Local 1982, Int'l Longshoremen's Ass'n v. Midwest Terminals of Toledo, Int'l, Inc.
| Decision Date | 10 December 2019 |
| Docket Number | No. 19-3319,19-3319 |
| Citation | 944 F.3d 607 |
| Parties | LOCAL 1982, INTERNATIONAL LONGSHOREMEN’S ASSOCIATION, Plaintiff-Appellee, v. MIDWEST TERMINALS OF TOLEDO, INTERNATIONAL, INC., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
For the third time, we are asked to review this dispute over a labor arbitration award issued in 2012. In short, Local 1982 of the International Longshoremen’s Association successfully pursued a grievance against Midwest Terminals to enforce their contract requiring Midwest to establish pension and welfare trust fund plans that comply with the Employee Retirement Income Security Act (ERISA). In 2014, we enforced the Joint Grievance Committee’s award in Local 1982 I . When disputes arose about implementing that award, Local 1982 returned to court seeking clarification from the Committee, composed of one employer and one union arbitrator. Midwest argued that no ambiguity existed and by engaging in negotiations it had complied with the award and the grievance was terminated. We ultimately affirmed remand of the award to the arbitrators for clarification, Local 1982 II , but before that could occur, Midwest’s CFO was appointed to the Committee as the representative for the employers; a deadlock resulted. Local 1982 sought to follow the next step of the grievance procedure in the contract; Midwest refused, arguing that the deadlock terminated the grievance procedure. The district court ordered the parties to proceed to the next step. We AFFIRM .
Our prior decisions set out the specific facts, which are briefly summarized here. At the time of the initial dispute, Local 1982 and Midwest were parties to a collective bargaining agreement (CBA) that consisted of a Master Agreement, formed between the parties’ affiliated regional employer group and the union, and a Local Agreement between the parties. Local 1982, Int’l Longshoremen’s Ass’n v. Midwest Terminals of Toledo, Int’l, Inc. , 560 F. App'x 529, 530 (6th Cir. 2014) (" Local 1982 I "). Both agreements have provisions that address the benefit, pension, and welfare plans relevant to the underlying dispute. Id. at 531-32.
In 2011, the union filed a grievance against Midwest for its failure to establish and contribute to such trust plans under Section 5.5A of the Master Agreement. After Midwest responded to the Union that it considered the grievance procedurally invalid, the Union escalated the grievance to Step Two of the Master Agreement grievance procedure—referral to a Joint Grievance Committee comprised of an employer representative and a union representative. Id. at 532.
Midwest refused to participate and did not respond to the requests of the Joint Grievance Committee for explanation and cooperation; the hearing went forward without Midwest present. Id. at 532-33. The central question at the hearing was whether Midwest established ERISA-compliant funds in accordance with Section 5.5A of the Master Agreement, which sets out "[t]he minimum contribution to affiliated local union and employer ERISA approved benefit, pension, and welfare plans." The Committee determined that Midwest had failed to do so and issued its ruling against Midwest. Id. at 533. Under the Master Agreement, Midwest could appeal the unfavorable award within ten days but did not do so; the award became final and binding, and the union filed suit to enforce it. Id. at 534-35. Finding that any contract ambiguity is an issue for the arbitrator, not the courts, we directed the district court to enter an order enforcing the award. Id. at 537, 540.
Shortly thereafter, the parties were back in court, this time over ambiguities in the content of the award. The district court found that the award was ambiguous and remanded to the Committee for clarification. We affirmed in Local 1982 II , finding that where an award "leaves doubt whether the submitted grievance has been fully executed, an ambiguity arises which the arbitrator is entitled to clarify." Local 1982, Int’l Longshoremen’s Ass’n v. Midwest Terminals of Toledo, Int’l, Inc. , 694 F. App'x 985, 987 (6th Cir. 2017) (" Local 1982 II ") (internal brackets, citations, and quotation marks omitted). We ruled that the award should be remanded for clarification, rejecting Midwest’s argument that it complied with the award by negotiating about terms and conditions of the trust agreement; we reasoned that those actions failed to fulfill "the CBA requirement for the creation of a trust fund" and "[c]ommon sense dictates that the Committee intended something more." Id. at 989.
