Opposition Brief — Panter v. American Synthetic Rubber Corp.

(® Supreme Coutt, mn

RILED

No. 87-2078 JUL 14 1988

DOERR Spon

SUPREME COURT OF ME UNITED STATES

October Term, 1988

GORDON PANTER, JIM MALLORY, LEO

VINCENT, J. J. EDRINGTON, JOE TEDE-

SCUCCI, R. L. FRENCH, JOHN W. VOGT,

TILFORD WAGERS, J ” — KEN-

NETH PEARL : : Petitioners

AMERICAN SYNTHETIC RUBBER CORPO-

RATION, and

UNITED RUBBER, CORK, LINOLEUM AND

PLASTIC WORKERS OF AMERICA, Local

423 and

UNITED RUBBER, CORK, LINOLEUM AND

PLASTIC WORKERS OF AMERICA, Inter-

national Union AFL-CIO - - - Respondents

On Petition for a Writ of Certiorari to the

Sixth Circuit Court of Appeals

BRIEF OF AMERICAN SYNTHETIC RUBBER

CORPORATION IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

MATTHEW R. WESTFALL

Counsel of Record

C. LAURENCE WOODS III

TONY C. COLEMAN

WESTFALL, TALBOTT & WOODS

501 South Second Street

Louisville, Kentucky 40202

Telephone: (502) 584-7722

Attorneys for American

Synthetic Rubber Corp.

WESTERFIELO-BONTE CO., 619 W. KENTUCKY-P.O. BOX 3251, LOUISVILLE, KY

aA

LIST OF PARENT COMPANIES, SUBSIDIARIES

AND AFFILIATES

Pursuant to Rule 28.1 of the Supreme Court Rules, the

following is a list of all parent companies, subsidiaries and

affiliates of American Synthetic Rubber Corporation.

The following companies have a minority ownership in-

terest in American Synthetic Rubber Corporation:

)

2.

3.

eT Pr SS

American Hoechst Corporation

Chromalloy American Corporation

Converse Rubber Corporation/A Division of

Electra

Dunlop Tire & Rubber Corporation

Goodall Rubber Company

Pickens Footwear

W. R. Grace & Company

Hewitt-Robbins/A Division of Litton Industrial

Systems, Inc.

Lacrosse Rubber Mills Company

Michelin Corporation

Norbalt Rubber Corporation

Rubbermaid Incorporated

Dart Industries, Inc.

Simplex Wire & Cable Company

il

TABLE OF CONTENTS

List of Parent Companies, Subsidiaries and Affiliates saa

wanes OC Raters ...6 6 A eee ili-iv

Counterstatement of the Case ...................... 1- 5

ery Of BEN . i... 6. Se san eee 5- 6

ps PNET ee er er rte Oe 6-12

A. Petitioners Have No Claim Against ASRC Under

the Labor Management Reporting and Disclo-

sure Act, 29 U.S.C. Section 401 et seq. ......... 6

B. Petitioners Have No Claim Against ASRC Under

Section 301 of The Labor Relations Act, 29

U.S.C. Section 1956. 68 a6@, «iss éaceneide canes 6- 7

C. Petitioners’ Seniority Rights Are Not “Status

DONC te ooo vec snk ba ee ys oe 7-9

D. ASRC Did Not Violate The Employee Retire-

ment Income Security Act, 29 U.S.C. Section

1001 et seq. In Limiting Petitioners’ Right to

Beveramee Pay... .cns.00ss nese see 10-12

| rie ag 12

iil

TABLE OF AUTHORITIES

Cases: PAGE

Charland v. Norge Division, Borg-Warner Cor-

poration, 407 F. 2d 1062 (6th Cir., 1969) ....... 9

Duncan v. Peninsula Shipbuilders Assn., 394 F. 2d

NE aga oss 60 a ck oa as oak ween 6

Flight Officers v. United Air Lines, 756 F. 2d 1262

i Cen bs chide pb ccceccseenes 11

Ford Motor Co. v. Huffman, 345 U.S. 330 (1953) .. 9

Gordon v. IBWU-PMA Benefit Funds, 616 F. 2d 433

i ce rc deck ahaa base eee va 11

Hayes v. Consolidated SVC Corp., 517 F. 2d 564 (1st

Cate eve hiss aacdddessecesiacves 7

Phillips v. Amoco Oil Co., 614 F. Supp. 694 (N.D.

