Opinion
Case No. C-1-01-467
March 6, 2003
O R D E R
This matter is before the Court on motions to dismiss Plaintiffs' second amended complaint filed by Defendants United Paperworkers International Union Local 1967 (Doc. No. 37), United Paperworkers International Union (Doc. No. 38), International Paper Company (Doc. No. 40), and Smart Paper LLC (Doc. No. 39). For the reasons that follow, each of the motions is GRANTED IN PART AND DENIED IN PART.
I. Background
The claims in this case arise out of International Paper Company's sale of the B Street Mill, located in Hamilton, Ohio, to Smart Paper LLC in January 2001. Plaintiffs, one hundred and fifteen in number, are former employees of International Paper and are members of both the United Paperworkers International Union ("PACE International") and United Paperworkers International Union Local 1967 ("PACE Local 1967") (sometimes collectively referred to as "the Unions"). In their amended complaint, Plaintiffs assert various theories for recovery of severance pay they claim is owed to them under the collective bargaining agreement and other agreements reached between the Unions and International Paper. In addition, some of the individual Plaintiffs present state law claims for age and disability discrimination.There are several documents and agreements relevant to analysis of Plaintiffs' claims and the pending motions to dismiss. The first of these documents is the collective bargaining agreement entered into on September 18, 1990, between International Paper (then Champion International Corporation), PACE International, and PACE Local 1967. See Doc. No. 34, Ex. A. The CBA itself contains no express provision for payment of severance benefits upon termination of employment. See generally id.
It was originally agreed that the CBA would expire on September 19, 1995. However, on September 26, 1996, International Paper and PACE Local 1967 entered into an Extension Agreement (Doc. No. 34, Ex. B) which pushed back the expiration date of the CBA to September 20, 1998. In relevant part, the Extension Agreement provides in the section regarding employment security:
3. In recognition of the importance of employment security in promoting cooperative efforts such as:
— Work redesigns
— Reorganizations which result in the elimination of positions or department
— Capital improvements which are based on returns which eliminate positions
— Elimination of positions as a result of other cooperative efforts
The parties agree that no represented employee shall lose employment as a result of such cooperative effort.
4. The parties recognize that conditions may arise which are excluded from this agreement. Examples include:
— Catastrophic events
— Market conditions
— Capital expenditures other than those included in #3 above
— Environmental mandates
Further it is recognized that decisions may be made and or [sic] circumstances evolve that are not initiated or driven by Champion Management. In these situations, positions may be eliminated and people lose employment within the Hamilton Mill. The Company commits to provide a fair level of economic security and best efforts to help affected employees continue their careers elsewhere.
5. Any job reductions and/or elimination of positions that may occur will be offset through normal attrition, reassignment and/or negotiated severance as referred to in #3 and #4 above.
Attrition shall be defined as:
— Retirements
— Resignations/Voluntary Terminations
— Promotions outside the Bargaining Unit or the Premium Papers Business
— Terminations for just cause
This agreement and commitment to employment security is a living document subject to change only by mutual agreement among the parties.
Doc. No. 34, Ex. B, §§ VII.3-VII.5. The Extension Agreement does not otherwise specifically address the issue of severance pay, such as defining events when severance would be paid or establishing a payment formula.
In May 1996, International Paper, PACE International, and PACE Local 1967 entered into an agreement entitled the Hamilton Mill Refiguration Agreement Phase II ("the Reconfiguration Agreement") which did establish specific formulas for payment of severance pay. See Doc. No. 34, Ex. F.
In January 2001, International Paper announced that it had sold the B Street Mill to Defendant Smart Papers, LLC. Second Amended Complaint ¶ 17. Although Plaintiffs dispute its legitimacy and/or its enforceability, International Paper, PACE International, and PACE Local 1967 entered into an agreement dated January 23, 2001 entitled "Hamilton B-Street Mill, Effects Bargaining Package" ("the EBP"). See Doc. No. 34, Ex. C. The EBP provides in relevant part:
As a result of the sale of the Hamilton B Street Mill to SMART Papers, LLC, International Paper proposes the following benefits to the PACE International Union and its affiliate Local 1967.
The following proposal is contingent upon timely ratification of this package by January 31, 2001.SEVERANCE
Employees who do not receive an employment offer from SMART Papers will be paid 60 hours pay at the rate of their current permanent classification (not red circle rates) on the date of sale for each full and pro-rata
year of continuous service with International Paper. Payments will be made as a lump sum within 30 days following date of sale and this payment will be subject to all applicable taxes.
Employees who do receive an employment offer from SMART Papers will not be entitled to severance pay unless they are terminated from SMART Papers, through no fault of their own, within eighteen (18), months of the sale date.
To be eligible for severance pay, an employee must be actively at work on the date of sale. Employees on disability or other approved leaves must be released to return to work in their former classifications.
The Union agrees that Severance Program 817, or any other Severance Program, does not apply, and that this severance agreement is the only severance agreement applicable to the employees of the Hamilton B Street Facility.
* * *
OUTSTANDING GRIEVANCES
All outstanding grievances will be considered settled and closed in accordance with the agreed upon terms.
Any employee that quits, resigns or is terminated for cause prior to the date of sale, without formal release by the Company, will forfeit eligibility under this agreement.
The provisions above apply only to those employees who have fully cooperated in the interview process. Cooperation includes submitting a completed employment application and signing and returning the requested forms, including one requiring a substance abuse screen, and participating in the employment interview process.See id. (emphasis in original). Although the agreement states that it will become effective upon ratification, it appears to be undisputed that the agreement was never presented to the rank-and-file members for approval. Second Amended Complaint ¶ 22. Instead, the agreement was signed by Kenneth Stanifer on behalf of PACE International and Tim Bray on behalf of PACE Local 1967. See id. ¶ 21.
Plaintiffs' employment with International Paper terminated upon final sale of the mill to Smart Papers. Second Amended Complaint ¶ 8. Plaintiffs applied for and obtained jobs with Smart Papers. As a result of their employment with Smart Papers, Plaintiffs did not receive a severance package upon termination from International Paper. Id. ¶ 102.
Except for three Plaintiffs who bring separate claims in Count X of the second amended complaint.
