BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
SMITH STEEL WORKERS
D.A.L.U. 19806, AFL-CIO
PRODUCTS COMPANY, INC.
(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 panel issued its Interim Award in this matter on July 22,
1999, which found, inter alia:
. . .
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.
. . .
Jurisdiction was retained pursuant to the express agreement of both
parties at the initial March 26, 1998, arbitration hearing which
gave rise to the Interim Award.
There, both parties also agreed that this proceeding should be
bifurcated into two parts: the first part would center on whether
the Company violated the contract by placing grievant Robert Muente
on L-2 rather than layoff status, and the second part would center
on Muente's entitlement to a pension service credit.
Attorney Marianne Goldstein Robbins on behalf of the Union
thus stated: "a second issue would be addressed as to Mr. Muente's
entitlement to a pension service credit, credit hours under the
pension plan, which the parties agree is an issue that the
arbitrator can decide." She added: "the Company's position is that
after the after there is an award on both issues, that Mr. Muente
would actually have to apply to the Pension Board for a pension and
the Board would have to make a recommendation on it. It is the
Union's understanding that the Pension Board would be bound by the
arbitration decisions in reaching its determination."
Attorney Richard A. Hooker on behalf of the Company then
. . .
A couple of things. The pension plan administrator would
clearly be bound by the arbitrable interpretation of the pension
plan provided it was proper in all other respects.
The second aspect, in all fairness I should
mention, is that
part of this agreement with the Union, the Company has agreed for
purposes of this case only to waive its jurisdictional objection to
consideration subsequently of the pension plan issue on the basis
of an argument that it hasn't been appropriately raised in this
case. In other words, we would agree to arbitrate it nonetheless.
. . .
Resolution of the grievance in Muente's favor would
improve the amount of his pension. If he, in fact, is entitled to
the "30 and out" pension he seeks which entitles an employee to
retire after 30 years irregardless of his age he would be
eligible to retire with a monthly pension of about $1,280. If he
is ineligible for such a pension, he has two choices: He can take
early retirement at age 57 (he now is 54), at which time he will
receive about $370 a month. Or, he can wait until he is age 62, at
which time he will receive about $588 a month.
After the Interim Award was issued, the Union stated that it
wanted to proceed with the second part of the proceeding and
hearing was held in Milwaukee, Wisconsin, on November 8, 2000,
before the undersigned and panel members Edgar Douglas, Jr., and
Scott Bauer who were appointed by the Union, and Robert F. Trednic
and Jeannie M. Daniels who were appointed by the Company.
The parties thereafter filed briefs and the Union filed a
reply brief that was received on January 22, 2001.
Based upon the entire record and the arguments of the parties,
I issue the following Supplemental Arbitration Award.
Since the parties were unable to jointly agree on the issues,
I have framed them as follows:
1. Is the grievance arbitrable?
2. If so, whether grievant Robert J.
Muente is entitled to
use up all of the hours of his pension bank for a two-year period
after he was laid off in March, 1993, and, if so, what is the
The facts surrounding Muente's grievance are set out in the
Interim Award and thus need not be repeated. It suffices here to
relate that Muente was hired in August, 1964; that, as found in the
Interim Award, he was laid off on March 1, 1993, rather than being
placed on disability leave as contended by the Company; and that he
then had a total of 4,092 hours in his pension credit bank which,
if applied over the next two years following his March, 1993
layoff, would enable him to retire on a "30 and out" pension
irregardless of his age. Conversely, if he is allowed to use his
pension bank hours for only one year as the Company contends, he
then only will have 29 years of eligibility, thereby making him
ineligible for a "30 and out" pension.
The Company purchased and took over the assets of A.O. Smith's
Automotive Product Company in 1997, and the Company and A.O. Smith
on January 27, 1997, entered into an Asset Purchase Agreement
("Agreement"), (Joint Exhibit 8), which stated, inter
the Company would assume all liabilities relating to "any
employment action or practice in connection with persons previously
employed or seeking to be employed. . ." based upon "breach of
employment or labor contract. . ." Said Agreement also stated that
A.O. Smith would be responsible for handling the "question of
pension eligibility by leaving all benefits based on service prior
to April, 1997. . ." and that the Company would be responsible for
"all benefits based upon service after 1997. . ." The Agreement
further stated that the Company would be responsible for certain
listed grievances, including Muente's (there listed as 1G-C80-95
and described as "Layoff vs. inactive status".)
