Accuride Erie, L.P. v. International Union, Automobile, Aerospace & Agricultural Implement Workers

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit

12-11-2007

Accuride Erie LP v. Local 1186
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-4007

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 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_________

No. 06-4007
_________

ACCURIDE ERIE, L.P.,
a limited partnership,
Appellant

v.

INTERNATIONAL UNION, AUTOMOBILE,
AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS
OF AMERICA, LOCAL UNION 1186,
a voluntary unicorporated association
_________

Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 05-cv-00169E)
District Judge: Honorable Sean J. McLaughlin
_________

Submitted Pursuant to Third Circuit LAR 34.1(a)
October 31, 2007

BEFORE: RENDELL and NYGAARD, Circuit Judges,
and McCLURE,* District Judge

(Filed: December 11, 2007)
_________

OPINION OF THE COURT
_________

McCLURE, District Judge.

*
The Hon. James F. McClure, Jr., Senior Judge, United States District Court for the
Middle District of Pennsylvania, sitting by designation.
 Appellant Accuride Erie, L.P. (“Accuride”) filed a complaint against appellee, the

International Union, United Automobile, Aerospace & Agricultural Implement Workers of

America, Local Union 1186 (“Union’) seeking to vacate a labor arbitration award. After cross

motions for summary judgment were filed, the district court denied Accuride’s motion and

granted the Union’s motion, thus confirming the arbitration award. Accuride argues that the

district court erred in granting summary judgment in favor of the Union because the arbitrator’s

award did not derive its essence from the parties’ collective bargaining agreement. For the

reasons provided below, we will affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1997, Accuride acquired a manufacturing plant from Kaiser Aluminum Corporation

(“Kaiser”) whose hourly employees were represented by the Union. Pursuant to a transitional

agreement, Union members were hired to fill positions at Accuride. Some of these union

members were eligible to retire under a benefits plan by Kaiser that included retiree medical

benefits. The parties entered into a collective bargaining agreement on May 1, 1997 which gave

members of the Union a one-time irrevocable election to receive either the Kaiser retiree medical

benefits or coverage under a medical plan for active Accuride employees (“1997 CBA”). In

1998, the parties entered into another CBA extending the 1997 agreement through August of

2003 (“1998 CBA”).

On February 16, 2001, the Union submitted a grievance on behalf of an employee and his

spouse who had previously elected Kaiser retiree medical benefits. The spouse had been denied

coverage under Kaiser’s retiree medical plan and then had sought coverage under the Accuride

medical plan. Accuride denied coverage based on the irrevocable election that had been made

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by the employee. On September 26, 2003, arbitrator Paul Gerhart ruled that the employee had

irrevocably opted out of the Accuride medical plan and that Accuride’s decision to deny

coverage was correct (“Gerhart Award”).

In September of 2003, a new CBA was reached which did not mention anything about

the former Kaiser employees who had previously elected the Kaiser retiree medical benefits

(2003 CBA). The only mention of medical benefits in the entire CBA is in Article 32 and states

that Accuride will provide “eligible employees” with medical benefits. Article 32 also states that

“[t]he specific terms of these benefits are set forth in the benefits plan and the insurance

contract” and that “[t]he benefits plan and the insurance contract are the controlling documents.”

Article 5 pertains to grievances and requires a grievance to be submitted “within 14 calendar

days of the occurrence giving rise to the grievance.” Finally, the Memorandum of Settlement

associated with the 2003 CBA contains a zipper clause that states that:

Settlements, side agreements (written or unwritten), memoranda of understanding,
letters of understanding, past practices, grievances settlements, and any other like
items that existed on or before August 31, 2003 are terminated. To the extent the
parties desire to continue any settlements, side agreements (written or unwritten),
memoranda of understanding, letters of understanding, past practices, grievances
settlements, and any other like items, they have been reduced to writing and
included in this Memorandum of Settlement or the [Collective Bargaining
Agreement].

In April of 2004, Accuride learned that Kaiser had filed an action in bankruptcy court to

terminate its retiree medical benefits program. Accuride notified the Union, who responded by

demanding that Accuride provide medical coverage for the former Kaiser employees who had

elected to receive Kaiser retiree medical benefits. The parties met on May 13 and 14, 2004 to

discuss proposals to provide benefits to the affected employees. At these meetings, Accuride

rejected the Union’s request to include the affected employees in the Accuride medical plan.

