The parties were not able to agree on the issues for decision. I have determined the
the following issues:
The Union filed grievances on behalf of Miller and Cronin. Cronin's is dated
1996, and Miller's is dated November 14, 1996. Each grievance alleges the Company "has
make contributions to (the Grievant's) 401K plan in accordance with the collective bargaining
agreement." Each grievance cites Article 32 as the governing provision and each grievance
that each employe is "to be made whole."
The Company manufactures fire pumps and other fire-fighting equipment. The
certified in 1994 as the exclusive bargaining representative for the bargaining unit including
Grievants. For roughly fifty years prior to the Union's certification, the unit was represented
independent union known as the W.S. Darley Employees' Association.
The grievances have deep roots. In May of 1994, the Company and Union began
their first collective bargaining agreement. That bargaining spanned over thirty face-to-face
and mediation before the Federal Mediation and Conciliation Service. On May 25, 1995, the
executed a labor agreement covering June 1, 1994 through May 31, 1997. To set the
background to the
grievances, it is necessary to give an overview of that portion of the bargaining history
Prior to the 1994-97 labor agreement, the Company made contributions to a profit
which is referred to below as the 401(a) Plan. These contributions were made on an annual
amounts determined at the Company's discretion, and distributed under a complicated
401(a) Plan did not permit employe contributions and did not afford employes the authority
how contributions were invested. The 401(a) Plan permitted employes to borrow against
balance for the purchase of a principal residence, for uninsured medical expenses or for
purposes. The 401(a) Plan restricted eligibility to those employes who were twenty-one or
had served the
Company for at least one year in which they had put in at least 1,000 hours of work.
The 401(a) Plan
permitted employes to enter the plan on the first day of the January or July next following
attainment of the age/time of service requirements noted above. To become fully vested in
Plan required seven years of service.
Mike Thoms served as the Union's chief spokesman in the negotiations for the
agreement. James Ward served as the Company's. The Union summarized the status of
on pension issues in a proposal made to the Company on April 10, 1995. That proposal
The parties were able to agree on some of these proposals. Ward summarized such
items in a letter to
Thoms dated April 25, 1995, which states:
On May 3, 1995, the parties met with an FMCS Mediator to attempt to resolve the
To prepare for the May 3 mediation, the Union prepared a written summary of open
of May 1, 1995. That document summarizes "Pension" thus:
The mediation stretched into the morning hours of May 4, but did result in a tentative
on a new labor agreement.
In a follow-up letter also dated May 5, 1995, Ward informed Thoms that Jeffrey
Darley, the Company's
Vice President and Manager of the Chippewa Falls operations, had informed Ward that his
of May 5 contained an error. Ward's letter states:
From this point, the parties began a tortuous path toward creating the 401(k) plan to be
under the terms of the labor agreement.
The Trustee for the 401(k) plan was the Old Kent Bank. The Bank's Trust Officer
responsibility for implementing it was John Falduto. The Company arranged for Falduto to
meeting among all unit employes to be covered by the 401(k) plan. Attendance at the
mandatory, and employes who could not attend were provided with relevant documents and a
of the meeting. The meeting took place on June 15, 1995. At the meeting, Falduto
document entitled "Plan Highlights" which states the "Participant Eligibility" thus:
The document states the plan's "Enrollment Dates" thus: "The first January 1 or July
attainment of eligibility requirements." The document states the plan's "Employee
Employee contributions are voluntary. May contribute from 1% to 15% of gross pay.
May contribute maximum of $9,240.00 in 1995. May change contribution percentage
as of the first day of January, April, July and October. (30 days written notice prior to
the date of change must be given to the plan administrator).
The document stated "Company Contributions" thus:
The company will make a contribution to the plan for each eligible employee in the
amount of: $25. for each week of service from June 1, 1994 through May 31, 1995.
$30. for each week of service from June 1, 1995 through May 31, 1996. $35. for
week of service from June 1, 1996 through May 31, 1997.
The document stated under the heading "Vesting" that employe contributions "are
always 100% vested"
and that Company contributions were not 100% vested until seven years of service. The
forth a vesting schedule, which ran from 0% for employes with less than two years of
service to 100%
for employes with seven years of service. The document stated "Participant Loans" thus:
administered by the plan administrator for unusual medical expenses, college education or the
of a principal residence. . . ." The Company invited Thoms to this meeting, but due to
commitments he could not attend. He did, however, view the video tape and related
Thoms wrote a letter to Darley dated December 6, 1995, which is headed "Pension
Contributions" and states:
Jeff, following our telephone conversation on Monday, December 4, 1995, concerning
the questions I have raised concerning the 401K plan as referenced under Article 23
(sic) of the Labor Agreement, and given your offer to address my concerns, I . . . submit
the following. . . .
- During the course of negotiations, the Union had proposed that the Company
should convert the existing 401A plan to a 401K plan.
- We also proposed that the Company would make weekly contributions into the
new 401K plan.
- We also proposed that the new 401K plan would include the money rolled over
from the old 401A plan.
- There would be at least three (3) investment vehicles that employees would
be able to make self-contributions into on a pre-taxed basis to the extent provided by
- Employees would be able to borrow money from their individual accounts
consistent with the law.
