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Latest Update: Mar. 02, 2020
Summary: RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 File Name: 07a0024p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _ X - UNITED STEELWORKERS OF AMERICA, AFL-CIO, Plaintiffs-Appellees, - CLC, et al., - - No. 05-4641 , v. > - - Defendants-Appellants. - COOPER TIRE & RUBBER COMPANY, et al., - N Appeal from the United States District Court for the Northern District of Ohio. No. 04-07411—David D. Dowd, Jr., District Judge. Argued: October 31, 2006 Decided and Filed:
Summary: RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 File Name: 07a0024p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _ X - UNITED STEELWORKERS OF AMERICA, AFL-CIO, Plaintiffs-Appellees, - CLC, et al., - - No. 05-4641 , v. > - - Defendants-Appellants. - COOPER TIRE & RUBBER COMPANY, et al., - N Appeal from the United States District Court for the Northern District of Ohio. No. 04-07411—David D. Dowd, Jr., District Judge. Argued: October 31, 2006 Decided and Filed: J..
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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 07a0024p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
X
-
UNITED STEELWORKERS OF AMERICA, AFL-CIO,
Plaintiffs-Appellees, -
CLC, et al.,
-
-
No. 05-4641
,
v. >
-
-
Defendants-Appellants. -
COOPER TIRE & RUBBER COMPANY, et al.,
-
N
Appeal from the United States District Court
for the Northern District of Ohio.
No. 04-07411—David D. Dowd, Jr., District Judge.
Argued: October 31, 2006
Decided and Filed: January 17, 2007
Before: SILER, GILMAN, and GRIFFIN, Circuit Judges.
_________________
COUNSEL
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.
_________________
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.
1
No. 05-4641 United Steelworkers et al. v. Cooper Page 2
Tire & Rubber Co. et al.
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 tires, 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 Cooper2
since 1941. Together, the USW and Local 207L represent the Plant’s bargaining unit employees.
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
1
United Rubber Workers of America was the predecessor to the United Steelworkers of America at the Plant
prior to their 1995 merger. In April 2005, the United Steelworkers of America, AFL-CIO, CLC merged with the Paper,
Allied-Industrial, Chemical and Energy Workers International Union to form the United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (the “USW”).
2
The USW and Local 207L are sometimes hereinafter collectively referred to as the “Union.”
3
Courts often use the terms “side letter,” “side agreement,” “side settlement,” and “settlement agreement”
interchangeably. For purposes of this opinion, we use “side letter” and “side agreement” to connote an agreement
separate from the underlying CBA. However, where the agreement settles a dispute arising under the underlying CBA,
No. 05-4641 United Steelworkers et al. v. Cooper Page 3
Tire & Rubber Co. et al.
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 5in response to the Financial Accounting Standards
Board’s implementation of FAS-106, in 1991. 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.
we use the terms “settlement agreement” or “side settlement.”
4
The first FASB Letter was dated November 24, 1991. Subsequent FASB Letters were dated October 17, 1994;
November 12, 1997; and November 6, 2000. Except for the dates and the monetary threshold triggering the caps, the
substance of the Side Letters has not changed.
5
FAS-106 was an accounting rule requiring companies to report all post-retirement benefit obligations other
than pensions on their balance sheets instead of on a pay-as-you-go basis. By setting a cap on retiree healthcare
liabilities, companies safeguarded against having to report astronomical amounts in liabilities.
No. 05-4641 United Steelworkers et al. v. Cooper Page 4
Tire & Rubber Co. et al.
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 of Cooper Tire who worked at the Plant;
(b) retired from Cooper Tire on or after November 24, 1991;
(c) was represented by the USWA, or its predecessors, for purposes of collective
bargaining prior to retirement;
(d) was a retired participant of the Plan at any time subsequent to January 1,
2004; and
6
Cooper interprets “per retired employee” as applying to the employee’s entire household, while the Union
asserts that it applies on an individual basis.
