Crown Cork & Seal v. International Ass'n of Mach.

• Decision Date: 18 September 2007
• Docket Number: No. 06-3639.,06-3639.
• Citation: 501 F.3d 912
• Parties: CROWN CORK & SEAL COMPANY, INC., Plaintiff-Appellant, v. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, The AFL-CIO; Alvin L. McColley; Leroy Kirchner; Steven Anderson, Individually and as representatives of a defendant class of retirees, Defendants-Appellees, International Association of Machinists and Aerospace Workers, The AFL-CIO, Counter Claimant-Appellee, v. Crown Cork & Seal Company, Inc., Counter Defendant-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

501 F.3d 912

CROWN CORK & SEAL COMPANY, INC., Plaintiff-Appellant, v. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, The AFL-CIO; Alvin L. McColley; Leroy Kirchner; Steven Anderson, Individually and as representatives of a defendant class of retirees, Defendants-Appellees, International Association of Machinists and Aerospace Workers, The AFL-CIO, Counter Claimant-Appellee, v. Crown Cork & Seal Company, Inc., Counter Defendant-Appellant.

No. 06-3639.

United States Court of Appeals, Eighth Circuit.

Submitted: April 12, 2007.

Filed: September 18, 2007.

Shay Dvoretzky, argued, Washington, DC (James A. Rydzel, Cleveland, OH, Andrew M. Kramer, Washington, DC, Kate Bushman and Robert T. Smith, New York, NY, Jerome A. Hoffman, Philadelphia, PA, on the brief), for appellant.

Sally M. Tedrow, argued, Washington, DC (Francis J. Martorana and Jennifer R. Simon, Washington, DC, G. Gordon Atcheson, Westwood, KS, on the brief,), for appellees.

Before MELLOY, BOWMAN, and GRUENDER, Circuit Judges.

BOWMAN, Circuit Judge.

Crown Cork and Seal Company appeals from the District Court's orders dismissing Crown's declaratory judgment claims brought under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA) and granting summary judgment to the International Association of Machinists and Aerospace Workers (IAM or the Union) on its counterclaim seeking to compel arbitration under LMRA. We reverse the summary judgment and dismiss the remaining issues on appeal.

In 1990, Crown, a manufacturer of packaging materials, acquired the metal division of Continental Can Company and that division's manufacturing plants. Over the preceding years, Continental and IAM had negotiated successive collectively bargained Master Agreements covering the employment relationship between Continental and its hourly employees. Crown has since bargained with IAM at the represented facilities. Pursuant to the Master Agreements, Crown committed to provide certain health benefits to eligible retirees.

In 2003, Crown announced its unilateral decision to modify the retiree health plans for all those employees who retired before April 1, 2002. (Those who retired after that date were covered by a different health plan.) The changes, effective August 1, 2003, included premium sharing, increased deductibles and out-of-pocket limits, decreased coverage for hospitalization, elimination of coverage for some dependents, and increases to lifetime benefits.

On June 6, 2003, before the effective date of the modifications, Crown filed suit in the District Court seeking declaratory relief in two counts. Count One was brought against IAM under LMRA, 29 U.S.C. § 185(a), seeking a declaration that Crown's unilateral modification of the retiree health plans did not violate the relevant Master Agreements. Count Two was brought under ERISA, 29 U.S.C. § 1132(a)(3), against IAM and a class represented by three named retirees and sought a declaration that the health plans could be modified as proposed without violating ERISA.

On July 1, 2003, IAM filed a grievance under the Master Agreements to protest the changes to the retiree health plans. Crown refused to arbitrate the grievance. The Union then moved the District Court to dismiss Crown's claims and filed a counterclaim under LMRA, 29 U.S.C. § 185(a), asking the court to compel arbitration.

On January 20, 2004, the District Court dismissed Crown's ERISA count for failure to state a claim. That dismissal took the named retirees out of the suit. As to Count One, the court exercised its discretion and elected not to assert jurisdiction over the LMRA declaratory judgment claim, dismissing that count as well. See 28 U.S.C. § 2201(a) ("any court . . . may declare the rights and other legal relations of any interested party seeking such declaration" (emphasis added)). IAM's arbitration counterclaim remained, and the parties filed cross-motions for summary judgment on a joint stipulation of facts. The District Court (the case had now been reassigned to a different judge) denied both motions, concluding that IAM did not have standing to represent the retirees. The District Court allowed the Union ninety days to amend its counterclaim or to substitute parties to remedy the standing problem and avoid dismissal. IAM then secured the written consent of 653 of 927 eligible retirees (or surviving spouses) to represent them in binding arbitration, after which the parties amended their pleadings and renewed their cross-motions for summary judgment. On September 25, 2006, the court granted the Union's motion and denied Crown's and ordered the parties to arbitrate the dispute. Crown appeals both of the dismissals and the summary judgment.