- We then proposed a seven (7) year schedule in order to avoid problems
associated with converting from the 401A to the 401K.
Bottom line is that we reached an agreement which included all the elements that I
outlined above with little debate.
The only sticky point as I remember was how much the weekly contribution should be.
Ultimately, we reached agreement on the weekly contribution levels of $25.00 per week
effective June 1, 1994, $30.00 per week effective June 1, 1995, and $35.00 per week
effective June 1, 1996.
Effective June 1, 1995, the old 401A plan should have been terminated; the money
should have been rolled over into the new 401K plan and the operative plan documents
should reflect the elements that I have referenced early in this letter.
On June 15, 1995, the Company sponsored an enrollment presentation for the new
plan. . . .
Shortly thereafter I viewed the video and examined the enrollment materials and
determined that everything appeared to be in order.
On November 22, 1995, I received a telephone call from one of your employees who
told me that he had just received a copy of his quarterly 401K statement, which was for
the period of July 1, 1995 through September 30, 1995. He told me that the statement
indicated that there were no contributions made by the Company during this period. I
told the employee that I thought that perhaps there was some sort of mistake made in
preparing the reports.
. . .
I called you on Monday, December 4, 1995, to find out what the Company was going
to do relative to this situation. You told me that the Company had
decided to make a contribution to the 401K on January 1, 1996, for the period of June
1, 1995 through December 30, 1995, and would make future contributions on a monthly
I asked you whether you intended to make the employees whole by paying the interest
on earnings that they would have made had the Company made the required
contributions on a weekly basis per the contract. You told me "no". I then told you that
I have no choice but to file a grievance on behalf of the bargaining unit. Enclosed is that
grievance. . . .
In addition to utilizing the grievance procedure, I feel that it is only fair to advise you
that unless the Company reconsiders its position on this matter, and agrees to the "make
whole" remedy that I have suggested, I will be filing charges with the National Labor
Relations Board and file a complaint with the Department of Labor who is currently
investigating employer activities concerning the funding of 401K plans. . . .
At the time of this letter, the Company had rolled over the 401(a) Plan into an
investment vehicle, which
was to become part of a 401(k) plan to be filed with the Internal Revenue Service (IRS).
contributions were being made into that vehicle, but had not been noted on employe
On January 9, 1996, the Company issued letters to Cronin and Miller, which stated:
An error was made on our part on behalf of your 401K deductions.
You had elected to have $50.00 per week deducted from your paycheck.
According to the Plan, your are not eligible to participate in the plan until
July 1, 1996
as your date of hire is January 6, 1995. Your participation in the plan will commence
on the first day January or July after which you have completed one year of service.
We have notified Old Kent Bank of this error, and a check . . . will be sent to your
The Company issued each employe a check as referred to in these letters. The Union
did not grieve
the return of this money.
In early February of 1996, Old Kent Bank provided the Company a copy of "the Old
Defined Contribution Master Plan and Trust Agreement and the Non-Standardized Adoption
Agreement" which were to constitute the 401(k) plan. The Adoption Agreement was headed
"Nonstandardized Code Sec. 401(k) Profit Sharing Plan." Section 1.03 of the Adoption
formally named the Plan as the "Darley Employees' Association Benefit Plan." Section 2.01
Adoption Agreement governed eligibility requirements. To meet those requirements, an
to be at least twenty-one years old and have at least one year of service with the Company.
also provided that employes could enter the Plan on the first day of the Plan year and on the
of the seventh month of the Plan year. Section 2.02 of the Adoption Agreement demanded
employe work at least 1,000 hours of service to establish a year of service under Section
forwarded a copy of these documents to the Union.
Thoms stated the Union's view of the proposed plan documents in a letter to Darley
February 21, 1996, which reads thus:
(A)fter months of waiting, you finally have provided me with the alleged plan
documents that you say have been used to administer the 401K plan that is covered
under Article 32 of the collective bargaining agreement. . . . I have since reviewed these
documents and have concluded that they do not reflect the terms and conditions of
Article 32 and that you have unilaterally imposed provisions contrary to those that were
. . . (T)he first problem that I see is the description of the plan. You call it a "profit
sharing plan", where in fact it is a defined contribution plan. The Article 1,
the Plan "as the plan adopted by the employer is the Darley employees' (sic)
Association Benefit Plan." The Darley Employees' Association is nonexistent .
Furthermore, there is no mention of the "weekly contribution rates as
defined in the
labor agreement. (sic)
It appears to me that the documents that you have provided me clearly indicate two
things. They are:
1.) That you have unilaterally implemented provisions that were contrary to those
agreed upon in bargaining.
2.) That Old Kent Bank is totally ignorant of how to administer a 401K plan of this
In my opinion, you have engaged in "bad faith bargaining", which is in violation of the
National Labor Relations Act. Therefore, at this time I will proceed accordingly by
filing charges with the N.L.R.B.
Furthermore, I will file a complaint with the Department of Labor, Pension
Administration . . .
The Company brought this letter to Falduto's attention. Ward summarized his
response in a letter
to Thoms, dated March 1, 1996, which states:
. . . According to Mr. Falduto, the reference to a "profit sharing plan" is not a
at all. If you do not trust the source of his information, perhaps you may wish to verify
this for yourself.
