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Moilanen v. Education Minnesota: US District Court : LABOR - collective bargaining agreement with cap on monthly amount & duration; plaintiff failed to exhaust; alleged breach not a repudiation of contract

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
DOUGLAS E. MOILANEN,
Plaintiff,
v.
EDUCATION MINNESOTA,
Defendant.
Case No. 07-CV-3134 (PJS/RLE)
ORDER
Michael C. Rajkowski and Ronald W. Brandenburg, QUINLIVAN & HUGHES, P.A.,
for plaintiff.
Roger A. Jensen and Carol A. Baldwin, JENSEN, BELL, CONVERSE & ERICKSON,
P.A., for defendant.
Plaintiff Douglas Moilanen brings claims of breach of a collective bargaining agreement
(CBA), violation of the Americans with Disabilities Act (ADA), and violation of the Age
Discrimination in Employment Act (ADEA) against his former employer, Education
Minnesota. This matter is before the Court on Education Minnesotas motion for summary
judgment. For the reasons that follow, the Court grants the motion and dismisses Moilanens
complaint.
I. BACKGROUND
Moilanen worked for Education Minnesota from 1985 until 2006. During his
employment, Moilanen was a member of The Education Minnesota Professional Organization
(TEMPO), a union which is a party to a series of CBAs with Education Minnesota. Each CBA
covered a two-year period. The 2002-2004 and 2004-2006 CBAs both contain the following
provision:
Income Protection. Education Minnesota will pay the full
premium for an income protection plan which will provide after
1Education Minnesota did not provide an index to its exhibits, and unfortunately the
exhibits are not labeled in a manner that would enable the Court to cite to them (or easily locate
them in the record). The Court will therefore cite the docket numbers of these exhibits. The
page numbers refer to the printed number on the top of the electronically filed copy of each
docket entry.
2Docket Nos. 37 and 38 are both copies of the policy. The second copy was apparently
sent by UNUM in 1998 to reflect that Education Minnesotas name had changed. (Education
Minnesota was created through a 1998 merger of the Minnesota Education Association and the
Minnesota Teachers Federation.) Nevertheless, the parties generally refer to the original policy
(Docket No. 37) as the governing policy. The Court will do likewise. The Court also notes that
the original policy was issued by UNUMs predecessor, Unionmutual Stock Life Insurance
Company of America. References to UNUM are intended to include its predecessor.
3The copy of the policy that UNUM sent to Education Minnesota in 1998 states that the
maximum monthly benefit is ,500, with a handwritten notation stating effective 9/1/04.
Docket No. 38 at 6. Neither party has contended that Moilanen was eligible for or received a
monthly benefit greater than ,000 under this version of the policy.
-2-
ninety (90) calendar days of disability, at least two-thirds of salary
to age seventy (70).
Docket No. 35 at 22; Docket No. 36 at 21.1 Pursuant to this provision, Education Minnesota
purchased a Group Long-Term Disability Insurance Policy (the policy) from UNUM Life
Insurance Company (UNUM). See Docket Nos. 37, 38.2
The policy contains two limitations that are at issue in this case. First, the maximum
monthly benefit available under the policy is ,000, for a total of ,000 per year. Docket
No. 37 at 5.3 Second, the policy contains a two-year cap on benefits for disability due to mental
illness (with certain exceptions not relevant here). Docket No. 37 at 23. Because of these
limitations, the policy allegedly fails to comply with the CBA. Specifically, a person earning
more than ,000 per year would receive, at most, ,000 per year under the policy, which is
less than the two-thirds of salary promised by the CBA. In addition, a person disabled by
-3-
mental illness would not receive benefits to age seventy (70) as promised by the CBA, unless
he happened to be within two years of turning seventy when he became disabled.