Plaintiffs filed an original complaint asserting twelve causes of action against PACE Local 1967, PACE International, International Paper Company, and Smart Paper, LLC on July 18, 2001. The original complaint listed seventy-five named Plaintiffs and twelve John Doe Plaintiffs. See Doc. No. 1. Plaintiffs filed a first amended complaint on July 23, 2001, which added four more named Plaintiffs. See Doc. No. 3. On January 9, 2002, Plaintiffs filed a second amended complaint which added thirty-six additional named Plaintiffs.
Plaintiffs' causes of action are as follows. Count I asserts a claim against PACE International and PACE Local 1967 pursuant to 28 U.S.C. § 1337 and Section 301 of the Labor Management Relations Act ("the LMPA"), 29 U.S.C. § 185. This count alleges that the Unions breached the local by-laws and the constitution of the International Union by ratifying the EBP without submitting the issue to the rank-and-file for ratification. This count also appears to allege that the Unions breached their duty of fair representation by not submitting the EBP to the membership for a vote.
Count II asserts a claim against International Paper, PACE International, and PACE Local 1967 pursuant to Section 301 of the LMRA. Count II alleges that these parties breached the CBA and the Extension Agreement by entering into the EBP, which had the effect of denying Plaintiffs severance pay. Alternatively, Plaintiffs allege that these Defendants violated the LMRA by entering into the Mill Reconfiguration Agreement without a membership vote. Even if there was a membership vote on the Mill Reconfiguration Agreement, Plaintiffs allege these parties breached the agreement by not paying severance upon their termination.
Count III asserts a claim against International Paper under the LMRA for breach of contract and promissory estoppel. Count III alleges that by virtue of the EBP, International Paper represented to Plaintiffs that in order to be eligible to receive severance pay, they would have to apply for employment with Smart Paper and be rejected. However, Plaintiffs allege, there were certain unidentified "covert" employees to whom International Paper paid severance even though those employees did not apply nor were they rejected, for employment with Smart Paper. In fact, Plaintiffs allege, International Paper advised these "covert" employees that they could get severance pay without applying for positions with Smart Paper. Thus, Plaintiffs contend, had they known they could have gotten severance without applying for new jobs, they would have preferred to take severance pay over continued employment with Smart Paper. Plaintiffs also claim that International Paper breached the EBP through its alleged preferential treatment of the "covert" employees.
Count IV of the second amended complaint asserts claims against PACE International and PACE Local 1967. Count IV alleges that the Unions violated 29 U.S.C. § 411(a)(1) by entering into the EBP without submitting it to the full membership for a vote.
This section provides:
Every member of a labor organization shall have equal rights and privileges within such organization to nominate candidates, to vote in elections or referendums of the labor organization, to attend membership meetings, and to participate in the deliberations and voting upon the business of such meetings, subject to reasonable rules and regulations in such organization's constitution and bylaws.29 U.S.C. § 411(a)(1).
Count V asserts claims against International Paper, PACE International, and PACE Local 1967. Count V consists of hybrid breach of fair representation/breach of the CBA claims under Section 301 of the LMRA. Specifically, Count V alleges that the Unions breached their fiduciary duty to Plaintiffs by failing to submit the EBP to the membership for ratification and by failing to secure the severance pay which they claim is provided by the CBA and the Extension Agreement. This count also alleges that the Unions breached their duty of fair representation by failing to act on a grievance over severance pay filed by a Larry McCreary, who, it should be noted, is not a plaintiff in this case. This count alleges that International Paper breached the CBA and the Extension Agreement by failing to give Plaintiffs severance pay. Finally, this count alleges that International Paper breached the EBP by failing to treat all employees equally thereunder.
Count VI brings age discrimination claims against PACE International, PACE Local 1967, and International Paper pursuant to the Ohio Civil Rights Act, Ohio Revised Code Chapter 4112. This count alleges that the EBP adversely impacted certain of the Plaintiffs by disproportionately reducing their benefits on the basis of age.
Count VII asserts a claim against Smart Paper under the Ohio Civil Rights Act as a aider and abettor of the alleged discriminatory acts outlined in Count VI of the second amended complaint.
Count VIII asserts a breach of contract claim against International Paper and Smart Paper on behalf of individual Plaintiff Douglas Howard. This count alleges that Howard applied for and accepted a job with Smart Paper in February 2001, but that he was terminated without cause and without fault of his own only two months later. Howard claims, however, that these Defendants failed to pay him for his accrued vacation and did not provide him with severance benefits in violation of the terms of the EBP.
Count IX of the second amended complaint apparently purports to be a combination state law disability discrimination claim/federal breach of contract claim filed on behalf of individual plaintiff Kenneth Bauer. This count alleges that Bauer was on disability leave at the time the Unions and International Paper entered into the EBP and that he was not informed that in order to be eligible for severance pay he had to be on active work status. This count further alleges that the EBP had the effect of denying him severance benefits on the basis of his disability.
Count X apparently asserts breach of contract claims against Smart Paper on behalf of individual plaintiffs Norman Brown, Michael Baker, Charles Hardix, and Donald Ruppert. This count alleges that Smart Paper breached the CBA by not paying severance to these Plaintiffs, even though, as their own allegations recite, they did not apply for jobs with Smart Paper.
Count XI asserts a state law age discrimination claim against Smart Paper on behalf of individual plaintiff Charles Campbell. This claim alleges that Campbell applied for a position with Smart Paper, that he was rejected for that position, and that Smart Paper hired a substantially younger person instead.
Count XII asserts state law fraud claims against International Paper and Smart Paper. This count essentially repeats the assertion that Plaintiffs were deceived into believing that they were required to apply for employment with Smart Paper and be rejected in order to receive severance pay. Plaintiffs apparently believe they were duped into taking jobs with Smart Paper when they would have preferred to take severance instead.
Finally, Count XIII asserts state law age discrimination claims against Smart Paper on behalf of individual Plaintiffs Jimmy Taylor, Michael Thomas, and Joseph Born. This count alleges that Smart Paper hired these Plaintiffs as maintenance technicians but has paid them less than substantially younger maintenance technicians. This count further alleges that these Plaintiffs were constructively discharged because of their age.
Each of the Defendants has filed a motion to dismiss the claims against them.