ees awa cbaes eave baeneses 11

Republic Steel Corp. v. Maddox, 379 U.S. 650 (1965) 11

Sutton v. Weirton Steel Division of National Steel

Corporation, 724 F. 2d 406 (4th Cir., 1983),

cert. den. 467 U.S. 1205 (1984) ................ 10

Thompson v. New York Central Railroad, 361 F. 2d

I EMS chk nse ensdvescenevssees 6

U.A.W. v. Yardman, Incorporated, 716 F. 2d 1476

(6th Cir., 1983), cert. den. 465 U.S. 1007 (1984). .7, 8, 9

West v. Butler, 621 F. 2d 240 (6th Cir., 1980) ..... 10

White Farm Equipment Company v. White Motor

Corp., 788 F. 2d 1186 (6th Cir., 1986) .......... 10

Statutes:

Employee Retirement Income Security Act,

29 U.S.C. Section 1001 e#t seq. ................- 4,10

ey POC ow ct cece ee ewes 10

EE EE EERO ED ccc ccd es cencces 10

| ee re 11

ES SS | Ee Serer 10

OR OD ed cae c de eeeceesees 10

iv

PAGE

Kentucky Civil Rights Act, Kentucky Revised Stat-

te SN GI ones soy sd awwcauseusonacevess 4

Labor Management Relations Act, 29 U.S.C. See-

I ae eet a yh oad ask gon ois oe 3, 6

Labor Management Reporting and Disclosure Act, |

et Ses ee I a on oo oa dca combs saniaecns 3, 6 |

Rule:

Rule 17.1, Supreme Court Rules ...... errors 5)

No. 87-2078

IN THE

SUPREME COURT OF THE UMTED STATES

October Term, 1988

GORDON PANTER, JIM MAtuory, LEO VIN-

CENT, J. J. EDRINGTON, JOE TEDESCUCCI,

R. L. FrRencu, JoHN W. Voct, TILFoRD

WaceErs, JIM Burns, KENNETH PEARL - Petitioners

Versus

AMERICAN SYNTHETIC RUBBER CORPORA-

TION, and

UNITED RUBBER, CorK, LINOLEUM AND

Puastic WorKERS OF AMERICA, Local

423 and

UNITED RUBBER, CoRK, LINOLEUM AND

Piastic WORKERS OF AMERICA, Interna-

tional Union AFL-CIO - - Respondents

ON PETITICN FOR A WRIT OF CERTIORARI TO THE

SIXTH CIRCUIT COURT OF APPEALS

BRIEF OF AMERICAN SYNTHETIC RUBBER

CORPORATION IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

COUNTERSTATEMENT OF THE CASE

In March 1981, Respondents American Synthetic

Rubber Corporation (ASRC) and United Rubber,

Cork, Linoleum and Plastic Workers of America,

Local 423 (Union) negotiated a three year collective

2

bargaining agreement. Under that agreement, em-

ployees who had more than two years of seniority re-

tained recall rights no matter how long they remained

laid off. The agreement also provided for severance

pay upon lay off. However, under the agreement, an

employee who received severance pay forfeited all his

seniority and recall rights. (R. 51 and 65)."

Petitioners were employed by ASRC. They were

represented for collective bargaining purposes by the

Union. Petitioners, as well as a number of other em-

ployees, were laid off in 1981 as a result of ASRC’s

decision to close part of its manufacturing facility.

In March, 1984, the Union and ASRC negotiated

a new collective bargaining agreement. In those nego-

tiations one of ASRC’s initial proposals was to change

the agreement so as to terminate the seniority and re-

eall rights of any employee after a period of layoff of

more than one year. The Union and ASRC eventually

agreed that seniority and recall rights would be termi-

nated after a period of layoff of two years or more.

The provision excluded active employees as well as

those on medical leaves of absence. (R. 114).

The Union and ASRC further agreed that when the

1981-84 contract expired and was replaced by the 1984-

87 contract, those employees who had been on layoff

more than two years would automatically lose their

seniority and recall rights. Since, under both con-

tracts, the relinquishment of seniority and recall rights

1All citations are to the Joint Appendix which is a part of the

record before the Sixth Circuit Court of Appeals.

3

was a quid pro quo for the receipt of severance pay,

those employees would have no right to severance pay

once the 1984-87 contract became effective. (R. 72 and

217).

A meeting was scheduled by the Union for March

7, 1984, with ASRC’s employees for the purpose of

voting to ratify the contract. (R. 296). In order to

give the laid off employees, who would lose their sen-

iority under the new contract, time to await the results

of the ratification meeting, the Union and ASRC

agreed that they would have until March 9, 1984 at

6:00 p.m. to apply for their severance pay. The Union

and ASRC also agreed that if the employees did not

apply for their severance pay before that time they

would lose any right to severance pay. (R. 215-216).

