Wednesday, February 07, 2007

Sixth Circuit Vacates Class Certification; Finds that Union Needed Consent to Represent Retirees

Per United Steelworkers v. Cooper Tire & Rubber Co., ---F.3d----, 2007 WL 101990 (6th Cir. Jan. 17, 2007):

Cooper Tire & Rubber Company ("Cooper") and United Steelworkers of America Local 207L ("Local 207L" or the "Union") were parties to a collective bargaining agreement ("CBA") containing an arbitration clause. The parties simultaneously executed a side letter that limited company contributions to retiree healthcare benefits. Following a dispute involving one of the side letter's terms, Local 207L filed suit in federal district court on behalf of the retirees, seeking to compel arbitration of the grievance. Local 207L claimed that the disagreement was arbitrable under the scope of the CBA's arbitration clause even though the side letter did not contain a separate provision for arbitration. The district court agreed, granting the Union's motion for summary judgment on the issue of arbitrability. For the reasons that follow, we AFFIRM the district court's decision to compel arbitration of the dispute over the side agreement. However, we VACATE the district court's order certifying the class under Fed.R.Civ.P. 23(b) and REMAND for further proceedings consistent with this opinion.

. . .

. . . Cooper argues that even if the dispute over the FASB Letter is subject to arbitration and the Union has standing, the district court erred by not requiring consent of the class members to Union representation. The Notice of Class Certification stated that "any final arbitration award, whether for or against the Defendants, [would] apply to" the Retirees and the Survivors. In ordering the class certification as such under Rule 23(b)(2), the district court precluded the class members' ability to pursue their ERISA rights, as well as any other claims, directly with Cooper.
In Cleveland Electric, we recognized two dangers in failing to require a union to obtain retirees' consent before arbitrating on their behalf. See Cleveland Elec. Illuminating Co. v. Util. Workers, Local 270, 440 F.3d 809, 817 (6th Cir.2006). First, employers could be faced with numerous retirees' claims and lawsuits if a determination is made that the Union was not authorized to act on the retirees' behalf. See id. (citing Meza v. General Battery Corp., 908 F.2d 1262, 1280 (5th Cir.1990) (holding that an injured former employee's lawsuit was not barred by res judicata where he never authorized the union to represent his interest in a previous lawsuit over the same benefits)). Second, retirees could lose their rights to pursue their claims directly with the employer if the union obtains an unfavorable arbitration decision. See id. (citing Rossetto v. Pabst Brewing Co., 128 F.3d 538, 540 (7th Cir.1997) (stating that if the union "loses in arbitration, the retirees lose, period")); see also Int'l Union, United Auto., Aerospace & Agric. Implement Workers v. Acme Precision Prods., Inc., 515 F.Supp. 537, 540 (E.D.Mich.1981) (holding that where a union sues on behalf of retirees, the judgment in that suit acts as a bar to suits by individual retirees brought at a later time).

We agree with the Union that there is no real danger that Cooper would have to relitigate the same issues with individual retirees that will have already been arbitrated with the Union. The Notice of Class Certification makes clear that all class members will be bound by any final arbitration award. Moreover, Cooper agreed to the order certifying the class under Rule 23(b). Therefore, our concern here is not for Cooper, but rather that the Retirees and Survivors will be bound by an unfavorable arbitration decision to which they never consented. As the Seventh Circuit stated in Rossetto, "[a] union's power to negotiate with management derives from the fact that the union is the exclusive bargaining representative of a group of people." Rossetto, 128 F.3d at 539. Because the Union is not the exclusive bargaining representative of the Retirees and Survivors, see Allied Chemical & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 172, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971) (holding retirees are not "employees" within the bargaining unit), any claims, statutory or otherwise, belong to the Retirees and Survivors, individually. The Union may still arbitrate on behalf of the Retirees and Survivors, but only after they have consented to such representation. See Cleveland Elec., 440 F.3d at 818 (requiring consent of retirees before allowing union to arbitrate on their behalf). Neither the Union nor a court may preclude the Retirees or Survivors the right to litigate with Cooper individually.


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