After the remand but before clarification of the award, the composition of the two-person Committee changed. Over the opposition of the union, Midwest appointed its Chief Financial Officer, Fred Diechert, to replace the employer representative on the Committee. The new two-person Committee deadlocked in clarifying the award. Local 1982 sought to escalate the grievance to Step 3 of the Master Agreement for review by an expanded grievance committee to resolve the deadlock. Midwest opposed the escalation and argued that Local 1982’s earlier efforts to confirm the arbitration award rendered it final, and a deadlock in interpreting the award terminated the procedure. The district court found Midwest’s arguments to be unavailing, and Midwest appeals.
This litigation is principally about the definition of a minimally compliant ERISA plan. "ERISA is a complex statute, but its purpose is simple: to establish a uniform regulatory regime for plan administration that protects monies belonging to plan beneficiaries while such funds are held and managed by others." Wilson v. Safelite Grp., Inc. , 930 F.3d 429, 434 (6th Cir. 2019) (internal citations and quotation marks omitted). With few exceptions, ERISA requires compliant plans to hold assets for plans in trust, 29 U.S.C. § 1103(a), and plan assets may be used only to provide benefits and pay reasonable expenses and "shall never inure to the benefit of any employer," 29 U.S.C. § 1103(c)(1). An ERISA plan fiduciary may be an employer, but the fiduciary is required to act "solely in the interest of the [Plan] participants and beneficiaries," 29 U.S.C. § 1104(a)(1), and must not "deal with the assets of the plan in his own interest or for his own account," 29 U.S.C. § 1106(b)(1). While the details are in dispute and require further clarification, the award here mandates the establishment of plans that comply with these principles. We turn to the procedures at issue.
The district court remanded the case for further clarification of an arbitration award previously confirmed by this circuit in Local 1982 I . The parties dispute whether we should review the district court’s decision de novo or for an abuse of discretion. That issue turns on whether the district court’s decision to remand was based on application of the law of the case. Compare M & C Corp. v. Erwin Behr GmbH & Co. , 143 F.3d 1033, 1037–38 (6th Cir. 1998), with Rouse v. DaimlerChrysler Corp. , 300 F.3d 711, 715 (6th Cir. 2002). Midwest loses under either standard.
Midwest argues on appeal that the grievance terminated because neither party filed a timely notice of appeal when the award was issued in 2012, and the clarification of the award resulted in a deadlock.1 But the practical consequence of this argument is that the winning party in an arbitration would have to appeal a favorable decision or risk losing the relief sought. This frustrates the purpose of grievance proceedings. Local 1982 had no reason to appeal an award in its favor but every reason to enforce a final arbitral award in the courts. As noted in multiple decisions in this case, moreover, Midwest chose not to participate in the initial proceeding. It cannot argue now that the case is closed on an alternative ground when courts have already affirmed the legitimacy of the proceeding. See Marino v. Writers Guild of America, E., Inc. , 992 F.2d 1480, 1484 (9th Cir. 1993) ().
It is also well settled that final arbitration awards may be remanded back to the original arbitrator or arbitration committee for clarification. See, e.g. , Indus. Mut. Ass’n, Inc. v. Amalgamated Workers, Local Union No. 383 , 725 F.2d 406, 412 n.3 (6th Cir. 1984) (); United Steelworkers of Am., Local 4839 v. New Idea Farm Equip. Corp. , 917 F.2d 964, 968 (6th Cir. 1990) ( ); M & C Corp. v. Erwin Behr GmbH & Co. , 143 F.3d 1033, 1038 (6th Cir. 1998) ().
Midwest’s argument, unadorned by precedent, is that the grievance is terminated, and that the award is unenforceable because it cannot be clarified by the initial arbitration Committee. But the award does not lose its effect simply because the original Committee cannot agree on a clarification of its contents. As established by the governing CBA, Step 3 of the grievance procedure specifies that if a grievance "is not satisfactorily settled or adjusted in Step 2, it shall be referred to an Expanded Joint Grievance Committee," the membership of which is then defined. The district court properly remanded the dispute to the next step of the grievance procedure. We previously ordered the parties to fulfill "the CBA requirement for the creation of a trust fund," Local 1982 II , 694 F. App'x...
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