is subject to mandatory arbitration, 2. whether the employer's actions in refusing to submit the dispute to arbitration is "frustrat[ing] the arbitral processes the parties have chosen," 3. and whether an injunction would be appropriate "under ordinary principles of equity" - probability of success on the merits, irreparable injury, and a balance of hardships. Fort Pitt Casting, 598 F.2d at 1278 (citations omitted); Nursing Homes, 759 F.2d at 1078. As the moving party, the union has the burden of proving these elements. Lodge 802, International Brotherhood of Boilermakers AFL-CIO, 511 F. Supp. 347, 349 (E.D. Pa. 1981).
As discussed above, the dispute which precipitated this action, whether the company is permitted to unilaterally change health insurance carriers, wages, and medical benefits after reaching impasse under an economic reopener, is covered by the collective bargaining agreement's arbitration clause. This clause is quite broad and nothing in the collective bargaining agreement excludes this issue from the arbitration process.
The court also agrees with the union that the company's refusal to arbitrate this issue has interfered with and frustrated the arbitration process. Exide was obligated to arbitrate whether it could unilaterally change the above terms of employment when notified by the union that the union sought arbitration of this issue. Exide's refusal to arbitrate this issue and unilateral implementation of the above changes "ran counter to the congressional policy of promotion of the arbitral process as a substitute for economic warfare." Fort Pitt Steel, 598 F.2d at 1279, quoting, United States Steel Corp. v. United Mine Workers, 593 F.2d 201, 204 (3d Cir. 1979).
Moreover, Exide's actions would render an arbitrator's award a "hollow formality" because "when rendered it could not return the parties substantially to the status quo ante." Fort Pitt Steel, 598 F.2d at 1298, quoting, Lever Bros., 554 F.2d at 123. It is for the arbitrator to decide whether the company could unilaterally change insurance carriers, wages, and medical benefits after reaching impasse pursuant to the economic reopener. However, as more fully discussed below, if the company is permitted to drastically cut wages and medical insurance coverage for its employees pending arbitration, and some of its employees are unable to obtain medical care as a result of these cuts, an arbitrator's award finding in favor of the union would indeed be merely a hollow formality. Fort Pitt Steel, 598 F.2d at 1282.
Having found that the dispute at issue here is subject to the grievance and arbitration procedures provided for in the national agreement and that the company's actions, if not enjoined, will frustrate the arbitral process, the court must determine whether the union has made a sufficient showing that it will suffer irreparable harm if an injunction is not issued. "The critical issue facing [a] district court [is] whether the breach of the contractual agreement to arbitrate caused or threatened to cause irreparable injury to union members." Fort Pitt Steel, 598 F.2d at 1280.
The union argues that its members will suffer irreparable harm because they face a substantial risk of being denied adequate medical care resulting from the company's wholesale wage cuts and drastic reduction in health insurance coverage. (Plaintiff's reply brief at 10) The defendant counters that the union and its members will suffer no irreparable harm because any such harm can be remedied by an arbitrator's award of reimbursed medical expenses and backpay. Defendant emphasizes that any hardship suffered by the union would be short lived. (Defendant's pre-hearing memorandum in opposition to preliminary injunction at 13)
In Fort Pitt Steel, the Third Circuit affirmed the district court's issuance of a preliminary injunction restraining an employer from terminating premium payments pending the arbitration of whether the union need reimburse the employer for premiums paid while the workers were out on strike. The court reasoned that the fact that the payment of money was involved did not automatically preclude a finding of irreparable injury. The court held that the union had made a sufficient showing of irreparable injury stating
If the risk of "water pipes freezing" can constitute irreparable injury, see Celotex Corp. v. Oil Workers, 516 F.2d 242, 242 (3d Cir. 1975), then surely the possibility that a worker would be denied adequate medical care as a result of having no insurance would constitute "substantial and irreparable injury".
Fort Pitt Steel, 598 F.2d at 1280. See also Shultz v. Teledyne, Inc., 657 F. Supp. 289, 293 (W.D. Pa. 1987) ("The termination of health insurance benefits, particularly to those on a fixed income [is a] sufficient threat of irreparable harm to warrant the issuance of an injunction."); Whelan v. Colgan, 602 F.2d 1060, 1062 (2d Cir. 1979) ("Threatened termination of benefits such as medical coverage for workers and their families obviously raised the specter of irreparable injury."): UAW v. White Farm Equipment Co., 5 E.B.C. 2449, 119 L.R.R.M. (BNA) 2878, 2883 (D. Minn. 1984).
