United Steelworkers 2116 v. Cyclops Corp.

• Decision Date: 20 January 1987
• Docket Number: No. C-1-83-1051.,C-1-83-1051.
• Citation: 653 F. Supp. 574
• Parties: UNITED STEELWORKERS 2116, et al., Plaintiffs, v. CYCLOPS CORPORATION, d/b/a Empire-Detroit Steel Division, Defendant.
• Court: U.S. District Court — Southern District of Ohio

653 F. Supp. 574

UNITED STEELWORKERS 2116, et al., Plaintiffs, v.CYCLOPS CORPORATION, d/b/a Empire-Detroit Steel Division, Defendant.

No. C-1-83-1051.

United States District Court, S.D. Ohio, W.D.

January 20, 1987.

William K. Shaw, Jr., Portsmouth, Ohio, for plaintiffs.

Daniel O. Berger, Cincinnati, Ohio, for defendant.

ORDER

HERMAN JACOB WEBER, District Judge.

This matter is before the Court upon Motions for Summary Judgment filed by both plaintiffs and defendant(doc. nos. 18 and 19).In addition, plaintiffs have filed a Motion to StrikeDefendant's Supplemental Affidavits (doc. no. 33).

The parties have entered into stipulations concerning this case(doc. no. 16).The parties have stipulated that Cyclops Corporation("Cyclops"), a Pennsylvania corporation, is and was at all relevant times, engaged in various businesses, including steel production at several sites.Prior to November 22, 1980, Cyclops owned and operated steel-making and related production facilities in the Portsmouth, Ohio area ("the Portsmouth facility"), these being the same facilities at which plaintiffs formerly were employed by Cyclops.Cyclops operated the Portsmouth facility as part of its Empire-Detroit Steel Division, a division of Cyclops.Encompassed in the Portsmouth facility as of January, 1980, were an operating coke plant, blast furnace and open-hearth furnaces.The coke plant is the same facility at which the named individual plaintiffs are or were employed by New Boston Coke Corporation("New Boston").

United Steelworkers of America ("International") was, since at least the 1940's, the collective bargaining representative for hourly paid production and maintenance, clerical, technical and plant protection employees who were employed by Cyclops or its predecessors at its Portsmouth facility.Local Union # 2116 of the United Steelworkers of America ("Local") is a subdivision of the International.The International continues to be the collective bargaining representative of all the Cyclops former hourly employees who became employed as hourly employees by New Boston.The International and Cyclops, or its predecessors since the 1940's, have entered into a series of collective bargaining agreements which, since the 1950's, have included pension provisions.

In effect from August 1, 1977 through July 31, 1980 were collective bargaining agreements for the production and maintenance employees, the clerical and technical employees and the plant protection employees.Also in effect for that same period was a pension agreement which was to expire on December 31, 1980.

On July 24, 1980, the parties entered into an agreement effective August 1, 1980("the extension agreement"), which extended the 1977 agreements and pension plan until July 31, 1981 when they expired.

In early 1980, Cyclops determined to cease its operations at its Portsmouth facility.Cyclops attempted to sell the entire facility as a going concern.Ultimately, Cyclops shut down its open-hearth and blast furnace facilities, selling the assets attributable to these facilities.After the shut down of the open-hearth and blast furnace, Cyclops continued operation of the coke plant and attempted to find a purchaser for the assets comprising the coke plant on a going concern basis.

On August 25, 1980, the coke ovens at the coke plant were put into a condition known as "hot idle" under which the temperatures of the coke ovens were maintained in order to prevent cooling which would severely damage the refractory linings of the ovens.This hot idle phase was effected in anticipation of resumption of coke production.The employment of the plaintiffs with Cyclops was not interrupted by this condition.

Cyclops sold the assets of the coke plant to New Boston on November 21, 1980.At the time of the sale, New Boston was a wholly-owned subsidiary of McLouth Steel Corporation("McLouth").All stock of New Boston is now held by Fred J. Dery, Trustee of New Boston, who was appointed by the United States Bankruptcy Court for the Eastern District of Michigan, Southern Division.

Pursuant to the sale transaction, New Boston desired to employ individuals who were experienced in the operations of the Portsmouth facility, particularly the coke plant.In response, Cyclops created a list which eventually included 227 hourly employees, including plaintiffs, who were designated to work for New Boston following the sale.(Hereinafter these employees are sometimes called the "listed employees").

