International Union, United Auto., Aerospace and Agr. Implement Workers of America, UAW v. Mack Trucks, Inc., 90-1192

• Decision Date: 18 October 1990
• Docket Number: No. 90-1192,90-1192
• Citation: 917 F.2d 107
• Parties: 135 L.R.R.M. (BNA) 2833, 59 USLW 2328, 117 Lab.Cas. P 10,376, 12 Employee Benefits Ca 2593 INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW v. MACK TRUCKS, INC. International Union, UAW, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 107

917 F.2d 107

135 L.R.R.M. (BNA) 2833, 59 USLW 2328,

117 Lab.Cas. P 10,376,

12 Employee Benefits Ca 2593

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW v. MACK TRUCKS, INC International Union, UAW, Appellant.

No. 90-1192.

United States Court of Appeals Third Circuit.

Argued Aug. 27, 1990.

Decided Oct. 18, 1990.

William T. Josem, Richard H. Markowitz (Argued), Markowitz & Richman, Philadelphia, Pa., for appellant.

Edward T. Ellis (Argued), Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pa., for appellee.

Before HUTCHINSON and NYGAARD, Circuit Judges, and RE, Judge. ^*

OPINION OF THE COURT

NYGAARD, Circuit Judge.

In its second appearance before this Court as an appellant in this case, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW (UAW) appeals the district court's order concluding that Mack did not breach the parties' 1984 Collective Bargaining Agreement and denying the UAW's request for injunctive relief. The UAW challenges this order on three grounds: (1) that the district court was bound by the prior opinion in this case, International Union, UAW v. Mack Trucks, Inc., 820 F.2d 91 (3d Cir.1987), which the UAW asserts held that the contract was breached; (2) that the contract language is unambiguous and required Mack to seek the UAW's approval of the terms and conditions of health insurance coverage before changing health insurance carriers; and (3) even if the contract language is ambiguous, the court's finding is clearly erroneous. ¹

We have jurisdiction over the district court's final judgment pursuant to 28 U.S.C.A. Sec. 1291 (West Supp.1990). The district court had subject matter jurisdiction over this suit pursuant to 28 U.S.C.A. Sec. 1331 (West Supp.1990) since this case arose under Sec. 301 of the Labor-Management Relations Act of 1947, as amended, 29 U.S.C.A. Sec. 185 (West 1978). We will affirm.

I.

This case involves a dispute over whether Mack could unilaterally change its health insurance carrier from Blue Cross/Blue Shield to Equitable without UAW approval, when the terms and conditions of the substituted coverage remained the same. Before 1984, the Collective Bargaining Agreement between Mack and UAW required that Mack use Blue Cross as its employees' health insurance carrier. By 1984, however, the Blue Cross plan costs had increased significantly, so during the 1984 negotiations, Mack proposed that it be able to unilaterally change carriers. The UAW countered that it would agree only after both parties accepted the terms and conditions of the proposed health insurance coverage.

The UAW's main concern was what the coverage would be, not who provided it. The parties, however, could not agree on the terms and conditions of coverage before the contract expired so they decided on a temporary solution. The UAW made the following proposal:

The terms and conditions of coverage, including those amendments made in these negotiations, are continued on the assumption that the current provider arrangement with Blue Cross/Blue Shield will continue for the term of the labor agreement. The company shall not exercise its option to select an alternate provider until the parties have reached a mutual agreement on the terms and conditions including restrictions, limitations and definitions that would be applicable to any provider other than Blue Cross/Blue Shield.

Mack in turn suggested the following changes: strike "provider" from the first sentence; and change "alternate provider" or "alternate carrier" to "alternate delivery system." The UAW agreed and the provision was changed to read:

The terms and conditions of coverage, including those amendments made in these negotiations, are continued on the assumption that the current arrangement with Blue Cross/Blue Shield will continue for the term of the labor agreement. The company shall not exercise its option to select an alternate delivery system until the parties have reached mutual agreement on the terms and conditions including restrictions, limitations and definitions that would be applicable to any delivery system other than Blue Cross/Blue Shield.

Later, Mack informed the UAW that it was changing health insurance carriers from Blue Cross to Equitable. Equitable would provide the same benefits in the same manner and under the same terms and conditions as Blue Cross. In January 1986, Mack unilaterally switched carriers.

