*1 McComb, v. Corp. Food Rutherford 91 L.Ed. 67 S.Ct. U.S.
(1947), given by the district the reasons record, above, the reiterated
court and materially dispute, indicates
which is not independent contrac- was an plaintiff FLSA.
tor defined dissent. respectfully
I Plaintiffs, SHY, et
ART al.
v. INTERNATIONAL
NAVISTAR
CORPORATION, et al.
Defendants, Inc, Defendant-Appellant,
Supplemental Benefit Committee of the Transportation International Supplemental Benefit
Corp. Retiree Intervenor-Appellee.
Program,
No. 14-3251. Appeals,
United States Court
Sixth Circuit.
Argued: 2015. Jan. 27, 2015.
Decided and Filed: March *2 (SBC). The
plemental Benefit Committee of Navistar’s contributions is deter- size agree- a formula mined on Navis- inputs that takes as data ment performance, and Navistar tar’s economic pro- agreement regularly must under *3 permit it to evalu- vide data to the SBC to applying the for- ate whether Navistar provides correctly. agreement mula The accounting firm for arbitration before an in the event that the SBC pro- or calculations” Navistar “information Scott, Sally Franczek Ra- ARGUED: J. vides to it. The SBC intervened Illinois, delet, P.C., Chicago, Appellant. for lawsuit, ultimately claiming original Zumwalt, Group, Groom Law A. Sarah improperly classifying was vari- Navistar Chartered, D.C., Washington, Appellee. for of its business activities and aspects ous Scott, Sally P. Ra- BRIEF: J. David ON structuring its business so as to еvade its delet, Zanzi, Pokorny, R. Abizer William agree- profit-sharing obligations under the P.C., Illinois, Radelet, Chicago, Franczek that under the ment. Navistar claimed Co., L.P.A., Pierce, Coolidge P. David Wall provid- accountant arbitration mechanism Ohio, for Sarah A. Dayton, Appellant. agreement, applies in ed for Zumwalt, Scallet, A. Law Edward Groom or calcula- disputes over the “information Chartered, D.C., Washington, Kev- Group, provided by tions” subject to arbitration. The Graydon Ritchey Head & claims were Murphy, in L. correctly Navis- agreed district court LLP, Mitchell, Kentucky, Appel- Fort subject tar that the claims were to arbitra- lee. However, contrary tion. to the district SUHRHEINRICH, CLAY, and Before: conduct before ruling, court’s Navistar’s ROGERS, Judges. Circuit not amount to a during litigation and did the claims. waiver of its to arbitrate ROGERS, J., opinion delivered the required. Arbitration is therefore SUHRHEINRICH, J., the court which arbitration clause at issue is con- The CLAY, 831-37), joined. (pp. delivered a J. agreement tained a settlement and con- dissenting opinion. separate (Shy in a class action lawsuit sent decree Corpora- et al. v. Navistar International OPINION tion) obligations relating ROGERS, Judge. Circuit employees. part its retired As whether a appeal This concerns decree, consent agreement and contract-interpretation particular yearly profit- make obligation had an subject involving corporate structure is Supplemental to a Bene- sharing payments for arbitra provision the contract agreement created the fit Trust. firm, accounting an and also tion fiduciary administrator of SBC as the and seeking whether Trust. The Supplemental Benefit through to arbitrate waived its enforcing Nav- calculating methods for during litigation. before and Un conduct in a Profit obligation were outlined istar’s relating in a lawsuit (Plan) der consent decree appen- an Sharing Plan attached as benefits, employee retirement and decree. Section dix to Supple required regular report by annual contributions to a Plan makes 8 of the of financial informa- managed by Sup- Navistar to the SBC mental Benefit Trust necessary to confirm that Navistar which shall be final binding on all making contributions the amounts to the dispute. required by plan. Section 8 also con- 2, 2009, July On the SBC sent Navis- tains a dispute resolution clause that re- tar a letter requesting additional finan- quires disputes over the “information or cial information and disputing Navistar’s provided by Navistar to be calculation^]” classification of Medicare Part D subsi- binding referred for determination to an dies profit calculations shar- (or accountant other neutral decisionmak- ing obligations. August On Nav- er) full, parties. chosen replied, istar providing at least some of clause provides: the requested declining If, following 8.4. a review of the infor- to pursue dispute resolution over the
mation and calculations pursu- subsidy Medicare classification issue on 8.1, 8.2, ant to Sections and 8.3 the grounds that reclassifying the subsi- *4 [SBC] such information or cal- dies would not affect Navistar’s overall culation^], it Company shall inform the obligations. 4,May 2010, On the SBC dispute days such within 30 calendar formally requested that Navistar arbi- receipt by the UAW and the trate the subsidy Medicare issue and ad- of such information. Compa- [SBC] The ditionally requested other financial infor- ny the and shall thereafter at- [SBC] appears mation. It that Navistar did not tempt, period for a not to exceed 30 respond directly, provided but instead days, dispute. calendar to resolve such (without updated financial information di- 8.4.1. If dispute rectly such cannot re- addressing be the requests SBC’s information) solved during period, parties the to 6, arbitration and on April that dispute attempt 14, will to identify 2011, a 2011. On November the SBC (such mutually acceptable party again third requested as more detailed financial firm) an accounting to resolve such dis- information and threatened go putes. court if Navistar to provide failed it. On 15, 2012, February Navistar replied to parties 8.4.2. If