Dematic Corp. v. International Union, Uaw

• Decision Date: 16 July 2009
• Docket Number: Case No. 1:08-cv-730.
• Citation: 635 F.Supp.2d 662
• Parties: DEMATIC CORPORATION, Plaintiff, v. INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW) and UAW Local 1485, Defendants.
• Court: U.S. District Court — Western District of Michigan

635 F.Supp.2d 662

DEMATIC CORPORATION, Plaintiff, v. INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW) and UAW Local 1485, Defendants.

Case No. 1:08-cv-730.

United States District Court, W.D. Michigan, Southern Division.

July 16, 2009.

COPYRIGHT MATERIAL OMITTED

Donald H. Scharg, Bodman LLP, Troy, MI, Aaron Dennis Graves, Bodman LLP, Detroit, MI, for Plaintiff.

Michael L. Fayette, Pinsky Smith Fayette & Kennedy LLP, Grand Rapids, MI, for Defendants.

OPINION and ORDER

Granting Plaintiff Dematic's Motion for Summary Judgment; Denying Defendant UAW's Motion for Summary Judgment; Vacating the Arbitration Award; Terminating and Closing the Case

PAUL L. MALONEY, Chief Judge.

Plaintiff Dematic Corporation brings this action to vacate an arbitration award under the Labor Management Relations Act of 1947, as amended, 29 U.S.C. § 185 ("LMRA"). See Complaint filed August 4, 2008 ("Comp") ¶ 1. The defendants, the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America and its Local 1485 ("UAW"), ask the court to confirm the award. The court has undisputed jurisdiction under LMRA and the Federal Arbitration Act, 9 U.S.C. § 1, et seq. ("FAA"). The parties have filed cross-motions for summary judgment. For the reasons that follow, the court will grant summary judgment to Dematic and vacate the arbitration award. The award was not merely erroneous; it strayed from the realm of interpretation entirely and attempted to impose the arbitrator's own brand of industrial justice.

BACKGROUND

Dematic and the UAW entered into a collective bargaining agreement ("CBA") in June 2004 which lasted until June 10, 2009 "and thereafter until sixty (60) days after either party shall serve written notice of a desire to terminate, modify ... or amend this Agreement." Comp. ¶ 7 and Ex. 1 (CBA) at 72 § 186 ("Duration and Renewal of Agreement"). So far as the record reflects, neither party has served written notice of its desire to terminate, modify or amend this 2004-2009 CBA.

The CBA reserves to Dematic "[a]ll the functions and responsibilities which Management had prior to the signing of this Contract ... except as specifically limited, restricted, or modified by the written provisions of this contract." CBA § 3. The CBA also provides that it is a complete agreement, and that the parties are not obligated to collectively bargain with regard to any issue, without regard to whether it was addressed by the CBA or discussed during negotiations:

The parties acknowledge that during the negotiations which resulted in this Agreement, each had the unlimited right and opportunity to make demands and proposals with respect to any subject or matter not removed by law from the area of collective bargaining, and that the parties [sic, perhaps was intended to read to the effect of "the parties' rights and obligations"] after the exercise of that right and opportunity are set forth in this Agreement.

Therefore, the Company and the Union, for the life of this Agreement, each voluntarily and unqualifiedly waivers [sic] the right and each agrees, that the other shall not be obliged to bargain collectively with respect to any subject or mattered referred to, or covered in this Agreement, or with respect to any subject or matter not specifically referred to or covered in this Agreement even though such subject or matter may not have been within the knowledge or contemplation of either or both parties at that time that they negotiated or signed the Agreement.

CBA § 4 (emphasis added, paragraph break added).

The parties argue over the applicability and interpretation of four contractual provisions which substantively address Dematic's obligation to continue providing certain laid-off employees with fringe benefits (life insurance, hospitalization insurance, hospitalization coverage, and dental insurance). Namely, Dematic maintains that the following four substantive provisions, by their plain language, defeat the UAW's claim to additional benefits:

154. LIFE INSURANCE

The Company will provide $55,000 life insurance coverage, including accidental death and dismemberment coverage for each employee. This policy will also include. . . . If an employee is laid off due to lack of work, retains seniority, and is not employed by any other employer, the Company shall at its own expense, continue to carry the company-provided insurance for the balance of the month in which the employee is laid off, plus two full calendar months following layoff. Any supplemental/dependent coverage must be paid for by the employee.