In anticipation of the sale of the coke works to New Boston, the International and New Boston entered into negotiations commencing in September of 1980 for the purpose of negotiating a collective bargaining agreement and a pension agreement between the parties which was to become effective with the purchase of the coke works by New Boston from Cyclops and which was to cover all hourly employees hired by New Boston, including the listed employees.The negotiations were successful and on November 12, 1980, the International and New Boston entered into a collective bargaining agreement.A pension agreement was separately executed in March, 1981, effective November 21, 1980.The collective bargaining agreement and pension agreement were in all relevant respects identical to those which had existed between Cyclops and the International.It was the expressed intent of the International and New Boston that the New Boston plan would provide the same terms and conditions as provided in the pension plan negotiated between Cyclops and the International for hourly employees at Portsmouth ("the Cyclops Hourly Plan"), provide identical levels of pension benefits and contain the same eligibility requirements for pensions as did the Cyclops Hourly Plan.It was the expressed intent of the International and New Boston that New Boston would grant full credit to the listed employees for all of their accumulated prior service with Cyclops.Plaintiffs agreed to accept and use their accumulated prior service credits with Cyclops in the New Boston Pension Plan.

Pursuant to the sale transaction, New Boston agreed to assume all accrued (vested and unvested) pension liabilities of the listed employees.In consideration therefor, Cyclops agreed to transfer to the New Boston Plan Trustee, assets held by the Cyclops Hourly Plan on behalf of the listed employees.

The International negotiated exclusively with New Boston in all these matters.The International did not negotiate or enter into any agreement with Cyclops with respect to the effects of the sale to New Boston or the transfer of pension plan assets and liabilities to New Boston from Cyclops.

On February 6, 1981, the Trustee of the Cyclops Hourly Plan transferred assets in the amount of $168,380, plus interest since October 31, 1980, to the bank designated in the agreement as the New Boston Plan Trustee.This sum represents the portion of Cyclops Hourly Plan assets which Cyclops actuaries, Towers, Perrin, Forster and Crosby ("TPF & C"), advised was allocable to the listed employees at the Cyclops Portsmouth facility pursuant to the federal law governing contributions to pension plans.TPF & C had originally calculated the amount necessary as $327,491, but due to changes in the identities of the listed employees, new calculations were made.TPF & C is in the business of rendering professional actuarial advice and is a national actuarial firm qualified with the Internal Revenue Service ("IRS") as an enrolled actuary under the Employment Retirement Income Security Act of 1974("ERISA"), 29 U.S.C. § 1001 et seq.

The Cyclops Hourly Plan included as participants the 227 listed employees, including the named plaintiffs.The Cyclops Hourly Plan was on November 21, 1980 and is now a qualified plan under § 401 of the Internal Revenue Code("the Code") and the trust established thereunder is an exempt trust under § 501 of the Code.

After it purchased the coke plant, New Boston and the trustee of the New Boston plant accepted assets transferred from the trustee of the Cyclops Hourly Plan.New Boston made contributions to the New Boston Plan trust and the New Boston Plan administrator received and granted applications for pension benefits under the New Boston Plan.All plaintiffs accepted and were granted full credit for their service with Cyclops by the New Boston Plan.

Prior to November 21, 1980, the listed Cyclops employees were told they would continue in employment with the purchasing company, New Boston.After November 21, 1980, none of the 227 listed employees worked for Cyclops.Immediately thereafter, at least 222 of those listed employees acquired the same employment rights with New Boston as they had possessed with Cyclops.The parties to the litigation do not stipulate as to the employment status with New Boston of five listed employees; Randolph D. Sparks, Charles Duncan, Isaac R. Parker, Jack E. Besco and Juanita B. Jarrells.

Since the November 21, 1980 sale, New Boston has owned and operated the coke plant which remains in operation as of this date.New Boston has made contributions to the New Boston Plan in full compliance with IRS funding regulations for 1982 and 1983 plan years.Funding for the 1984 plan year is not due until September of 1985.New Boston obtained a waiver from the IRS of minimum funding requirements for the 1981 plan year and it has complied with the payment schedule required to be maintained under this waiver to the present time.

All listed employees, including the named plaintiffs, except for those who elected to retire or were not required to work, continued to be employed by New Boston and each of these employees continued to perform similar duties with New Boston.Further, all listed employees who have applied for pension from New Boston have received such pension with full credit for their Cyclops service with the sole exception of Charles Rose.The parties have agreed that the factual circumstances of the denial of Mr....