II. Analysis
Except for the individual employment discrimination claims, Plaintiffs in this case essentially present a number of different theories to recover severance pay after International Paper sold the B Street Mill to Smart Paper even though Smart Paper hired them after the sale. Resolution of the pending motions involves analysis of a series of agreements entered into by International Paper, PACE International, and PACE Local 1967. Furthermore, to a large extent, the success or failure of Plaintiffs' claims rests on the applicability or enforceability of the EBP.
The enforcement and interpretation of collective bargaining agreements under § 301 is governed by substantive federal law. However, traditional rules for contractual interpretation are applied as long as their application is consistent with federal labor policies. Many of the basic principles of contractual interpretation are fully appropriate for discerning the parties' intent in collective bargaining agreements. For example, the court should first look to the explicit language of the collective bargaining agreement for clear manifestations of intent. The intended meaning of even the most explicit language can, of course, only be understood in light of the context which gave rise to its inclusion. The court should also interpret each provision in question as part of the integrated whole. If possible, each provision should be construed consistently with the entire document and the relative positions and purposes of the parties. As in all contracts, the collective bargaining agreement's terms must be construed so as to render none nugatory and avoid illusory promises. Where ambiguities exist, the court may look to other words and phrases in the collective bargaining agreement for guidance. Variations in language used in other durational provisions of the agreement may, for example, provide inferences of intent useful in clarifying a provision whose intended duration is ambiguous. Finally, the court should review the interpretation ultimately derived from its examination of the language, context and other indicia of intent for consistency with federal labor policy. This is not to say that the collective bargaining agreement should be construed to affirmatively promote any particular policy but rather that the interpretation rendered not denigrate or contradict basic principles of federal labor law.International Union, UAW v. Yard-Man, Inc., 716 F.2d 1476, 1479 (6th Cir. 1983). The Court's analysis of the claims proceeds somewhat out of the order they are presented in the second amended complaint. Nevertheless, the Court believes that the analysis flows in a logical and coherent fashion.
Reviewing the plain language of the CBA (Doc. No. 34, Ex. A) reveals that it makes no promises whatever that covered members would receive severance pay upon termination from International Paper. Similarly, although the Extension Agreement (Doc. No. 34, Ex. B) states that job reductions would be offset in part through negotiated severance, the agreement itself does not otherwise provide a specific formula for payment of severance or further identify under what conditions an employee would become eligible for payment of severance. This appears to be a purposeful omission since the Extension Agreement recognizes the possibility that the necessary job reductions could be achieved through normal attrition, such as voluntary terminations or retirement, or terminations for just cause. As evidenced by later agreements, namely the Mill Reconfiguration Agreement and the EBP, the Unions and International Paper did negotiate severance terms for terminated employees. Therefore, it would appear that both the Unions and International Paper lived up to their obligations under the CBA. and the Extension Agreement to negotiate severance pay for covered employees. In any case, because it is clear that neither the CBA nor the Extension Agreement promises to pay severance to terminated employees, Plaintiffs do not state a claim for relief to the extent they claim that they were entitled to severance pay under the CBA and Extension Agreement.
The 1996 Mill Reconfiguration Agreement does provide specific formulas for payment of severance and explains eligibility for severance pay. See Doc. No. 34, Ex. F. However, the Mill Reconfiguration Agreement was superceded by the 2001 EBP. See Doc. No. 34, Ex. C., at 1 ("The Union agrees that Severance Program 817, or any other Severance Program, does not apply and that this severance agreement is the only severance agreement applicable to the employees of the Hamilton B Street Facility."). Thus, Plaintiffs are entitled to severance pay, if at all, under the terms of the EBP.
Plaintiffs, however, allege that International Paper and the Unions breached the CBA, the Extension Agreement, and the Mill Reconfiguration Agreement by entering into the EBP. It is clear that International Paper and the Unions intended for the EBP to supersede all previous agreements regarding severance pay. Plaintiffs' contention that International Paper and the Unions breached the earlier agreements by entering into the EBP presumes that they did not have authority to make the latter agreement. By claiming that International and the Unions did not have authority to enter into the EBP, Plaintiffs are challenging the validity and enforceability of the EBP. This Court, however, does not have jurisdiction under the LMPA to determine the validity of a collective bargaining agreement. Adcox v. Teledyne, Inc., 21 F.3d 1381, 1388 (6th Cir. 1994); Huessener v. National Gypsum Co., 887 F.2d 672, 676 (6th Cir. 1989). In other words the EBP is presumed to be valid and the Court is not authorized to consider allegations to the contrary.
Effects bargaining is mandatory. First Nat'l Maint. Corp. v. NLRB, 452 U.S. 666 (1981). Thus, the EBP is a form of collective bargaining agreement. Although PACE Local 1967 relies on Adcox for the proposition that the Court does not have jurisdiction to determine the validity of the EBP, curiously, later in its brief, in addressing Plaintiffs' claim that the Unions breached the Local bylaws and the Union constitution, PACE Local 1967 argues that the EBP is not a collective bargaining agreement because it relates to terminating International Paper's relationship with the Unions and not to ongoing wages and working conditions. In making this argument, the Local relies on Retail Clerks Int'l Assoc. v. Lion Dry Goods, Inc., 369 U.S. 17 (1962), for the proposition that an effects bargaining agreement is not a CBA. In Lion Dry Goods, the Court held that the district court's § 301 jurisdiction extends to strike settlement agreements because they are "contracts" within the meaning of the LMPA. See id. at 25-28. Contrary to the Local's argument, in reaching this conclusion, the Court specifically stated, "We need not determine whether or not this strike settlement agreement is a `collective bargaining agreement' to hold, as we do, that it is a `contract' for purposes of § 301(a)." Id. at 28. It was sufficient for the Court that the strike settlement agreement was "significant to the maintenance of labor peace" and "affect[ed] the working conditions of the employees." Id. The same can be said in this case about the EBP — it was significant to the maintenance of labor peace and affected the members' working conditions. The Court sees nothing in the Lion Dry Goods opinion which states that the labor agreement must relate to ongoing or future working conditions to confer jurisdiction under § 301. Indeed, the Local's latter proposition that the EBP is not a collective bargaining agreement negates its contention that Adcox controls the decision on the validity of the EBP. The Adcox decision specifically states that the Court had previously determined that § 301 jurisdiction does not extend to questions of validity of a collective bargaining agreement while holding that the district court did not have jurisdiction to consider the validity of the plant closing agreement in that case. See Adcox, 21 F.3d at 1388. In other words, the Adcox Court treated the plant closing agreement as a form of collective bargaining agreement. Thus, the Local's latter contention, that the EBP is not a collective bargaining agreement, is without merit.