dispute the to such SBC, listing general and itemized ob- cannot identify mutually acceptable jections to the SBC’s information re- party third dispute, to resolve such quests. Navistar also noted that it had dispute to such shall obtain a list specifically responded not to the SBC’s largest firms, the seven accounting May 4 request because response de- measured the number of certified pended ongoing on with public practicing accountants original parties Shy agreement. United Company The States. alternately, shall then beginning [SBC] 23, 2012, On March the SBC filed a Company, strike one name off motion to Shy litigation, intervene in the only such list until one name remains. shortly by followed a motion to enforce the remaining firm shall be empowered agreement, seeking settlement an order dispute. to resolve the requiring provide Navistar to the informa- Following 8.4.3. 13, selection of the requested. tion the SBC had April On 2012, to resolve the dispute provided as Navistar filed a motion for extension 8.4.2, Section 8.4.1 or the parties to the seeking permission time the court’s present shall argu- delay evidence and response Navistar’s to the SBC’s ment in support position of their and the motion to enforce until after the court individual оr firm shall render a decision ruled on the motion to SBC’s intervene. granted leave the district court 2012, filed a re- After 25, Navistar April On amend, intervene, moved to dismiss Navistar motion to SBC’s sponse to the ground on the complaint amended SBC’s intervention the SBC’s arguing that subject to it raised were questions that the 6, 2013, February On proper. the Plan. arbitration under motion the SBC’s granted court district for the SBC to with instructions intervene court the district March On February it did complaint, file motion to dismiss denied 2013, 11, 15, March 2013. On The district complaint. amended SBC’s motion to response to filed a allegations all of court found enforce, to dismiss the well as a motion was dis- complaint, the SBC the amended arguing for subsequent complaint, SBC’s calculations” the “information or puting time, that the among things, other the first that therefore information were sub- requests for scope claims fell under these resolution alternative ject to the However, the court clause. Plan. March outlined On procedures ar- (although the SBC had not also held district court sustained that Navistar had waived gued) enforce, finding that its SBC’s motion through its be- questions arbitrate those over what litigation. during havior before Plan was not under the provide had to Navistar’s re- the court noted particular, dispute resolu- the alternative subject to over the luctance to enter into arbitration *5 ordering and procedures, tion subsidy prior litiga- payments Medicare by the requested information provide tion, fact that Navistar did not and the provided this infor- After Navistar SBC. first claim to arbitrate the SBC’s seek mation, August 2013 filed a the SBC on until after information requesting complaint, charging motion to amend its to inter- granted the SBC’s motion court manipulated corpo- its that Navistar had these deci- The court found vene. analysis to accounting and rate structure “completely inconsistent sions were obligations, in profit-sharing its eliminate resolu- dispute on the Plan’s any reliance In par- of the Plan. of the terms delay violation and also caused procedures,” tion following four ticular, alleged the the SBC by delaying the prejudiced the SBC viоlations: payments resolution of to. The might be entitled that the SBC (1) forming [Navistar] entities motion district court denied Navistar’s acquired as businesses then treats dismiss, appeals. See and Navistar favorably from Navistar’s more [treated 16(a)(1)(B). § U.S.C. and then under the point Plan] of view Navistar are against The SBC’s claims prop- or not reallocating their revenues arbitration, as the district subject all allocating costs and erly completely or ar- ruled, notwithstanding the SBC’s court among Opera- the Covered expenses (2) affirmance on the alternative tions;' gument for excluding dividends and simi- subject to that the claims are not ground calculation of from the payments lar (3) clause. Profits; under the arbitration excluding ... arbitration Qualifying “disputing] ... claim the SBC is subsidy from In each payments Part D Medicare regarding Profits; calculation^]” or Qualifying calculation of obligations Supplemental (4) Navistar’s Eligible Bonus em- failing to exclude un- that Navistar Qualify- Benefit Trust the calculation of ployees from under the set- reporting obligations der its ing Hours. agreеment. places tlement This each hours of certain workers “Qualifying scope claim within the of the arbitration Hours”—all directly concern the “informa- clause. provided by tion” pursuant to its obligations under agree- Section 8. do not ment, “information” refers to the contents § purposes appeal of this 8.4 is an of “a worksheet detailing the calculation' of agreement one with a —albeit obligation, Contribution the Qualifying scope narrow which the Federal Arbi —to Hours, Profits, and the Qualifying [includ- (FAA) applies. tration Act The First ing] a listing by category employees of the persuasively Circuit has held that the fol included and excluded the calculation of elements, lowing all present this case Qualifying Hours and all information rea- well, amounted to “arbitration ev sonably necessary to review the calculation erything finality, but name”: “an indepen of Qualifying Profits.” taking one of If— adjudicator, dent substantive standards the SBC’s claims as an example—some (the ...), contractual terms op and an employees wrongly inсluded in the portunity for present each side to calculation of Qualifying when, Hours un- Tech, case.” See Fit Inc. v. Bally Total contract, der the terms of the they should (1st Holding Corp., Fitness excluded, have been then the information Cir.2004). The FAA applies even when in the worksheet is incorrect. The arbitra- agreement only partic is limited to applies when the SBC “dis- disputes. ular class of Id. putes information provid- or calculation^]” claim, core, Because the SBC’s at its is ed is not limited aspects Navistar misclassified various disputes terms to over the calculations in- business, of its resulting incorrect infor- volved. If the being provided SBC, mation classification of employees, plainly it is dis- scope SBC’s claims are within the puting the information Navistar pro- has agreement. Disputes over how vided in its worksheet and worked, earnings, hours and similar as- *6 subject to arbitration. Thus the SBC’s pects of a categorized business should be disputes classification subject are to arbi- purposes for the of accounting analysis an tration. are disputes over “information.” To the extent that the SBC’s claims extend be- It is true that disputes, classification yond categorization operational to the disputes, potentially unlike calculation in- practices of the claims are so questions volve of contract interpretation closely tied to the information provided to accounting, as well as but this does not that agreement SBC the arbitration fall plain outside the text of the arbitra- applies. still agreement, First, for two reasons. SBC, claims, The accountant-based nature of underlying dis- the dis- putes categorization pute procedure resolution aspects of various at most creates of Navistar’s reports ambiguity business some scope Nav- as to whether the provides, istar and disputes so the SBC is of disputing over “information or calcula- the “information” by Navistar. was intended to be restricted tion^]” The SBC’s claims—about whether subsid- disputes legal analysis which no what- iaries are acquired,” However, “businesses about the might necessаry. soever be inclusion of various revenue sources and unqualified language otherwise of the (cid:127) Medicare Part D “Qualifying subsidies in agreement trumps any assumption that Profits,” and about parties the inclusion of the would not have committed le-
826 while to order arbi- disputes declining to an accountant’s resolution. accountant
gal is be ambiguity allegations The there tration for of miscon- “business —must —if conventions,” arbitration” even “resolved favor of accounting duct unrelated to an clause is limited when ac- the First nonetheless ordered Circuit Ltd., Noble scope. Bratt Enters. v. Int’l “accounting countant for is- Cir.2003) (quoting 338 F.3d 613 sues.” at 8. Scis., Volt Inc. v. Bd. Trustees of Info. While two of SBC’s claimed viola- Univ., Leland U.S. Junior Stanford tions—Navistar’s creation of and reallo- S.Ct. L.Ed.2d subsidiaries, cation profits (1989)). of dividends from sub- exclusion earned Second, disputes the contract involved in phrased though in part sidiaries —are as arguments SBC’s classification-based they operational involving were violations relatively closely simple are related to misconduct, sub- they business are still it accounting; suppose is reasonable ject to arbitration. To extent agreement that the to the intended they operational are rather than issues disputes support such to be arbitrated. To issues, they classification are still so newly its claim Navistar misclassified closely connected information Nav- formed subsidiaries as “businesses ac- they istar provides to SBC that in its quired,” points complaint SBC count over disputes as information. agreement’s of “generally invocation The claims that created a accepted accounting principles.” number and foreign of domestic subsid- second and third claimed contract iaries “acquired that it classified busi- as particular components violations relate to nesses,” a classification that reduced the Qualifying Profits calculation—in- obligation Supplemental Benefits acquired foreign come and dividends from by profit. Trust created the subsidiaries’ Part D entities Medicare subsidies. Further, Navistar structured these sub- blush, At first cоntract interpretation way in a sidiaries minimized its obli- depend here appear questions issues gations, example, having foreign for accounting foreign entities —whether subject subsidiary not to the settlement Navistar and controlled whether “nominally purchase” other Also, the subsidies constituted “income.” bottom, subsidiaries. At are classi- these the SBC’s fourth claimed violation con- operational fication rather than employees
cerns whether were properly disputes. alleges The SBC that the eco- Eligible” classified “Bonus calcu- nomic substance Navistar’s business “Qualifying ap- lation of Hours.” This *7 not in the its sub- reflected structure of depend to pears employees on how were sidiaries, it does in- allege, but not compensated, again likely is to be an stance, substantively hurt area that are accountants familiar with. any performance the aspects of analyze When accountants businesses’ bal- sheets, business in order to reduce its obli- they necessarily ance categorizе contrast, Tech, gations. In in Fit the aspects perform- various of the businesses’ plaintiffs alleged of their portion in inputs ance order to the find to calcula- —in claim First not sub- tions. Thus it that an the Circuit held was appears accountant ject to the defendants arbitrator could resolve the claims arbitration —that SBC’s actively effectively, away at directed customers they least to the extent that profits concern in what is fitness whose classifications essential- centers determined Tech, ly an In accounting analysis. obligations plain- Fit defendants’ to
