RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
ELECTRONIC CITATION: 2004 FED App. 0142P (6th Cir.)
File Name: 04a0142p.06 _________________
COUNSEL
UNITED STATES COURT OF APPEALS
ARGUED: John L. Wolfe, Akron, Ohio, for Appellants.
FOR THE SIXTH CIRCUIT David F. Dabbs, McGUIRE WOODS LLP, Richmond,
_________________ Virginia, Melvin P. Stein, UNITED STEELWORKERS OF
AMERICA, Pittsburgh, Pennsylvania, for Appellees.
CARL BAUER et al., X ON BRIEF: John L. Wolfe, Akron, Ohio, for Appellants.
Plaintiffs, - David F. Dabbs, Jonathan P. Harmon, McGUIRE WOODS
- LLP, Richmond, Virginia, Melvin P. Stein, UNITED
- No. 02-4327 STEELWORKERS OF AMERICA, Pittsb urgh,
CRAIG M. BENNETT et al., - Pennsylvania, Clair E. Dickinson, BROUSE McDOWELL,
Plaintiffs-Appellants, > Akron, Ohio, for Appellees.
,
- _________________
v. -
- OPINION
RBX INDUSTRIES, INC. et al., - _________________
Defendants-Appellees. -
- KAREN NELSON MOORE, Circuit Judge. The
N contentious relationship between a corporation and a group of
Appeal from the United States District Court its former employees following the closing of a
for the Northern District of Ohio at Akron. manufacturing facility in Barberton, Ohio is the milieu for
No. 02-00415—James Gwin, District Judge. this appeal. At issue is a significant question of whether
federal courts have the ability to hear claims filed pursuant to
Argued: March 12, 2004 § 301 of the Labor Management Relations Act (“LMRA”), 29
U.S.C. § 185(a), and pursuant to the Employee Retirement
Decided and Filed: May 17, 2004 Income Security Act (“ERISA”), 29 U.S.C. § 1132, when an
accord reached between the corporation and the employees’
Before: NELSON, MOORE, and FRIEDMAN, Circuit union terminates a previously negotiated Collective
Judges.* Bargaining Agreement (“CBA”), the breach of which
provided the factual basis for both claims. Additionally, we
must evaluate the scope of the “right to sue” provision of the
Labor-Management Reporting and Disclosure Act
(“LMRDA”), 29 U.S.C. § 411, to determine whether a viable
LMRDA claim has been alleged.
*
Judge Daniel M. Friedman, Circuit Judge of the United States Court
of Appeals for the Federal Circuit, sitting by designation.
1
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Plaintiffs-Appellants (“Plaintiffs”) were a group of former amend their complaint to include a claim under the LMRDA,
employees1 at the Barberton, Ohio mixing facility owned by 29 U.S.C. § 411. On appeal, the Plaintiffs argue that because
Midwest Rubber Custom Mixing Corp. (“Midwest”), which the district court did not have jurisdiction over their § 301
in turn was controlled by RBX Industries, Inc. (“RBX”). hybrid claim, it erred in reaching the merits of the § 301 and
Following the closure of the Barberton facility, the Plaintiffs’ ERISA claims, as it should have dismissed the action without
national union, the United Steel Workers of America, AFL- prejudice. The Plaintiffs also argue that the district court
CIO (“USWA”), and RBX signed a Settlement agreement erred in denying their motion to add the LMRDA claim. We
(the “Settlement”) in April 2002, which abrogated the agree that the district court lacked jurisdiction over the
previously negotiated CBA and purported to resolve all Plaintiffs’ § 301 and ERISA claims, and consequently we
disputes between RBX and its former employees. The VACATE the judgment of the district court and REMAND
Plaintiffs filed an action against RBX, the USWA, and the with instructions that the district court dismiss the Plaintiffs’
employees’ local union, Local Union # 77L, United Steel action without prejudice. We AFFIRM the district court’s
Workers of America (“Local 77L”)2, alleging a “hybrid” denial of the Plaintiffs’ motion to amend the complaint to add
§ 301 breach of contract/breach of duty of fair representation an LMRDA claim.
claim under the LMRA, 29 U.S.C. § 185(a), and various
claims relating to the denial of benefits under ERISA. I. BACKGROUND FACTS AND PROCEDURE
29 U.S.C. § 1132.
A. The 1997 CBA
The district court granted RBX’s and the Unions’ motions
for summary judgment and denied Plaintiffs’ motion to The effects of the Settlement can not be fully understood
without explaining the 1997 CBA, which the Settlement
superseded. The 1997 CBA was the latest in a series of pacts
negotiated between Midwest and Local 77L, and it tied in
1 several previously negotiated benefit plans. Two of these
Initially, Carl Bauer and twenty-one other former employees of the
Barberton, Ohio factory filed this action. Five new plaintiffs were added plans are pertinent3: the Midwest Rubber Supplemental
in April 2002. Only twenty of the twenty-seven Plaintiffs are parties to Unemployment Benefits Plan (“SUB Plan”) and the Midwest
the appea l. The nam ed Plaintiffs represent approximately 17% of the Rubber Custom Mixing Corp. Union Hourly Employees
bargaining unit formerly represented by Local Union # 77L, United Steel
W orkers of America (“Local 77L”).
Medical and Life Insurance Plan (“Medical Plan”), the latter
of which is also referred to as the “Agreement on Welfare
2
The Plaintiffs brought their action against RB X Ind ustries, Inc. and Benefits Programs.” With regard to the Medical Plan, the
RBX Corporation (collectively “RBX ”). RBX Corp. is a Delaware 1997 CBA stated, “It is recognized by the parties hereto that
corporation, whose parent, RB X H oldings, Inc., had purchased Midwest’s the provisions as outlined in Section 1 Paragraph (a) of [the
stock in 1990. RBX Industries, also known as RBX Reorganized, was CBA] may be applied to and shall include the [Pension Plan]
RBX Corp.’s successor-in-bankruptcy. Midwest merged into RBX and the Agreement on Welfare Benefits Programs . . . .” Joint
Industries on August 16, 2001. The Plaintiffs also named as defendants
three benefits plans and RB X in its capacity as administrator of those
plans: the Midwest Rubber Custom M ixing Corp. Unio n Ho urly
Employees Pen sion P lan (“P en sio n P lan”); the M idwest Rubber 3
Supplemental Unemployment Benefits Plan (“SUB Plan”); and the Midwest and the employees had also previously negotiated the
Midwest Rubber Custom M ixing Corp. Union Hourly Employees Medical Pension Plan, which is not at issue in this appeal and which was not
and Life Insurance Plan (“Medical Plan”). affected by the Settlement.
