Delk v. Ford Motor Co., s. 94-6259

• Citation: 96 F.3d 182
• Decision Date: 12 May 1998
• Docket Number: Nos. 94-6259,94-6261,s. 94-6259
• Parties: 153 L.R.R.M. (BNA) 2268 Richard DELK and Harold Ramsey, on behalf of themselves and as representatives of the class herein defined (94-6259); Jerry Arthur, Wendell Rose, Patricia Wright and Steve Wright, on behalf of themselves and as representatives of the class herein defined (94-6261), Plaintiffs-Appellants, v. FORD MOTOR COMPANY; Ford-UAW Supplemental Unemployment Benefit Plan; International Union, United Automobile, Aerospace and Agricultural Implement Workers of America-UAW (94-6259/6261); Leland Jackson; Ronald Gettlefinger; Pat Pellilo; Medford Lee, individually and as members of defendant, Ford UAW Supplemental Unemployment Benefit Plan Local Committee; Joint Board of Administration of the Ford-UAW Supplemental Unemployment Benefit Plan (94-6261), Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 182

96 F.3d 182

153 L.R.R.M. (BNA) 2268

Richard DELK and Harold Ramsey, on behalf of themselves and as representatives of the class herein defined (94-6259) Jerry Arthur, Wendell Rose, Patricia Wright and Steve Wright, on behalf of themselves and as representatives of the class herein defined (94-6261), Plaintiffs-Appellants, v. FORD MOTOR COMPANY; Ford-UAW Supplemental Unemployment Benefit Plan; International Union, United Automobile Aerospace and Agricultural Implement Workers of America-UAW (94-6259/6261); Leland Jackson; Ronald Gettlefinger; Pat Pellilo; Medford Lee, individually and as members of defendant, Ford UAW Supplemental Unemployment Benefit Plan Local Committee; Joint Board of Administration of the Ford-UAW Supplemental Unemployment Benefit Plan (94-6261) Defendants-Appellees.

Nos. 94-6259, 94-6261.

United States Court of Appeals Sixth Circuit.

Argued May 14, 1996.

Decided Sept. 16, 1996.

Rehearing Denied May 12, 1998.

Schuyler J. Olt (argued and briefed), Pedley, Ross, Zielke & Gordinier, Louisville, KY, for Plaintiffs-Appellants in No. 94-6259.

Samuel Manly (argued and briefed), Louisville, KY, for Plaintiffs-Appellants in No. 94-6261.

Kimberly K. Greene (argued), Holly Thacker, Michael Keith Kirk, Wyatt, Tarrant & Combs, Louisville, KY, John M. Thomas, Ford Motor Company, Dearborn, MI, Edgar A. Zingman (briefed), Wyatt, Tarrant & Combs, Louisville, KY, for Defendants-Appellees Ford Motor Company, Ford-UAW Supplemental Unemployment Benefit Plan, Leland Jackson, Ronald Gettlefinger, Pat Pellilo, Medford Lee, Joint Board of Administration of Ford-UAW Supplemental Unemployment Benefit Plan.

Herbert Segal (argued and briefed), Adrienne A. Berry, Segal, Isenburg, Sales, Stewart, Cutler & Tillman, Louisville, KY, Kimberly K. Greene, Holly Thacker, Michael Keith Kirk, Wyatt, Tarrant & Combs, Louisville, KY, John M. Thomas, Ford Motor Company, Dearborn, MI, for Defendant-Appellee International Union, United Automobile, Aerospace and Agricultural Implement Workers of America-UAW.

Before: NELSON and MOORE, Circuit Judges; CLELAND, District Judge. ^*

CLELAND, District Judge.

These two consolidated class actions challenge the administration of the Supplemental Unemployment Benefit Plan ("SUB Plan"), part of the collective bargaining agreement between Ford Motor Company and the UAW. The Appellants are or were hourly paid UAW union members employed by Ford during the late 1970s and the early 1980s, when Ford and other American automobile manufacturers were experiencing a financial crisis, in part as a result of pressure from foreign competition. The Arthur Appellants worked at Ford's Louisville Assembly Plant, and the Delk Appellants worked at the Kentucky Truck Plant. Both challenge the administration of the SUB Plan during this time of financial difficulty, particularly in relation to the Trade Readjustment Allowances provided under the Federal Trade Expansion Act of 1962. The issues presented by the Delk Appellants are whether the district court applied the proper standard of care applicable to the fiduciary-employer of an ERISA-governed plan designed to provide benefits to workers laid off by the employer and whether they have standing to recover benefits directly to them, as opposed to the SUB Plan. The Arthur Plaintiffs ask this court to determine that Ford breached the SUB Plan by failing timely to notify the them of overpayments of SUB benefits before it acted to recoup those overpayments. After examining the district court's exceptionally thorough Findings of Fact and Conclusions of Law, we find no error and affirm.

I.

Appellants do not challenge the district court's findings of fact, but a review of the rather complex factual background in which this case arose is necessary to an understanding of the issues raised on appeal. Accordingly, we set forth the background facts at length here.