827 core, then, Id. at 4. At The accountant arbitration in tiffs. clause Navis- appears applied “disagreements] claim to be that PureWorks to not alter any of subsidiaries does to item included in tar’s use re [earnout reality port],” of its that is much to language the economic business closer this accounting analysis agreement. not Fed.Appx. should alter the arbitration 554 at (second profit sharing Since alteration in In obligations. original). of its 378 oрinion, SBC com- an operational unpublished required decisions the we arbi “operational plains only disagreements of affected the information tration of af the sub- fecting report including to the SBC and not the earn-out dis — business, performance these putes of Navistar’s are about stance the earn-out disputes about information. Id. disputes still covenants.” Such “concern and affect numbers that included were required have twice accountant arbi We in report,” the earn-out and therefore were directly af operational disputes tration for arguably at least included the arbitra accounting. information relevant fecting tion at analysis clause. Id. 380. This Inc., Holdings, v. JPD Inc. Chronimed applies equally operational disputes (6th 388, Cir.2008); Pure- 391 challenges here. The SBC Navistar’s cor Solutions, Works, Unique Inc. v. Software porate fundamentally not structure be (6th Inc., Fed.Appx. Cir. company cause it wishes to restructure the 2014). JPD, In clause re arbitration it way but wishes to change because quired arbitration fоr over an business information was Nav- reported calculation, “all earnings and also issues istar; operations only the SBC cares about having bearing dispute.” on such they affect It accounting. insofar as is language F.3d at 391. We held that this interpret plausible “dispute the informa allegations defendant applied [provided by including Navistar]” as engaged in that had practices had business change claim that the ought earnings were at hurt the business whose corporate because the structure the infor issue, in violation of “contractual commit mation reflects violates the settlement Id. The earnings.” ments maximize Therefore, agreement. policy the federal language arbitration requires in favor arbitration. slightly is this case narrower: As we Nestle Waters Amer held North required only “disputes when the ica, Bollman, Inc. federal strong v. provid information or [the] caleulation[s]” policy in favor of arbitration resolves merely ed it not when parties’ in favor doubts as intentions dispute bearing has a information. of аrbitration. 505 F.3d Cir. operational JPD was But the 2007). closely accounting less connected to calcu case, addition, than in Navistar’s as the de lations did alleged pre-litigation fendant’s misconduct in JPD af waive arbitration. performance fected the of the business and failure to raise arbitration conduct (hurting response the business of entities whose the SBC’s motion to inter subject profit sharing) as vene at start of did not con earnings *8 In of the provided. well as the information stitute a waiver to arbitrate short, operational may by be com the A waives disputes claims-raised SBC. arbitration, if if it to accountant the lan acts in a “com mitted arbitration manner JPD, clause, of on an guage pletely any the arbitration inconsistent with reliance fairly disputes. agreement” delays asserting can be read to or cover such arbitration 828 sought an order the which the SBC com- an extent that “to such the pelling provide Navistar to infor- preju- incur[red]
opposing party actual Plan) by the required mation with- Hurley v. Deutsche Bank Trust Co. dice.” (6th Cir.2010). out as a 334, raising arbitration defense. Americas, 338 argued that Navistar first arbitra- inconsistency and prejudice Both actual 11, on March required was present is here. required, are and neither complaint in its to the SBC’s contrast, answer Corp. in Johnson Associates. simultaneously filed 713, reply and its Corp., v. HL Operating the SBC’s motion to enforce the set-' Cir.2012), there we held was waiver agreement. tlement holding- pres- after that both factors were Moreover, much of Navistar’s con- ent. actions, of individually None these three question here concerned a duct at issue whole, amounts to a or as waiver of already that the district court has decided: arbitration. letter to the Navistar’s SBC the comply Navistar must whether Part D regarding Medicare subsidies on Even if request SBC’s information. 3, August 1 in the list above— 2009—-item conduct waived Navistar’s Navistar’s that, explicitly acknowledges the ab- the question, that arbitrate conduct stract, a over the classification of dispute on with reliance the arbitration consistent In declining is arbitrable. subsidies for resolution of aris- grounds arbitrate on the dispute ing supplied the informa- after Navistar payments in no Navistar owe event would tion. Trust, Benefit Supplemental Navis- ruling court’s on re- tar noted: must at this The district waiver time re- “[W]e following spectfully your request lies actions on the decline dispute a subset of the total interactions resolution pro- which are initiate Plan, dispute you Navistar and the that led to cedures as the between SBC present identify dispute: impact no whatsoever has profit sharing payments due.... Navistar 2009, 3, August 1. de- On Navistar however, agree, will this has issue request clined the SBC’s to arbitrate timely been raised [SBC] D the