BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
SMITH STEEL WORKERS D.A.L.U. 19806,
TOWER AUTOMOTIVE PRODUCTS
(Grievance of Robert J. Muente)
Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C., by Ms.
Marianne Goldstein Robbins, on behalf of the Union.
Varnum, Riddering, Schmidt & Howlett, LLP, by Mr. Richard A.
Hooker, on behalf of the Company.
The above-captioned parties, herein "Union" and "Company", are signatories to a
collective bargaining agreement providing for final and binding arbitration before a
five-person Board of Arbitration. Pursuant thereto, hearing was held in Milwaukee,
on March 26, 1998, before the undersigned and panel members John Paul Hartig and Scott
Bauer who were appointed by the Union, and Daniel G. Bender and Robert F. Trednic who
were appointed by the Company. The hearing was transcribed and both parties filed briefs
that were received by May 7, 1998. There, both parties agreed to a bifurcated hearing and
that I should retain my jurisdiction if the grievance is sustained. Thereafter, I provided my
fellow arbitration panel members with a copy of my draft Award on July 9, 1998. I
subsequently met with them in executive session on June 9, 1999, to discuss certain
relating to my proposed Award.
Based upon the entire record and the arguments
the parties, I issue the following
Since the parties were unable to jointly agree on the issue, I have framed it as
Did the Company violate Article IX, Section E, of the contract
when it placed grievant
Robert J. Muente on L2 status in March, 1993, rather than on lay-off status, if so, what is
the appropriate remedy?
The Company operates a facility in Milwaukee, Wisconsin, where it manufactures
truck frames and truck frame components. It purchased and took over said facility in 1997
from the A.O. Smith Corporation, the predecessor employer.
Grievant Muente, a Senior Shop Clerk in Department 7971, has been employed there
since August, 1964. Muente experienced recurring medical problems with his feet because
of degenerative arthritis, so much so that the Company's doctor placed restrictions in his
ability to stand, walk, and to climb ladders (Joint Exhibit 3).
Muente returned from vacation on March 1, 1993, at which time he was told by John
Ziperski, his immediate supervisor, that his job duties had changed and that he henceforth
would be required to help lift automotive frames weighing about 200 pounds. Muente
that his medical restrictions prevented him from lifting such heavy objects. Muente testified
that Ziperski then told him that he was being laid-off out of the department and out of the
plant and referred him to the Company's Manpower office which is responsible for placing
employes throughout the plant.
Supervisor Ziperski testified that Muente's job had changed by March 1, 1993,
because there was a diminished need for his clerical duties, a matter not in issue here. He
denied telling Muente on March 1, 1993, that he was being laid off.
After speaking to Ziperski, Muente went to the Manpower office where he was told
by Clinton Day to report to two departments for possible placement. Muente went there as
ordered, but he was told there were no jobs for which he was then qualified. Muente
to the Manpower office where he was released from duty and told by Day that he could
for sick leave. Muente testified: "My understanding of my status was laid-off."
In this connection, Manpower Coordinator James J. Schmidt testified that employes
who are disqualified from plant jobs because of medical disabilities or restrictions are placed
on L2 status which means "Inactive, no job found"; that said status has been used by the
Company since about 1986 or 1987; that the Union every Thursday is provided with
documents showing which employes have been placed on L2 status; that the Union in March,
1993, was given an activity report, (Company Exhibit 4), showing that Muente and two other
employes had been placed on L2 status; and that the Union has never grieved anyone's L2
On cross-examination, Schmidt who has never sat in on any contract
"You can't use the word 'layoff' [in describing Muente's status]
because that means
there's somebody with less seniority than [sic] working, and if there's people with less
seniority than [sic] working, you can't lay off on the line of seniority. So it can't be called a
Schmidt added that Muente never received the March, 1993, activity report (Company
Exhibit 4), that listed him on L2 status; that said report also referred to layoffs; that
Exhibit 3 and 4 do not refer to Muente's pension or benefits status; and that he has heard the
term "Layoff, no job found".
Employe Benefit Clerk Specialist Benita Raney, a 14-year employe, testified that an
employe on layoff loses his/her dental benefits on the date of layoff, as opposed to employes
on sick leave who retain those benefits for up to two years. She added that employes with
more than 10 years seniority who are on L2 status retain their group health and group life
insurance benefits for up to two years, as opposed to laid off employes who continue to
receive them for only up to three months. She also said that Muente had been provided
a summary plan description which spelled out this distinction (Company Exhibit 6).
On cross-examination, she acknowledged that Company Exhibit 5 only address health
benefits and that Company Exhibit 6 only refers to group life and disability benefits without
mentioning health benefits or pension. She also said that she had never heard the term
"Layoff, no job found."