With respect to the title of the plan, Mr. Falduto assures us that a change of names
would be a very simple undertaking. Jeff has already stated to me he is perfectly willing
to do so. What name would you like to use?
Your February 21, 1996 letter indicates that you may have other concerns as well.
However, since you fail to specify precisely what those concerns may be, it is
impossible to respond in a meaningful fashion. Would you care to enlighten us?
. . .
In a letter to Darley dated March 14, 1996, Thoms questioned the
timing of the issuance of quarterly
statements under the Plan as well as the quality and quantity of the data included with the
statements. Thoms also included a suggestion that Falduto return to Chippewa Falls to
employe concerns on the point. Darley brought the concerns voiced by Thoms to Falduto
forwarded to Thoms, in a letter dated March 27, a copy of Falduto's written response.
Ward summarized the status of the implementation of the Plan
in a letter to Thoms dated
April 22, 1996, which states:
Having received no response to my letter of March 1, 1996, I am
writing once again
in hopes of reviving the stalled discussions over the finalization of the necessary
documentation for the Section 401(k) plan presently in effect.
As a result of the concerns raised in your letter of February 21, 1996,
has refrained from executing the Non-Standardized Adoption agreement which Jeff
Darley presented to you on February 8th . . . This omission obviously
problematic in the event of an audit. It also precludes the filing with the IRS of a
request for a determination as to the qualification of that plan.
The Company would like to continue moving forward. Since the main
block from the Union's standpoint appears to relate to the frequency of
contributions, we seemingly should be able to agree to disagree for now, pending the
resolution of that issue in the upcoming grievance arbitration proceeding. If you
would feel more comfortable in doing so, the parties could certainly execute a
formal written stipulation to that effect.
I recognized that one additional item noted in your letter of February
modification. Thus, in lieu of the plan name "Darley Employees' Association
Benefit Plan", why not simply call it the "Represented Chippewa Falls Darley
Employees' Benefit Plan"? If any other unresolved issues remain outstanding, it
would be greatly appreciated if you could specifically identify those issues so that
the Company and/or Old Kent Bank can address them.
. . . If you feel that a face-to-face meeting would be helpful, the
Company would like
to establish one as well.
The parties ultimately agreed to meet, with Falduto, on May 15, 1996.
In a letter to Thoms dated
May 2, 1996, Ward asked that the Union state their questions regarding the Plan in writing
the meeting "so that Mr. Falduto will be prepared to answer them." Ward's letter also
With the obvious exception of the contribution frequency issue involved
pending grievance arbitration proceeding, I am cautiously optimistic that we may be
able to resolve most, if not all, of our remaining differences. Because there was so
little discussion at the bargaining table regarding the substantive terms of the Section
401(k) plan to be implemented, the Company has basically been guided by its
general understanding that aside from those areas where the parties expressly agreed
to the contrary, the features of the old Section 401(a) plan would remain intact.
Perhaps a more detailed explanation as to the similarity of features between the two
plans might be helpful.
I am assuming that an important area of inquiry may pertain to initial
new hires. In a recent telephone conversation you indicated that some of those new
hires were disappointed to learn that their voluntary self-contributions needed to be
returned to them because they were not yet eligible to participate. Even though such
self-contributions were not a feature of the old plan, we certainly can explore various
options that may be available.
I will now await receipt of your list of questions. . . .
Thoms responded in a letter dated May 9, 1996, which states:
. . .
Given the purpose of this meeting, all five (5) union stewards will be
Mr. Falduto's presence and participation is essential . . .
You have asked me to prepare a list of questions for Mr. Falduto
401k plan. My questions are as follows:
1.) Why can't we get the quarterly statements within a
reasonable time period
following the quarter's end?
2.) Why don't the statements that we receive include
all the account
activities . . .
3.) Why can't someone meet with the employees to explain
how to interpret their
These are the most frequently asked questions.
In addition to the questions listed above, there are other issues yet to
be resolved like
new hire participation. Why not let new hires enroll during the next open
enrollment period following their probation period? After all, employer
contributions should begin as soon as they become regular bargaining unit
employees. Why can't enrollment be accomplished on a quarterly
Why doesn't the plan document reference the
collective bargaining agreement and
include a copy of the relative contract language as an exhibit? Then, as
increase or decrease employer contributions, the exhibits would act as amendments
to the plan document as a whole.
Finally, I would suggest that the name of the plan be changed to read
Darley Hourly Employee 401k Plan". This is not a "profit sharing plan" anymore.
. . .
As I see it, the problem with trying to use the old 401A profit sharing
documents to administer the new 401k defining contribution plan are obvious. First
of all, contributions to the old plan were predicated on the company's profits and
disbursements were made annually and were based on a unique formula. The new
plan is funded in part by mandated weekly contributions by the employer in addition
to individual salary deferral. That is why the old plan document provided for annual
open enrollments; because disbursements were only done once a year.
In closing, I too share your optimism that this meeting will be fruitful.
. . .
The parties met on May 15 to discuss these and other points.
Thoms served as the Union's chief spokesman for the meeting. Five
Union Stewards assisted
him: Jerome Benson; Anthony Monpas; Tom Schimmel; Ken Schick; and Ed Wanish.
as the Company's chief spokesman. Two representatives of Old Kent Bank, including
him. Darley, Mary Knutson, and Frank Bucheger also appeared for the Company. Knutson
Company's Personnel Manager for the Chippewa Falls plants. Bucheger serves as the Plant
for one of those plants. The meeting lasted roughly two hours.
