United Steelworkers v. Cooper Tire & Rubber Co.

• Decision Date: 17 January 2007
• Citation: 474 F.3d 271
• Parties: UNITED STEELWORKERS OF AMERICA, AFL-CIO, CLC, et al., Plaintiffs-Appellees, v. COOPER TIRE & RUBBER COMPANY, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

474 F.3d 271

UNITED STEELWORKERS OF AMERICA, AFL-CIO, CLC, et al., Plaintiffs-Appellees, v. COOPER TIRE & RUBBER COMPANY, et al., Defendants-Appellants.

United States Court of Appeals, Sixth Circuit.

Argued: October 31, 2006.

Decided and Filed: January 17, 2007.

COPYRIGHT MATERIAL OMITTED

ARGUED: Michael T. McMenamin, Walter & Haverfield, Cleveland, Ohio, for Appellants. David M. Fusco, Schwarzwald & McNair, Cleveland, Ohio, for Appellees. ON BRIEF: Michael T. McMenamin, Nancy A. Noall, Morris L. Hawk, Walter & Haverfield, Cleveland, Ohio, for Appellants. David M. Fusco, James G. Porcaro, Melanie R. Bordelois, Schwarzwald & McNair, Cleveland, Ohio, for Appellees.

Before SILER, GILMAN, and GRIFFIN, Circuit Judges.

OPINION

SILER, Circuit Judge.

Cooper Tire & Rubber Company ("Cooper") and United Steelworkers of America Local 207L ("Local 207L" or the "Union") were parties to a collective bargaining agreement ("CBA") containing an arbitration clause. The parties simultaneously executed a side letter that limited company contributions to retiree healthcare benefits. Following a dispute involving one of the side letter's terms, Local 207L filed suit in federal district court on behalf of the retirees, seeking to compel arbitration of the grievance. Local 207L claimed that the disagreement was arbitrable under the scope of the CBA's arbitration clause even though the side letter did not contain a separate provision for arbitration. The district court agreed, granting the Union's motion for summary judgment on the issue of arbitrability. For the reasons that follow, we AFFIRM the district court's decision to compel arbitration of the dispute over the side agreement. However, we VACATE the district court's order certifying the class under FED.R.CIV.P. 23(b) and REMAND for further proceedings consistent with this opinion.

I.

Cooper, a manufacturer of rubber and ties, has a plant in Findlay, Ohio (the "Plant"). Local 207L and the United Steelworkers of America¹ have been parties to a series of CBAs with Cooper since 1941. Together, the USW and Local 207L represent the Plant's bargaining unit employees.²

The Union and Cooper were parties to a CBA, originally effective from November 6, 2000, to October 31, 2003, and extended to February 16, 2004, that governed the terms and conditions of the Plant's bargaining unit employees (the "2000 Basic Agreement"). Article II of the 2000 Basic Agreement pertains to the grievance procedure, which culminates in arbitration. The relevant language of Article II provides:

A grievance is a complaint, dispute, or controversy between the Company and the Union, in which it is claimed that the Company has failed to comply with an obligation assumed by it under the terms of this Agreement, and which involves either 1) a dispute as to the facts involved, [or] 2) a question concerning the meaning, interpretation, scope, or application of this Agreement. . . . Any grievance or dispute which remains unsettled after following the Grievance Procedure outlined above may be appealed to arbitration by the party desiring arbitration. . . . The decision of the . . . [a]rbitrator shall be final and binding to both parties.

The Union and Cooper were also parties to an Employee Pension and Insurance Agreement, originally effective from November 6, 2000, to October 31, 2003, which also was extended until February 16, 2004 (the "2000 Benefits Agreement"). Article 14 of the 2000 Benefits Agreement contains an appeals provision that provides:

If any dispute . . . shall arise . . . between the Company and any Employee, Pensioner, or former Employee who has retired during the life of the Agreement . . . or between the Local Union and Company as to the interpretation or application of this Agreement, such dispute shall . . . be taken up as a grievance beginning with the next step preceding arbitration, and be thereafter handled in accordance with the Grievance Procedure provided in the Basic Labor Agreement.

