Dwyer v. Climatrol Industries, Inc., 75-2119
| Decision Date | 01 November 1976 |
| Docket Number | No. 75-2119,75-2119 |
| Citation | 544 F.2d 307 |
| Parties | 93 L.R.R.M. (BNA) 2728, 79 Lab.Cas. P 11,716, 1 Employee Benefits Ca 1265 Arthur DWYER et al., Plaintiffs-Appellants, v. CLIMATROL INDUSTRIES, INC., et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Leonard W. Schulz, Big Bend, Wis., Eugene A. Kershek, West Allis, Wis., for plaintiffs-appellants.
Herbert P. Wiedemann, Stanley S. Jaspan, Milwaukee, Wis., M. Jay Whitman, Detroit, Mich., George F. Graf, Milwaukee, Wis., for defendants-appellees.
Before HASTINGS, Senior Circuit Judge, and TONE and BAUER, Circuit Judges.
We are concerned here primarily with the validity of a plant closedown agreement and its relationship to a relevant collective bargaining agreement and its kindred pension plan agreement. The federal district court 1 granted the motions of the defendant Company and defendant Unions for summary judgment and entered judgment thereon dismissing the plaintiffs' action. Plaintiffs appeal. We affirm.
The underlying cause of action was brought pursuant to Section 301(a) of the Labor Management Relations Act, 29 U.S.C. § 185(a) (1970). Plaintiffs were Arthur Dwyer and 35 other former employees of Climatrol Industries, Inc. (Climatrol), all of whom were former members of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) and its Local 409 (together referred to as the defendant Unions). 2 Named as defendants were Climatrol and the defendant Unions.
In their complaint plaintiffs charged a breach of the collective bargaining agreement and the subject pension plan agreement executed March 1, 1970, between Climatrol and the defendant Unions, covering employees at Climatrol's Milwaukee, Wisconsin, facility, and sought to hold defendants liable for the amount required to fully fund the pension plan agreement.
On December 1, 1970, Fedders Corporation, a New York corporation, became the successor in interest of Climatrol and thereby became bound by the March 1, 1970, collective bargaining and pension plan agreements executed by Climatrol. Despite strong pressure from the defendant Unions, Fedders announced on June 29, 1971, its final decision to close its Milwaukee plant.
As early as June 30, 1971, the defendant Unions began negotiations with Fedders on the impact of the plant closing. A Union proposed closedown agreement demanded increases of contractual benefits, and major increases in the area of pensions, insurance and severance. On October 8, 1971, Fedders refused to accept the tendered plan, and after a month's impasse, proposed a counteroffer, with actuarial figures and bids from insurance companies on annuity contracts. Upon mature consideration and recommendation by the elected bargaining committee of Local 409, the UAW joined in accepting Fedders' proposed closedown agreement. The subject closedown agreement was duly executed December 15, 1971, by Local 409, the UAW and Fedders.
Certain provisions of the pension plan agreement are critical to the determination of the subject matter of this litigation the closedown agreement.
Article XII of the pension plan agreement provides:
Under Section 12.03, the pension plan agreement was to remain in full force and effect until March 1, 1973, when it would be proper subject matter for the next collective bargaining negotiations.
Article V, Section 5.01, of the closedown agreement amended the terms of Section 9.01 of the pension plan agreement, as follows:
"9.01 The Company will contribute, not later than February 15, 1972, $160,000 to the Trust Fund, and upon payment of such amount, the Company shall have no further funding obligation under the Plan."
Fedders paid the $160,000 into the Trust Fund and considered its obligation under the pension plan fully satisfied. The defendant Unions agreed.
It is relevant to note here that Fedders and the defendant Unions in no way modified the provisions of Section 13.01 of the pension plan, which section defines how funds in the Trust Fund of the plan should be allocated upon termination of the plan. The benefit provisions of the pension plan were not altered. The $160,000 additional contribution to the Trust Fund by Fedders was allocated in accordance with the pre-existing allocation formula.
The issues raised on this appeal seem to be those in fact which were considered by the district court in its well-reasoned opinion, reported as Dwyer v. Climatrol Industries, Inc., E.D.Wis., 403 F.Supp. 683 (1975). Such issues may be stated as:
1. Whether the plaintiff employees of the Company had a vested property interest in the pension plan agreement of March 1, 1970, which may not be terminated without their consent.
2. Whether the Company and the Union are estopped from terminating the pension benefits.
3. Whether the Union breached its duty of fair representation by agreeing to the closedown agreement.
It seems to be conceded that a union has no authority on behalf of its membership to bargain away vested or accrued rights. The key question here, of course, becomes whether plaintiffs in fact or in law had any vested rights which were bargained away by the defendant Unions, and, if so, how did such rights become vested.
At the outset, it seems relevant to notice again the express language of Section 12.01 of the pension plan agreement, supra, which states the plan "may be modified, altered or amended upon mutual agreement of the Company and the Union." Did the defendant Unions have the legal capacity to change the pension plan agreement as was done through Article V, Section 5.01, of the closedown agreement in amending Section 9.01 of the pension plan agreement, supra ?
It appears that such legal capacity did exist, in light of our language in Waters v. Wisconsin Steel Works of International Harvester Co., 7 Cir., 427 F.2d 476, cert. denied, 400 U.S. 911, 91 S.Ct. 137, 27 L.Ed.2d 151 (1970). There, in addressing the collective bargaining legitimacy we stated: "Since parties to a labor contract are always free to amend their agreements, we do not see how an amendment through the ordinary processes of collective bargaining can be considered a breach of contract." Id. at 489.
Plaintiffs argue that this cannot be applied to their vested rights, relying principally on Hauser v. Farwell, Ozmun, Kirk & Co., D.C.Minn., 299 F.Supp. 387 (1969). This case did not stand for the proposition that funds became vested according to the existing allocation formula, and that once the decision had been made to terminate the pension plan, the union lacked capacity to negotiate reallocation of those remaining funds. In Hauser, the employer and the union were attempting to modify the allocation of funds previously contributed to the pension plan, and accordingly were no longer subject to collective bargaining by the union.
By contrast, however, in the case at bar, the closedown agreement affected only future contributions to the pension plan, a subject over which the defendant Unions, as the exclusive bargaining representative of the employees involved, had complete and sole authority to negotiate. Section 9(a), National Labor Relations Act, as amended, 29 U.S.C. § 159(a). 3
We agree with the district court that the plaintiffs had no vested interest in this pension program. The Court found that plaintiffs' rights under the pension plan agreement were subject to the terms of the contract which provided for the right to modify. Having reserved such right to modify, the contracting parties could do so without the express consent of those who might otherwise benefit therefrom. Further, the collective bargaining agreement here provides for a plant closing. Dwyer, 403 F.Supp. at 685.
In light of the foregoing, we hold that plaintiffs did not have an unalterable vested interest in the pension plan agreement.
In reference to plaintiffs' second defense of estoppel, we confess to finding such defense at best to be obscure. It seems to rest upon plaintiffs' contention in their main brief, page 27, that "the plaintiffs...
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