Muente in January, 1995, spoke to Jannine Peterson in the Company's benefits office
who told him that he could not use the accumulated hours in his Pension Credit Bank for
retirement purposes because he was on L2 status. That, said Muente, "was the first time I
have heard that." It appears that Muente has about 4000 excess hours in the Pension Credit
Bank, thereby possibly making him eligible for a pension.
The Pension Credit Bank is provided for in the Milwaukee Industrial Pension Plan
Smith Steel Workers ("Plan") (Joint Exhibit 7), which states in pertinent part:
. . .
The purpose of the Pension Credit Bank is to provide you, if
eligible, with an opportunity
to accumulate Hours of Service in excess of 1,700 up to a maximum of 2,080 which you
in any year starting in 1981. Thus, if you earned 2,080 Hours of Service in one year, 380
Hours would be deposited in your account. Your accumulated Hours are withdrawn from
your Pension Credit Bank Account when you terminate or retire. These Hours are
the Hours in those years in which you fall short of the 1,700 Hours or 1,000 Hours
to earn a full year of Credited Service or Vesting Service, respectively, due to layoff.
The Pension Credit Bank is effective on and
after January 1, 1981. However, an account
will not be established and Hours of Service shall not begin to accumulate until the year
following the year in which the employee attains five years of seniority. Hours from the
Pension Credit Bank can only be applied to years which are the later of 1981 or the year
the employee attains five years of seniority. At the time of termination or retirement, any
unused Hours of Service in your Pension Credit Bank account are eliminated.
Said Plan is incorporated by reference in Article IX, Section E,
of the parties' contract which
"The A.O. Smith Corporation Milwaukee Industrial Plan
applicable to employees covered
by the Agreement is set forth in a separate agreement between the Company and Union."
Muente subsequently contacted the Union after he spoke to Peterson and the instant
grievance was filed on February 24, 1995. The Company in December, 1996, notified
Muente that he was being laid-off at that time because his seniority no longer entitled him to
Muente acknowledged that he received a September 12, 1994 letter (Company Exhibit
1), from the Company stating that he was on "disability leave"; that he has received Social
Security total and permanent disability benefits since August, 1993; that he received health,
dental and life insurance benefits for two years following March 1, 1993;
that he in March, 1995, was granted total and permanent disability benefits under the
Company's life insurance policy; and that he has not paid any Union dues since March 1,
1993, which is a requirement that laid-off employes must meet.
Earlier, Muente in 1993 applied for worker's compensation benefits on the ground
that he injured himself on the job, but he was turned down. The Company in said
asserted that Muente's injuries were not job-related and that he had been laid off.
Administrative Law Judge Neil Krueger on April 12, 1996, denied Muente's worker's
compensation claim, as he found: "When [Muente] returned from vacation, the applicant
told that due to job restructuring he was unable to return to his old job and was laid off."
(page 2). Muente appealed said denial to Wisconsin's Labor and Industry Review
Commission. The Company in said appeal filed a Memorandum In Opposition to Petition
for Review on May 21, 1996, which stated, inter
alia: "From 1990 until his layoff in March,
1993, Applicant's job position was as a clerk." (p. 2). The Commission on July 12, 1996,
denied Muente's appeal. Muente appealed said denial to the Waukesha County Circuit
Court. The Company on February 19, 1997, filed a brief in said proceeding which stated,
inter alia: "Muente went on vacation in February
of 1993. Upon his return, Muente was
informed that due to corporate restructuring, he was laid off." (page two). The Circuit
on June 11, 1997, dismissed Muente's appeal.
Union Grievance Chair William Krueger testified that he "in the late '80's or early
'90's" asked Manpower Director Trudy Fredenberg what L2 referred to and that she
answered, "Laid-off, no job found." Asked if there were any discrepancy between "laid-off"
and "L2 status", Krueger replied: "I thought they were both layoff."
On cross-examination, Krueger was unable to recall the specific details that caused
him to question Fredenberg. He initially agreed that employes on lay-off status would lose
their dental insurance, health insurance, and life insurance earlier than employes on L2 status
and that the Union receives a personnel activity report every week from the Company. On
redirect examination, Krueger backed off this testimony by stating that he had not studied
whether laid-off employes lose their health, life, and dental benefits much sooner than
employes on L2 status.
Subsequent to the hearing, Manpower Director Fredenberg participated in an April
3, 1998, telephone conference call wherein she denied ever telling Krueger that L2 status
meant "Laid-off, no job found."