Plaintiffs also claim that the EBP was not properly ratified because the Local President signed the agreement instead of submitting it to the full membership for a vote. Again, however, this contention challenges the validity of the EBP. Therefore, the Court is without jurisdiction to consider this contention as well. In light of the foregoing analysis, it is clear that Count II of the second amended complaint, which asserts claims against International Paper and the Unions for breach of the CBA, the Extension Agreement, and the Mill Reconfiguration Agreement, fails to state claims for relief because the claims therein are based on the alleged invalidity of the EBP. Therefore, Defendants' motion to dismiss Count II of the second amended complaint is well-taken and is GRANTED.
Plaintiffs charge in Count I that the Unions violated both the local bylaws and the Union constitution by entering into the EBP without submitting the agreement to the membership for ratification. PACE Local 1967's bylaws provide:
With the assistance of an authorized Representative of the International Union, the Bargaining Committee shall conclude agreements with Management subject to retification [sic] by the membership for the Local Union.
Doc. No. 34, Ex. D, Art. XIV, § 3. The bylaws also provide that "Each separate group shall vote on ratification of their individual contracts."See id., Art. XIX, § 3. The International Union constitution provides:
A collective bargaining agreement must be ratified and approved by a majority of the members covered by said agreement present and voting on the question by secret ballot before the same shall be executed on behalf of the Union[.]See id. Ex. E, Art. XVI, § 1. Although there does not appear to be a dispute on this issue, the Court assumes for purposes of the motions to dismiss that the EBP was not submitted to the local members for ratification.
Individual union members may bring suit against their union under § 301 for breach of the union constitution because the union constitution is considered to be a contract between labor organizations, and, the individual members of the union are considered to be third-party beneficiaries of that contract. See Wooddell v. International Bhd. of Elec. Workers, Local 71, 502 U.S. 93, 101 (1991); Tisdale v. United Ass'n of Journeymen, 25 F.3d 1308, 1311 (6th Cir. 1994). There appears to be some dispute in the case law whether individual union members may bring suit for breach of the local bylaws. In Korzen v. Local Union 705, 75 F.3d 285 (7th Cir. 1996), the Seventh Circuit held that local bylaws are contracts between the local union and its members, and, therefore, there is no § 301 jurisdiction for claims based on breach of the bylaws. Id. at 288. By contrast, the Ninth Circuit appears to assume that § 301 jurisdiction extends to suits for breach of the local bylaws.See, e.g., Ackley v. Western Conference of Teamsters, 958 F.2d 1463, 1477 (9th Cir. 1992). The Court need not, however, resolve this conflict since it appears that the right to ratification of agreements in the local bylaws is merely coextensive, or a reiteration, of the same right given in the International constitution. In other words, in this case, a claim for breach of the local bylaw regarding ratification would achieve no more or no less than a claim for breach of the same right in the constitution.
Parenthetically, the Court observes that there is no federal requirement that CBA's be ratified by the rank-and-file. Central States Southeast Southwest Areas Pension Fund v. Kraftco, Inc., 799 F.2d 1098, 1111 (6th Cir. 1986). However, a CBA must be ratified if the union's constitution or bylaws create such a requirement. Id. Despite the presence of a ratification requirement, the employer may rely on the apparent authority of the union representative to conclude the agreement if there is a past history which indicates that ratification is not necessary. Id. In this case, however, both the bylaws and the constitution call for ratification of CBA's and, at this point, the Court has not been presented with any evidence showing that the Local president had apparent authority to conclude agreements without membership ratification.
The Unions argue, however, that the International constitution supercedes any claimed right in the bylaws to vote on agreements. In support of this argument, the Unions rely on two separate sections of the International constitution. First, the Unions point to Article VII, § 5 of the International constitution, which states: "In the event of a conflict between bylaws of a Local Union and this Constitution, the Constitution shall be controlling." See Doc. No. 34, Ex. E, Art. VII, § 5. The Unions then point to Article XVI, § 3 of the constitution, which provides:
The International Union or Local Union, as the case may be, acting as the exclusive bargaining representative of the members, is irrevocably authorized and empowered by each member to present, negotiate and settle any and all grievances, complaints, and disputes arising out of the relationship between the member and his or her employer.Id. Art. XVI, § 3. Thus, the Unions argue, because they are empowered under the constitution to resolve grievances between the member and the employer, Plaintiffs' claimed right under the bylaws to vote on agreements conflicts with the International constitution's provision that the Unions are empowered to resolve grievances and disputes. Therefore, the Unions argue, Plaintiffs fail to state a claim for breach of either the bylaws or the International constitution.
There are several problems with this argument. First, there is no evidence on this record, or for that matter, there are no suggestions in the complaint, that International Paper and the Unions entered into the EBP in order to settle grievances over the issue of severance pay. Indeed, from all indications in the complaint, which we assume to be true, the parties entered into the EBP in order to facilitate the transfer of the B Street Mill to Smart Paper. Second, although the Court should defer to a union's reasonable interpretation of its own constitution, United Food Comm. Workers Int'l Union Local 911 v. United Food Comm. Workers Int'l Union, 301 F.3d 468, 478 (6th Cir. 2002), the Unions have not presented an official interpretation that a "grievance" or "dispute" within the meaning of the constitution encompasses effects bargaining agreements. In any event, even if the Court were presented with such an interpretation, this interpretation would be unreasonable because it would read out of the constitution the provision that members are entitled to vote on collective bargaining agreements. As the Court stated earlier, labor contracts should not be read to render terms nugatory. If the power to unilaterally settle grievances included the power to unilaterally approve the EBP, which the Court has stated is a form of CBA, the provision of the constitution giving the members the right to vote on CBA's affecting them would be rendered nugatory. Therefore, the Court rejects the Unions' contention that their power to settle grievances supercedes Plaintiffs' right to vote on collective bargaining agreements.
