Brewery, Grain & Allied Workers, Local Union 1158, Etc., Etal., Plaintiffs-appellees, v. Falstaff Brewing Corporation, Defendant-appellant, 679 F.2d 39 (5th Cir. 1982)

In this suit by two unions against an employer, jurisdiction is based solely upon section 301 of the National Labor Relations Act, 29 U.S.C. § 185(a), which authorizes suits in federal court for a violation of a collective bargaining contract.¹  Brewery, Grain and Allied Workers, Local No. 1158, and the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local No. 270 (referred to jointly as "the Union") brought suit against the Falstaff Brewing Corporation ("Falstaff"), claiming that Falstaff violated its collective bargaining agreement with the Union by refusing to accord the same level of reduced early retirement benefits to employees who had been terminated before retirement, as to those who were in Falstaff's employ when they retired. The district court granted the Union's motion for summary judgment, finding that Falstaff breached its collective bargaining agreement by not providing identical rates of benefit reductions to the two groups of employees.

In the present suit, based solely upon a breach of the collective bargaining agreement, the issue is whether under the collective bargaining agreement Falstaff was obligated to pay certain former employees the same reduced pension benefits as it agreed to pay present employees. We do not find to be pertinent to determination of this issue whether Falstaff did or did not breach its obligation to bargain with the Union before providing pension benefits for these former employees (as statutorily required by the ERISA statute, see below), nor whether the Union did or did not acquiesce in pension plan modifications that provided such benefits-hotly argued issues below, the resolution of which in part led the district court into error. Finding that the collective bargaining agreement did not require Falstaff to pay the former employees the benefits sought for them by the Union's suit, we reverse the grant of summary judgment in favor of the Union, and we direct that Falstaff's cross motion for summary judgment be entered.

Facts

Falstaff and the Union entered into a joint stipulation of facts that included the submission of eight joint exhibits. The undisputed facts are set out below.

Under an earlier pension plan agreement between the parties, an employee would become eligible for early retirement if he attained age fifty-five while in Falstaff's employ, and after at least twenty-five years of credited service. There was, however, an actuarial reduction of benefits amounting to 6 percent per annum if an employee exercised his early retirement option.²  Any employee whose employment was terminated for any cause except death or retirement, but who earned at least fifteen years of credited service at the date of termination, was considered a "continuing former participant,"³  entitled to a "vested deferred retirement benefit"⁴  that would enable him to obtain full retirement benefits at age sixty-five, the normal retirement age. A "continuing former participant" was, therefore, not eligible for early retirement.

During negotiations for the 1975-77 collective bargaining agreement, the parties amended the pension plan only as it pertained to employees eligible for early retirement, but not for "continuing former participants" (who, as stated, were not eligible for early retirement). The amendment provided that an otherwise qualified early retiree need complete only fifteen (instead of twenty-five years) years of credited service to be eligible for early retirement benefits, and that the actuarial reduction was changed from 6 percent per annum to 4.2 percent per annum. Both changes were to become effective as of April 1, 1975. By the express terms of the pension plan amendment, the status of "continuing former participants" remained unchanged.⁵ 

The collective bargaining agreement between Falstaff and the Union was extended by agreement between the parties to remain in effect until April 1, 1979. Falstaff closed its New Orleans plant in November 1978, and the employees represented by the Union locals involved were terminated. The terminated (then) employees who had not reached age fifty-five with the required years of credited service thus became "continuing former participants"-who, as such were not entitled to early retirement benefits under the literal terms of the pension agreement. There is no charge by the Union that the plant closure was violative of the labor laws.

In 1977, Falstaff submitted a revised and restated version of its pension plan agreement with the Union to the Internal Revenue Service ("IRS") for review and approval under the Employee Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C. § 1001 et seq. Negotiations between Falstaff and the IRS continued until March 1979, when the pension plan was approved, effective as of January 1, 1976.

In order to comply with the statutory requirements of ERISA, Falstaff had to provide an early retirement option for "continuing former participants." Falstaff did so, but it provided that any "continuing former participants" who exercised their early retirement option would have their benefits reduced by 6 percent per annum, rather than 4.2 percent per annum, as provided for early retirees (exclusive of "continuing former participants") under the 1975 collective bargaining agreement.⁶  Falstaff claimed that its choice of the 6 percent per annum reduction level was required for solvency of the pension fund.

The Union became aware of the proposed reduction level for "continuing former participants" shortly after the plant closure occurred in November 1978. The Union filed this suit against Falstaff in March 1979, claiming that Falstaff had breached its collective bargaining agreement with the Unions by not providing "continuing former participants" with early retirement benefits at a 4.2 percent per annum reduction rate.⁷ 

The Union does not allege that any employee who reached age fifty-five while in Falstaff's employ after the required years of credited service, is not receiving early retirement benefits, if elected.

