United Paperworkers Intern. Union AFL-CIO, CLC v. Champion Intern. Corp.

• Decision Date: 16 August 1990
• Docket Number: CLC,AFL-CI,J,No. 89-6055,No. 1305,1305,89-6055
• Citation: 908 F.2d 1252
• Parties: 135 L.R.R.M. (BNA) 2267, 116 Lab.Cas. P 10,252, 12 Employee Benefits Ca 2097 UNITED PAPERWORKERS INTERNATIONAL UNION,, and its LocalW. Boelsche, Bobby K. Oglethorpe, and Lewis A. Stadler, Plaintiffs-Appellants, v. CHAMPION INTERNATIONAL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1252

908 F.2d 1252

135 L.R.R.M. (BNA) 2267, 116 Lab.Cas. P 10,252,

12 Employee Benefits Ca 2097

UNITED PAPERWORKERS INTERNATIONAL UNION, AFL-CIO, CLC, and its Local No. 1305, J.W. Boelsche, Bobby K Oglethorpe, and Lewis A. Stadler Plaintiffs-Appellants, v. CHAMPION INTERNATIONAL CORPORATION, Defendant-Appellee.

No. 89-6055.

United States Court of Appeals Fifth Circuit.

Aug. 16, 1990.

Louis L. Robein, Jr., Gardner, Robein & Urann, Metairie, La., Michael Hamilton, Nashville, Tenn., and Bruce Fickman, Fickman & Van Os, Houston, Tex., for plaintiffs-appellants.

L. Chapman Smith, Carol Helliker, Paul L. Mitchell, and Gloria Salinas, Baker & Botts, Houston, Tex., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before THORNBERRY, JOHNSON, and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

United Paperworkers International Union, its local affiliate, and three retired union members brought this class action against Champion International Corporation, alleging breach of a collective bargaining agreement in violation of 29 U.S.C. Secs. 185(a) and 1132 and seeking damages and injunctive relief. The district court entered a take-nothing judgment from which plaintiffs appeal. We reverse and remand.

I.

In the spring of 1986, the United Paperworkers International Union and Champion International Corporation entered into a collective bargaining agreement to deal with plant restructuring at the company's mill in Pasadena, Texas. The agreement, ratified by the union membership in May 1986, included an early retirement plan, under which employees retiring on or after June 1, 1986, could continue to receive group medical insurance coverage until age 65 through authorized monthly premium deductions from their pension checks. The monthly premium was to be $15.50. When asked during negotiations what the basis was for this premium figure, the company representative said that it was equal to the Medicare Part B premium.

The agreement refers in several places to medical coverage for early retirees. In particular, exhibits 1 and 6 to the agreement, incorporated by reference, discuss medical premiums. Exhibit 1, entitled "Benefits for Employees Affected by the Mill Restructuring," provides that early retirees have to make contributions of $15.50 per month per covered individual for health insurance, and it refers the reader to the insurance plan itself for specific coverage.

Exhibit 6, entitled "Revised Medical Plan--Coverage After Retirement," provides in pertinent part,

A monthly contribution of $15.50 ^* will be required for each covered individual until that individual reaches age 65. For example, coverage for a retiree and spouse while both are under age 65 would require a contribution of $31.00 ^* per month. If the retiree reaches age 65 but the spouse has not, the contribution for the spouse would be $15.50 ^* per month until the spouse also becomes age 65 years old.

^* Contributions for the retiree medical plan are equal to the Medicare Part B premium.

Additionally, the deduction authorization signed by each retiree enrolling in the revised medical insurance program contains the following language: "I understand that the cost per month per covered individual under age 65 will be equivalent to the Medicare Part B premium."

In early 1987 the company sold its Pasadena plant to Simpson Pasadena Paper Company. On February 3, 1987, the union and the company entered into an Effects of Sale Agreement that terminated the May 1986 collective bargaining agreement but did not say anything about the May 1986 retirees. Until the end of 1987, the May 1986 retirees continued to receive medical insurance coverage at a monthly cost of $15.50.

As of January 1, 1988, the company increased the monthly premiums to $24.80 for each covered individual under age 65; this increase corresponded to an increase in the Medicare Part B premium. As of January 1, 1989, the company further increased the monthly premium to $31.90 to correspond to another Medicare Part B increase. An earlier Medicare Part B premium increase in 1987 had not resulted in an accompanying increase in the retirees' premium.

In March 1988 the union, its local affiliate, and three retired employees (collectively, the "union") brought this action against the company in the district court a quo. The court granted the union's motion for class certification in December 1988. The union alleged that the company breached the 1986 collective bargaining agreement and violated the Employee Retirement Income Security Act of 1974 (ERISA) by increasing the retirees' medical insurance premiums. It sought monetary damages and a permanent injunction.

