LAWFUEL – The Legal Newswire – Jones Day won a significant victory in the United States Court of Appeals for the Eighth Circuit in a case involving modifications to retiree health benefits and the arbitrability of disputes over such modifications.
When Jones Day’s client, Crown Cork and Seal Company, changed the health plans provided to certain of its retirees, it also sued for a declaratory judgment that the changes were lawful under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). On behalf of the retirees, the International Association of Machinists and Aerospace Workers counterclaimed for arbitration of the dispute pursuant to the arbitration clauses in the expired collective bargaining agreements that created the retiree health benefits. The district court ordered arbitration and dismissed Crown’s declaratory judgment claims, but the Eighth Circuit reversed.
Interpreting a line of Supreme Court precedents, the court of appeals explained that, because the union’s grievance arose after the expiration of the relevant collective bargaining agreements, it was arbitrable only if the benefits at issue were actually vested under the past agreements. The Eighth Circuit agreed with Crown that the inquiry into arbitrability required the court to determine whether the benefits were vested even though doing so reached the merits of the dispute, which an arbitrator might otherwise decide. Reviewing the myriad provisions of the collective bargaining agreements in question, the court concluded that the benefits were not vested, and that the dispute was therefore not arbitrable.
Having already held as a matter of law that the benefits were not vested, the Eighth Circuit further explained that it would be futile to remand the case for a decision by the district court on the merits of Crown’s declaratory judgment claims because the lower court would be foreclosed by law of the case from declaring that Crown’s actions violated either ERISA or LMRA.
The Eighth Circuit issued its decision in Crown Cork & Seal Co. v. International Association of Machinists and Aerospace Workers, No. 06-3639, on September 18, 2007. James Rydzel of Jones Day’s Cleveland Office and Shay Dvoretzky of the Washington Office (who argued the case before the Eighth Circuit) led the appeal team, which also included Andrew Kramer and Sarah McClure (Washington), and Kate Bushman and Robert Smith (New York).
