Arbuckle v. Gen. Motors LLC

Decision Date15 July 2016
Docket NumberDocket No. 151277.
Citation885 N.W.2d 232,499 Mich. 521
Parties ARBUCKLE v. GENERAL MOTORS LLC.
CourtMichigan Supreme Court

MacDonald & MacDonald, PLLC, Flint (by Robert J. MacDonald ), for Robert Arbuckle.

Ogletree, Deakins, Nash, Smoak & Stewart, PLLC, Birmingham (by Gregory M. Krause ), and Kim F. Ebert, pro hac vice, for General Motors, LLC.

Donald M. Fulkerson and Adler Stillman, PLLC, Farmington Hills (by Barry Adler ), for the Michigan Association for Justice.

LARSEN, J.

In this case, we consider whether MCL 418.354 of the Worker's Disability Compensation Act (WDCA)1 permits coordination of plaintiff's workers' compensation benefits with his disability pension benefits in light of postretirement changes made to plaintiff's pension plan as a result of collective bargaining. Applying federal substantive law to the facts of this case, we hold that defendant may coordinate plaintiff's disability pension benefits because the parties' collective-bargaining agreements and the subsequent modifications thereto did not vest plaintiff's right to uncoordinated benefits.2 We therefore reverse the judgment of the Court of Appeals and reinstate the order of the Michigan Compensation Appellate Commission, which allowed coordination.

I. BASIC FACTS AND PROCEEDINGS

Plaintiff, Clifton Arbuckle,3 began working for defendant, General Motors LLC, in July 1969; he retired in May 1993. On June 20, 1991, plaintiff sustained a work-related back injury and, effective May 1, 1993, began receiving a total and permanent disability pension from defendant. Following his retirement later that month, plaintiff filed a petition seeking workers' compensation benefits for his work-related disability.

In February 1995, a magistrate found plaintiff partially disabled and granted him an open award of benefits at a fixed rate of $362.78 a week until further order of the Workers' Compensation Agency. Sometime after he began receiving workers' compensation benefits, plaintiff also began receiving Social Security Disability Insurance (SSDI) benefits.

After discovering that many employers were paying more than once to compensate a disabled employee's lost earning potential when that employee was also receiving disability pension benefits, the Legislature, in 1981, enacted MCL 418.354.4 The statute permits an employer to reduce its obligation to pay an employee's weekly workers' compensation benefits by coordinating those benefits with that employee's disability pension benefits. Although the statute makes coordination mandatory by default,5 MCL 418.354(14) permits an employer to elect not to coordinate disability pension benefits in certain circumstances, such as when it negotiates an employment agreement that provides otherwise.

In this case, defendant and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW)6 executed a letter of agreement in 1990 (the 1990 Letter of Agreement), pursuant to which defendant agreed not to coordinate statutory workers' compensation benefits with contractual disability pension benefits for its employees. This letter of agreement was incorporated into the then-existing 1990 collective-bargaining agreement (CBA) between defendant and the UAW, constituting an amendment of the 1990 pension plan under which plaintiff would eventually retire. The 1990 Letter of Agreement provided that the prohibition against benefit coordination was to continue “until termination or earlier amendment of the 1990 Collective Bargaining Agreement,” which expired on November 15, 1993.

Between 1990 and 2003, defendant and the UAW negotiated new CBAs at three- or four-year intervals. Each CBA replaced its predecessor and was accompanied by a letter of agreement that replicated the provisions against benefit coordination set forth in the 1990 Letter of Agreement.7 Things changed, however, in September 2007, when defendant and the UAW agreed to a formula by which defendant would use disability pension benefits to reduce workers' compensation benefits. As a result of this agreement (the 2007 Letter of Agreement), which was simultaneously incorporated into the then-existing 2007 CBA, workers' compensation benefits and disability pension benefits were to be coordinated, but only “for employees who are injured and retire on or after October 1, 2007....”8 (Underlining omitted.) In other words, the 2007 Letter of Agreement lifted the prohibition against coordination with respect to future retirees but did not affect those like plaintiff, who had already retired.9 Like its predecessors, the 2007 Letter of Agreement expressly stipulated that the agreement against coordination would continue “until termination or earlier amendment of the 2007 Collective Bargaining Agreement....”