Various witnesses testified at the November 8, 2000,
Retired A.O. Smith employee Robert J. French served on the
Union's bargaining team in the 1983 contract negotiations with A.O.
Smith involving the then-existing pension plan. He testified that
the Union then proposed to eliminate the 1,700 hour requirement
needed to qualify for a full year of credited pension service; that
A.O. Smith rejected that proposal; that the Union then proposed a
1,000 hour requirement; that A.O. Smith rejected that proposal and
countered with a proposal to give credit for periods of layoff that
employees might incur after 1981 by allowing them to bank any hours
worked in excess of 1,700 to a maximum of 2,080; and that the Union
then agreed to A.O. Smith's proposal. Before then, there was no
pension credit bank.
French added that A.O. Smith's representatives in the 1983
negotiations never said that the bank could only be used for up to
one year after layoff and that no cutoff was ever discussed. He
also said that the Union's representatives then believed employees
"could apply whatever hours were in the bank to fill up the void of
1,700 hours for any particular year, and that they could use that
until the bank was exhausted." He also testified that the 1983
negotiations over the pension credit bank took place within the
larger context of the parties' negotiations over a successor
collective bargaining agreement. That is why the "19806 Contract
Report" at p. 3, (Union Exhibit 10), refers to the pension credit
bank agreed to in those negotiations, along with the other items
agreed to in the 1983 contract negotiations (including other
changes in the pension plan). That also is why bargaining unit
members were asked to vote on the tentative contract at August 9
and August 10, 1983, membership meetings.
On cross-examination, French acknowledged that there was no
signature line on the 1980 Plan document (Union Exhibit 9), or any
Plan document thereafter.
Union committeeman Dale Scholl also sat in on the 1983
negotiations. He agreed with French's testimony of what then took
place regarding the pension credit bank and said there was no
discussion of how long employees could use the pension credit bank
prior to retirement. He also said that there never was any such
discussion in subsequent contract negotiations and that the Union
as of March, 1992, had never signed off on any more changes to the
On cross-examination, Scholl testified that there were
negotiated changes in the pension plan in 1991 which were
apparently mandated under ERISA, and that those changes were
subsequently implemented. He also said there may have been other
changes at that time.
Grievance Chair John P. Hartig, a member of the Union's
bargaining team since 1992, testified that the parties since 1992
never have negotiated a limitation on the use of the pension credit
bank. He also said that former employee Annie Day was laid off on
October 22, 1993, for about 20 months before she was recalled in
May, 1995, and that she received credit for that time from her
pension credit bank. He also said former employee Eddie Grady
received 2.3 years' credit from the pension credit bank when he was
laid off, and that the Company's records failed to show any
employee other than Muente who had been denied a pension because
they had been on layoff more than a year just prior to retirement.
He also said that as of March, 1995, there was no signed Pension
Plan document (Company Exhibit 7), and that 1988 was the last
On cross-examination, he testified that Day was not on layoff
or sick leave status before she retired; that Day was allowed to
use her pension credit bank for the time of her prior 1993-1995
layoff; that a summary plan document was distributed to employees
in 1993 or 1994; and that he never asked A.O. Smith's benefits
department for any information relating to retirement.
Grievant Muente, who is 54 years old, testified that he
contacted A.O. Smith's Employee Benefits Department in 1995 and
spoke to Jannine Peterson who told him he was not eligible for a
"30 and out" pension because he was on sick leave status; that he
filed a written appeal (Union Exhibit 14), and that his appeal was
denied in a March 13, 1995, letter that stated, inter
"Therefore, if you believe your classification is incorrect, you
should appeal the determination through the appeal process
established under the labor agreement." (Union Exhibit 15).
