The US Court of Appeals for the Sixth Circuit recently affirmed a district court’s decision to grant defendant-appellee TRW Vehicle Safety Systems, Inc.’s (TRW) motion to compel arbitration, finding that TRW retirees were bound by an arbitration provision in a collective bargaining agreement (CBA) negotiated prior to their retirement. The lower court had held that plaintiffs Norman VanPamel and Thomas Slaght, former employees of TRW suing on behalf of a putative class, were required to arbitrate contract and Employee Retirement Income Security Act (ERISA) claims challenging changes TRW made to prescription drug benefits in their retiree health plans. 

Plaintiff’s union, Local 471 of the United Automobile, Aerospace, and Agriculture Implement Workers of America (Union) and TRW entered into a CBA effective December 1, 1993, that was scheduled to expire on December 1, 1996. The plant at which plaintiffs worked closed in 1997 and, in preparation for the closing, TRW and the Union entered into a termination agreement effective November 20, 1996 (Termination Agreement). The Termination Agreement extended the 1993 CBA through the plant’s closure. Plaintiffs alleged that TRW terminated prescription drug coverage for Medicare-eligible retirees in violation of its contractual obligation under the CBA. In granting TRW’s motion to compel arbitration, the district court applied a presumption of arbitrability based on a “clear and broad” arbitration provision in the Termination Agreement. 

Plaintiffs argued that pursuant to Supreme Court precedent they could only agree to arbitrate their ERISA claims by expressly listing that specific statutory claim in the arbitration provision. The Supreme Court previously found that a provision in a CBA that “clearly and unmistakably” required a union member to arbitrate claims under the Age Discrimination in Employment Act (ADEA) was enforceable as a matter of law. The Sixth Circuit determined that plaintiffs applied this ruling too broadly. The court distinguished ERISA claims from ADEA claims on the basis that ERISA claims derive from rights conferred under the CBA while ADEA claims can arise regardless of the existence of the CBA. 

The court rejected plaintiffs’ argument that their right to health care benefits derived from the CBA only, and that the right vested prior to the date the Termination Agreement took effect. Plaintiffs retired after the November 1996 Termination Agreement which required all disputes to be arbitrated. According to the court, the CBA and the Termination Agreement must be read together, not separately as plaintiffs urged. 

VanPamel et al. v. TRW Vehicle Safety Systems, Inc., et al., No 12-2173 (6th Cir. Jul. 23, 2013).