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Nicol v. United Steel Workers of America

August 29, 2008


The opinion of the court was delivered by: David Stewart Cercone United States District Judge

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Plaintiffs, Richard Nicol ("Nicol") and Paul Deppenbrook ("Deppenbrook") (collectively "Plaintiffs"), initiated this action against Defendant, the United Steelworkers of America (the "USWA" or the "Union"), alleging fraud and deceit ,and a breach of fiduciary duty by the Union in the negotiation and enforcement of a shut-down agreement with regard to plants operated by Republic Technologies International ("RTI"). The Union has filed a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.Plaintiffs have responded and the motion is now before the Court.


Plaintiffs are former employees of RTI's cold-finished steel plant in Beaver Falls, Pennsylvania, and were members of the USWA, the collective bargaining agent for the production and maintenance workers at the Beaver Falls plant. Second Amended Complaint, ¶ 1; Joint Stipulation ¶¶ 3-5. The terms and conditions of employment of the bargaining unit employees at the Beaver falls facility were governed by a 1998 Master Agreement between the USWA and RTI*fn1 . Defendant's Exhibit 1, Deposition of David McCall (hereinafter "McCall Dep.") pp. 23 - 24.

On April 2, 2001, RTI filed a petition for voluntary bankruptcy under Chapter 11 of the United States Bankruptcy Code. Joint Stipulation ¶ 9. Subsequent to the bankruptcy filing, RTI and the USWA entered into negotiations to modify the 1998 Master Agreement in attempt to avoid an action by RTI to void the agreement in the Bankruptcy Court and to assist RTI in achieving a plan of reorganization. CSMF ¶ 12. In order to negotiate the modification to the 1998 Master Agreement, the USWA convened a committee comprised of local union representatives*fn2 from each RTI plant. CSMF ¶ 13; Joint Stipulation ¶ 10. David McCall ("McCall"), USWA District 1 Director, was the chief negotiator for the USWA. CSMF ¶ 15; Joint Stipulation ¶ 12.

After several months of negotiations, the USWA and RTI reached an agreement on a Modified Labor Agreement ("MLA") in December 2001, which provided for changes in wages, health care, pension benefits, profit sharing and employee stock ownership. CSMF ¶¶ 15 & 19; Joint Stipulation ¶¶ 12 & 15. The MLA also provided that RTI, with the USWA's cooperation, obtain a "Byrd Bill Loan" from the Emergency Steel Loan Board. CSMF ¶ 19; Joint Stipulation ¶ 15. At the time of the MLA, RTI employed over four thousand (4,000) USWA-represented members. Defendant's Exhibit 2, McCall Affidavit (hereinafter "McCall Aff.") ¶ 4.

The MLA was submitted to the USWA membership for ratification, and the membership approved the MLA on January 24, 2002. CSMF ¶ 20; Joint Stipulation ¶ 16. The MLA was also approved by the Bankruptcy Court for the Northern District of Ohio on March 4, 2002. CSMF ¶ 21; Joint Stipulation ¶ 17. RTI failed to apply to the Emergency Steel Loan Board for a loan, and therefore, did not obtain a Byrd Bill Loan. CSMF ¶ 22; Joint Stipulation ¶ 25.

In April of 2002, RTI entered into an agreement to sell its assets and facilities to KPS Special Situations Fund, L.P. and Pegasus Partners II, L.P., collectively known as "Newco." CSMF ¶ 25; Joint Stipulation ¶ 19. The sale would result in more than fifteen hundred (1,500) USWA members, including those at the Beaver Falls plant, suffering job elimination and plant shutdowns. McCall Aff. ¶ 6. RTI then began negotiating with McCall, on behalf of the USWA, regarding the effects of a sale and plant shutdown regarding contractual issues arising out of the collective bargaining agreement. CSMF ¶ 26; Supplemental Joint Stipulation ¶ 20. The negotiations resulted in a proposed shutdown agreement (the "Shutdown Agreement") between the parties. Id.

The Shutdown Agreement provided for certain shutdown benefits*fn3 , including a payment of $425,000.00 to settle exiting grievances under the collective bargaining agreement at all plants, and the establishment of a Voluntary Employees' Beneficiary Association ("VEBA"), funded by a $5 million payment by RTI, for payment of future healthcare benefits for USWA retirees and/or former USWA employees of RTI. CSMF ¶¶ 27 & 28; Joint Stipulation ¶¶ 23 & 24; McCall Aff. ¶ 6. Further, the Shutdown Agreement provided that the contemplated sale of RTI's assets and facilities would constitute a "shutdown," triggering the payment of early retirement benefits to all eligible members regardless of whether or not their facility was sold to the purchaser and continued operations. CSMF ¶ 29; Supplemental Joint Stipulation ¶ 21; McCall Aff. ¶ 6. Moreover, the Shutdown Agreement eliminated the need for union members to establish the lack of suitable log-term employment in order to qualify for shutdown benefits, which was otherwise required under the shutdown provisions of the Master Agreement. McCall Dep. pp. 124-127.

