INTERN. UNION, UNITED AUTO. v. FEDERAL FORGE

• Decision Date: 05 April 1984
• Docket Number: No. G 83-330.,G 83-330.
• Citation: 583 F. Supp. 1350
• Parties: INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW); its Local 724 and Earl Huff, Earl Rennaker and Jim Helbig, on behalf of themselves and all others similarly situated, Plaintiffs and Counter Defendants, v. FEDERAL FORGE, INC., a Michigan corporation, Defendant and Counter Plaintiff.
• Court: U.S. District Court — Western District of Michigan

583 F. Supp. 1350

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW); its Local 724 and Earl Huff, Earl Rennaker and Jim Helbig, on behalf of themselves and all others similarly situated, Plaintiffs and Counter Defendants, v. FEDERAL FORGE, INC., a Michigan corporation, Defendant and Counter Plaintiff.

No. G 83-330.

United States District Court, W.D. Michigan, S.D.

April 5, 1984.

Samuel C. McKnight, John R. Canzano, Southfield, Mich., Jordan Rossen, Gen. Counsel, Nancy Schiffer, Asst. Gen. Counsel, Detroit, Mich., for plaintiffs and counter defendants.

Ronald R. Pentecost, Lansing, Mich., for defendant and counter plaintiff.

OPINION

ENSLEN, District Judge.

This action arose from a termination of health insurance benefits by Defendant in connection with the closing of its Federal Division plant in Lansing, Michigan. Plaintiffs contend that retired employees, their eligible dependents and spouses and eligible surviving dependents and spouses, have a vested contractual right to the insurance benefits pursuant to a collective bargaining agreement and employee welfare benefit plan. In a four count Complaint, they seek to enforce this right. Counts I, II and III allege a violation of § 301 of the Labor Management Relations Act of 1947 (LMRA), 29 USC § 185, while Count IV alleges a violation of §§ 502(a)(1)(B) and 502(a)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 USC §§ 1132(a)(1)(B) and 1132(a)(3). Injunctive, declaratory and monetary relief are requested.

On January 11, 1984, Defendant filed a Motion to Strike Plaintiffs' Jury Demand, or for Partial Summary Judgment and to Strike Jury Demand. The Motion to Strike Jury Demand was withdrawn on February 22, 1984. The Motion for Partial Summary Judgment remains, and is presently before the Court. Deleting those portions of Defendant's motion which deal with the jury trial issue, three issues remain to be addressed herein. They will be discussed seriatim.

I. Standard of Review

To warrant the grant of summary judgment, the moving party bears the burden of establishing the non-existence of any genuine issue of fact that is material to a judgment in his favor. Adickes v. S.H. Kress & Company, 398 U.S. 144, 147, 90 S.Ct. 1598, 1602, 26 L.Ed. 142 (1970); United States v. Articles of Device ... Diapulse, 527 F.2d 1008, 1011 (CA 6 1976); Nunez v. Superior Oil Company, 572 F.2d 1119 (CA 6 1978); Tee-Pak, Inc. v. St. Regis Paper Company, 491 F.2d 1193 (CA 6 1974). If no genuine issue as to any material fact is established, the moving party is entitled to judgment as a matter of law. Chavez v. Noble Drilling Company, 567 F.2d 287 (CA 5 1978); Irwin v. U.S., 558 F.2d 249 (CA 5 1977).

In determining whether or not there are issues of fact requiring a trial, "the inferences to be drawn from the underlying facts contained in the (affidavits, attached exhibits, and depositions) must be viewed in the light most favorable to the party opposing the motion." United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed. 176 (1962); Bohn Aluminum & Brass Corporation v. Storm King Corporation, 303 F.2d 425 (CA 6 1962). Even if the basic facts are not disputed, summary judgment may be inappropriate when contradictory inferences may be drawn from them. United States v. Diebold, supra; EEOC v. United Association of Journeymen & Apprentices of the Plumbing & Pipefitting Industry, Local 189, 427 F.2d 1091, 1093 (CA 6 1970). In making this determination, the Court must make reference to the entire record and all well pleaded allegations are to be accepted as true. Dayco Corporation v. Goodyear Tire and Rubber Company, 523 F.2d 389 (CA 6 1975); Holmes v. Insurance Company of North America, 288 F.Supp. 325 (D.C.Mich.1968); Mahlar v. U.S., 196 F.Supp. 362 (D.C.Pa.1961). These guidelines will be adhered to as substantive issues of the motion are examined.

II. Claim for the Present Value of Future Retiree Insurance Premiums

Plaintiffs have requested, as an alternative to their claim for specific performance, damages in the form of the present value of their insurance benefits. Defendant argues that Plaintiffs' request does not entitle them to a jury trial. Defendant does not appear to argue that Plaintiffs are not entitled to assert this claim. Therefore, the Court agrees with Plaintiffs that summary judgment as to this claim must be denied.