Ward, Darley, Thoms, Schick, Schimmel and Wanish testified
concerning the discussion which
took place at that meeting. Thoms, Schick, Schimmel and Wanish testified that Ward stated
although employes would not qualify for a Company contribution until the January or July 1
their completion of one qualifying year of service, the Company would pay, for employes
met the eligibility requirements, a contribution for the period between the employe's
completion of their
probation period until their enrollment in the Plan. Thoms stated that Ward noted the
purpose of this
retroactive payment was to avoid making payments to employes who did not demonstrate a
commitment to the Company. Thoms also noted that Ward did not mention Article 2 during
discussions. Thoms' notes from the meeting on this point state:
Employer contributions made the next enrollment period following 12
employment. Jan 1 July 1 Employer contributions would accrue from end
probationary period and be deposited upon enrollment.
Ward denied making the statement, noting, among other points, that
retroactive Company contributions
had never been discussed in bargaining and that he had never been authorized to offer such a
He noted that the Company did not object to permitting employes to make self-contributions
401(k) plan at the completion of their probation period, but that the Company was not
expanding employe eligibility for Company contributions beyond that established under the
Ward testified that he informed the Union that the Company was not interested in assuming
or jeopardizing the tax status of the Plan. Ward stated he was aware of the Union's desire to
Company contributions for new employes as soon as possible following completion of the
period. His notes reflect this as a "BIG ISSUE." He also noted the Union asked for, and
Company waiver of grievance timelines to permit the Union to check this issue with its
Knutson kept notes of the meeting for the Company. Her notes
concerning the discussion on
Company contributions read thus:
Participation of new hires: Why can't enrollment be on the next
completion of their eight week trial period?
The plan could be adopted to allow a new employee to make
contributions after the
eight week trial period & on the beginning of the next quarter.
The employer contributions are made following the employee satisfying
21, 1 yr. of service & 1,000 hrs. work -- enrollment dates would be either January 1
July 1. The Company contribution date would begin on the new employees (sic)
The Union felt the employer should start making contributions when
the new hire
became a regular bargaining unit employee, following his eight week trial period.
Jim Ward noted during negotiations there was very little discussion on
the pension plan.
The Company has the understanding when they agreed to change from a 401(A) plan
to a 401(K) plan everything would remain the same unless negotiated differently. An
employer contribution was negotiated, the employee's ability to make contributions, the
employees being able to make investment decisions. Different terms for employee
eligibility was (sic) not negotiated.
The Union felt it was not necessary to negotiate eligibility requirements
negotiated a defined contribution.
The Union requests the Company to waive the time limits on the
while they seek legal counsel. . . .
Knutson's notes confirm Thoms' testimony that the parties discussed
how much of the labor agreement
should be incorporated into the Plan. Her notes of that discussion read thus:
Plan Document reference the labor agreement:
The Company noted it was in the union's best interest to reference the
contract w/i the
401(K) plan document.
We are dealing w/ a prototype plan document that has been reviewed
by IRS. If you
attach any exhibits or make amendments the plan document must be reviewed again by
the IRS at a large cost to the plan participants. Every time you have the IRS review the
plan you face disqualification of the plan if the amendment is outside of the regulations.
Union agreed it would be best to reference the labor agreement w/i the
. . .
Thoms' and Knutson's notes state that the meeting adjourned at 6:00
Darley faxed Falduto a list of items for Old Kent Bank to
respond to as a result of the May 15
meeting. That fax, which was not issued to the Union, reads thus:
. . .
1) New employees entering the plan the first quarter after probationary
A.) We will allow new employees to enter plan only on employee
B.) The Company will continue with its contribution to employees as
. . .
Falduto responded to Darley in a letter dated May 29, 1996, which
I have reviewed my notes and your memo dated May 22, 1996
pertaining to our meeting
the previous week. Our notes contained the same issues to be addressed. Please find
my responses to issues as listed in your memo.
1) I have confirmed that the proposed prototype plan document will
allow two eligibility
structures. The eligibility for the new defined employer contribution can remain the
same as it had been in the former profit sharing plan. We do have the ability to allow
for employee contributions to the plan as discussed; as of the entry date (first day of the
calendar quarter) following the completion of the probationary period.
. . .
Ward forwarded a copy of Falduto's May 29 letter to Thoms in a letter
dated May 31, 1996. In the final
paragraph of that letter, Ward asked Thoms to "let me know if you have any additional
questions, or if
any of the questions you raised initially remain unanswered."
Thoms responded in a letter to Darley dated June 12, 1996,
. . . I am in receipt of the letter that John Falduto sent to you dated
May 29, 1996,
concerning the above captioned pension plan. I have reviewed its content and believe
that it accurately reflects the issues that were raised at out (sic) May 22, 1996, meeting.
Therefore, I think you should proceed by providing me with a copy of the revised plan
documents and adoption agreement. If they are in order, you can take whatever steps
that are necessary to execute them.
