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Exelon Generation Co., LLC v. Local 15

September 2, 2008


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 07 C 968- Matthew F. Kennelly, Judge.

The opinion of the court was delivered by: Tinder, Circuit Judge.

ARGUED MAY 13, 2008

Before EASTERBROOK, Chief Judge, and KANNE and TINDER, Circuit Judges.

Exelon Generation Company, LLC, Exelon Business Services Company, and Commonwealth Edison Company ("Exelon") filed a complaint for declaratory judgment against Local 15, International Brotherhood of Electrical Workers, AFL-CIO ("Local 15" or "Union"), seeking a determination that disputes over Exelon's changes to medical benefits for retirees are not within the scope of the parties' collective bargaining agreement ("CBA") or arbitrable under the grievance procedure and that Local 15 may not represent the retirees. The parties filed cross-motions for summary judgment. The district court granted the Union's motion and denied Exelon's motion, concluding that the Union may represent the retirees in arbitration and that the matter was subject to arbitration. Judgment was entered. Exelon appeals.

I. Background

Exelon and Local 15 are parties to a CBA. They have engaged in collective bargaining for over fifty years and have bargained over mandatory bargaining subjects such as working conditions and wages as well as permissive bargaining subjects such as retiree medical benefits that become effective upon a bargaining unit employee's retirement. The terms of the retiree medical benefits have been memorialized in Memoranda of Agreement Reached in Collective Bargaining ("MOAs") which supplemented and became part of the CBA.

In January 2004, Exelon made various unilateral changes to the retiree medical benefits. These changes immediately affected certain retirees and may also affect current employees when they retire. This led to a dispute between Exelon and the Union over the interpretation and application of the retiree medical benefit provisions. The Union believes that the dispute is within the scope of the CBA's four-step grievance procedure which states in part: "Should any dispute or difference arise between the Company and the Union or its members as to the interpretation or application of any of the provisions of this Agreement . . . the dispute or difference shall be settled through the grievance procedure." If a dispute is not resolved at steps one through three, then at step four, at the request of a party to the grievance, the dispute shall be referred to arbitration. The grievance procedure states: "All decisions rendered by the impartial arbitrator shall be final and binding on both parties."

On October 4, 2005, the Union filed a grievance under step 1 of the grievance procedure, alleging that Exelon violated the CBA and MOAs "with respect to retiree medical plans, premiums, and prescription drug costs for active and retired employees." In the section entitled "Name of Employee(s)," the Union wrote, "For the good of the Union." The grievance proceeded through steps 1, 2 and 3 of the grievance procedure without resolution. On February 19, 2006, the grievance proceeded to step 4, when the Union referred the grievance to arbitration. Exelon participated in the selection of an arbitrator and hearing dates. However, Exelon later argued that "retirees are not part of the bargaining unit and Exelon does not have an obligation to . . . bargain with Local 15 with respect to current retirees."

Exelon provides medical benefits to approximately 5,889 bargaining-unit retirees and their dependents. The Union does not have the consent of all retirees affected by Exelon's changes to retiree medical benefits to represent them in arbitration of the dispute. Seven retirees have consented to representation by the Union in the grievance procedure, though not in writing. No affected retiree has filed an individual action against Exelon over the changes to the retiree medical benefits.

On February 20, 2007, Exelon filed a complaint for declaratory judgment, seeking a declaration that disputes over its decisions to modify retiree medical and prescription drug benefits are not subject to arbitration under the CBA. The parties filed cross-motions for summary judgment, raising two issues of arbitrability and an issue of the Union's standing. The district court granted the Union's motion for summary judgment and denied Exelon's motion. The court first decided that the dispute between the Union and Exelon over retiree medical benefits falls within the scope of the grievance procedure in the CBA. Second, it concluded that Exelon had consented to arbitrate the underlying retiree medical benefit dispute. And, finally, the court concluded that the Union could represent the retirees who consented to its representation; consent of all affected retirees was not necessary for the Union to pursue arbitration.

II. Analysis

We review de novo the district court's decisions on the cross-motions for summary judgment. Rickher v. Home Depot, Inc., No. 07-2850, 2008 WL 2877515, at *3 (7th Cir. July 28, 2008). In this case we address (1) whether Exelon consented to arbitration of a dispute over retiree medical benefits brought by the Union on behalf of retirees, and (2) whether the Union may arbitrate a dispute under the CBA on behalf of affected retirees when it has the consent of a few but not all of the affected retirees.*fn1 Before getting to the substantive issues presented on appeal, we must first assure ourselves that we have appellate juris-diction.

A. Appellate Jurisdiction

A question arose at oral argument of whether a final judgment had been entered by the district court, and we ordered the parties to file supplemental memoranda addressing the issue. The parties complied with the order, and we are ...

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