Appeal from the United States District Court for the Eastern District of Pennsylvania; D.C. Civil No. 87-6172, 87-6475.
Cowen, Nygaard, and Aldisert, Circuit Judges.
Purolator Products, Inc. appeals at No. 89-1894 from the judgment of the district court after a non-jury trial, awarding damages in favor of Joseph Bell and Stanley Bokunewicz (employees). Bell and Bokunewicz appeal at No. 89-1950 from the denial of a request for penalties, costs and counsel fees.
The Purolator appeal presents the question whether a previous award by an arbitrator was final and binding, thereby precluding the district court from considering the Bell and Bokunewicz claims. We must also decide whether employees' claims for disability retirement benefits ripened prior to execution of an agreement relating to the closing of a Purolator plant and whether Purolator was a proper party to the employees' lawsuit. In the cross-appeal we must determine whether the district court erred when it declined to award attorneys' fees and costs to the employees.
Jurisdiction in the trial court was proper based on 28 U.S.C. § 1331. We have jurisdiction pursuant to 28 U.S.C. § 1291. This appeal was timely filed. Rule 4(a), F.R.A.P.
Our review of the district court's decision as to the binding effect of the labor arbitration and the applicability of the Labor Management Relations Act, 29 U.S.C. § 185, is plenary. See York Bank and Trust Co. v. Federal Savings & Loan Ins. Corp., 851 F.2d 637 (3d Cir. 1988), cert. denied, 488 U.S. 1005, 109 S. Ct. 785, 102 L. Ed. 2d 777 (1989). To review the decision as to when the employees' pension rights vested, we must separate the issue into its respective parts, applying the clearly erroneous standard to the factual component and the plenary standard to the legal component. Ram Constr. Co. v. American States Ins. Co., 749 F.2d 1049, 1053 (3d Cir. 1984). Finally, we review the district court's denial of attorneys' fees and costs under the clearly erroneous standard. See Baker Indus., Inc. v. Cerberus, Ltd., 764 F.2d 204, 209-10 (3d Cir. 1985).
Because the facts in the district court proceedings are not in dispute, we will summarize the findings of the court.
Employees were injured while working at Purolator's Ringtown plant and ordinarily would have qualified for disability pensions. Before they could complete the process necessary to receive the pensions, however, Purolator closed its Ringtown plant and entered into a closure agreement with the Independent Union of Purolator Employees, Inc. The closure agreement provided that all "pending claims" against Purolator were to be extinguished. Purolator's position was that the term "pending claims" included the disability pensions sought by Bell and Bokunewicz. Employees, however, took the position that their pensions were not subject to the closure agreement because their rights were vested and that, in any case, the closure agreement was never intended to apply to their claims.
Since 1973, the union has represented employees at the Ringtown plant. During that time, the union and Purolator entered into a series of collective bargaining agreements, the last of which was to be effective from May 27, 1983 to May 26, 1986. In this agreement, Purolator contracted to provide a pension plan for its employees, the terms of which were set out in documents for the Ringtown Hourly Paid Employees' Pension Plan. The parties stipulated that the appellees satisfied the requirements for disability pensions and would have received them had the plant not closed.
On November 16, 1983, Purolator announced its intention to terminate the operations at Ringtown. The next day, Bokunewicz sustained injuries in the course of his employment. On November 18, Bell also sustained work-related injuries.
During November and December of 1983, Purolator and the union met to negotiate a closure agreement. The plant was closed in March, 1984 without a closure agreement. An agreement was finally reached in July, 1984, which provided that excess funds in the pension plan would be distributed to the pensioners. In exchange, the union agreed that the agreement "represent[ed] a final and complete disposition of all claims or disputes, known or unknown, which the Union or Individuals had, has or may have with the Company. . . ." Opinion of June 20, 1989, at 3.
In May and September, 1985, the union informed Purolator that Bell and Bokunewicz had received Social Security Award Certificates and were, therefore, entitled to pensions. Purolator, however, claimed it was not required to provide the pensions because of the closure agreement. The union filed a grievance and the parties went to arbitration. The arbitrator decided that he lacked jurisdiction. Following the arbitrator's decision, the employees filed separate suits in the Pennsylvania Court of Common Pleas which were removed to the district court as issues under section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, the Employment Retirement Security Act of 1974 (ERISA), as amended, 29 U.S.C. §§ 1001-1461 and contract law. The district court held that Bell and Bokunewicz were entitled to disability pensions, but denied penalties, costs and attorneys' fees. These appeals followed.