In late 2003, Moilanen went on sick leave due to depression. Moilanen Aff. 5. His
condition did not improve, and he began receiving long-term disability benefits on January 7,
2004. Moilanen Aff. 10. In April 2005, UNUM sent Moilanen a letter informing him of the
two-year cap on benefits related to mental illness. Docket No. 36 at 57-58. But Moilanen was
not concerned about the two-year cap because he did not believe that he would remain disabled
for the full two years. Moilanen Aff. 9. As it turned out, Moilanen remained on disability until
his benefits expired, after which he used his remaining sick leave. Moilanens last day of
employment was February 9, 2006. Compl. 14.
Although he was not terribly concerned about the two-year cap while he remained on
disability, Moilanen did promptly object to the ,000 monthly limitation as being contrary to
the CBA. In October 2005, TEMPO filed a grievance on Moilanens behalf over the monthly
limitation. Docket No. 39 at 2-3. TEMPO settled the grievance with Education Minnesota
before the grievance was arbitrated. Docket No. 33 at 8. In August 2006, TEMPO notified
Moilanen of the settlement and asked him to return a signed release of claims and other
documents to put the settlement into effect. Docket No. 39 at 59.
By that time, however, Moilanens disability benefits had expired, and he wanted to
protest the two-year cap in addition to the ,000 monthly limitation. Moilanen refused to sign
off on the settlement and demanded written assurance from TEMPO that the union would do
something about the two-year cap. Moilanen claimed to have expressed concern about the twoyear
cap many months ago. Docket No. 36 at 46. In response, TEMPO denied that Moilanen
-4-
had ever complained about the two-year cap and refused to take formal action on Moilanens
behalf with respect to the cap because Moilanen was no longer a member of the union. Docket
No. 36 at 49. In September 2006, Moilanen filed charges of disability discrimination with the
Equal Employment Opportunity Commission (EEOC) against both Education Minnesota and
TEMPO. Docket No. 36 at 51-52, 54-55.
II. ANALYSIS
A. Standard of Review
Summary judgment is appropriate if the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A dispute
over a fact is material only if its resolution might affect the outcome of the suit under the
governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
dispute over a fact is genuine only if the evidence is such that a reasonable jury could return a
verdict for either party. Ohio Cas. Ins. Co. v. Union Pac. R.R., 469 F.3d 1158, 1162 (8th Cir.
2006). In considering a motion for summary judgment, a court must view the evidence and the
inferences that may be reasonably drawn from the evidence in the light most favorable to the
non-moving party. Winthrop Res. Corp. v. Eaton Hydraulics, Inc., 361 F.3d 465, 468 (8th Cir.
2004).
B. Counts I and II
In Counts I and II, Moilanen asserts claims for breach of the CBA. The exclusive
remedy for breach of a CBA is a claim under 301 of the Labor Management Relations Act
(LMRA), 29 U.S.C. 185(a). See Schuver v. MidAmerican Energy Co., 154 F.3d 795, 799
-5-
(8th Cir. 1998) (Section 301 completely preempts state law claims founded directly on rights
created by collective-bargaining agreements (citation and quotations omitted)). Before bringing
suit under 301, an employee must ordinarily exhaust any mandatory grievance procedure in the
CBA. Vaca v. Sipes, 386 U.S. 171, 184-85 (1967). But the employee may be excused from the
exhaustion requirement in certain circumstances. For example, the employee need not exhaust if
his failure to do so is the result of his unions breach of its duty of fair representation. Smegal v.
Gateway Foods of Mpls., Inc., 763 F.2d 354, 359 (8th Cir. 1985) (Only if exhaustion has been
precluded by the Union in breach of its duty of fair representation can this obligation be
bypassed.). Similarly, the employee may be excused from the exhaustion requirement if his
employer repudiated the grievance process, Waldron v. Boeing Co., 388 F.3d 591, 593 n.2 (8th
Cir. 2004), or if other circumstances rendered the grievance process wholly futile, Glover v. St.
Louis-San Francisco Railway Co., 393 U.S. 324, 330 (1969).
If the CBA contains a finality provision, an employee who exhausts the grievance
process is ordinarily bound by the result of that process. Waldron, 388 F.3d at 594; Bills v. U.S.
