UAW Retirees Cannot Benefit from Restatement of Benefits

The 3rd U.S. Circuit Court of Appeals cited other case law, saying “It is clear that any party contesting an unfavorable order or judgment below must file an appeal,’” and “[A] party which does not appeal a decision by a district court cannot receive relief with respect to that decision.”

The appellate court also said the U.S. Supreme Court’s decision in Ackermann v. United States is instructive. In that case, a brother, his sister, and her husband had their naturalization cancelled in a consolidated trial. The brother appealed, but the sister and her husband did not. The brother prevailed in his appeal, after which the sister and her husband attempted to avail themselves of the brother’s victory. In its decision, the Supreme Court said a party that makes “a considered choice not to appeal . . . cannot be relieved of such a choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong.”

The 3rd Circuit said the application of these principles to the current case is relatively straightforward. “The United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) opposed Visteon’s motion to terminate other post-employment benefits (OPEB) for its retirees in bankruptcy court and lost. The bankruptcy court entered an order which was final and appealable as to this specific issue. If the UAW wanted relief from that order, it had to appeal. It did not. Just as Visteon would have been bound by that order had it lost and not appealed, so is the UAW,” the panel wrote in its opinion.

The court found UAW’s decision not to appeal “was a risk,” but one that the UAW made in a “calculated and deliberate” fashion. It noted that at oral argument before the district court, the UAW conceded that “were we to reconsider the situation, I would have filed [a notice of appeal] too, or at least urged my client to allow us to do that.” The UAW also acknowledged that it was “not saying that every time somebody appeals something in Bankruptcy Court, just because it could affect other people or there’s a common issue, that in effect they’ve all appealed.”

After filing for bankruptcy in 2009, Visteon asked the bankruptcy court for permission to terminate OPEB. The UAW, the Industrial Division of the Communications Workers of America (IUE), and several salaried employees of Visteon contested the motion saying the company must comply with Section 1114 of the Bankruptcy Code, which requires benefit plan trustees to attempt to reach an agreement with the retirees regarding modification of retiree benefits before it can ask the bankruptcy court to modify or terminate them.

The bankruptcy court decided Visteon did not have to comply with Section 1114 and could terminate the benefits. The bankruptcy court carved out the benefits for retirees from Visteon’s North Penn plant, one of the groups the UAW represented, from its order, because the plant was still operating and subject to an ongoing collective bargaining agreement. Subsequent to the bankruptcy court’s order, Visteon and the UAW entered into a Closure Agreement for the North Penn plant to settle all disputes related to the North Penn closing. The Closure Agreement set forth the procedures for terminating OPEB for North Penn retirees, and was approved by the Bankruptcy Court.

The IUE, on behalf of the retirees it represented from the Connersville and Bedford plants, appealed the OPEB termination order to a district court, which affirmed the order. The union then appealed to the 3rd Circuit, and the appellate court reversed the order for termination of benefits. The appellate court noted that after it issued its ruling mandate, the IUE and UAW both moved the bankruptcy court to reinstate the OPEB for all retirees, which it did except the North Penn subgroup which was covered by the Closure Agreement.

Visteon appealed the bankruptcy court’s restoration order to the district court, arguing that the UAW and its retirees remained bound by the OPEB termination order because they never appealed it. The district court agreed, and the UAW appealed to the 3rd Circuit.

The appellate court noted that in its decision in the IUE appeal, “we made no mention of the UAW whatsoever.” It conceded that the judgment it issued “was admittedly broad.” But, it argued “[w]hen an opinion is silent as to the scope [of the parties,] the district court should assume as a general rule that only the issues and parties on appeal are included.” The appellate court added that “it would be anomalous to assume” that our judgment applied to a nonparty to the appeal, without even mentioning it.”

The court rejected UAW’s argument that the prior decision rendered the bankruptcy court’s termination order void from the beginning, saying an order is only void from the beginning if the court that entered the order (1) lacked the power or jurisdiction to do so, or (2) acted in a manner inconsistent with due process of law.

It also rejected the UAW’s argument that its failure to appeal should not bind its retirees because it was never appointed to represent them, saying it is inconsistent with the UAW’s course of conduct and, even if the argument had any merit, it would not further the cause of the retirees that belonged to UAW because none of them individually appealed.

The 3rd Circuit’s decision is at http://www2.ca3.uscourts.gov/opinarch/123352np.pdf.