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Federated Metals Corp. v. United Steelworkers of America AFL-CIO and Its Local Union

decided: April 28, 1981.

FEDERATED METALS CORPORATION, A WHOLLY OWNED SUBSIDIARY OF ASARCO, INCORPORATED
v.
UNITED STEELWORKERS OF AMERICA AFL-CIO) AND ITS LOCAL UNION, NO. 365, LABOR ORGANIZATIONS AND THE AMERICAN ARBITRATION ASSOCIATION FEDERATED METALS CORPORATION, APPELLANT IN NO. 80-1606 UNITED STEELWORKERS OF AMERICA (AFL-CIO), AND ITS LOCAL UNION, N. 365, LABOR ORGANIZATIONS, APPELLANTS IN NO. 80-1607



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. Civ. No. 78-2568)

Before Seitz, Chief Judge, and Rosenn and Sloviter, Circuit Judges.

Author: Seitz

Opinion OF THE COURT

Federated Metals Corporation appeals from an order of the district court compelling the parties to arbitrate the disputed pension claims on the motion of the United Steelworkers of America (the Union) for summary judgment. The Union cross-appeals from an order of the district court denying its demand for arbitration of the disputed disability claims.

I.

The Union and American Smelting & Refining Company (ASARCO), the parent corporation of Federated Metals, entered into a Collective Bargaining Agreement and a Pension and Disability Agreement in 1974.*fn1 In 1977, ASARCO closed part of its facility at Perth Amboy, New Jersey. Effective April 1, 1977, Federated Metals acquired the remaining portions of ASARCO's Perth Amboy facility. Federated Metals employed approximately ninety-four former ASARCO employees and assumed both the Collective Bargaining Agreement and the Pension and Disability Agreement. Both of these agreements were to expire on June 30, 1977.

During June of 1977, Federated Metals and the Union met to negotiate new agreements. When they failed to reach agreement, the Union commenced an economic strike and picketing against Federated Metals on July 1. Negotiations continued during the strike. After seven months of negotiations and six months of strike, Federated Metals considered negotiations to be at an impasse. It informed the Union of its decision to close the plant, and on January 11, 1978, it publicly announced this decision.

On April 7, 1978, the pension claimants filed claims for benefits under the Pension and Disability Agreement. The pension retirement benefits sought were 70/80 benefits, which provide for early retirement benefits at age fifty-five if an employee attains age plus continuous service credits of seventy years or more, or if he or she has not reached fifty-five and attains age plus continuous service credits of eighty years or more.*fn2 On April 24 and May 18, the disability claimants filed claims for disability benefits under the Pension and Disability Agreement. Neither the pension nor the disability claimants were eligible for benefits at the time the agreement expired. If it is permissible to consider events that occurred between the expiration date of the agreement and the plant shutdown, each claimant has met the factual prerequisites for qualifying for benefits.

Federated Metals denied the claims of both the pension and disability claimants. The Union filed a request for arbitration of these disputes, but Federated Metals filed a complaint in federal district court requesting a stay of the arbitration proceeding.

The Retirement Plan and the Disability Plan provide that the interpretation of the Plans and determinations as to eligibility under the Plans are reserved to the Pension Board for the Retirement Plan*fn3 and to the employer for the Disability Plan.*fn4 The Pension and Disability Agreement contains a limited arbitration agreement that subjects three types of disputes to arbitration: the number of years of continuous service; the claimant's age; and the cause of the permanent or total disability (for disability benefits).*fn5

On January 23, 1980, the district court ruled from the bench on the parties' cross-motions for summary judgment. It ordered arbitration of the pension claims, finding that the subject matter of the Union's claim related to the number of years of service, which was arbitrable under the Pension and Disability Agreement. In ordering arbitration, the court found that the dispute arose under the agreement even though it arose after it had expired, and that the Union did not delay unreasonably in filing its claim for arbitration. Therefore, the court held that the pension claims were arbitrable under the reasoning of Nolde Brothers, Inc. v. Local No. 358, Bakery & Confectionery Workers, 430 U.S. 243, 97 S. Ct. 1067, 51 L. Ed. 2d 300 (1977) (Nolde).

The court denied the Union's request for arbitration of the disability claims. It found that the grievances did not relate to age, to years of service, or to the cause of injury. Because only these three types of disputes were subject to arbitration under the Pension and Disability Agreement, the court ruled that the disability claims were not arbitrable.

II.

Determining whether a particular grievance is arbitrable is a matter of contract interpretation; the parties may draft a narrow arbitration clause that excludes particular types of disputes from arbitration or that provides for termination of the arbitration agreement at the termination of the collective bargaining agreement. See, e.g., United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 1352, 4 L. Ed. 2d 1409 (1960). However, the strong federal policy favoring arbitration as the method to resolve labor disputes should guide a court when it decides whether an arbitration clause covers a particular grievance. See United Steelworkers v. American Manufacturing Co., 363 U.S. 564, 566, 80 S. Ct. 1343, 1345, 4 L. Ed. 2d 1403 (1960); United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S. Ct. 1358, 4 L. Ed. 2d 1424 (1960) (the Steelworkers Trilogy). ...


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