                                                                                                                           Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-14-2007

Locals 45C 776C v. PPG Ind Inc
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-2275




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                                                               NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                                ____________

                          Nos. 06-2275, 06-2278 and 06-2491
                                    ____________

               INTERNATIONAL CHEMICAL WORKERS
             UNION COUNCIL OF THE UNITED FOOD AND
      COMMERCIAL WORKERS UNION AND ITS LOCALS 45C AND 776C,
                          Appellant No. 06-2275

                     UNITED STEELWORKERS OF AMERICA,
                        AFL-CIO-CLC, a labor organization,
                                 Appellant No. 06-2278

                    LOCAL LODGE 470 OF DISTRICT 161
               INTERNATIONAL ASSOCIATION OF MACHINISTS
                   AND AEROSPACE WORKERS, AFL-CIO,
                             Appellant No. 06-2491

                                           v.

                               PPG INDUSTRIES, INC.
                                   ____________

                   On Appeal from the United States District Court
                        for the Western District of Pennsylvania
                (D.C. Nos. 01-cv-01751, 01-cv-01601 and 01-cv-02110)
                      District Judge: Honorable David S. Cercone
                                     ____________

                      Submitted Under Third Circuit LAR 34.1(a)
                                   May 17, 2007

      Before: FISHER and ROTH, Circuit Judges, and RAMBO,* District Judge.


      *
        The Honorable Sylvia H. Rambo, United States District Judge for the Middle
District of Pennsylvania, sitting by designation.
                                   (Filed: June 14, 2007 )
                                       ____________

                                OPINION OF THE COURT
                                     ____________

FISHER, Circuit Judge.

       This appeal consists of three related cases against PPG Industries, Inc. (“PPG”).

The Appellants, unions 1 that represent employees of PPG, challenge the District Court’s

grant of summary judgment in favor of PPG. For the reasons that follow, we will affirm.

                                              I.

       As we write only for the parties, who are familiar with the factual context and the

procedural history of the case, we will set forth only those facts necessary to our analysis.

In 2001, PPG sent a letter to thousands of its retired employees stating that it intended to

reduce/modify retiree health benefits. The medical benefits had been negotiated under

various, expired collective bargaining agreements (“CBAs”) between the Appellants and

PPG.2 The Appellants filed grievances claiming that PPG could not modify/reduce retiree




       1
       The Appellants in No. 06-2275 are International Chemical Workers Union
Council of the United Food and Commercial Workers Union, and its Locals 45C and
776C. The Appellant in No. 06-2278 is United Steelworkers of America, AFL-CIO-CLC.
The Appellant in No. 06-2491 is Local Lodge 470 of District 161, International
Association of Machinists and Aerospace Workers, AFL-CIO.
       2
        The terms of the medical benefits programs are provided in a Group Insurance
Plan or Group Benefits Plan (“GIP”). The parties agree that the GIPs are incorporated
into the CBAs.

                                              2
medical benefits, and sought arbitration under the terms of the CBAs.3 PPG refused to

process the grievances and to arbitrate. The Appellants then filed suit in the District

Court under section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C.

§ 185. The complaints alleged that PPG violated the terms of expired CBAs.

       The parties filed cross-motions for summary judgment on the issue of arbitration.

The unions claimed that PPG was obligated to arbitrate the issue of whether PPG could

modify/reduce retiree benefits. PPG argued that it was necessary for the District Court to

determine whether the benefits had vested before it could determine the issue of

arbitrability. According to PPG, the benefits were non-vested benefits granted under

expired CBAs and, thus, were not subject to arbitration. The Appellants claimed there

was sufficient evidence of vesting to enable them to at least survive summary judgment.

       The Magistrate Judge recommended that summary judgment be entered in favor of

PPG. After the Appellants filed objections, the District Court adopted the Magistrate’s

recommendations and entered summary judgment in favor of PPG. It determined that the

medical benefits were not vested and that PPG was not required to arbitrate the

grievances. This timely appeal followed.

                                               II.

       We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the District Court’s

orders granting summary judgment de novo. See Kneipp v. Tedder, 95 F.3d 1199, 1204


       3
           All of the relevant CBAs included broad arbitration provisions.

                                               3
(3d Cir. 1996). We apply the same standard employed by the District Court, and view the

facts in the light most favorable to the Appellants. See Moore v. City of Philadelphia,

461 F.3d 331, 340 (3d Cir. 2006).

                                            III.