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Appendix (“J.A.”) at 1022 (art. XV, § 2(a)). Additionally, the 80%, the separation payments would be deferred until the
1997 CBA explicitly incorporated the SUB Plan. J.A. at 1022 fund position exceeded 80%. The SUB Plan explicitly stated
(art XV, § 2(b)) (“It is recognized by the parties hereto that that employees did not have any rights or vested interests in
the separate Agreement on [SUBs] . . . is a part of this the assets of the fund. J.A. at 322 (art. IX, § 5). Furthermore,
Agreement.”). Either Midwest, a committee appointed by the SUB Plan’s existence was tied to the CBA’s: “Upon the
Midwest, or RBX, as Midwest’s successor, administered all termination of the [CBA], [Midwest] shall have the right to
three plans and possessed discretionary authority to determine continue the Plan in effect and to modify, amend, suspend, or
eligibility, disburse benefits, and manage disputes. terminate the Plan, except as may be otherwise provided in
any subsequent [CBA] . . . .” J.A. at 326 (art. X, § 4(a))
1. The SUB Plan (emphasis added).
The SUB Plan gave the Barberton employees “certain 2. The Medical Plan
Benefits in the event of their layoff,” J.A. at 284 (art. I),
which were “intended to supplement any State System The Medical Plan gave employees medical benefits and life
Benefits,” J.A. at 284, rather than replace them. The SUB insurance both during employment and in the event of a
Plan provided for the disbursement of benefits and separation layoff. Following termination of employment, an employee
payments at amounts commensurate with seniority. A would continue to receive medical benefits “for a period of 90
general trust fund served as the Plan’s only financial source. days beginning with the first day of layoff.” J.A. at 217 (art.
Midwest was required to pay a certain amount into the fund IV, § K.1(a)). An employee would also be covered for an
each month, but Midwest’s contribution could be offset or additional time period beyond the first ninety days, which
reduced by the costs of providing medical benefits for laid-off varied as a function of the number of SUBs an employee
employees. would expect to receive given an employee’s available credit
units on the last day worked prior to the layoff. For example,
A Midwest employee at Barberton earned SUBs based if an employee were entitled to thirty-three weeks of SUBs,
upon several factors. An employee accrued “credit units” for as determined by the employee’s seniority and the SUB
each work week completed. The amount of the employee’s Plan’s fund position, the employee would receive ninety days
SUBs consequently depended on seniority, whether that plus five months of full medical coverage. See J.A. at 218
employee had used his or her credit units for prior benefits, (art. IV, § K.1(b), (c)). If the SUB fund position dropped
and the status of the “fund position.” The SUB fund position below 4% at the time of layoff, the employee would not be
was determined by dividing the current market value of the entitled to any SUB benefits, which consequently would limit
fund’s assets by a number proportional to the number of the employee’s post-layoff medical coverage to ninety days.
covered employees. Credit units were canceled if the fund Furthermore, if the SUB Plan were terminated, a laid-off
position fell below a certain level. For example, if the fund employee would only be entitled to ninety days of medical
position fell below 80%, credit units were canceled in a care following the date of termination.
manner that rewarded seniority. If the fund position fell
below 4%, no SUBs were payable. The fund position also
determined the payment of separation payments: separation
payments would be distributed only if the fund position
equaled or exceeded 80%. If the fund position fell below
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 7 8 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
B. RBX’s Bankruptcy Proceedings 1. Negotiations Between RBX and the Unions
RBX entered bankruptcy proceedings in December 2000 a. The First Proposal
after one of its creditors filed an involuntary Chapter 11
bankruptcy petition against it.4 On June 29, 2001, RBX filed On August 14, 2001, Jones, acting as the USWA
a motion seeking authority to close the Barberton plant and to representative, and several Local 77L officers met with
transfer all operations to another RBX-owned plant in RBX’s attorneys, led by William Twomey (“Twomey”) in
Tallapoosa, Georgia in the hopes that consolidating RBX’s what became a contentious meeting. Twomey commenced
mixing operations into one location would maximize RBX’s the meeting by claiming that no severance payments would be
profits from that sector. As required by the bankruptcy court, available because the SUB fund position was below 4% on
RBX sent a letter dated June 29, 2001, to the USWA and account of health care benefits paid to laid-off employees in
Rose Jones (“Jones”), who was the USWA representative recent years. Several Barberton employees expressed anger
serving Local 77L, explaining that RBX would be closing the regarding the apparent lack of severance pay, accusing RBX
Barberton facility subject to the approval of the bankruptcy of having negotiated the SUB Plan in bad faith. J.A. at 916
court. It emphasized that “the Midwest operation has been (Minutes, 08/14/01). The union representatives sought to
losing money for two years and, at current sales levels, our persuade RBX not to close the plant, suggesting that the City
employees could work at minimum wages and no benefits of Barberton might be able to provide assistance, but Twomey
and the Midwest operation would still fail to reach made it clear that RBX had no choice but to close the plant.
profitability levels competitive with our other locations.” J.A.
at 331 (RBX Letter 06/29/01). On July 12, 2001, the Failing to reach any solution on August 14, the parties
bankruptcy court granted RBX’s motion to discontinue reconvened the following day. RBX provided Local 77L with
operations at Barberton. an official Worker Adjustment and Retraining Notification
Act (“WARN”) notice, as is required by federal statute. See
C. The Closing of the Barberton Plant 29 U.S.C. § 2102 (a). The WARN letter, dated August 14,
2001, clarified that “all employees in the collective bargaining
After learning of RBX’s intentions, Local 77L met with unit at Midwest will be permanently laid off sometime during
representatives of the government of the City of Barberton in the period between October 15th, 2001 and 14 days
early August to explore ways of forestalling the plant’s thereafter.” J.A. at 50 (WARN Letter). The union
closure. This meeting was not fruitful because no one from representatives complained to no avail that the notice was
RBX attended the meeting. Quickly recognizing that the late. The parties then turned their attention to the issue of
plant closure was a fait accompli, the parties entered into severance pay. RBX offered one of two alternatives to the
“effects” negotiations. Barberton employees: 1) each employee would receive a
lump-sum payment equal to one week of severance pay for
each year of service, plus a $1,000 cash bonus, but no medical
insurance beyond the first ninety days; or 2) each employee
would receive one week of severance pay for every year of
4
service paid on a weekly basis, plus company-paid health
The bankruptcy petition was filed in the Bankruptcy Court for the insurance for the same period of time. The Local 77L
District of Delaware, but the case was transferred to the Bankruptcy Court
for the Western District of Virginia.