classification Medicare Part any event the material in dispute becomes subsidies, claiming that if the even year.” appears future This to be refer- this prevailed would not affect SBC § requirement ence 8.4 of the obligations Navistar’s under Plan —the clause of the agree- plan. notify Navistar ment —that the SBC respond 2. not a fur- Navistar did days receipt dispute within 30 of the May ther notice sent on about. by the relating to Navis- completely Such statement is consistent D tar’s treatment Medicare Part with a willingness to arbitrate. requesting further in- subsidies about fi- company’s formation respond failure to nances; April in its next letter on May 4, 2010 notice of as to 2011,. simply Navistar an D 2 in the Medicare Part subsidies—item update quali- as to its calculation of concerning, list above—is more but it not fying profits and did mention the does Ignor- still not come close waiver. dispute. ing a of arbitration pro- formal invocation (if 3. in fact what April opposed On cedures that is (in did, provide motion to intervene the record does evi- *9 otherwise) tion, delay with reli- cannot solely is consistent this be dence attributed arbitration, these cir- at least in to Navistar. SBC could have sought ance compelling any court There is no order arbitration at cumstances. .evidence in explained, that the either time after Navistar record SBC refused to arbitrate time, why issue, it May any notice or at other but never did so and now questiоn that dispute argues subject it over subsi- that the is not believed moot, suggested was not previously dies arbitration. Navistar’s conduct not is thus may ignored Navistar. Navistar have prejudice sole cause the SBC notice, therefore, it may not because dis- have suffered. simply reliance on but claimed can Waiver also not be inferred dispute it still considered moot because delay, litigation Navistar’s once com doubted that it was worth menced, seeking in arbitration of in what pursue time to that matter. have re- We provide'to formation it had to the SBC. that was no peatedly determined there Navistar raised arbitration as a defense arbitrate, party when a refused to waiver its second substantive submission in the litigation, to the prior commencement of first, litigation.1 opposition In its to the grounds opponent’s on the that its claims intervene, SBC’s motion ar Inc., substantively weak. JPD gued only that the SBC’s intervention was 394; Highlands at Health Wellmont improper. sought It to delay any response Network, Plan, Inc. v. Deere John Health to the including SBC’s defenses claims— (6th Cir.2003). Inc., 350 F.3d A might that force dismissal—until the dis explaining why unwill- reply Navistar was trict court determined that the interven helpful, arbitrate ing to would have been proper begin ap tion was with. This in the context previously but of its stated context, proach is reasonable. In this for not arbitrating, reason Navistar’s si- suggestion Navistar’s that the SBC could seen, easily can be in the words of lence complaint have litigation filed a new decision, Highlands typical as “the to acknowledging does not amount posturing may party occur one where litigation the appropriate dispute reso attempting to ‘stare down’ other Instead, lution the court method. oversee hope party the other will litigation, ing Shy the new and not the give up.” 350 574. This simply F.3d at court, would have resolved Nav is therefore reliance silence consistent with objections to istar’s the SBC’s suit for on arbitration and not sufficient for waiver. information, including the applicability Moreover, pre-litigation Navistar’s be- This procedural posture arbitration. dis delay way havior did not proceedings tinguishes this case from Johnson Associ ates, actually prejudiced the SBC. While in which we held there was a waiver dispute over the still subsidies is unre- of arbitration when the defendant failed years solved several after indif- as a raise arbitration defense its answer to the arbitra- at request plaintiffs complaint. ference SBC’s to the arguments 1. Navistar's motion to dismiss SBC’s first these in effect —that complaint response to the motion SBC’s filings, invoked arbitration. In these ''arbitration,” did to enforce not use the word displayed affirmatively its desire to submit argued both that the claims were but SBC’s claims alternative resolu- subject procedure resolution procedure and its belief that the Plan identified in the Plan and were therefore not required Navistar and the SBC to do so. This properly before the district The dis- court. invoke is sufficient to arbitration. correctly trict court held—and the does *10 830 not suffice opponent, harass the should to response to the SBC’s
718. City v. did not raise for denial.” Moore properly as reason to intervene motion of Cir.1986) (6th mo- Paducah, a defense because F.2d 562 arbitration to right only tion addressed Piper Corp., (quoting Davis v. Aircraft validity of the SBC’s and not the Cir.1980)). intervene Adopting context, arguing that the In this claims. context, held in the waiver we this rule instead a fresh lawsuit ought bring SBC in Associates the defendant Johnson that not waive arbitration intervening does of by delaying its invocation prejudice caused willingness imply it not does because plaintiffs had arbitration because dispute, only a de- substantive litigate the discovery in expense and effort expended defenses, including arbitra- all sire to raise helpful in arbitration. that would not be tion, litigation. of fresh in the context here, at 720. That is not the case with Johnson Asso- A further distinction at all not advance because the did for