Blue Cross/Blue Shield contracts with a large network of doctors and hospitals, who agree to provide Blue Cross/Blue Shield patients with reduced hospital and physician rates. The Blue Cross/Blue Shield plan is a non-contributory health insurance program which pays for covered procedures performed by participating physicians in full. The Connecticut General Plan, on the other hand, is a co-pay program, which requires an annual deductible payment of $ 200 for each individual, with a maximum deductible payment of $ 400 per family, before an individual can receive any payment for hospital, surgical or medical benefits. In addition, a co-payment of 35% is required of each individual or family until, in an individual's case, he or she has paid $ 5,000 out-of-pocket or, in a family's case, $ 10,000 for covered hospital, surgical, or medical services during the year. Under the Connecticut General plan, employees are billed directly by the hospital or physician and are indemnified later by Connecticut General. Therefore, plaintiff's members are threatened with a great reduction in their medical insurance benefits.
Plaintiff's members also have suffered a significant reduction in wages. Exide has cut wage rates by $ 4.35 per hour in Allentown, $ 1.00 per hour in Burlington, $ 2.00 per hour in Denver, and $ 2.75 per hour in Logansport.
I am convinced that irreparable harm exists in this case as a result of the drastic reduction in health insurance benefits and the wholesale wage cuts implemented by the company. A substantial risk exists that workers will forego necessary medical treatment or diagnosis because of their inability to pay their share of the costs. Mr. Robert Humanick testified that his wages were slashed by approximately $ 3.40 or 37% and that should he or a member of his family become ill, he would have only a "few hundred dollars to pay." Mr. Humanick also stated that a number of employees presently were afflicted with serious medical problems. Moreover, Mr. Robert Alpert, senior benefits consultant, stated that he has seen doctors and hospitals refuse to treat patients who were unable to pay for treatment in advance of the procedure. "It is a utopian notion that all working men and women . . . can well afford . . . the cost of essential medical services today or that, if they cannot afford them, that those services will always be provided to them. . . . The harsh reality is that persons on limited incomes who are not covered by some form of medical insurance often forego needed medical attention because of its prohibitive cost." Mamula v. Satralloy, Inc., 578 F. Supp. 563, 577 (S.D. Ohio 1984) (court issued an injunction restraining an employer from refusing to make health insurance premium payments where some of the employees could not afford to purchase health insurance or could only afford to purchase limited insurance); see also UAW v. White Farm Equipment Co., 5 E.B.C. 2449, 119 L.R.R.M. (BNA) 2882.
The company's argument that this case can be distinguished from Fort Pitt Steel and the other cited cases because the workers in those cases faced a total termination of medical benefits, while the UAW workers face only a reduction in benefits is without merit.
This argument ignores the substantial wage cuts imposed on the workers by Exide. Because of the financial constraints placed on the union members resulting from the wage cuts, the practical effect of the medical benefits reductions could well be to preclude employees from seeking medical treatment.
Nor is the union's inability to name a particular employee who has been denied medical treatment under the Connecticut General plan of any moment. Blue Cross/Blue Shield continued to pay UAW workers' benefits until Monday, May 9, 1988. Because Blue Cross/Blue Shield has only recently ceased paying these benefits,
no reason existed for employees to forego medical care. To refuse to issue an injunction until the union can present evidence that an employee has been seriously injured because he could not obtain medical care would be senseless. Moreover, the union need not produce evidence that its members actually have been harmed. A showing of threatened irreparable harm is also sufficient.
The company's argument that any harm suffered by the employees as a result of the reduction in health care benefits can be remedied by an arbitrator's award of reimbursed medical expenses should the union prove successful at the arbitration is also without merit. Such an argument simply ignores economic realities. This argument rests on the assumption that one who has inadequate medical insurance will nonetheless seek and obtain necessary medical care, will pay for the medical care received at the time, and will be reimbursed by the company should the union win its grievance. However, this argument falters when one realizes that the cost of medical hospitalization and other services is far beyond the reach of the average worker. "It is an unfortunate but true fact of life today that health care costs have skyrocketed to the point where health care insurance is virtually a necessity for persons of modest incomes if needed medical attention is to be obtained." Mamula, 578 F. Supp. at 577. The effects of delay in obtaining necessary medical treatment or of not receiving any medical attention because one does not have adequate medical insurance are incapable of being easily measured. This harm cannot be adequately compensated by an arbitrator's decision to award reimbursed medical expenses after an employee's condition has worsened because he or she could not afford medical care. Id.
