Weimer v. Kurz-Kasch, Inc.

• Decision Date: 10 December 1985
• Docket Number: INC,KURZ-KASC,No. 84-3325,84-3325
• Citation: 773 F.2d 669
• Parties: 120 L.R.R.M. (BNA) 2432, 54 USLW 2188, 103 Lab.Cas. P 11,664, 6 Employee Benefits Ca 2258 Paul W. WEIMER, Plaintiff-Appellant, v., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 669

773 F.2d 669

120 L.R.R.M. (BNA) 2432, 54 USLW 2188,

103 Lab.Cas. P 11,664,

6 Employee Benefits Ca 2258

Paul W. WEIMER, Plaintiff-Appellant, v. KURZ-KASCH, INC., Defendant-Appellee.

No. 84-3325.

United States Court of Appeals, Sixth Circuit.

Argued June 11, 1985.

Decided Sept. 18, 1985.

As Amended on Denial of Rehearing Oct. 30, 1985.

Rehearing and Rehearing En Banc Denied Dec. 10, 1985.

Robert T. Dunlevey, Jr., Lang, Horenstein & Dunlevey, Stephen A. Watring, argued, Dayton, Ohio, for plaintiff-appellant.

Frank H. Stewart, argued, Taft, Stettinius & Hollister, Martin McHenry, Cincinnati, Ohio, for defendant-appellee.

Before MERRITT and CONTIE, Circuit Judges, and BROWN, Senior Circuit Judge.

BAILEY BROWN, Senior Circuit Judge.

Plaintiff Paul Weimer, a retiree of defendant Kurz-Kasch, Inc.'s South Broadway plant, in Dayton, Ohio, filed this class action under section 301(a) of the Labor Management Relations Act, 29 U.S.C. Sec. 185, seeking to force Kurz-Kasch to resume providing life and health insurance benefits to certain Kurz-Kasch retirees. Additionally, in his amended complaint, plaintiff Weimer asserted a pendent state law breach of contract claim against defendant Kurz-Kasch. In its answer, Kurz-Kasch admitted terminating the life and health insurance benefits of its South Broadway retirees but contended that its obligation to provide retiree benefits expired with the expiration of the collective bargaining agreement between Kurz-Kasch and the relevant unions.

Both plaintiff Weimer and Kurz-Kasch moved for summary judgment. The district court held that Kurz-Kasch's obligation to provide retiree insurance benefits ceased with the expiration of the collective bargaining agreement; thus the court granted defendant's motion for summary judgment, denied plaintiff's motion for summary judgment, and entered judgment for defendant from which Weimer appealed. We now vacate the trial court's grant of defendant's motion for summary judgment. Furthermore, we vacate the trial court's denial of plaintiff's motion for summary judgment and remand with instructions to enter judgment for plaintiff. Finally, we remand the action to the district court for further proceedings with regard to plaintiff's motion to certify a class action and with regard to damages.

I. Background

During the mid 1970s, Kurz-Kasch operated four manufacturing plants in Ohio. This action involves only Kurz-Kasch's South Broadway plant, from which plaintiff Weimer retired. Workers at the South Broadway plant went on strike in September, 1975, at the expiration of their collective bargaining agreements. Kurz-Kasch immediately ceased paying life and health insurance benefits for active employees but continued to pay for such benefits for retirees. On November 17, 1975, after negotiation attempts had failed, Kurz-Kasch permanently closed its South Broadway plant. (Kurz-Kasch's other plants remained in operation.) On December 16, 1975, Kurz-Kasch notified South Broadway retirees that, for financial reasons, "effective January 1, 1976, life insurance on all retired personnel will be discontinued and effective February 1, 1976 you will no longer be included in our Blue Cross/Blue Shield plan." App. 179. The cessation of the South Broadway retirees' insurance benefits led to the filing of this action.

The workers at the South Broadway plant were represented by three different unions, each of which had its own collective bargaining agreement with Kurz-Kasch. This suit is brought by plaintiff Weimer, a former member of the Moulders union, on behalf of an ad hoc group of South Broadway plant retirees who were members of either the International Association of Machinists and Aerospace Workers, Local 225, (the Machinists) or the International Moulders and Allied Workers Union, Local 45 (the Moulders). App. 1-2. A separate action against Kurz-Kasch was filed in the same district court by members of a third union, the Metal Polishers, Buffers, Platers & Allied Workers International, Local 11. ¹

As stated, both Weimer and Kurz-Kasch moved for summary judgment. Since plaintiff purportedly represented the retired members of two different unions, each of which had its own collective bargaining agreement with Kurz-Kasch, the district court examined both the Machinists' and the Moulders' collective bargaining agreements. ² The district court found ambiguous the insurance provisions of both collective bargaining agreements upon which Weimer relied. The court then looked to the remainder of the insurance and other provisions of the collective bargaining agreements and determined that Kurz-Kasch's obligation to contribute toward life and health insurance coverage for South Broadway plant retirees ended with the September, 1975, termination of the agreements.