In 2009, because of the severe economic downturn and defendant's impending bankruptcy, defendant and the UAW revisited their 2007 Letter of Agreement and agreed to amend its terms to encompass a larger pool of retirees. As a result of this agreement (the 2009 Letter of Agreement), which was again simultaneously incorporated into the then-existing 2009 CBA, defendant and the UAW agreed that all retirees who retired prior to January 1, 2010, regardless of their date of retirement or injury” would be subject to benefit coordination consistent with the 2007 formula.10

On November 16, 2009, defendant advised plaintiff by letter that effective January 1, 2010, his benefits would be partially reduced pursuant to the formula set forth in the 2007 Letter of Agreement. Given plaintiff's weekly benefit award, his initial SSDI benefit, his disability pension benefit, and his average weekly wage at the time of his injury, the letter indicated that plaintiff's coordinated weekly workers' compensation rate would be $264.96. Plaintiff received a nearly identical letter on January 19, 2010, the only material difference being that his weekly workers' compensation rate was reduced to $262.55.

Following coordination of his benefits, plaintiff requested a hearing before the director of the Workers' Compensation Agency, who found that defendant was improperly using plaintiff's SSDI benefits to offset his workers' compensation benefits in violation of MCL 418.354(11).11 A workers' compensation magistrate reversed the director's MCL 418.354(11) ruling but nevertheless concluded that, under Murphy v. City of Pontiac,12 defendant was prohibited from reducing plaintiff's workers' compensation benefits by his disability pension benefits because plaintiff had never agreed to coordination and there was no evidence establishing that the UAW had the authority to bargain on behalf of plaintiff following his retirement.

The Michigan Compensation Appellate Commission (MCAC) affirmed the magistrate's ruling on MCL 418.354(11) but reversed the judgment, holding that regardless of the UAW's authority to bind retirees, defendant was permitted to coordinate plaintiff's disability pension benefits under Murphy. Alternatively, the MCAC held that coordination was proper because any right plaintiff had to uncoordinated benefits as part of the 1990 Letter of Agreement and the 1990 CBA had expired effective November 15, 1993. After granting plaintiff's application for leave to appeal, the Court of Appeals reversed the decision of the MCAC and remanded the case for further proceedings.13

On appeal in this Court, defendant contended that the Court of Appeals erred by denying defendant its right to coordinate benefits because, under the express terms of the 1990 Letter of Agreement and the 1990 CBA, its agreement not to coordinate employees' workers' compensation benefits with their pension disability benefits expired on November 15, 1993. Because the 2009 Letter of Agreement thereafter permitted coordination of those benefits for those “who retired prior to January 1, 2010, regardless of their date of retirement or injury,” defendant argued that coordination was proper under MCL 418.354(14).14

Plaintiff responded that as a retiree, he is no longer an active member of the UAW and, therefore, is not covered by the 2009 Letter of Agreement in which defendant and the UAW agreed that coordination was permissible. In the absence of any evidence that the UAW possessed the authority to bind plaintiff to agreements occurring after his retirement, plaintiff argued that the prohibition against coordination to which he did agree as part of the 1990 Letter of Agreement and the 1990 CBA remains in effect.15

In lieu of granting defendant's application for leave to appeal, we ordered oral argument on whether to grant the application or take other action,16 directing the parties to file supplemental briefs addressing the following two issues: (1) whether the plaintiff's action is preempted by federal law, and (2) whether the plaintiff's action is governed by state law or federal law.”17

II. STANDARD OF REVIEW

Although judicial review of a decision by the MCAC is limited, questions of law in a workers' compensation case, including the proper interpretation of a statute, are reviewed de novo.18 Interpretation of a collective-bargaining agreement, like interpretation of any other contract,19 is also a question of law also subject to review de novo.20 A reviewing court interprets a collective-bargaining agreement “according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy.”21

III. ANALYSIS

A threshold question is whether plaintiff's claim of entitlement to uncoordinated workers' compensation benefits is actually a claim under § 301 of the federal Labor Management Relations Act (LMRA)22 and is, therefore, preempted by federal law. As part of this inquiry, we must determine whether we, as a state court, have jurisdiction to decide the merits of this case and, if so, whether state or federal law controls. In resolving these separate yet interrelated questions, it is helpful to review the relevant principles of...

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