                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                            File No: 14a0171n.06

                                   No. 12-1824

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT


INTERNATIONAL UNION, UNITED                 )                     FILED
AUTOMOBILE, AEROSPACE AND                   )                  Mar 03, 2014
AGRICULTURAL IMPLEMENT WORKERS              )              DEBORAH S. HUNT, Clerk
OF AMERICA (UAW); JAMES WARD;               )
MARSHALL HUNT; AND RICHARD                  )
GARDEN,                                     )
                                            )
      Plaintiffs-Appellees,                 )
                                            )
      v.                                    )         ON   APPEAL    FROM  THE
                                            )         UNITED STATES DISTRICT
KELSEY-HAYES COMPANY; TRW                   )         COURT FOR THE EASTERN
AUTOMOTIVE HOLDINGS                         )         DISTRICT OF MICHIGAN
CORPORATION; AND NORTHROP                   )
GRUMMAN SYSTEMS CORPORATION,                )
                                            )
      Defendants-Appellants,                )
                                            )
TRW, INC., aka TRW AUTOMOTIVE,              )
                                            )
      Defendant.                            )
                                            )
                                            )         OPINION


Before: ROGERS, GRIFFIN and DONALD, Circuit Judges.




                                        1
        BERNICE BOUIE DONALD, Circuit Judge. The Kelsey-Hayes Company (“Kelsey-

Hayes” or “the Company”)1 appeals an order of the district court partially denying its motion to

compel arbitration. For the reasons below, we AFFIRM the decision of the district court.

                                               I.

        In 1998, Kelsey-Hayes entered into a collective bargaining agreement (“CBA”)

[hereinafter, the “1998 CBA”] with the International Union, United Automobile, Aerospace, and

Agricultural Implement Workers of America (“UAW” or “the Union”), which represented the

employees of its Detroit manufacturing plant. The 1998 CBA provided comprehensive

healthcare coverage to its retirees and their surviving spouses; it also specified that any

healthcare-related disputes would be exempt from otherwise applicable provisions requiring

disputes to be resolved through arbitration. (See 1998 CBA, art. XIV, art. V § 4, Supp. “H” and

“H-1”).

        In 2001, Kelsey-Hayes closed its Detroit manufacturing plant, and negotiated a General

Release and Termination Agreement [hereinafter, the “Plant Closing Agreement”] with the

Union. The Plant Closing Agreement released Kelsey-Hayes from most—but not all—of its

obligations under earlier CBAs. Healthcare benefits that had been negotiated under the 1998

CBA remained intact and were incorporated by reference into the 2001 Plant Closing

Agreement. The 2001 Agreement also included a general arbitration provision of broad

applicability, providing that any disputes arising with the Union would be resolved through

arbitration:



        1
          Kelsey-Hayes Company and its parent company, TRW Automotive Holdings Corp.,
were acquired by Northrop Grumman in 2002. All three are named defendants in this case,
referred to collectively and interchangeably, as “the Company” hereinafter.
                                                  2
       In the event the Union shall have any dispute or disagreement concerning the
       interpretation and application of this Agreement, the sole and exclusive recourse
       of the Union is to submit any dispute or disagreement in writing to the Company
       within thirty (30) days after the Union shall reasonably have become aware of the
       existence of any such dispute or disagreement. Within ten (10) days of receipt of
       the written document, the Company and the Union shall meet to attempt to
       resolve the matter. Should the meeting fail to resolve the matter, arbitration shall
       be conducted in accordance with the labor arbitration rules of the American
       Arbitration Association.

(2001 Plant Closing Agreement, ¶20).

       Following the execution of the 2001 Plant Closing Agreement, Kelsey-Hayes continued

to provide health care benefits in compliance with the terms of the 1998 CBA for approximately

ten years. In September 2011, however, retirees received letters informing them of a change to

their healthcare. The letters announced that the Company planned to terminate their participation

in its retiree healthcare plan and require them to purchase individual plans for Medicare

supplemental insurance with HRA-funding instead.

                                               II.

       In October 2011, the retirees filed this suit under Section 301 of the Labor Management

Relations Act (“LMRA”), 29 U.S.C. § 185, alleging violations of the Employee Retirement

Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), (a)(3), and claiming that the

Company’s plan breached the terms of the 2001 Plant Closing Agreement and the terms of the

1998 CBA incorporated therein.

       Kelsey-Hayes moved for an order to compel arbitration, relying on the 2001 Plant

Closing Agreement’s general arbitration clause. Plaintiffs opposed the motion, arguing that

healthcare disputes were explicitly removed from arbitration under the 1998 CBA’s anti-

arbitration provision.


                                                3
       The district court initially granted the motion to compel arbitration in its entirety, finding

that the 2001 Plant Closing Agreement “extinguished” the 1998 CBA anti-arbitration clauses.