this support additional ciates lends intervene was the SBC’s motion to while case, the defendant en- point. relatively few so the SBC wasted pending, including discovery, af- litigation, in gaged unnecessary litigation. resources in its answer raising nоt ter prejudiced not be- Finally, the SBC was it. at 720. That is invoking Id. and before allegedly untimely re- cause of Navistar’s response case here. Between its not the that was dispute arbitration of a quest for motion to intervene and to the SBC’s place. in the first subject to arbitration intervention, to allow the court’s decision amended All the claims in the SBC’s actively pursue litigation did not for the as to the complaint except only filing on any way. Its substantial Part D subsidies response to the SBC’s classification of Medicare the record was motion to enforce the to amend its the actions motion arose after simply it agreement, settlement constitute waiver. The district allegedly position that it would re- its reiterated motion to inter- court allowed SBC’s the motion to enforce after spond to provide ordered Navistar to vene and to inter- court ruled on the motion district requested, that the did not Thus Navistar’s conduct vene. ruling that the over wheth- process rather litigate that it intended to suggest provide obligated Navistar was er its with the SBC. than arbitrate subject information was not requested subsequently arbitration.2 The SBC litiga engaging Navistar’s not complaint to include further amended motion to enforce was tion while information and specific claims as to the preju that it did not pending also means it provided by calculations by failing to raise arbitration the SBC dice those claims that is now arbitrability of a motion to earlier. In the context if Navistar’s conduct at issue. Thus even alone, ... “[djelay complaint, amend a to arbitrate the extent of waived the any specifically resulting preju without SBC, obligations to the it dice, reporting any design by obvious dilatoriness or explicitly state that the SBC intended put Navistar did not motion to enforce 2. The SBC's litigate than claims suspected rather arbitrate the SBC that Navis- on notice that Instead, arising manipulation. place- from such "intentionally manipulating the tar was requested only explicitly that the dis- various motion revenues and costs in its ment of provide the infor- profit-sharing court order Navistаr to trict units” to reduce its business Agree- required by mation the Settlement obligations, did not seek relief but motion manipulation ment. arising from such for harm apply force the in- not make sense to waiver settlement does it stant (finally) litigation. zealously after ful- Rather than arose guarding require Had obligations. those Navistar not filled *11 dispute, the the instant Navistar attempted quietly to arbitrate extent of its sat receiving all that until an obligations ruling at and left the adverse reporting of its answer the district court. Those are precise- defense out to the arbitration ly the in which complaint, litiga- first the course of circumstances this Court has past, unaffected. It found waiver the the tion would have been would majority straying to maintain errs in from that prece- then be unreasonable dent today. Navistar’s failure to seek of an found issue the district court was not I. by
covered the arbitration clause waived right to seek arbitration of oth- Navistar’s A more direct of statement the factual disputes. if Navistar’s er Even eventual background perhaps to this case is neces- attempt preliminary ques- to arbitrate the summarized, sary. recently As this Court of how much information it had to the underlying litigation was filed as proved prior to the that its provide SBC class action in “when at- 1992 Navistar attempt to delay conduct was bad faith tempted to reduce costs for retired dispute, the resolution of the the SBC was employee life health and insurance bene- not harmed Navistar’s behavior. This Shy fits.” Corp., v. Navistar Int’l tardily is because the Navistar question (6th Cir.2012). Navistar sought not be to arbitrate could arbitrated claimed it become it would insolvent if place; seeking in the first to arbitrate required comply were with obligation would not in itself have earlier advanced facing to retirees. Id. the Under threat of may proceedings. While bear deeper even the cuts to retirees’ benefits if long responsibility some for the duration of company bankruptcy, entered the retirees’ SBC, dispute with the its behavior with representatives negotiated a settlement satisfy to arbitration regard does the funding restructure the level and of those particular elements of waiver. benefits. v. Navistar No. Shy Corp., Int’l. (S.D.Ohio C-3-92-222, reasons, WL 1318607 For the the foregoing district 1993). court, May though The district court’s decision is VACATED and RE- expressing concern “the settlement MANDED with instructions order arbi- agreement many will impose hardship on tration the claims in SBC’s Second retirees,” accepted in due course Complaint. Amended (“the Shy parties Agree- CLAY, ment”) dissenting. Judge, Circuit it as a and entered consent decree. *1, Id. at *12-13. I respectfully cannot con- I dissent. Plan, Shy Supplemental The Agree-
clude
is at
§in
heart of
before
to-
Sharing
ment
8.4 of the Profit
Plan
this Court
(“PSP”) agreed
day,
component
formed a
to submit
central
Shy
Shy
re-
Agreement.
Agreement
these dimensions to arbitration. Even if
The
arbitrable,
placed
I
prior
package
would find
retirees’
benefits
with
“Base
require
plans:
that Navistar waived its
two
Plan” and
in an
Id. at *4.
Base
engaging
“Supplemental
unmistakable
Plan.”