The Unions argue, however, that these claims should be dismissed because Plaintiffs failed to exhaust the internal union grievance procedures before filing this lawsuit. The district court may require union members to exhaust the internal union grievance procedures before suit is filed against the union. Clayton v. International Union, UAW, 451 U.S. 679, 691 (1981). If, however, the internal procedures do not provide the complete relief the claimant seeks or are inadequate to reactivate his or her grievance, then the exhaustion requirement will be waived. Id. at 696. In this case, the Court agrees with Plaintiffs that neither the local bylaws nor the International constitution provide an internal grievance mechanism to be exhausted. The Court observes that both the bylaws and the constitution contain trial and appeal procedures regarding the administration of discipline to members. See Doc. No. 34, Ex. D, Bylaws Art. XVI; Ex. E, Constitution Art. XI. The Court, however, does not see anything in either of these documents which outlines a procedure for a union member to challenge actions taken by the Local or by a Local official.
The Court should note an important distinction here. Plaintiffs in this claim allege breaches of the bylaws and constitution, which do not provide internal grievance procedures, as opposed to a breach of the CBA, which does provide grievance procedures.
The closest any section comes to providing a vehicle for challenging union acts or actions is contained in Article XI, § 11 of the constitution, which states: "In the absence of formal charges being filed, the International Executive Board shall have the authority (but shall not be obliged) to entertain, hear, and decide appeals from the acts, failure to act, or decision of any International Union Officer, Local Union, or the Executive Board of such Local Union." See id. Art XI, § 11. Even if this section were construed to provide an internal grievance procedure for Plaintiffs to challenge the Local's actions in this case, the section makes clear that the International Executive Board is not required to act on any grievance or complaint filed under this section. Thus, the Court concludes that the Unions do not have a mandatory internal grievance procedure which must be followed. Accordingly, the Court concludes that Plaintiffs are not required to exhaust any internal grievance procedures with respect to the claims in Count II of the second amended complaint.
Finally, the Unions argue that the claims of the new Plaintiffs who were added in the second amended complaint are barred by the six month statute of limitations for claims under § 301, as set forth by the Supreme Court in DelCostello v. International Bhd. of Teamsters, 462 U.S. 151, 155, 172 (1983); Aloisi v. Lockheed Martin Energy Sys., Inc., ___ F.3d ___, No. 01-5753, 2003 WL 431900, at *4 (6th Cir. Feb. 25, 2003). Since the second amended complaint was filed on January 9, 2002 and the new Plaintiffs' claims accrued no later than the transfer of the B Street Mill, which was in January or February 2001, their claims are barred by the statute of limitations unless they relate back somehow. The Court agrees with the Unions that Plaintiffs may not amend their complaint to add new parties after the statute of limitations has run. See Cox v. Treadway, 75 F.3d 230, 240 (6th Cir. 1996) ("Sixth Circuit precedent clearly holds that new parties may not be added after the statute of limitations has run, and that such amendments do not satisfy the `mistaken identity' requirement of Rule 15(c)(3)(B)."); but see 6A, Wright, et al., FEDERAL PRACTICE PROCEDURE § 1501, at 154-55 (2nd ed. 1990) ("As long as defendant is fully apprised of a claim arising from specified conduct and has prepared to defend the action, his ability to protect himself will not be prejudicially affected if a new plaintiff is added, and he should not be permitted to invoke a limitations defense."). In the light of the clear precedent of this Circuit, because the new Plaintiffs were added after the expiration of the statute of limitations, the Unions' motions to dismiss the § 301 claims of the Plaintiffs added in the second amended complaint are well-taken and are GRANTED.
In a claim somewhat related to the claim in Count II, in Count IV Plaintiffs allege that the Unions violated 29 U.S.C. § 411(a)(1) because they failed to submit the EBP to the membership for a ratification vote. Section 411(a)(1) provides:
Equal rights
Every member of a labor organization shall have equal rights and privileges within such organization to nominate candidates, to vote in elections or referendums of the labor organization, to attend membership meetings, and to participate in the deliberations and voting upon the business of such meetings, subject to reasonable rules and regulations in such organization's constitution and bylaws.29 U.S.C. § 411(a)(1). Plaintiffs' theory here is that they were denied an equal right to vote on the EBP because it was "ratified" by the single "vote" of the Local president.
Section 411(a)(1) was not designed to enforce union constitutions and bylaws, but rather was implemented to ensure that union members are not discriminated against in their right to nominate and vote. Nienaber v. Ohio Valley Carpenters Dist. Council, 652 F.2d 1284, 1286 (6th Cir. 1981). In order to state a claim for a violation of § 411(a)(1), Plaintiffs must allege that they were denied a right that was accorded to other members. Talbot v. Robert Matthews Dist. Co., 961 F.2d 654, 666 (7th Cir. 1992). In this case, the complaint makes clear that none of the members of PACE Local 1967 were permitted to vote on the EBP. Therefore, Plaintiffs were not denied a right that was given to other members and, consequently, they fail to state a claim under § 411(a)(1). Plaintiffs' attempt to cast the Local president's unilateral approval of the EBP as a "vote" is clever but it is obvious that while this act may have been a violation of the constitution and bylaws, and perhaps even a usurpation of power, it was in no way a "vote" on the EBP. Under similar circumstances, the Talbot Court held that the local union president's act of entering into a collective bargaining agreement without a membership vote did not state a violation of § 411(a)(1). See id. Accordingly, the Union's motion to dismiss Count IV of the second amended complaint is well-taken and is GRANTED.
Count V states a "hybrid" § 301 claim against International Paper for breach of the collective bargaining agreement, the Extension Agreement, and the EBP and against the Unions for breach of their duty of fair representation. Plaintiffs allege that International Paper breached the collective bargaining agreement and the Extension Agreement by failing to pay Plaintiffs severance and they allege that International Paper breached the EBP by not treating all employees in the same manner. Plaintiffs further allege that the Unions breached their duty of fair representation by failing to submit the EBP to the membership for ratification, by allowing only the Local president to "vote" on the EBP, by failing to secure severance pay under the collective bargaining agreement and the Extension Agreement, and by failing or refusing to act on the grievance for severance pay filed by Larry McCreary.