* * *

156. HOSPITALIZATION [footnote 14 citing Letter of Understanding No. 11] Effective January 1, 2004, the Company will provide to all employees, their dependents and retirees the benefits described in the Summary Plan Description . . . . The cost of this benefit will be shared between the Company and the Employee. * * * If an employee is laid due to lack of work, retains seniority, and is not employed by any other employer, the Company shall, at its expense, continue to provide the benefits for the balance of the month in which the employee is laid off, plus two full calendar months following layoff. Thereafter, the employee and/or dependents will be able to continue the benefit as specified in the Summary Plan Description. * * *

157. Any employee desiring to carry such insurance as stated in paragraph 156 [hospitalization], must pay the Company the full cost of the Premium on or before the first day of the third month following the month in which he is laid off. Premiums must be paid on or before the first day of each month thereafter. . . .

158. The Company will continue to provide all employees, their dependents and retirees, dental insurance as described in the Summary Plan Description. * * * If an employee is laid due to lack of work, retains seniority and is not employed by any other employer, the Company shall, at its expense, continue to provide the benefits for the balance of the month in which the employee is laid off, plus the two full calendar months following layoff. Thereafter, the employee and/or dependents will be able to continue the benefit as specified in the Summary Plan Description. * * *

CBA at 54-55 § 154 (life insurance) (emphasis added); id. at 57-58 §§ 156-157 (hospitalization) (emphasis added); id. at 59-60 § 158 (dental insurance) (emphasis added).

Dematic also relies on the agreement's integration clause, which reads as follows:

185. ENTIRE UNDERSTANDING.

This Agreement and supplementary attachments contain the entire understanding between the two parties and supersedes all prior agreements or understandings, written or oral, between the Company and the Union. Any policies or practices heretofore followed, which are in anyway inconsistent with any of the provisions of this Agreement, are hereby revoked.

Any supplementary agreement negotiated and agreed to between the parties to this Agreement and attached hereto shall become a part hereof as though contained herein. * * *

CBA at 71 § 185 (emphasis added).

Finally, Dematic relies on the fact that by its terms, the CBA limits an arbitrator to applying and interpreting the CBA as written:

The powers of the arbitrator shall be limited to the application and interpretation of this Contract as written, and he shall at all times be governed wholly by the terms of this Contract and shall have no power or authority to change this Contract in any respect, or to add or take away any of its terms.

CBA at 11 § 30 (emphasis added).

It is undisputed that before this CBA took effect in June 2004, Dematic provided life insurance, hospitalization, and dental-insurance benefits to laid-off employees for longer than the three months now required by the CBA. Comp. ¶ 19. Dematic's complaint alleges that since the current CBA took effect in June 2004, it "has exercised [its] specifically stated contractual rights guaranteed by the CBA and has not paid for insurance benefits beyond the limitations set forth in Sections 154, 155f, 156, 157, and 158, in accordance with Section 159a of the CBA." Comp. ¶ 18. The Union, however, alleged that Dematic continued to offer post-voluntary-layoff benefits for a longer period than contractually required until June 2007, when Dematic sent letters announcing that it would discontinue that practice. Comp. Ex. 4 at 11 (arbitration decision).

About three years into the CBA, in June 2007, the UAW filed two grievances, as permitted by CBA section 39. The first grievance alleged that voluntarily laid-off employees "are now required to pay the cobra [COBRA] rate for health insurance after three months of being laid off. In the past, the company continued to pay for an employee's health insurance for the duration of the layoff," Comp. ¶ 19 (quoting Ex. 2), while the second grievance stated, "Joe Wekenman was given a voluntary layoff and not told that his insurance would run out at anytime. Past practice— We [sic] have never taken insurance away from employees who elect to take a voluntary [lay-off]", Comp. ¶ 20 (quoting Ex. 3).

The Arbitrator's Decision in Favor of the UAW

Arbitrator Elaine Frost held a hearing in Michigan on April 10, 2008, heard testimony, accepted exhibits and post-hearing briefs, then issued her decision on May 7, 2008. Comp. ¶¶ 21-22 (citing Ex. 4 at 1, 8 & 10). The arbitrator awarded voluntarily laid-off employees these types of insurance, paid by Dematic, for up to six months following lay-off, rather than the three months that the parties agree is required by the clear terms of the CBA. Comp. Ex. 4 at 13. The arbitrator's "Analysis and Conclusions" section stated, in its entirety:

The question before the arbitrator is whether or not the company is required to pay insurance benefits to employees on voluntary layoff beyond the period set forth in §§ 154 (life), 156 (health) and 158 (dental) of "the end of the month . . . and two full...