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 9 10 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
representatives took the offer back to the union membership, filed by Jones in response to a letter sent by RBX, which
which rejected the proposal on August 19. informed the Barberton employees that their health insurance
ended on January 13, 2002, ninety days after the closing of
b. The Second Proposal the plant. Some Local 77L members objected to the manner
in which Jones handled the filing of grievances and the effects
The parties reconvened on October 8, 2001. Twomey negotiations. In January, a Local 77L member, Douglas
proposed a new offer: each employee would receive one Sauerbrei, requested that Jones be removed as administrator.
week’s severance pay for each year of service, plus RBX However, during a February 13, 2002, hearing held by the
would pay its share of each employee’s health premium, USWA to determine if the Administratorship was properly
which would be applied to the employee’s COBRA premium. established, there was allegedly no objection to the
The membership rejected this proposal on October 12, establishment of the Administratorship or to Jones’s abilities
demanding increased severance pay and longer lasting in that role.
medical benefits.
D. The Lawsuit and the Settlement
c. The Third Proposal
1. The Initial Complaint
A third meeting was held on November 9, 2001. RBX
offered a sharply scaled-back proposal. RBX would pay a The Plaintiffs filed their complaint on March 5, 2002,
lump-sum severance payment of one day’s pay for each year setting forth two claims for relief. In the first claim, the
of service, plus RBX would pay for health benefits through Plaintiffs alleged that RBX breached the 1997 CBA and that
November 30, 2002 (by applying the premium RBX would the two Unions breached their duties of fair representation in
have paid towards an employee’s COBRA payments). violation of § 301 of the LMRA. In the second claim, the
However, the employees would have to pay a $250 monthly Plaintiffs alleged that RBX “neglected and refused to pay,”
co-payment from June 1 to November 30. The membership J.A. at 35-36 (Pl. Compl.), the benefits provided in the three
eventually turned down this last proposal on December 30, plans, which entitled the Plaintiffs to receive the benefits and
2001. punitive damages pursuant to ERISA.
2. The Relationship Between Local 77L and the USWA 2. The Settlement
As predicted in the WARN letter, RBX closed the In March 2002, the USWA met again with RBX officials.
Barberton facility and fired nearly all of its employees on Twomey made clear that RBX was lowering its offer and that
October 15, 2001. Pursuant to Article IX of the USWA he did not believe the Plaintiffs’ lawsuit would succeed.
Constitution, the USWA placed Local 77L in RBX appeared to have the upper hand in these negotiations,
Administratorship on November 29, 2001, suspending the mainly as it believed it did not have any obligation to provide
Local 77L officers because the plant had closed and naming health insurance coverage beyond ninety days because the
Rose Jones as the Administrator of Local 77L. Owing to the SUB fund position fell below 4% in early 2001. RBX made
large number of unresolved disputes between the employees no contributions to the SUB Plan trust fund in 2001 “because
and RBX, the USWA filed multiple grievances on behalf of the required contributions were reduced, under the terms of
the Barberton employees. Several of these grievances were the SUB Plan, by the cost of providing medical insurance to
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employees on layoff.” J.A. at 481 (McMillan Aff.). The completely and finally resolves all disputes, grievances and
Unions and the Plaintiffs countered that even if the fund disagreements between the Parties[,] and the Company has no
position dipped below 4% at some point in October 2001, the continuing obligations under the [CBA].” J.A. at 103.
fund position was over 4% in September 2001 and that was
the position that should have been used to calculate the 3. The Continuing Legal Proceedings
benefits.
The Plaintiffs filed a motion for a temporary restraining
Twomey drafted a settlement proposal for Jones to review, order and a preliminary injunction on March 26, 2002, to
and the USWA ultimately agreed to its terms. The Settlement prevent RBX and the Unions from completing the effects
was signed and completed on April 5, 2002, although the negotiations that eventually produced the Settlement. The
membership of Local 77L never voted on the matter. The district judge denied the motion for a temporary restraining
Settlement bound RBX to pay all Barberton employees: order as moot on April 16, 2002, because the Settlement had
1) nine days of pay, equal to the number of days that the plant already been signed. On May 2, 2002, the district court heard
closing notice was allegedly late; and 2) ninety days of arguments regarding the Plaintiffs’ renewed motion for a
RBX’s share of health insurance premiums, plus payment of preliminary injunction. The district judge denied the motion
the same amount toward COBRA premiums for a number of for a preliminary injunction, ruling that the Plaintiffs failed to
additional weeks equal to the number of years worked. J.A. demonstrate a strong likelihood of success on the merits.
at 101. Additionally, the Settlement resolved many of the
outstanding employee grievances pursued by the USWA. The Plaintiffs then sought to amend their complaint on
July 11, 2002, alleging a claim under the LMRDA, 29 U.S.C.
The Settlement superseded the 1997 CBA and all the Plans, § 411, that the Defendants deprived them of the “right to sue”
except for the Pension Plan. J.A. at 99 (“This Agreement promised by the LMRDA. RBX and the Unions opposed this
shall be controlling and superior to any inconsistent amendment because it was filed only three weeks before the
provisions of the currently applicable [CBA] between the close of discovery and because, they asserted, it would not
Parties and to any other document or documents . . . .”); J.A. survive a Rule 12(b)(6) motion to dismiss. The district judge
at 100 (“Any and all other severance provisions and/or other agreed with the Defendants and denied the motion to amend
benefits . . . including but not limited to the [SUB] Plan, [the on futility grounds. The Plaintiffs moved for reconsideration
Medical Plan] and any other plans . . . hereafter shall be null of this denial, arguing that the Settlement had divested the
and void in their entirety.”). The Settlement contained a district court of subject matter jurisdiction, and thus the
provision regarding the SUB Plan, which stated that RBX met Unions, by allegedly acting in concert with RBX, effectively
its SUB Plan funding obligations, that there were insufficient destroyed the Plaintiffs’ lawsuit, all of which violated the
funds to pay a benefit, and that the fund assets would be used LMRDA. The district court declined to reconsider its
to administer the SUB Plan with the remainder to be decision.
distributed to the Barberton employees. Finally, the
Settlement purported to resolve all lingering issues, Both defendants moved for summary judgment in early
providing: “[T]his Agreement provides a full remedy for the August. The district court granted both motions on
effects of the Company’s decision and . . . no further October 17, 2002. The district court did not rule against the
negotiation of the decision to close and/or the effects of that Plaintiffs based upon a jurisdictional defect. Instead, it held
decision shall be required,” J.A. at 100, and “This Agreement that the Plaintiffs could not succeed on their § 301 claim
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 13 14 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
because: 1) the Union had the authority to negotiate and enter had jurisdiction, and thus its opinion is valid. Therefore, we
into the settlement agreement; 2) the Union did not breach its are faced with the slightly strange situation in which the
duty of fair representation in representing the Plaintiffs; and Plaintiffs seek to undermine the jurisdictional basis for their
3) RBX did not breach the 1997 CBA. The district court own claim, but their opponents, in order to maintain an
granted the Defendants’ motions for summary judgment and advantageous judgment, suggest the opposite. We hold that
dismissed the case. Plaintiffs timely appealed, and we have the district court erred in reaching the merits of the § 301
jurisdiction over the final order of the district court pursuant claim: the Settlement superseded the 1997 CBA, making a
to 28 U.S.C. § 1291. § 301 claim impossible and consequently precluding the
district court from asserting jurisdiction.
