Amaro v. Continental Can Co., No. 83-5519

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtBefore KENNEDY, SKOPIL, and PREGERSON; SKOPIL
Citation724 F.2d 747
Parties100 Lab.Cas. P 10,849, 5 Employee Benefits Ca 1215 Santiago AMARO, et al., Plaintiffs-Appellants, v. The CONTINENTAL CAN COMPANY, Defendant-Appellee.
Docket NumberNo. 83-5519
Decision Date23 January 1984

Page 747

724 F.2d 747
100 Lab.Cas. P 10,849, 5 Employee Benefits Ca 1215
Santiago AMARO, et al., Plaintiffs-Appellants,
v.
The CONTINENTAL CAN COMPANY, Defendant-Appellee.
No. 83-5519.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted Oct. 5, 1983.
Decided Jan. 23, 1984.

Page 748

David Feller, Berkeley, Cal., for plaintiffs-appellants.

Franklin H. Wilson, McCutchen, Black, Verleger & Shea, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before KENNEDY, SKOPIL, and PREGERSON, Circuit Judges.

SKOPIL, Circuit Judge:

INTRODUCTION

In this case we are confronted with the competing tensions of access to the courts and arbitration. The issue presented is whether an arbitration award on a grievance under a collective bargaining agreement is res judicata of an Employee Retirement Income Security Act ("ERISA") claim arising out of the same facts. A related issue is whether exhaustion of arbitration procedures for contractual grievances is required prior to bringing a statutory claim under section 510 of ERISA. The district court held that the arbitration award on a contractual grievance adverse to former employees of the Continental Can Company barred their ERISA claims against their former employer. We reverse and remand.

FACTS AND PROCEEDINGS BELOW

The plaintiffs are former employees ("employees") of the Continental Can Company ("Continental") who were laid off from the company's Los Angeles plant between 1976 and the present. 1 The employees' union representative, United Steel Workers of America ("Union"), filed a grievance on March 5, 1980 alleging that Continental's layoff of these employees and its correspondent shift of production to other plants violated various provisions of the collective bargaining agreement. The agreement mandates final and binding arbitration of contractual disputes. The Union pursued the grievance to arbitration. The arbitrator denied the grievance, concluding that Continental's conduct was in response to changing market conditions and did not violate the collective bargaining agreement.

On August 13, 1981 the Union filed a second grievance. This was identical to the first grievance, but covered the period subsequent to the arbitrator's decision. No disposition has been rendered in this grievance.

The employees then commenced this action. Their complaint alleges that Continental violated section 510 of ERISA, 29 U.S.C. Sec. 1140, by laying employees off to prevent them from obtaining the number of years of continuous service required to qualify for Continental's Employee Pension Benefit Plan and Employee Welfare Plan.

These plans fall within the coverage of ERISA. See 29 U.S.C. Sec. 1003(a)(1), (2). Section 510 of ERISA provides in pertinent part that:

[i]t shall be unlawful ... to discharge, fine, suspend, expel, discipline, or discriminate against a participant or a beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under [an employee benefit plan].

29 U.S.C. Sec. 1140.

This statutory claim arises from the same events that spurred the contractual grievance-

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--Continental's laying off employees and shifting production work from its Los Angeles plant which resulted in the laid-off employees not being recalled to work. The district court granted Continental's motion for summary judgment, holding that the arbitrator's decision on the contractual claim is res judicata of the employees' ERISA claim. This dismissal came before the plaintiffs were able to pursue any discovery.
DISCUSSION

A. Standard of Review.

In reviewing a grant of summary judgment, we need only decide "whether any genuine issue of material fact remains for trial and whether the substantive law was correctly applied." Taxpayers for Vincent v. Members of City Council, 682 F.2d 847, 848-49 (9th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 1180, 75 L.Ed.2d 429 (1983). There are no disputed facts. Accordingly, we must only determine whether the substantive law was correctly applied. Beers v. Southern Pacific Transportation Co., 703 F.2d 425, 428 (9th Cir.1983). That is, we must decide whether the district court erred in holding the arbitral decision is res judicata of the employees' ERISA claim.

B. Res Judicata.

Under the doctrine of res judicata, a final judgment on the merits precludes the parties from relitigating claims which were or could have been raised in that action. Nevada v. United States, --- U.S. ----, 103 S.Ct. 2906, 2918, 77 L.Ed.2d 509 (1983). There is no precise or simple test that can be applied in determining what constitutes a claim. Harris v. Jacobs, 621 F.2d 341, 343 (9th Cir.1980). A factor to be considered in determining whether the same claim is involved is "whether the two suits involve infringement of the same right." Id. We find that the rights involved in the employees' contractual claim before the arbitrator are independent of those implicated in their statutory claim under ERISA.

Continental contends that the employees' ERISA claim is in reality a contractual claim that has been the subject of final and binding arbitration. Specifically, it claims this is a contractual claim for a breach of an implied covenant of good faith. The essence of its argument is that the statutory claim is another attempt to relitigate the contractual claim. It claims the court should not reconsider the merits of the contractual grievance.

We reject this reasoning. Continental inaccurately characterizes the ERISA claim. The employees' statutory claim is premised on a violation of section 510 of ERISA. Section 510 prohibits anyone from interfering with the attainment of any rights to which a person may become entitled under the provisions of an employee benefit plan that falls within the coverage of ERISA. This statutory claim is not for benefits under a collective bargaining agreement. The employees, in fact, are not yet eligible for those benefits. Nor is this the same as an action for a breach of an implied covenant of good faith. The ERISA action is to enforce statutory rights designed to protect the employees from actions which interfere with their attainment of eligibility for those benefits. We are persuaded that in enacting section 510, Congress created a statutory right independent of any collectively bargained rights. See Kross v. Western Electric Co., Inc., 701 F.2d 1238, 1242-43 (7th Cir.1983). 2

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To hold otherwise would endanger the protection afforded employees by Congress' enactment of ERISA. See 29 U.S.C. Sec. 1001. That protection then would become subject to elimination in the collective bargaining process. An ERISA claim could be defeated without the benefit of the protections inherent in the judicial process. 3 The "ready access to the Federal courts" that ERISA was intended to provide would be eliminated. See 29 U.S.C. Sec. 1001(b).