No. 05-4641 United Steelworkers et al. v. Cooper Page 5
Tire & Rubber Co. et al.
(e) has been required to pay contributions toward the cost of coverage under the
Plan (either for him or herself or for him or herself and eligible dependents)
at any time subsequent to January 1, 2004.
Class B (the “Survivors”) consisted of those individuals qualifying as the following:
(a) is a surviving spouse of an individual who:
(i) was a former hourly employee of Cooper Tire who worked at the
Plant;
(ii) retired from Cooper Tire on or after November 24, 1991; and
(iii) was represented by the USWA, or its predecessors, for purposes of
collective bargaining prior to retirement;
(b) was a beneficiary of the Plan at any time subsequent to January 1, 2004; and
(c) has been required to pay contributions toward the cost of coverage under the
Plan (either for him or herself alone or for him or herself and eligible
dependents) at any time subsequent to January 1, 2004.
This class also includes eligible dependents of all individuals who meet the criteria
above.7
The Stipulation and Agreed Order Concerning Class Certification bound “all members of Class A
or B” to “any . . . arbitration award resolving the ‘Grievance,’” without providing the class members
an opportunity to opt out of representation by the Union.
Cooper moved for summary judgment on grounds that: 1) it never agreed to submit disputes
over the FASB Letter to arbitration; 2) the FASB Letter is collateral to the Basic and Benefits
Agreements and, therefore, is not arbitrable under either of those agreements’ arbitration clauses;
3) the Union does not have standing to arbitrate a dispute on behalf of the Retirees or the Survivors;
and 4) the Union has no authority to waive the Retirees’ or Survivors’ rights to litigate their ERISA
claims. The district court denied Cooper’s motion for summary judgment and granted the Union’s
motion for summary judgment on the issue of arbitrability. It held that the presumption of
arbitrability had not been overcome with respect to the 2000 Side Letter. The district court also held
that even though the Union no longer serves as the exclusive bargaining representative of a retired
employee, it still has standing to pursue the rights of the Retirees and Survivors as a party to the
CBAs.
On appeal, Cooper argues that the district court erred: 1) in finding that the dispute over the
Side Letter was arbitrable; 2) in finding that the Union has standing to arbitrate claims on behalf of
the Retirees and Survivors, who are no longer or who have never been represented by the Union;
and 3) in waiving the class members’ rights to a federal court forum by ordering arbitration of their
claims against Cooper, with no opportunity to opt out of class representation by the Union.
7
The Retirees and the Survivors are sometimes collectively referred to as the “class members.”
No. 05-4641 United Steelworkers et al. v. Cooper Page 6
Tire & Rubber Co. et al.
II.
A. Standard of Review
We review the district court’s decision denying Cooper’s motion for summary judgment de
novo. See McMullen v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir. 2004). Similarly, we review de
novo the district court’s decision to compel arbitration of a particular dispute. See Floss v. Ryan’s
Family Steak Houses, Inc.,
211 F.3d 306, 311 (6th Cir. 2000) (citations omitted). Whether a
claimant has standing is a question of law that we review de novo. See United States v. Miami Univ.,
294 F.3d 797, 806 (6th Cir. 2002) (citation omitted). Finally, we review a district court’s grant of
class certification for an abuse of discretion. See Coleman v. General Motors Acceptance Corp.,
296
F.3d 443, 446 (6th Cir. 2002).
B. Arbitrability of the 2000 FASB Letter
In deciding the arbitrability of a dispute, we begin with the presumption that national labor
policy favors arbitration. See Gen. Drivers, Salesmen & Warehousemen’s Local Union No. 984 v.