II. ANALYSIS
1. The Plaintiffs’ § 301 “Hybrid” Claim
A. Standards of Review
Section 301(a) of the LMRA provides the jurisdictional
Normally, we review de novo a grant of summary basis for the Plaintiffs’ breach of contract/breach of duty of
judgment. Flint v. Ky. Dep’t of Corr., 270 F.3d 340, 346 (6th fair representation claims, which are deemed “hybrid” § 301
Cir. 2001). However, here we must first determine whether claims:
the district court properly had jurisdiction to issue a summary
judgment. We review de novo questions of subject matter Suits for violation of contracts between an employer and
jurisdiction. Caudill v. N. Am. Media Corp., 200 F.3d 914, a labor organization representing employees in an
916 (6th Cir. 2000). Additionally, the denial of the Plaintiffs’ industry affecting commerce as defined in this chapter, or
motion to amend is also reviewed de novo. “Denial of leave between any such labor organizations, may be brought in
to file an amended complaint is usually reviewed under an any district court of the United States having jurisdiction
abuse of discretion standard.” LRL Props.v. Portage Metro of the parties, without respect to the amount in
Hous. Auth., 55 F.3d 1097, 1104 (6th Cir. 1995). “When, controversy or without regard to the citizenship of the
however, the district court denies the motion to amend on parties.
grounds that the amendment would be futile, we review
denial of the motion de novo.” Inge v. Rock Fin. Corp., 281 29 U.S.C. § 185(a). The Plaintiffs’ claim actually comprised
F.3d 613, 625 (6th Cir. 2002). The district court ruled on two causes of action that are “inextricably interdependent,”
such “futility” grounds, and therefore we review de novo the DelCostello v. Int’l Bhd. of Teamsters, 462 U.S. 151, 164-65
denial of leave to amend. (1983) (quotation omitted), such that “[t]o prevail against
either the company or the Union, [Plaintiffs] must not only
B. The District Court’s Jurisdiction over the § 301 Claim show that [the company acted] contrary to the contract but
must also carry the burden of demonstrating breach of duty by
We are presented with a counterintuitive appeal in which the Union.” Hines v. Anchor Motor Freight, Inc., 424 U.S.
the Plaintiffs argue that the district court did not have 554, 570-71 (1976). “[I]f the first claim anchored in the
jurisdiction over their own § 301 claim. Accordingly, the employer’s alleged breach of the [CBA] fails, then the breach
Plaintiffs ask us to vacate the judgment of the district court of duty of fair representation claim against the union must
and to dismiss the action without prejudice. RBX, and to a necessarily fail with it.” White v. Anchor Motor Freight, Inc.,
more limited extent the Unions, contend that the district court 899 F.2d 555, 559 (6th Cir. 1990).
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Jurisdiction in a § 301 claim is premised upon the existence § 301 claim alleging that Teledyne breached a 1988 CBA by
of a contract, which an employer subsequently breaches. refusing to pay certain benefits after closing down the facility
Section 301 opens the federal courthouse only to “[s]uits for at which the employees worked. As part of the shutdown, the
violation of contracts.” 29 U.S.C. § 185(a). “Where there is workers’ union and Teledyne reached a Plant Closing
no contract, the courts have no jurisdiction.” 1 Patrick Hardin Agreement that settled the disputes over the benefits and that
& John E. Higgins, Jr., The Developing Labor Law 1321 (4th expressly superseded the 1988 CBA. On appeal, we affirmed
ed. 2001); see also 5 N. Peter Lareau, National Labor the district court’s dismissal of the § 301 claim for lack of
Relations Act: Law & Practice § 41.02[2][a], at 41-7 (2d ed. jurisdiction, ruling that there could be no breach of contract
2003) (“Jurisdiction under Section 301 is premised on the claim when the Plant Closing Agreement abrogated the 1988
existence of a viable contract (usually a [CBA]); courts do not CBA that was allegedly violated. Id. at 1385-86. We held
have Section 301 jurisdiction over expired [CBAs].”); that if there was no breach-of-contract claim, there could be
Johnson v. Pullman, Inc., 845 F.2d 911, 914 (11th Cir. 1988) no § 301 duty-of-fair-representation claim against the union
(“A federal court has jurisdiction over a suit for a violation of because a plaintiff in a § 301 claim must show both a breach
a collective bargaining agreement under section 301 only of a CBA and a breach of the duty of fair representation. Id.
while the agreement is in force.”). at 1386-87. In Heussner, we confronted a similar case in
which former employees alleged a breach of a 1984 CBA that
Initially, the Plaintiffs pleaded that RBX breached the 1997 had been superseded. We ruled that we only “possess[ed]
CBA by failing to pay SUBs, by failing to fund the SUB Plan, subject matter jurisdiction in cases involving an alleged
and by terminating the employees’ health benefits. Then, the violation of an existing [CBA].” Heussner, 887 F.2d at 676
Settlement superseded the 1997 CBA, rendering the SUB (emphasis added). Because the 1984 CBA had been
Plan and the Medical Plan null and void. The only contract abrogated, we affirmed the district court’s dismissal for lack
in existence after April 2002 was the Settlement. The of subject matter jurisdiction. Id; see also Storey v. Local
Plaintiffs do not allege that RBX breached the Settlement, and 327, Int’l Bh’d of Teamsters, 759 F.2d 517, 523 (6th Cir.
to the extent they argue that the Settlement was invalid, 1985) (“If the plaintiffs had relied only on section 301 as a
“[d]istrict courts do not . . . possess subject matter jurisdiction jurisdictional basis for this action, the absence of a collective
under Section 301(a) in cases concerning the validity of a bargaining agreement at the time of the alleged misconduct of
contract.” Heussner v. Nat’l Gypsum Co., 887 F.2d 672, 676 the defendants would have been significant.”). There is
(6th Cir. 1989); see also Textron Lycoming Reciprocating virtually no difference between the facts of Adcox and
Engine Div., Avco Corp. v. UAW, 523 U.S. 653, 657 (1998) Heussner and this case. Thus, the Settlement negated our
(“‘Suits for violation of contracts’ under § 301(a) are not suits jurisdiction over the Plaintiffs’ § 301 action.5
that claim a contract is invalid, but suits that claim a contract
has been violated.”). Thus, the Plaintiffs are unable to
demonstrate that a contract existed, which RBX could have 5
There is some amb iguity over whether the expiration or supersession
breached. of a labor contract that is the subject of a § 301 claim is better viewed as
raising a jurisdictional prob lem or, instead, a failure-to-state-a-claim
The absence of a contract and the consequent inability to problem. On the one hand, federal courts have limited jurisdiction in the
prove a breach of that contract condemn jurisdictionally the area of federal labor law because the National Labor Relations Board
entire hybrid § 301 claim. In Adcox v. Teledyne, Inc., 21 F.3d “was Congress’ chosen instrument for effecting national lab or policy.”
