Sixth Circuit Holds District Court Lacked Authority to Award Attorneys’ Fees and Decide ERISA Claim Subject to Mandatory Arbitration

In UAW International, et al. v. TRW Automotive U.S. LLC, No. 19-2252, __F.App’x__, 2021 WL 926527 (6th Cir. Mar. 11, 2021), the Sixth Circuit considered consolidated appeals where Plaintiffs, retirees and a labor union, alleged that Defendant TRW violated the terms of the CBA and ERISA when it changed retiree medical from Humana health care coverage to Health Reimbursement Accounts. The district court granted TRW’s motion to compel arbitration based on the CBA. Plaintiffs appealed the order to arbitrate but then the arbitrator ruled in Plaintiffs’ favor, finding that TRW breached its contractual duties under the CBA. Plaintiffs then voluntarily dismissed their appeal. The arbitrator declined to award Plaintiffs attorneys’ fees based on the terms of the CBA that each party is responsible for their own attorneys’ fees. Plaintiffs did not seek to vacate the arbitration award. Instead, they filed a motion for attorneys’ fees and expenses under ERISA and filed a renewed motion for summary judgment arguing that the breach of the CBA constituted a violation of ERISA. The district court granted Plaintiffs’ renewed motion for summary judgment and awarded attorneys’ fees only with respect to work done related to the issue of whether TRW violated ERISA.

The Sixth Circuit determined that the district court lacked authority to decide Plaintiffs’ ERISA and attorneys’ fee claims because the CBA mandated arbitration of these claims. The CBA provided arbitration as the exclusive remedy for any dispute so the district court could not adjudicate the merits or craft any sort of remedy. The district court could have decided a timely motion to vacate or modify the award on the limited grounds applicable to such motions, but Plaintiffs did not these motions. The arbitrator decided the ERISA attorneys’ fee issue and absent Plaintiffs moving to vacate or modify the award, there was no basis for the district court to review the award. The district court did not have any authority to grant Plaintiffs’ motions because the reopened issues did not relate to the enforcement of the arbitrator’s award. Although the district court did have authority to review Plaintiffs’ later timely motions to enforce the arbitrator’s award with respect to relief for nine of the retirees, resolution of those matters did not give the court authority to determine the merits of the ERISA claims or alter the award.

Even if the arbitrator did not address the ERISA claims, the district court still had no authority to decide those claims. When Plaintiffs dropped the previous appeal of the arbitration order they waived any objection to arbitration. Once the issues were delegated to the arbitrator, the district court could not adjudicate issues the arbitrator did not reach. “[B]ecause the district court lacked the authority to award fees, the award is reversed, and we do not reach any issues about the proper scope of fees if the district court did have the authority to grant them.”