Malone & Hyde, Inc., 23 F.3d 1039, 1043 (6th Cir. 1994) (citing United Steelworkers v. Warrior
& Gulf Navigation Co.,
363 U.S. 574, 582 (1960)). Our analysis is guided by four principles set
forth in AT & T Technologies, Inc. v. Communications Workers,
475 U.S. 643 (1986), and
summarized by this circuit as follows:
1) a party cannot be forced to arbitrate any dispute that it has not obligated itself by
contract to submit to arbitration; 2) unless the parties clearly and unmistakably
provide otherwise, whether a collective bargaining agreement creates a duty for the
parties to arbitrate a particular grievance is a question for judicial determination;
3) in making this determination, a court is not to consider the merits of the
underlying claim; and 4) where the agreement contains an arbitration clause, the
court should apply a presumption of arbitrability, resolve any doubts in favor of
arbitration, and should not deny an order to arbitrate unless it may be said with
positive assurance that the arbitration clause is not susceptible of an interpretation
that covers the asserted dispute.8
Int’l Union v. Cummins, Inc., 434 F.3d 478, 485 (6th Cir. 2006) (citing United Steelworkers v. Mead
Corp..
21 F.3d 128, 131 (6th Cir. 1994)). “The presumption favoring arbitration is based on a policy
recognizing arbitration as a ‘substitute for industrial strife,’ see Malone &
Hyde, 23 F.3d at 1043
(quoting Warrior &
Gulf, 363 U.S. at 578)), and on the belief that arbitrators, more so than the
8
Cooper contends that because the fourth principle – presuming arbitrability – only applies where the agreement
contains an arbitration clause, it is not applicable to side agreements that, as here, do not contain a separate arbitration
clause. Cooper’s argument is flawed for several reasons. Namely, it does not cite to any case that supports this novel
proposition. Moreover, the presumption favoring arbitrability is a principle that courts are to apply in making the
determination of “whether a collective bargaining agreement creates a duty for the parties to arbitrate a particular
grievance.” See Cummins, 434 F.3d at 485. The dispute between Cooper and the Union involves whether the Basic or
Benefits Agreement creates a duty for the parties to arbitrate their dispute over the FASB Letter. This is exactly the type
of dispute where the presumption favoring arbitrability is to be applied; the fact that the grievance is over a side letter
is of little consequence. This conclusion is supported by our policy reasons for favoring arbitration, which are just as
prominently raised by a grievance over a side letter. See Malone &
Hyde, 23 F.3d at 1043 (citations omitted); see also
Warrior &
Gulf, 363 U.S. at 578-79 (“[The Collective Bargaining Agreement] is more than a contract; it is a generalized
code to govern a myriad of cases which the draftsmen cannot wholly anticipate. [It] covers the whole employment
relationship.”) (citation and footnote omitted); Inlandboatmens Union v. Dutra Group,
279 F.3d 1075, 1079 (9th Cir.
2002) (“[A] collective bargaining agreement is not limited solely to the specific provisions of the basic labor contract
formally executed by the parties, but it may also include, among other things, written side agreements.”) .
No. 05-4641 United Steelworkers et al. v. Cooper Page 7
Tire & Rubber Co. et al.
courts, possess the proper experience and expertise to resolve labor disputes,” id. (citing Litton Fin.
Printing Div’n v. NLRB,
501 U.S. 190, 213-14 (1991) (Marshall, J., dissenting)).
The question presented here, whether a dispute over a side agreement that does not provide
for arbitration falls within the CBA’s arbitration clause, is one that this court has not previously
addressed. There is a split among the circuits that have spoken on this issue. The Second, Fourth,
and Eighth Circuits apply the “collateral” test in determining whether a dispute over a side
agreement is arbitrable. Under the collateral test, courts consider the similarity of the side
agreement’s subject matter to the subject matter of the CBA. If the subject matter is dissimilar, the
side agreement is deemed collateral to the CBA. However, where the side agreement is “integral”
to the CBA, courts permit arbitration of disputes over its provisions. See, e.g., Cornell Univ. v. UAW
Local 2300, 942 F.2d 138, 140 (2d Cir. 1991) (holding that a “letter of understanding” was
“collateral” to the CBA and therefore not governed by the CBA’s arbitration clause); Adkins v.