Upon reconsideration, however, the district court reversed itself in part, finding that not all of the

Plaintiffs’ rights were governed by the 2001 Plant Closing Agreement. Specifically, the district

court concluded that a subset of the Plaintiffs—those who had retired prior to the plant closing in

2001—could not be bound by the terms of the Plant Closing Agreement, because their rights had

already vested under the 1998 CBA:

       [T]he Plant Closing Agreement cannot alter the rights of those retirees who had
       already retired, and whose rights had already vested, prior to the execution of this
       document. . . . [The Plaintiffs who chose to retire] prior to the signing of this Plant
       Closing Agreement are not bound by it. See Allied Chemical and Alkali Workers
       of America, Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 181,
       n. 20 (1971) (“[u]nder established contract principles, vested retirement rights
       may not be altered without the pensioner's consent”); Prater v. Ohio Education
       Association, 505 F.3d 437, 444 (6th Cir. 2007) (subsequent agreement between
       union and employer does not permit employer to amend or terminate retiree
       benefits that have already vested). Therefore, the now-challenged Order must be
       modified. Hence, those Plaintiffs who retired prior to April 17, 2001 cannot be
       required to arbitrate their claims because their benefits and interests are governed
       by the 1998 CBA.

       Kelsey-Hayes filed a timely notice of appeal, arguing that all of the Plaintiffs, including

those who retired prior to the execution of the 2001 Plant Closing Agreement, were bound by its

general arbitration clause. The appeal raised several other issues which were voluntarily

dismissed by the time we heard oral arguments in this case. The only remaining issue is whether

employees of the Kelsey-Hayes manufacturing plant who retired prior to the plant closing in

2001 and before the subsequent execution of the Plant Closing Agreement incurred any

obligation to arbitrate their dispute over retiree healthcare benefits, pursuant to the general

arbitration clause contained in the 2001 Plant Closing Agreement.


                                                  4
                                                 III.
       This Court reviews a district court’s conclusions of law regarding whether to compel

arbitration de novo. Watson Wyatt & Co. v. SBC Holdings, Inc., 513 F.3d 646, 649 (6th Cir.

2008); see also Teamsters Local Union No. 89 v. Kroger Co., 617 F.3d 899, 904 (6th Cir. 2010);

United Steelworkers of Am. v. Cooper Tire & Rubber Co., 474 F.3d 271, 277 (6th Cir. 2007);

Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 311 (6th Cir. 2000).

       It is well-established that parties cannot be compelled to arbitrate a dispute unless they

are contractually bound to do so by a valid and enforceable prior agreement. Cooper, 474 F.3d at

277 (“[A] party cannot be forced to arbitrate any dispute that it has not obligated itself by

contract to submit to arbitration.” (citation omitted)); see also IAM v. AK Steel Corp., 615 F.3d

706, 711 (6th Cir. 2010) (“[A]rbitration is . . . a matter of contract between the parties. . . . [T]he

parties [must] have agreed to submit to arbitration.”). A dispute is not arbitrable if the parties’

agreement “specifically excludes” the subject matter of that dispute from arbitration. Cleveland

Elec. Illuminating Co. v. Utility Workers, 440 F.3d 809, 816 (6th Cir. 2006) (“[A] union and an

employer may arbitrate retirement healthcare disputes only ‘if there is nothing in the agreement

that specifically excludes the dispute from arbitration,’ and then only with the retirees’

‘consent.’”); see also Cooper, 474 F.3d at 279 (“[P]arties may exclude disputes arising under a

side agreement from arbitration should they include a statement to that effect in the arbitration

clause of the CBA or in the side agreement itself.”); UFCW v. Fresh Mark, 81 F.App’x. 23, 28

n.3 (6th Cir. 2003) (“[P]arties routinely exclude individual claims for benefits from general CBA

arbitration and grievance procedures.”).

       Here, the Kelsey-Hayes employees who retired prior to the 2001 Plant Closing

Agreement were no longer members of the Union at the time of the plant closing and were not
                                                  5
represented by the Union in the negotiation or execution of the Plant Closing Agreement. It is

well established that when a union negotiates with an employer, the union represents only active

employees, and it does not represent the interests of retirees absent their consent. See Allied, 404

U.S. at 181 n. 20 (“Since retirees are not members of the bargaining unit, the bargaining agent is

under no statutory duty to represent them in negotiations with the employer.”); Amos v. PPG

Indus., Inc., 699 F.3d 448, 453 (6th Cir. 2012). The Kelsey-Hayes employees who retired prior

to the 2001 Plant Closing Agreement thus did not consent to the terms of the Plant Closing

Agreement and cannot be compelled to arbitrate under provisions contained in that agreement.

                                                IV.
       Accordingly, we AFFIRM the district court’s order.




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