Cement Divisions, Nat. Gypsum Co. (Huron) v. United Steelworkers of America, AFL-CIO-CLC, Local 135

• Decision Date: 19 June 1986
• Docket Number: LOCAL,No. 85-1206,AFL-CIO-CL,85-1206
• Citation: 793 F.2d 759
• Parties: 123 L.R.R.M. (BNA) 2015, 104 Lab.Cas. P 11,972 CEMENT DIVISIONS, NATIONAL GYPSUM CO., (HURON), Plaintiff and Counter-Defendant-Appellant, v. UNITED STEELWORKERS OF AMERICA,135, Defendant and Counter-Plaintiff-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 759

793 F.2d 759

123 L.R.R.M. (BNA) 2015, 104 Lab.Cas. P 11,972

CEMENT DIVISIONS, NATIONAL GYPSUM CO., (HURON), Plaintiff and Counter-Defendant-Appellant, v. UNITED STEELWORKERS OF AMERICA, AFL-CIO-CLC, LOCAL 135 Defendant and Counter-Plaintiff-Appellee.

No. 85-1206.

United States Court of Appeals Sixth Circuit.

Argued April 18, 1986.

Decided June 19, 1986.

Russell Thomas, Jr. (argued), Julie S. Jacobs, Pepper, Hamilton and Scheetz, Detroit, Mich., for plaintiff and counter-defendant-appellant.

Kim Arthur Siegfried (argued), Staff Atty., Dist. 29, United Steelworkers of America, Allen Park, Mich., Carl B. Frankel, Associate General Counsel, United Steelworkers of America, Pittsburgh, Pa., for defendant and counter-plaintiff-appellee.

Before KRUPANSKY and WELLFORD, Circuit Judges; and PECK, Senior Circuit Judge.

WELLFORD, Circuit Judge.

Appellant, Cement Divisions, National Gypsum Co. ("Company"), appeals from a final order granting summary judgment to appellee, United Steelworkers of America ("Union"), seeking partial vacation and clarification of an arbitrator's award, which required the Company to pay an additional 370 weeks of benefits to a group of employees who voluntarily took layoff status. Appellant challenges the arbitrator's authority to resolve the issue on two grounds: (1) the arbitrator's decision exceeded the scope of the issue presented and (2) the decision did not "draw its essence" from the collective bargaining agreement.

The dispute arose from differing interpretations advanced by each party to the collective bargaining agreement between the Company and the Union and the Supplemental Unemployment Benefits Plan (SUB Plan). The collective bargaining agreement was effective from May 1, 1981 through May 1, 1984. As a supplement to this agreement, the parties executed the SUB Plan to provide additional employee benefits in the event of layoffs or other work-related absences. The SUB Plan required creation of a Trust Fund financed by Company contributions, based upon the number of hours worked by covered employees. Under the SUB Plan, the Company's liabilities are defined and limited.

In the fall of 1981, during a time of economic distress, the Company concluded that unprofitability of certain business operations required a substantial workforce reduction. The collective bargaining agreement provided that employees with least seniority would be laid off first. It also permitted up to forty senior employees to elect voluntary layoff with a guarantee of recall after 90 days. ¹ After a voluntarily laid off senior employee is recalled, another senior employee may elect layoff status, replacing his predecessor on layoff. ² If no senior employee elected voluntary layoff, the collective bargaining agreement's general rule of last hired, first laid off, applies.

The Company's obligation to such employees on layoff is limited by its obligation to make contributions to the SUB Plan from which unemployment benefits are paid. If, for example, the funding of the Trust Fund is insufficient to pay each laid off employee benefits for one week, all such benefits are suspended. ³ The SUB Plan contained an exception to dispensing benefits when the Fund is depleted:

The foregoing to the contrary notwithstanding, an eligible applicant with twenty (20) or more years credited service who possesses sufficient lay-off credit units shall be guaranteed lay-off benefits irrespective of the Trust Fund Position. The guarantee period shall be twelve (12) consecutive weeks following the date of the employee's lay-off provided the applicant retains eligibility to benefits during the period.

With respect to any pay period in any month for which the trust fund position is less than 36 percent [of the Maximum Funding level], the Company shall pay this guaranteed benefit from their Company funds. Except that, when more than 25 employees are on voluntary lay-off, the least senior voluntaries over and above 25 shall be provided SUB benefits out of the Trust and Contingent Funds in the same manner and to the same extent as laid-off employees with less than twenty (20) years seniority.

Art. 9, Sec. 2 (emphasis in original).

The first group of senior volunteers, Group A, began layoffs between September 24, 1981 and November 1, 1981 and ended their ninety day period between November 16, 1981 and February 22, 1982. Group A received all required benefits from the Trust Fund.