III. Mitigation of Damages

Defendant claims that Plaintiffs have suffered no damages for which it can be held liable. Defendant contends that it made several offers by which payment of insurance premiums would have continued. Defendant alleges that Plaintiffs refused these offers or attached unreasonable and unacceptable conditions on them, thereby failing to mitigate their damages. Defendant believes that Plaintiffs' refusal to eliminate their damages, "when they clearly could have done so on reasonable terms", precludes them from an award of monetary relief for the present value of insurance benefits, and for costs and expenses.

According to the Restatement of Contracts 2d (1981), § 350, damages may not be recovered for a loss which the injured party could have avoided without "undue risk, burden or humiliation". However, the claimant may not be precluded from recovery to the extent that he or she has made "reasonable but unsuccessful efforts to avoid loss" (emphasis added). See also, Texaco, Inc. v. Operative P & C Masons International Union, Local No. 685, 343 F.Supp. 267 (W.D.La.1972), aff'd, 472 F.2d 594 (CA 5 1973), cert. den., 414 U.S. 1091, 94 S.Ct. 721, 38 L.Ed.2d 548 (1973). This duty to mitigate damages is recognized as a fundamental principle of contract law. See, e.g., Tedford v. Peabody Coal Company, 383 F.Supp. 787 (N.D.Ala. 1974), rev'd on other grounds, 533 F.2d 952 (CA 5 1976). The Sixth Circuit has recognized this principle in suits brought under § 301 of the LMRA. Schneider v. Electric Auto-Lite Company, 456 F.2d 366, 373 (CA 6 1972).

Applying this principle to the instant motion, I believe the question of Plaintiffs' alleged failure to mitigate damages raises genuine issues of material fact which should not be decided by this Court at this stage in these proceedings. Summary judgment as to this issue must be denied.

IV. Damages for Mental Distress

Defendant contends that damages for mental anguish or distress are generally not awarded in breach of contract actions, and that this tenet has been applied to actions for breach of a collective bargaining agreement under § 301 of the LMRA. Defendant also argues that such damages should not be allowed under § 502 of ERISA.

Neither the parties nor this Court have located any published case law addressing the question of damages for mental distress in § 301 LMRA actions against an employer for breach of a collective bargaining agreement, or in actions under § 502(a)(1)(B) and (a)(3) of ERISA. Therefore, this Court must look to analogous case law and the principles behind the two Acts in question to resolve this issue.

The substantive law to be applied in LMRA § 301 suits is federal law, which is to be fashioned from the policy of our national labor laws, existing federal law, and state law to the extent compatible with § 301. Textile Workers v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1956); Kheel, Labor Law (1982), § 9.072, pp 9-158 to 9-160. As explained by the Supreme Court in Textile Workers, supra at 457, 77 S.Ct. at 918.

The range of judicial inventiveness will be determined by the nature of the problem.... Federal interpretation of the federal law will govern, not state law.... But state law, if compatible with the purpose of § 301, may be resorted to in order to find the rule that will best effectuate the federal policy.... Any state law applied, however, will be absorbed as federal law and will not be an independent source of private rights.

The parties cite this Court to two Sixth Circuit cases. In Farmer v. ARA Services, 660 F.2d 1096 (CA 6 1981), the court held that damages for emotional and mental distress may be awarded to employees for a union's breach of its duty of fair representation in an action under §§ 8(b) and 9(a) of the LMRA. Punitive damages may not be so awarded.¹ Plaintiffs had alleged that Defendant Union had failed and/or refused to arbitrate and compromise their legitimate grievances arising under a collective bargaining agreement, and that the union had breached its duty of fair representation by negotiating and entering into the agreement.

St. Clair v. Local U. No. 515 of Int. Bro. of Teamsters, etc., 422 F.2d 128 (CA 6 1969), was an action by an employee against a union local for alleged unfair representation in connection with his discharge from employment. The court held that although the union had breached its duty of fair representation (but had not procured the discharge), it was liable at most for back pay less interim earnings and not for humiliation and embarrassment in the eyes of the member's wife and children and loss of his home to a mortgage holder. The court based this conclusion on the principle of Hadley v. Baxendale, 9 Exch. 341 (1854), that consequential damages in contract law will not be awarded unless the consequences were clearly contemplated by the parties as being at the heart of the contract. Id. at 132.

It may be that these decisions are inconsistent, or it may be that the Sixth Circuit intends for the determination as to the availability of mental distress damages to be made on a case-by-case basis. In any event, I find it unnecessary to attempt to resolve this question, because I agree with Plaintiffs that these decisions are not particularly relevant to the issue at hand. Both decisions involved actions against unions by members, and neither appear to involve § 301 of the LMRA. I find it noteworthy, nevertheless, that one panel of this Circuit has allowed damages for mental distress under the LMRA, and...