II. Applicable Law

A. Standard of review

The district court granted defendant's motion for summary judgment after determining that there were no genuine issues of material fact in that, as a matter of contract interpretation, the collective bargaining agreements did not grant retirees insurance benefits subsequent to expiration of the collective bargaining agreements. We agree with the district court's conclusion that the only issue presented is one of contract interpretation, but we are unable to concur in the district court's conclusion, based on its interpretation of the collective bargaining agreements, that Kurz-Kasch is entitled to judgment. Contract interpretation, such as is involved here, is a question of law not subject to the clearly erroneous standard; thus, in reviewing the district court's interpretation of the pertinent contracts, we are not bound by Fed.R.Civ.P. 52(a). Chevron, U.S.A. v. Belco Petroleum Co., 755 F.2d 1151, 1153-54 (5th Cir.1985). The trial court's conclusions of law are freely reviewable by the court of appeals. Washington Transit Authority v. Mergentime Corp., 626 F.2d 959, 961 (D.C.Cir.1980). See also Policy v. Powell Pressed Steel Co., 770 F.2d 609 (6th Cir.1985). In interpreting these collective bargaining agreements, we reach a contrary conclusion and hold that these retirees were entitled to continued insurance benefits.

B. Case law concerning retiree insurance benefits

This court dealt with the question whether retirees' health insurance benefits continued past the expiration of the collective bargaining agreement in International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), and Local 134, UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984). In Yard-Man, this court laid out the manner in which a court should proceed when examining the duration of retiree benefits:

[W]hether retiree insurance benefits continue beyond the expiration of the collective bargaining agreement depends upon the intent of the parties. Clearly the parties to a collective bargaining agreement may provide for rights which will survive termination of their collective bargaining relationship.... Any such surviving benefit must necessarily find its genesis in the collective bargaining agreement.

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[T]he court should first look to the explicit language of the collective bargaining agreement for clear manifestations of intent. The intended meaning of even the most explicit language can, of course, only be understood in light of the context which gave rise to its inclusion. The court should also interpret each provision in question as part of the integrated whole. If possible, each provision should be construed consistently with the entire document and the relative positions and purposes of the parties. As in all contracts, the collective bargaining agreement's terms must be construed so as to render none nugatory and avoid illusory promises. Where ambiguities exist, the court may look to other words and phrases in the collective bargaining agreement for guidance. Variations in language used in other durational provisions of the agreement may, for example, provide inferences of intent useful in clarifying a provision whose intended duration is ambiguous. Finally, the court should review the interpretation ultimately derived from its examination of the language, context and other indicia of intent for consistency with federal labor law. This is not to say that the collective bargaining agreement should be construed to affirmatively promote any particular policy but rather that the interpretation rendered not denigrate or contradict the basic principles of federal labor law.

Yard-Man, 716 F.2d 1479-80 (citations omitted). ³

Although Yard-Man counseled that courts are to look first at the collective bargaining agreement when determining whether the parties intended that retiree benefits continue beyond expiration of the agreement, the court also emphasized two factors weighing in favor of an interpretation that retiree benefits survive expiration of the collective bargaining agreement.

First, this court recognized that normally retiree benefits are vested. Yard-Man, 716 F.2d at 1482 n. 8. This is true because retirees, with respect to their benefits, are unprotected in the collective bargaining process. Upon expiration of a collective bargaining agreement, a union owes no duty to bargain for continued nonvested benefits for retirees. Yard-Man, 716 F.2d at 1482. A union may choose to forego nonvested retiree benefits in future negotiations in favor of more compensation for active employees. The union may not, however, "bargain away retiree benefits which have already vested in particular individuals. Such rights, once vested upon an employee's retirement, are interminable and the employer's failure to provide them [is] actionable under Sec. 301 by the retiree." Id. at 1482 n. 8 (citing Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass, 404 U.S. 157, 181 n. 20, 92 S.Ct. 383, 398 n. 20, 30 L.Ed.2d 341 (1971)). See also Upholsterers' International Union v....