Although the union has made a sufficient showing of irreparable harm to enjoin the company from changing health insurance carriers and from reducing health insurance benefits, it has not made a sufficient showing that its members will be irreparably harmed absent an order enjoining Exide from reducing wages. In this circuit, a reduction in wages or a loss of salary does not constitute irreparable harm because such a loss is easily compensable by money damages. Morton v. Beyer, 822 F.2d 364, 372 (3d Cir. 1987); see also In Re Arthur Treacher's Franchisee Litigation, 689 F.2d 1137 (3d Cir. 1982). Nor is a claim that one will be unable to purchase food and clothing or pay house and car loans sufficient to constitute irreparable harm. In Morton, the plaintiff claimed that his state prison employer violated his due process rights by suspending him without pay and without a proper hearing. Plaintiff sought an injunction requiring his employer to reinstate him immediately to active employment claiming that he suffered irreparable harm because he could no longer afford to pay his necessary living expenses. The Third Circuit reversed the district court's issuance of a preliminary injunction stating that although "we are not insensitive to the financial distress suffered by employees whose wages have been terminated, we do not believe that loss of income alone constitutes irreparable harm." Id. at 372.
Moreover, the UAW employees can be made whole by an arbitrator's award of backpay should the union succeed at the arbitration. Further, the substantial threat that the employees will be unable to obtain adequate medical care because the company has changed health insurance carriers and has reduced health insurance benefits is adequately addressed by my order enjoining Exide from changing health insurance carriers or benefits pending arbitration. Therefore, I must dissolve that part of my order dated May 17, 1988 which enjoined the company from reducing wages pending arbitration.
In dissolving that part of the May 17, 1988 injunction concerning wages, I am aware that I must reject the union's argument based on the recent Third Circuit case UAW v. Mack Trucks, Inc., 820 F.2d 91 (3d Cir. 1987). In Mack Trucks, a general insurance agreement prohibited the parties from unilaterally changing medical insurance carriers. Notwithstanding this clause, the company changed insurance carriers without securing the agreement of the union. Both parties agreed that the benefits provided by the two carriers were the same.
The union brought suit seeking a permanent injunction restraining the company from unilaterally changing insurance carriers. Although it was clear that the employer had violated the collective bargaining agreement, I denied the union's motion for a preliminary injunction reasoning that the union had failed to show irreparable harm because the benefits provided by the two carriers were identical. Id. at 92.
The Third Circuit reversed my denial of the union's motion for a preliminary injunction stating that "as a matter of the law the district court erred in holding that Mack's breach of the collective bargaining agreement has not harmed the Union." Id. at 95. The court found that by unilaterally changing insurance carriers when it had agreed not to do so without the agreement of the union, the company had deprived the union of a "valuable bargaining chip" and, thus, the union suffered irreparable harm. The court stated:
Article I, section 2 of the collective bargaining agreement as amended requires the Union to agree to proposed terms and conditions before Mack is able to substitute another health insurance carrier for Blue Cross/Blue Shield. Nothing in that provision, however, empowers Mack to force the union to accede to "an alternative delivery system," even if its terms and conditions surpassed those which the union enjoined with Blue Cross/Blue Shield. The UAW thus possessed a bargaining chip which the union might trade for other benefits from Mack.
Id. at 95.
Unlike Mack Trucks in which it was clear that the company had breached the insurance agreement, whether the company breached the collective bargaining agreement or the general insurance agreement by taking unilateral action pursuant to the economic reopener is not clear. In fact, this is the very question which the union desires to be arbitrated. In essence, the present position of the parties in this case is a step before Mack Trucks. Should the arbitrator find for the company, then the company has not breached the collective bargaining agreement or the general insurance agreement and we never reach the question of irreparable harm. On the other hand, should the arbitrator find for the union, then the company will have breached both agreements by unilaterally changing wages, insurance carriers and insurance benefits without the consent of the union. Because it is not yet clear whether the company's unilateral action breached the collective bargaining agreement or the general insurance agreement and, therefore, whether the union has lost a "bargaining chip," I am unprepared to hold that the union has shown irreparable harm based on Mack Trucks.