Times-World Corp.,
771 F.2d 829, 830-31 (4th Cir. 1985) (holding that an “addendum” to the CBA
was integral to it and therefore subject to the arbitration clause); United Steelworkers v. The Duluth
Clinic, Ltd.,
413 F.3d 786, 788 (8th Cir. 2005) (“This court . . . follows the Second Circuit’s
approach.”).
Three other circuits, the Third, Seventh, and Ninth, have adopted the “scope” test. They hold
that unless the parties indicate otherwise, disputes over a side agreement are arbitrable if the subject
matter of the side agreement is within the scope of the CBA’s arbitration clause. See, e.g., L. O.
Koven & Bro., Inc. v. Local Union No. 5767, United Steelworkers, 381 F.2d 196, 204-05 (3d Cir.
1967) (concluding that a dispute over a side agreement that was silent as to arbitrability was
governed by the CBA’s arbitration clause because the underlying subject was one “ordinarily a
matter for consideration by an arbitrator” under the CBA); Niro v. Fearn Int’l, Inc.,
827 F.2d 173,
175 (7th Cir.1987) (holding that a “settlement agreement is an arbitrable subject when the
underlying dispute is arbitrable”); Dutra
Group, 279 F.3d at 1080 (holding that “disputes arising
under a side agreement must be arbitrated if the dispute relates to a subject that is within the scope
of the CBA’s arbitration clause”).
We agree with the scope test as applied by the Ninth Circuit.9 In determining the
arbitrability of side letters and side agreements, we begin our inquiry by analyzing the CBA’s
arbitration clause. See Dutra Group, 279 F.3d at 1080. With the scope of the arbitration clause in
mind, we then look to the subject matter of the side agreement to determine if it falls within the
clause’s intended coverage.
Id. Of course, parties may exclude disputes arising under a side
agreement from arbitration should they include a statement to that effect in the arbitration clause of
the CBA or in the side agreement itself.
Id. at 1080 n.6 (citation omitted).
Turning to the arbitration clause in the 2000 Benefits Agreement, it provides for arbitration
of “any dispute . . . as to the interpretation or application of this Agreement.” Recently, we noted
that “the presumption of arbitrability is particularly applicable where the arbitration clause provides
for arbitration of any controversy involving the interpretation of the CBA.” Cleveland Elec.
Illuminating Co. v. Util. Workers, Local 270, 440 F.3d 809, 814 (6th Cir. 2006) (citing Commc’ns
9
We do not agree with the Union’s assertion that this circuit has already adopted the scope test as evidenced
by our decisions in Utility Workers Union, Local 118 v. Oh. Edison Co., No. 97-4332, 1998 WL 869941 (6th Cir. Dec.
3, 1998); Malone &
Hyde, 23 F.3d at 1043; and Amalgamated Clothing Workers v. Ironall Factories Co.,
386 F.2d 586
(6th Cir. 1967). While these cases involved disputes over settlement agreements that we determined were arbitrable
under the CBA’s arbitration clause, each of the settlement agreements resolved grievances that were already arbitrable
under the underlying CBA. Here, the FASB Letter is a side letter, not a settlement agreement resolving an underlying
dispute that was arbitrable in the first place under the CBA . Therefore, this case presents a question of first impression
for our court.
No. 05-4641 United Steelworkers et al. v. Cooper Page 8
Tire & Rubber Co. et al.
