Matuszak v. Torrington Co., 90-1026
| Citation | 927 F.2d 320 |
| Decision Date | 22 April 1991 |
| Docket Number | No. 90-1026,90-1026 |
| Parties | 136 L.R.R.M. (BNA) 2764, 118 Lab.Cas. P 10,640 Michael H. MATUSZAK, et al., Plaintiffs-Appellees, v. The TORRINGTON COMPANY, et al., Defendants-Appellees, v. Margaret A. MILES, Joan Nowaczynski, Robert J. Orszulak, David Jastrzembski, Ronald J. DeKerr and Linda S. Sanders, Class Representatives for I.I.D. Group, Cross-Defendants and Involuntary Plaintiffs-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Charles S. Leone, South Bend, Ind., for plaintiffs-appellees.
Barry A. Macey, Richard J. Swanson, Segal and Macey, Indianapolis, Ind., Douglas D. Small, Franklin A. Morse, II, Roger Benko, Barnes & Thornburg, South Bend, Ind., for defendants-appellees.
R. Wyatt Mick, Jr., Bingham, Loughlin, Mick & Bent, Mishawaka, Ind., Thomas R. Fette, Charles H. Mostov, Fette, Dumke & Passaro, St. Joseph, Mich., Franklin A. Morse, II, South Bend, Ind., for cross-defendants and involuntary plaintiffs-appellants.
Before POSNER and COFFEY, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
This appeal concerns when laid off employees of Torrington Company ("Torrington" or "Company") receive seniority credit for the period of their layoff under their collective bargaining agreement ("CBA"). Jurisdiction is based upon statutory interpleader (28 U.S.C. Sec. 1335), Section 301 of the Labor Management Relations Act ("LMRA") (29 U.S.C. Sec. 185), and Section 502 of the Employee Retirement Income Security Act ("ERISA") (29 U.S.C. Sec. 1132). The Appellants are a class of fifty-one employees (the "Class") who are a part of a larger group that had been laid off prior to a plant closing. If the Class members earned seniority day-by-day during their layoff, each of them had sufficient seniority to be entitled to plant closure benefits. None of the Class members had enough seniority to receive these benefits, however, if they were entitled to seniority for the period of their layoff only when (and if) recalled to work. The Appellees include Torrington and the members of the Board of Administration ("Board") that denied plant closure benefits to the Class. The District Court granted summary judgment for the Appellees, concluding that the Class members are not entitled to plant closure benefits. We reverse and remand for further proceedings because we conclude the Class members' seniority as defined in the CBA includes the time spent on their final layoff.
In 1966, Torrington entered into a CBA with the International Union of the United Automobile, Aero-Space, and Agricultural Implement Workers of America ("UAW") and its Local Union Number 590 in South Bend, Indiana ("Local"). The Local had been concerned about the impact of a possible plant closure upon the most senior Torrington employees. And so, the 1966 CBA required Torrington to establish a Supplemental Unemployment Benefit Fund ("Fund") that would pay benefits to eligible employees in the event Torrington would close or relocate its South Bend plant.
In 1981, Torrington, the UAW and the Local entered into the CBA now at issue. The 1981 CBA specifies that an employee "must have at least ten (10) years of continuous Company service" to be eligible for plant closing benefits from the Fund. Article XV, Section 2. All parties agree that "continuous Company service" means "seniority" as defined in the 1981 CBA. As required by the CBA, Torrington, the UAW and the Local together approved a written plan for the administration of the Fund, as amended May 1, 1981 ("Fund document" or "Plan document"). Because the Fund is maintained by Torrington for the purpose of providing unemployment benefits to the employees, it is an "employee welfare benefit fund" and thus subject to ERISA. See 29 U.S.C. Secs. 1002-1003.
The Fund document contains eligibility language identical to that of the 1981 CBA. The Fund document also establishes procedures for applying for benefits. An employee must first file an application with the Company. If the application is denied, the employee may then appeal to the Board. The Board's decision is final and binding upon all parties. Although the Board is forbidden to waive, alter, or qualify the eligibility requirements, the Board does possess the authority to make necessary interpretations of the Fund document. See Fund document, Article X.
