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Prime Healthcare Services - Landmark LLC v. United Nurses and Allied Professionals

United States Court of Appeals, First Circuit

February 3, 2017

PRIME HEALTHCARE SERVICES - LANDMARK LLC, Plaintiff, Appellee,
v.
UNITED NURSES AND ALLIED PROFESSIONALS, LOCAL 5067, Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND [Hon. Ronald L. Lagueux, U.S. District Judge]

          Christopher Callaci, for appellant.

          David C. Casey, with whom Jillian S. Folger-Hartwell and Littler Mendelson, P.C. were on brief, for appellee.

          Before Torruella, Lipez, and Barron, Circuit Judges.

          TORRUELLA, Circuit Judge.

         This appeal requires us to decide whether a dispute between employees and their successor employer should be resolved in arbitration or in the courts. The parties agreed to arbitrate this dispute. The district court, however, refused to compel arbitration; it found that ERISA preempted arbitration of this dispute, and reasoned that this, in turn, presented an issue of arbitrability properly decided by a judge, not an arbitrator. Because we find that the issue of ERISA preemption in this case is not an issue of arbitrability, but rather one that is squarely for the arbitrator to decide, we reverse.

         I. Background

         Plaintiff-Appellee Prime Healthcare Services ("Prime") purchased Landmark Medical Center ("Landmark"), a financially-troubled hospital in Woonsocket, Rhode Island, in December 2013. Defendant-Appellant United Nurses and Allied Professionals, Local 5067 ("Union") is a union local which represented Landmark's employees pursuant to a collective bargaining agreement.

         In 2006, Landmark and the Union entered into a collective bargaining agreement ("Landmark CBA"), in effect until 2009, renewed automatically each year unless either party reopened. This CBA contained a grievance and arbitration clause that provided that any unresolved disputes "concerning the interpretation, application or meaning" of the CBA could be submitted to arbitration with the American Arbitration Association. This CBA also contained a pension provision, which stated, in relevant part:

The Employer [Landmark] and the Union agree that, if during the term of this Agreement the Employer sells more than fifty (50) percent of its assets, the Employer may terminate the Landmark Medical Center Retirement Plan for Union Employees in accordance with the requirements of ERISA. The Union acknowledges and agrees it is clearly and unmistakably waiving any and all rights it has or may have to bargain with the Employer over any aspect of the termination, provided such termination shall not reduce benefits accrued by any participant in the Landmark Medical Center Retirement Plan for Union Employees as of the date of termination.

         In June 2008, Landmark was placed under the oversight of a Temporary Special Master by the Providence Superior Court due to its financial woes.

         In 2012, Prime made an offer to take over Landmark. Prime met with the Union and agreed that it would take over Landmark's contract with its employees.

         On October 10, 2012, Prime and the Union signed a cover memorandum ("Cover Memorandum") and accompanying contract ("Prime CBA"). The Cover Memorandum provided that "Prime shall recognize and continue to process any and all grievances and/or labor arbitrations pending at the time of the closing pursuant to the CBAs referenced herein". The Cover Memorandum also stipulated that in the event of inconsistencies between the Cover Memorandum and the Asset Purchase Agreement (that was yet to be concluded and approved by the court), the Cover Memorandum would govern. The Prime CBA contained the same grievance/arbitration clause as the Landmark CBA.

         On June 5, 2013, the Pension Benefit Guarantee Corporation ("PBGC") announced its intention to involuntarily terminate Landmark's defined benefit retirement plan because Landmark had failed to maintain the minimum funding requirements.[1]The termination was completed the following week.

         On July 1, 2013, the Union filed a grievance against Landmark alleging a violation of the pension provision of the Landmark CBA. The grievance was denied, and the Union demanded arbitration.

         On July 8, 2013, the Providence Superior Court authorized Landmark to execute the termination agreement. The Court also ruled that "any and all rights and remedies of [the Union] with respect to the employee retirement benefits are reserved." The PBGC and the Special Master then entered into an Agreement for Appointment of Trustee and Termination of Plan.

          This Agreement conveyed all assets of the retirement plan to the PBCG, and provided, inter alia, that any asset purchase agreement that the Special Master entered into could not include assumption of the retirement plan.

         In October 2013, the Union amended its grievance against Landmark to state: "The employer violated the governing Collective [B]argaining Agreement . . . when it changed the terms of the defined pension benefit provisions and ceased making contributions to employees [sic] pensions". Landmark denied this amended ...


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