Muente then took no further action under the A.O. Smith plan
because of his pending grievance here. He thus did not contact
A.O. Smith's Benefits Department until after the panel issued its
Interim Award when he was told to contact A.O. Smith, which he did.
Thereafter, he put his request in writing on April 3, 1999, and
A.O. Smith by letter dated April 27, 1999, informed him that he was
ineligible for a "30 and out pension" because his change in L-2
status to laid-off "will allow you to use hours in your pension
credit bank to earn an additional year of credited service for a
total of 29 years."
On cross-examination, Muente acknowledged that he has been
receiving Social Security disability benefits since August, 1993,
and said he did not make a claim under the pension plan because:
"The plan limits you in making that application within one year of
being off work. That year passed, and I'm no longer eligible for
it." He acknowledged that he could have applied in 1993, but that
he did not do so because: "I didn't plan on being permanently
disabled." Asked why he did not use the pension plan's appeal
procedure after A.O. Smith denied him a pension, he answered:
"Because previously I was directed to use the grievance procedure.
I'm right in the middle of a grievance." He added: "I've been
going through this for six years. It's back and forth. Nobody
wants to take responsibility for anything." Muente acknowledged
that he does not have any credit under the Company's pension plan.
Union President Duane McConville on or about March 20, 1997,
received a letter from the Company (Union Exhibit 17), which stated
that the Company was responsible for a number of grievances,
including Muente's. He testified that the Company and A.O. Smith
have disagreed between themselves as to which party is responsible
for certain pension benefits.
On cross-examination, McConville acknowledged that Muente does
not have one hour of active service with the Company, and that if
a person's service was entirely before April of 1997, the benefit
paid on that service would be entirely A.O. Smith's responsibility.
Benita Raney processes pension benefits for the Company's
salaried and hourly employees. She testified about a conversation
she had with Muente on March 31, 1999, in which she told him that
the Company was not responsible for paying him a pension "because
he has not worked since 4-18-97. . ." and because he thus would
have to contact A.O. Smith direct. . ." (Company Exhibit 13).
On cross-examination, she said that she has been processing
pension benefits for about the last five years and that her
knowledge of A.O. Smith's pension policies has been gained since
that time. She added that Muente has 4,092 hours in his pension
credit bank; that he would have 30 years of credited service if he
were allowed to use all of the hours in his bank; that Muente as of
March 1, 1994, ceased to be an employee under the pension plan;
that there are two separate pension plans; and that he is covered
under Plan II because he was hired after 1955. She also stated
that an employee is eligible for a "30 and out" pension if he/she
has "30 or more years of credited service"; that Muente is eligible
for a deferred vested benefit under Plan 2 because Section 2-6
therein has a different definition of "Employee"; and that Muente
therefore would receive lower monthly payments under that
Asked whether the word "employee" means "different things at
different times in this document", she answered: "There are
specific definitions of employee under certain sections of the
Plan." She then referred to Section 3.3 of Plan 2 which deals with
deferred vested benefits, but later acknowledged that Section 2.6
does not define eligibility for retirement.
POSITIONS OF THE PARTIES
The Union contends that the "arbitration panel has
jurisdiction to resolve this dispute"; that the panel also "has the
requisite personnel jurisdiction to decide this grievance"; that
the present dispute is "ripe for adjudication"; that Muente is
entitled to use up all of the hours in his pension credit bank "to
obtain service credit during his layoff, until the bank is
exhausted"; and that a decision to deny benefits here must be
reviewed under a de novo standard. As a remedy,
the Union asks
that Muente be allowed to utilize his pension credit bank until his
bank of 4,092 hours is exhausted and that those credits be
transferred so that he becomes eligible for a "30 and out" pension;
that he be made whole for all losses suffered; and that the panel
retain its jurisdiction "to resolve any disputes concerning
application. . ." of the award.
