International Union v. Cummins, Inc.
| Decision Date | 18 January 2006 |
| Docket Number | No. 05-3190.,05-3190. |
| Citation | 434 F.3d 478 |
| Parties | INTERNATIONAL UNION et al., Plaintiffs-Appellees, v. CUMMINS, INC., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Gregory J. Utken, Baker & Daniels, Indianapolis, Indiana, for Appellant. Joan Torzewski, Harris, Reny & Torzewski, Toledo, Ohio, for Appellees.
ON BRIEF:
Gregory J. Utken, Dustin D. Stohler, Baker & Daniels, Indianapolis, Indiana, for Appellant. Joan Torzewski, Harris, Reny & Torzewski, Toledo, Ohio, for Appellees.
Before: DAUGHTREY, GILMAN, and SUTTON, Circuit Judges.
In this labor arbitration dispute, the primary issue is whether the suit to compel arbitration filed by International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, and its Local 336 (collectively, the Union) was barred by the statute of limitations. This appeal also raises issues as to whether the underlying dispute was arbitrable and whether the Union's suit was barred by laches.
The Union was the recognized collective bargaining agent for employees at the Atlas Crankshaft Factory in Fostoria, Ohio for many years. Cummins, Inc. owned the Atlas plant until 1999, when it was sold to Krupp Hoesch Automotive of America, Inc. The Union and Cummins negotiated a Plant Sale Agreement (PSA) that obligated Cummins to fund "Plan B," a pension plan benefitting former hourly employees who had worked at the Atlas plant and hourly employees who would continue to work there after the sale to Krupp. The PSA provided that Plan B was not to be amended or terminated without the mutual consent of the Union and Cummins. In late 1999, Cummins determined that Plan B was underfunded, and it notified the Union that it was considering merging Plan B into Cummins's well-funded Plan A for its other employees. This merger occurred in October of 2001. In December of 2001, the Union notified Cummins that, in its view, the merger violated the "no termination/no amendment" clause of the PSA, and it filed a grievance.
Over the next two-and-a-half years, the Union and Cummins corresponded regarding the arbitrability of the grievance, culminating in the Union filing suit to compel arbitration in March of 2004. The district court granted summary judgment in favor of the Union, holding that the Union's action to compel arbitration was timely, that the dispute was arbitrable, and that Cummins's laches defense was inapplicable. For the reasons set forth below, we AFFIRM the judgment of the district court and REMAND the case for referral to arbitration.
Article 5 of the PSA requires Cummins to sponsor and fund Plan B, and further provides that "[t]he plan shall not be amended or terminated except by mutual agreement between the Company and the Union except as may be required by law or regulation." On the other hand, Article XIX of Plan B outlines the benefits that the employees are to receive "[i]n the case of any merger or a consolidation with, or transfer of assets or liabilities to, any other plan." Finally, Cummins and the Union agreed in Article 16 of the PSA to arbitrate any alleged breaches of the PSA.
Cummins determined in 1999 that Plan B was underfunded. It then notified the Union that it wanted to merge Plan B into Plan A, the pension plan covering Cummins's salaried employees and executives. Ken Lortz, the Union's Assistant Regional Director, requested information about the merger from Hudnall Pfeiffer, Cummins's counsel, and suggested that the parties arrange a conference call to discuss the potential merger. Lortz and Pfeiffer corresponded over the next few months, with Lortz asking for information about the details of the merger and Pfeiffer submitting information regarding the funding methods, assets, and liabilities of Plan B.
In August of 2000, Cummins's employee David Wright told Lortz that Cummins was no longer interested in merging the plans. But Cummins had filed a Notice of Plan Merger with the IRS in 1999 and never in fact abandoned the proposed merger. David Price, a Cummins employee, first notified Lortz in November of 2001 that the merger had taken place the prior month.
