Earlier this month, the Sixth Circuit Court of Appeals issued two interesting union-related decisions. In one, it held the district court had jurisdiction to hear an ERISA claim even though the parties’ bargaining agreement had expired a years earlier because the union did not request the court to decide an unfair labor practice claim over the duty to maintain the status quo during negotiations. The other case involved whether a double breasted shop was subject to arbitration under the grievance procedure in a subsidiary’s bargaining agreement and whether the parent company had tacitly agreed to permit the arbitrator to decide the initial question of arbitrability by appearing at the arbitration. The Court remanded the case to determine whether the parent company had tacitly agreed to permit the arbitrator (rather than a court) to determine arbitrability. The Court also found that the employer’s motion to vacate the award was timely because it was filed within three months of the arbitrator’s supplemental award fixing damages even though it was filed four months after the arbitrator determined liability.
In Greenhouse
Holdings v. Int’l Union of Painters and Allied Trades, the Kentucky employer
owned 90% of a Tennessee subsidiary, which had a bargaining agreement and shared a similar name with the parent organization.
The union then filed an ambiguous grievance, which was submitted to
arbitration. The Union indicated that it
believed that both the Kentucky and Tennessee operations were subject to the
bargaining agreement while one management representative insisted that the Kentucky
operations were non-union. The arbitrator
sided with the union and ordered wages paid to the Kentucky employees as well
as the Tennessee employees. The employer
moved to vacate under the FAA.
The district court agreed that there was insufficient evidence
that the employer had agreed that its Kentucky operations were subject to the
bargaining agreement and had never signed the CBA. However, the Sixth Circuit determined that
this did not end the question and remanded the case for the trial court to re-examine
the facts. The employer may have tacitly
agreed to arbitrate the arbitrability of the dispute (i.e., let the arbitrator
decide whether it was subject to the bargaining agreement) instead of
permitting a court to determine arbitrability.
If so, the court’s review of the issue would be much more limited and
not de novo.
On one hand, the Union’s attorney suggests that Kinney spoke on behalf of Greenhouse at the arbitration. But on the other, Kinney states that he participated only on behalf of Clearview Tennessee. This dispute matters. If Greenhouse wasn’t at the arbitration, or if Kinney appeared on behalf of Greenhouse merely to object to the arbitrator’s authority, then the court can decide de novo whether Greenhouse was bound by the CBA. But if Greenhouse consented to arbitration and the question of whether it was bound by the CBA was clearly before the arbitrator, then a higher standard of review applies.
In Operating
Engineers v. Rieth-Riley Construction, the Court reversed the dismissal
of the union’s ERISA complaint, but noted that the case may still be ultimately
dismissed (on summary judgment) for the same reason. The union agreed to the termination of the
2013 multi-employer bargaining agreement and refused to accept ERISA
contributions from the defendant employer, until the employer discovered an old
bargaining agreement (which had expired and been replaced many years earlier),
reflecting a previous 9(a) relationship with the union. The employer insisted on negotiating a new
agreement with the union and, thus, maintaining the status quo under NLRA rules.
The union accepted the contributions and
then, a year later when negotiations had soured, sought to audit the employer
for delinquent contributions and brought suit under ERISA to enforce payment of
the allegedly delinquent contributions. While
the union could not attempt to litigate an unfair labor practice charge through
ERISA, it could sue the employer for breach of contract under ERISA. The lack of a live contract – since the
bargaining agreement had expired and been replaced years ago – was not a
jurisdictional requirement to bring an ERISA action, but it might result in the
lawsuit being dismissed on summary judgment or at trial:
The trial court determined that the
source of the obligation . . . . acted as “an essential jurisdictional fact” that it had to “determine before proceeding forward.” . . . And here, [the employer] and the Funds “never entered into another contract” after the CBA expired. Nor did any independent agreements bind the parties. Without a contract, the court found [the employer’s] contribution duty “[arose] solely” from its “statutory status quo obligation under federal labor law.” . . . . And without a contract, the court held it lacked jurisdiction to hear the Funds’ claim. So it directed the Funds to the NLRB and dismissed their suit without prejudice.
. . . .
Here, the Funds brought an ERISA claim, not an unfair-labor-practices claim. They argued that [the employer] failed to make its “promised [contractual] contributions,” not that it violated the NLRA by refusing to bargain or maintain the status quo. . . . . Because the Funds ask us to find that [the employer] breached a contract, not that it violated the NLRA, their claim does not fall into Advanced Lightweight’s ambit.
Of course, in the end, the Funds’ contract claims may fall flat for the reasons the district court gave. But those findings go to the merits of the Funds’ ERISA claim, not our jurisdiction to hear it. To the extent that the district court concluded otherwise, it erred.
. . .
[Assuming the employer] is right about the contracts; they don’t exist. Even so, a deficient contract claim by itself doesn’t convert[] the Funds’ complaint into an unfair labor practice claim” and “divest[]” this court of jurisdiction. . . . . Rather, it would mean what a deficient claim always does in this context: The Funds lose on the merits.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