The Company, in turn, contends that "the Arbitrator has no
jurisdiction to adjudicate grievant's rights under the A.O. Smith
Plan because neither A.O. Smith nor the Plan are parties to this
proceeding; because Muente's only recourse is through the Plan and
not the collective bargaining agreement; that the dispute is not
ripe because Muente "has taken no steps to appeal from the
response. . ." he got from A.O. Smith; that Muente is not entitled
to a "30 and out" pension because the Plan expressly states that a
laid-off employee after a year no longer is an eligible employee
under that part of the Plan; and that the proper standard of review
here is whether A.O. Smith's initial denial of Muente's "30 and
out" pension is "arbitrary and capricious".
The first issue that must be decided here is whether the
grievance is arbitrable.
As to that, and as related above at pp. 2-3, Attorney Hooker
and Attorney Robbins both agreed at the initial March 26, 1998,
arbitration hearing that this matter should be bifurcated and that
the second phase would center on Muente's eligibility for pension
service credits. Moreover, Attorney Hooker then agreed "we would
agree to arbitrate it nonetheless" even though, in the Company's
view, the grievance had not been properly processed. The parties'
joint agreement there as to how to proceed here should answer this
But, even if there were no such agreement, one cardinal fact
stands out relating to whether the grievance is arbitrable: the Union and A.O. Smith
in 1983 expressly negotiated over the
pension credit bank which is the focus of this dispute.
Thus, French testified without contradiction that A.O. Smith's
representatives then raised the issue of a pension credit bank
after they had rejected two Union proposals aimed at lowering the
amount of credited time needed for eligibility purposes. In
addition, both French and Scholl testified without contradiction
that A.O. Smith's representatives never claimed that the bank only
could be used for up to 12 months.
The parties on September 2, 1983, therefore executed a
document entitled "A.O. Smith Corporation Milwaukee Industrial
Pension Plan (Smith Steel Workers) Agreement" which stated, inter
alia, that A.O. Smith would not amend the Plan "except as may be
required by the Internal Revenue Service. . ." or ERISA and which
went on to state at page 11:
. . .
Pension Credit Bank: An account in which the
accumulate Hours of Service in excess of 1,700 but not more than
2,080 hours for each calendar year commencing on or after January
1, 1981; provided, however, that such account shall not be
established and Hours of Service shall not begin to accumulate
until the following year in which such Employee attains five years
of seniority, as shown on the records of the Company.
. . .
Said pension credit bank was subsequently referenced in the
1988 Plan and it also was referenced in the 1992 Plan (Company
Exhibit 7), which states:
. . .
(vii) At the time of retirement or termination an
shall be eligible to receive additional Credited Service from
the Employee's Pension Credit Bank for any periods of layoff,
commencing with the later of Plan Year 1981 or the Plan Year
following the year in which the Employee attained five years
of seniority (as shown on the records of the Company). Hours
from the Pension Credit Bank Service subaccount will
automatically be transferred to any year in which the Employee
is credited with less than 1,700 Hours of Service on account
of layoff. The transfer will commence with the later of Plan
Year 1981 or the Plan Year following the completion of five
years of seniority and proceed year by year until the year of
termination or retirement or, if earlier, until the amount of
Hours of Service in the Pension Credit Bank Service subaccount
is exhausted. The Hour of Service transferred for any year
will be the minimum number of Hours necessary to maximize the
Employee's Credited Service. The unused portion of an
Employee's Pension Credit Bank Service subaccount shall be
eliminated after the required transfer to all applicable Plan
. . .
Article IX, Section E, of the parties' current collective
bargaining agreement refers to the pension plan by stating: "The
A.O. Smith Corporation Milwaukee Industrial Pension Plan applicable
to employees covered by this agreement is set forth in a separate
agreement between the Company and the Union."
All this goes to the guts of this case because it shows that
the Union and A.O. Smith in 1983 negotiated over the pension credit
bank; that the end product represented the fruits of their
collective bargaining efforts; and that their agreement was
referenced in their collective bargaining agreement. Moreover,
those pension credit bank negotiations took place within the larger
context of the parties' negotiations for a successor contract which
included other changes in the pension plan. Thereafter, all of
those changes, including the pension credit bank proviso, were
voted upon at the Union's membership meetings. (See Union Exhibit
10 which reports all those negotiated changes to the Union's
There thus was a direct connection between the pension credit
bank and the collective bargaining agreement that then was being
negotiated. Accordingly, and because neither the collective
bargaining agreement nor the pension plan precludes arbitration
over such a dispute, this matter is arbitrable under Article VII of
the contract which states: "If the Union or any employee believes
that a justifiable request or complaint exists, they shall bring it
to the attention of the appropriate immediate supervisor."
