Cnh America v. Uaw
645 F.3d 785
| 6th Cir. | 2011Background
- CNH America LLC sues the UAW over pre-reorganization retirees' healthcare obligations and VEBA funding under a 1998 CBA incorporated into the VEBA agreement.
- Pre-IPO Case/CNH assumed Case's CBA obligations; Tenneco (El Paso) indemnified CNH for pre-reorganization retiree expenses.
- VEBA funded above-cap costs with CNH contributing $24.7 million and the UAW $2.8 million; VEBA supposedly completed CNH's funding per the 1998 agreement.
- VEBA funds exhausted in 2002; Yolton litigation subsequently sought lifetime, fully funded benefits; CNH later sued the UAW in 2009 alleging covenant not to sue and state-law torts.
- District court dismissed CNH's state-law claims as preempted by LMRA §301 and rejected the covenant-not-to-sue theory; the Sixth Circuit reversed preemption but affirmed others, with Part concurrence/dissent.
- The core issue on appeal is whether funding Yolton violated a VEBA covenant not to sue and whether CNH’s state-law claims survive federal preemption and proper pleading standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does VEBA third paragraph create a covenant not to sue? | CNH: VEBA binds UAW not to sue CNH for above-cap costs. | UAW: VEBA contains no covenant not to sue; no release of CNH's liability. | No covenant not to sue; VEBA bears no such promise. |
| Does § 301 preempt CNH's state-law claims? | CNH's claims arise from pre-contractual misrepresentations; not dependent on CBA terms. | Preemption applies where relief requires interpreting the CBA/VEBA. | § 301 does not preempt the state-law claims. |
| Are CNH's misrepresentation claims adequately pleaded? | CNH alleges UAW representations about authority to bind retirees were negligent/intentional and relied upon. | Some claims, especially intentional misrepresentation, fail Rule 9(b) particularity. | Implied warranty of authority and negligent misrepresentation adequately pleaded; intentional misrepresentation dismissed with prejudice for lack of particularity. |
| Should the intentional misrepresentation claim be dismissed with prejudice? | CNH should have opportunity to amend. | District court acted within discretion; failure to amend warrants prejudice. | Dismissed with prejudice. |
| If preemption does not apply, what is the procedural posture for remaining claims? | Proceed to merits without remand if preemption resolved; pleading standards apply. | Remand unnecessary; dismiss remaining properly pleaded claims. | Remanded for further proceedings consistent with decision; district court's non-preemption rulings upheld. |
Key Cases Cited
- Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985) (preemption when state claims depend on contract terms)
- Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399 (1988) (state-law claims intertwined with contract preempted)
- Textron Lycoming Reciprocating Engine Div., Avco Corp. v. UAW, 523 U.S. 653 (1998) (preemption not triggered by pre-contractual misrepresentations absent contract interpretation)
- Alongi v. Ford Motor Co., 386 F.3d 716 (2004) (fraudulent inducement claims not preempted when independent of contract interpretation)
- Northwestern Ohio Administrators v. Walcher & Fox, Inc., 270 F.3d 1018 (2001) (fraudulent inducement claims not preempted when pre-contractual actions independent of CBAs)