Ooley v. Schwitzer Div., Household Mfg. Inc.
| Decision Date | 20 April 1992 |
| Docket Number | 90-3104,Nos. 90-2729,s. 90-2729 |
| Parties | 140 L.R.R.M. (BNA) 2138, 121 Lab.Cas. P 10,134, 22 Fed.R.Serv.3d 677 Paul OOLEY, Plaintiff-Appellant, v. SCHWITZER DIVISION, HOUSEHOLD MANUFACTURING INCORPORATED, United Steelworkers of America and United Steelworkers of America, Local 1148, Defendants-Appellees. Paul OOLEY, Sherrard Stevens and Gerald Martin, et al., Plaintiffs-Appellants, v. SCHWITZER DIVISION, HOUSEHOLD MANUFACTURING INCORPORATED, United Steelworkers of America and United Steelworkers of America, Local 1148, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
James B. Mitchell, Jr., Indianapolis, Ind. (argued), for plaintiffs-appellants.
Joel H. Kaplan, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., Wayne O. Adams, III, Joseph H. Hogsett, Jeffery M. Mallamad, Bingham, Summers, Welsh & Spilman, Indianapolis, Ind., Andrew D. Roth (argued), Bredhoff & Kaiser, Washington, D.C., Richard J. Swanson, Segal & Macey, Indianapolis, Ind., James B. Robinson, Kircher & Phalen, Cincinnati, Ohio, Michael H. Gottesman, Barbara Bergman, Washington, D.C., for defendants-appellees.
Before BAUER, Chief Judge, WOOD, Jr., * Circuit Judge, and ESCHBACH, Senior Circuit Judge.
This is a class action with plaintiff Paul Ooley serving as a class representative. All the plaintiffs are former employees of Schwitzer Division, Household Manufacturing Incorporated ("Schwitzer"). The plaintiffs worked in a Schwitzer plant located in Indianapolis, Indiana. United Steelworkers of America and United Steelworkers of America, Local 1148 ("the Steelworkers Union" or "the Union") were the plaintiffs' bargaining representatives. A Collective Bargaining Agreement ("CBA") between Schwitzer and the Steelworkers Union regulated the relationship between Schwitzer and its employees. Article 36 of this CBA incorporated by reference a separate pension plan agreement ("the Pension Plan"). The dispute on appeal centers on whether the plaintiffs qualify for an Immediate Broken Service Retirement Pension under subsection 8.2 of the Pension Plan.
In the spring of 1984, Schwitzer announced to the Steelworkers Union and the employees that it was considering closing its Indianapolis plant. The shutdown was to take place either later in 1984 or early in 1985. At the time of the announcement, the CBA was still in effect. However, the CBA was due to expire on August 31, 1985.
After Schwitzer made this announcement, the Steelworkers Union's representatives and Schwitzer officials began to negotiate the terms of the plant closing. After a series of meetings ending in October of 1984, the Steelworkers Union and Schwitzer negotiated a Plant Closure Agreement ("the Closure Agreement").
In negotiating the Closure Agreement, the Steelworkers Union obtained several employee benefits that were not provided for in the CBA. For example, the Closure Agreement provided the employees with severance benefits, payment for accrued vacation time, lifetime insurance benefits for one type of pension, and lump sum payments under another pension. These benefits were not available under the CBA.
Nevertheless, there was one concession that Schwitzer would not make at these meetings. That is, Schwitzer refused to concede that the CBA allowed employees to accumulate seniority status for up to five years after the plant closure so that they could "creep" into an Immediate Broken Service Retirement Pension under Section 8.2 of the Pension Plan ("an immediate pension"). The parties refer to this ability to accumulate seniority rights in order to "creep" into an immediate pension as "creep rights." It was the failure to obtain this additional concession that has resulted in the current litigation.