Moreover, while the Company asserts otherwise, it is
unnecessary to have either A.O. Smith or the Plan administrator as
necessary parties, as the grievance only goes to whether the terms
of the 1983 bargained-for pension credit bank are being violated.
In addition, it does not necessarily follow that the Plan's
administrator would not adhere to whatever decision is reached
here. To the contrary, Attorney Robbins at the initial March 26,
1998, hearing stated: "It is the Union's understanding that the
Pension Board would be bound by the arbitration decisions in
reaching its determination." Attorney Hooker echoed that
understanding by stating: "The pension plan administrator would
clearly be bound by the arbitrable interpretation of the pension
plan, provided it was proper in all other respects." Given the
parties' confidence that the Plan administrator will heed the
ruling here, there simply is no need for him/her to be a necessary
party at this point.
It also is unnecessary to here decide whether the Company or
A.O. Smith is responsible for paying Muente's pension, as that is
apparently a matter of dispute between them as evidenced by a July
26, 2000, letter from A.O. Smith's Associate General Counsel
Kenneth J. Maciolek to Attorney Hooker (Union Exhibit 18), wherein
he stated, inter alia:
. . .
"any additional liability that the A.O. Smith
incurs because of the Muente arbitration is a labor liability under
Section 1-4 of the Asset Purchase Agreement between Tower
Automotive Inc. and A.O. Smith. Tower has assumed this liability
and A.O. Smith will expect full indemnity for any losses related to
this matter as provided in Section 9.3(b)(iii) of the Agreement."
. . .
Any disagreement between the Company and A.O. Smith over which
party is responsible for Muente's pension thus must be resolved in
The Company's reliance on certain court cases involving res
judicata and collateral estoppel are thus inapposite since I need
not decide what effect, if any, the Award will have on subsequent
events and on other parties. See Scholl v. Lundberg, 178 Wis. 2d
259, 504 N.W. 2d 115 (Wis. App. 1993); Industrial Workers v. Kroger
& Co., 900 F.2d 944 (6th Cir., 1990); Northern States Power Co. v.
Bugher, 189 Wis. 2d 541, 525 N.W. 2d 723 (Wis. 1995); Warm Springs
Lumber Co. Inc., 181 NLRB 600 (1970).
The Company also cites several cases in support of its claim
that the Plan's appeal procedure represents "the exclusive
mechanism for adjudication of those rights." See IAM, District 10
v. Waukesha Engine Div., Dresser Industries, Inc., 17 F.3d 196 (7th
Cir., 1994); Printing Specialties, Local 680, v. Nabisco Brands,
Inc., 833 F.2d 102 (7th Cir., 1987).
In IAM, supra, the Court ruled that a grievance involving a
group health plan and whether a person had to be precertified was
not arbitrable because the language of the "CBA and the Plan
reveals that Waukesha and IAM did not intend to subject
determinations of medical necessity to arbitration." Id., at 198.
There, the contract stated that the arbitrator was "limited to the
construction and application of the terms of this Agreement, as
applied to the specific grievance presented for arbitration." The
contract's only reference to the group health plan stated that the
employer would continue to provide coverage "as specified in the
Summary Plan Booklet" which, in turn, stated that no medical
expense benefits would be paid for "Charges for services and
supplies that are not medically necessary, as determined by Aetna."
Id., at 198. The Court found that coverage was always available
and that the administrator "simply denied. . . the request for
precertification", thereby not implicating any terms of the
contract. The Court distinguished another case, Air Line Pilots
Ass'n Int'l v. Delta Air Lines, Inc., 863 F.2d 87 (D.C. Cir. 1988),
cert denied, 493 U.S. 821 (1989), on the ground
that it involved
"the overall eligibility of a pilot for disability benefits,
whereas here the dispute concerns one specific claim by an eligible
plan beneficiary." Id., at 199.