Meanwhile, the UAW filed this action seeking to preliminarily and permanently enjoin Mack from changing carriers. The UAW later withdrew its motion for preliminary injunction and proceeded to a non-jury trial for a permanent injunction. After the UAW presented its evidence, Mack moved for a directed verdict under Fed.R.Civ.P. 50, asserting that the UAW failed to prove both a breach of contract and irreparable harm. ² The district court granted the directed verdict, finding that although the UAW had shown that Mack violated the contract, the UAW was not entitled to equitable relief because it failed to show irreparable harm.

The UAW appealed, arguing that it had presented sufficient evidence of harm to overcome Mack's motion for a directed verdict. We reversed, concluding that Mack's breach did harm the UAW and remanded for further proceedings consistent with the opinion. We reasoned that by unilaterally changing health insurance carriers Mack deprived the UAW of a bargaining chip. Nevertheless, we rejected the UAW's request to enter a permanent injunction because the issue came to us from a directed verdict and that "precluded Mack from introducing evidence to counter the union's case." International Union, 820 F.2d at 98.

On remand, Mack sought to introduce evidence on the breach of contract issue. Mack wanted to prove that the term "alternative delivery system" was ambiguous and did not mean "carrier" or "provider" as asserted by the UAW. The UAW sought to prevent Mack from introducing this evidence. It argued that our decision on appeal prevented Mack from relitigating the issue. The district court disagreed with the UAW and admitted Mack's evidence.

When trial resumed, the chief spokesperson for Mack on the Joint Subcommittee on Benefits testified that the terms "provider" and "carrier" were changed to "alternate delivery system" because the terms were not synonymous. Mack's spokesperson stated that he wanted the change "to assure that the company would have the option of switching to another insurance carrier, as long as the insurance carrier provided benefits on a fee for service basis and on the same terms and conditions as Blue Cross/Blue Shield." International Union, UAW v. Mack Trucks, Inc., 733 F.Supp. 938, 944 (E.D.Pa.1990). Also, Mack's expert in the field of employee benefits and health care testified that "delivery system" had a special meaning in the health care field--that the term refers to the manner in which health care insurance coverage is provided by, for example, a fee for service system, a health maintenance organization (HMO), or a preferred provider organization (PPO). The UAW did not rebut Mack's evidence of ambiguity, or the meaning of the term "delivery system."

After hearing all the evidence, the district court entered judgment in favor of Mack. The court first held that the language of the contract was ambiguous because it was reasonably susceptible to different meanings. It based its conclusion on the fact that during negotiations, the terms "provider" and "carrier" were changed to "alternate delivery system" and that, therefore, the term "alternate delivery system" could not mean the same as "carrier" or "provider" as argued by the UAW. The district court next found that the parties intended the term to mean that Mack could unilaterally change the health insurance carrier so long as the new carrier provided benefits in the same manner and extent as the old carrier. The court found the testimony of Mack's witnesses to be credible. The court also noted that the UAW failed to contest this testimony on rebuttal.

II.

The first issue is whether the district court erred by permitting Mack to assert and present evidence on remand that it did not breach the contract. The UAW claims Mack is barred from challenging the breach of contract finding the district court made in its directed verdict because Mack did not challenge that finding on appeal, and the Court of Appeals stated in its opinion that Mack's actions violated the contract. These issues are essentially legal and require that we interpret the rules of civil procedure. Therefore, our review is plenary. Dent v. Cunningham, 786 F.2d 173, 175 (3d Cir.1986).

Both UAW contentions disregard the procedural posture of the appeal. Under Fed.R.Civ.P. 41(b) Mack retained the right to present evidence if the court of appeals reversed. Federal Deposit Ins. Corp. v. Mason, 115 F.2d 548 (3d Cir.1940). In Federal Deposit, we held that a defendant in a non-jury trial who, pursuant to Rule 50, is granted a directed verdict subsequently reversed on appeal, shall upon remand be afforded an opportunity to present evidence as if the verdict had been denied by the district court. 115 F.2d at 552.

Statements in our opinion in UAW's first appeal in this case do not prevent Mack from presenting its "no breach" argument on remand. We said:

Mack appears to concede that it (in the district court's words) "breached the collective bargaining agreement by changing its health insurance carrier from Blue Cross/Blue Shield to Equitable without the consent of the UAW." Slip op. at 9. We, therefore, find it beyond dispute that Mack indeed violated its contract ... We need only to decide the legal question of whether the Union adduced evidence of harm sufficient to make out a prima facie case and, therefore, to avoid a directed verdict.

International Union, 820 F.2d at 95.

The UAW rests its argument on this language, but fails to take our...