We begin with Crown's challenge to the District Court's summary judgment decision on the arbitrability of the Union's grievance. We review de novo the decision to grant summary judgment. Because the cross-motions were filed on a joint stipulation of facts, the only issue is whether IAM is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c).

As we have said, Continental and Crown negotiated a series of Master Agreements with IAM over the years that included corresponding health plans for retirees. For reasons not explained in the record, the 1981 health plan, amended in 1988, applied to all Continental retirees when Crown acquired Continental's metal division in 1990, regardless of their retirement dates and notwithstanding that there were any number of Master Agreements and corresponding retiree health plans before 1981. Continental retirees continued to be covered by the 1981 health plan after the acquisition until Crown's unilateral change on August 1, 2003, as did Crown retirees who were represented by IAM postacquisition and who retired by March 31, 1993. The remaining Crown employees who retired before April 1, 2002, received benefits under either the April 30, 1993-April 1, 1999, health plan or the April 1, 1999-April 1, 2002, health plan, depending upon when they retired.¹ The June 1, 2002 (retroactive to April 1, 2002)-June 1, 2005, health plan covered those who retired between those dates. The 2002-2005 Master Agreement is of collateral relevance to this appeal, as we will explain, but those who retired with the health plan referenced in that Master Agreement are not affected by this case.²

The applicable Master Agreements set out a detailed grievance procedure that culminates in binding arbitration of an unresolved grievance, which is defined as "any difference between the Local Management and the Union or employees as to the interpretation or application of, or compliance with, [the Master] Agreement respecting wages, hours, or conditions of employment." 1993 Master Agreement art. 13, sec. 13.1. Crown contends that the Union and Crown (or its predecessor) agreed only to arbitrate disputes between the company and active employees, not retirees who are no longer represented by the Union. We do not disagree with that statement, as far as it goes. "[R]etirees are neither `employees' nor bargaining unit members." Allied Chem. & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 176, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971). And while there is a presumption of arbitrability in labor disputes if the parties have so agreed, we have concluded that retirees are "outside the collective bargaining relationship." Anderson v. Alpha Portland Indus., 752 F.2d 1293, 1298 (8th Cir.) (holding that retirees were not required to exhaust grievance procedures before seeking judicial determination of benefits), cert. denied, 471 U.S. 1102, 105 S.Ct. 2329, 85 L.Ed.2d 846 (1985); cf. Allied Chem. & Alkali Workers, 404 U.S. at 181 n. 20, 92 S.Ct. 383 (noting that union's representation of retirees in labor negotiations under LMRA is permitted but not mandatory). In this case, however, a grievance by definition includes a "difference between [Crown] and the Union . . . as to the interpretation or application of, or compliance with" the Master Agreements. With the express consent of most of the retirees, the Union is the party seeking to compel arbitration of the dispute over retiree health benefits, not the retirees themselves. We conclude that the language of the Master Agreements in this case is sufficient to show that Crown did in fact agree to arbitrate with the Union alone— the entity that has brought the grievance here at issue.

The District Court looked to the 2002-2005 Master Agreement to decide the arbitrability issue because it was the agreement in effect when the Union filed the grievance on behalf of the retirees in 2003. The court said, "Although prior agreements may be relevant to determine the scope or extent of benefits to which the retirees may be entitled, or the extent to which the company can unilaterally change the benefits, the dispute is premised on the agreement in effect at the time of the filing of the [grievance]." Mem. & Order of Sept. 25, 2006, at 17. Because the District Court determined that the dispute arose under the 2002-2005 Master Agreement, the court failed, as the Union concedes, to "expressly analyze the question of whether the parties' dispute is arbitrable under the expired" Master Agreements (although IAM believes that the court's "analysis of the arbitrability issue necessarily supports (and, indeed, would require) the conclusion that the parties' dispute is arbitrable under the expired contracts"). Br. of Appellees at 14. The grievance in question arose under the expired Master Agreements, not the 2002-2005 Master Agreement, and it is those expired agreements that must be construed to decide the arbitrability issue.

So we are faced with this question: Should we remand the case to the District Court to analyze the arbitrability issue under the expired Master Agreements? It is usually not the function of the appellate court "in the first instance to construe...