Case Summary: Alcan Packaging Co. v. Graphic Communication Conference, International Brotherhood of Teamsters & Local Union No. 727-S et al, 12-cv-00167 (S.D. Iowa)
This case is about what happens when a company that is subject to a labor union collective bargaining agreement (CBA) sells its business to another company. Plaintiff is an Australian-British company that operated three food packaging facilities in Iowa and Wisconsin (“Alcan”). Defendants are two labor organizations that represent employees at the plants (“Teamsters”). Alcan and Teamsters are parties to a CBA that provided for, among other things, severance pay to certain employees who were terminated due to the “complete and permanent closing” of the plants.
Alcan sold the three plants to the Bemis Company. Although all of the employees kept their job with the new owners, Teamsters complained that Bemis did not assume the CBAs upon purchase of the plants and that the employees got lesser rights upon employment at Bemis, including certain health insurance rights. Teamsters also took the position that the sale of the plants terminated the employees due to the “complete and permanent closing” of the plants and that, therefore, certain employees were entitled to severance pay under the CBA. Alcan disagreed. The parties went through arbitration and the arbitrator agreed with Teamsters on all points and ruled, among other things, that the employees were entitled to severance pay. Alcan filed this suit in the U.S. District Court of the Southern District of Iowa to vacate only the ruling on severance pay. Teamsters filed a Motion to Confirm and Enforce the Arbitration Award. Argument on that motion is the subject of the video.
The district court issued an order enforcing the arbitration agreement in all parts except the severance issue on which it held that the plant was not completely and permanently closed so that the employees were not entitled to severance pay. Defendants have appealed that ruling.
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