Totes Isotoner v. Inter. Chem. Workers, Local 664C

• Decision Date: 08 July 2008
• Docket Number: No. 07-3577.,07-3577.
• Citation: 532 F.3d 405
• Parties: TOTES ISOTONER CORPORATION, Plaintiff-Appellee, v. INTERNATIONAL CHEMICAL WORKERS UNION COUNCIL/UFCW LOCAL 664C, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

532 F.3d 405

TOTES ISOTONER CORPORATION, Plaintiff-Appellee, v. INTERNATIONAL CHEMICAL WORKERS UNION COUNCIL/UFCW LOCAL 664C, Defendant-Appellant.

No. 07-3577.

United States Court of Appeals, Sixth Circuit.

Argued: March 13, 2008.

Decided and Filed: July 8, 2008^*.

ARGUED:

Randall Vehar, ICWUC/UFCW Legal Department, Akron, Ohio, for Appellant. Lawrence J. Barty, Taft, Stettinius & Hollister, Cincinnati, Ohio, for Appellee.

ON BRIEF:

Randall Vehar, Robert W. Lowrey, ICWUC/UFCW Legal Department, Akron, Ohio, for Appellant. Lawrence J. Barty, Paula Jean Dehan, Taft, Stettinius & Hollister, Cincinnati, Ohio, for Appellee.

Before: CLAY and McKEAGUE, Circuit Judges; and BOYKO, District Judge.^**

CLAY, delivered the opinion of the court, in which BOYKO, D.J., joined. MCKEAGUE, J. (pp. 419-22), delivered a separate dissenting opinion.

CLAY, Circuit Judge.

Defendant, International Chemical Workers Union Council/UFCW Local 664C ("Union"), appeals the district court's order granting the motion of Plaintiff, totes›Isotoner Corporation, to vacate a supplemental labor arbitration award. For the reasons that follow, we AFFIRM the judgment of the district court.

BACKGROUND

Totes›Isotoner Corporation ("the Company") is an employer that makes and markets umbrellas, gloves and other weather-related accessories, with its principal place of business located in Butler County, Ohio. The Union is an unincorporated labor organization that is the exclusive representative of production and maintenance employees at the Company's distribution center in Butler County. Over the years, the Union and the Company have been signatories to a series of collective bargaining agreements, one of which was effective April 27, 1998 through April 26, 2002.

A. 1998 Collective Bargaining Agreement

On April 27, 1998, the Union and the Company executed a collective bargaining agreement ("CBA") which memorialized "their agreement with respect to rates of pay, hours of work, and conditions of employment to be observed by the Company, the Union and employees covered by this agreement; [and provided] procedures for equitable adjustment of grievances...." (J.A. at 30)

1. Health Benefits

Section 1(a) of Appendix C to the 1998 CBA outlined the Company's obligations with respect to medical, dental, life and accidental death insurance coverage for Union employees during the lifetime of the agreement. Appendix C provided that "[c]overage for ... benefits will be as outlined in the Totes›Isotoner Umbrella of Benefits plan and will be available to employees after 60 working days." (J.A. at 56) Under the "Umbrella of Benefits" plan, both union and non-union employees received the same benefits and coverage terms for relevant insurance programs.

2. Duration of the 1998 CBA and the Grievance Procedure

Under Article XIXX of the 1998 CBA, the parties agreed that "[u]nless otherwise agreed upon by the parties, notice to modify and/or terminate within the time period specified above shall prevent this Agreement from renewing itself and shall automatically terminate said Agreement upon its expiration date without benefit of further notice of either party." (J.A. at 52)

Moreover, under Article XXI of the 1998 CBA, both the Company and the Union agreed that neither could make unilateral changes to the items referenced in the 1998 CBA. (J.A. at 53) In anticipation of grievances for alleged violations of the 1998 CBA, Article XVII both defined what a grievance meant under the CBA and authorized the use of arbitration to resolve grievances. Specifically, Article XVII provided that

A grievance is any difference between the employer and an employee or employees or the Union about what any part of this Agreement means or how it will be applied.

* * *

In the event that no settlement is reached, either party, upon written notice to the other, may refer the matter to an impartial arbitrator whose decision shall be final and binding upon all parties to the grievance. However, the arbitrator shall not have the right to delete or make changes in any of the provisions of this Agreement, or to insert new ones....

(J.A. at 50-51)

B. Change to the Umbrella of Benefits Plan

In November of 2001, the Company notified both Union and non-Union employees of changes to the Umbrella of Benefits plan for the upcoming year. The Company announced that the changes would result in increased costs for health insurance premiums and other out-of-pocket expenses. On November 5, 2001, the Union protested the increase, alleging that the changes to the Umbrella of Benefits plan were unilateral and therefore violative of the 1998 CBA. Notwithstanding the Union's protest, the Company proceeded to implement the changes on January 1, 2002.

