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International Union v. Mack Trucks Inc.

argued: March 16, 1987.


Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C.Civil No. 85-7417.

Author: Mansmann

Before: HIGGINBOTHAM, MANSMANN, and ROSENN, Circuit Judges

MANSMANN, Circuit Judge.

This matter comes before us on appeal from an order of the district court which granted the motion of the defendant, Mack Trucks, Inc. ("Mack"), for a directed verdict in this action by the plaintiff -- International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW ("UAW" or "the Union") -- to enforce the parties' collective bargaining agreement pursuant to § 301 of the Labor-Management Relations Act, 29 U.S.C. § 185 (1982). The district court concluded as a matter of law that "the Union has failed to demonstrate that its members have been harmed by Mack's technical violation of the contract" and, therefore, refused to issue a permanent injunction in the Union's favor. UAW v. Mack Trucks, Inc., 733 F. Supp. 938, slip op. at 9 (E.D. Pa. 1986) (hereinafter "slip op."). We possess jurisdiction pursuant to 28 U.S.C. § 1291 (1982). We agree with the district court that Mack's decision to change unilaterally the health insurance carrier for its employees violated Mack's collective bargaining agreement with the UAW. We find, however, that the Union carried its burden of proving irreparable harm. Because the district court rested its directed verdict and consequent denial of injunctive relief on an erroneous finding of ultimate fact, we will vacate the judgment of the district court and will remand this case for further proceedings.


The collective bargaining agreement between the Union and Mack provides that Mack will pay for health insurance benefits to its union employees. Prior to 1984, the parties had specified Blue Cross/Blue Shield as the health insurance carrier. However, during negotiations in 1984, officers and employees of the Union expressed to Mack officials that some union members were dissatisfied with Blue Cross/Blue Shield. The UAW subsequently proposed a means to permit Mack to replaced the health insurance carrier under certain conditions during the term of the new contract. According to the Union, it suggested the proposal in order to secure better quality health insurance services for the UAW membership while simultaneously precluding Mack from modifying unilaterally the terms of the benefits package.

Under the UAW's plan, the parties would detail the terms and conditions of the health insurance program which the carrier would provide. Although Mack initially responded favorably to the Union's offer, the parties failed to reach an agreement. Mack then offered to continue the terms and conditions of the existing health insurance program with a carrier of Mack's choosing. The Union countered with the following:

The terms and conditions of coverage, including those amendments made in these negotiations, are continued on the assumption that the current arrangement with Blue Cross/Blue Shield will continue for the term of the labor agreement. The Company shall not exercise its option to select an alternate delivery system until the parties have reached mutual agreement on the terms and conditions including restrictions, limitations and definitions that would be applicable to any delivery system other than Blue Cross/Blue Shield.

On November 7, 1984, the parties initialed this proposal which became part of Appendix B to their master labor agreement effective October 30, 1984.

On June 11, 1985, the UAW-Mack Benefits Committee met to discuss health insurance benefits issues. Mack advised the Union that, inter alia, Mack was soliciting bids from various health insurance plans. Union representative Jack Derry thereupon reminded Mack's representatives that the parties had to agree mutually on the terms and conditions of any delivery system before Mack could select a provider other than Blue Cross/Blue Shield. Nonetheless, Mack's Dennis Guinan informed the Union at a meeting in Detroit on November 4, 1985 that Mack had tentatively selected the Equitable Life Assurance Society ("Equitable") to assume the insurance program on January 1, 1986. The Union again objected.

On November 18, 1985, the parties met at Equitable's Regional Benefits Center in Columbus, Ohio. At that meeting, the Union asked Mack to delay implementing the conversion to Equitable, since the UAW required more time to study the change and to resolve pertinent unanswered questions. The Union also stated that Mack's decision to close its Allentown, Pennsylvania plant and to outsource work from its Hagerstown, Maryland facility demanded the Union's immediate attention. Mack nonetheless sent the Union a letter on December 6, 1985 addressing question raised at the Columbus meeting. Three days later, Mack formally notified the UAW that effective January 1, 1986 Mack "will exercise its option . . . to replace the present insurance carriers for our group insurance coverage under the Agreement with Equitable."

Union representatives immediately presented written grievances to Mack on December 10 and 16, 1985 protesting its actions. Again on December 16, 1985, the UAW by letter reminded Mack of the requirement in Article I, Section 2 of the insurance agreement that Mack could not change insurance carriers until "the parties have reached mutual agreement on the terms and conditions including restrictions, limitations and definitions that would be applicable to any [other] delivery system. . . ." The UAW further pledged to meet with Mack "at the earliest possible mutually convenient time" to resolve these issues. On December 19, 1985, Mack responded to the Union's letter and indicated that the terms and conditions of the UAW's existing insurance coverage would not be reduced with Equitable. Mack offered, accordingly, to furnish the UAW with a comparative breakdown of the Blue Cross/Blue Shield and Equitable plans by February 15, 1986 and to answer the Union's questions in the interim. The Union responded by filing a complaint and a motion for a preliminary injunction on December 26, 1985 to stop Mack from switching to Equitable.

On December 30, 1985, the parties entered into a stipulation and order whereby the plaintiff withdrew its motion for a preliminary injunction. In return, the defendant formally promised to provide a complete comparative breakdown of the two insurance programs, to which the UAW would respond in writing. The parties additionally agreed to discuss outstanding problems until the date of trial, if trial proved necessary. On January 1, 1986, Mack replaced Blue Cross/Blue Shield with Equitable.

Mack sent to the Union a "Comparative Document for the Mack-UAW Insurance Program" on January 17, 1986. The UAW responded ten days later with a request for additional documents by which to compare the old and new insurance plans. On January 31, 1986, the parties met to discuss inadequacies which the Union found in the comparative breakdown. Mack and the UAW continued to exchange correspondence throughout the ensuing two months.

Finally, on April 21, 1986, the Union notified Mack that the Union would not accept the terms and conditions of coverage with Equitable. Moreover, the UAW reiterated its "principal concern" that "the Company does not have the right under the terms of the collective bargaining agreement to make a change in insurance carriers in a unilateral fashion without the agreement and consent of the Union."

On August 19 and 20, 1986, the district court held a non-jury trial on the Union's complaint and accompanying request for a permanent injunction to require Mack to reinstate the Blue Cross/Blue Shield health insurance plan. At the close of the plaintiff's case, Mack moved for a directed verdict pursuant to Fed. R. Civ. P. 50(a). The defendant argued that the UAW had failed to prove that Mack had breached the collective bargaining agreement and that, in any event, the Union had not shown irreparable harm as a result of the change from Blue Cross/Blue Shield to Equitable. The Union responded that it need not demonstrate irreparable harm to obtain a permanent injunction; rather, it had to (and did) prove a breach of the collective bargaining agreement and a balance of the equities favoring the relief sought. ...

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