Storey v. Local 327, Int’l Bh’d of Team sters, 759 F.2d 51 7, 522 (6th Cir.
1381 (6th Cir. 1994), a group of former employees filed a 1985). Generally, the NLRB has jurisdiction over labor disputes. “When
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 17 18 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
an activity is arguably subject to § 7 or § 8 of the [NLRA], the States as
2. The Impact of the Jurisdictional Divestment
well as the federal courts must defer to the exclusive competence of the
National Labor Relations Board.” San Diego Bldg. Trades Council v. The parties disagree over what should be the next step once
Garmon, 359 U.S. 236, 245 (1959). However, § 301 carved out a limited we rule that the district court did not have jurisdiction over
exception to the NLRB’s exclusive jurisdiction: “Section 301 of the the § 301 claim. The Plaintiffs argue that the district court
[LMRA] specifically created jurisdiction in the district courts to hear suits should have dismissed their § 301 claim without prejudice,
for violation of [CB As] an d contracts b etween labo r organizations.”
Storey, 759 F.2d at 522. W hen there is no existing labor contract, the but should have retained jurisdiction over their ERISA
violation of which is the kernel of a § 301 suit, the district courts may not claims. Pls. Br. at 31-33. Accordingly, the Plaintiffs believe
have jurisdiction, because any allegations o f unfair labor prac tices sho uld that the district court’s opinion, which holds that summary
be litigated before the NLRB. judgment was proper because there were no genuine issues of
On the other hand, the expiration or supersession of a contract can be material fact regarding the USWA’s alleged breach of its duty
seen as a non-jurisdictional issue. The lack of a labor contract may
simply d emo nstrate that a plaintiff has failed to state a c laim upon which of fair representation, should be disregarded. For their part,
relief can be granted, but not deprive a federal court of jurisdiction. The RBX and the USWA suggest that the district court properly
Supreme Court, in a case that postdates our precedents in Adcox v. granted summary judgment. They ask the panel to affirm the
Teledyne, Inc., 21 F.3d 1381 (6th Cir. 1994), and Heussner v. National district court’s opinion as “a straightforward application of
Gypsum Co., 887 F.2d 672, 676 (6th Cir. 1989), stated: binding precedent.” Unions Br. at 19; see also RBX Br. at
[§ 301] simply erects a gateway through which parties may pass
into federal court; once they have entered, it does not restrict the
16-20.
legal landscape they may traverse. Thus if, in the course of
deciding whether a plaintiff is entitled to relief for the Generally, when a court lacks jurisdiction over a particular
defendant’s alleged violation of a contract, the defendant claim for relief, that court cannot proceed. “Whenever it
interposes the affirmative defense that the contract was invalid, appears by suggestion of the parties or otherwise that the
the court may, consistent with § 301(a), adjudicate that defense. court lacks jurisdiction of the subject matter, the court shall
Textron Lycoming Reciprocating Engine Div., Avco Corp. v. UAW, 523
U.S. 653 , 657 -58 (1 998 ). This language suggests that a federal court has dismiss the action.” Fed. R. Civ. P. 12(h)(3); see also Steel
jurisdiction to rule that a labor contract is invalid when the legality of the Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998)
contract is raised as an affirmative defense to a plaintiff’s claims that the (“Without jurisdiction the court cannot proceed at all in any
contract has been violated. One reading of this dicta is that a federal court cause. Jurisdiction is power to declare the law, and when it
may possess jurisdiction over a plaintiff’s § 301 claim based on a ceases to exist, the only function remaining to the court is that
violation of a CBA, but the defendant may raise the affirmative defense
of the invalidity (here expiration or supersession) of the CBA; in such a of announcing the fact and dismissing the cause.”) (quotation
case the fede ral court cou ld dism iss the claim because relief cannot be omitted). No formal motion is needed to raise the issue, and
granted for the vio lation of a contract that no longer exists. Another an objection to subject matter jurisdiction can be raised at any
reading of this quotation is that federal courts only possess jurisdiction to time at either the trial or appellate level. 5A Charles Alan
rule that a contract is invalid because of some defect, e.g., lack of Wright & Arthur R. Miller, Federal Practice & Procedure
consideration or anticipato ry brea ch, but that federal courts do not have
jurisdiction when there is no dispute that the contract in question does not
§ 1393, at 773-75 (2d ed. 1990).
exist.
Comp aring (1) our precedents in Adcox and Heussner and (2) the
general principle that federal courts have limited jurisdiction in this area,
with a lone amb iguous statemen t by the Supreme Court, we believe that § 301 claim premised upon an expired or sup ersed ed co ntract are still
our prior rulings that a federal court does not have jurisdictio n to hear a binding on us.
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 19 20 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
Dismissal is undoubtedly the appropriate action, but the 1. The Plaintiffs’ ERISA Claims
remaining question is whether prejudice should attach. The
Supreme Court recognized that “[a]t common law dismissal The Plaintiffs brought their action against the Plans and
on a ground not going to the merits was not ordinarily a bar RBX as the administrator of the Plans, pursuant to several
to a subsequent action on the same claim.” Costello v. United different ERISA provisions. First, the Plaintiffs claimed that
States, 365 U.S. 265, 285 (1961). The Supreme Court has RBX violated 29 U.S.C. § 1109(a) by breaching their
declined to alter this common-law rule, writing, “If the first fiduciary duties as described by 29 U.S.C. § 1104(a). See
suit was dismissed for . . . want of jurisdiction . . . the 29 U.S.C. § 1132(a)(2) (“A civil action may be brought . . .
judgment rendered will prove no bar to another suit.” Id. at by a participant, beneficiary or fiduciary for appropriate relief
286; see also Mitan v. Int’l Fid. Ins. Co., No. 00-1554, 2001 under section 1109 of this title.”); 29 U.S.C. § 1109(a) (“Any
WL 1216978, at *5 (6th Cir. Oct. 3, 2001) (“Dismissals of person who is a fiduciary with respect to a plan who breaches
actions that do not reach the merits of a claim, such as any of the responsibilities, obligations, or duties imposed
dismissals for lack of jurisdiction, ordinarily are without upon fiduciaries by this subchapter shall be personally liable
prejudice.”). In Heussner, a case that like Adcox is directly to make good to such plan any losses to the plan resulting
on point, we affirmed the district court’s dismissal without from each such breach.”) (emphasis added); 29 U.S.C.