The
delay
dramatically
Plan
cut retirees’
life
campaign of avoidance
both be-
basic
and after the
intervened to en-
and health insurance benefits and reduced
fore
turn,
are defined
operations,
to well
ered
funding obligation
below
broadly to
Navistar In-
quite
PSP
include
Id. In ac-
value.
pre-settlement
half its
Corporation, its
Transportation
ternational
Shy
district
Agreement,
cepting
company
International
parent
cuts
retir-
painful
that the
court noted
and all
Corporation, and “their successors
Supplemental
by the
would be offset
ees
subsidiaries,
of their affiliates
Plan, explaining:
exception
Corpo-
of Navistar International
Plan, which
a tru-
Supplemental
[T]he
(R. 399-5, PSP,
ration
PGID
Canada.”
turns over much
concept,
innovative
ly
1668.)
provisions
also
PSP
includes
ownership
very
of Navistar
acquired
of any
entities
the treatment
un-
who must sacrifice benefits
retirees
*12
agreement,
of the
after the effective date
agreement, a Plan
der the settlement
for those
profit-sharing obligations
with
(perhaps
could well alleviate some
which
varying
percent
оn the
own-
entities
based
more)
the
much as one-half or
of
the
ership by
acqui-
Navistar and whether
which
re-
hardship
the settlement will
in
States.
sitions are located
the United
quire
Supple-
retirees to endure.
Plan is a trust which
be
mental
will
2000,
year
Each
from 1994 to
by
and
rep-
retirees
their
administered
varying
gener-
made
of
contributions
—but
must contribute
resentatives. Navistar
PSP,
the
ally
pursuant to
substantial —size
the
of its common stock
50% of
shares
$100,000 in
in amount from
ranging
profits
of
future
portion
and a
its
2000, however,
to
million in
1999.
$71.6
Supplemen-
established under the
trust
to
dropped
the annual contribution
zero
generated by
Plan. The income
the
tal
there,
excep-
and
the sole
remained
used,
in-
Plan can be
for
Supplemental
paid
million
tion of a
contribution
$1.4
stance,
premiums
to reduce the
company
2004. The
now claims
the
must
their health
pay
retirees
for
insur-
paid in
million contribution was
error.
$1.4
Thus, if the retirees’ sacrifices
ance.
complaint,
alleged
As
in SBC’s amended
prosperity,
allow Navistar to return to
any profit
claimed
Navistar has
not to owe
significant
will
a
the retirees
own
share
the
sharing contribution under
PSP even
consequent gain
the
in the value of
years
the
as a whole
company
where
company.
the
reported a net income of hundreds mil-
to
Id. The SBC was formed
administer
This
lions or
billions of dollars.
out-
even
governing
The terms
Supplemental Plan.
come stands
marked contrast
Shy
element of the
profit sharing
Shy Agreement
terms
that call
of the
are
in a document
Agreement
contained
prof-
of its
portion
Navistar to contribute a
parties
as the Profit
referred
Plan,
its to
and to
Supplemental
Plan, or
Sharing
“PSP.” Navistar’s obli-
provisions
broadly
PSP
that so
define the
gation
pay
portion
profits
a
operations.
covered
While Navistar’s con-
Plan, however,
Supplemental
a
fund the
Sharing
under
Profit
Plan
tributions
part
larger
settlement
constituent
zero,
corporate
have
struc-
dwindled
agreement and
decree.
consent
ture
a
increase
has shown marked
owned or
The PSP sets the amount of Navistar’s
number of businеss entities
con-
affiliates,
by Navistar
profit
Supplemen-
to be contributed to the
trolled
performance
that the
believes reflects
development
tal Plan as
function of the
company’s
effort to shield the
operations”
of certain “covered
concerted
profits
obligation
Supple-
worked
qualifying
number of
hours
em-
mental
ployees
operations.
in those
Cov-
Plan.
covered
years prior
intervening
In the
required
be
to submit to arbitration any
litigation, the
significant
SBC encountered
that the party has not agreed to so
difficulty obtaining information from Nav-
submit.”
Enterprises,
Bratt
Inc. v. Noble
Ltd.,
company
obligated
609,
istar
Cir.2003);
Int’l
company
disclose under the PSP. The
ex-
see also Granite Rock Co. v. Int'l Bhd. of
provide timely
Teamsters,
cused its failure to
profit
287, 302,
561 U.S.
130 S.Ct.
sharing
2847,
(2010) (“[W]e
calculations and disclosures based
Since its initial litiga- jurisdiction intervention the district court retained to “re- tion, consistently has SBC raised the solve disputes relating to or arising overarching claim “that Navistar has allo- out of or in connection with the enforce- revenues, ment, profits cated costs and within interpretation or implementation” of (R. group explicit the consolidated for the pur- parties’ agreement. 399-2, Shy poses robbing 1455.) of Supplement Program Agreement 15.4, § PGID profit-sharing payments of the to which it allegations, The SBC’s as articulated in (R. 395-1, Enforce, is entitled.” Motion to the initial motion to enforce and as de 117.) PGID greater degree tailed to a in the First Amended Complaint, state a claim that
II.
manipulation
of its corporate
agree
I cannot
majority
with the
and earnings structure constitutes an in
present dispute
tentional,
scope
falls within the
compa
material breach of the
presumption
of the federal
ny’s obligation
favor of arbi-
Shy Agreement
under the
tration, but that presumption
annually
cannot
to
prof
be
contribute a share of its
used as a means of rewriting the clause to
its to the Supplemental Plan. Under our
one,
encompass
dispute,
present
like the
precedent,
“strictly
a consent decree is
that goes beyond simply contesting
preserve
bargained
construed to
for
content of
position
Navistar’s disclosures.
