LOCAL 836 v. Echlin, Inc.

• Decision Date: 22 September 1987
• Docket Number: No. 84-CV-8357-FL.,84-CV-8357-FL.
• Citation: 670 F. Supp. 697
• Parties: LOCAL 836 OF the UNITED AUTOMOBILE AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW), et al., Plaintiffs, v. ECHLIN, INC. and Midland Brake, Inc., Defendants.
• Court: U.S. District Court — Western District of Michigan

670 F. Supp. 697

LOCAL 836 OF the UNITED AUTOMOBILE AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW), et al., Plaintiffs, v. ECHLIN, INC. and Midland Brake, Inc., Defendants.

No. 84-CV-8357-FL.

United States District Court, E.D. Michigan, S.D. at Flint.

December 16, 1986.

On Motion for Clarification September 22, 1987.

COPYRIGHT MATERIAL OMITTED

Roger J. McClow, Southfield, Mich., for plaintiffs.

M. Jay Whitman, Associate Gen. Counsel, Intern. Union, UAW, Detroit, Mich., James Allan Smith, David H. Grigereit, Atlanta, Ga., Clark Shanahan, Owosso, Mich., for defendants.

MEMORANDUM OPINION AND ORDER

NEWBLATT, District Judge.

Pending are four separate motions by defendant Echlin. The first two are summary judgment motions under Rule 56, Fed.R.Civ.P., seeking dismissal of Complaint Counts I and II. Also filed were motions to strike the jury demand and the prayer for mental distress damages.

Defendants are successors to Midland-Ross which had negotiated the 1981-1984 collective bargaining agreement (CBA) with the plaintiff union. Defendants purchased the company from Midland Ross on August 31, 1982, in the middle of the contract period. When the contract expired, the defendants closed the plant.

At issue in the case is the obligation of defendants to provide retirement benefits to those persons who retired during the contract period between the August 31, 1982 acquisition by the defendants and the July, 1984 plant closure. The summary judgment motions as to each count simply litigate the duty of defendants to provide certain health and welfare benefits to the named subset of retirees, i.e., those who retired after the acquisition. Count I alleges a breach of the contractual duty under the CBA based on § 301 of the Labor Management Relations Act of 1947, 29 U.S. C. § 185. Count II is based on a claimed violation of § 502 of the Employee Retirement Income Security Act (ERISA), 29 U.S. C. § 1001, et seq.

I Count I — Summary Judgment Motion Relating Thereto.

The defendants' theory is that irrespective of what the extrinsic evidence relating to contractual intent may show, the language of Article 22 of the CBA is unambiguously "durational" in its delineation of the entire benefit package. Being unambiguous, defendants claim that as a matter of law, the Court is precluded from even considering plaintiffs' proffered factual material going to the parties' intent that the contested benefits were to be vested so that they survive the term of the collective bargaining agreement. Defendants claim that nothing outside of the agreement can be considered since the duration of these benefits was specifically stated to be for the period of the contract. This claim is based on Article 22, which reads as follows (pertinent part only):

The group insurance schedule of benefits will be continued during the period of this agreement with the changes agreed to being placed in effect on the dates agreed and as outlined below:

....

Subject coverage is further extended to the surviving spouse of deceased retired employees until eligible for Medicare ("fill") policy. Surviving spouse must have attained the age of 55.

The defendants go further, however, and contend that even if the contract language is ambiguous, a consideration of the extrinsic evidence dispels any triable issue of fact as to the parties' contractual intent. While defendants have amassed some evidence supporting their view, the extrinsic evidence does not preclude any genuine issue of fact as to the parties' contractual intent.

The question of whether this Court may look to contraindicative extrinsic evidence adduced by plaintiffs in interpreting an unambiguous provision of a CBA is easy to pose, but difficult to answer in view of recent Sixth Circuit pronouncements (some of which may be dicta) which approve this practice. To be complete, these cases will be discussed even though it is unnecessary to consider this question since the Court finds the language is ambiguous and thus extrinsic evidence may be considered under traditional principles.