Unless you have some objection, I would like to go through the
process of electing the
Union Trustee, who will serve on the administrative committee. This would be done
at our next membership union meeting. . . .
In a letter to Thoms dated July 26, 1996, Darley enclosed "the Old
Kent Bank Defined Contribution
Master Plan and Trust Agreement and Adoption Agreement Nonstandardized Code 401(k)
Sharing Plan," which is referred to below as the Plan. Darley's letter states:
. . . These documents have now been updated to reflect all agreed
upon terms we have
discussed throughout the ongoing communication, meetings, and correspondence we
have had to date. We now ask that you review and approve it before final execution by
the Company, the Administrative Committee, and Old Kent Bank. Once the document
is executed by the appropriate parties it will then be filed with the Internal Revenue
Service for final determination. . . .
Section 1.03 of the Plan's Adoption Agreement names the Plan as
"W.S. Darley & Co. Chippewa Falls
Shop Employees' 401(k) Plan." Section 2.01(a) of the Adoption Agreement states
"Attainment of age
21" as a condition to eligibility "(t)o become a Participant in the Plan." Section 2.01(b)
following "Service requirement" as a condition to eligibility: "Eight week probationary
period per the
Collective Bargaining Agreement following the Employee's Employment
Section 2.01(c) of the Adoption Agreement specifies "Special requirements for non-401(k)
plan." Subsection (1) states that Section 2.01(c) requirements apply to "(t)he allocation of
nonelective contributions and Participant forfeitures." Subsection (2) states, as an eligibility
"(f)or participation in the allocations described in (1)," the following: "One year of
the Employee's Employment Commencement Date." Section 2.01(f) specifies the "Plan
. . . first day of the calendar quarter following the completion of
the probationary period
for 401(k) participation. The first day of the plan year and the first day of the seventh
month for employer nonelective contributions and Participant forfeitures.
Section 2.02 of the Adoption Agreement requires employe completion
of "1,000 Hours of Service"
during "(t)he Plan Year, beginning with the Plan Year which includes the first anniversary of
Employee's Employment Commencement Date" for participation in the Plan. Article III of
Adoption Agreement governs "Employer Contributions and Forfeitures." Section 3.01(a)
Company to contribute, under the Section 401(k) component of the Plan, an employe's
determined salary deferrals. Section 3.01(d) governs "Nonelective contributions."
Subsection (1) of
this section states that the Company can contribute "(t)he amount (or additional amount) the
may from time to time deem advisable." This subsection incorporates the contribution
Thoms responded to Darley in a letter dated July 30, 1996,
. . . I am in receipt of your letter dated July 26, 1996, as well as the
information that was included.
I have reviewed the Old Kent Bank Defined
Contribution Master Plan and Trust
Agreement, and the Adoption Agreement, and have found
them to be in order and
consistent with our understanding and agreement. Therefore, I am in concurrence of
your plans to execute these documents and the subsequent filing with the IRS.
Sometime after Darley received this response, the Company executed
the Adoption Agreement and filed
it with the IRS. As noted above, the grievances were filed after it became apparent to the
Grievants that the Company had not made a contribution under Article
32 for the period of time
between their completion of their probation period and their meeting the Plan's eligibility
The parties stipulated that the Company contribution claimed by
the Grievants under the 1994-97 labor agreement has been resolved in the 1997-2000 labor
Further facts will be set forth in the
THE UNION'S POSITION
After a review of the evidence, the Union contends that pension plan eligibility
are ambiguous. This ambiguity reflects that the Company's "obligation to make pension
contributions began as soon as the parties ratified the agreement, 14 months before the plan
documents were completed." The time period at issue here, from March 3, 1995 through
1996, preceded the parties' completion of the plan documents.
The ambiguity is manifested by the "Company's treatment of individual 401(k)
contributions." The Company allowed the Grievants "to begin their 401(k) contributions
eight week probationary period," then the Plan administrator "returned their contributions"
they were ineligible. The Union concludes this conduct belies the Company's assertion that
plan's eligibility requirements are unambiguous." The conflicting interpretations of the
and the Plan administrator establish the ambiguity of the Plan.
Nor was this the parties' sole misunderstanding, since they "also had a dispute about
timing of the Company's weekly defined contributions." The Company advocated annual
contributions, while the Union insisted on monthly contributions.
To resolve the ambiguity, the Union contends that a "review of bargaining history" is
necessary. Initially, the Union argues that the Company's contention that "the old profit
agreement was in effect until the new plan was completed" is without merit since it was not
negotiated, conflicts with the terms of the 1994-97 agreement, and conflicts with the
The terms of the 1994-97 agreement establish the obligation asserted by the grievance.
Company assertions that the Plan was not in effect until August of 1996 show no more than
Article 2 of the 1994-97 agreement governs the ambiguity. The contractual denial of fringe
to probationary employes establishes a "clear inference that employees do
receive benefits once they
complete their probationary period." The parties' practice
regarding other benefits, including vacation, is consistent with this inference. Even if
document applies to the period between March of 1995 and July of 1996, "nothing in the
document expressly negates the grievants' entitlement to their accrued pension contributions."
A detailed review of the parties' bargaining history confirms that the parties mutually
understood "that the employer contributions would be retroactive to the end of the
period." None of the testifying Union witnesses had any reason to misrepresent the relevant
discussions, and the testimony of Company witnesses offers no direct or persuasive rebuttal.
