188 F.3d 130 (3rd Cir. 1999), 98-3461, Int'l Union v Skinner Engine Company

Docket Nº:98-3461
Citation:188 F.3d 130
Case Date:August 10, 1999
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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188 F.3d 130 (3rd Cir. 1999)




No. 98-3461

United States Court of Appeals, Third Circuit

August 10, 1999

Argued: May 24, 1999

On Appeal from the United States District Court for the Western District of Pennsylvania (Dist. Ct. Civil Action No. 93-289E) District Judge: Maurice B. Cohill, Jr.

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[Copyrighted Material Omitted]

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Richard E. Gordon, Esq. (Argued), Howard Grossinger, Esq., GROSSINGER, GORDON & VATZ,

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1000 Law & Finance Building, Pittsburgh, PA 15219

William D. Taggart, Esq., 1359 West 6th Street, Frontier Place, Erie, PA 16505, Attorneys for Appellants

James T. Marnen, Esq. (Argued), KNOX McLAUGHLIN GORNALL, & SENNETT, P.C., 120 West Tenth Street, Erie, PA 16501-1461, Attorney for Appellee

BEFORE: GREENBERG and ALITO, Circuit Judges, and ACKERMAN, Senior District Judge[*]


ACKERMAN, Senior District Judge:

The primary question presented in this appeal is whether life and medical insurance benefits provided to retired employees under various collective bargaining agreements vested at the time of each employee's retirement or were terminable by the employer at the expiration of the collective bargaining agreement under which the right to the benefits was provided. Appellants, representatives of a class of former, now retired, hourly employees of defendant Skinner Engine Company ("Skinner"), contend that the plain language of the collective bargaining agreements provided for lifetime benefits. They argue alternatively that the agreements were sufficiently ambiguous on the issue of vesting, and therefore, the matter can be resolved only after a full trial on the merits. The district court disagreed on both counts and granted Skinner's motion for summary judgment dismissing the action. See International Union, United Auto., Aerospace & Agric. Implement Workers of Am., U.A.W., U.A.W. Local No. 1697 v. Skinner Engine Co. , 15 F.Supp. 773 (W.D. Pa. 1998).

This court has jurisdiction over the present appeal pursuant to 28 U.S.C. S 1291. We affirm.


The plaintiffs/appellants in this matter are International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, U.A.W. ("International Union"), U.A.W. Local No. 1697 ("Local 1697"), and class representative Theodore Ruef. Ruef is a retired hourly employee of Skinner who brought this action on behalf of himself and all other retired hourly workers of Skinner, as well as their spouses, who retired before September 3, 1993. International Union and Local 1697 are the exclusive collective bargaining agents for the hourly production and maintenance workers employed by Skinner, which is located in Erie, Pennsylvania.1

In 1970, the hourly employees at Skinner unionized, and their relationship thereafter was embodied in a sequence of collective bargaining agreements (the "CBAs") covering the time periods from 1974 to 1977, 1977 to 1980, 1980 to 1981, 1981 to 1984, 1986 to 1989, 1989 to 1993, and 1993 to 1996.2 From 1974 until the 1993 CBA went into effect, Skinner paid all of its hourly retirees' health care benefits, fifty percent of health care premiums for retirees' spouses until they attained the age of sixty-five, and the retirees' premiums on life insurance. These benefits were even paid by Skinner between 1984 and 1986,

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when the employees worked without a contract.

At issue in this case is a provision in the CBAs relating to life and medical insurance benefits entitled, "INSURANCE AND PENSION." The wording of the section, however, is not the same in all the CBAs, and the appellants have focused on the sometimes subtle differences. With respect to medical insurance benefits, S 47.2 of the 1971-1974 CBA, entitled, "Blue Cross-Blue Shield Coverage," provided in relevant part as follows:

The Company will continue to provide Blue Cross-Blue Shield hospitalization and surgical coverage, all costs being borne by the Company. (Emphasis supplied).

All of the CBAs contained substantially similar language with respect to Blue Cross-Blue Shield coverage.

The CBAs also provided "Major Medical Insurance Coverage." The 1974-1977 CBA, for example, stated as follows:

The Company will continue to provide major medical insurance coverage, all costs being borne by the Company. Employees over 65 must enroll in Medicare A&B and B/C, B/S/Supplementals. (Emphasis supplied).

