Anderson v. Alpha Portland Industries, Inc.

• Citation: 558 F. Supp. 913
• Decision Date: 04 March 1983
• Docket Number: No. 82-1413C(4).,82-1413C(4).
• Parties: Robert ANDERSON, Jr., et al., Plaintiffs, v. ALPHA PORTLAND INDUSTRIES, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

558 F. Supp. 913

Robert ANDERSON, Jr., et al., Plaintiffs, v. ALPHA PORTLAND INDUSTRIES, INC., et al., Defendants.

No. 82-1413C(4).

United States District Court, E.D. Missouri, E.D.

November 12, 1982.

On Motion for New Trial March 4, 1983.

Sheldon Weinhaus, Levin & Weinhaus, St. Louis, Mo., for plaintiffs.

George S. Hecker, Michael G. Biggers, Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., for Industries and Ins. and Health Plan.

Edward K. Fehlig, Ziercher, Hocker, Human, Michenfelder, Nations & Jones, St. Louis, Mo., for defendants.

MEMORANDUM

HUNGATE, District Judge.

This matter is before the Court on various pretrial motions.

Plaintiffs are all retired employees of the defendant Alpha Portland Industries, Inc. (Alpha) formerly employed by its division, Alpha Portland Cement Company at the division's St. Louis facility. Jurisdiction is invoked pursuant to the Employee Retirement Income Security Act (ERISA) § 502, 29 U.S.C. § 1132 and the Labor-Management Relations Act (LMRA) § 301, 29 U.S.C. § 185.

Also named as a defendant is the Insurance and Health Plan for Hourly Employees of Alpha Portland Cement Company; Alpha administers the aforesaid Plan, which is represented by the same counsel herein, and both entities will be referred to below collectively as Alpha. The Equitable Life Assurance Society of the United States (Equitable) is also named as a defendant.

Plaintiffs assert their claims as beneficiaries of certain collective bargaining agreements and related insurance agreements executed from time to time by Alpha and plaintiffs' union representatives, none of whom have been joined in this action. It is the retirees' contention that they are entitled to life insurance and hospitalization and surgical benefits enforceable under the agreements for the remainder of their lives. By their initial complaint, they seek mandatory injunctive relief and compensatory damages.

Due to adverse business conditions, Alpha either closed or sold the assets of its six remaining cement plants during the period from 1978 to September, 1982, including the St. Louis plant. Following consultations and negotiations with both the international and remaining local unions during 1981 and 1982, Alpha terminated the pertinent coverage effective May 1, 1982, upon expiration of all existing collective bargaining agreements. All retirees were notified of the proposed action March 29, 1982. Thereafter, Alpha concluded labor contracts with its existing employees to cover the period up to its liquidation of the remaining cement plants. These last agreements expressly excluded the benefits now in controversy.

Alpha moves for summary judgment pursuant to Rules 12(b)(1), 12(b)(6), and 56(a) of the Federal Rules of Civil Procedure. It is Alpha's contention that the rights in dispute are governed by labor contracts containing grievance procedures which culminate in binding arbitration. It states that plaintiffs have failed to exhaust these contractual remedies. Based on well-established principles favoring exhaustion of such remedies under federal labor and pension laws, Alpha contends that subject matter jurisdiction may not be assumed over this dispute.

Alpha correctly asserts that

"It is a settled principle that no action can be brought under 29 U.S.C. § 185(a) until a party attempts to exhaust his contractual remedies as to any claim." Petersen v. Rath Packing Co., 461 F.2d 312, 315 (8th Cir.1972); Bonnot v. Congress of Independent Unions Local # 14, 331 F.2d 355 (8th Cir.1964). Exhaustion of nonjudicial remedies must be pled in a complaint. Hayes v. New England Millwork Distributors, 602 F.2d 15, 18 (1st Cir.1979).

International Molders and Allied Workers Union v. Aquarius Shoe Corp., 511 F.Supp. 361, 363 (E.D.Mo.1981); see Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960).

The same requirement of exhaustion of contract remedies applies to suits under ERISA. E.g., Challenger v. Local Union 1, International Bridge, Structural & Ornamental Ironworkers, 619 F.2d 645, 647 (7th Cir.1980); Amato v. Bernard, 618 F.2d 559, 566-68 (9th Cir.1980); Carpenters Local No. 1846 v. Pratt-Farnsworth, Inc., 511 F.Supp. 509, 515 (E.D.La.1981); see Sample v. Monsanto Co., 485 F.Supp. 1018, 1019 (E.D.Mo. 1980).

It is plaintiffs' position that they are entitled to life-long insurance coverage because such benefits were "vested" upon their retirement and could not thereafter be defeated by Alpha's unilateral action or bargained away in subsequent negotiations. Alpha denies any such liability on a variety of grounds.