In order to prevail on a hybrid claim under the LMRA, the plaintiff must not only prove that the employer breached the collective bargaining agreement, he must also prove that the union breached its duty of fair representation. Chauffeurs, Teamsters, and Helpers Local No. 391 v. Terry, 494 U.S. 558, 564 (1990). If the claim for breach of the collective bargaining agreement fails, the claim for breach of the duty of fair representation must also fail. White v. Anchor Motor Freight, Inc., 899 F.2d 555, 559 (6th Cir. 1990). Likewise, if the plaintiff cannot show that the union breached its duty of fair representation, the claim against the employer for breach of the collective bargaining agreement must fail. Id.
Initially, the Court notes that to the extent that Plaintiffs base their hybrid claim on International Paper's alleged breach of the collective bargaining agreement and Extension Agreement by failing or refusing to pay Plaintiffs severance pay, they fail to state a claim for relief. As discussed above, neither the collective bargaining agreement nor the Extension Agreement make specific promises to pay severance to terminated employers. Thus, International Paper could not have breached these agreements by not paying severance to Plaintiffs. Moreover, the EBP, which is presumed to be valid, supercedes both the collective bargaining agreement and the Extension Agreement with respect to severance pay. Therefore, to the extent that either of the earlier agreements contains provisions for severance pay upon termination, they were without force and effect at the time the B Street Mill changed hands. Thus, again, International Paper could not have breached these agreements by not paying severance to Plaintiffs.
Plaintiffs' claim that International Paper breached the EBP by paying severance to certain "covert" employees who were not required to apply for employment with Smart Paper and be rejected as a precondition, as Plaintiffs were required to do, is really a claim that International Paper engaged in direct dealing or direct bargaining with those employees. It is important to note here that Plaintiffs do not allege that International Paper did not comply with the EBP with respect to their severance rights, only that International Paper did not follow the procedures in the EBP when deciding to pay severance to other employees. Therefore, as stated, this is really a direct dealing claim instead of a claim that International Paper breached the EBP.
Direct dealing or direct bargaining with an employee who is covered by a collective bargaining agreement is an unfair labor practice under the National Labor Relations Act. J.I. Case Co. v. NLRB, 321 U.S. 332 (1944); 29 U.S.C. § 158(a)(5). The National Labor Relations Board has exclusive jurisdiction over claims for unfair labor practices; thus, a claim for an unfair labor practice cannot be a basis for a hybrid § 301 claim. Martin v. Lake County Sewer Co., Inc., 269 F.3d 673, 680 (6th Cir. 2001)
Finally, Plaintiffs allege that International Paper breached the CBA by failing to act on the severance grievance filed by Larry McCreary. As the Court indicated above, Larry McCreary is not a party in this action. Plaintiffs have not alleged that they filed their own grievances which International Paper and the Unions have failed to process. The Court does note, however, that McCreary's grievance purports to claim severance benefits for all employees affected by the transfer of the B Street Mill. Despite the breadth of the claim for relief in McCreary's grievance, Plaintiffs have not directed the Court to, nor has the Court's own research found, any authority which states that covered employees may piggyback off of another employee's grievance without filing their own grievances. Indeed, as the Court reviews the grievance procedures outlined in the CBA, they appear to contemplate the processing of grievances filed by single employees. See Doc. No. 34, Ex. A (CBA), § 8.01, et seq. In other words, there are no piggybacking provisions in the grievance procedures. Therefore, these Plaintiffs have no standing to contest International Paper's alleged failure to act on Larry McCreary's grievance.
In summary, Plaintiffs have failed to state a claim that International Paper breached any of the agreements referred to in Count V of the second amended complaint. Without any claim that International Paper breached one of these agreements, Plaintiffs' hybrid § 301 claim must fail. See White, 899 F.2d at 559. Therefore, the Court need not decide whether the Unions breached their duty of fair representation. Accordingly, Count V of the second amended complaint is DISMISSED.
Count III purports to state claims against International Paper under LMRA for breach of the EBP and for promissory estoppel. Under the LMRA, covered employees may bring promissory estoppel claims related to the CBA. Anderson v. ATT Corp., 147 F.3d 467, 477 (6th Cir. 1998). Plaintiffs' promissory estoppel claims are also premised on the allegation that International Paper gave severance to employees who were not required to apply for employment with Smart Paper. Plaintiffs allege that International Paper misrepresented to them that they would be required to apply for employment with Smart Paper and be rejected in order to be eligible for severance pay. Even though Plaintiffs were treated according to the terms of the EBP, they claim that this was a misrepresentation because International Paper allegedly paid severance to employees who were not required to apply for jobs with Smart Paper. As the Court has just stated, a claim based on this set of facts is really an unfair labor practice claim that is within the exclusive jurisdiction of the National Labor Relations Board. Martin, 269 F.3d at 680.
The Court does take notice of case law which states that the National Labor Relations Act does not preempt other federal labor claims which provide remedies consistent with the NLRA. Connell Constr. Co., Inc. v. Plumbers Steamfitters Local Union No. 100, 421 U.S. 616, 635 n. 17 (1975); Hospital Emp. Div. of Local 79 v. Mercy-Memorial Hosp. Corp., 862 F.2d 606, 608 (6th Cir. 1988), vacated on other grounds by 492 U.S. 914 (1989). Thus, while a claim that the employer breached the CBA may be an unfair labor practice, it is also a claim that is actionable under § 301 of the LMRA. See, Vaca v. Sipes, 386 U.S. 171, 179-80 (1967). As the Court has just stated, however, Plaintiffs do not claim that International Paper did not follow the procedures in the EBP as to them, only that other employees were treated more favorably than the EBP allows. Thus, Plaintiffs stated a claim for an unfair labor practice instead of a claim for breach of the EBP. Similarly, Plaintiffs' estoppel claim is not in truth based on an alleged representation or misrepresentation of fact by International Paper. The essence of Plaintiffs' estoppel claim is that International Paper failed to disclose that it would commit an unfair labor practice by engaging in direct dealing with other employees. Plaintiffs have not, in other words, pled in this count facts which show a violation which is also remedial under § 301. Plaintiffs have simply attempted to plead around the exclusive jurisdiction of the NLRB. Accordingly, they fail to state a claim for relief in Count III. Thus, the motions to dismiss Count III of the second amended complaint are well-taken and are GRANTED.
