Supplemental Benefit Committee v. Navistar, Inc.

781 F.3d 820, 2015 FED App. 0056P, 59 Employee Benefits Cas. (BNA) 2595, 2015 U.S. App. LEXIS 4974, 2015 WL 1383106
CourtCourt of Appeals for the Sixth Circuit
DecidedMarch 27, 2015
Docket14-3251
StatusPublished
Cited by29 cases

This text of 781 F.3d 820 (Supplemental Benefit Committee v. Navistar, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Supplemental Benefit Committee v. Navistar, Inc., 781 F.3d 820, 2015 FED App. 0056P, 59 Employee Benefits Cas. (BNA) 2595, 2015 U.S. App. LEXIS 4974, 2015 WL 1383106 (6th Cir. 2015).

Opinions

ROGERS, J., delivered the opinion of the court in which SUHRHEINRICH, J., joined. CLAY, J. (pp. 831-37), delivered a separate dissenting opinion.

OPINION

ROGERS, Circuit Judge.

This appeal concerns whether a particular contract-interpretation dispute involving corporate structure is subject to the provision in the contract for arbitration by an accounting firm, and also whether the party seeking arbitration waived its right to arbitrate through its conduct before and during litigation. Under a consent decree in a lawsuit relating to employee retirement benefits, Navistar makes annual contributions to a Supplemental Benefit Trust managed by a Supplemental Benefit Committee (SBC). The size of Navistar’s contributions is determined by a formula provided in the agreement that takes as inputs data on Navis-tar’s economic performance, and Navistar must under the agreement regularly provide data to the SBC to permit it to evaluate whether Navistar is applying the formula correctly. The agreement provides for arbitration before an accounting firm in the event that the SBC disputes the “information or calculations” Navistar provides to it. The SBC intervened in the original lawsuit, ultimately claiming that Navistar was improperly classifying various aspects of its business activities and structuring its business so as to evade its profit-sharing obligations under the agreement. Navistar claimed that under the accountant arbitration mechanism provided for in the agreement, which applies to disputes over the “information or calculations” provided by Navistar, the SBC’s claims were subject to arbitration. The district court correctly agreed with Navis-tar that the claims were subject to arbitration. However, contrary to the district court’s ruling, Navistar’s conduct before and during litigation did not amount to a waiver of its right to arbitrate the claims. Arbitration is therefore required.

The arbitration clause at issue is contained in a settlement agreement and consent decree in a class action lawsuit (Shy et al. v. Navistar International Corporation) relating to Navistar’s obligations to its retired employees. As part of the agreement and consent decree, Navistar had an obligation to make yearly profit-sharing payments to a Supplemental Benefit Trust. The agreement created the SBC as the fiduciary and administrator of the Supplemental Benefit Trust. The methods for calculating and enforcing Nav-istar’s obligation were outlined in a Profit Sharing Plan (Plan) attached as an appendix to the agreement and decree. Section 8 of the Plan required a regular report by Navistar to the SBC of financial informa[823]*823tion necessary to confirm that Navistar was making contributions in the amounts required by the plan. Section 8 also contains a dispute resolution clause that requires disputes over the “information or calculation^]” provided by Navistar to be referred for binding determination to an accountant (or other neutral decisionmaker) chosen by the parties. In full, the clause provides:

8.4. If, following a review of the information and calculations provided pursuant to Sections 8.1, 8.2, and 8.3 the [SBC] disputes such information or calculation^], it shall inform the Company of such dispute within 30 calendar days of the receipt by the UAW and the [SBC] of such information. The Company and the [SBC] shall thereafter attempt, for a period not to exceed 30 calendar days, to resolve such dispute.
8.4.1. If such dispute cannot be resolved during that period, the parties to that dispute will attempt to identify a mutually acceptable third party (such as an accounting firm) to resolve such disputes.
8.4.2. If the parties to such dispute cannot identify a mutually acceptable third party to resolve such dispute, the parties to such dispute shall obtain a list of the seven largest accounting firms, measured by the number of certified public accountants practicing in the United States. The Company and the [SBC] shall then alternately, beginning with the Company, strike one name off such list until only one name remains. The remaining firm shall be empowered to resolve the dispute.
8.4.3. Following selection of the party to resolve the dispute as provided in Section 8.4.1 or 8.4.2, the parties to the dispute shall present evidence and argument in support of their position and the individual or firm shall render a decision which shall be final and binding on all parties to the dispute.

On July 2, 2009, the SBC sent Navis-tar a letter requesting additional financial information and disputing Navistar’s classification of Medicare Part D subsidies in its calculations of its profit sharing obligations. On August 3, 2009, Nav-istar replied, providing at least some of the requested information and declining to pursue dispute resolution over the Medicare subsidy classification issue on the grounds that reclassifying the subsidies would not affect Navistar’s overall obligations. On May 4, 2010, the SBC formally requested that Navistar arbitrate the Medicare subsidy issue and additionally requested other financial information. It appears that Navistar did not respond directly, but instead provided updated financial information (without directly addressing the SBC’s requests for arbitration and information) on April 6, 2011. On November 14, 2011, the SBC again requested more detailed financial information and threatened to go to court if Navistar failed to provide it. On February 15, 2012, Navistar replied to the SBC, listing general and itemized objections to the SBC’s information requests. Navistar also noted that it had not specifically responded to the SBC’s May 4 request because its response depended on ongoing litigation with the original parties to the Shy agreement.

On March 23, 2012, the SBC filed a motion to intervene in the Shy litigation, followed shortly by a motion to enforce the settlement agreement, seeking an order requiring Navistar to provide the information the SBC had requested. On April 13, 2012, Navistar filed a motion for extension of time seeking the court’s permission to delay Navistar’s response to the SBC’s motion to enforce until after the court ruled on the SBC’s motion to intervene. [824]*824On April 25, 2012, Navistar filed a response to the SBC’s motion to intervene, arguing that the SBC’s intervention was not proper. On February 6, 2013, the district court granted the SBC’s motion to intervene with instructions for the SBC to file a complaint, which it did on February 15, 2013. On March 11, 2013, Navistar filed a response to the SBC’s motion to enforce, as well as a motion to dismiss the SBC’s subsequent complaint, arguing for the first time, among other things, that the SBC’s requests for information were subject to the alternative dispute resolution procedures outlined in the Plan. On March 29, 2013, the district court sustained the SBC’s motion to enforce, finding that its dispute over what information Navistar had to provide under the Plan was not subject to the alternative dispute resolution procedures, and ordering Navistar to provide the information requested by the SBC. After Navistar provided this information, the SBC on August 21, 2013 filed a motion to amend its complaint, charging that Navistar had manipulated its corporate structure and accounting analysis to eliminate its profit-sharing obligations, in violation of the terms of the Plan. In particular, the SBC alleged the following four violations:

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781 F.3d 820, 2015 FED App. 0056P, 59 Employee Benefits Cas. (BNA) 2595, 2015 U.S. App. LEXIS 4974, 2015 WL 1383106, Counsel Stack Legal Research, https://law.counselstack.com/opinion/supplemental-benefit-committee-v-navistar-inc-ca6-2015.