The Union concludes by requesting that "the grievances be sustained and that (the
pension . . . contributions for March 3, 1995 through July 1, 1996 be deposited into their
THE COMPANY'S POSITION
After a review of the evidence, the Company contends that the "issue in dispute is
the Plan documents require that the Employer's contribution to the non-401-(K) portion of
401(K) Plan be made retroactive to the conclusion of the eight week probationary period,
employee becomes a Plan participant." The Company argues that the language of the Plan,
predecessor and relevant bargaining history establish that the Company obligation to make
defined weekly contribution . . . is prospective only."
Threshold to this issue, however, is an "issue of substantive arbitrability which
the context of the parties' respective position relative to the subject dispute." More
Company argues that the Union "made no written proposal nor were there discussions
retroactivity," while the Company urges that the predecessor profit sharing plan continued
as modified by the parties' bargaining for a 1994-97 labor agreement. Because there was no
agreement on retroactivity, the Company concludes that "the Union, in actuality, is seeking
formation' rather than 'contract interpretation' in this proceeding."
"Contract formation" is beyond an arbitrator's jurisdiction under Article 9 and cannot
considered within the "presumption of arbitrability" set forth by the Steelworker's Trilogy,
under federal law, "a party cannot be required to submit to arbitration any dispute which it
agreed to submit." In the absence of a "meeting of the minds" there is no agreement for an
arbitrator to interpret: "The national labor policy militates against the arbitration of issues
surrounding labor contract formation."
Even if there is an arbitrable dispute, the Company contends that the contract will not
support the grievance. Article 32 is, according to the Company, clear and unambiguous. It
obligates the Company "to make the defined weekly contribution" to "eligible" unit
labor agreement is, however, silent on eligibility requirements. Thus, "the Plan documents .
provide the requisite conditions . . . which are controlling." Arbitral precedent requires
the parties' intent at the time agreement provisions were negotiated. In this case, then, the
what the parties intended "in May of 1995 when negotiations . . . reached their conclusion."
Evidence of bargaining history "demonstrates conclusively a mutual intent to be
the terms and conditions of the predecessor 401(A) plan, unless a term or condition was
by the 1994-95 negotiations." Thoms' December 6, 1995 letter establishes that the Union
to convert the old 401(a) plan to a 401(k) plan. Because the Union "did not propose to
the former . . . plan" and failed to make any proposal regarding eligibility or retroactivity, it
necessarily follows that the eligibility requirements of the old plan were carried into the Plan.
Bargaining history underscores this. The Company consistently provided the Union
Plan documents which carried forward the eligibility requirements from the 401(a) Plan.
never objected to this. When the parties discussed Union objections to the conversion, those
discussions did not cover eligibility. The Company summarizes the relevant discussion and
(T)he Union did not make one proposal concerning eligibility or retroactivity, which,
of itself demonstrates that the contribution terms of the predecessor plan were to
prevail. Furthermore, the conduct of the Union, after the 1994-97 contract was
negotiated, demonstrates that they were in full agreement with the eligibility
requirements of the former plan.
Nor did the May 15, 1996 meeting alter this. Union assertions that Ward committed
to make retroactive payments have no support in any documentation of the Plan or its
Ward denied making the statement, and Company witnesses corroborated his testimony.
the testimony of Union witnesses is credited, there is no reason to consider the testimony
eligibility requirements are clear and unambiguous and since that testimony flies in the face
Nor can the provisions of the 1997-2000 agreement be considered to support the
The removal of any reference to the 401(a) Plan cannot obscure that the agreement expressly
incorporates the eligibility requirements of that plan, thus establishing that the parties "have
reaffirmed their intention to bind themselves to the provisions of the former 401(A) plan."
the provisions of Article 2 undercut this conclusion. A general reference that employes
benefits upon completion of their probationary period cannot overcome the specific terms of
The Company concludes by requesting that "the grievances be denied in their
The Company, unlike the Union, contends that the grievances pose a threshold issue
arbitrability. According to the Company, the grievances pose issues not of contract
but of contract formation.
The Company appropriately cites AT&T Technologies v. CWA, 121 LRRM
as the authority generally governing the determination of arbitrability. The AT&T
LRRM at 3331) noted that "(t)he principles necessary" to determine arbitrability issues "are
. . . (and) were set out by this Court . . . in a series of cases known as the Steelworkers
citing Steelworkers v. American Mfg. Co., 363 U.S. 564, 46 LRRM 2414 (1960);
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574,
46 LRRM 2416 (1960); and
Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 46 LRRM
The AT&T Court drew the following four principles from the Steelworkers
The first principle gleaned from the Trilogy is that "arbitration is a matter of contract
and a party cannot be required to submit to arbitration any dispute which he has not
agreed to so submit."
. . .
The second rule, which follows inexorably from the first, is that the
arbitrability . . . is undeniably an issue for judicial determination."
. . .
The third principle is that . . . a court is not to rule on the potential
merits of the
. . .
