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Local Union No. 97, International Brotherhood of Electrical Workers v. NRG Energy

May 8, 2009


The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Judge


On September 20, 2005, Plaintiff filed this labor action, pursuant to Section 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185, alleging that Defendant failed to comply with the terms of an arbitration ruling in Plaintiff's favor. More specifically, Plaintiff's Complaint asserts that, pursuant to an arbitration award, Defendant must recalculate pension benefits for all bargaining unit employees who retired between June 1, 2001, and September 30, 2003, using "Covered Earnings" at$16,500.00 and paying all affected retirees the difference between the recalculated pension benefits and the retirement benefits actually paid to them. (Dkt. No. 1.) In its request for relief, Plaintiff has also asked for its reasonable attorneys' fees and costs incurred in this action. (Dkt. No. 1.)

On August 21, 2006, Defendant filed a motion for summary judgment seeking dismissal of the action in its entirety. (Dkt. No. 21.) On October 2, 2006, Plaintiff filed a cross-motion for summary judgment. (Dkt. No. 27.) After carefully considering the parties' motion papers, and for the reasons that follow, Defendant's motion is denied and Plaintiff's cross-motion is granted.


For the sake of brevity, the Court will not repeat the well-known legal standard governing motions for summary judgment pursuant to Fed. R. Civ. P. 56. Rather, the Court will refer the parties to its decision in Proctor v. Kelly, 05-CV-0692, 2008 WL 5243925, at *3-4 (N.D.N.Y. Dec. 16, 2008) (Suddaby, J.).


NRG Energy ("NRG" or "Defendant") owns and operates a variety of energy-related operations worldwide, including electric power generating facilities in Dunkirk, Tonawanda, and Oswego, New York. Local Union No. 97 of the International Brotherhood of Electrical Workers (the "Union" or "Plaintiff"), represents bargaining unit employees at these three facilities. On May 5, 1999, Niagara Mohawk Power Corporation ("Niagara Mohawk"), NRG, and the Union entered into a tripartite Memorandum of Agreement ("tripartite agreement") concerning the transfer of collective bargaining unit employees to NRG. The tripartite agreement stated that NRG agreed to assume the terms and conditions of the 1996-2001 Niagara Mohawk/Union collective bargaining agreement, and extend the expiration date of the assumed agreement through September 30, 2003. In accordance with the 1996-2001 Niagara Mohawk/Union collective bargaining agreement, NRG calculated retiree pensions using a $16,500 cap on "Covered Earnings" from June 1999 through May 31, 2001.

On June 1, 2001, NRG unilaterally stopped using the $16,500 cap on "Covered Earnings" and began using an amount based on yearly United States Social Security Administration published average earnings data. The Union claimed that NRG's benefit calculation methodology violated the then-effective Collective Bargaining Agreement ("CBA") between NRG and the Union, and the Union filed a contract grievance on January 16, 2002. NRG denied the grievance on January 27, 2002. After unsuccessful settlement negotiations, on June 28, 2002, the parties submitted their grievance to arbitration, as mandated by the CBA, to settle the dispute. The Grievance Arbitration Hearing was scheduled to be heard before Arbitrator Robert Herzog on July 23 and 24, 2003. The arbitration hearing was delayed several times.

In the interim, on May 14, 2003, approximately sixteen (16) months after the Union filed its contract grievance, NRG filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). On this same day, NRG sent a letterto each of its employees, as well as the Union, which stated that NRG's bankruptcy filing "should have little, if any, affect on employees." The letter also stated, "We expect employee wages and salaries to continue to be paid in the normal course and employee benefits to continue uninterrupted, subject to the terms of the plan and policy." Finally, the letter stated that the bankruptcy filing "has no impact upon NRG's current qualified defined contribution 401(k) and qualified pension plans. Under federal law, your pension benefits and 401(k) are not subject to claims by NRG's creditors."*fn1

The Bankruptcy Court set July 14, 2003, as the bar date ("deadline") for filing proofs of claim against NRG's bankruptcy estate. The Union admits that it had actual knowledge of both the bankruptcy case and the proof of claim deadline before July 14, 2003. The Union also admits that it received a proof of claim form prior to the July 14, 2003, proof of claim deadline. However, NRG admits that it did not directly inform all NRG employees who retired during the period June 1, 2001, through September 30, 2003, of the proof of claim deadline.

In July 2003, NRG and the Union agreed to cancel the hearings scheduled for July 24 and 25, 2003, in order to attempt to settle the dispute informally. The agreement to cancel the hearings was confirmed by letter sent by NRG's attorney Robert L. Hobbins on July 22, 2003. In the letter, Mr. Hobbins stated that it was "the Company's commitment to bargain in a good faith attempt to reach a mutually acceptable resolution as part of a comprehensive settlement for a new collective bargaining agreement." Despite the fact that the Union had a pending arbitration action against NRG, the Union never filed a proof of claim.

On August 20, 2003, NRG and the Union met in Syracuse, New York, and exchanged contract proposals for a new collective bargaining agreement. One of the Union's bargaining proposals was to return "Covered Earnings" to $16,500 and recalculate all pension benefits for the June 1, 2001, through September 30, 2003, term of the agreement, and maintain the $16,500 level for the term of any new collective bargaining agreement. As a result of the negotiations, the parties agreed on the "Covered Earnings" level for employees retiring after September 30, 2003. However, the parties were unable to settle the dispute that was then pending in arbitration regarding the Covered Earnings level for employees retiring on or before September 30, 2003.

On November 24, 2003, the Bankruptcy Court entered the Confirmation Order confirming the Chapter 11 Plan. In December 2003, NRG and Xcel Energy, Inc. ("Xcel") entered into an "Employees Matter Agreement" pursuant to which NRG agreed to indemnify and hold Xcel . . . harmless from any liability or expense resulting from any claim of any nature that relate to, arise out of, or result from . . . any acts or omissions or alleged acts or omissions by or on behalf of NRG or any NRG Subsidiary as participating employers under the Pension Plan . . . and any acts or omissions or alleged acts or omissions by or on behalf of NRG or any NRG Subsidiary under or with respect to any plan sponsored or maintained by NRG or NRG Subsidiary that was merged into the Pension Plan . . . .

After several delays, on February 17, 2005, Arbitrator Herzog began conducting hearings on the "Covered Earnings" dispute regarding employees retiring on or before September 30, 2003. Both the Union and NRG were represented by counsel at the hearings. During the hearings, the Union and NRG stipulated to submission of the following issue to Arbitrator Herzog for final and binding decision:

Whether the Company violated the collective bargaining agreement by using an amount other than $16,500 for the 'Covered Earnings' portion of the benefit formula in calculating the pension benefit of the grievant and other eligible bargaining unit members who retired between June 1, 2001 and September 30, 2003?

In addition, during the hearings, NRG's attorney, Mr. Hobbins, stated to the Arbitrator that Xcel was not a necessary party to the arbitration. NRG also introduced the NRG Pension Plan into evidence during the hearings as the operative pension plan document for determination of the "Covered Earnings" dispute. NRG never mentioned or claimed, either before or during the arbitration, that the Chapter 11 reorganization had discharged the claims ...

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