Workers v. Mich. Bell Tel. Co., 820 F.2d 189, 193 (6th Cir. 1987)); see also Simon v. Pfizer, Inc.,
398 F.3d 765, 775 (6th Cir. 2005) (interpreting “any dispute arising out of an agreement” broadly)
(emphasis omitted). Construing the scope of the 2000 Benefits Agreement’s arbitration clause
broadly, we next turn to the subject matter of the side agreement. Here, the 2000 FASB Letter
concerns retirement healthcare contribution caps. While the narrow subject of retirement healthcare
contribution caps is not discussed in the 2000 Benefits agreement, references to medical benefits
generally, and healthcare coverage of retired employees, are replete. For example, Article 11 of the
2000 Benefits Agreement is entitled “Hospital, Surgical, Drug, and Medical Benefits for Employees
and Their Dependents.” Sections 11.2 - 11.8 of Article 11 outline healthcare liabilities under the
2000 Benefits Agreement. Section 11.15 addresses healthcare coverage of retired employees. The
subject matter of the 2000 FASB Letter – retirement healthcare contribution caps – certainly can
be said to pertain to a subject addressed in the 2000 Benefits Agreement – namely, retiree healthcare
benefits. Given this court’s broad reading of the 2000 Benefits Agreement’s arbitration clause, see
Cleveland
Elec., 440 F.3d at 814, the 2000 FASB Letter clearly falls within its scope. Moreover,
the CBA’s arbitration clause does not contain any exclusion for disputes arising under side
agreements. Neither does the 2000 FASB Letter exclude disputes over its terms from arbitration.
Thus, the side agreement at issue involves a grievance that, under the provisions of the 2000
Benefits Agreement, may be arbitrated.
Cooper contends that the implementation dates of the FASB Letters conclusively
demonstrate that they were never intended to fall within the scope of the Benefits Agreements. All
of the Benefits Agreements, and their corresponding arbitration clauses, had a duration of three
years. However, each of the corresponding FASB Letters was not to be implemented until after the
Benefits Agreement had expired. According to Cooper, this discrepancy in dates indicates that the
FASB Letters are not within the scope of the Benefits Agreements’ arbitration provisions because
no dispute could have developed before the corresponding Benefits Agreement expired. We rejected
a similar argument in Malone & Hyde. There, we noted that the “Supreme Court has recognized that
a party’s obligation to arbitrate does not automatically cease upon termination of the collective
bargaining agreement.” Malone & Hyde, 23 F.3d at 1045 (citing Nolde Bros., Inc. v. Bakery &
Confectionery Workers Union, Local No. 358,
430 U.S. 243, 252 (1977)). Therefore, the fact that
the Benefits Agreements expired before the FASB Letters were to be implemented does not
necessarily preclude arbitration of a dispute over the Letters.
In adopting the scope test, we note that it is consistent with the important goal of establishing
industrial peace because this test establishes greater certainty in the bargaining process. See Dutra
Group, 279 F.3d at 1081 (citing Auciello Iron Works, Inc. v. NLRB,
517 U.S. 781, 785 (1996) (“The
object of the National Labor Relations Act is industrial peace and stability, fostered by collective-
bargaining agreements providing for the orderly resolution of labor disputes between workers and
employees.”)). The collateral test, in our opinion, creates uncertainty because parties have no gauge
as to when a side agreement is similar or dissimilar to the underlying CBA. See
id. With the scope
test, the inquiry focuses on the breadth of the arbitration clause, thereby permitting parties to
reference the plethora of case law interpreting arbitration clauses of other CBAs. Simply put, “the
general arbitration clause will apply to a dispute over a side agreement to the same extent it would
govern any other disagreement between the parties.”
Id.
Should a party intend not to arbitrate disputes over a particular side agreement, language to
that effect may be included within the side agreement. Moreover, if the parties wish to restrict the
CBA’s arbitration clause from applying to side agreements, they can provide for such within the
language of the CBA. This test is consistent with our presumption favoring arbitration, see Warrior
&
Gulf, 363 U.S. at 582, and is also congruous with reading the CBA as “more than a contract,” and
as an instrument covering the “whole employment relationship.”
Id. at 578-79.
No. 05-4641 United Steelworkers et al. v. Cooper Page 9
Tire & Rubber Co. et al.
We are also satisfied that the outcome of applying the scope test to this case supports the
policy concerns behind the presumption favoring arbitration of labor disputes. First, submitting the
dispute over the 2000 FASB Letter to arbitration provides a forum in which the outcome is not only
determined by the language of the contract, but is also guided by such factors as “the effect upon
productivity of a particular result, its consequence to the morale of the shop, [and the arbitrator’s]
judgment whether tensions will be heightened or diminished.” See Warrior & Gulf, 363 U.S. at 582.
