September 2, 1982
ADAMS, ROBERT J., BUCKLEY, MERREDNA T., CALLOWAY, WILLIAM J., CONNNELL, JAMES JOSEPH, COSELLA, ANTHONY MICHAEL, COOK, JOHN R., CROWLEY, ANNE, ON BEHALF OF THE ESTATE OF WILLIAM J. CROWLEY, DECEASED, CULLEN, KATHRYN M., DICARLO, ANGELINA A., DELGRAMMASTRO, ROCCO, DIEHL, KATHLEEN, AS EXECUTRIX OF THE ESTATE OF JOHN M. DILLENSCHNEIDER, DECEASED, DOMAROTSKY, WANDA A., DREGAR, FRANK A., EBY, ROBERT J., FAY, AMANDA, FLINN, MARTHA, FLOOD, THOMAS E., FRAZIER, CORNELIUS, JR., GERACE, MARY, GUOKAS, ROSE T., HABINA, MARY F., HICKMAN, JAMES, JONES, ROBERT H., KELLY, PEARL, KLEIN, JOSEPH J., LINDER, ELIZABETH D., MARUCCI, AUGUSTINE, MCGOWAN, JAMES, MCNALLY, ELIZABETH A., MORRIS, JOHN, MUMBOWER, JOHN, MYERS, ANNA M., MYERS, AGNES M., NEFF, JOHN A., PAPALA, GRACE MARY, PETRICCIONE, ANNA, PHILLIPS, RICHARD M., RALLS, RUSSELL, RAYSICK, FLORENCE, RONAU, DANIEL J., RUSSELL, BERNARD C., RUSSELL, JOHN V., RUSSELL, MARGARET, SANTOLERI, ANTHONY, STANOWITCH, WALTER J., STEIN, MADELINE T., STEINMETZ, JOHN F., STILLWELL, BEATRICE L., SMITH, MARIE, SWALLOW, NANCY, WATTS, WILLIAM J., WEISS, ANTOINETTE W., WILLIAMS, CLIFFORD W., WILLIAMS, ROBERT, UMSTETTER, FRANK, VENTI, MARIE, WOLLNER, JAMES C., BARLOW, BRIDGET
GOULD, INC. AND FIRST TRUST COMPANY OF ST. PAUL, MINNESOTA, IDIVIDUALLY AND AS TRUSTEE OF THE GOULD INC. PENSION TRUST FOR HOURLY EMPLOYEES AND PENSION BENEFIT GUARANTY CORPORATION GOULD, INC., AND FIRST TRUST COMPANY OF ST. PAUL, MINNESOTA APPELLANTS
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
Before: ALDISERT and WEIS, Circuit Judges, and RE, Chief Judge.*fn*
The sole question presented for resolution in this interlocutory appeal certified under 28 U.S.C. § 1292(b) is whether certain individual employees, plaintiffs below, are bound by the results of an arbitration between their employer and their union and thereby barred from bringing their complaint in federal court. The district court determined they were not and denied defendants' motion for summary judgment. Defendants obtained the district court's certification of the question, however, and we allowed the appeal. We reverse.
In 1962, appellant Gould, Inc. purchased the Wilkening Manufacturing Co. piston ring manufacturing plant, whose employees were represented by Local 416 of the United Auto Workers. The union and Gould entered into successive collective bargaining agreements as well as a pension agreement whose trust assets are administered by appellant First Trust Co. In 1973, because of its "antiquated plant, . . . failing product line, intense competition, and a declining market share," Gould announced its intention to terminate operations at the plant and to release all of the employees.Gould and UAW representatives met to discuss the phase-out of operations, including the ramifications for the pension plan. Determining that the plan's assets were actuarially insufficient to provide full benefit payments to all claimants and retirees, the union demanded that Gould fully fund the plan. When Gould refused, the union filed a grievance under Article XVII ("Grievance Procedure") of the collective bargaining agreement, even though Article XII ("Pension Plan") of the same agreement established procedures for the resolution of pension disputes.
Unable to resolve the dispute, Gould and the union submitted it to a single arbitrator pursuant to the final step of Article XVII. The union again demanded that Gould fully fund the plan or, alternatively, fund it on a sound actuarial basis. Gould argued that it had met its contractual obligations. Professor John Perry Horlacher, Chairman of the University of Pennsylvania Department of Political Science and former Vice President of the National Academy of (Labor) Arbitrators, served as arbitrator and found that Gould had not properly funded the plan. On November 24, 1975, he issued an award which in part ordered the following:
5. The Company is directed to make further contributions to the fund, using to calculate them the assumptions that were in effect at the end of 1968.These shall be in addition to the contributions already made.
6. These additional contributions shall be for the period when the changed assumptions were made effective after 1968 until the Plan terminated.
7. In the event of disagreement concerning the amount of these additional contributions, the Company's and the Union's actuaries shall negotiate the sums. If they cannot agree, their contentions in writing shall be forwarded to me and I will make the determination.
8. The money put into the Plan's fund by direction of this award shall be distributed to the eligible employees in accordance with Section 7.2 of the Plan contract as modified by any side agreement in effect at the time of the Olna's termination.
Although the arbitrator rejected the union's demand for full funding, he required Gould to recalculate its contributions so that the benefits could be increased in line with the pension agreement's asset allocation provisions. The union, by its counsel and actuary, reviewed the new computations and agreed that they complied with the arbitrator's award. The record does not indicate that this post-arbitration activity was anything more than what a Gould official characterized as "a question of implementing the award and . . . working out numbers."*fn1 The union also released any employee claims against Gould arising from the arbitration.
Appellees, active employees whose pension benefits had vested,*fn2 contended that although some additional money was placed in the trust fund, the dispute was resolved so as to give them no benefits while giving retired employees full benefits. They brought an action in the district court claiming that Gould had breached its contractual obligation under the pension plan and had fraudulently induced the plaintiffs to continue their employment, and that First Trust had breached its fiduciary duty in refusing to pay pension benefits when due. Defendants, citing the finality provision of the Article XVII grievance procedure, moved for summary judgment on the ground that the plaintiffs were bound by the arbitrator's award. Basing its decision on Hauser v. Farwell, Ozmun, Kirk & Co., 299 F. Supp. 387 (D.Minn. ...
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