We are satisfied that the district court was correct when it determined that the award of the arbitrator did not preclude consideration of the employees' claims in federal court. The arbitrator identified the issues before him as "(1) Are the grievances arbitrable?; (2) If the grievances are arbitrable, are the grievants entitled to disability retirement benefits?; and, (3) If the grievants are entitled to disability retirement benefits, what shall the remedies be?" The arbitrator then concluded that "the grievances are not arbitrable. The substantive issues presented in the grievances are therefore beyond the authority of the arbitrator." Opinion of June 20, 1989, at 14.
Purolator asserts that the arbitrator's award, denying employees benefits is final and binding. It argues that there is a strong national policy favoring resolution of labor disputes through arbitration as was first announced in the Steelworkers' Trilogy: United Steelworkers of Am. v. American Mfg. Co., 363 U.S. 564, 4 L. Ed. 2d 1403, 80 S. Ct. 1343 (1960); United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960); United Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363 U.S. 593, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960); the parties in this case voluntarily sought an alternative form of dispute resolution through arbitration; even questions ordinarily reserved for the courts, including arbitrability, may be submitted to arbitration if the parties consent, Johnson v. UFCW, Local No. 23, 828 F.2d 961, 964 (3d Cir. 1987); the arbitrator determined the issue of substantive arbitrability in favor of Purolator when it discussed and decided the substantive issues of the case; the arbitrator then rendered an informed opinion dismissing employees' claims for disability retirement benefits; the parties are, therefore, bound by this decision.
Purolator next asserts that even if we agree with the district court's conclusion that it was not precluded from reviewing the effect of the closure agreement, we must reverse that part of the decision pertaining to the issue of vesting of the employees' rights. Purolator argues that: "the mere fact that arbitrable and not arbitrable issues co-exist is insufficient to confer [the district court] with jurisdiction over the entire dispute," Opinion of June 19, 1989, at 17; and that the district court did not overcome the presumption of arbitration in its rationale supporting the decision to hear the vesting issue.
We disagree. The arbitrator said that "the grievances are not arbitrable. The substantive issues presented in the grievances are therefore beyond the authority of the arbitrator." It is difficult to perceive language more clear and free from ambiguity than that contained in the official decision of the arbitrator. He said that he was not deciding the case because (1) the grievances are not arbitrable and (2) are beyond his authority to decide. He decided that he was without jurisdiction. It is true that having admitted lack of jurisdiction, he went off on an obiter dictum frolic of his own and volunteered some observations on the merits. But everything after denial of jurisdiction by the arbitrator, including the discussion of substantive issues, was dicta, pure and simple. We agree with the district court:
The arbitrator did stray briefly into the merits, but despite some careless wording, he certainly did not intend to decide anything other than jurisdiction. The decision cannot fairly be read as an endorsement of [Purolator's] position.
Purolator's argument that this court has held that issues normally adjudicated by the courts, including arbitrability, may be decided by an arbitration if the parties consent, does not convince us otherwise. See Johnson, 828 F.2d 961. To be sure, in Johnson, we said that "the parties . . . may agree to submit the question of arbitrability to an arbitrator." 828 F.2d at 964 (citing Warrior & Gulf Navigation Co., 363 U.S. 474, 483 n.7). But a Johnson issue arises only when a party who originally agreed to arbitration seeks to renege on the agreement after the arbitrator in fact determines that he or she has jurisdiction. Johnson prevents a party from going to court for a "second opinion" on jurisdiction after the parties agree to let the arbitrator decide the issue and the arbitrator decides that the issue is arbitrable. Johnson is of no help to Purolator here because the arbitrator found that the issue was not arbitrable.
The relationship between the courts and the arbitrator in labor matters is well settled. In 1960, the Supreme Court made reference to this relationship in Steelworkers' Trilogy, supra. The issue was revisited in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 11 L. Ed. 2d 898, 84 S. Ct. 909 (1964); Nolde Bros. Inc. v. Local No. 358, Bakery & Confectionery Workers' Union, 430 U.S. 243, 51 L. Ed. 2d 300, 97 S. Ct. 1067 (1977); and AT & T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 89 L. Ed. 2d 648, 106 S. Ct. 1415 (1986). It is now labor-management doctrine that the question of arbitrability is generally a question for the court, ...