Steel LLC, 267 F.3d 785, 788 (8th Cir. 2001). To bring a suit for breach of the CBA directly
against his employer, such an employee must plead and prove that the union breached its duty of
fair representation in its handling of his grievance. Waldron, 388 F.3d at 594.
At the end of the day, then, an employee who has failed to grieve his claim is in
essentially the same position as an employee who has fully grieved his claim: In either case, the
employee is barred from seeking judicial relief unless the employee can establish some defect in
the grievance process. With these precepts in mind, the Court turns to Moilanens 301 claims.
4The CBA defines a grievance as any claim that there has been a violation,
misinterpretation, or misapplication of the terms of this contract . . . . Docket No. 35 at 12;
Docket No. 36 at 12. Moilanens claims that Education Minnesota breached the CBA by failing
to obtain a disability policy in compliance with the CBAs requirements plainly fall within this
definition.
-6-
1. Count I
In Count I, Moilanen alleges that the two-year cap on benefits related to mental illness
violates the CBA. It is undisputed that Moilanen did not grieve this alleged breach, and
Moilanen does not argue that his failure to grieve is the result of any breach of the duty of fair
representation by TEMPO. To the contrary, Moilanen expressly disavows any claim that
TEMPO breached its duty of fair representation. Moilanen also conceded at oral argument that
the contractual grievance process in the CBA is mandatory and that his breach-of-contract claims
are grievances subject to this process within the meaning of the CBA.4 It appears, then, that
Count I is barred by Moilanens failure to exhaust the grievance process.
Moilanen argues, though, that he was not required to exhaust because his claim is a
straightforward breach-of-contract claim, rather than what is known as a hybrid claim.
A hybrid claim is a claim that involves both a breach-of-contract claim against the employer
and a breach-of-duty-of-fair-representation claim against the union. Moilanens analysis on this
point is a bit muddled. Whether or not a claim is hybrid is relevant to determining what statute
of limitations applies to the claim, not to determining whether exhaustion is required. ( Hybrid
claims are governed by the six-month limitations period of 29 U.S.C. 160(b), DelCostello v.
Intl Bhd. of Teamsters, 462 U.S. 151, 155 (1983), while a straightforward breach-of-contract
claim is governed by whatever limitations period applies to breach-of-contract actions under the
law of the relevant state, UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 704-05 (1966).)
-7-
Of course, when an employee brings a hybrid claim, his reason for doing so may be to
overcome the exhaustion requirement that would otherwise bar his 301 claim. A hybrid
claim necessarily involves a claim that the union breached its duty of fair representation and,
if established, such a breach can excuse a failure to exhaust. But a hybrid claim is not the only
way to overcome the exhaustion requirement. As discussed above, an employee may avoid the
exhaustion requirement by proving that the employer repudiated the contractual grievance
process or by proving that invoking the grievance process would have been futile. In such cases,
some courts have held that the employees claim is not a hybrid one subject to the six-month
limitations period of 29 U.S.C. 160(b). See Cabarga Cruz v. Fundacion Educativa Ana G.
Mendez, Inc., 822 F.2d 188, 191-92 (1st Cir. 1987) (where the employee was excused from the
exhaustion requirement because of the employers repudiation, his claim was not hybrid). But
regardless of whether the employees claim is properly labeled as hybrid, the bottom line is the
same: The employee must establish a basis for failing to exhaust the mandatory grievance
process; if he does not, his 301 claim must be dismissed. Cf. id. (analyzing whether the
employee had excused his failure to exhaust even though his claim was not hybrid).