The company moved for summary judgment. After a hearing, the court granted the motion, concluding that the collective bargaining agreement unambiguously provided that the retirees' premium would track the Medicare Part B premiums, varying exactly as the Medicare Part B premium changed.

II.

The union maintains that the collective bargaining agreement did not permit increases in the medical insurance premium of the May 1986 Pasadena plant retirees. It argues that it submitted sufficient evidence in the form of affidavits and various documents to present a genuine dispute as to the material fact of whether the collective bargaining agreement permitted such increases. Thus, it asserts, summary judgment should not have been granted. ¹

The company argues that the construction of the collective bargaining agreement is a question of law and that the sole issue on appeal is whether the district court correctly construed that agreement. It maintains that that agreement unambiguously provided for an increase in the retirees' medical insurance premium whenever the Medicare Part B premium increased and that therefore the company's actions in accordance with this construction did not breach the agreement.

A.

The company first asserts that the union has waived the right to argue that the collective bargaining agreement was ambiguous because it did not make that argument in its opening brief. The company correctly states the general proposition that any issues not raised or argued in the appellant's brief are considered waived and will not be entertained on appeal. See In re Tex. Mortgage Servs. Corp., 761 F.2d 1068, 1073-74 (5th Cir.1985). Moreover, an appellant abandons all issues not raised in its initial brief. Piney Woods Country Life School v. Shell Oil Co., 905 F.2d 840, 854 (5th Cir.1990); Nissho-Iwai Co. v. Occidental Crude Sales, Inc., 729 F.2d 1530, 1539 n. 14 (5th Cir.1984).

Although the union does not say expressly in its original brief that the collective bargaining agreement was "ambiguous," the premise of its argument is that the agreement was subject to two reasonable interpretations. The company's interpretation is that the retirees' insurance premium was to increase as the Medicare Part B premiums increased; the union's view is that the retirees' insurance premium was to remain fixed at $15.50 per month. The union asserts that the evidence it submitted in opposition to the summary judgment motion showed that the company's interpretation was not the only reasonable one, since the evidence raised a genuine issue of material fact--the parties' intent as to the amount of the insurance premium.

A contract is ambiguous if it is reasonably susceptible to more than one interpretation. International Bhd. of Boilermakers v. Local Lodge D111, 858 F.2d 1559, 1561 (11th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1955, 104 L.Ed.2d 424 (1989); Richland Plantation Co. v. Justiss-Mears Oil Co., 671 F.2d 154, 156 (5th Cir.1982) (interpreting Texas law). Since the union argues essentially that the collective bargaining agreement is reasonably susceptible to two meanings, it is asserting ambiguity. Hence, it has not waived or abandoned its claim that the collective bargaining agreement is ambiguous.

B.

The union brought this suit against the company under section 301(a) of the Labor Management Relations Act, 29 U.S.C. Sec. 185(a), ² which allows federal district courts to entertain suits for violation of contracts between an employer and a labor organization. Federal substantive law governs the interpretation and enforcement of collective bargaining agreements under section 301(a). See Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456, 77 S.Ct. 912, 917, 1 L.Ed.2d 972 (1957). Moreover, "state law, if compatible with the purpose of section 301, may be resorted to in order to find the rule that will best effectuate the federal policy." Id. at 457, 77 S.Ct. at 918. Another circuit has explained, citing Textile Workers, that "traditional rules for contractual interpretation are applied as long as their application is consistent with federal labor policies." International Union, UAW v. Yard-Man, Inc., 716 F.2d 1476, 1479 (6th Cir.1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984); see also Anderson v. Alpha Portland Indus., Inc., 836 F.2d 1512, 1517 (8th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1310, 103 L.Ed.2d 579 (1989).

However, the construction and application of a collective bargaining agreement's terms cannot be strictly confined by ordinary principles of contract law. Smith v. Kerrville Bus Co., 709 F.2d 914, 917 (5th Cir.1983); NLRB v. L.B. Priester & Son, Inc., 669 F.2d 355, 365 (5th Cir.1982). The provisions of a labor contract may be more readily expanded by implication than those of contracts memorializing other transactions. Smith v. Kerrville Bus Co., 709 F.2d at 917.

The parties do not identify, and we have not found, any federal labor policy favoring or disfavoring fixed health insurance premiums for retirees. Therefore, we apply traditional rules of contract interpretation to determine whether the collective bargaining agreement provides for a fixed premium, keeping in mind the flexibility accorded the application of...