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Burke v. Latrobe Steel Co.

October 17, 1985

GERALD BURKE AND JAMES R. NOVAK, APPELLANTS
v.
LATROBE STEEL COMPANY, APPELLEE



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA (D.C. Civ. NO. 84-57)

Author: Weis

Before ADAMS, GIBBONS, and WEIS, Circuit Judges.

Opinion OF THE COURT

WEIS, Circuit Judge.

This appeal presents another variation of the question whether the court or contractual arbitration is the proper forum for resolving pensioners' ERISA claims. In this case, although an arbitrator had ruled in favor of most of their plan interpretation contentions, plaintiff pensioners nonetheless pressed their allegation of statutory violations in the district court. We conclude that the arbitration requirement does not preclude resort to a judicial forum even though there may be a factual overlap between contractual and statutory claims. Accordingly, we will vacate a district court judgment which held that an arbitration award was a final resolution of the dispute.

After an arbitrator had decided that the employer had violated the terms of the collective bargaining agreement and pension plan, the company and the pensioners moved for summary judgment in the district court. The court granted the defendant company's motion and denied that of plaintiff pensioners.

This case grows out of a disagreement between plaintiffs, two former employees, and defendant company over its right to recall pensioners to work. Of the several forms of retirement which the terms of the bargaining agreement specify, the one at issue here is styled "The Rule of 65." Under that provision, an employee who has at least 20 years of continuous service and whose combined age and years of service total 65 or more may elect to retire if he is put on an extended lay off and the company fails to provide "suitable long term employment."

Having met the requirements under the Rule of 65, plaintiff Burke elected to retire in May 1983 and Novak followed suit in August 1983. In September of that year, the company recalled both men to work. They objected and returned under protest, contending that their recall was contrary to the collective bargaining agreement as well as the pension plan.

The plaintiffs' complaint in the district court alleged that defendant had violated ERISA and the terms of the pension plan. The proceedings were stayed while the parties submitted their dispute to an arbitrator pursuant to the plan. He ruled that under the collective bargaining agreement the company had no right to require a Rule of 65 pensioner to return to work against his wish. As a remedy, the company was directed to restore the basic pension benefits that had been withheld during the period of recall. The employees were permitted to keep the wages and benefits they had earned but were not entitled to a supplemental payment of $400 per month since the company had provided suitable employment during the recall period.*fn1

The district court concluded that the relief sought came within the coverage and meaning of the pension plan and that the arbitration had resolved the matters in dispute. Relying on Adams v. Gould, Inc., 687 F.2d 27 (3d Cir. 1982), the court entered summary judgment for defendant.

On appeal, plaintiffs contend that they have rights under ERISA independent of those conferred by the pension plan. They allege that the company, which acts as administrator of its own plan, violated the conflict of interest provision of ERISA, 29 U.S.C. § 1106(b)(2), the anti-discrimination clause, 29 U.S.C. § 1140, and fiduciary obligations under 29 U.S.C. § 1104. In response, defendant argues that the only issue is the interpretation of the plan, and as to that matter the parties are bound by the arbitrator's award. As an alternative, the company asserts that even if independent statutory rights exist, plaintiffs in this case have failed to set forth a claim on which relief can be granted.

After the district court had acted on the case now before us, we had occasion in several appeals to address the relationship between claims under a pension plan and those under ERISA. Consequently, the district judge did not have the benefit of those opinions in coming to his decision.

In Viggiano v. Shenango China Div. of Anchor Hocking Corp., 750 F.2d 276 (3d Cir. 1984), we noted the frequent uncertainty about whether a controversy should proceed in a judicial forum under ERISA or by arbitration under the terms of a collective bargaining agreement. We observed that "in the nature of things, at times, there is an overlap," id. at 279, but concluded that the employer's duty to fund the plan -- the issue there in dispute -- depended on interpretation of the collective bargaining agreement and therefore should be decided by arbitration. We stated, however, that if the arbitrator found that the employer did have a duty to fund the plan, the employees would then be free to present their ERISA claims to the court.

Barrowclough v. Kidder, Peabody & Co., Inc., 752 F.2d 923 (3d Cir. 1985), presented a similar problem. We again pointed out the distinction between statutory and contractual claims and observed, "ERISA neither completely supplants nor is completely subordinate to arbitration." Id. at 939. Claims seeking to enforce the terms of a pension plan and to recover benefits provided by it are subject to a contractually required arbitration process. Purely statutory issues, however, are not within the competence of an arbitrator and fall under the court's jurisdiction. See U.S. Steel and Carnegie Pension Fund v. McSkimming, 759 F.2d 269, (3d Cir. 1985). To the same effect, see Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984); Air Line Pilots Ass'n Int'l v. Northwest ...


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