Here, by contrast, grievances are not "limited to the
construction and application of the terms of this Agreement. . ."
as they were in IAM. Rather, and as related above, Article VII of
the contract here allows for a broader reach by stating: "If the
Union or any employee believes that a justifiable request or
complaint exists, they shall bring it to the attention of the
appropriate immediate supervisor." IAM is also distinguishable
because the Court there found that there was "one specific claim by
an eligible plan beneficiary" whereas the grievance here turns on
Muente's overall eligibility for a "30 and out" pension a matter
that also can affect other laid-off employees who want to use up
all of the hours of their pension credit bank for more than one
year. Hence, given its broader implications, Muente's grievance is
hardly fact-specific, as it raises the broader question of whether
the terms of the 1983 agreement on the pension credit bank are
being violated not only to his own individual situation, but also
to any other similarly-situated laid off employees who need to use
their pension credit bank for more than a year in order to qualify
for a pension.
In Printing Specialties, Local 680, supra, the Court ruled
that a grievance seeking early retirement benefits under the
employer's pension plan was not arbitrable because a "wealth of
forceful evidence. . ." showed that there was only a "passing
reference to the Pension Plan. . ." in the contract; that there was
no "clear relationship between the Pension Plan and . . ." the
contract; and that the employer there expressly rejected the
union's attempt to bargain over the pension plan that had been
unilaterally established. Id. at 104-105. Thus, the Court found
that "The Pension Plan was not established through collective
bargaining with this Union. . ." Id. at 105. The Court added,
however, that it "might reach a different result if Nabisco and the
Union had explicitly bargained over the terms of the Pension Plan
and made their agreement a part of the collective bargaining
agreement." Id., at 105.
Here of course, and as established by French and Scholl's
undisputed testimony, the Union and A.O. Smith did bargain over the
pension credit bank back in 1983. Moreover, that agreement became
part of the collective bargaining agreement since the Union's
membership voted on that very issue when it ratified the overall
contract in August, 1983. Hence, the facts here are the very
opposite of the facts in Printing Specialties, Local 680, Supra. as
the Court's dicta there indicates that it would reach a contrary
result here given the "clear relationship" between the pension
credit bank and the parties' 1983 collective bargaining agreement.
The cases relied upon by the Company also are distinguishable
because both parties here agreed at the original March 26, 1998,
hearing to resolve this dispute in this forum. See Ladish Co.
Inc., v. IAM Local 1862, 966 F.2d 250, at 254, citing Jones Dairy
Farm v. Local No. P-1236, 760 F.2d. 173, 175. (7th Cir. 1985),
(cert denied, 474 U.S., 845, 1985), which states:
"if a party
voluntarily and unreservedly submits an issue to arbitration he
cannot later argue that the arbitrator has no authority to resolve
it." The Court in Ladish also cited United Independent Flight
Officers, Inc., v. United Airlines, Inc., 756 F.2d. 1274 (7th Cir.,
1985), to state: "that an employer that acts in these dual roles
does not breach any
fiduciary duty by agreeing during bargaining to a certain
commitment, and then administering the plan in accordance with the
terms of the final agreement." Ibid.
In addition, the grievance here involves an issue of general
application which can affect other bargaining unit employees who
may be laid off for more than a year - which is unlike the
situations cited by the Company where the disputes were fact-specific and centered on
whether particular employees could receive
benefits based upon their individual circumstances. This general
issue therefore can be resolved through the grievance arbitration
procedure because that is the very procedure the parties have
agreed to follow in determining whether negotiated benefits are
being improperly withhheld. See Gulf & Western Mfg. Co., v.
Steelworkers 128, LRRM 2330, (D.N.J. 1988), where the Court ruled
that a pension dispute was arbitrable because the parties bargained
over pension benefits and because the administrator in that plan
only addressed issues relating to "an individual's benefits under
the plan,", as opposed to addressing questions involving "an entire
group of employees. . ." who seek resolution of a question
involving "general entitlement to pension benefits." Id., at 2335-2336.