A. Whether the Language of Article 22 is "Ambiguous".

Plaintiffs contend the language is ambiguous because the provision above quoted which extends "subject coverage" to surviving spouses of deceased retired employees until their Medicare benefits are triggered at age 65 (provided the spouse has attained the age of 55 years) implies that the health and welfare benefits were intended to be available to retirees as well, based on their age, and not keyed to contract expiration. In support of their major premise, plaintiffs point out that under Article 22, it would be possible for a surviving spouse, 55 years old in 1984, the last year of the contract, to receive pension benefits for 10 years beyond the life of the CBA, i.e., until she or he attained age 65. If retirement benefits are thus available to the spouse based on age, plaintiffs reason they are all the more available to retirees themselves. At any rate, say plaintiffs, this proves the preamble is not absolutely durational, is therefore ambiguous, and thus allows consideration of extrinsic evidence as to the intent of the contracting parties.

A traditional rule of construction of the "surviving spouse" language would hold it to be an exception to an absolutely durational preamble language. On the other hand, application of a rule of construction in itself implies some ambiguity. Otherwise a rule of construction is not necessary.

The more powerful argument supporting the claim of ambiguity is that the preamble purports not to limit the duration of benefits but rather the "schedule of" benefits that followed. It is obvious that the "schedule of" language is surplusage if it has no meaning independent of the term "benefits" only. In other words, as defendants have urged, "schedule of" benefits means the same as "benefits." Taking plaintiffs' interpretation, the durational preamble would limit the "schedule" to the life of the contract, but not the "benefits" per se. This is sufficient to conclude that an ambiguity exists.

II Assuming the contract language is not ambiguous, does this preclude consideration of extrinsic evidence?

But even if the preamble relied on by Echlin is unambiguously "durational" as to retiree health and welfare benefits when interpreted in context with the whole of Article 22, is consideration of extrinsic evidence of a contrary intent precluded?

The leading case is Intern. U. United Auto., Aero., Etc. v. Yard-Man, 716 F.2d 1476 (6th Cir.1983). Footnote 1 presents a favorable view of considering extrinsic evidence.

The parties presented no extrinsic evidence of intent in this case and elected to rely exclusively on the terms of their collective bargaining agreement ... On appeal, Yard-Man raised arguments based on economic considerations which were not part of the record before the District Court. These do not, therefore, constitute any part of our analysis. p. 1480.

In light of the Yard-Man holding that retirement benefits are prima facie vested so long as retirement status is maintained by the retiree, footnote 2 is also interesting.

We agree with Yard-Man that traditional rules of contractual interpretation require a clear manifestation of intent before conferring a benefit or obligation. See, e.g., Kellogg Co., v. N.L.R.B. supra, 457 F.2d 519 at 524 (6th Cir. 1972). We do not agree, however, that the duration of the benefits once clearly conferred is subject to this stricture.

In Cadillac Malleable Iron, 728 F.2d 807, the Sixth Circuit, relying on Yard-Man, emphatically approved the district court's consideration of the history of the parties' bargaining relationship, and "the testimony of the corporate secretary who maintained personnel records and customarily talked with each employee who was about to retire, and the testimony of various employees concerning their interviews with the Secretary." Cadillac at 809. That court also stated that it is proper to consider the "context from which the collective bargaining agreement arose ..." p. 809.

Of course, Cadillac made no reference to the necessity for an ambiguity in the language of the CBA. Nevertheless, it is authority for the principle that extrinsic evidence may be considered, especially in light of this language from Yard-man:

Many of the basic principles of contractual interpretation are fully appropriate for discerning the parties' intent in collective bargaining agreements. For example, the court should first look to the explicit language of the CBA for clear manifestations of intent ... The intended meaning of even the most explicit language can, of course, only be understood in light of the context which gave rise to its inclusion. p. 1479. (Underlining supplied.)

If "context" refers to the contract language only, then, of course, this is no authority for consideration of outside evidence. However, the treatment in Cadillac Malleable, with its explicit reference to later language in Yard-Man referring to the "context" in a way that clearly includes the "surrounding circumstances" of the bargain, leads to the conclusion that it is proper to look outside the four corners to determine intent.¹

The outside evidence is in dispute, but does include the following:

1. The predecessor's officer (Bruce Engle) who negotiated the contract, on deposition said the benefits were "for the duration of the retiree, not the contract." (Part of Engle's deposition attached to plaintiff's responsive brief.)²

2. Marlene Dade of defendants' personnel department wrote letters to retirees assuring them that the benefits were "lifetime," and did not expire with the contract.

3. Midland Ross, defendants' predecessor, has continued to provide the benefits in issue to employees who retired prior to the sale to defendants' plant. This certainly is evidence of the contract's meaning to one of the original contracting parties and supports the denial of the motion.

The Court concludes...