On December 3, 2001, the Union filed a Notice of Intent to Arbitrate, claiming that the merger violated Article 5 of the PSA, which provides that Plan B is not to be amended or terminated without the Union's consent. The parties communicated over the next two-and-a-half years concerning the alleged breach of the PSA. A summary of their relevant conversations and correspondence is set forth below:
February 14, 2002: Telephone call between Pfeiffer and Lortz
• Lortz accuses Pfeiffer of acting in bad faith and asks Pfeiffer to send him information concerning the merger.
• Claims that the merger discussions with Lortz got "bogged down."
• Indicates that the PSA contemplated a merger and that the merger did not require amending or terminating the plan.
• Attaches a "redlined" copy of Plan B, but states that none of the changes are relevant to the merger.
June of 2003: Lortz and Dave Glover, a Cummins executive, mutually select an arbitrator to hear the case.
• Acknowledges that the grievance is still unresolved.
• Notifies Pfeiffer that Cummins and the Union have mutually selected an arbitrator.
• Offers to contact the arbitrator in order to set up mutually acceptable dates for a hearing.
• States that he is "surprised" that the Union is still pursuing the arbitration and that he had assumed the Union had dropped the matter.
• Reminds Lortz of an earlier conversation when Cummins explained that the plan was not "amended" when the merger occurred.
• Reiterates that the company is responsible for funding the plan and that the merger saved the plan from underfunding.
• Claims that the employees are actually better off after the merger.
• Reminds Lortz of his promise to have Sharon Meadows, counsel for the Union, contact Pfeiffer and "once again request[s]" the Union to forward him "any legal authority or other basis to support its conclusion that Cummins should have amended the plan."
• Claims that the grievance is not arbitrable because the PSA prohibits amending the plan, but does not prohibit failing to amend the plan. So, if the Union's position is that Cummins should have amended the plan, there is no breach.
• "[T]akes exception" with Cummins's "twist[ed]" characterization of the Union's position.
• Argues that whether an issue is arbitrable is for the arbitrator to decide.
• Claims that the Union's position—that Cummins's decision to unilaterally amend the plan violated the PSA—has not changed.
• States that the Union "intend[s] to move forward to arbitration" unless it reaches an agreement with Cummins.
• Claims that whether the plan was amended was not in dispute.
• Cites caselaw holding that the issue of arbitrability is one for the court, rather than the arbitrator, to decide.
• Argues that the merger benefitted, rather than harmed, the bargaining-unit employees.
• Suggests that "it is time to move on."
August 1, 2003: Telephone call between Lortz and Pfeiffer
• Pfeiffer informed Lortz that the grievance is not arbitrable and requested again that the Union forward him the legal basis for its position.
• States that the attempt to schedule a conference call was fruitless.
• Requests that the Union provide Pfeiffer with a statement of its position and supporting legal authority.
• Articulates the Union's position that "a merger constitutes an amendment."
• States that "[n]either the collective bargaining agreement nor applicable case law" requires the Union to provide legal support for its position, because a party does not have to establish the underlying merits of a claim before arbitration.
• Blames Cummins for the "inordinate delay" and states:
• Claims that the Union voluntarily agreed to provide Cummins with authority for the Union's position.
• Urges Torzewski to reconsider her position in light of this background and again requests information regarding legal authority.
• Clarifies that the Union's position is not that Cummins should have amended the plan, but that the merger constituted a unilateral amendment.
• Claims that it is up to the arbitrator to determine whether Cummins breached the agreement.
• Hopes that the parties will "promptly progress to arbitration."
• Notes that Pfeiffer did not respond to her October 15th letter.
• Asks if the arbitration should proceed on the briefs or with a hearing.
• Claims that the Union has never pointed to specific language in the plan that constitutes an amendment.
• States that Cummins "continue[s] to believe that there is no dispute under the Plant Closing Agreement that is arbitrable."
Following Pfeiffer's last letter, the Union filed suit to compel arbitration on March 17, 2004. The district court granted summary judgment in favor of the Union, rejecting Cummins's argument that the suit was barred by the statute of limitations and laches. Because the parties agreed to arbitrate "alleged breaches of the [Plant Sale] [A]greement," the district court...
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