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Friday, January 13, 2012

An Eastern District of Michigan court recently ruled that retired union members must arbitrate their claims seeking a lifetime of fully-paid retiree medical benefits under a CBA (UAW v. Kelsey-Hayes Co., E.D. Mich., No. 2:11-cv-14434-JAC-RSW, 12/22/11).

Prior to the plaintiffs’ retirement in the late 1990s, their collective bargaining unit and their employer entered into a CBA which required that the employer would pay the full cost of medical coverage for eligible retirees and their spouses. However, in September 2011, the employer’s successor announced that, effective January 1, 2012, it would discontinue its current healthcare plan for Medicare-eligible retirees and surviving spouses.

The union, on behalf of the retirees, filed this lawsuit alleging that they were entitled to a lifetime of fully-paid medical benefits and that the defendant employers’ conduct breached the terms of the parties’ CBA as well as their fiduciary duties under ERISA. In response, the defendants filed a motion seeking to compel arbitration of the plaintiffs’ claims pursuant to a “plant closing agreement” which was entered into in 2001 and contained a broad arbitration clause.

In granting the defendants’ motion to compel arbitration of the plaintiffs’ claims, the court rejected the plaintiffs’ contentions that (1) Sixth Circuit precedent clearly states that retirees cannot be forced to arbitrate their claims; (2) the plant closing agreement excludes retiree benefits from the general arbitration clause; (3) the terms of the CBA should govern since plaintiffs rely primarily upon the CBA and not the plant closing agreement for their claims; and (4) some of the retirees covered by the action were excluded from the application of the plant closing agreement. Rejecting each of these arguments in turn, the district court found that the plaintiffs failed to show any Sixth Circuit precedent that exempts retirees from mandatory arbitration when contractually required. The court also determined that the plant closing agreement – and its broad arbitration provision– which plaintiffs’ relied upon to assert their right to guaranteed medical benefits, was controlling on this issue. Thus, the anti-arbitration provision contained in the CBA was moot.

The opinion was authored by Judge Julian Abele Cook Jr. and is available online at: https://ecf.mied.uscourts.gov/doc1/09715391983.

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