Finally, where it has been established that where the contract contains an arbitration
clause, there is a presumption of arbitrability in the sense that "(a)n order to arbitrate
. . . should not be denied unless it may be said with positive
assurance that the arbitration clause is not susceptible of an interpretation that covers
the asserted dispute. Doubts should be resolved in favor of coverage. 121 LRRM
The first principle highlights the Company's contention that the grievances do not
interpretation, but contract formation. The second and third are applicable here only to
that the issue of arbitrability is a legal issue which, to be honored in this contractual forum,
be addressed as a threshold issue to any determination of the merits of the grievances. As
above, the labor agreement contains an arbitration clause, and thus the final principle
there is a presumption that the grievances are arbitrable, unless it can be said with positive
that the contract cannot be read to cover them.
As preface to addressing this issue, it is necessary to note that the grievances do not
legal issue whether a grievance arbitrator can interpret or enforce the Plan itself. The issue
for example, whether Old Kent Bank has failed to properly interpret the eligibility
the Plan. Rather, the grievances pose the issue whether Article 32 can be interpreted to
retroactive payments sought by the Union.
Articles 8 and 9 submit disputes "involving the interpretation or application of the
agreement" to arbitration where those disputes cannot be handled at earlier steps of the
procedure. There is no agreement provision which would specifically bar arbitration of
concerning the contributions set forth in Article 32. That article, on its face, incorporates
Section 401(k) plan established and maintained pursuant to the terms of the operative plan
documents." The Plan provides for a nonelective "(d)iscretionary contribution" from the
Article 32 specifies what that discretionary contribution will be. The grievances, by seeking
retroactive contribution of the amounts specified in Article 32, thus make a claim governed
face by Article 32. This must be characterized as a "dispute involving the interpretation or
application" of Article 32.
The Company's arbitrability claim states a defense to the merits of the grievance.
of the defense demands an interpretation of the language of Articles 32 and the incorporated
provisions in light of relevant bargaining history. That evaluation process is contractual and
in nature, and thus cannot be considered to state a bar to arbitration. The Union claims that
32, read in light of Article 2, extends to the Grievants a right to a retroactive Company
contribution under the Plan. The Company's defense to this claim is that the parties never in
agreed that Articles 2 and 32 could be applied in that fashion. The defense falls short of
that the cited agreement provisions cannot be read as the Union asserts, thus establishing a
contractual void on the point. Rather, the defense asserts that, in light of relevant evidence,
agreement provisions cannot persuasively be read as the Union asserts. This line of
contractual, not legal, in nature. The grievances are, under Articles 8 and 9, arbitrable.
I have adopted the Union's statement of the issue as that appropriate to the merits of
grievances. That issue questions whether the Grievants are entitled to the Plan's non-401(k)
Company contributions between March 3, 1995 and July 1, 1996. To address this contention
requires setting out the logical chain asserted by the Union to establish the entitlement. As
above, Article 32 sets out the amount of the Company's nonelective, discretionary
stating the specific amounts in the labor agreement, the parties relieved themselves of the
periodically amend the Plan to reflect negotiated changes to the contribution levels. Read
the Plan's eligibility requirements under 2.01 and 2.02 would preclude the Company
sought by the grievances. The Union contends, however, that those eligibility requirements
stand alone and must be read in light of Article 2 and relevant bargaining history.
Article 2, in the Union's view, implies that employes qualify for fringe benefits, such
pension payments, at the completion of an eight week probation period. The Union asserts
implication was made express during negotiations, as highlighted by the May 15, 1996
Against this background, the eligibility requirements of Sections 2.01 and 2.02 establish a
designed to preclude Article 32 payments to short-term employes. For an employe who
meets those requirements, the bar is temporary and the employe must be paid the Article 32
accrued between the close of the probation period and entry into the Plan. This reading of
agreement is logical and has support in bargaining history.
The Union's view is not, however, persuasive. Evidence of bargaining history
Company's reading of the contract over the Union's. The necessary preface to examination
point is to note that the agreement provisions disputed by the parties cannot be considered
unambiguous. As noted above, the Union's reading of Article 2 to establish an eligibility
on an implication from the terms of the provision. More significantly, Article 32 cannot be
considered clear and unambiguous. As the Union persuasively argues, the parties' ongoing
regarding the provision underscore this point. Nor can the relationship of Article 32 and the
documents it incorporates be considered without ambiguity. For example, Section 3.01(d)
Company contributions to the non-401(k) aspect of the Plan "discretionary." This reference
standing alone, broad enough to permit the retroactive payments sought by the Union.
stands alone and how other Plan and contract provisions affect it introduce ambiguity into
32 and its incorporation of Plan provisions.
Prior to reviewing the bargaining history, it is necessary to stress that the Union's
of Plan eligibility rests on an inference drawn from the terms of Article 2. This does not
view cannot be considered persuasive. Rather, it highlights the need for evidentiary support
view. A review of the evidence of bargaining history will not afford the Union's view the
A review of the proposals exchanged by the parties indicates the Union's view of the
eligibility for Company contributions was not made express until Thoms' letter of May 9,
The Union contends that this reflects its assumption that Article 2 set the eligibility standard,
negotiating a defined contribution plan was all that was necessary to establish that standard.
should not obscure that prior to that point, no express proposals established the Union's
While the Company cannot point to a specific proposal definitively establishing its view of
eligibility, the "Plan Highlights" set forth at the June 15, 1995 meeting set forth separate
employe and Company contributions. The parties' dispute concerning 401(k) employe
in 1995 may not directly speak to the dispute concerning non-401(k) Company contributions,
it did establish that the Company was not reading the then existing plan documents to follow
Union's view of eligibility. The plan documents submitted to the Union in February of 1996
no support for the Union's view of eligibility, yet the Union's initial challenge of them did
a specific issue regarding the impact of Article 2 on eligibility.