POSITIONS OF THE PARTIES
The Union argues that the Company violated the contract when it refused to
Muente's post-March 1, 1993, status as a lay-off and when it, instead, placed him on L2
status, thereby preventing him from using his excess accumulated hours under the Pension
Credit Bank for the purpose of qualifying for a pension. The Union thus contends that
Muente was laid-off under the ordinary definition of that term; that the Company itself in
Muente's worker's compensation proceeding admitted that he was laid-off; that the "term L-2
is used nowhere in the contract"; that Fredenburg told Krueger that L-2 status meant
"Laid-off, no jobs found"; and that in "reality, L-2 status is just one form of a layoff." As a
the Union requests an interim ruling finding that the Company violated the contract when it
"failed to recognize Muente's lay-off status. . ."
The Company, in turn, contends that, "By traditional definition and common sense,
grievant's release should be deemed a medical leave of absence" because of "the parties'
clear, consistent and unequivocal past practice" and that waiver and estoppel "prevent
grievant and the Union from successfully arguing grievant was laid off on March 1, 1993."
The Company also makes clear that its actions herein in not raising a timeliness objection
should not be taken as a waiver of any future timeliness objections.
This is a difficult issue to resolve for a number of reasons.
For starters, the term "L-2" does not appear either in the parties' collective
agreement or in the Pension Plan. As a result, this case turns on how this term has been
applied outside the face of the contract.
Secondly, both parties present reasonable but competing - arguments as to
Muente was, or was not, on "lay-off". The term "lay-off" is critical because, as related
the Pension Plan that is incorporated by reference in Article IX, Section 9, of the contract,
states in pertinent part:
"These hours (in the Pension Credit Bank) are added to the Hours
in those years in which
you fall short of the 1,700 Hours or 1,000 Hours necessary to earn a full year of Credited
Service or Vesting Service, respectively, due to layoff."
The Union asserts that the term "layoff" is defined in Webster's Seventh New
Dictionary as: "the act of laying off an employee or a workforce", or "a period of
or idleness", or "to cease to employ (a worker), usually temporarily." Here, Muente's
absence from work after March 1, 1993, can certainly be deemed "a period of inactivity or
idleness" that marked the temporary cessation of his employment.
On the other hand, the Company points out that Muente was told in September, 1994,
that he was on disability leave status, (Company Exhibit 1), and that he was not laid-off
because "lay-off" has been defined to "include any suspension from employment arising out
of a reduction in the workforce. . ." See How Arbitration Works, Elkouri
and Elkouri, p. 770
(BNA, 5th Ed., 1997). Since there was no reduction in the work force
here, the Company
argues that Muente was never laid-off, but rather, was placed on a medical leave of absence.
Both of these definitions are reasonable, which is why it is difficult to now ascertain
Muente's precise legal status after March 1, 1993.
However, the Company did not contest Muente's unemployment compensation claim
at that time, thereby indicating that the Company viewed Muente's status as some sort of
layoff since unemployment compensation is usually given to laid-off employes. Moreover,
the Union makes a plausible argument that "L-2 status is just one form of lay-off. An
employe in L-2 status is laid-off because of medical limitations and their seniority status
there can be no placement if there is no job with the employe's limitations."
The Company asserts, though, through the combined testimony of Schmidt and
Fredenburg, that a well-developed past practice has arisen to the effect that L-2 does
to layoff, but rather, to "no job found." Grievance Chair Krueger, however, flatly denied
this was so, as he claimed that Fredenburg once told him that L-2 meant "Laid-off, no job
found." While both parties assert that the testimony of their respective witnesses must be
credited on this score, I conclude that that is simply impossible to do, as the testimony of
both Union and Company witnesses on this issue appears plausible.
The Company's case, however, is undercut by the fact that Employe Benefits Clerk
Raney testified that she never heard of the term "L-2". Given her expertise as a benefits
expert, one would think that she would be aware of such an important term if it were
commonly used since one's L-2 status is determinative of how long certain benefits will be
Moreover, there is no evidence showing that Muente himself knew what the L-2
designation meant. To the contrary, Muente said: "My understanding of my status was
Muente's understanding certainly was justified because the Company itself
in his worker's compensation case that he had been laid-off. Thus, the Company's May 21,
1996, brief stated: "From 1990 until his layoff in March, 1993, applicant's job
as a clerk." (page 2). (Emphasis added). Its subsequent February 11, 1997, brief stated:
"Muente went on vacation in February of 1993. Upon his return, Muente was informed that
due to corporate restructuring, he was laid off." (page 2). (Emphasis added).
The Company asserts "its worker's compensation counsel was simply and obviously
mistaken." The Company offers no explanation, however, as to how its own counsel could
have made that critical mistake. In addition, I credit Muente's testimony that he believed he
was laid-off on March 1, 1993, since there is no evidence that the Company then ever clearly
told him that he was not being laid off.