prejudice when the district court lacked subject matter § 1104(a)(1)(B) (“[A] fiduciary shall discharge his duties with
jurisdiction pursuant to § 301. Heussner, 887 F.2d at 675. respect to a plan solely in the interest of the participants and
We therefore vacate the district court’s judgment because the beneficiaries . . . with the care, skill, prudence, and diligence
court was without jurisdiction to consider whether the Unions under the circumstances then prevailing that a prudent man
breached their duty of fair representation. The district court acting in a like capacity and familiar with such matters would
should have dismissed the § 301 claim without prejudice and use in the conduct of an enterprise of a like character and with
should have refrained from granting summary judgment on like aims.”). The main relief sought by the Plaintiffs for the
the § 301 issue because it did not have jurisdiction to do so. breach of fiduciary duties was a monetary settlement that
We do not reach the merits of the duty-of-fair representation inured to them.6 Second, the Plaintiffs sought “to recover
component of the § 301 claim because of this jurisdictional
limitation.
6
C. The District Court’s Jurisdiction over Plaintiffs’ The Plaintiffs’ de sired re med y of compe nsatory and punitive
damages payable to the Plaintiffs is not available as a remedy for a
ERISA Claims breach-of-fiduciary-duties claim. A party alleging breach of fiduciary
duties cannot seek personal remuneration. “[A] cause of action under
The parties further disagree on whether the Settlement also § 1132(a)(2) permits recovery to inure only to the ERISA plan, not to
divests the district court of jurisdiction over the Plaintiffs’ individual beneficiaries.” Adcox v. Teledyne, Inc., 21 F.3d 1381, 1390
ERISA claims. The Plaintiffs believe that no matter the fate (6th Cir. 19 94) (emp hasis ad ded ). Thus, the P laintiffs’ breach-of-
fiduciary-duties claim would not survive a mo tion to dismiss.
of their § 301 claim, the district court properly retained Furthermore, a company does not breach its fiduciary duties under ERISA
jurisdiction over the ERISA claims and should have ruled when it terminates a non-vested welfare benefit plan. Fiduciary duties do
upon them. We disagree and hold that just as the Settlement not apply to the termination of a welfare bene fit plan, see Gregg v.
divested the district court of jurisdiction over the § 301 hybrid Transp. Workers of Am. Int’l, 343 F.3d 833, 844 (6th Cir. 200 3), becau se
claim, so too it eliminated the district court’s ability to hear the com pany does not act in a fiduciary capacity in amending or
terminating a non-vested plan. Hunter v. Caliber Sys., Inc., 220 F.3d 702,
the ERISA claims. 718 (6th Cir. 2000) (“W e have reco gnized that employers who are also
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 21 22 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
benefits due to [them] under the terms of [the] plan.” court concluded that “[b]ecause . . . the [CBA] pursuant to
29 U.S.C. § 1132(a)(1)(B). Third, the Plaintiffs sought to which plaintiffs seek the special distribution benefits is no
recover compensatory and punitive damages under 29 U.S.C. longer ‘in force,’ the district court lacked subject matter
§ 1132(a)(3), even though § 1132(a)(3) does not specifically jurisdiction over the . . . claim.” Id. In Heussner, we reached
mention the availability of punitive damages and provides the exact same conclusion when a plaintiff argued that 29
only for equitable relief.7 U.S.C. § 1132 “provided an independent basis for district
court jurisdiction over claims [for pension, health, insurance,
2. Jurisdiction Over the ERISA Claim and unemployment benefits] based on the superseded
[CBA].” Heussner, 887 F.2d at 677. We held, “Section 502
The district court did not have jurisdiction over the [§ 1132] does not give subject matter jurisdiction to federal
Plaintiffs’ ERISA claims because the Settlement rendered courts over actions to collect benefits due under an expired
null and void the welfare benefit plans upon which the ERISA collective bargaining contract. Because Section 502
claims were premised. Our ruling above that the district court authorizes suits for benefits to be brought in federal court only
did not have jurisdiction to hear the § 301 claim does not while a collective bargaining contract remains in force, the
automatically deprive the district court of the ability to hear district court in this case did not have jurisdiction . . . .” Id.
the ERISA claims; the court’s power to entertain the ERISA (citations omitted) (emphasis added).
claims springs from a different statutory provision, as the
court has jurisdiction over a § 1132(a)(1)(B) action pursuant There is no doubt that the Settlement superseded the
to 29 U.S.C. § 1132(e)(1). Nonetheless, the Settlement that Medical and SUB Plans. First, the Medical and SUB Plans
divested the district court of jurisdiction over the § 301 claim were fully incorporated into the CBA, and the Settlement
has the same effect on the ERISA claims. In Adcox, we held expressly trumped all previous CBAs and agreements.
that because a settlement agreement superseded a CBA, Additionally, the Settlement explicitly stated that “[a]ny and
which included a benefit plan, “the district court lacked all other severance provisions and/or or [sic] other benefits, of
jurisdiction under § 1132 to entertain a challenge to the Plant whatever nature, including but not limited to the [SUB] Plan
Closing Agreement’s validity.” Adcox, 21 F.3d at 1388. This [and the Medical Plan] . . . shall be null and void in their
entirety.” J.A. at 100 (Settlement). Because the agreements
that created the plans are no longer in force, Heussner and
plan sponsors wear two hats: one as a fiduciary in administering or Adcox apply, and the district court did not have jurisdiction
managing the plan for the benefit of participants and the other as over the ERISA claim. The Plaintiffs urge us to reconsider
employer in performing settlor functions such as establishing, funding, these precedents, but we are bound by our prior decisions.
amending, and terminating the trust. The fiduciary obligations imposed
by ERISA are implicated only where an employer acts in its fiduciary
capacity.” (citations omitted)).
The Plaintiffs offer several responses, all unsuccessful
variations of the assertion that Heussner and Adcox do not
7
The district court did not analyze the Plaintiffs’ ERISA claims. It
apply because the Settlement either did not or could not
instead focused solely on whether the USW A had the authority to supersede the Medical and SUB Plans. First, the Plaintiffs
nego tiate and enter into the S ettlement and whethe r US W A breached its claim that the Medical and SUB Plans were not a part of the
duty of fair representation in doing so. Nonetheless, by granting the CBA. This is a highly dubious point, given that the 1997
Defend ants’ motions for summary judgment in their entirety, dismissing CBA specifically incorporates the SUB Plan as part of the
the Plaintiffs’ claims, and terminating the action, the district court
implicitly ruled against the Plaintiffs on their ERISA claims.