All employees on layoff were given notice that they had

to apply for severance pay by that time or they would

lose their right to severance pay. (R. 118).

On March 7, 1984, the Union membership ratified

the contract by a vote of 79 to 7. (R. 296). By 6:00

p.m. on March 9, 1984, all employees who were laid

off had requested their severance pay, except Peti-

tioners. (R. 52).

On March 9, 1984, Petitioners filed suit in the

United States District Court for the Western District

of Kentucky. The Complaint alleged that the Union

and ASRC violated the Labor Management Relations

Act (LMRA), 29 U.S.C. Section 185(a) and the Labor

Management Reporting and Disclosure Act (LMRDA),

29 U.S.C. Section 401 et seq. by negotiating a contract

4

which infringed on Petitioners’ seniority and recall

rights. (R. 14-23).

On March 22, 1984, Petitioners filed an Amended

Complaint. (R. 28-38). It added a claim that the

Union and ASRC violated the Kentucky Civil Rights

Act, KRS Chapter 344, by discriminating against the

Petitioners on the basis of their age.

On April 24, 1985, Petitioners moved for leave to

file a Second Amended Complaint. The District Court

denied this motion but allowed Petitioners to file a

Third Amended Complaint. (R. 39-44). It raised an-

other new claim. Petitioners alleged that ASRC and

the Union conspired to deprive them of their severance

pay benefits in violation of the Employee Retirement

Income Security Act, 29 U.S.C. Section 1001 ef seq.

The District Court granted summary judgment to

the Union and ASRC on each of Petitioners’ claims by

various orders and memoranda entered throughout the

course of the litigation. On December 17, 1984, the

District Court granted ASRC’s motion for summary

judgment on Petitioners’ age discrimination and See-

tion 301 claims. The Court denied Petitioners’ Motion

for a Preliminary Injunction and the Union’s motion

for summary judgment on the Petitioners’ LMRDA

claim. (R. 69-94).

On November 1, 1985, the Court granted ASRC’s

motion for summary judgment on Petitioners’ claim

under the LMRDA as it related to ASRC. (R. 65-68).

On May 1, 1986, the Court denied the Union’s re-

newed motion for summary judgment and granted

5

ASRC’s with respect to all of Petitioners’ claims except

the allegation that ASRC had violated ERISA. (R.

59-63).

On September 5, 1986, the Court granted the Un-

ion’s motion for summary judgment on the LMRDA

claims. The District Court also granted ASRC’s mo-

tion to dismiss Petitioners’ claim for severance pay

under ERISA. The sole claim remaining before the

Court, at this point, was that of Petitioner J.J. Ed-

rington, who alleged that he had applied for his sev-

erance pay prior to the March 9, 1984, deadline, but

had not been paid. (R. 50-58).

On February 9, 1987, the District Court denied Pe-

titioner’s motion to set aside its September 5, 1986,

Order. It also granted ASRC’s motion to dismiss

Edrington’s claim on the basis that he failed to exhaust

the administrative remedies available to him under the

collective bargaining agreement. (R. 46-49).

On February 27, 1987, Petitioners filed a Notice of

Appeal. (R. 45). After briefs were filed and oral

argument was held, the Sixth Circuit Court of Appeals

affirmed the District Court’s decision. A per curiam

order was entered on April 25, 1988.

Petitioners have now requested this Court to review

the Sixth Circuit Court of Appeals’ decision.

SUMMARY OF ARGUMENT

Supreme Court Rule 17.1 provides that certiorari

will be granted ‘‘only when there are special and im-

portant reasons therefor.’’ Petitioners have presented

no special or important reason that would justify the

6

granting of certiorari in this case. The District Court

properly granted summary judgment on Petitioners’

claims and the Sixth Cireuit Court of Appeals prop-

erly affirmed.

ARGUMENT

A. Petitioners Have No Claim Against ASRC Under The

Labor Management Reporting and Disclosure Act. 29

U.S.C. Section 401 et seq.

Petitioners’ argument under the LMRDA focuses

upon the Union’s alleged violations of this statute.

The District Court properly granted summary judg-

ment to ASRC on the basis that the LMRDA ‘does not

apply to employers but only to the relationship between

the Union and its members.’’ (R. 66). The statute

does not provide for a cause of action against an em-

ployer. See, Thompson v. New York Central Railroad,

2961 F. 2d 137 (2nd Cir., 1966) and Duncan v. Penin-

sula Shipbuilders Assn., 394 F. 2d 237 (4th Cir., 1968).

