Below please find a summary of Cup v. Ampco, a recent decision by the United States Court of Appeals for the Third Circuit dealing with the issue of arbitrability in a labor arbitration case.
Akers National Roll Company operated a manufacturing plant in Pennsylvania employing workers represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. Cup v. Ampco Pittsburgh Corp., No. 17-2349, 2018 WL 4101049, at *1 (3d Cir. Aug. 29, 2018). In 2016, Ampco acquired Akers, and a dispute over healthcare benefits emerged. Id. The conflict centered around former employees who had retired but were not yet sixty-five years old, thus making them ineligible for Medicare. Id. Before Ampco took over, these retired employees paid almost $200 per month to receive healthcare benefits. Id. Ampco announced it would scrap the program and, instead, reimburse these retired employees on a monthly basis for purchasing private healthcare plans. Id. The employees opposed the change, arguing that the reimbursements were of limited value and that they preferred the existing plan. Id.
The union filed a grievance under the collective bargaining agreement (“CBA”) in place at the time, contending that the terms of the CBA governed when differences between retired union employees and Ampco arose over the interpretation of the CBA. Id. However, Ampco rebutted that the union no longer represented the retired employees. Id. Roland Cup, on behalf of himself and other similarly-situated employees, sued Ampco to compel arbitration. Id.
In response to the suit filed by Cup and the union, Ampco sought to dismiss the case for failure to state a claim. Id at 2. Again, Cup and the union sought to compel arbitration per the CBA, which allowed movants to move to arbitration after an “unsatisfactory Company grievance determination.” Id. The district court agreed and granted the motion, finding “strong federal policy in favor of resolving labor disputes through arbitration.” Id. Ampco appealed to the Third Circuit Court of Appeals. Id.
Third Circuit’s Analysis
Jurisdiction: The Third Circuit began by considering whether the district court’s granting of the motion to compel arbitration constituted a final decision, which would allow the decision to be appealable. Id. Cup and the union asserted that a motion to compel arbitration does not itself constitute a final decision. Id. The Third Circuit agreed with Cup’s statement but found the district court went beyond granting the motion to compel and “clos[ing] the case administratively.” In its order, the district court also dismissed the remaining claims of the plaintiffs after granting Cup and the other employees relief on their first claim (compelling arbitration). Id. As the Third Circuit concluded, the district court “disposed of the entire case” and left no aspect of it pending, rendering the decision final and appealable. Id at 3.
Whether the Arbitration Agreement was Subject to the CBA: On appeal, Ampco contended that conflict over healthcare benefits was not subject to arbitration under the CBA because health benefits are not covered by the CBA. Id. The union responded that under Section 19 of the CBA, the language clearly referenced benefit plans including “medical insurance.” Id. However, the Third Circuit found that the language in Section 19 referenced “employees,” not retirees, and rejected the employees’ point.
The union argued further that if the retirees are not explicitly included in Section 19, they are implicitly included since Section 19 incorporated another document, a Memorandum of Agreement (MOA), which explicitly referenced healthcare benefits. Id. The Third Circuit disagreed, finding that mere mention of “medical insurance” is insufficient to incorporate the MOA into Section 19 of the CBA. Id. The appellate court found no explicit intent to incorporate the MOA into the CBA and noted that the CBA did incorporate some external documents by explicitly referencing those documents. Id at 4. Ultimately, the Third Circuit rejected the union’s second point, as well. Id.
However, the Third Circuit went on to extrapolate on the consequences of finding that the MOA was not incorporated in the CBA, a finding that precluded the plaintiffs from asserting a “presumption of arbitrability.” Id at 5. Under a contract containing an arbitration clause, a court cannot presume that an issue is arbitrable unless it can be positively asserted that the matter falls within the arbitration provision. Id. Due to the lack of incorporation of the MOA, which did not have an arbitration clause, into the CBA, which did have an arbitration clause, the Third Circuit held that the presumption of arbitrability did not apply in this context. Id.
The Third Circuit reversed and remanded the case after finding that the matter was not subject to arbitration under the CBA. Id. You can read the full opinion here: http://www2.ca3.uscourts.gov/opinarch/172349p.pdf.
(Nick Leyh, a third-year student at the University of Missouri School of Law prepared this post.)