On October 13, 1983, Torrington announced it was closing its South Bend plant and relocating outside Indiana. The Board then announced that to be eligible for plant closing benefits, an employee must have been actively working at Torrington on the date of the plant closure announcement. The Board abandoned that position during the litigation before the District Court, 1 and now accepts that employees who were on layoff on the date of the plant closure announcement may be eligible for benefits, but only if they had ten years seniority prior to their last layoff. According to the Board, employees earn seniority while laid off, but they receive this seniority only upon being called back to work. In the present case, the plant closed, so none of the laid off workers were called back--and so none, according to the Board, ever received seniority credit for the layoff period. The Class members, needing credit for the final layoff period to be eligible for benefits, urge that seniority accrues day-by-day from the date of hire, and so they received seniority for the final layoff whether they were recalled or not.
This Court reviews the District Court's grant of summary judgment de novo. See, e.g., La Preferida, Inc. v. Cerveceria Modelo, S.A., 914 F.2d 900, 905 (7th Cir.1990). A further question is the degree of deference, if any, we owe to the Board's interpretation of when laid off employees receive seniority under the Plan. The Supreme Court has held "that a denial of [ERISA] benefits ... is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989). 2 In the present case, then, the standard of review of the Board's interpretation is de novo unless the Plan provides otherwise.
This conclusion requires de novo review of the Board's decision because no plan can provide discretion to deny benefits for reasons identified only years after the fact. 3 ERISA requires that "every employee benefit plan shall provide adequate notice in writing to any participant ... whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial." 29 U.S.C. Sec. 1133; see also 29 C.F.R. Sec. 2560.503-1(e), (f) (). This requirement that the board disclose the basis for its decision is necessary so that plan beneficiaries "can adequately prepare ... for any further administrative review, as well as an appeal to the federal courts." Richardson v. Central States Southeast and Southwest Areas Pension Fund, 645 F.2d 660, 665 (8th Cir.1981). This Court would emasculate ERISA's disclosure requirement if it were to defer to reasons that the Board first identified on appeal in the District Court, years after the decision at issue. No plan can authorize such a result, so Firestone requires that we review the Board's decision de novo. 4
The question we must answer is when does an employee who has been laid off receive seniority for the time of the layoff. 5 Again, the Class argues that seniority accrues continuously during the time of the layoff. The Appellees contend that an employee will receive seniority credit for time spent on layoff only if and when the employee is recalled. The Class members need credit for their layoff time to attain ten years seniority and so to establish eligibility for plant closure benefits.
The place to begin is the CBA. Article VI of the CBA provides:
Section 1. All new employees shall be considered temporary employees for the first three (3) months. After this probationary period, they shall be placed upon the seniority list dated from the original date of hire. Layoff or discharge of temporary workers is entirely at the Company's option, but if considered discriminatory, may be taken up as a grievance.
....
Section 3. Seniority may be lost for the following reasons only: ....
(e) Absence from work for twenty-four (24) months by an employee with less than two (2) years seniority. One (1) month additional time will be allowed for each year of service after two (2) years.
(emphasis added).
We believe the language of the CBA unambiguously rejects the position advocated by the prevailing parties below. Seniority accrues "from the original date of hire." Seniority is lost because of a layoff only if the layoff lasts at least twenty-four months. No other provision in the CBA authorizes the tolling of seniority accrual during layoff. The CBA is clear: The Class members may include the time spent during their final layoff in their seniority, notwithstanding the fact they were never recalled.
But the Appellees contend this unambiguous language must be read in context with the course of dealing at Torrington. Four affidavits, including two from members of the nine-person Local bargaining team that negotiated the 1981 CBA, are offered stating in virtually identical language:
[T]he collective bargaining agreement was consistently interpreted by the Company and the Union to provide that an individual recalled from an economic layoff before his or her seniority...
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