Petitioners do not contend that the District Court

erred in granting summary judgment to ASRC on

their ¢laims under the LMRDA. Accordingly, there

is no reason for granting certiorari on this claim with

respect to ASRC.

B. Petitioners Have No Claim Against ASRC Under Sec-

tion 301 Of The Labor Management Relations Act, 29

U.S.C. Section 185a et seg.

Petitioners’ argument under Section 301 of the

——= +

LMRA focuses upon the Union’s alleged breach of its

duty of fair representation. Petitioners have no claim

against ASRC under Section 30L.

7

In the original and Amended Complaint in this

case, Petitioners admitted that the collective bargain-

ing agreement, which was the source of their recall

and seniority rights, expired on March 1, 1984. (R.

16 and 31).

Accordingly, Petitioners have not and cannot allege

that there has been a breach of a collective bargaining

agreement. Absent an alleged breach of a collective

bargaining agreement, federal courts do not have juris-

diction under Section 301. Hayes v. Consolidated SVC

Corp., 517 . 2d 564 (1st Cir., 1975).

Again, Petitioners have presented no reason which

would justify the granting of certiorari with respect

to ASRC on their claims under Section 301 of the

LMRA.

C. Petitioners’ Seniority Rights Were Not

“Status Benefits”.

Petitioners contend that their recall and seniority

rights under the 1981-84 collective bargaining agree-

ment were ‘‘status benefits’’ which could not be altered

by ASRC and the Union. Petitioners’ argument is

without merit and provides no reason for the grant of

certiorari in this case.

[In support of their argument, Petitioners rely ex-

clusively on the Sixth Circuit of Appeals decision in

U.AW. v. Yardman, Incorporated, 716 F. 2d 1476

(1983), cert. den. 465 U.S. 1007 (1984). Yardman is

inapposite. In Yardman, the employer, after the ex-

piration of the collective bargaining agreement, ter-

minated the life and health insurance benefits which

8

the agreement had provided retirees. The union sued

under Section 301, on behalf of the retired employees,

contending that the company was obligated to pay the

retirees’ life and health insurance even after the con-

tract’s termination.

The Sixth Cireuit Court of Appeals agreed. In

framing the issue to be decided, the Court stated,

‘‘whether retiree insurance benefits continue beyond

the expiration of the collective bargaining agreement

depends upon the intent of the parties.’”” As the Court

recognized, ‘‘the parties to a collective bargaining

agreement may provide for rights which will survive

termination of their contractual relationship.”’ IJd.,

at 1479.

To determine the parties’ intent, the Court indi-

cated that the language of the agreement, as well as the

context in which it was negotiated, must be examined.

In upholding the union’s claim, the Court found that

the language of the agreement demonstrated an intent

that the retirees’ insurance benefits would continue

after the expiration of the contract. In further sup-

port of its conclusion, the Court held that ‘‘retiree

benefits are in a sense ‘status’ benefits which, as such,

carry with them an inference that they continue so long

as the prerequisite status is maintained.’’ Id., at 1482.

Yardman does not support Petitioner in this case.

Yardman involved a dispute over the interpretation of

ambiguous language in a collective bargaining agree-

ment. The union claimed the language created a

9

vested right to insurance benefits. The employer ar-

gued it did not.

In this case, on the other hand, there is no conten-

tion that Petitioners’ recall or seniority rights turn

upon the interpretation of ambiguous language. There

is no dispute between ASRC and the Union as to the

meaning of the language governing these rights. The

Union and ASRC, through negotiations, agreed to a

provision which clearly eliminated Petitioners’ sen-

iority and reeall rights. Thus, there is no reason to

engage in contract interpretation in order to determine

ASRC’s and the Union’s intent.

The legal issue in this case, which was not present in

Yardman, is whether ASRC and the Union had the

right to eliminate Petitioners’ seniority. ASRC and the

Union had the right to make such a modification. In

fact, courts have uniformly held that seniority rights

are not vested benefits and, thus, are subject to modi-

fication through collective bargaining. Charland v.

Norge Division, Borg-Warner Corporation, 407 F. 2d

1062 (6th Cir., 1969) and Local 1251, United Auto-

mobile Workers v. Robertshaw Controls Co., 405 F. 2d

29 (2nd Cir., 1968). This Court recognized as much

in Ford Motor Co. v. Huffman, 345 U.S. 330 (1953)

wherein it was held that a union has the authority and

discretion to negotiate seniority provisions which affect

employees differently.