       The Appellants claim that the District Court erred by deciding whether the benefits

were vested in order to determine whether the dispute was arbitrable. They argue that the

District Court improperly reached the merits of the underlying claim, when it should have

only decided the arbitration issue. Although the law in this area is somewhat unclear, we

believe it was necessary for the District Court to consider whether the benefits vested in

order to make the determination of whether the dispute was arbitrable.

       It is clear that the expiration of a CBA does not automatically extinguish the

parties’ duty to arbitrate. See Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery

Workers Union, 430 U.S. 243, 251 (1977). Rather, the duty to arbitrate disputes that arise

under the contract continues even after expiration of the CBA. See id. In Litton

Financial Printing Division v. National Labor Relations Board, 501 U.S. 190 (1991), the

Supreme Court explained that its holding in Nolde applied “only where a dispute has its

real source in the contract.” Id. at 205. A dispute regarding an expired CBA has its real

source in the contract when “it involves facts and occurrences that arose before

expiration, where an action taken after expiration infringes a right that accrued or vested

under the agreement, or where, under normal principles of contract interpretation, the



                                             4
disputed contractual right survives expiration of the remainder of the agreement.” Id. at

205-06.

       Whether arbitration is required and what issues are subject to arbitration are

questions to be determined by the court, “and a party cannot be forced to arbitrate the

arbitrability question.” Id. at 208-09 (internal quotation marks and citations omitted).

Although there is a presumption in favor of arbitration when a CBA contains a broad

arbitration clause, the presumption should not be applied “wholesale in the context of an

expired [CBA], for to do so would make limitless the contractual obligation to arbitrate.”

Id. at 209. When a court is asked to determine whether a duty to arbitrate exists, it

“cannot avoid that duty because it requires [it] to interpret a provision of a [CBA].” Id.

       We agree with our sister courts that have held that a court may need to decide the

merits of the underlying claim in order to decide arbitrators’ jurisdiction. See Indep. Lift

Truck Builders Union v. Hyster Co., 2 F.3d 233, 236 (7th Cir. 1993); United Parcel Serv.,

Inc. v. Union de Tronquistas de Puerto Rico, 426 F.3d 470, 473-74 (1st Cir. 2005); Int’l

Bhd. of Elec. Workers v. GKN Aerospace N. America, Inc., 431 F.3d 624, 628-29 (8th

Cir. 2005).4 However, there is some conflict between the courts as to whether a court


       4
         We recognize that the Supreme Court’s holding in Litton is at odds with its
decision in Nolde, which suggested that a court should not address the merits of the
underlying claim. See, e.g., Luden’s Inc. v. Local Union No. 6 of the Bakery,
Confectionery & Tobacco Workers’ Int’l Union of America, 28 F.3d 347, 353-54 (3d Cir.
1994). We did not need to resolve the tension in Luden’s, but we expressed a reluctance
to follow the decisions of other courts which treated Litton as impliedly overruling Nolde.
Id. at 354. This case requires us to resolve the tension, and we choose to accept the duty

                                              5
should actually rule on the merits of the underlying claim. The United States Court of

Appeals for the Seventh Circuit stated that “[i]f the court must, to decide the arbitrability

issue, rule on the merits, so be it.” Hyster, 2 F.3d at 236. The United States Courts of

Appeals for the First and Eighth Circuits, however, have held that a court should not

decide the merits as long as it is possible that an arbitrator could reasonably determine

that the dispute arose under the contract. See U.P.S., 426 F.3d at 474; GKN, 431 F.3d at

628. It is unnecessary for us to weigh in on this question because as discussed below we

do not believe that the retiree medical benefits provided under the CBAs could reasonably

be interpreted to have vested. As the Appellants claim that this dispute is arbitrable based

on the vesting of the retiree health benefits, it was proper for the District Court to

consider whether the benefits vested.5

       We now must consider whether the benefits vested or could possibly be interpreted

to have vested. The interpretation of a CBA or plan document is a question of law. See

U.A.W. v. Skinner Engine Co., 188 F.3d 130, 138 (3d Cir. 1999). The Appellants “bear[]



dictated by Litton. We must determine the question of arbitrability, even if that requires
us to consider the underlying claim.
       5
        We do not address the Appellants’ claim that an implied-in-fact CBA existed in
this case because they failed to raise that argument in their opening briefs. “An issue is
waived unless a party raises it in its opening brief, and for those purposes a passing
reference to an issue . . . will not suffice to bring that issue before this court.” Laborers’
Int’l Union of N. America v. Foster Wheeler Corp., 26 F.3d 375, 398 (3d Cir. 1994)
(internal quotation marks and citations omitted). Because we do not consider the implied-
in-fact CBA argument, we will deny the Appellee’s motions to file sur-reply briefs to
address this argument.