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 On May 31, 2004, Kaiser terminated its retiree medical benefits with the approval of the

bankruptcy court. On June 8, 2004, the Union submitted a grievance demanding that Accuride

provide medical coverage for the affected employees. Accuride denied the grievance at every

stage of the grievance process, reasoning that the elections made by the Kaiser retirees were

irrevocable. Accuride also determined that the grievance was untimely because it was not filed

within fourteen days of the occurrence giving rise to the grievance as required by the 2003 CBA.

The grievance was then heard by arbitrator Robert Creo. Arbitrator Creo ruled that the

affected employees’ elections in 1997 did not preclude the receipt of benefits under the 2003

CBA. He reasoned that the 2003 CBA required Accuride to provide benefits to all “eligible

employees” and that the irrevocable election was terminated by the 2003 CBA. He also ruled

that the grievance was timely because the occurrence giving rise to the grievance was the

termination of benefits that occurred on May 31, 2004. Finally, he ruled that the Gerhart award

was not binding on the current arbitration because it arose under a previous agreement and under

different circumstances.

The district court found that the arbitrator’s award drew its essence from the 2003 CBA

and upheld the award. Specifically, the district court found that the arbitrator relied on the

language in the 2003 CBA that Accuride would provide benefits to all “eligible employees” and

the absence of any language incorporating the elections from the previous CBA in determining

that the elections did not survive the 2003 CBA. Similarly, the district court found that the

arbitrator relied on the 2003 CBA in determining that the grievance was timely because the

arbitrator determined that the date of the occurrence under the 2003 CBA was the date Kaiser

actually terminated the benefits. Finally, the district court found that the arbitrator correctly

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found that he was not bound by the Gerhart award based on his finding that the elections did not

survive the 2003 CBA. Therefore, the district court granted the Union’s motion for summary

judgment and dismissed the case. This appeal followed.

II. JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction pursuant to section 301(a) of the Labor Management

Relations Act, 29 U.S.C. § 185. Because the district court entered final judgment against

Accuride, we have jurisdiction pursuant to 28 U.S.C. § 1291. Our review is plenary, and we

apply the same standard as the district court in reviewing the arbitration award. Exxon Shipping

Co. v. Exxon Seamen's Union, 73 F.3d 1287, 1291 (3d Cir.1996).

The United States Supreme Court has consistently held that courts exercise a narrow and

deferential role in reviewing arbitration awards arising from labor disputes. Pennsylvania Power

Co. v. Local Union No. 272, Intern. Broth. of Elec. Workers, AFL-CIO, 276 F.3d 174, 178 (3d

Cir. 2001) (citing United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 36,

108 S.Ct. 364, 98 L.Ed.2d 286 (1987) and W.R. Grace & Co. v. Local Union 759, Int'l Union of

the United Rubber, Cork, Linoleum and Plastic Workers of Am., 461 U.S. 757, 764, 103 S.Ct.

2177, 76 L.Ed.2d 298 (1983)). The rationale for this limited role is to encourage the arbitration

of labor disputes and not undermine them by excessive court intervention on the merits of an

award. Id. (quoting United Steelworkers of Am. v. Enterprise Wheel and Car Corp., 363 U.S.

593, 597, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960)).

In light of this policy of encouraging arbitration awards, there is a strong presumption in

their favor. Id. (citing Newark Morning Ledger Co. v. Newark Typographical Union Local 103,

797 F.2d 162, 165 (3d Cir.1986)). The court must uphold an award that “draws its essence from

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the collective bargaining agreement.” United Steelworkers, 363 U.S. at 597. An award draws its

essence from a collective bargaining agreement if “its interpretation can in any rational way be

derived from the agreement, viewed in light of its language, its context, and any other indicia of

the parties’ intention.” Brentwood Medical Associates v. United Mine Workers of America, 396

F.3d 237, 240 (3d Cir. 2005) (citing United Transp. Union Local 1589 v. Suburban Transit

Corp., 51 F.3d 376, 379-80 (3d Cir. 1995)) (emphasis in original). Thus, we should not vacate

an award simply because we would have reached the opposite conclusion had we been the

original arbitrator. See Citgo Asphalt Refining Co. v. Paper, Allied-Indus., Chem. & Energy

Workers Int'l Union Local No. 2-991, 385 F.3d 809, 816 (3d Cir.2004) (citation omitted).