The district court found that Falstaff breached its collective bargaining agreement and granted the Union's motion for summary judgment. Falstaff appeals, urging reversal and the grant of its own cross motion for summary judgment.

Issues

On appeal, Falstaff argues that the district court erred in holding that Falstaff breached its collective bargaining agreement with the Union. Specifically, Falstaff claims that: (1) the Union acquiesced in Falstaff's modification of the pension plan because it did not request bargaining over the revision when it first learned of Falstaff's deliberations on the matter in November 1978; (2) that Falstaff's statutory duty to bargain with the Union did not continue after the plant closure, because the bargaining unit ceased to exist; (3) that there was no breach of the collective bargaining agreement; and (4) that the district court misread certain provisions in the collective bargaining agreement.⁸ 

Although the Union insisted at oral argument that the theory of its case was based solely on the breach of contract provision, see section 301(a) of the National Labor Relations Act, 29 U.S.C. § 185(a), both parties have also made arguments concerning breaches of the statutory duty to bargain.⁹ 

In our view, the only issue presented to us by this appeal in this breach-of-contract case is whether the district court properly held that Falstaff breached its collective bargaining agreement with the Union. We thus do not reach and need not express an opinion on the unfair labor practice issues.Breach of the Collective Bargaining Agreement

Falstaff argues that the 1975-77 collective bargaining agreement, which altered the pension plan, created no obligation whatsoever on Falstaff to accord early retirement rights to continuing former participants. The Union admitted this, see Union br. at 4-5, but nevertheless also presented us at oral argument with a claim to the effect that the 1975-77 collective bargaining agreement, which was extended through 1979, provided that any employee entitled to early retirement would receive early retirement benefits at the 4.2 percent per annum level (see note 5). The collective bargaining agreement was confected without reference to employees who because of termination of employment became "continuing former participants" under the pension plan. The Union nevertheless contends that, when because of ERISA's statutory requirement the "continuing former participants" subsequently became eligible under the pension plan for early retirement benefits, they should have received this benefit at the same bargained-for 4.2 percent reduction level as those who did qualify for early retirement under the plan. When asked whether the collective bargaining agreement provision relied upon by the Union excluded "continuing former participants," the Union responded that the provision was intended to cover any employee entitled to early retirement.

We find this argument unpersuasive. The Union admitted that the pension plan was amended to reflect the change in pension benefits desired and obtained by the Union in negotiating the 1975-77 collective bargaining agreement, and that the pension plan amendment specifically omitted change in the status of "continuing former participants." Given so, we are unable to agree with the Union's argument that the meaning of the collective bargaining agreement provision should be determined by reference to anything other than the pension plan changes agreed to at the time the bargaining contract was executed.

The change from the 6 percent per annum actuarial reduction to the 4.2 percent per annum reduction for early retirees was the result of collective bargaining between Falstaff and the Union. The Union used its bargaining power to create a benefit for a certain class of employees (prospective early retirees), and it was successful. The Union did not choose to bargain for the same benefit to be accorded to "continuing former participants," those who were terminated before qualifying for early retirement but nevertheless by reason of service entitled to pension benefits at age 65. While Federal law (ERISA) might statutorily require that these "continuing former participants" receive early retirement benefits, this statutory requirement does not provide that these benefits be accorded at the same level that they were contractually accorded to employees as a result of the collective bargaining process. The Union does not allege that the IRS required any specific level of benefit for plan approval or that the IRS complained of Falstaff's decision to offer a 6 percent reduction to "continuing former participants" now statutorily entitled to some early retirement benefits, during the two years of negotiation between Falstaff and the IRS leading to approval of Falstaff's revision of the pension plan to accord with ERISA requirements.¹⁰  The 4.2 percent reduction represents a benefit gained as the result of the delicate balance of power that the National Labor Relations Act establishes between unions and employers; we see no basis upon which the Union may now seek to obtain a benefit for those who are former employees and also "continuing former participants," when it did not seek such benefit through collective bargaining when the 1975, and subsequent, collective bargaining agreements were confected.

Falstaff claims, and the Union does not dispute, that any employee who reached age fifty-five after serving the required number of years of credited service with Falstaff is receiving early retirement benefits, if the employee so elected. Thus, since we reject the Union's claims as to "continuing former participants," Falstaff did not breach its collective bargaining agreement with the Union and is therefore entitled to judgment on its cross motion for summary judgment.

Conclusion

Finding that Falstaff did not breach its collective bargaining agreement with the Union, we REVERSE the summary judgment granted the Union by the district court, and we direct that summary judgment be entered in favor of Falstaff on its cross motion.

REVERSED.