                                               6
the burden of proving by a preponderance of the evidence, that the employer intended the

welfare benefits to vest.” Id. at 138-39 (internal quotation marks and citation omitted).

Because an employer is not required to vest such benefits, a determination of vesting “is

not to be inferred lightly and must be stated in clear and express language,” and this

principle applies regardless of the particular type of plan document at issue. Id. at 139

(internal citations omitted).

       The Appellants claim that the plain language of the CBAs and the GIPs expressly

provide vested retiree medical benefits. However, the language in the relevant documents

in this case is quite similar to the language we examined in Skinner.6 For example, some

of the provisions state that PPG “will provide” retiree health benefits or that such benefits

“may be continued” or “will continue.” As in Skinner, “[i]t cannot be said that the

phrases clearly and expressly indicate vesting.” 188 F.3d at 141. Although some of the

terms provide that coverage will be provided to the surviving spouse of a retiree until the

spouse remarries or dies, this is not durational language that qualifies these terms. Id.

(explaining that durational language such as “‘will continue for the life of the retiree’ or

that the they ‘shall remain unalterable for the life of the retiree’” would clearly and




       6
        The parties made memorandums of agreement (“MOAs”) after they negotiated
terms, but before they entered into a CBA. At least one of the MOA’s used language to
suggest that the spouses of retirees were entitled to lifetime benefits. However, the
MOAs were not incorporated into the CBAs. As the CBAs indicated that they were the
final and complete agreement between the parties, the MOAs do not reflect the final
intent of the parties. Therefore, the MOAs are not relevant to our analysis.

                                              7
expressly indicate vesting). The CBAs all included termination provisions which

provided that the terms of the CBA remained in effect until the expiration of the CBA. In

Skinner, we explained that reading provisions related to retiree medical benefits in

conjunction with termination provisions could suggest that the benefits only continued

until the end of the CBA’s term. Id.7 It cannot be said that the language of the CBAs and

the GIPs unambiguously vested the retiree health benefits.

       The Appellants also claim that, even if the plain language is not clear, the relevant

provisions of the CBAs and the GIPs create an ambiguity which precludes the granting of

summary judgment. The determination of whether a CBA or other plan document

provision is ambiguous is a question of law. Id. at 142. The Appellants contend, as did

the appellants in Skinner, that phrases such as “will continue” or “shall provide” could be

interpreted to mean that PPG would pay for health benefits for the lifetime of a retiree.

See id. After considering the parties’ arguments, we do not believe that this is a

reasonable interpretation of the phrases when they are read in the appropriate contexts.

       We also can consider extrinsic evidence in determining whether the CBAs and

GIPs are ambiguous. Id. at 145. However, extrinsic evidence cannot be used to create




       7
        The Appellee also claims that durational provisions it inserted into GIPs
beginning in the 1980s are clear evidence that it did not intend for the benefits to vest.
The Appellants claim that the provisions were unilaterally inserted, they protested the
inclusion, and that the provisions are ineffective. It is unnecessary for us to resolve this
argument as we believe that it is clear that the Appellants did not meet their burden of
proving that the benefits vested without consideration of the durational provisions.

                                              8
ambiguity. Id. In this case, the Appellants rely on the facts that PPG continued to

provide insurance to retirees during strikes and letters PPG sent to retirees that explained

the scope of health benefits as extrinsic evidence that the benefits vested.

       Although this evidence could suggest an intent for the retiree benefits to vest,

“extrinsic evidence should be carefully circumscribed.” Id. at 146. There is no

ambiguous contractual language, and we will not allow such evidence to create an

ambiguity where none exists. The phrases regarding retiree health benefits in this case

“are simply not susceptible to more than one reasonable interpretation, and they do not

somehow render the CBAs incomplete or ambiguous.” Id.

       Viewing all reasonable inferences in favor of the Appellants, there is not sufficient

evidence for the unions to survive summary judgment.8 Therefore the District Court

properly determined that the retiree benefits did not vest.

                                             IV.

       For the foregoing reasons, we will affirm the District Court’s grant of summary

judgment in favor of PPG.




       8
        We have fully considered all of the remaining arguments raised by the parties and
find them to be without merit.

                                              9