Because Schwitzer refused to concede this point, the Steelworkers Union proposed a compromise which Schwitzer accepted. This compromise, which is found in Section 3 of the Closure Agreement, allowed the employees to accumulate seniority until August 31, 1985, which was the CBA's expiration date. This compromise allowed a few employees to creep into an immediate pension after the plant closing date. Nevertheless, although all members of the plaintiff class were within five years of qualifying for an immediate pension, the members of the plaintiff class were not able to qualify for an immediate pension by the August 31, 1985, deadline. 1
After negotiating this agreement, the Steelworkers Union posted notices on the plant's bulletin boards announcing a meeting regarding the plant closure, and the Union mailed notices to employees on layoff status. The Steelworkers Union also This preannounced meeting with the employees took place on October 14, 1984. At this meeting, the Steelworkers Union's negotiating committee did not take a position on whether or not the employees should approve the Closure Agreement. After a short discussion, the employees ratified the Closure Agreement with a vote of 185 to 77. All members of the plaintiff class voted against ratification.
provided the employees with written summaries of the benefits provided in the Closure Agreement.
After the vote was taken, some members of the plaintiff class contacted the Steelworkers Union's officials in order to determine if they could accumulate up to five years of seniority status after the plant shutdown. In other words, these members of the plaintiff class wanted to know if the Closure Agreement extinguished any creep rights that they may have had under the Pension Plan. If the Closure Agreement did not extinguish the plaintiffs' rights under the CBA, the plaintiffs also wanted to know if subsection 8.2 of the Pension Plan allowed them to elect layoff status and thereby accumulate up to five years of seniority so that they could "creep" into an immediate pension. Schwitzer took the position that neither the Closure Agreement nor the CBA allow the plaintiffs to accumulate seniority for up to five years after the plant shutdown. Then on November 27, 1984, the Steelworkers Union filed a class action grievance on behalf of the employees who claimed they were entitled to such creep rights.
However, on September 12, 1985, the Steelworkers Union announced that it was dropping this grievance. When making this announcement to the plaintiffs, Mr. Kline, a Union attorney, indicated that the grievance was dropped because the Steelworkers Union's outside counsel, after reviewing the CBA, the Closure Agreement, and the relevant law, determined that there was little chance of prevailing on these grievances. However, the record, when read in the light most favorable to the plaintiffs, indicates that the "real reason" the Steelworkers Union dropped this grievance may not have been because the Steelworkers Union thought the claim lacked merit. To the contrary, Mr. Kline admitted to the plaintiffs' former counsel that the Steelworkers Union dropped the grievance because if the plaintiffs prevailed in the arbitration, then this would strengthen the plaintiffs' claim that the Steelworkers Union had breached its duty of fair representation when it negotiated away the plaintiffs' creep rights. Accordingly, the record seems to indicate that the Union dropped the claim partially because the Union thought it had merit.
After the Steelworkers Union dropped the plaintiffs' grievance, the plaintiffs filed a class action in the federal district court against Schwitzer and the Union. This complaint urges that Schwitzer breached the CBA when it refused to permit the plaintiffs to creep into an immediate pension. This complaint also alleges that the Steelworkers Union breached its duty of fair representation when it negotiated away the plaintiffs' creep rights and when it failed to pursue these rights in arbitration. 2
The defendants motioned for summary judgment. The district court granted the motion for summary judgment on several grounds. First, the district court determined that the plaintiffs' reading of the CBA was "too strained to survive summary judgment" and that the only reasonable interpretation of the CBA precluded the plaintiffs from creeping into an immediate pension. Memorandum Entry Regarding Defendants' Motions for Summary Judgment at 17. This conclusion disposed of the plaintiffs' claims for breach of the CBA. The district court also found another basis for disposing of the plaintiffs' breach of contract claims. That is, the The district court then went on to address the plaintiffs' claim that the Steelworkers Union breached its duty of fair representation. The district court concluded that the Steelworkers Union did not breach its duty of fair representation in bargaining away the employees' alleged creep rights under subsection 8.2 of the Pension Plan. One reason for this conclusion was that no such rights existed under the CBA. Again pointing to the fact that the CBA did not provide for creep rights, the district court also concluded that the Steelworkers Union did not violate its duty of fair representation when refusing to arbitrate the plaintiffs' grievance with regard to these creep rights.
district court determined that the
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