Moilanen next argues that he was not required to exhaust because Education Minnesota
repudiated the contract. But the only evidence of this alleged repudiation to which Moilanen
points is Education Minnesotas failure to purchase a disability policy that conforms to the
requirements of the CBA. Obviously, though, an allegation that an employer breached a CBA is
not the same as an allegation that an employer repudiated the grievance process established by
the CBA. If it were, no employee would ever be required to exhaust because in every 301 case
the employer is accused of breaching the CBA. The relevant inquiry is not whether the employer
-8-
breached the CBA which, again, is alleged in every 301 case but whether the employer
repudiated the contractual grievance process. See Carpenters Fringe Benefit Funds of Ill. v.
McKenzie Engg, 217 F.3d 578, 585-86 (8th Cir. 2000) (employers breach was not a repudiation
of the arbitration provision and did not excuse the unions failure to exhaust).
There is no evidence that Education Minnesota repudiated the contractual grievance
process. To the contrary, Education Minnesota submitted to that process when Moilanen
challenged the ,000 monthly limitation on disability benefits. Moilanens grievance involved
an alleged breach of the same provision of the CBA that was allegedly breached by the two-year
cap on benefits related to mental illness. There is simply no evidence that Education Minnesota
repudiated the contractual grievance process either in general or with respect to Moilanens
complaint about the two-year cap.
Moilanen also argues that any attempt to use the grievance process would have been
futile because TEMPO could not compel UNUM to continue paying him benefits. But
Moilanens claim is against Education Minnesota, not UNUM. Education Minnesota was a
party to the CBA, and Education Minnesota could have been held liable through the grievance
process for any breach of the CBA. Indeed, when TEMPO grieved the ,000 monthly
limitation on Moilanens behalf, Education Minnesota agreed to settle the claim by paying
money to Moilanen. As noted, that grievance was based on the same provision in the CBA and
related to the same disability policy. Under these circumstances, Moilanen cannot show that
invoking the grievance process would have been futile.
Finally, Moilanen cites Anderson v. Alpha Portland Industries, Inc. for the proposition
that, as a retiree, he was not required to exhaust the CBAs grievance process. 752 F.2d 1293,
5Instead, Anderson held that grievance procedures, as applied to retirees, are not
presumptively mandatory. Anderson, 752 F.2d at 1295-98.
6Although one month might sound like a short length of time, it is comparable to the
period of time TEMPO had to file a grievance on Moilanens behalf. Under the CBA, TEMPO
is required to file grievances within twenty-five days of the date of the event underlying the
grievance or the date the aggrieved party first had knowledge of the event underlying the
grievance, whichever is later. Docket No. 36 at 12.
-9-
1298 (8th Cir. 1985). Anderson does not, as Moilanen seems to assume, establish a per-se rule
that retirees are never subject to mandatory grievance procedures.5 But even if it did, Anderson
would not help Moilanen in this case. Moilanens disability benefits expired on January 6, 2006,
Moilanen Aff. 10, and Moilanen had been aware since at least April 2005 that his benefits
would be capped at two years under the mental-illness provision. At the latest, then, Education
Minnesota was in breach as of January 7, 2006. But Moilanens last day of employment was not
until February 9, 2006. Thus, Moilanen had just over a month to initiate the grievance process
before he retired.6 Moilanen offers nothing that would excuse his failure to grieve his dispute.
The best Moilanen can do is point to evidence in the record that he complained about the twoyear
cap to TEMPO. But Moilanen does not contend that he ever asked TEMPO to file a
grievance on his behalf and, as noted, he does not claim that TEMPO breached its duty of fair
representation.
In sum, Moilanen was required to exhaust the contractual grievance process with respect
to the two-year cap on benefits for disability caused by mental illness. Moilanens failure to
exhaust his remedies bars his 301 claim that the two-year cap breached the CBA. Education
Minnesotas motion for summary judgment on Count I is therefore granted.
7Although Education Minnesota seemed to argue in its brief that Moilanen failed to
exhaust this claim, it conceded at oral argument that Moilanen had done so.
-10-
2. Count II
In Count II, Moilanen alleges that Education Minnesota breached the CBA by obtaining a
disability policy that had a maximum benefit level of less than two-thirds of his salary. There is
no dispute that Moilanen exhausted the grievance process with respect to this claim.7 That
process ended in a settlement that Moilanen refused to accept.