Counts VI, XI, and XIII all state claims for age discrimination under the Ohio Civil Rights Act. Count IX states a claim for disability discrimination under the Ohio Civil Rights Act. International Paper and Smart Paper have moved to dismiss these discrimination claims against them on the grounds that Plaintiffs have failed to plead facts which state a prima fade case of discrimination. The U.S. Supreme Court held recently, however, that employment discrimination plaintiffs do not need to plead facts which satisfy the prima facie showing of discrimination as described in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). See Swierkiewicz v. Sorema, N.A., 534 U.S. 506, 511 (2002); Jackson v. Crosset Co., 33 Fed. Appx. 761, 762 (6th Cir. 2002) (applyingSwierkiewicz). It is sufficient for purposes of Rule 8 of the Federal Rules of Civil Procedure if the plaintiff pleads simply that he was terminated because of his age in violation of the ADEA. Swierkiewicz, 534 U.S. at 514. In this case, Plaintiffs have pleaded that Defendants discriminated against them because of their age, and in one case disability, in violation of the Ohio Civil Rights Act. Accordingly, they have sufficiently stated claims for relief under Rule 8. Therefore, Defendants' motion to dismiss these claims on the grounds that Plaintiffs failed to state a prima facie case of discrimination is not well-taken and is DENIED.
Alternatively, the Unions argue that Plaintiffs' state law discrimination claims are preempted by the LMRA. The LMRA preempts state law claims dependent on an interpretation of a collective bargaining agreement.Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 210-11 (1985). The Sixth Circuit has adopted a two-step approach to § 301 preemption analysis:
First, the district court must examine whether proof of the state law claim requires interpretation of collective bargaining agreement terms. Second, the court must ascertain whether the right claimed by the plaintiff is created by the collective bargaining agreement or by state law. If the right both is borne of state law and does not invoke contract interpretation, then there is no preemption. However, if neither or only one criterion is satisfied, section 301 preemption is warranted. In order to make the first determination, the court is not bound by the "well-pleaded complaint" rule, but rather, looks to the essence of the plaintiff's claim, in order to determine whether the plaintiff is attempting to disguise what is essentially a contract claim as a tort. If the plaintiff can prove all of the elements of his claim without the necessity of contract interpretation, then his claim is independent of the labor agreement. Moreover, neither a tangential relationship to the CBA, nor the defendant's assertion of the contract as an affirmative defense will turn an otherwise independent claim into a claim dependent on the labor contract.DeCoe v. General Motors Corp., 32 F.3d 212, 216 (6th Cir. 1994) (citations omitted). Addressing the second element of the DeCoe analysis first, the right not to be discriminated against on the basis of age or disability is not a right provided by the CBA but rather is a right created by state law independent of the CBA and subsequent agreements. Therefore, Plaintiffs state law discrimination claims satisfy the second step of DeCoe.
The dispositive question is whether resolution of the discrimination claims will require interpretation of the CBA and other agreements. The Sixth Circuit recognizes that a plaintiff may utilize a disparate impact theory of recovery in age discrimination cases. Abbott v. Federal Forge, Inc., 912 F.2d 867, 872 (6th Cir. 1990). A disparate impact claim requires a plaintiff to show that a facially neutral employment practice falls more harshly on one group than another. To prevail on this claim, the plaintiff must identify the practice in question and show an adverse effect by producing statistical evidence which is sufficient to show that the practice disadvantaged the plaintiff because of his or her membership in a protected group. Alexander v. Local 496, Laborers' Int'l Union of North Am., 177 F.3d 394, 419 (6th Cir. 1999). If the plaintiff succeeds in making a prima facie showing of a disparate impact, the burden shifts to the employer to show that the challenged practice is a business necessity. Id.
In this case, the Court cannot conceive of a situation in which Plaintiffs' disparate impact claim would require interpretation of the CBA or the EBP. In light of the case law regarding disparate impact claims, the Court would assume that the bulk of Plaintiffs' case would be devoted to an analysis tending to demonstrate that younger, non-protected employees were recipients of severance pay under the EBP at a statistically significant higher incidence than older employees. The Court would not anticipate that this type of analysis would require interpretation of any terms of the EBP. The Court would further anticipate that any business justification Defendants would proffer for entering into the EBP would concentrate on factors extrinsic to the EBP itself, such as cost. Similarly, Plaintiff Bauer's disability discrimination claim alleges simply that the EBP excluded him from eligibility for severance pay because of his disability. Again, the Court does not believe that this claim will require interpretation of the EBP. Therefore, the Court rejects the Unions' contention that Plaintiffs' state law employment discrimination claims are preempted by the LMRA. Accordingly, Defendants' motions to dismiss Counts VI, IX, XI, and XIII of the second amended complaint are not well-taken and are DENIED.
In any event, there is some strong dicta suggesting that the LMRA never preempts state law employment discrimination claims. See Lueck, 471 U.S. at 212 ("Clearly, § 301 does not grant the parties to a collective-bargaining agreement the ability to contract for what is illegal under state law."); Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 412 (1988) ("The Court of Appeals recognized that § 301 does not pre-empt state anti-discrimination laws, even though a suit under these laws, like a suit alleging retaliatory discharge, requires a state court to determine whether just cause existed to justify the discharge."); Smolarek v. Chrysler Corp., 879 F.2d 1326, 1332 (6th Cir. 1989) (commenting on Lingle).
Count VII of the second amended complaint attempts to hold Smart Paper accountable for the alleged discriminatory impact of the EBP, as alleged in Count VI, pursuant to Ohio Rev. Code § 4112.02(C). This section provides:
It shall be an unlawful discriminatory practice . . . [f]or any person to aid, abet, incite, compel, or coerce the doing of any act declared by this section to be an unlawful discriminatory practice, to obstruct or prevent any person from complying with this chapter or any order issued under it, or to attempt directly or indirectly to commit any act declared by this section to be an unlawful discriminatory practice.