The SUB Plan is a benefit provided in the collective bargaining agreement between Ford and the UAW. As its name implies, the SUB Plan offers eligible laid off workers extra unemployment benefits during temporary production downturns, to supplement state or federal unemployment benefits. SUB Plans were created in the UAW's 1955 collective bargaining agreement with Ford, General Motors, and Chrysler. The Ford SUB Fund is funded solely by contributions from Ford based on a formula set forth in the Plan.

Employees accumulate credit units based upon actual weeks worked up to a maximum of 52 credits. When employees are laid off, they surrender credit units to receive SUB benefits. The number of credit units required to obtain a benefit for any given week is a function of the level of the Fund, the credit unit cancellation base and the employees' seniority. As the SUB Fund level and the credit unit cancellation base decrease, less senior employees surrender more credit units than more senior employees. If the credit unit cancellation base drops below a level set forth in the Plan, employees with less than 10 years' seniority are not entitled to any SUB benefits.

An employee has no unqualified right to receive SUB benefits; the SUB Plan expressly states that "No person shall have any right, title or interest in or to any of the assets of the Fund...." Nevertheless, to the extent that funds are available, an eligible laid off employee is entitled to receive--and Ford is obligated to pay--SUB benefits. The employee's benefit is "an amount which, when added to his State Benefit and Other Compensation, will equal 95% of his Weekly After-Tax Pay minus $12.50....."

The Plan expressly includes as a "state" benefit Trade Readjustment Allowances provided under the Federal Trade Expansion Act of 1962 ("TRA"). TRA is a benefit payable to certain eligible workers laid off because of declining sales due in significant part to competitive imported products. 19 U.S.C. § 2271 et seq. (West 1980).

In order for TRA to have any impact on a laid off worker's SUB benefit, it must be "received or receivable." Otherwise, TRA cannot be taken into consideration in deciding the amount of SUB to which a laid off employee is entitled. The same is true of any "State Benefit or Other Compensation." In other words, unless and until TRA is "received or receivable," an employee is contractually entitled to a SUB payment calculated without reference to that "state" benefit; for purposes of the SUB Plan, it is as if the TRA benefit does not exist until it becomes "received or receivable."

For TRA to be awarded, a group of three employees, or the employees' authorized representative, must petition the United States Department of Labor ("Labor") for certification of a plant. The test for certification is whether, in Labor's determination, "increases of imports of articles like or directly competitive with articles produced by" the plant have "contributed importantly to" layoffs and declines in production or sales at that facility. 19 U.S.C. § 2272 (West 1980). If certification is granted, Labor sets an "impact date," i.e., the date on which layoffs due to foreign competition are deemed to have begun. Once Labor certifies a plant, the process is turned over to the relevant state unemployment insurance agency to receive, process and, if warranted, pay claims for TRA benefits filed by individual plant workers. 19 U.S.C. § 2311 (West 1980). While Labor makes the determination as to whether a plant should be certified for TRA, state unemployment agencies decide whether a particular employee at the plant is eligible for TRA and, if so, for which weeks.

Although Labor may certify a plant, not all employees at that plant may be eligible to receive TRA benefits. First, Labor may issue only a partial certification, in which some--but not all--of the vehicles or parts made at that site are certified as being impacted by imported goods. Thus, laid off employees in those plants who do not work on certified products are ineligible for TRA. Second, even workers on certified products are not eligible for TRA if they fail to meet Labor's "26 week test," which requires that the employee work a total of 26 weeks in the prior 52 weeks on a certified product, and receive a certain specified level of wage. Based on his earlier experience with TRA from 1975 to 1979, Leonard Page, Associate General Counsel for the UAW, estimated that 10 to 20% of the workers at a certified plant would be found ineligible for TRA benefits.

In 1979, Ford, General Motors and Chrysler began laying off tens of thousands of employees due to a downturn in automobile and truck sales in the United States caused in part by increasing foreign competition. Pursuant to the SUB Plans in effect at the three companies, laid off UAW workers made applications for and received benefits from the SUB Funds.

In the summer of 1979, Leonard Page, the UAW's unofficial Trade Act Coordinator, began to contemplate the possibility of obtaining TRA benefits for UAW members nation-wide. The UAW traditionally filed TRA petitions on behalf of its members, and viewed this as its responsibility. The UAW's goal, of course, was to gain maximum benefits for all affected UAW members.

However, Page and the UAW were concerned about the viability of an industry-wide TRA petition. In previous experiences with TRA, there was litigation between the UAW and Labor over whether the large American-made cars could ever be "like or directly competitive with" imported subcompacts. In 1975 and 1977, Labor analyzed TRA petitions using a market segment approach and certified primarily U.S. plants that manufactured subcompact or small luxury cars (e.g. Bobcats and Pintos at Ford). In those years, Labor refused to certify approximately 70% of the Ford and Chrysler plants and approximately 90% of the GM plants.

Labor's market segment approach also made it difficult to obtain certification for parts plants. Parts plants typically produced parts for all sizes of cars; to obtain certification for all or a portion of a...