Opinion
Case No. 3:04CV7125.
January 18, 2005
ORDER
This is a proceeding to compel arbitration pursuant to a plant closing agreement. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, and Local Number 336 (the Union) claim that Cummins, Inc., in violation of the agreement, amended its members' pension plan when it merged that plan into one for salaried employees. The company contends that the merger did not constitute an amendment and the Union's grievance is not arbitrable. In addition, the company contends that this suit is untimely.
Pending are cross-motions for summary judgment. For the reasons that follow, the Union's motion shall be granted and the company's motion shall be denied.
Background
Cummins sold its Atlas Crankshaft subsidiary in December, 1999. It agreed, however, to continue to fund the pension plan of former Atlas workers and those who were to continue to work for the purchaser. As part of this arrangement, Cummins agreed with the Union that the plan could not be "amended or terminated" except by mutual agreement by the parties or as required by law or regulation. The parties agreed to arbitrate any disputes arising under the agreement.
The pension plan referenced the possibility of the plan's merger:
In the case of any merger or a consolidation with, or transfer of assets or liabilities to, any other plan, each Employee in the Plan shall receive (if the Plan then terminated) a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the Monthly Benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if the Plan had then terminated).
(Doc. 9, Exhibit 6, p. 32)
In late 1999, the company determined that the plan was under-funded. It notified the Union about that situation, indicating that it was contemplating rolling the plan into its larger, and sufficiently funded plan for salaried employees. This would eliminate the risk of and consequences from the under-funding of the hourly employees' plan. The company filed a notice of merger with the I.R.S. in December, 1999.
On January 6, 2000, company counsel wrote the Union about the merger and provided a copy of the I.R.S. form and anticipated notice to the employees. The notice explained the underfunding problem. In October, 2001, the plans were merged retroactively to January 1, 2000.
On December 3, 2001, the Union notified the company that, in its view, the merger violated the no amendment provision of the agreement. The Union filed a grievance seeking arbitration of the issue. Thereafter, the Union asked for additional information about the merger. The company provided that information on February 20, 2002, reconfirming its earlier position that the merger did not involve either an amendment or termination of the plan.
The parties met in August, 2002, to discuss pending grievances. During that meeting, the Union repeated its demand that the merger be arbitrated. The company reiterated its position that the merger did not involve an amendment and, therefore, there was no alleged breach of the agreement. The company asked the Union to identify the alleged amendment on which it based its grievance.
On June 9, 2003, the Union informed the company that its December 3, 2001, grievance and arbitration request needed to be placed before an arbitrator. The Union also notified the company of the arbitrator whom it had selected.
On June 23, 2003, the company restated its contention that no amendment had occurred and stated the "the grievance is not arbitrable." The Union insisted that an amendment had occurred and that it wanted to arbitrate the dispute. On June 26, 2003, the Union repeated its position that the merger constituted an amendment and violated that agreement. The Union also stated that it intended to move forward with arbitration.
On July 9, 2003, Cummins reiterated that the plan had not been amended and stated that the issue of whether the Plan Merger was arbitrable under the agreement was for a court. It also told the Union that it was time to "move on." On August 20, 2003, however, the company attorney wrote the Union, asking that the Union set forth its position as to how the plan had been amended.
Further correspondence ensued between counsel for the parties, with each asserting its client's basic contentions about an amendment or lack thereof. After the company attorney sent a letter on March 4, 2004, restating the company's position and its non-arbitrability, the Union filed this suit.
Discussion
In United Steelworkers v. Mead Corp., 21 F.3d 128 (6th Cir. 1992), the Sixth Circuit summarized the principles applicable to an action to compel arbitration. They are: 1) a party cannot be forced to arbitrate any dispute that it has not obligated itself to arbitrate by contract; 2) whether the contract creates a duty to arbitrate a grievance is an issue for judicial determination unless clearly and unmistakably provided otherwise; 3) in making this determination, the court will not consider the merits of the underlying claim; 4) where the agreement contains an arbitration clause, the courts apply a presumption of arbitrability unless the arbitration clause is not susceptible of interpretation that covers the dispute.
The company argues:1) this action is barred by the statute of limitations and the doctrine of laches; and 2) the dispute is not arbitrable because there was no breach of the Sale Agreement. I find these arguments unpersuasive.
1. Statute of Limitations and Laches
The parties agree that an action to compel arbitration must be filed within six months of a party's refusal to arbitrate. McCready v. Auto Workers Local 971, 809 F.2d 1232, 1236 (6th Cir. 1987). Such refusal must, however, be unequivocal. Id. The determinative issue in this case is when the six month statute began to run; this requires determination of when the company's refusal to arbitrate became "unequivocal."