“The
parties.”
of the
Williams v. Vu
kovich,
duty
Cir.1983);
to arbitrate a
derives from
parties’ agreement
§
and a
cannot
see also 23 Williston on Contracts
63.3
stated,
gravamen
Simply
(4th ed.). (a
where
breach exists
material
is en-
is that Navistar
allegations
the con-
substantially defeats
“the breach
negate
faith scheme to
in a bad
gaging
Here, it is undeniable
purpose”).
tract’s
duty to contribute
contractual
substantive
commitment
ongoing
that Navistar’s
to fund the benefits
profits
of its
portion
Supple-
profits
of its
pay
portion
reading
provi-
of a
retirees. No fair
of its
to the “bar-
integral
Plan was
mental
of
the resolution
governing
siоn
id.,
parties,”
position
gained
calculations” dis-
“information or
about the
mitigating
retir-
a means
representing
comes close to en-
company
closed
allow[ed]
“sacrifices
if their
ees’ losses
Therefore,
I
a claim.
compassing such
Shy,
prosperity,”
return to
applied
§
cannot be
would hold that
8.4
claim
*4. The SBC’s
at
Moreover, oppose acterizes Navistar’s decision ultimately acceptable “concerning” file a but to enforce and to the SBC’s motion Highlands Well invoking “typical posturing” under clearly to dismiss without motion Network, v. Deere fur- Health Inc. John entailed mont compel Plan, Inc., 568, 574 unnecessary Health 350 F.3d delay and unwarranted ther Cir.2003). Wellmont, Highlands how comparable to the circumstances ever, in a discussion “were respond- Hurley, in where the defendants claims and stage respective “mul- about their motions and filed plaintiffs ed to the and the defendant stated positions” mo- their nondispositive tiple dispositive ” “ point’ decline ‘at [that] arbitration. See that it would requesting tions” before (editing in Id. at 574 engage arbitration. Only at after the district 338-39. majority opinion distorts original). motion to granted part court Highlands the rationale of Wellmont to disclose enforce and ordered Navistar Rath it in these circumstances. applying and after the requested, na reasonably accounting for the file an er than information to SBC used potentially ture of back-and-forth between that detailed over complaint amended High as the Court did parties, used to adverse twenty pages the various ruses Wellmont, in majority Sup- lands from the SBC and the profits shield un obstruction and stant case condones only then did Navistar plemental Plan — I hold that justifiable avoidance. would Sixth compel seek to arbitration. Under timely to a noticed respond in total failure to persists precedent, Circuit *16 issue pute clause as an arbitration majority addressing the mislead- resolution 1. The avoids argument, ing Navistar's instead governed by nature of Federal Arbitration Act. That briefing asserting simply later, that Navistar’s hindsight, recog- court the district Maj. Op. at to invoke arbitration.” “sufficient in Navis- arbitration issue hidden nized the 829, briefing appears that the at this n. 1. It away § 8.4 does not take tar’s reference to however, not, alert the stage was sufficient to conduct was the fact that Navistar’s court to the nature of SBC or the district misleading and inconsistent both request, since neither Navistar's rely right good on its faith intention to reрlies court addressed Navis- nor district arbitrate. argument regarding dis- tar’s the alternative 837 dispute constitutes interference with a MAPLE
plaintiffs rising efforts to arbitrate DRIVE FARMS LIMITED JPD, PARTNERSHIP, Plaintiff, level of waiver. See Inc. v. Chron Inc., 388, Holdings, imed Smith, Plaintiff-Appellant, Nicholas H. Cir.2008). v. Finally, delay has caused the VILSACK, Secretary, “actual Tom prejudice.” Hurley, United F.3d Department Agricul- at majority incorrectly 338. The States asserts ture, Defendant-Appellee. that Navistar arbitration in raised “its second substantive submission the liti- No. 13-1091. gation.” Maj. fact, atOp. 829-30. In United States Appeals, Court of Navistar waited until its substan- fourth Sixth Circuit. issue, tive sitting submission to raise the quietly rights on its arbitration while the Argued: Oct. 2013. parties litigated the right SBC’s to inter- April Decided and Filed: 2015. vene, motion to enforce the agreement, settlement and Navistar’s ini-
tial motion to dismiss. These
costs, though not as extreme as some
cases, are sufficient qualify as actual
prejudice precedent. Compare under our Corp.,
Johnson Associates at
(affirming finding district court’s of waiver “plaintiffs prejudiced by
where were un-
necessary delay expense because ‘the to arbitrate was not asserted for
eight months, during which motions were
filed, requests discovery materials
were made responses prepared, were judicial
and a settlement conference was ”).
held.’
CONCLUSION sum, I would hold that the instant
dispute is not within the scope of the arbi- clause,
tration and that even if arbitrable, precedent Sixth Circuit
compels a conclusion Navistar waived to demand arbitration. I there- respectfully
fore dissent.