United Paperworkers v. International Paper Co.

• Decision Date: 12 November 1991
• Docket Number: Civ. No. 90-0003-B.
• Citation: 777 F. Supp. 1010
• Parties: UNITED PAPERWORKERS INTERNATIONAL UNION, LOCAL 14, AFL-CIO-CLC, et al., Plaintiffs, v. INTERNATIONAL PAPER COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Maine

777 F. Supp. 1010

UNITED PAPERWORKERS INTERNATIONAL UNION, LOCAL 14, AFL-CIO-CLC, et al., Plaintiffs, v. INTERNATIONAL PAPER COMPANY, et al., Defendants.

Civ. No. 90-0003-B.

United States District Court, D. Maine.

November 12, 1991.

Jeffrey Neil Young, McTeague, Higbee, Libner, Madadam, Case & Watson, Topsham, Me., for plaintiffs.

S. Mason Pratt, Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, Me., for defendants.

OPINION AND ORDER ON STIPULATED RECORD

GENE CARTER, Chief Judge.

This case involves an action for severance pay for over one thousand striking members of Local 14 of the United Paperworkers International Union and Local 246 of the International Brotherhood of Firemen and Oilers (hereinafter "the Unions"). The action arises under the terms of the International Paper Company Androscoggin Mill Severance Benefit Plan (hereinafter "the Plan"), pursuant to a collective bargaining agreement between International Paper Company (hereinafter "IP" or "Defendant") and the Unions. The Plan is an employee welfare benefit plan within the meaning of 29 U.S.C. § 1002(1) of the Employee Retirement Income Security Act, as amended (hereinafter "ERISA"), which is administered solely by Defendant. Revised Stipulated Facts (hereinafter "Stip."), ¶¶ 6-7.

Originally, three individual Plaintiffs had alleged under Count I of the Second Amended Complaint (hereinafter "the Complaint") that Defendant had violated the Plan but, subsequently, the parties settled these individual claims. See Defendants' Reply Memorandum on Submission on Stipulated Record and Cross Motions for Summary Judgment at 1. Thus, Count I has been dismissed.

Parties have submitted to the Court on a stipulated record the defense of failure to exhaust administrative remedies raised in response to Count II; Count III; Count IV; and the claim in Count V that a contract existed within the meaning of Section 301 of the Labor Management Relations Act (hereinafter "LMRA"), 29 U.S.C. § 185. The parties have also submitted the following claims in Count II and Count V that the group Plaintiffs are entitled to severance pay on cross motions for summary judgment in the event the Court reaches them after consideration of the aforementioned claims.

In support of their motions now pending on a stipulated record, the parties have filed a Revised Joint Exhibit List and Revised Stipulated Facts, both filed on March 11, 1991, and Stipulation on Submission of Case for Decision, filed March 20, 1991. The Court also has before it the Memorandum of Points and Authorities in Support of Plaintiffs' Motion for Summary Judgment (hereinafter "Plaintiffs' Memorandum"), and the Memorandum in Support of Defendants' Motion for Partial Summary Judgment (hereinafter "Defendants' Memorandum"), both filed on February 15, 1991.

For the reasons that follow, under Count II, the Court finds that Plaintiffs have failed to prove by a preponderance of the evidence that their failure to exhaust their administrative remedies under the 1984 Agreement and implemented offer was justified. The court dismisses Count II and will therefore not reach the cross motions for summary judgment.

With respect to Count III, the Court finds that Defendants failed to comply with the reporting and disclosure requirements of 29 U.S.C. § 1021(b) and failed to have a claims procedure that complied with the provisions of 29 U.S.C. § 1133 of ERISA and the applicable Code of Federal Regulations. In addressing the merits of Count III, the Court concludes, however, that Plaintiffs have failed to show significant reliance upon, or prejudice arising from, Defendants' violations of ERISA. Accordingly, the Court will dismiss Count III.

With respect to Counts IV and V, the Court will dismiss these claims because of Plaintiffs' failure to prove by a preponderance of the evidence that futility justified their failure to exhaust their administrative remedies under the 1984 Agreement or implemented offer.¹

I. Background

The Unions and IP have been parties to a series of collective bargaining agreements at the Androscoggin Mill from 1965 to June 16, 1987, which have set forth the terms and conditions of employment for members of the Unions working for IP in production and maintenance positions. Stip. ¶ 9. The most recent of these collectively-bargained agreements was effective from June 1, 1984 until June 16, 1987, after the Unions gave notice of their intent to terminate it. Stip. ¶¶ 10-11.

When IP and the Unions were unable to reach agreement upon a collective bargaining agreement to succeed the 1984 agreement, members of the Unions, including most of the Plaintiffs, commenced an economic strike on June 16, 1987, which lasted until October 9, 1988. Stip. ¶ 12. On June 22, 1987, before IP hired any replacement workers, it notified all Plaintiffs of the possibility it would do so. Stip. ¶ 51. Beginning on June 29, 1987, and continuing thereafter, IP hired replacement workers to perform the work formerly performed by striking members of the Unions. Stip. ¶ 13.