CBA and applies the CBA’s duration period to the Medical
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 23 24 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
Plan. It is also a moot point because the Settlement not only dropped below 4%, no continuing medical coverage beyond
expressly superseded the CBA but also explicitly abrogated the ninety days would be afforded to the employees.
the Medical and SUB Plans.
Similarly, the SUB Plan was terminable. The SUB Plan
Second, the Plaintiffs try to demonstrate, to no avail, that provided, “So long as the [CBA] of which this Plan is a part
the terms of the Medical and SUB Plans precluded their shall remain in effect, the Plan shall not be . . . terminated.”
elimination by the Settlement. Each plan, however, can by its J.A. at 326 (art. X, § 4(a)) (emphasis added). “Upon the
terms be abrogated by subsequent agreement or by the termination of the [CBA], the Company shall have the right
residual effect of the termination of other benefit plans. The to continue the Plan in effect and to . . . terminate the Plan
Medical Plan generally states that termination of the CBA . . . .” J.A. at 326 (art. X, § 4(a)) (emphasis added). The
does not affect the duration of the Medical Plan. J.A. at 224 Settlement superseded the 1997 CBA, and therefore the terms
(art. V, § 6). The Settlement, however, did not just terminate of the SUB Plan did not prevent its termination.
the CBA; it specifically voided the Medical Plan as well. The
only provision of the Medical Plan to address the termination Third, the Plaintiffs contend that the benefits conferred by
of the Plan states, “Notwithstanding the termination of the these two plans were vested and thus could not be affected by
Plan in accordance with its terms, the benefit programs the Settlement. The terms of the agreement, the plain
provided for therein shall be continued for a period of 90 days language of ERISA, and our caselaw interpreting ERISA
following such termination.” J.A. at 224 (art. V, § 7). The belie such a statement. The SUB Plan explicitly declared that
Settlement provided for the ninety-day coverage required in the employees did not have a vested interest in the assets of
the event of the Medical Plan’s termination. J.A. at 101 the SUB fund or in the company contributions to the fund.
(Settlement, § 9.b). J.A. at 322 (art. IX, § 5). The Medical Plan did not explicitly
state that the health care benefits were vested. ERISA
Additionally, Article four, section K(3) of the Medical distinguishes between welfare benefit plans and pension
Plan, which is the operative provision dealing with continued plans. Compare 29 U.S.C. § 1002(1) with 29 U.S.C.
medical benefits following layoff, states, “In the event that the § 1002(2)(A). Welfare benefit plans include severance
[SUB] Plan shall be terminated in accordance with its terms benefit plans, Adams v. Avondale Indus., Inc., 905 F.2d 943,
prior to the termination of this Plan, Section K(1)(b) shall 947 (6th Cir. 1990), medical, surgical, or hospital care benefit
thereupon cease to have any force or effect.” J.A. at 219 plans, 29 U.S.C. § 1002(1)(A), and unemployment benefit
(art. IV, § (K)(3)).8 The fate of the continuing-coverage plans. Id. “Welfare benefit plans are not subject to
provisions of the Medical Plan is tied with that of the SUB mandatory vesting requirements under ERISA, unlike pension
Plan. The interdependence of the Plans is logical given that plans. Therefore, there is no statutory right to vested . . .
the length of the continuing coverage depended on the benefits, and the parties must agree to vest a welfare benefit
number of weeks of SUBs to which an employee was entitled. plan.” Maurer v. Joy Techs., Inc., 212 F.3d 907, 914 (6th Cir.
If the SUB Plan no longer existed or the funding position 2000) (citation omitted). “As a matter of law under ERISA,
one of the key differences between welfare and pension plans
is that welfare plan benefits do not vest.” Gregg v. Transp.
Workers of Am. Int’l, 343 F.3d 833, 844 (6th Cir. 2003). We
8 have explained,
Section K(1)(b) sets out the schedule for how long each emp loyee
will receive continuing coverage beyond the first ninety days after layoff.
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 25 26 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
Apparently, Congress chose not to impose vesting LMRDA claim on the basis of futility. We review de novo its
requirements on welfare benefit plans for fear that decision.9
placing such a burden on employers would inhibit the
establishment of such plans. In drawing the line between The Plaintiffs’ proposed LMRDA claim alleged that the
employer actions subject to the fiduciary duty USWA and RBX “conspired together to violate and to limit
requirement and those not, we must avoid any rule that Plaintiffs’ rights . . . to institute and to proceed with this
would have the effect of undermining Congress’ action in this Court.” J.A. at 432 (Pls. Motion for Leave to
considered decision that welfare benefit plans not be File a Second Am. Compl.). Recognizing that the Settlement
subject to a vesting requirement. divested the district court of jurisdiction over the § 301 claim,
the Plaintiffs chiefly assert that the agreement to the
Adams, 905 F.2d at 947 (citation omitted). Plaintiffs are thus Settlement left the Plaintiffs without relief in federal court.
simply incorrect in their protestations that their welfare The Plaintiffs contended that this deprived them of the “right
benefits were vested interests, particularly given that the to sue” ensconced in the LMRDA. Because the LMRDA
terms of the Plans either specifically disclaim vesting or are does not serve the role envisioned by the Plaintiffs and
silent on the issue. because they did not state a claim upon which relief can be
granted, we agree with the district court’s denial of the motion
In sum, the district court did not have jurisdiction to hear to amend on futility grounds.
the Plaintiffs’ ERISA claims because the Settlement
terminated the SUB and Medical Plans. Our precedents, such “The Labor-Management Reporting and Disclosure Act of
as Adcox and Heussner, clearly dictate that federal courts 1959 was the product of congressional concern with
have no power to hear an ERISA claim regarding a welfare widespread abuses of power by union leadership.” Finnegan
benefit plan that has been superseded. On remand, the district v. Leu, 456 U.S. 431, 435 (1982). It was “designed
court should dismiss the ERISA claims. specifically to regulate internal union affairs.” Hrometz v.
