
show that the arbitrator committed clear error.
Last, Plaintiffs argue that the arbitrator erred by finding that conferences
terminated on October 27, 2008. The arbitrator’s determination of a withdrawal date is a
mixed question of fact and law, which courts will uphold unless the arbitrator committed
clear error. Nitehawk Exp., Inc., 223 F.3d 483, 488. Here, Plaintiffs have failed to show
that the arbitrator committed clear error. 2
Based on the files, records, and proceedings herein, and for the reasons stated
above, IT IS HEREBY ORDERED that:
Plaintiffs’ Motion for Summary Judgment Vacating the January 5, 2016
Arbitration Award (Doc. No. ) is DENIED.
Genz-Ryan’s Motion for Summary Judgment (Doc. No. ) is
GRANTED. Plaintiffs’ Amended Complaint (Doc. No. ) is DISMISSED WITH
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: May 30, 2017
s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
Plaintiffs also moved for summary judgment to strike Defendant’s affirmative
defenses. (Doc. No. 45 at 34-35.) Because the Court resolves the case at summary
judgment, the Court does not need to address this issue.
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