The 1977-1980, 1981-1984, 1986-1989, and 1989-1993 CBAs contain substantially similar language.

Beginning with the 1977-1980 CBA, Skinner provided a prescription drug insurance policy. Section 45.2 of the 1980-1981 CBA, for example, stated that Skinner "will continue to provide . . . prescription drug insurance policy with deductible . . . all costs being borne by the Company." (Emphasis supplied). The 1984-1986, 1986-1989, and 1989-1993 CBAs contained substantially similar language.3

With respect to life insurance coverage, the appellants rely on language found in some of the CBAs that such coverage "shall remain" at a certain figure. Section 44.5 of the 1981-1984 CBA, for example,

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provided in relevant part that "Life Insurance Coverage for retirees shall remain at $3,000 during the term of this Agreement." (Emphasis supplied). The 1986-1989 and 1989-1993 CBAs contained identical language, except with respect to the specific amount of coverage.

Each of the CBAs also contained as the last section of the agreement a provision entitled, "Term of Agreement." Section 51 of the 1974-1977, for example, states as follows: "This Agreement shall be effective as of September 1, 1974, and continue in full force and effect through August 31, 1977, at which time it will terminate." Similarly, S 46 of the 1986-1989 CBA provides in relevant part as follows:

This Agreement represents a complete resolution of all non economic items and shall, in all of its terms, remain in effect from July 1, 1986 until midnight, June 30, 1989. With respect to economic items, the agreement shall be reopened and these items shall be subject to negotiations prior to July 1, 1987. . . .

In December, 1991, the Financial Accounting Standards Board ("FASB")4 issued a new statement, FASB Statement No. 106, which required that the projected future cost of providing post-retirement benefits be recognized by companies as an expense as employees render services, instead of recognizing the expense when those benefits were paid.5 Skinner implemented FASB Statement No. 106 as of July 1, 1995. Because of the new accounting standard, Skinner believed that it was financially beneficial to reduce the benefits it provided to active employees and retirees.

At the time FASB Statement No. 106 was issued, the 1989 CBA was in effect. The 1989 CBA was scheduled to expire on June 30, 1993. During the 1993 negotiations, the union took the position that the proposed changes concerning retiree benefits applied only to future retirees. However, after the terms of the 1993 CBA were agreed upon, including the terms of medical and life insurance benefits for retirees, Skinner eliminated or modified those benefits for retirees retroactively. Consequently, employees who had retired prior to the effective date of the 1993 CBA were no longer eligible for the benefits to which they had become accustomed. Specifically, the changes involved the following: (1) elimination of life insurance for the retirees; (2) elimination of Skinner's payment of one-half of the cost of health insurance for the retirees' spouses; (3) requiring a co-payment of premiums by retirees with respect to Medicare supplemental health insurance coverage; (4) requiring a co-payment of premiums from retirees with regard to prescription drug insurance; and (5) an increase of the deductibles with respect to retirees' life insurance and spousal health insurance, allowing coverage to continue with payment of the premiums by the retiree or spouse.

This suit followed. Appellants contend that Skinner's termination of benefits constitutes

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a breach of the CBAs under Section 301 of the Labor Management Relations Act, 29 U.S.C. S 185, and a breach of its fiduciary duty under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. S 1001 et seq. They further assert that Skinner is equitably estopped from denying lifetime benefits.


A. The Summary Judgment Standard

On appeal, this court exercises plenary review of the district court's granting of summary judgment. See Boyle v. County of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998). Accordingly, "the appellate court is required to apply the same test the district court should have utilized." Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir. 1987) (in banc); see also Sempier v. Johnson & Higgins, 45 F.3d 724, 727 (3d Cir. 1995).

Pursuant to Federal Rule of Civil Procedure 56(c), a motion for summary judgment will be granted

if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law.

In other words, "summary judgment may be granted if the movant shows that there exists no genuine issue of material fact that would permit a reasonable jury to find for the nonmoving party." Miller v. Indiana Hosp., 843 F.2d 139, 143 (3d Cir. 1988). All facts and inferences are construed in the light most favorable to the non-moving party. See Peters v. Delaware River Port Auth. of Pa. and N.J., 16 F.3d 1346, 1349 (3d Cir. 1994).

At the summary judgment stage, a court may not weigh the evidence or make...

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