Because the Constitution of the USWA does not require ratification of plant closing agreements, the Shutdown Agreement was not submitted to the membership for a ratification vote. McCall Aff. ¶ 7; Defendant's Exhibit 17. The Shutdown Agreement was, however, submitted to the Bankruptcy Court for approval, and after notice and hearing, was approved by order of the Bankruptcy Court on June 26, 2002. Joint Stipulation ¶ 24; Defendant's Exhibit 10.

On June 12, 2002, the Pension Board Guaranty Corporation ("PBGC"), which assumed the responsibility to pay the retirement benefits of RTI employees as a result of RTI's bankruptcy, filed suit in the United States District Court for the Northern District of Ohio. CSMF ¶ 36; Joint Stipulation ¶ 29. The PBGC filed suit to terminate the RTI pension plans and to set June 14, 2002, as the plan termination date pursuant to a "Notice of Termination" of its intent to terminate the plans, and to have PBGC appointed as statutory trustee. Id. Because the sale and shutdown of the RTI facilities was not to occur until August 16, 2002, such action by PBGC would prevent the payment of the shutdown benefits as negotiated between RTI and the USWA in the Shutdown Agreement. CSMF ¶ 37; Joint Stipulation ¶ 28.

The USWA intervened in the PBGC litigation in attempt to preserve the negotiated shutdown benefits for its membership. CSMF ¶ 38; Joint Stipulation ¶ 30. After joint motions for summary judgment, the District Court granted the USWA's motion and ruled that August 17, 2002*fn4 , was the date of the termination of the plan, and therefore, PBGC was required to pay the shutdown pensions. Joint Stipulation ¶ 31; Defendant's Exhibit 11a.

PBGC appealed the District Court's Order to the United States Court of Appeals for the Sixth Circuit. CSMF ¶ 40; Joint Stipulation ¶ 32. On October 1, 2004, the Sixth Circuit reversed the Order of the District Court and found that the proper date of plan termination was June 14, 2002, and remanded the action to the District Court. Joint Stipulation ¶ 32; Defendant's Exhibit 11b. In further attempt to preserve the negotiated shutdown benefits for its membership, the USWA filed a petition for writ of certiorari to the Supreme Court of the United States. CSMF ¶ 41; Joint Stipulation ¶ 33. The Court denied the USWA's petition on March 7, 2005. Id.

While the PBGC litigation was pending, Plaintiffs Nicol and Deppenbrook filed unfair labor charges against both the USWA and RTI. On October 25, 2002, Deppenbrook filed charges against the USWA with the NLRB alleging the union had breached its duty of fair representation to its members in connection with the shutdown of RTI in Beaver Falls. CSMF ¶ 44; Joint Stipulation ¶ 36; Defendant's Exhibit 12. The NLRB found there was insufficient evidence of a violation of the National Labor Relations Act ("NLRA"), and the complaint was dismissed on February 28, 2003. CSMF ¶ 45; Joint Stipulation ¶ 37; Defendant's Exhibit 13. Deppenbrook's appeal to the General Counsel of the NLRB was dismissed on May 23, 2003. CSMF ¶ 45; Joint Stipulation ¶ 37.

Nicol also filed a complaint with the NLRB on October 25, 2002, but he filed against RTI alleging it engaged in unfair labor practices by failing to bargain with the union in good faith regarding bankruptcy negotiations and the shutdown. CSMF ¶ 46; Joint Stipulation ¶ 38; Defendant's Exhibit 14. Nicol's complaint was likewise dismissed by the NLRB, and his appeal dismissed. CSMF ¶ 47; Joint Stipulation ¶ 39; Defendant's Exhibit 14.


Pursuant to FED. R. CIV. P 56(c), summary judgment shall be granted when there are no genuine issues of material fact in dispute and the movant is entitled to judgment as a matter of law. To support denial of summary judgment, an issue of fact in dispute must be both genuine and material, i.e., one upon which a reasonable fact finder could base a verdict for the non-moving party and one which is essential to establishing the claim. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). When considering a motion for summary judgment, the court is not permitted to weigh the evidence or to make credibility determinations, but is limited to deciding whether there are any disputed issues and, if there are, whether they are both genuine and material. Id. The court's consideration of the facts must be in the light most favorable to the party opposing summary judgment and all reasonable inferences from the facts must be drawn in favor of that party as well. Whiteland Woods, L.P. v. Township of West Whiteland, 193 F.3d 177, 180 (3d Cir. 1999), Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987).

When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In the language of the Rule, the nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." FED. R. CIV. P 56(e). Further, the nonmoving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir.1989) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). The non-moving party must respond "by pointing to sufficient cognizable evidence to create material issues of fact concerning every element as to which ...

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