Ohio Rev. Code § 4112.02(J). Smart Paper argues that this claim should be dismissed because Smart Paper was not a signatory to the EBP and, therefore, cannot be held liable for the alleged discriminatory impact of the EBP. Unfortunately, there is a dearth of case law interpreting § 4112.02(J). A Westlaw search of cases from all courts within the Sixth Circuit produced only nine cases even mentioning § 4112.02(J), and none provides a definitive interpretation of its applicability. This Court, however, sees nothing in the any of these cases nor the text of the statute itself which deflects liability from Smart Paper because it was not a signatory to the EBP. See, e.g., Van Diver v. Morgan Adhesive Co., 710 N.E.2d 1219, 1224 (Ohio Ct.App. 1998) (stating that § 4112.02(J) applies to "persons," not just "employers."). Thus, if Plaintiffs did show that the EBP had a discriminatory impact and that Smart Paper somehow aided, abetted, incited, or compelled International Paper and/or the Unions to enter into the EBP, then the Court believes that Smart Paper could be held accountable under § 4112.02(J) despite the fact that it was a non-signatory to the EBP. In other words, Smart Paper's liability under § 4112.02(J) is not necesssarily dependent on its status as a non-signatory of the EBP. Therefore, Smart Paper's motion to dismiss Count VII is not well-taken and is DENIED.
Count VIII alleges that International Paper and Smart Paper breached the EBP as to Plaintiff Howard because, although he was hired by Smart Paper, he was terminated without just cause after two months of employment and was not given severance pay. Smart Paper argues that this claim should be dismissed as to it because it was a non-signatory to the EBP. International Paper argues that this claim should be dismissed because Howard failed to exhaust the grievance procedures outlined by the CBA. Because the Court agrees with International Paper that Howard failed to exhaust the grievance procedures in the CBA, it need not decide whether he can proceed against Smart Paper under an alter ego theory of recovery.
It is well-established that where a CBA provides a procedure or mechanism for resolving disputes arising out of the CBA, a claimant must exhaust those remedies before filing suit to enforce the contract.Wedding v. University of Toledo, 89 F.3d 316, 319 (6th Cir. 1996). In this case, the CBA provides procedures for resolving disputes over wages and working conditions and Howard does not deny that he did not resort to those procedures before bringing suit to enforce the EBP. Howard argues, however, that he was not required to exhaust the CBA grievance procedures because they apply only to employees of International Paper and he was an employee of Smart Paper when he was terminated. This is a specious argument. For Howard to be entitled to severance pay at all, it must be through operation of the EBP, which is an amendment of the CBA. Thus, the fact that Howard was not an "employee" of International Paper is not dispositive. The Court thinks it clear that when the rights the plaintiff seeks to vindicate arise under a collective bargaining agreement, he must exhaust the grievance procedures provided by the CBA. See Terwilliger v. Greyhound Lines, Inc., 882 F.2d 1033, 1038-39 (6th Cir. 1989). Since Howard seeks payment of severance under the EBP, he must exhaust the grievance procedures provided by the CBA. Furthermore, as has been made clear, the EBP supercedes the CBA only with respect to severance pay. Therefore, Plaintiffs' argument that Howard does not have any grievance procedures to exhaust because the EBP itself provides none is without merit. Accordingly, Defendants' motion to dismiss Count VIII of the second amended complaint is well-taken and is GRANTED.
Count X purports to state claims for breach of the CBA on behalf of individual Plaintiffs Brown, Baker, Hardix, and Ruppert. This claim alleges that Smart Paper breached the CBA because Plaintiffs did not apply for employment with Smart Paper and were denied severance. Although the Court is not sure it understands this claim, as was made clear above, neither the CBA nor the Extension Agreement made promises to pay severance. The Mill Reconfiguration Agreement did contain a severance package but was superceded by the EBP. The EBP, which is presumed to be valid, only provided severance to employees who applied for and were denied employment with Smart Paper. Since these Plaintiffs did not according to their own allegations apply for employment with Smart Paper, they were not entitled to severance pay under the EBP. Accordingly, these Plaintiffs fail to state claims for relief. Therefore, Smart Paper's motion to dismiss Count X of the second amended complaint is well-taken and is GRANTED.
Count XII attempts to assert state law fraud claims against International Paper and Smart Paper based again on the contention that some favored employees received severance pay even though they were not required to apply for employment with Smart Paper. As the Court has stated, this set of facts really describes an unfair labor practice within the exclusive jurisdiction of the NLRB. Even if the Court were erroneous in concluding that Plaintiffs' promissory estoppel claims did not arise solely under the National Labor Relations Act, it is clear that a state law fraud claim premised on this same set of facts is preempted by the NLRA. San Diego Bldg Trades Council v. Garmon, 359 U.S. 236, 245 (1959); Serrano v. Jones Laughlin Steel Co., 790 F.2d 1279, 1286-1288 (6th Cir. 1986) Accordingly, Defendants' motion to dismiss Count XII of the second amended complaint is well-taken and is GRANTED.
Conclusion
To summarize the above analysis, each of the Defendants' motions to dismiss is GRANTED IN PART AND DENIED IN PART. The motions to dismiss of Defendants United Paperworkers International Union Local 1967 (Doc. No. 37) and United Paper Workers International Union (Doc. No. 38) are well-taken and are GRANTED with respect to Counts I, IV, and V of the second amended complaint. Those claims are DISMISSED WITH PREJUDICE. The Unions' respective motions to dismiss Count II of the second amended complaint are not well-taken and are DENIED, except for the claims of the new Plaintiffs added in the second amended complaint. The motions to dismiss are well-taken as to the claims of the new Plaintiffs and they are, therefore, GRANTED. The claims of the new Plaintiffs in Count II are DISMISSED WITH PREJUDICE.
Defendant International Paper Company's motion to dismiss (Doc. No. 40) is GRANTED IN PART AND DENIED IN PART. The motion is well-taken and is GRANTED with respect to Counts II, III, V, VIII, and XII of the second amended complaint. Those claims are DISMISSED WITH PREJUDICE. The motion is not well-taken and is DENIED with respect to Counts VI and IX of the second amended complaint.
Finally, Defendant Smart Paper LLC's motion to dismiss (Doc. No. 39) is GRANTED IN PART AND DENIED IN PART. The motion is well-taken and is GRANTED with respect to Counts VIII, X, and XII of the second amended complaint. Those claims are DISMISSED WITH PREJUDICE. The motion is not well-taken and is DENIED with respect to Counts VII, XI, and XIII of the second amended complaint.
Plaintiffs' motion to strike PACE Local 1967's supplemental memorandum (Doc. No. 56) is MOOT because the Court has not relied on the supplemental memorandum in reaching the conclusions herein.