United States District Court, D. Arizona
MEMORANDUM OF DECISION AND ORDER
STEPHEN M. McNAMEE, District Judge.
Pending before the Court is Respondents'/Counterclaimants' United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFLCIO, CLC ("Union") Renewed Motion to Confirm Arbitration Award. (Doc. 37.) The Union's motion is fully briefed. (Docs. 41-44.) The Court scheduled and the parties presented oral argument on the motion. (Docs. 36, 45, 47.)
After review and consideration of the pleadings and the parties' presentations, the Court finds first that ASARCO LLC ("ASARCO") did not waive its argument regarding limitations on the jurisdictional authority of the Arbitrator to reform the collective bargaining agreement. However, on the merits, the Court will confirm the arbitration award, deny vacating the award, and issue judgment.
The relevant undisputed facts that led to grievances being filed by the Union on behalf of newly hired employees of ASARCO were set forth in the decision of the Arbitrator. (Doc. 2-1.) Using the background facts established by the Arbitrator in his decision (see id.), the Court will state, quote, or summarize the pertinent facts necessary here for the Court to properly resolve the issues presented.
ASARCO is engaged in mining and/or refining copper and other minerals at five facilities in Arizona. It also operates a copper refinery in Amarillo, Texas. The case before the Arbitrator arose out of a decision by ASARCO not to pay what is known as the Copper Price Bonus ("Bonus") to new employees hired on or after July 1, 2011. A grievance protesting ASARCO's decision was filed by the Union on behalf of the new employees not paid the Bonus. The grievance asserted a violation of the June 15, 2011, Memorandum of Understanding between ASARCO and the Union and referenced failure to issue payment of the Bonus to new hires. The Union requested as a remedy that all new employees hired after July 1, 2011, be made whole on the Bonus.
Historically, to put the matter in context, in 2006, negotiations began between ASARCO and the Union for the 2007 Basic Labor Agreement ("BLA"). (Doc. 2-2.) During negotiations, the Union proposed that ASARCO agree to pay a bonus to its unionized employees based on the price of copper. Eventually ASARCO accepted the Union's proposal and the Bonus became Article 9, Section C, of the BLA. (Id. at 46.) Under this section, ASARCO agreed to pay the Bonus based on the three-month average daily cash settlement price each quarter for copper on the London Metal Exchange. ASARCO was to pay the Bonus quarterly in a lump sum to eligible employees; the Bonus would only be paid if the quarterly average copper price exceeded $1.60 per pound. (Id.) If that requirement was met, ASARCO was required to pay the Bonus within 30 days of the end of the quarter according to a scale contained in the BLA. (Id.)
During these 2006 negotiations, the parties also agreed to a proposal that limited eligibility to employees who would be entitled to receive the Bonus. Specifically, the eligibility language which became part of the BLA states: "The Copper Price Bonus will be paid to each such Participant accruing Continuous Service under the Retirement Income Plan for Hourly Rated Employees of ASARCO, Inc. at the end of the calendar quarter." At the arbitration hearing the parties stipulated that the "Retirement Income Plan for Hourly Rated Employees of ASARCO is also known as the "pension plan." In January 2007 a tentative agreement on the BLA was reached which contained the proposed Bonus language. The members of the Union ratified the BLA. Although the Bonus amount has varied depending on the price of copper, the amount paid to each eligible employee has been as high as $8, 000 annually.
In 2010, negotiations began for the successor to the 2007 BLA, which was set to expire. The parties agreed to extend the BLA for one year by way of a Memorandum of Agreement ("MOA"). The 2010 MOA was scheduled to expire on June 30, 2011. During the negotiations for a 2011 Agreement, both parties made presentations regarding ASARCO's business outlook. ASARCO displayed a chart showing the cost of the Bonus. It also displayed, under the heading of "Goals and Expectations, " the statement "Tie bonus compensation to business performance and achievement of business goals that are defined by key performance indicators or agreed-upon metrics, rather than basing the bonus on the price of copper alone." No specific proposal was made by either party during bargaining to change the Bonus calculation or to change eligibility for the Bonus.