More significantly, the Company, from Ward's letter of May 2, 1996, consistently
clearly took the position that the provisions of the 401(a) Plan would continue except as
modified in bargaining. This position is well-rooted in the parties' bargaining history. The
proposals which preceded the tentative contract agreement in May of 1995 touched on only a
portion of the components of a 401(k) plan. It is not apparent how a 401(k) plan could be
constructed without some reliance on the predecessor 401(a) Plan. It is, however, apparent
number of the features of the 401(a) Plan were incorporated, with no apparent discussion,
As noted above, Thoms expressly stated the Union's opposing view in his letter of
1996. This set the stage for the meeting of May 15, 1996. Setting aside that meeting for the
moment, however, the parties' conduct following the May 15 meeting affords more support
Company's view of bargaining history than for the Union's. Darley's May 22, 1996 fax to
clearly stated that the Company wished to continue the 401(a) eligibility considerations into
the non-401(k) aspect of the Plan. This letter, standing alone, has no significance beyond
consistency of the Company's view, since it was not shared with the Union. Falduto's letter
29, 1996, is, however, no less clear than Darley's fax, and Ward supplied the Union with
The Union's June 12, 1996 and July 30, 1996 letters affirm the accuracy of the Plan
The least that can be said of these two letters is that they afford no basis to conclude the
expressly challenged the Company's consistently articulated view of employe eligibility for
32 payments under the non-401(k) aspect of the Plan. As a matter of bargaining history, the
reading of eligibility under Article 2 thus stands on an assumption made by the Union,
indirectly communicated to the Company. The Company's reading of eligibility under
and the Plan stands on express views consistently communicated to the Union.
Nor does evidence on the May 15, 1996 meeting afford a persuasive basis for any
conclusion. That meeting can be viewed as a stark statement of a fundamental credibility
dispute. While the credibility issues underlying that meeting are undeniable, the
scant support for viewing that meeting as the defining moment of the parties' bargaining
Rather, the meeting confirmed the conflicting assumptions brought to the meeting by the
Both the context of the meeting and the testimony concerning what was said afford no reason
discredit the views of the Union or the Company's witnesses.
The meeting took place against long-simmering disputes concerning the 401(k) and
non-401(k) aspects of the Plan. The Company heard, and agreed to a different view of
401(k) contributions; heard concerns regarding the eligibility for non-401(k) contributions;
agreed to waive grievance timelines for the point to be more fully explored by the Union.
this background, it is unremarkable that Union representatives could hear agreement to all
raised, without distinguishing between the 401(k) and the non-401(k) aspects of the
More significantly, what reliable corroborating evidence there is favors the
It is undisputed that Ward did not mention Article 2 in making the statements the Union
establish their view of eligibility for retroactive non-401(k) contributions. That the Union
made this point express prior to or during the meeting makes it easier to conclude that some
confusion existed on the point than to conclude that Ward agreed to the Union's position on
eligibility. Beyond this, the Company's position on carrying forward 401(a) Plan eligibility
non-401(k) aspects of the Plan before and after the meeting make it difficult to conclude it
abandoned this position during the meeting. That the Company's view was more clearly
the Union's before and after the meeting underscores this. That the Union did not challenge
Falduto's May 29, 1996 letter further underscores this.
Beyond this, the most complete, reliable and readable set of notes from the meeting is
Knutson's. This is not surprising since she, unlike Ward or Thoms, was not required to both
and take notes. Both Thoms' and Ward's notes show unmistakable signs of being drafted by
meeting participant. Both are sketchy to the point of being threadbare in their explanation of
covered. The handwriting in each manifests inevitable haste. Knutson's notes, to the
the detail to be expected of one who was not burdened with spokesperson duties. More
significantly, her notes confirm Thoms' notes in enough respects to make it impossible to
she drafted them to counter Thoms'. More to the point, her notes indicate the Company's
never varied from the position asserted by Ward before and after the May 15 meeting.
In sum, the Company's view of Article 32 is more firmly rooted in the language of
and Article 32 than is the Union's. Because that article is not clear and unambiguous,
bargaining history becomes relevant. That evidence establishes that the Company
clearly stated its view that 401(a) plan eligibility would carry forward into the non-401(k)
the Plan. The Union's view of eligibility rests on an inference which can
be drawn from Article 2, but is less reliably rooted in bargaining history than the
adopt the Union's view risks creating agreement through arbitration which was never made
parties in bargaining. For that reason, the grievances must be denied.
The grievances are substantively arbitrable.
The Grievants are not entitled to Company contributions to their pension plans for the
from the end of their probationary period on March 3, 1995, to their enrollment in the plan
1, 1996. The grievances are, therefore, denied.
Dated at Madison, Wisconsin, this 12th day of January, 1999.
Richard B. McLaughlin /s/
Richard B. McLaughlin, Arbitrator