An arbitrator, unlike a judge, is “usually chosen because of the parties’ confidence in his knowledge
of the common law of the shop and their trust in his personal judgment to bring to bear
considerations which are not expressed in the contract.”
Id. “The ablest judge cannot be expected
to bring the same experience and competence to bear upon the determination of a grievance, because
he cannot be similarly informed.”
Id.
Moreover, contrary to Cooper’s contention, arbitration of the instant dispute does promote
“the peaceful resolution of labor disputes.” See Commc’ns
Workers, 475 U.S. at 650 (quoting
Schneider Moving & Storage Co. v. Robbins,
466 U.S. 364, 371-72 (1984)). Cooper argues that
because the class members are all retirees, their spouses, and dependents, they, unlike current
employees, have no recourse to economic weapons, i.e., strikes. Cooper cites Robbins as support
for its contention. Robbins involved a dispute between the trustees of an employee trust fund and
the employers. See
Robbins, 466 U.S. at 369. The employers sought an order to bind the trustees
to the CBA’s arbitration clause. See
id. at 366. The Supreme Court held that “[b]ecause the trustees
of employee-benefit funds have no recourse to [strikes and lockouts], requiring them to arbitrate
disputes with the employer would promote labor peace only indirectly, if at all,” and, therefore, the
presumption of arbitrability did not apply.
Id. at 372.
Robbins is distinguishable for reasons that we have previously addressed. Namely, the
dispute over the 2000 FASB Letter is between the Union and Cooper, whereas the grievance in
Robbins was brought by trustees, not by the union. In Cleveland Electric, this distinction was
critical to our finding that “the presumption of arbitrability applies to disputes over retirees’ benefits
if the parties have contracted for such benefits.” See Cleveland
Elec., 440 F.3d at 816; see also Int’l
Union, United Auto., Aerospace & Agric. Implement Workers v. Yard-Man, Inc.,
716 F.2d 1476,
1486 (6th Cir. 1983) (noting that the union, as a signatory to the contract, could bring an action for
third party beneficiary retirees because it has a direct interest in maintaining the integrity of the
retiree benefits created by the CBA). Because it is the Union, not a third party beneficiary, that
brought the grievance over the 2000 FASB Letter, there is recourse to economic weapons such as
striking. Moreover, even though the class consists of all non-Union member Retirees and Survivors,
the Union still has an interest in resorting to economic weapons in order to maintain the integrity
of the bargaining process. Additionally, the dispute over the 2000 FASB Letter may also affect how
retirement contribution caps will be applied to current employees, who are Union members.10
Therefore, it is clear that our holding furthers the policy “recognizing arbitration as a ‘substitute for
industrial strife.’” See Malone &
Hyde, 23 F.3d at 1943 (quoting Warrior &
Gulf, 363 U.S. at 578)).
C. Union’s Standing
Cooper also maintains that the district court erred in finding that the Union has standing to
represent the Retirees and Survivors. We recently addressed this question in Cleveland Electric,
10
Cooper also asserts that the presumption favoring arbitration is not applicable to the FASB Letters because
retiree health benefits are a permissive, not a mandatory, subject of bargaining. This argument was also addressed in
Cleveland Electric, where we held that the “presumption of arbitrability applied to a dispute over retirees’ benefits
brought by the union because the union and employer were parties to the contract providing for arbitration,”
notwithstanding the fact that retirees’ benefits are not a mandatory subject of bargaining. See Cleveland Elec., 440 F.3d
at 815 (citing Mich.
Bell, 820 F.2d at 192).
No. 05-4641 United Steelworkers et al. v. Cooper Page 10
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stating that “where a union and company bargain for retiree benefits and include the benefits in a
contract, the union has standing to represent the retirees in any dispute concerning those benefits.”