On June 14, 2011, ASARCO proposed modifying Article 12, Section Q of the BLA to state "Employees hired on and after the Effective Date are not eligible to participate in the pension plan." ASARCO also proposed modifying Article 12, Section O, by stating under the heading of Retiree Healthcare: "Employees hired on and after the Effective Date are not eligible for coverage." ASARCO stated that it was its intention to eliminate retiree health care for new hires. ASARCO further proposed a change to Article 12 by adding new language that said: "Article 12, Section P, 401(k) Savings Plan: ASARCO will match 100% of Employee pre-tax contributions up to 6% of eligible pay in cash for Employees hired on and after the Effective date."
At the June 14, 2011 meeting, ASARCO proposed extending the BLA and the 2010 MOA with certain modifications which included ASARCO's proposal that employees hired on and after July 1, 2011, would not be eligible to participate in the pension plan. The language in the previous MOA, which stated that "All provisions of the BLA shall remain in force and effect, except as otherwise provided herein, " also continued in the new MOA. Later, during the negotiations, the Union indicated that it opposed ASARCO's proposal stating that new hires would not be eligible for health care coverage upon retirement. Eventually ASARCO agreed to remove that language.
It is undisputed that at no point during the 2011 collective bargaining negotiations did the Union ask ASARCO if other benefits would be impacted by removing new hires from the pension plan, nor did ASARCO ever state that removing new hires from the pension plan would impact the new hires' eligibility for the Bonus. Rather, neither party mentioned the Bonus or eligibility for the Bonus during collective bargaining. Had the parties been aware of the impact of the change, it is further undisputed that the proposed change in eligibility for the Bonus would have been subject to collective bargaining by the parties. The Union members ratified the new MOA, which was scheduled to go into effect on July 1, 2011.
Between July 1, 2011 and October 25, 2011, ASARCO representatives told prospective new employees and newly hired employees that they would be eligible for the Bonus. ASARCO also made it clear that new hires were not eligible to participate in the pension plan.
Ultimately, before any bonus payments were made to new employees, ASARCO determined that based on the language of the BLA, new employees would not be entitled to the Bonus. The Union then filed a grievance on behalf of the new employees hired on or after July 1, 2011, who were denied the Bonus. The grievance was subject to arbitration.
Before the Arbitrator, the Union argued that there was a mutual mistake shared by both parties which required reformation of the collective bargaining agreement. The Union contended that both parties failed to recognize that the language that eliminated pension benefits for new hires would also make new hires ineligible for the Bonus, and that by failing to change the Bonus eligibility language, the parties failed to ensure that new hires remained eligible for the Bonus. The Union further argued that both parties believed and intended that all bargaining unit employees would remain eligible for the Bonus.
Before the Arbitrator, ASARCO contended that under the clear language of the MOA the Arbitrator did not have authority to order that new hires be made eligible for the Bonus, nor did he have authority to rewrite the BLA to make new hires eligible for the Bonus. ASARCO relied on the language of the BLA which states that an arbitrator lacks the authority to alter the BLA. ASARCO stressed that the parties specifically agreed in the BLA that an arbitrator, acting under the grievance and arbitration procedure, "shall not have jurisdiction or authority to add to, detract from, or alter in any way, the provisions of [the BLA]." (Doc. 2-2 at 32.) According to ASARCO, based on the Union's request for reformation, the Arbitrator would be required to ignore the BLA, and by doing so, exceed his limited authority and do exactly what the clause prohibits by either deleting the bonus pension link or adding a phrase into the BLA that would entitle new hires to receive the Bonus. ASARCO argued that the alleged mistake did not authorize the Arbitrator to so exceed his authority and change the language of the BLA.
The Arbitrator stated that the Union could not point to contract language in the BLA that was violated by ASARCO because it simply did not exist. The Arbitrator found that there is no language in the BLA which required that ASARCO pay the Bonus to any employees not covered by the pension plan. Because there is no dispute that employees hired after July 1, 2011 are not covered by the pension plan, the Arbitrator did not find for the Union based on the language of the BLA. Rather, the Arbitrator applied the doctrine of mutual mistake to reform the BLA to permit the Bonus to be paid to new employees that were not eligible for the Bonus because they did not meet the eligibility requirement of being covered by the pension plan. The Arbitrator ordered that the BLA be amended to read as follows:
Article 12, Section Q. Pension Plan: Employees hired on and after the Effective Date are not eligible to participate in the pension plan. However, [ASARCO] shall treat such Employees as if they were accruing Continuous Service under the Retirement Income Plan for Hourly Rated Employees of ASARCO Inc. on the same terms as other Employees, only for purposes of determining eligibility ...