The Sixth Circuit, in a split decision, held that a dispute between a union and an employer regarding retiree healthcare benefits was not arbitrable because the issue of retiree healthcare benefits was not encompassed within the collective bargaining agreement’s (CBA’s) grievance procedures.

The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union (the “Union”) commenced suit against LLFlex, LLC, (“Employer”), arguing that the Employer violated the CBA by refusing to arbitrate the Union’s grievance related to the Employer’s unilateral change requiring individuals who retired to pay a share of the premium cost of their healthcare benefits.  The CBA contained a grievance procedure with the last step being arbitration.  The Union utilized the CBA’s grievance procedure, but when the time came for arbitration, the Employer refused to engage in arbitration.

Before reaching the merits, the Sixth Circuit first concluded, contrary to the district court’s ruling, that the Union had Article III standing because a CBA is a contract and a party to the contract has a judicially cognizable interest for Article III purposes regardless of the merits of the claim.

Two of the three judges on the Sixth Circuit panel nevertheless concluded that the case was properly dismissed by the district court because the Union’s dispute over the change in retiree healthcare benefits was not arbitrable.  The Court identified three reasons for its decision.  First, the four-step grievance procedure clause applied only in limited circumstances, such as “working conditions, discharges, seniority rights, layoff and re-employment.”  Second, the retiree health benefits at issue were not mentioned in the CBA and therefore the grievance procedure clause was not susceptible to an interpretation that it covered a dispute regarding such benefits.  Finally, the CBA’s “Purpose of Agreement” article explained that the CBA only concerned conditions of employment for “employees” and retirees are not “employees.”

The dissenting judge reached the opposite conclusion for three reasons:  (i) the arbitration clause was available to “any employee who feels that he/she has a just grievance” and nothing in the grievance procedure clause prohibited the grievance committee from considering other “just grievances” not expressly listed in the clause; (ii) the grievance procedure had been used by the parties and there was no reason to prohibit the use of the final arbitration step; and (iii) the CBA expressly incorporated by reference the pension plan and that plan contained a clause about retiree health benefits.

The case is United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union, AFL-CIO-CLC v. LLFlex, LLC,No. 19-5464, 2021 WL 1123301 (6th Cir. March 24, 2021).

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Photo of Russell Hirschhorn Russell Hirschhorn

Russell L. Hirschhorn, co-head of the ERISA Litigation Group, represents plan fiduciaries, trustees, sponsors and service providers on the full range of ERISA and state law benefit and fiduciary issues. From single plaintiff litigation and arbitration to complex class action litigation, he provides…

Russell L. Hirschhorn, co-head of the ERISA Litigation Group, represents plan fiduciaries, trustees, sponsors and service providers on the full range of ERISA and state law benefit and fiduciary issues. From single plaintiff litigation and arbitration to complex class action litigation, he provides practical guidance, develops unique litigation defense strategies and, when appropriate, mediates successful resolutions.

Russell represents clients across a wide array of publicly-held, multi-national companies and privately owned companies across a multitude of industries including, banking, finance and investments, pharmaceuticals, retail products and construction, to name just a few. In addition, he also counsels benefit plan clients on a host of compliance and federal and state government agency enforcement matters, including complex and lengthy investigations and audits by the U.S. Departments of Justice and Labor.

Russell is management co-chair of the American Bar Association Employee Benefits Committee as well as management co-chair of the Trial Institutes Committee of the American Bar Association’s Labor and Employment Law. He also writes on cutting-edge ERISA litigation issues, serving as a contributing author and a past chapter editor to Employee Benefits Law (BNA Third Edition).

Deeply dedicated to pro bono work, Russell was a principal drafter of several amicus briefs for the Innocence Project, a legal non-profit committed to exonerating wrongly convicted people. Russell has been recognized on several occasions for his commitment to pro bono work including by President George W. Bush in receiving the U.S. President’s Volunteer Service Award.