Cleveland Elec., 440 F.3d at 815. Moreover, we noted that “a union’s assertion of rights outside the
bargaining unit [is] not dispositive of the duty to arbitrate.”
Id. (citing Mich. Bell, 820 F.2d at 192);
see also
Yard-Man, 716 F.2d at 1486 (describing how the union, as a signatory to the contract, could
bring an action for third party beneficiary retirees because it has a direct interest in maintaining the
integrity of the retiree benefits created by the CBA). Therefore, it is clear that the Union does have
standing to arbitrate on behalf of the Retirees, and given Cleveland Electric’s reasoning, it also has
standing to arbitrate the claims of the Survivors.
D. Consent of the Retirees and Survivors to Union Representation
As a final matter, Cooper argues that even if the dispute over the FASB Letter is subject to
arbitration and the Union has standing, the district court erred by not requiring consent of the class
members to Union representation. The Notice of Class Certification stated that “any final arbitration
award, whether for or against the Defendants, [would] apply to” the Retirees and the Survivors. In
ordering the class certification as such under Rule 23(b)(2), the district court precluded the class
members’ ability to pursue their ERISA rights, as well as any other claims, directly with Cooper.
In Cleveland Electric, we recognized two dangers in failing to require a union to obtain
retirees’ consent before arbitrating on their behalf. See Cleveland Elec., 440 F.3d at 817. First,
employers could be faced with numerous retirees’ claims and lawsuits if a determination is made
that the Union was not authorized to act on the retirees’ behalf. See
id. (citing Meza v. General
Battery Corp.,
908 F.2d 1262, 1280 (5th Cir. 1990) (holding that an injured former employee’s
lawsuit was not barred by res judicata where he never authorized the union to represent his interest
in a previous lawsuit over the same benefits)) . Second, retirees could lose their rights to pursue
their claims directly with the employer if the union obtains an unfavorable arbitration decision. See
id. (citing Rossetto v. Pabst Brewing Co.,
128 F.3d 538, 540 (7th Cir. 1997) (stating that if the union
“loses in arbitration, the retirees lose, period”)); see also Int’l Union, United Auto., Aerospace &
Agric. Implement Workers v. Acme Precision Prods., Inc.,
515 F. Supp. 537, 540 (E.D. Mich. 1981)
(holding that where a union sues on behalf of retirees, the judgment in that suit acts as a bar to suits
by individual retirees brought at a later time).
We agree with the Union that there is no real danger that Cooper would have to relitigate the
same issues with individual retirees that will have already been arbitrated with the Union. The
Notice of Class Certification makes clear that all class members will be bound by any final
arbitration award. Moreover, Cooper agreed to the order certifying the class under Rule 23(b).
Therefore, our concern here is not for Cooper, but rather that the Retirees and Survivors will be
bound by an unfavorable arbitration decision to which they never consented. As the Seventh Circuit
stated in Rossetto, “[a] union’s power to negotiate with management derives from the fact that the
union is the exclusive bargaining representative of a group of people.” Rossetto, 128 F.3d at 539.
Because the Union is not the exclusive bargaining representative of the Retirees and Survivors, see
Allied Chemical & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate Glass Co.,
404 U.S. 157,
172 (1971) (holding retirees are not “employees” within the bargaining unit), any claims, statutory
or otherwise, belong to the Retirees and Survivors, individually. The Union may still arbitrate on
behalf of the Retirees and Survivors, but only after they have consented to such representation. See
Cleveland
Elec., 440 F.3d at 818 (requiring consent of retirees before allowing union to arbitrate on
their behalf). Neither the Union nor a court may preclude the Retirees or Survivors the right to
litigate with Cooper individually.
No. 05-4641 United Steelworkers et al. v. Cooper Page 11
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III.
For the foregoing reasons, the judgment of district court compelling arbitration of the dispute
over the side letter is AFFIRMED, the Stipulation and Agreed Order Concerning Class Certification
is VACATED, and the case is REMANDED for further proceedings consistent with this opinion.
