Johnson v. St. Frances Xavier Cabrini Hosp. of Seattle

• Decision Date: 06 August 1990
• Docket Number: No. 89-35392,89-35392
• Citation: 910 F.2d 594
• Parties: , 12 Employee Benefits Ca 2267 Suzanne JOHNSON; Janet Young, individually and on behalf of all similarly situated employees, Plaintiffs-Appellants, v. ST. FRANCES XAVIER CABRINI HOSPITAL OF SEATTLE; St. Frances Xavier Cabrini Employees Pension Plan; and Walter E. Abegglen and Sister Tommasina Lanski, M.S.C., Trustees of the Plan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 594

910 F.2d 594

59 USLW 2112, 12 Employee Benefits Ca 2267

Suzanne JOHNSON; Janet Young, individually and on behalf of all similarly situated employees, Plaintiffs-Appellants, v. ST. FRANCES XAVIER CABRINI HOSPITAL OF SEATTLE; St. Frances Xavier Cabrini Employees Pension Plan; and Walter E Abegglen and Sister Tommasina Lanski, M.S.C., Trustees of the Plan, Defendants-Appellees.

No. 89-35392.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 10, 1990.

Decided Aug. 6, 1990.

Richard H. Robblee, Hafer, Price, Rinehart & Schwerin, Seattle, Wash., for plaintiffs-appellants.

William W. Treverton, Conner, Gravrock and Treverton, Bellevue, Wash., for defendants-appellees.

Appeal from the United States District Court for the Western District of Washington.

Before FARRIS, PREGERSON and FERGUSON, Circuit Judges.

FERGUSON, Circuit Judge:

I.

Petitioners are a group of nurses, members of the Washington State Nurses Association, filing as a class of individual participants in the Cabrini Hospital pension plan. The nurses have sued their employer (the Cabrini Hospital), their pension plan, and the plan's Trustees under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001-1461.

Since 1979, the employer has provided the nurses with a defined contribution pension plan. Although the effective date is in dispute, by 1987 the employer unilaterally reduced its contributions to the plan by about forty percent. The nurses allege that the reduction violates various sections of ERISA, including 29 U.S.C. Sec. 1104 (fiduciary responsibility) and Secs. 1054(h) and 1054(g) (statutory notice).

A collective bargaining agreement exists between the nurses union and the employer. The agreement provides for arbitration of contract disputes. Reference is made in the agreement to the employer's obligation to provide a pension plan, but the terms of the plan are not covered in the agreement. In opposing the reduction of pension contributions, the nurses both pursued arbitration through their union asserting a violation of the collective bargaining agreement; and filed this class action suit under ERISA.

At arbitration, the arbitrator found for the Hospital, ruling that the pension plan contribution reduction did not violate the collective bargaining agreement. In this suit, the employer and the nurses filed cross motions for summary judgment. The district court granted summary judgment for the employer, accepting the employer's assertion that the suit was essentially settled by the arbitrator's findings. The nurses now appeal, asking that summary judgment be entered for them, and that they be awarded attorney's fees. We find summary judgment inappropriate for either party, and remand to the district court for further proceedings.

II.

A grant of summary judgment is reviewed de novo. Gibson v. Prudential Insurance Co., 915 F.2d 414, 416 (9th Cir.1990). The court must decide if there is "no genuine issue as to any material fact," United Steelworkers of America v. Phelps Dodge, 865 F.2d 1539, 1540 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 51, 107 L.Ed.2d 20 (1989), and whether the substantive law is applied correctly. Amaro v. Continental Can Co., 724 F.2d 747, 749 (9th Cir.1984).

III.

The nurses allege that the pension plan trustees breached their fiduciary duty to the plan under 29 U.S.C. Sec. 1104 by agreeing to the reduced contributions. The district court held that this claim was barred as res judicata, since the alteration to the pension plan was a contractual matter which had already been argued before the arbitrator.

Only one clause of the collective bargaining agreement refers to the pension plan. Section 12.4 of the agreement reads,

Retirement Plan. The Employer will provide a retirement plan for regular status nurses. Retirement benefits and eligibility requirements for participation shall be defined by the Employer's plan.

At arbitration, the union contended that this provision incorporated the terms of the pension plan as part of the collective bargaining agreement, and that the substantive provisions of the plan were therefore contractually binding. The union argued that section 15.01 of the pension plan thus prevented a reduction of contributions under the contract. Section 15.01 reads:

The Plan and Trust may be amended at any time by action of the Board. No amendment can be made that would reduce or withhold any right or benefits of the then existing Plan Participants, unless such amendment is required in order to obtain qualification of the Plan under the Internal Revenue Code.

The union's position was rejected by the arbitrator. The arbitrator held that under section 12.4 of the collective bargaining agreement, the terms and administration of the plan were not subject to negotiation; and that the union had yielded its right to collectively bargain over the terms of the plan. The arbitrator went on to say that in any event, according to his interpretation of section 15.01 of the pension plan and other documents "not incorporated into the [collective bargaining] Agreement," the plan did not bar reduction in contributions. It was this interpretation of section 15.01 of the pension plan which the district court held was res judicata of the nurses' ERISA claim.

However, according to the arbitrator's own interpretation of the contract, the terms of the pension plan were not incorporated into the collective bargaining agreement. Since the terms of the plan were external to the agreement, any substantive interpretation of those terms is therefore beyond the scope of the arbitrator's authority, which is limited to interpretation of the Agreement. As such, the arbitrator's view of the pension plan is dicta, and cannot be res judicata of subsequent claims. See Eichmann v. Fotomat Corp., 759 F.2d 1434, 1440 (Kennedy, C.J., concurring) (9th Cir.1985).

Further, the claim of breach of fiduciary responsibility under ERISA is a different claim than that presented to the arbitrator. The arbitrator was not engaged in a general examination of the terms and history of the pension plan, nor of the fiduciary duties of those administering the plan. The arbitrator looked narrowly to one section of the plan only to evaluate if it supported a contractual claim under the collective bargaining agreement. Since this claim is distinct from that which the arbitrator considered when he reviewed a term of the pension plan, res judicata does not apply. Amaro, 724 F.2d at 749.

Nor does this Circuit generally consider it within an arbitrator's competence to decide ERISA claims. Id. at 750. "Arbitrators, many of whom are not lawyers ... lack the competence of courts to interpret and apply statutes as Congress intended." Id. It is true that some pension claims may be covered by collective bargaining agreements, and that an arbitrator's decision may be binding on such claims. Barrowclough v. Kidder, Peabody & Co., 752 F.2d 923, 939 (3rd Cir.1985). However, in determining whether a dispute arguably covered by both ERISA statute and a collective bargaining agreement is arbitrable, the key question is whether the answer settling the dispute "is to be found in the collective bargaining agreement or in ERISA's provisions." Viggiano v. Shenango China Div., 750 F.2d 276, 279 (3rd Cir.1984). In the instant case, the arbitrator decided that the terms of the pension plan were independent of the collective bargaining agreement:

In the Arbitrator's view, all the Employer was required to do, in accordance with Section 12.4 [of the collective bargaining agreement] was to "provide" a Retirement Plan for the benefit of regular status registered nurses. The evidence established that the initial level of contribution was never the subject of negotiation between the two parties. The level of contribution was independently established by the Hospital without consultation with the Association. Thus, it was a retirement plan provided by the Hospital for the benefit of its employees.

The arbitrator's contractual analysis makes clear that the terms of the pension plan were not a part of the collective bargaining agreement. The nurses and the employer neither agreed to negotiate nor arbitrate the terms of the plan. See Sulit v. Dean Witter, 847 F.2d 475,...