Although not expressly argued by the union, one could also contend that the company breached the collective bargaining agreement's arbitration clause by refusing to arbitrate an issue which has now been held to be arbitrable. This argument is equally without merit. If such were the case, then the court would have to find irreparable harm in the form of a lost bargaining chip in every suit in which an employer or union sought an order compelling arbitration and maintaining the status quo pending that arbitration. There would no longer be a need for the moving party to show irreparable harm independent from the non-moving party's refusal to arbitrate and injunctions would automatically issue. Such a result would fly directly in the face of the longstanding requirement that a party seeking an injunction pending arbitration must show that such an injunction would be appropriate under ordinary principles of equity. See Boys Markets, 398 U.S. at 254; Nursing Home, 759 F.2d at 1098; Fort Pitt Steel, 598 F. Supp. at 1279. Therefore, I decline to extend Mack Trucks to a situation in which the question of whether the company has violated the contract is the very issue being sent to arbitration.
The two prerequisites for preliminary injunctive relief remaining for discussion are success on the merits and balancing of the equities. Neither party devotes much time to these issues. The union's burden of showing probable success on the merits is not great. To obtain an injunction maintaining the status quo the union need only show that the position it will argue in arbitration is "sufficiently sound to prevent the arbitration from being a futile endeavor." Nursing Home, 759 F.2d at 1098 n. 3, quoting, Panoramic Corp., 668 F.2d at 284-85. "If there is a genuine dispute with respect to an arbitrable issue, the barrier [to the issuance of an injunction] we believe appropriate[ly sic] has been cleared." Panoramic, 668 F.2d at 285. Plaintiff has made a satisfactory showing that it will be successful on the merits so long as its position is not "frivolous." Id. Any higher burden would "intrude significantly on the arbitrator's function and would constitute the sort of judicial preemption of the arbitral process condemned" by the Supreme Court. Id. See Buffalo Forge Co. v. United Steelworkers, 428 U.S. 397, 49 L. Ed. 2d 1022, 96 S. Ct. 3141 (1976).
I conclude that the union's claim that the economic reopener language does not permit the company to unilaterally change insurance carriers, insurance benefits and wages sufficiently raises a "genuine" dispute to support a preliminary injunction. With respect to the health insurance changes, the general insurance agreement clearly provides that the company shall make no changes in insurance carriers absent mutual agreement of the parties. Nor is there anything in the economic reopener language which permits the company to unilaterally change wages, insurance carriers or insurance benefits. Moreover, the company's argument that the union has not shown a probable success on the merits is a reiteration of its argument that the dispute at issue here is not arbitrable. According to the company, an arbitrator would have no jurisdiction to decide these issues because action taken pursuant to an economic reopener after impasse is governed by section 8(d) of the National Labor Relations Act. I must reject this contention for the same reasons discussed above in support of my conclusion that the economic reopener issue is subject to arbitration.
Finally, defendants argue that a preliminary injunction should not issue because the balance of the harms that the parties will suffer weighs in its favor. According to the defendant, it will be put to great expense if it must convert its coverage from Connecticut General back to Blue Cross/Blue Shield. However, any harm which defendant may suffer resulting from the issuance of this preliminary injunction is limited to that of money damages. Conversion back to Blue Cross/Blue Shield will only involve the payment of insurance premiums pending the disposition of the arbitration, which the parties have been instructed to hold as expeditiously as possible. Further, it appears that this task will not be terribly onerous administratively as Blue Cross/Blue Shield has only recently discontinued honoring the claims of plaintiff's members. The harm to the plaintiff, on the other hand, is the potential lack of adequate medical care and resulting risk to its members' health. In balancing the relative harms to the parties, plaintiff and its members are in greater jeopardy than is defendant.
CONCLUSIONS OF LAW
1. I have jurisdiction over this dispute pursuant to section 301 of the National Labor Relations Act, 29 U.S.C. § 185.
2. The issue of whether defendant Exide may unilaterally change medical insurance carriers, medical insurance benefits and wages is arbitrable under the national collective bargaining agreement.
3. Plaintiff UAW and its members will suffer irreparable harm if an injunction does not issue restraining defendant Exide from changing medical insurance carriers and from reducing medical insurance benefits.
4. Plaintiff UAW has failed to show that it will suffer irreparable harm if an injunction restraining defendant Exide from reducing wages does not issue.
5. Plaintiff has shown that the position it will argue in arbitration is sufficiently sound to prevent the arbitration from being a futile endeavor.
6. The equities favor the plaintiff.
7. The public interest is served by issuing this injunction.