Moreover, employees not covered by a collective bargaining agreement would not face this threshold obstacle in an ERISA claim. Employees could bring an ERISA claim and avail themselves of liberal pretrial discovery without first succeeding in a grievance proceeding. We will not sanction results where the ability to bring an ERISA claim is dependent in part on the existence of a collective bargaining agreement or the scope of that agreement. 4

Finally, the arbitrator of the employees' grievance did not consider the ERISA claim. Nor should he have. Arbitrators, many of whom are not lawyers, see F. Elkouri and E.A. Elkouri, How Arbitration Works, 3d Ed. (1981) at 90-91, 94, lack the competence of courts to interpret and apply statutes as Congress intended. 5 As the Supreme Court has said, "[t]he specialized competence of arbitrators pertains primarily to the law of the shop, not the law of the land." Alexander v. Gardner-Denver Co., 415 U.S. 36, 57, 94 S.Ct. 1011, 1024, 39 L.Ed.2d 147 (1974). The resolution of statutory issues "is a primary responsibility of courts," not arbitrators. Alexander, 415 U.S. at 57, 94 S.Ct. at 1024.

The district court misapplied the substantive law when it held the arbitrator's decision barred the employees' claim under section 510 of ERISA.

C. Exhaustion of Arbitration Procedures.

We must also decide whether the employees' ERISA claims are barred for failure to exhaust their contractual remedies. The Union's August 13, 1981 grievance ("second grievance") has not reached a final disposition. Continental maintains that the employees' section 510 claim is barred by this failure to exhaust contractual remedies. The question is not whether the employees have exhausted their contractual claims, but whether they must do so prior to bringing a section 510 claim. Section 502 of ERISA, 29 U.S.C. Sec. 1132, which provides for civil enforcement of the Act, is silent on the exhaustion doctrine being a prerequisite to an ERISA action.

Continental offers two principal arguments to support its position that section 510 claims may not be pursued until all contractual claims have been fully resolved.

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156 practice notes
  • Barrowclough v. Kidder, Peabody & Co., Inc., No. 83-5777
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • January 18, 1985
    ...of statutory violations can be brought in a federal court notwithstanding an agreement to arbitrate. See Amaro v. Continental Can Co., 724 F.2d 747, 749-50 (9th Cir.1984); Lewis v. Merrill Lynch, Pierce, Fenner & Smith, 431 F.Supp. 271, 274-78 (E.D.Pa.1977); cf. Air Line Pilots Ass'n, 6......
  • Franklin v. Murphy, Nos. 83-3939
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • October 23, 1984
    ...precludes the parties from relitigating claims which were or could have been raised in that action." Amaro v. Continental Can Co., 724 F.2d 747, 749 (9th Cir.1984). Franklin has indicated no reason why he could not have raised this legal theory in his prior actions. Cases Remanded Fina......
  • Simon v. Pfizer Inc., No. 03-1192.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • February 18, 2005
    ...contrary, but merely cites two out-dated cases in which courts did not require arbitration of ERISA claims: Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir.1984), for the proposition that arbitrators lack the necessary competence to deal with ERISA statutory violations, and McLendon v. ......
  • Gavalik v. Continental Can Co., Nos. 85-3597
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 19, 1987
    ...claims and its conclusion that such claims are not encompassed under the terms of the Pension Agreement. Cf. Amaro v. Continental Can Co., 724 F.2d 747, 749 (9th Cir.1984) ("This statutory claim [under Sec. 510 of ERISA] is not for benefits under a collective bargaining agreement. The ......
  • Request a trial to view additional results
156 cases
  • Barrowclough v. Kidder, Peabody & Co., Inc., No. 83-5777
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • January 18, 1985
    ...of statutory violations can be brought in a federal court notwithstanding an agreement to arbitrate. See Amaro v. Continental Can Co., 724 F.2d 747, 749-50 (9th Cir.1984); Lewis v. Merrill Lynch, Pierce, Fenner & Smith, 431 F.Supp. 271, 274-78 (E.D.Pa.1977); cf. Air Line Pilots Ass'n, 627 F......
  • Franklin v. Murphy, Nos. 83-3939
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • October 23, 1984
    ...merits precludes the parties from relitigating claims which were or could have been raised in that action." Amaro v. Continental Can Co., 724 F.2d 747, 749 (9th Cir.1984). Franklin has indicated no reason why he could not have raised this legal theory in his prior actions. Cases Remanded Fi......
  • Simon v. Pfizer Inc., No. 03-1192.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • February 18, 2005
    ...contrary, but merely cites two out-dated cases in which courts did not require arbitration of ERISA claims: Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir.1984), for the proposition that arbitrators lack the necessary competence to deal with ERISA statutory violations, and McLendon v. ......
  • Gavalik v. Continental Can Co., Nos. 85-3597
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 19, 1987
    ...claims and its conclusion that such claims are not encompassed under the terms of the Pension Agreement. Cf. Amaro v. Continental Can Co., 724 F.2d 747, 749 (9th Cir.1984) ("This statutory claim [under Sec. 510 of ERISA] is not for benefits under a collective bargaining agreement. The emplo......
  • Request a trial to view additional results

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