United Steelworkers of America v. Retirement Income Plan for Hourly-Rated Employees of ASARCO, Inc.
filed January 7, 2008,
Cite as 05-16833

Workers’ Arbitration Claim Sustained, Legal Fees Remanded

ASARCO, Inc., laid off some employees as part of a plan for a permanent shutdown for purposes of calculating pension benefits. ASARCO and the employees represented by United Steelworkers of America had previously agreed to the plan.

As a result, a great number of the laid-off employees applied for benefits, which ASARCO denied on the ground that their combined age and years of continuous service totaled less than 80.

Following that, the union filed a grievance, which ASARCO denied. And subsequently, ASARCO also refused the arbitration requested by the union.

The union filed a petition in the district court to compel arbitration of the benefits claims under the Labor Management Relations Act and the Employee Retirement Income Security Act. The complaint named both ASARCO and the Retirement Income Plan for Hourly-Rated Employees of ASARCO, Inc.

The district court entered summary judgment in favor of the union.

ASARCO then filed for bankruptcy, which resulted in an automatic stay of proceedings. The plan then moved to stop all proceedings.

The district court granted the union’s motion for attorney’s fees and costs, and denied the plan’s motion to stay.

The Retirement Income Plan for Hourly-Rated Employees of ASARCO, Inc. (the plan) elevated the case for appeal.

The Ninth Circuit court of appeals affirmed in part and remanded in part, holding that retirees are not excluded from the arbitration procedure because they stopped being employees when they retired.

The appeals court pointed out that the plan’s contention that retirees could not take advantage of the arbitration provision because they stopped being employees when they retired is absurd since creating a pension dispute mechanism and then denying access to it to pensioners does not serve its purpose.

The appeals court contends that because it was the union that sought arbitration, complained to compel arbitration, and actively pursued the litigation that followed, the threat of economic disruption made the presumption of arbitrability applicable.

In affirming the ruling, the appeals court held that the district court did not err when it granted summary judgment to union and its laid-off employees seeking arbitration of benefits claims under Sec. 301(a) of Labor Management Relations Act and Sec. 502 of the Employee Retirement Income Security Act.

The decision was based on the following grounds:

• that the threat of economic disruption was greater with the union and not just its retired employees being a party


• the claim was still timely since the letter to union only denied some of its claims, and retirees should not be excluded from the arbitration process.

Further, the appeals court also found that the district court did not err in denying plan’s motion to stay under the doctrine of judicial estoppel since the union did not name the plan as a necessary party.

Finally, the court concluded that although the award of attorney fees was not an abuse of discretion, remand was necessary to determine first the effect of the automatic stay on the award of attorney fees.