Petitioners’ argument that their seniority and ‘re-

call rights were ‘‘status’’ benefits not subject to change

presents no reason for the grant of certiorari.

10

D. ASRC Did Not Violate The Employee Retirement In-

come Security Act, 29 U.S.C. 1001 et seq., In Limiting

Petitioners’ Right To Severance Pay.

Petitioners’ final argument is that ASRC and the

Union violated the Employee Retirement Income Se-

curity Act (ERISA), 29 U.S.C. Section 1001 et seq.

Petitioners’ argument is legally baseless and presents

no reason for granting certiorari.

The District Court properly granted summary

judgment to ASRC on Petitioners’ severance pay

claims. Provisions concerning severance pay are ‘‘em-

ployee welfare benefit plan[s]’’ as defined by ERISA.

29 U.S.C. Section 1002(1). The ‘‘vesting’’ require-

ments of ERISA do not apply to benefits provided by

‘employee welfare benefit plan[s].’’ 29 U.S.C. See-

tion 1051(1). Also see, White Farm Equipment Com-

pany Vv. White Motor Corp., 788 F. 2d 1186 (6th Cir.,

1986). Since severance benefits are not vested, they

are subject to modification through collective bargain-

ing. Sutton v. Weirton Steel Division of National

Steel Corporation, 724 F. 2d 406 (4th Cir., 1983), cert.

den. 467 U.S. 1205 (1984).

The only provisions of ERISA Petitioners claim

ASRC violated are 29 U.S.C. Section 1140 and 1141.

Section 1140 only applies to and protects vested rights.

It affords no protection to unvested benefits such as

severance pay. Sutton, supra, at 410-411. Section

1141 of ERISA is a criminal! provision which provides

no civil cause of action. West v. Butler, 621 F. 2d

240, 244 (6th Cir., 1980).

11

Petitioners also argue that ASRC’s actions in

limiting their right to severance pay were arbitrary

and capricious. The arbitrary and capricious stand-

ard of review is imposed by ERISA on administrators

of a pension or welfare plan. 29 U.S.C. Section 1104.

Also see, Gordon vy. IBWU-PMA Benefit Funds, 616

F. 2d 483 (9th Cir., 1980). Sueh fiduciary require-

ments only apply in connection with the administration

of employee benefit plans. ‘They do not apply to a modi-

fication or termination of a plan which does not pro-

vide vested benefits. Sutton, supra, at 410-411; Phil-

lips, supra; and Flight Officers v. United Air Lines,

756 F. 2d 1262 (7th Cir., 1985).

ASRC and the Union had the right under ERISA

to agree that Petitioners would not be entitled to sev-

erance pay if it was not requested before 6:00 p.m. on

March 9, 1984. The District Court properly held that

there was no violation of ERISA and granted sum-

mary judgment to ASRC on that basis. Petitioners

have presented no reason why the District Court was

incorrect.

Petitioners mention that J.J. Edrington requested

severance pay vefore the March 9, 1984 cutoff date.

(pp. 18-19). The Distriet Court’s summary judgment

vu Edrington’s claim for severance pay did not involve

ERISA. Rather, Edrington’s claim was dismissed be-

cause he failed to exhaust the administrative remedies

available to him under the collective bargaining agree-

ment. (R. 48). This decision was proper under Pe-

public Steel Corp. v. Maddox, 379 U.S. 650 (1965).

12

As with Petitioners’ other claims, their arguments

based upon ERISA present no reason for this court

to grant certiorari.

CONCLUSION

In light of the foregoing, American Synthetic Rub-

ber Corporation requests that this petition be denied.

MatrHew R. WEsT

Counsel of Recofa

C. LAuRENcE Woops III

Tony C. CoLEMAN

WESTFALL, TALBOTT & Woops

501 South Second Street

Louisville, Kentucky 40202

Telephone: (502) 584-7722

Attorneys for American

Synthetic Rubber Corporation

ae AE Ah aD.

ee)

mt a —

< ea eNO as gd mn

Dine

4 me gigiea tee

i

;

i

4

j

:

2

:

:

4

a

13

CERTIFICATE

It is hereby certified that a copy of the foregoing has

been served by mail pursuant to Supreme Court Rule 28.3

upon Michael Boylan, Counsel for Petitioners, 807 W. Mar-

ket Street, Louisville, Kentucky 40202; John Frith Stew art,

300 Marion E. Taylor Bldg., Louisville, Kentucky 40202

and Paul Malesick, 87 S. High Street, Akron, Ohio 44308,

Counsel for Respondent Unions.

WY A (bed

Attorney for Ameri

Synthetic Rubber Cory at