The Company's failure to clearly communicate that message to Muente at that time
is the key to this case. For since the issue herein turns on whether Muente can use his bank
of excess hours to qualify for a pension after working for 28 years, fundamental fairness
dictates that Muente should have been fully informed that his L-2 status prevented him from
qualifying for his pension unless his status changed. Had he received such information,
Muente and the Union may have done something to protect his possible pension rights.
the Company bore the burden of providing Muente with that information it after all
promulgated and put him on L-2 status it, rather than him, must bear the cost of
confusion has arisen over this issue.
The Company points out that Muente for nearly two years after March 1, 1993,
continued to receive health and dental benefits and it thus argues: "A party is prevented
claiming entitlement by its own knowing inaction and acceptance of status, coupled with
reliance by the other contracting party" and that, moreover, employes who accept such
benefits have "unilaterally waived or relinquished their claimed remedy for the breach." The
Company thus cites City of DePere, 86 LA 733, 734 (1986), a prior decision of mine where
I ruled to that effect.
DePere is distinguishable. It centered on an express oral agreement
a city and a union representative over whether sick leave would be paid under certain
circumstances and whether said agreement which benefited employes for nearly
seven full years should be negated. I there found that the union "is estopped
attacking the validity of the very bargain which its own spokesperson initiated and struck."
Id. at 734.
Here, by contrast, there is no clearly expressed bargain to the effect that Muente
agreed to give up his right to use the excess hours in the Pension Credit Bank in exchange
receiving insurance benefits for two years, rather than the several months that he otherwise
may have received. Instead, this case turns on whether Muente is now estopped from using
the Pension Credit Bank because there was an implicit bargain to this effect.
The evidence shows that there is not one single document that provided Muente with
notice to that effect since: (1), Muente was not told by the Company until 1995 that he had
been on L-2 status; (2), Muente was never provided with the March, 1993, weekly data sheet
which was provided to the Union and which showed his L-2 status (Company Exhibits 3 and
4); and (3), the insurance plan descriptions provided to him (Company Exhibits 5 and 6), did
not explain that receiving said benefits made him ineligible to use his Pension Credit Bank
an issue the Union disputes in any event. In other words, there is insufficient proof that
Muente knowingly relinquished his right to use the excess hours in his Pension Credit Bank
so that he could qualify for a pension.
Since Wisconsin law defines a waiver as the "voluntary relinquishment of a known
legal right", he did not waive his right to use the Pension Credit Bank. See Bank of Sun
Prairie v. Opstein, 273 N.W. 279, 86 Wis. 2d 669 (1979); Faust v. Ladysmith-Hawkins
School Systems, Joint Dist. No. 1, Bd. Of Ed. Of Ladysmith, 277 N.W. 2d 303, 88 Wis.
2d 525, opinion reconsidered, 281 N.W. 2d. 611, 88 Wis. 2d. 525. That also is what
distinguishes this case from the other cases cited by the Company wherein arbitrators have
found waivers, i.e. Judson Parking, Inc., 84 LA 210 (Dworkin, 1985); Colonial Baking
Co., 32 LA 193 (Piercey, 1959); Chrysler Corp., 6 LA 389 (Wolff, 1947).
The record does show that the Union failed to charge Muente the $1 per month union
dues that laid-off employes must pay for the Union-sponsored death benefit coverages and
that, furthermore, the Company told Muente in September, 1994, that he was in a disability
leave status. While supporting the Company's case, these facts are insufficient to constitute
a waiver because: (1), it is possible that the Union erred in not charging him $1 a month in
union dues; and (2), it was not unreasonable for Muente to have concluded that he was on
lay-off status because of his disability.
The Company therefore erred in placing Muente on L-2 status and thereby preventing
him from using the excess hours in his Pension Credit Bank. In addition, I find that there is
no merit to the Company's claim that such a ruling should be applied prospectively and that
the requested relief herein should be denied. For while the Company has acted in good faith
throughout this matter and while Muente himself perhaps should have been more diligent in
ascertaining his precise status, those considerations are insufficient to strip Muente of the
hard-earned pension to which he may be entitled.
Lastly, the Company states that issues relating to Muente's "entitlement and his
obligation to repay the Plans should he be successful here need not be dealt with. . . by the
[arbitration] Board. . ." I agree, which is why I have not done so.
In light of the above, it is my
1. That the Company violated Article IX, Section E, of the contract when it
placed grievant Robert J. Muente on L-2 status in March, 1993, rather than on lay-off status.
2. That Muente is entitled to apply to use the excess hours in the Pension Credit
Bank for the purpose of determining whether he is entitled to a pension.
3. That to resolve any questions that may subsequently arise in this matter, I shall
retain my jurisdiction indefinitely pursuant to the agreement of the parties.
Dated at the City of Madison, Wisconsin this 22nd day of July,
Amedeo Greco, Arbitrator