C. 2002-2007 Collective Bargaining Agreement

In February of 2002, the Union provided the Company with notice that it was seeking changes or amendments to the 1998 CBA. Under the terms of the 1998 CBA, the automatic termination clause of the Agreement is triggered when either party seeks to change or amend the existing Agreement. Thereafter, the Company and the Union engaged in negotiations for a new collective bargaining agreement. As a consequence of these negotiations, the parties reached agreement regarding a new five year collective bargaining agreement which went into effect on April 27, 2002. The 2002 CBA incorporated identical language from Article XXI and Appendix C of the 1998 CBA.

D. Union Grievance and the Original Arbitration Award

On March 19, 2002, the Union filed a charge against the Company with the National Labor Relations Board, alleging that "on or about December, 2001, and continuing thereafter," the Company "failed and refused to bargain in good-faith" with the Union regarding changes to the Umbrella of Benefits plan. (J.A. at 283) In response, NLRB Region 9 determined that the Union's charge should be administratively deferred for arbitration in accordance with the terms of the 1998 CBA. According to the NLRB Regional Director, the Company "expressed a willingness for a reasonable period of time to arbitrate the dispute underlying the charge ... notwithstanding ... the subsequent expiration of the [1998] contract." (J.A. at 70)

On June 17, 2002, pursuant to the NLRB's deferral, the Union filed a grievance with the Company, again alleging that the changes to the Umbrella of Benefits plan violated the 1998 CBA. In the grievance, the Union sought to have pre-January 1, 2002 insurance premiums reinstated and employees reimbursed for the additional premiums paid as a result of the January 1, 2002 increases. The parties, however, were unable to settle the grievance and therefore submitted the matter for arbitration before a jointly-selected arbitrator.

Because the parties did not stipulate the issues to be decided by the Arbitrator, the Arbitrator determined the issues to be as follows:

Did Management violate the Agreement when they unilaterally made changes in the healthcare insurance benefits beginning on January 1, 2002?

If Management violated the Agreement, what is the appropriate remedy?

(J.A. at 80) The Arbitrator relied on the 1998 CBA to resolve the two above-referenced issues in favor of the Union.

With respect to the first issue, the Arbitrator examined Article XXI, the Waiver Clause of the 1998 CBA, to find that "the healthcare insurance benefits and the employees' share of the premiums in effect at the time the Agreement was finalized is what the Union bargained for with the Company and they are not subject to unilateral change by Management during the lifetime of the Agreement." (J.A. at 87)

On March 5, 2004, to remedy the violation of the 1998 CBA, the Arbitrator ordered that

[t]he changes Management made to the employees' healthcare insurance coverage on or about January 1, 2002 are hereby rescinded and all of the benefits previously in effect are to be reinstated. The change in employees' share of the healthcare insurance premiums that occurred as a result of these changes are hereby rescinded and employees are to be reimbursed for any and all additional costs they incurred as a result of Management having violated the Agreement. In addition, employees are to be reimbursed for all monies spent for benefits that would have been paid for under the coverage in effect before the changes occurred, but were not paid for after the changes occurred. Management is hereby directed to cease and desist from unilaterally making any changes in employees' healthcare insurance benefits provided for in Appendix C of the Agreement. Management is hereby directed to cease and desist from unilaterally increasing employees' share of healthcare insurance premium costs. The Arbitrator will retain jurisdiction over this matter until the award is fully implemented.

(J.A. at 89)

E. Alleged Non-Compliance and Supplemental Award

In response to the Arbitrator's award in favor of the Union, the Company calculated the loss incurred by each employee as a result of the benefits change between January 1, 2002, the commencement of the health plan changes, and April 26, 2002, the expiration date of the 1998 CBA. The Company did not, however, revoke the January 1, 2002 change to the health benefits plan or reinstate the prior terms of the Umbrella of Benefits plan. Consequently, the Union filed a complaint with the Arbitrator arguing that the Company was not in compliance with his March 5, 2004 award.

Thereafter, the parties agreed to submit the non-compliance dispute to the Arbitrator through "supplemental proceedings" and a hearing was held on September 13, 2004. At the outset of the hearing, the Arbitrator noted that he did not retain the documents regarding his March 5, 2004 award. Therefore, the parties submitted joint exhibits containing the 1998 CBA, the NLRB referral to arbitration, and the initial grievance filed by the Union. During the supplemental proceedings, the parties presented oral arguments and later briefed controverted issues...