On October 13, 1987, IP notified the Unions it was implementing its final offer, which consisted of the terms of the 1984 Agreement, but not including the provisions of section 7 of the 1984 Agreement relating to final and binding arbitration. Stip. ¶ 14. Mill Rule 23 was the provision in the 1984 Agreement which governed the payment of severance pay. Stip. ¶ 15. It has been included in all production and maintenance collective bargaining agreements at the Androscoggin Mill since the Mill began operating in 1965. Stip. ¶ 16.

On August 12, 1987, the Unions requested that IP pay the strikers severance pay. IP denied this request, asserting that the strikers had not been laid off within the meaning of Mill Rule 23. Stip. ¶ 19. Section 7 of the 1984 Agreement contained the grievance and arbitration procedure for disputes arising under the Agreement, including disputes as to the payment of severance benefits under Mill Rule 23. Stip. ¶ 20.

The implemented offer has remained in effect since October 13, 1987, with no material changes. Stip. ¶ 21. A portion of the implemented offer eliminated one hundred seventy-eight production and maintenance positions represented by the Unions, including the layoff of the one hundred fifty-one most junior members of the Unions. Stip. ¶¶ 22-23. Pursuant to Mill Rule 23, IP paid severance pay to employees laid off as a result of the implemented offer.

At a negotiating session on November 13, 1987, at which the parties discussed the payment of severance pay to employees laid off as a result of the implemented offer, the Unions questioned why all the strikers would not be paid severance pay. IP asserted that strikers were not entitled to severance pay because the strike was "employee action," not "company action." Stip. ¶ 28. IP sent to all of the strikers a letter dated February 1, 1988, advising them, inter alia, that "strikers who have been permanently replaced are not eligible for severance pay." Stip. ¶ 58.

On October 9, 1988, Plaintiffs and the Unions ended the strike and made an unconditional offer to return to work at the Androscoggin Mill. Stip. ¶ 37. Upon the conclusion of the strike, IP elected to retain the replacement workers rather than immediately reinstate the former strikers who were Union members. IP agreed to recall and continues to recall former strikers, pursuant to a recall agreement between IP and the Unions, only as replacement workers have quit or been terminated or new positions were created. Stip. ¶ 38.

On December 8, 1988, the Unions filed a grievance requesting that IP pay severance benefits to all strikers who had not been recalled within six weeks of the end of the strike. Stip. ¶ 39. On January 18, 1989, the Unions requested that Defendants pay severance benefits to all strikers who had not been recalled since the end of the strike, and one-half severance benefits to all strikers who had been recalled between November 27, 1988 and January 9, 1989. Stip. ¶ 40.

On February 14, 1989, Defendants denied the Unions' grievance for severance pay on behalf of the group Plaintiffs. Stip. ¶ 41. The group Plaintiffs did not request a second or third step in the grievance procedure under section 7 of the 1984 Agreement. Stip. ¶¶ 42-43. The group Plaintiffs also did not request arbitration under Section 7 of the 1984 Agreement. Stip. ¶ 44. Additionally, the group Plaintiffs did not request a second or third step in the grievance procedure, or arbitration, under the implemented offer. Stip. ¶¶ 45-47.

On March 21, 1989, counsel for Plaintiffs filed with the National Labor Relations Board (hereinafter "NLRB") a charge against IP alleging that IP's refusal to pay any severance benefits to the group Plaintiffs constituted an unfair labor practice. Stip. ¶ 48. On May 2, 1989, the Regional Director of the NLRB refused to issue a complaint for an unfair labor practice against IP. Stip. ¶ 50.

Following the NLRB's action, the Unions filed the instant suit on January 3, 1990.

II. Count II

The parties stipulate that the Plaintiffs did not exhaust their administrative remedies before filing their suit in this Court. Stip., ¶¶ 41-47.² Plaintiffs allege under Count II that they are excused from exhausting these remedies under ERISA because of futility and denial of meaningful access to such remedies. Complaint ¶ 55.³ For the reasons that follow, the Court finds that Plaintiffs have failed to prove by a preponderance of the evidence that their failure to exhaust their administrative remedies was justified, based either on futility or denial of meaningful access.

Although ERISA does not by its terms mandate exhaustion of administrative remedies prior to instituting suits for denial of benefits under the Act, courts have uniformly applied the exhaustion doctrine⁴ to such suits.⁵ See, e.g., Springer v. Wal-Mart Associates' Group Health Plan, 908 F.2d 897, 899 (11th Cir.1990); Weldon v. Kraft, Inc., 896 F.2d 793,...