That is precisely the situation here because this dispute can
cover all laid-off employees who want to use up all of the hours in
their pension credit bank if they are laid off for more than a
year. In this connection, other courts have ruled that a pension
dispute was arbitrable because it involved a negotiated contractual
provision. See Local 369, Utility Workers v. Boston Edison Co.,
752 F.2d (1st Cir. 1984); Ladish, supra, at 966 F.2d. 250; United
Steelworkers of America v. Titan Tire Co., 204 F.3d 858 (8th Cir.
2000); AIW Local 232 v. Briggs and Stratton Corp., 837 F.2d. 782
(7th Cir. 1988).
As for the Company's claim that this matter is not "ripe", the
record shows that:
Muente lost his job when he was placed on L-2 status in March,
Muente first learned that he could not use
the hours in his
pension credit bank because of his L-2 status in January, 1995.
Muente was told by an A.O. Smith
representative that he was not
eligible for a "30 and out pension" and that he would have to file
a grievance under the labor contract in 1995.
After the Interim Award was issued,
Muente again contacted A.O.
Smith and was told that he still was ineligible for a "30 and out"
pension in April, 1999.
Given the extraordinary amount of time that already has
since Muente was first told in 1995 that he was ineligible for such
a pension and that he would have to use the contractual grievance
procedure, and given that this issue can impact other retirees who
not have the luxury of waiting six years for a resolution of their
pension eligibility, I find that this issue is, indeed, "ripe".
There thus is no merit to the Company's contrary assertion that his
"entitlement under the A.O. Smith Plan is not ripe for
determination under any circumstances" because Muente did not
appeal A.O. Smith's initial denial of his benefit claim (Emphasis
Turning now to the merits of Muente's grievance, the Company
asserts that Muente is not entitled to use more than one year's
worth of banked pension credits because the term "Employee" in
Section 1.1(i) of the Plan II (Company Exhibit 7), is defined as
. . .
Employee: Any person on the active hourly
employment roll of
the Company at its Milwaukee Works who is included in the
collective bargaining unit represented by Smith Steel Workers and
whose service date with the Company is on or after January 1, 1955.
In addition, for purposes of this Plan, an Employee not actively at
work because of approved personal leave, sick leave or layoff shall
continue in the employment of the Company on the active hourly
employment roll while on such leave or layoff through the later of
the date which is one year from the date last worked or one year
from the date the Employee last received accident/sickness or
worker's compensation benefits.
. . .
There are several problems with this claim.
The first centers on A.O. Smith's failure to ever tell the
Union's negotiators in the 1983 negotiations over the pension
credit bank or at any other time for that matter that the
pension credit bank has a one-year limitation for employees who are
on layoff and who wish to retire. Thus, Union negotiators French
and Scholl both testified without contradiction that no such
limitations were ever discussed in the 1983 negotiations which
created the pension credit bank.
That is why, apparently, no such limitation appears in that
part of the Plan which states that employees can use the pension
bank "until the amount of Hours in Service in the pension credit
bank service subaccount is exhausted." (Company Exhibit 7, p. 3;
Union Exhibit 6, pp. 12-13). Period. There thus is no limitation
on how long that valuable benefit can be used. The Company
therefore in effect urges that this language should be construed to
read: "until the amount of hours in service in the pension credit
bank service subaccount is exhausted, or in the case of employees
on layoff status up to 12 months, whichever occurs first." The
problem, of course, is that this is not what this proviso states.
The same is true for the original 1983 language related above.
As a result, the plain language of this proviso must be
accorded its ordinary meaning, which means that the pension bank
can be used by all employees until all of the hours are used up
irregardless of whether they are on layoff. This interpretation is
in line with what was discussed in the 1983 negotiations and it is
the one that must be followed here because it was A.O. Smith which
proposed this proviso in the 1983 negotiations. Hence, any
ambiguity in the language must be construed against it because: "It
is a standard rule of contract interpretation that ambiguous
language will be construed against the party who proposed or
drafted it." (Footnote citations omitted). See How Arbitration
Works, Elkouri and Elkouri (BNA, 5th Ed., 1996), pp.