Rather, an award should only be vacated if there is no support in the record for the arbitrator’s

determination or if the arbitrator demonstrates a manifest disregard for the agreement entirely

unsupported by principles of contract construction. Exxon Shipping Co. v. Exxon Seamen's

Union, 993 F.2d 357, 360 (3d Cir.1993) (quoting News America Publications v. Newark

Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990)).

III. DISCUSSION

Accuride presents three arguments why the arbitrator’s award should be vacated. First, it

argues that the award exceeded the arbitrator’s authority because the irrevocable elections

survived the expiration of the 1998 CBA and therefore the award did not draw its essence from

the CBA. Second, it takes issue with the arbitrator’s conclusion that the grievance was timely.

Finally, it argues that the arbitrator ignored the final and binding nature of the Gerhart award

from 2003.

A. Effect of the Irrevocable Elections

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 The arbitrator determined that the 2003 CBA did not mention the previous irrevocable

elections and that the agreement specifically stated that Accuride would provide “eligible

employees” with medical benefits. He reasoned that the parties could have easily incorporated

the elections from the previous agreement into the 2003 CBA but did not do so. Furthermore, he

found that there was no language in the 2003 CBA to support an argument that the prior

elections made the Kaiser retiree’s “ineligible.”

We reiterate that our review of the arbitrator’s decision is very narrow and deferential.

The critical question is whether the decision drew its essence from the CBA, not whether we

would have reached the same conclusion if we reviewed the case in the first instance. We

believe that the arbitrator’s conclusion that the previous elections did not survive the 2003 CBA

was a rational interpretation of the agreement. The absence of any mention of the previous

elections in the 2003 CBA, the ease with which such a mention could have been placed, and the

zipper clause in the Memorandum of Settlement which explicitly negates all past agreements, all

weigh in favor of concluding that the elections did not survive the 2003 CBA. Therefore, we

will affirm the district court’s decision on this issue.

B. Timeliness

The 2003 CBA contains a provision which requires a grievance to be submitted “within

14 calendar days of the occurrence giving rise to the grievance.” The arbitrator concluded that

the grievance was timely because the date of the occurrence was May 31, 2004, the date that

Kaiser terminated its medical plans with the approval of the bankruptcy court, and the grievance

was filed on June 8, 2004. Accuride argues that the appropriate date is May 13 or 14, 2004, the

dates the Union unsuccessfully sought coverage from the Kaiser retirees from Accuride. Again,

7
we believe the arbitrator’s decision drew its essence from the CBA. The arbitrator determined

that the date the medical plans were terminated was the “occurrence giving rise to the

grievance.” It makes sense to us that this date be used as the “occurrence” because if the

medical plans were ultimately not terminated, there would be no harm to the Kaiser retirees and

we doubt the grievance would have even been filed. It is not as though the arbitrator selected an

entirely arbitrary date or completely ignored the fourteen day time limitation. Therefore, we

agree with the district court and will not disturb the arbitrator’s ruling that the grievance was

timely.

C. Effect of the Previous Arbitration

Accuride’s final argument is that the arbitrator ignored the final and binding nature of the

Gerhart award. The arbitrator concluded that the Gerhart award occurred under a different CBA

and under a different set of circumstances. We agree. The Gerhart award interpreted the 1998

CBA, which extended the 1997 CBA containing the irrevocable elections. The controlling

document in the instant case is the 2003 CBA. Furthermore, we note that the arbitrator’s ruling

that the Gerhart award was not binding was clearly based on his conclusion that elections from

the previous CBA were not incorporated into the 2003 CBA, and we have already held that this

conclusion drew its essence from the 2003 CBA. It would make no sense to require an arbitrator

to be bound by a previous arbitration which applied a clause from a previous contract which the

arbitrator has validly found is no longer part of the current contract. Therefore, we affirm the

decision of the district court on this issue as well.

IV. CONCLUSION

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 Because the arbitrator’s conclusions that the elections from the previous CBA were no

longer part of the 2003 CBA, that the grievance was timely filed, and that the Gerhart award was

not binding all drew their essence from the 2003 CBA, we will affirm the district court’s ruling

and uphold the award.

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