Article 11 of the 2000 Benefits Agreement covered healthcare benefits for employees and their dependents. Section 11.5 dealt specifically with medical benefits of retired employees and their spouses and dependents. However, neither the 2000 Basic Agreement nor the 2000 Benefits Agreement mentioned the cap on Cooper's contributions toward retiree healthcare that is outlined in the side letter.³

As is common in labor agreements, each CBA and all related agreements between Cooper and the Union were included in a collective bargaining "packet." Any side agreements between Cooper and the Union were also included. Since 1991, every packet has contained a side letter that caps Cooper's annual contributions toward retiree healthcare benefits (the "FASB Letters" or "Side Letters").⁴ The FASB Letters were drafted in response to the Financial Accounting Standards Board's implementation of FAS-106, in 1991.⁵ Cooper's implementation of the FASB Letters was consistent with accounting practices throughout the rubber industry. Cooper and the Union disagree about whether the FASB Letters were "negotiated" or were the unilateral decision by Cooper. According to the Union, the fact that there was a signature line for the Union president which stated "Agreed" illustrates that the FASB Letters were a negotiated agreement. Cooper contends that its decision to implement the FASB Letters was unilateral and would have been carried out with or without the Union's consent.

The 2000 FASB Letter provides:

The Company shall provide benefits under the Basic Medical Benefits Program, and the Major Medical Benefits Program as set forth in the Pension and Insurance Agreement dated November 6, 2000 for retirees and their dependents subject to the following limitations:

1. The average annual Company contributions to be paid for all health care benefits per retired employee (including their surviving spouse) who retires on or after November 24, 1991, October 17, 1994, November 12, 1997, and November 6, 2000 shall not exceed $9,800 for retirees (including surviving spouses) under age 65 and $3,850 for retirees (including surviving spouses) over age 65. The age of any such retiree or surviving spouse will be determined as of each January 1 for the entire year.

2. If the average annual cost of health care benefits for each such group described in Paragraph 1 above exceeds the specified amount, the cost in excess of that amount shall be allocated evenly to all retired employees (including surviving spouses) in such group.

3. Notwithstanding the foregoing, no retired employee or surviving spouse shall be obligated to contribute for such excess health care cost until January 1, 2004.

4. The average annual cost of health care benefits for each group shall be determined by taking the total annual health care payments made by the Company for each group separately and dividing each amount by the number of retired employees (including surviving spouses) in such group as of January 1 of each year.

5. The parties agree that the amount of the maximum average annual Company contributions for health care benefits as described in Paragraph 1 above shall be considered a mandatory subject of Collective Bargaining in any subsequent negotiations. It is further agreed by the parties that this issue shall not be influenced by or bound to any previous or future Board or Court decisions.

Notably, the FASB Letters do not contain any language relating to arbitration or other grievance procedures should a dispute develop. Since 1991, the FASB Letters have been discussed and executed at the same time as the Basic and Benefits Agreements. The only factor distinguishing the execution of the Basic and Benefits Agreements from the FASB Letters was their dates of expiration. For example, while the 2000 Basic and Benefits Agreements were adopted on November 6, 2000, the same date as the 2000 FASB Letter, they expired on October 31, 2003, whereas the FASB Letter would not take effect until January 1, 2004.

While the Union had requested that the FASB Letters and all side letters be included in the employee contract booklet, Cooper declined, citing that the volume of such a booklet would be impracticable. Cooper admits that whether a side letter is included in the contract booklet is a very minor factor in determining if the content of a side letter is arbitrable.

Effective January 1, 2004, Cooper implemented the 2000 FASB Letter in accordance with its interpretation of the term "per retired employee."⁶ On January 5 2004, the Union filed a grievance with Cooper. Cooper responded that the 2000 FASB Letter was not subject to grievance or arbitration procedures because: 1) it does not involve an obligation imposed by the 2000 Basic Agreement as to the facts involved, or raising a question concerning the "meaning, interpretation, scope, or application" of the 2000 Basic Agreement; 2) it does not involve a dispute concerning the interpretation or application of the 2000 Benefits Agreement; and 3) the Union has no standing to pursue the grievance as it involves claims by non-Union members.

In July 2004, the Union sued Cooper in federal district court to compel arbitration, alleging the following causes of action: 1) claim to compel arbitration under Section 301 of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185, by labor unions and retirees, on behalf of themselves and as class representatives, over the contributions that the retirees are required to pay for medical coverage; or, in the alternative; 2) breach of contract under Section 301 of the LMRA; and also, in the alternative; 3) violation of Section 502(a)(1)(B) and (3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) and (3). In December 2004, the parties agreed to an order certifying the class under FED. R.CIV.P. 23(b)(2). Class A (the "Retirees") consisted of all individuals meeting the following criteria:

(a) is a former hourly employee...