Blogging Employee Benefits

January 19, 2006

Plan Merger Must Be Arbitrated

Filed under: Litigation, Pensions — Fuguerre @ 7:30 am

Arbitration between a company and union is required after the union objected to the company’s merger of a union pension plan with a non-union pension plan, according to a 6th Circuit Court of Appeals ruling affirming a district court decision. [International Union v. Cummins Inc., CA6, No. 05-3190, 1/18/06]

The court found that the union’s lawsuit is not barred by laches, since the substantial delay in the case was not unwarranted. Over a period of more than two and a half years, the employer’s actions reasonably led the union to to think that the company was open to negotiation, so any delay in filing the suit was excusable.

Although the company declined arbitration early during that period and wrote that it “continues to believe” that the dispute was not arbitrable, its conduct throughout the period suggested that it remained open to negotiation. Since its refusal to arbitrate was not unequivocal until its final communication of that period, the union’s suit is not barred by the 6-month statute of limitations.

The 6th Circuit also affirmed the district court’s ruling that the dispute is arbitrable. The court sidestepped the underlying merits of the claim, an inquiry that belongs with arbitration rather than the courts.

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