The second problem with the Company's claim that the term
"Employee" should exclude employees who have been laid off for more
than one year is that: (1), there is no evidence that the Union
ever agreed to or signed off on that definition in 1992 or at any
other time; and (2), said definition conflicts with what was agreed
to in the 1983 negotiations. Thus, Union negotiators Scholl and
Hartig testified without contradiction that the Union has never
signed off on the 1992 revisions and the Plan's definition of
"Employee". Moreover, there is no proof that this definition was
even negotiated. Absent any such agreement, a laid off employee
who otherwise is entitled to use up all of the hours of his/her
pension credit bank for the reasons just stated above, cannot be
denied receiving that negotiated benefit through the back-door
device of redefining who is an employee for pension purposes.
The Company contends that the absence of a signed 1992 Plan
document is immaterial because "there is no record evidence any of
the parties' pension plans embodied a 'signed' agreement after the
1980-83 Plan" and because every bargaining unit member has enjoyed
the "fruits" of the 1992 Plan without complaint. But, there is no
proof whatsoever that the Union and the Company ever agreed to the
one-year definition of "Employee" found in Section 1.1(i), above.
Absent such proof, it simply is too much of a stretch to conclude
that that definition was ever bargained over merely because various
Plan documents were never signed by the Union.
Hence, Muente is a qualified employee who can use up all of
the hours in his pension bank irregardless of whether he has been
laid-off one year or two years. To claim otherwise would in effect
mean that Muente and all other similarly-situated laid-off
employees can be denied this important negotiated benefit via a
unilaterally-established definition the Union never agreed to.
Since that would in effect negate what was agreed to in the 1983
negotiations, such a result, and definition, cannot stand.
In addition, the one-year definition of "Employee" in Section
1.1(i) must be read alongside the definition of "Employee" in
Section 2.6 which states that an "Employee" is entitled to deferred
vested beneifts" and which does not limit benefits to those
employees who have been laid off for more than one year. Moreover,
the Union submits there is no reason
why Muente's two additional years of service credit all drawn
from his pension credit bank cannot be granted before he is
considered to be on layoff status for pension purposes. If that is
done, the Plan's definition of "Employee" can be met.
Lastly, the Company asserts that an "arbitrary and capricious"
standard must be applied to determine whether the Plan's earlier
rejection of Muente's pension request can be overturned. I
disagree. This "arbitrary and capricious" standard was never
negotiated with the Union. Furthermore, since only staff and not
the Plan's administrator responded to Muente's initial request, it
does not appear that this standard covers the staff's actions.
Moreover, since Muente for the reasons stated above is entitled to
use up all of the hours in his pension credit bank pursuant to the
1983 collective bargaining negotiations, it in any event is
"arbitrary and capricious" to deny him full use of that negotiated
Based upon the foregoing, it follows that Muente can use up
all of the 4,092 hours in his pension credit bank so that he
receives two more credited years of service. Such hours therefore
are to be transferred and credited to his account so that he
becomes eligible for a "30 and out" pension. He also is entitled
to be made whole for all sums of money that he has not yet received
because of the failure to award him a "30 and out" pension in
March, 1995, when he first became eligible to receive it.
Based upon the above, it is my
1. That the grievance is arbitrable.
2. That grievant Robert J. Muente is entitled to use up all
of the 4,092 hours of his pension credit bank for a two-year period
after he was laid off in March, 1993. Such hours are to be
transferred and credited to his account so that he becomes eligible
to receive a "30 and out" pension in March, 1995. He therefore is
entitled to receive whatever benefit is payable under a "30 and
out" pension from that time forward.
3. That grievant Robert J. Muente also is to be made whole
for all sums of money that he has not yet received because of the
failure to award him a "30 and out" pension in March, 1995.
4. That to resolve any questions that may arise over
application of this Award, I will retain my jurisdiction
Dated at Madison, Wisconsin this 7th day of May, 2001.
Amedeo Greco, Arbitrator