The Union states that the statute did not begin to run until March 4, 2004, when the company sent its last letter. Only at that point, the Union argues, had the company notified it unequivocally that it would not arbitrate the dispute about the merger of the plan.
The company disagrees, stating that it made clear its determination not to arbitrate over six months before the March 17, 2004, filing date of this suit. The company points to its statement in its June 23, 2003, letter that "[t]he grievance is not arbitrable" and its July 9, 2003, letter that the issue of arbitrability was for a court to decide, and that it was time for the Union to "move on."Nothing thereafter, the company asserts, including its request to the Union to state the basis for its claim of arbitrability, conveyed any indication that the company was willing to arbitrate the dispute.
The company argues that it unequivocally refused arbitration on June, 23, 2003. Yet, in a letter dated September 3, 2003, the Union specifically asked defendant, "[i]f you are refusing to arbitrate this matter please advise within the next ten (10) days so that the Union may begin the appropriate litigation." (Doc. 19, exhibit 1 — 4). The company's response neither refused arbitration nor referenced prior refusals. Instead, it simply asked for further clarification of the Union's position.
This exchange highlights two problems with the company's position. First, if the June, 23, 2003, letter was an actual refusal, the company certainly would have treated it as such in response to the Union's straightforward question. Second, as of the September 3, 2003 letter, the company was stating that it still did not understand the Union's claim. Not until the March 4, 2004, letter does the company appear to comprehend the nature of the dispute. If defendant did not understand the issue and claim — and it admitted as much in its letters — it could not have unequivocally refused to arbitrate the dispute.
Furthermore, considering the circumstances, company's assertions that "the grievance is not arbitrable" were more in the nature of a repeated contention — and tepid at that, given its repeated requests for counter-argument — than an unequivocal refusal.
The same is true of the company's further statement that, "applicable law . . . holds that the issue of arbitrability is for a court to decide, not an arbitrator." (Doc. 22, exhibit J). The company's repeated requests to the Union for further legal explanation of its belief that the dispute should be arbitrated belie its contention that it had taken an unequivocal stance against arbitration prior to the March 4, 2004 letter.Only in that communication was its position stated unequivocally, so that the statute of limitations began then to run. This suit, having been filed less than two weeks thereafter, is timely.
This letter again operates on the mistaken premise that it was "undisputed that the plan was not amended."
Similarly, the suit is not barred by laches. It appears that the delay was caused by the failure of the parties to communicate their respective positions. Certainly, defendant cannot ignore the simple request of the September 3, 2003, letter and then claim that it was the Union's conduct that created the delay.
2. Arbitrability
In ATT Techs., Inc. v. Communications Workers of Amer., 475 U.S. 643, 649 (1986), the Supreme Court decided that, "unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator."
The Sale Agreement provides that Plan B "shall not be amended or terminated except by mutual agreement between the company and the Union." (Doc. 1, unmarked attachment, p. 5) The Union alleges that defendant breached this clause by altering the funding mechanism of the plan. While it does not appear that the company's action constituted a breach in any form, that issue is to be decided by an arbitrator, not me.
Section 16.4 of the Sale Agreement provides that "alleged breaches of [the Plant Closing] agreement" will be resolved through arbitration. (Doc. 1, unmarked attachment, p. 11) I am limited as to what issues I can decide in this context:
The function of the court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator. In these circumstances the moving party should not be deprived of the arbitrator's judgment, when it was his judgment and all that it connotes that was bargained for.United Steelworkers of Am. v. Amer. Mfg. Co., 363 U.S. 564, 567-568 (1960).
Much the same is true when the parties have agreed to arbitrate all alleged breaches of the contract. The Union clearly alleges that the company violated the contract: whether the Union is correct is for the arbitrator to decide:
The courts . . . have no business weighing the merits of the grievance, considering whether there is equity in a particular claim, or determining whether there is particular language in the written instrument which will support the claim. The agreement is to submit all grievances to arbitration, not merely those which the court will deem meritorious.Id.
Defendant argues that the Union only has a right to arbitrate breaches. Thus, because the funding change is not a breach, there is no arbitration right. This is incorrect; the Union does not need to show breach; it merely needs to allege it.
Conclusion
It is, therefore,
ORDERED THAT:
1) The Union's motion for summary judgment to compel arbitration be, and the same hereby is granted;
2) Cummins's motion for summary judgment be, and the same hereby is denied.
So ordered.