Replacing Group A, Group B employees then started their layoffs as soon as the ninety day period expired for Group A voluntaries. On March 16, 1982, the Company sent a letter to all Union employees at their homes and also posted the letter on department bulletin boards notifying employees of the imminent depletion of the Trust Fund because of the large number of employees on layoff status. The Company also conducted a meeting with the Union's Executive Board on March 29, 1982, regarding the depletion of the Trust Fund.

As predicted, on April 4, 1982, for the first time since the creation of the SUB Plan in the 1970s, there were insufficient funds in the Trust Fund to pay one full week of benefits for all laid-off employees. This funding deficiency triggered the provisions of the SUB Plan requiring the suspension of benefit payments from the Trust Fund and the payment by the Company of those benefits to employees with 20 or more years of service pursuant to its 12-week guarantee.

The 90-day maximum voluntary layoff period expired for the twenty-five senior employees in Group B between February 8, 1982 and May 24, 1982. Thereafter, another group of senior employees, Group C, replaced them on voluntary layoff. This "replacement" procedure repeated itself throughout 1982 upon expiration of a predecessor's 90-day voluntary lay-off period.

On April 22, 1982, the Union filed a grievance on behalf of "all top 25 voluntary senior employees laid off as per Agreement with the Company, for the period beginning April 18, 1982 and continuing through layoff," citing the Company's refusal to pay SUB benefits to employees in Groups B and C as well as to all subsequent senior employees who voluntarily took layoff status. The grievance was timely processed through the grievance procedure and was presented to an arbitrator for decision. ⁴

At the arbitration hearing held February 3, 1983, the parties stipulated to an issue and certain facts. The parties agreed to submit certain additional post-hearing stipulations of fact to the Arbitrator. The stipulated issue was:

Did the Company violate the collective bargaining agreement and Supplemental Unemployment Benefit Plan beginning April 18, 1982, in denying SUB benefits to certain employees--i.e., is the Company obligated to provide guaranteed SUB benefits to employees with over twenty years service who take voluntary layoffs as replacements for an original group of twenty-five employees who have received twelve weeks of benefits, when the SUB Trust Fund is below the 36% funding point?

In the grievance proceedings, the Company denied the Union's charge, stating that the Company's guarantee obligation was limited to the first 12-weeks of the layoff, and that since Group A received SUB benefits for the entire period of their lay-off, no violation of the agreement had occurred. The Union contended, on the other hand, that Art. 9, Sec. 2 of the SUB Plan required payment of twelve (12) weeks of SUB benefits to any employee with 20 years or more seniority regardless of the Trust Fund position, and that such twelve-week period began on that employee's date of layoff regardless of whether or not the employee had been involved in the layoff at the time the Trust Fund position fell below the specified 36%. The Union asserted that a new twelve-week guarantee obligation would be established each time an employee replaced another on voluntary layoff status even though the original employee on the voluntary layoff at the time the Trust Fund fell below 36% had already received the twelve-week guarantee. ⁵

After reviewing the stipulated facts and the briefs submitted at the arbitration hearing by both parties, the Arbitrator concluded that neither the Union nor the Company position could be fully sustained under the applicable language of the relevant agreements:

The Arbitrator is convinced beyond doubt that in 1978 the parties agreed the senior employees would have the fundamental right to elect layoff at times of force reductions, thereby assuming said status instead of the junior employee who would normally be laid off. It is also clear that SUB benefits were integrated into the voluntary layoff scheme in 1978 and 1981 negotiations. However, in Article IV-F(3), the parties agreed that voluntaries would be entitled to SUB benefits "accorded to normal employees." On the other hand, in 1981 the parties provided in Article IX, Section 2 of the Plan that the first 25 voluntaries would be entitled to twelve weeks of benefits guaranteed by the Company when the Fund position goes below 36%.

The above identified 1981 language must at least mean that some voluntaries are entitled to the same benefit guarantee as that provided to twenty year employees. A literal reading of the 1981 language leads to the conclusion that the minimum Company guarantee obligation was for twelve weeks of benefits for 25 voluntaries, or for 300 weeks of benefits for those taking voluntary layoffs. It is quite clear to the Arbitrator that when the Fund position went below 36% on April 4, 1982, a Company obligation to provide 300 weeks of guaranteed benefits to voluntaries was triggered.

(Emphasis added).

The Arbitrator rejected the Union's contention that 300 weeks ⁶ of SUB benefits were required to be paid to each successive group of senior employees on voluntary layoff. After an extensive discussion, the Arbitrator reasoned that while "300 weeks of benefits are guaranteed for voluntaries at the point that the Trust Fund position goes below 36%", the...