Local 550, Int’l Ass’n of Bridge Constr. & Ornamental
D. The Denial of the Plaintiffs’ Motion to Amend Ironworkers, 227 F.3d 597, 601 (6th Cir. 2000) (quotation
omitted). The LMRDA
Finally, the Plaintiffs appeal the district court’s denial of
their motion to amend their complaint to add a claim under [P]laced emphasis on the rights of union members to
§ 101 of the LMRDA, 29 U.S.C. § 411(a). Although the freedom of expression without fear of sanctions by the
district court most likely would have been justified in denying union, which in many instances could mean loss of union
the motion to amend because of its tardiness — the Plaintiffs
filed the motion three months after the deadline for amending
the pleadings, two months after the Settlement that allegedly 9
gave rise to the LMRDA claim, and only eleven days before Even though the district court did not have jurisdiction over the
the Defendants’ summary judgment motions were due — the Plaintiffs’ § 301 and ERISA claims, there is an independent jurisdictional
basis for the LMRDA claim such that the district court could have
district court declined to permit the Plaintiffs to add an properly heard the case had it permitted the Plaintiffs to amend their
com plaint. See 29 U.S.C. § 41 2 (“Any person whose rights secured by
the provisions of this subchapter have been infringed by any violation of
this subchapter may bring a civil action in a district court of the United
States for such relief (including injunctions) as may be appropriate.”).
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 27 28 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
membership and in turn loss of livelihood. Such There are no cases that support the Plaintiffs’ belief that the
protection was necessary to further the [LMRDA]’s actions of RBX and the USWA give rise to a valid LMRDA
primary objective of ensuring that unions would be claim. The plain language of the statute also demonstrates
democratically governed and responsive to the will of that the Plaintiffs’ claim, if added, would not survive a motion
their memberships. to dismiss. First, RBX is not liable under § 411(a)(4). The
statute only prohibits “labor organizations” from inhibiting a
Finnegan, 456 U.S. at 435-36. As part of the “Bill of Rights plaintiff’s right to file suit against that organization. It does
of Members of Labor Organizations,” § 101 of the LMRDA not authorize a cause of action against employers.
in part mandates,
Because they take it out of context, Plaintiffs
No labor organization shall limit the right of any member misunderstand the meaning of the statute’s second proviso,
thereof to institute an action in any court, or in a which states that a union cannot infringe a member’s right to
proceeding before any administrative agency, sue, provided that “no interested employer or employer
irrespective of whether or not the labor organization or association shall directly or indirectly finance, encourage, or
its officers are named as defendants or respondents in participate in, except as a party, any such action, proceeding,
such action or proceeding, or the right of any member of appearance, or petition.” See Pls. Br. at 54 (citing 29 U.S.C.
a labor organization to appear as a witness in any § 411(a)(4)). This provision limits the union member’s
judicial, administrative, or legislative proceeding, or to complete right to initiate a legal proceeding when the
petition any legislature or to communicate with any member’s suit is funded by the employer. The exception
legislator: Provided, That any such member may be exists to prevent employers from interfering in the relations
required to exhaust reasonable hearing procedures (but between union members and the unions, but it does not create
not to exceed a four-month lapse of time) within such an independent basis for employer liability under the
organization, before instituting legal or administrative LMRDA. Funding by an interested employer of a union
proceedings against such organizations or any officer member’s suit does not make the employer liable; rather, such
thereof: And provided further, That no interested funding only limits the union member’s absolute freedom to
employer or employer association shall directly or initiate legal proceedings. The exception, which if applicable
indirectly finance, encourage, or participate in, except as would hurt, rather than help the Plaintiffs’ alleged LMRDA
a party, any such action, proceeding, appearance, or claim, is not relevant here in any event given that RBX and
petition. the Plaintiffs are adversaries, not allies.
29 U.S.C. § 411(a)(4). To establish a prima facie violation of Second, the claim must fail as asserted against the USWA,
this right to institute a legal action, a plaintiff must because the union has not limited the Plaintiffs’ ability “to
demonstrate that he or she engaged in the protected conduct, institute” its action. The Plaintiffs successfully instituted
the union retaliated against the plaintiff, and the plaintiff their action against both RBX and the USWA in federal court
suffered an injury as a result of the union’s action. Thompson and proceeded to litigate the case for over a year. The
v. Office & Prof’l Employees Int’l Union, 74 F.3d 1492, 1506 Plaintiffs have not even alleged, let alone offered any
(6th Cir. 1996). evidence, that the USWA retaliated against them for engaging
in this lawsuit. It is true that the Settlement has impeded the
Plaintiffs’ ability to win their lawsuit in federal court by
No. 02-4327 Bauer et al. v. RBX Industries, Inc. et al. 29 30 Bauer et al. v. RBX Industries, Inc. et al. No. 02-4327
divesting the district court of subject matter jurisdiction and negotiate. To hold that the USWA’s actions here violated the
by purporting to settle all claims between the Barberton LMRDA would establish a troublesome precedent, because
employees and RBX. However, the LMRDA does not create it would prevent unions from reaching settlements when such
a cause of action against unions for actions that diminish the settlements potentially could have a secondary effect on
chances for a member to succeed in a lawsuit against a union. pending litigation filed by a small percentage of the
bargaining unit’s members.
To the extent that the Plaintiffs could argue that the USWA
retaliated against Plaintiffs’ lawsuit by negotiating and III. CONCLUSION
signing the Settlement, this contention would be misguided;
if successful, such an assertion would significantly limit the In sum, the Settlement divested the district court of
ability of unions to represent the entire bargaining unit. Any jurisdiction over both the § 301 and ERISA claims. The
suggested causal connection between the Settlement and the district court erred when it proceeded to reach the merits of
lawsuit is tenuous. The Plaintiffs comprised less than 20% of the case. We VACATE the district court’s grant of summary
the total membership of Local 77L, but the USWA was judgment and REMAND with instructions to dismiss the
charged with obtaining some modicum of benefits for all the Plaintiffs’ action without prejudice. The district court’s
Barberton employees. There is no evidence that the USWA denial of the motion to amend the complaint to add an
signed the Settlement to impact the court’s jurisdiction over LMRDA claim is AFFIRMED, because the Plaintiffs did not
the action, even though the Settlement had that incidental state a claim that would survive a motion to dismiss.
effect. Signing a settlement that has such a secondary effect
does not constitute the type of behavior that § 411(a)(4) is
designed to prohibit.
Additionally, subjecting unions to liability under the
LMRDA for actions such as the USWA’s would place into
direct conflict the LMRDA and the duty of labor
organizations to represent their members under the National
Labor Relations Act. A union is obligated to represent all the
members of a bargaining unit in negotiations as the exclusive
bargaining agent. 29 U.S.C. § 159(a); see also Vaca v. Sipes,
386 U.S. 171, 177 (1967) (“It is now well established that, as
the exclusive bargaining representative . . . the Union had a
statutory duty fairly to represent all . . . employees.”). If a
union were forced to refrain from negotiating plant-closing
settlements, which are applauded by some union members
and derided by others, whenever a faction of the union
membership filed suit over an alleged breach of a CBA, the
union could harm the non-litigious members by refusing to
negotiate until the conclusion of the lawsuit. The union could
also be liable to the nonparty union members for its failure to