434 F.3d 478 (6th Cir. 2006), 05-3190, International Union v. Cummins, Inc.

Docket Nº:05-3190.
Citation:434 F.3d 478
Party Name:INTERNATIONAL UNION et al., Plaintiffs-Appellees, v. CUMMINS, INC., Defendant-Appellant.
Case Date:January 18, 2006
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 478

434 F.3d 478 (6th Cir. 2006)

INTERNATIONAL UNION et al., Plaintiffs-Appellees,

v.

CUMMINS, INC., Defendant-Appellant.

No. 05-3190.

United States Court of Appeals, Sixth Circuit.

January 18, 2006

Argued: Dec. 9, 2005.

Appeal from the United States District Court for the Northern District of Ohio at Toledo, No. 04-07125—James G. Carr, Chief District Judge.

Page 479

COUNSEL

ARGUED:

Gregory J. Utken, BAKER & DANIELS, Indianapolis, Indiana, for Appellant.

Joan Torzewski, HARRIS, RENY & TORZEWSKI, Toledo, Ohio, for Appellees.

ON BRIEF:

Gregory J. Utken, Dustin D. Stohler, BAKER & DANIELS, Indianapolis, Indiana, for Appellant.

Joan Torzewski, HARRIS, RENY & TORZEWSKI, Toledo, Ohio, for Appellees.

Before: DAUGHTREY, GILMAN, and SUTTON, Circuit Judges.

OPINION

RONALD LEE GILMAN, Circuit Judge.

In this labor arbitration dispute, the primary issue is whether the suit to compel

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arbitration filed by International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, and its Local 336 (collectively, the Union) was barred by the statute of limitations. This appeal also raises issues as to whether the underlying dispute was arbitrable and whether the Union's suit was barred by laches.

The Union was the recognized collective bargaining agent for employees at the Atlas Crankshaft Factory in Fostoria, Ohio for many years. Cummins, Inc. owned the Atlas plant until 1999, when it was sold to Krupp Hoesch Automotive of America, Inc. The Union and Cummins negotiated a Plant Sale Agreement (PSA) that obligated Cummins to fund "Plan B," a pension plan benefitting former hourly employees who had worked at the Atlas plant and hourly employees who would continue to work there after the sale to Krupp. The PSA provided that Plan B was not to be amended or terminated without the mutual consent of the Union and Cummins. In late 1999, Cummins determined that Plan B was underfunded, and it notified the Union that it was considering merging Plan B into Cummins's well-funded Plan A for its other employees. This merger occurred in October of 2001. In December of 2001, the Union notified Cummins that, in its view, the merger violated the "no termination/no amendment" clause of the PSA, and it filed a grievance.

Over the next two-and-a-half years, the Union and Cummins corresponded regarding the arbitrability of the grievance, culminating in the Union filing suit to compel arbitration in March of 2004. The district court granted summary judgment in favor of the Union, holding that the Union's action to compel arbitration was timely, that the dispute was arbitrable, and that Cummins's laches defense was inapplicable. For the reasons set forth below, we AFFIRM the judgment of the district court and REMAND the case for referral to arbitration.

I. BACKGROUND

Article 5 of the PSA requires Cummins to sponsor and fund Plan B, and further provides that "[t]he plan shall not be amended or terminated except by mutual agreement between the Company and the Union except as may be required by law or regulation." On the other hand, Article XIX of Plan B outlines the benefits that the employees are to receive "[i]n the case of any merger or a consolidation with, or transfer of assets or liabilities to, any other plan." Finally, Cummins and the Union agreed in Article 16 of the PSA to arbitrate any alleged breaches of the PSA.

Cummins determined in 1999 that Plan B was underfunded. It then notified the Union that it wanted to merge Plan B into Plan A, the pension plan covering Cummins's salaried employees and executives. Ken Lortz, the Union's Assistant Regional Director, requested information about the merger from Hudnall Pfeiffer, Cummins's counsel, and suggested that the parties arrange a conference call to discuss the potential merger. Lortz and Pfeiffer corresponded over the next few months, with Lortz asking for information about the details of the merger and Pfeiffer submitting information regarding the funding methods, assets, and liabilities of Plan B.

In August of 2000, Cummins's employee David Wright told Lortz that Cummins was no longer interested in merging the plans. But Cummins had filed a Notice of Plan Merger with the IRS in 1999 and never in fact abandoned the proposed merger. David Price, a Cummins employee, first notified Lortz in November of 2001 that the merger had taken place the prior month.

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On December 3, 2001, the Union filed a Notice of Intent to Arbitrate, claiming that the merger violated Article 5 of the PSA, which provides that Plan B is not to be amended or terminated without the Union's consent. The parties communicated over the next two-and-a-half years concerning the alleged breach of the PSA. A summary of their relevant conversations and correspondence is set forth below:

February 14, 2002: Telephone call between Pfeiffer and Lortz

• Lortz accuses Pfeiffer of acting in bad faith and asks Pfeiffer to send him information concerning the merger.

February 20, 2002: Letter from Pfeiffer to Lortz

• Claims that the merger discussions with Lortz got "bogged down."

• Indicates that the PSA contemplated a merger and that the merger did not require amending or terminating the plan.

March 14, 2002: Letter from Pfeiffer to Lortz

• Attaches a "redlined" copy of Plan B, but states that none of the changes are relevant to the merger.

June of 2003: Lortz and Dave Glover, a Cummins executive, mutually select an arbitrator to hear the case.

June 9, 2003: Letter from Lortz to Pfeiffer

• Acknowledges that the grievance is still unresolved.

• Notifies Pfeiffer that Cummins and the Union have mutually selected an arbitrator.

• Offers to contact the arbitrator in order to set up mutually acceptable dates for a hearing.

June 23, 2003: Letter from Pfeiffer to Lortz

• States that he is "surprised" that the Union is still pursuing the arbitration and that he had assumed the Union had dropped the matter.

• Reminds Lortz of an earlier conversation when Cummins explained that the plan was not "amended" when the merger occurred.

• Reiterates that the company is responsible for funding the plan and that the merger saved the plan from under funding.

• Claims that the employees are actually better off after the merger.

Reminds Lortz of his promise to have Sharon Meadows, counsel for the Union, contact Pfeiffer and...

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