Regardless of the merits of these contentions, plaintiffs' central allegation is that Alpha failed to honor an alleged commitment made in the bargaining process:

That the cancellation of said insurance coverage constitutes a violation of the prior collective bargaining agreements with plaintiffs' collective bargaining representatives under which plaintiffs retired, violates the terms of the various plans then extant and in effect at the time of retirement, and further violates the terms of the summary plan description.

Complaint ¶ 23.

Whatever rights they now assert stem from the "Insurance and Health Agreement of Alpha Portland Industries, as amended May 1, 1978, and its predecessor agreements (collectively referred to as the Insurance Agreement)." Complaint Exhibit 1. The agreement embodied in that exhibit was an appendix to the 1978 collective bargaining agreement (the Basic Agreement) executed by Alpha, the United Cement, Lime and Gypsum Workers International Union (the International Union) and the various local unions at Alpha's plants then operating throughout the country.

Sections 1 and 2 of Article XII of the 1978 Insurance Agreement specify the life insurance, hospitalization and surgical benefits available to Alpha retirees who retired during all periods commencing from November 1, 1948 up to April 30, 1979.

The Insurance Agreement at Article II, § 5, specifies that:

Any difference arising under this Program respecting the administration, determination and/or implementation of the Program shall be subject to the grievance procedure established in the Basic Agreement beginning with Step 2 of such procedure.

Complaint Exhibit 1. Plaintiffs nowhere dispute that this suit concerns a difference respecting the administration, determination, and/or implementation of the "Program," as that term is elsewhere defined within the Insurance Agreement to include the benefits presently in controversy. The method for processing a grievance is clearly set out in the 1978 Basic Agreement for the St. Louis plant.

Plaintiffs' argument that binding arbitration is not required by these agreements is not persuasive. The Court is of the opinion that they are clear and unambiguous in establishing a binding method of dispute resolution. Alpha Exhibits 13-23, 26-28. See Challenger, supra at 647.

Plaintiffs also contend there are other reasons why they should not be bound by the grievance process. They cite their status as retirees, the dissolution of the local union, the St. Louis plant closure, and Alpha's alleged favorable negotiating position as to any such grievance, as reasons in support of the present litigation. (E.g., Plaintiffs Price and Ratty affidavits).

None of these arguments excuses the required exhaustion of remedies. Plaintiffs' status as retirees does not distinguish their claims. Neither does it deny the international union's authority to vindicate their rights.

Plaintiffs mistakenly rely on Allied Chemical & Alkali Workers of America v. Pittsburgh Plate Glass Co., 404 U.S. 157, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971) for the proposition that the representational authority of the unions ceased upon their retirement. That case is inapposite:

In Pittsburgh Plate Glass, the Supreme Court held that the retirement benefits of already retired employees were not a mandatory subject of bargaining under the National Labor Relations Act.

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The issue presented in this case is different than that considered in Pittsburgh Plate Glass. Here, unlike the latter cited case, the issue is not whether the Company must bargain with the Union over the benefits of retired employees, but rather whether the Company did, in fact, contractually commit itself to provide continuous insurance coverage for retirees for the duration of their natural lives. If the Company made such a commitment in the collective bargaining agreement it entered into with the Union, "then under accepted contract principles the union has a legitimate interest in protecting the rights of the retirees and is entitled to seek enforcement of the applicable contract provisions." United Steelworkers of America, AFL-CIO v. Canron, Inc., 580 F.2d 77, 80-81 (3d Cir.1978) (footnote omitted). For these reasons, the Third Circuit in United Steelworkers of America v. Canron, Inc., supra, recently affirmed a District Court Order directing that arbitration proceed between an employer and a union over the question of insurance coverage for retirees.

Textile Workers of America, AFL-CIO, Local 129 v. Columbia Mills, Inc., 471 F.Supp. 527, 530-31 (N.D.N.Y.1978); see also Local 589, International Ladies' Garment Workers' Union, AFL-CIO v. Kellwood Company, 592 F.2d 1008, 1011-12 (8th Cir.1979); McLaughlin v. E-Systems, Inc., 403 F.Supp. 67, 69-70 (N.D.Tex.1975). The Columbia Mills opinion goes on to state at 531:

Finally, the Company argues that the termination of the collective bargaining agreement and the cessation of operations by the Company renders arbitration ineffective and inappropriate.... However, in light of the Supreme Court's decision in Nolde Brothers, Inc. v. Local No. 358, AFL-CIO 430 U.S. 243, 97 S.Ct. 1067, 51 L.Ed.2d 300, supra, these arguments must be rejected.

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In the present case, as in Nolde

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