As noted, if a CBA contains a finality provision, an employee is bound by the result of
the grievance process unless he can prove that the union breached its duty of fair representation.
Waldron, 388 F.3d at 594. Here, the CBA provides that arbitration is final and binding. Docket
No. 35 at 13; Docket No. 36 at 12. Although Moilanens claim was settled short of arbitration,
Moilanen does not contend that TEMPO lacked the authority to enter into a binding settlement.
In fact, Moilanen conceded at oral argument that, if he had been a union member at the time of
the settlement, he would be bound by it. Cf. Bowen v. U.S. Postal Serv., 459 U.S. 212, 226
(1983) (When the union, as the exclusive agent of the employee, waives arbitration or fails to
seek review of an adverse decision, the employer should be in substantially the same position as
if the employee had had the right to act on his own behalf and had done so.).
Moilanens only argument with respect to this claim, then, is that because he was no
longer a union member at the time his claim was settled, he is not bound by the result. But
Moilanen cites no authority for this proposition, and it would be strange if the otherwise binding
result of a mandatory grievance process could be undone by the happenstance of an employee
leaving his job before the grievance was resolved. The Court therefore concludes that Moilanen
-11-
can overcome the binding nature of the settlement only by proving that the union breached its
duty of fair representation. Waldron, 388 F.3d at 594. As Moilanen claims no such breach,
Count II must be dismissed.
C. Count III
In Count III, Moilanen alleges that Education Minnesotas intentional purchase of an
income protection plan that specifically limited mental disability protection to twenty-four
months violated the ADA by treating mental disability less favorably than physical disability.
Compl. 37. As Education Minnesota points out, though, courts have not been hospitable to
such claims. See, e.g., EEOC v. Staten Island Sav. Bank, 207 F.3d 144, 152 (2d Cir. 2000)
([W]e agree with the other circuits to have addressed the issue that the plain language of Title I
of the ADA does not require equal coverage for every type of disability and that such a
requirement, if it existed, would destabilize the insurance industry in a manner definitely not
intended by Congress when passing the ADA. (quoting Ford v. Schering-Plough Corp., 145
F.3d 601, 608 (3d Cir. 1998)); Weyer v. Twentieth Century Fox Film Corp., 198 F.3d 1104,
1116-18 (9th Cir. 2000) (rejecting ADA claim premised on two-year limitation on benefits for
disability caused by mental illness); Lewis v. Kmart Corp., 180 F.3d 166, 169-72 (4th Cir. 1999)
(same); Kimber v. Thiokol Corp., 196 F.3d 1092, 1101-02 (10th Cir. 1999) (same); Ford, 145
F.3d at 608-12 (same); Parker v. Metro. Life Ins. Co., 121 F.3d 1006, 1015-19 (6th Cir. 1997)
(en banc) (same).
The Eighth Circuit does not appear to have addressed whether an employer violates the
ADA by offering different levels of coverage for mental and physical disabilities, but the Court
agrees with Education Minnesota that the Eighth Circuit will likely agree with every other circuit
-12-
that has addressed the issue and hold that the practice does not violate the ADA. Cf. Krauel v.
Iowa Methodist Med. Ctr., 95 F.3d 674, 677-78 (8th Cir. 1996) (rejecting claim that exclusion of
medical coverage for infertility treatments violated the ADA). Moilanen argues, though, that
Education Minnesotas conduct violated the ADA because the CBA did not permit Education
Minnesota to purchase a policy that provided lesser benefits for different types of disabilities.
But that fact would establish a breach of contract, not a violation of the ADA. (And Moilanen
cannot base a 301 claim on such a breach because he failed to grieve it.) The Court therefore
grants summary judgment on Moilanens ADA claim.
D. Count IV
In Count IV, Moilanen alleges that Education Minnesotas intentional purchase of an
income protection plan that specifically limited mental disability protection to twenty-four
months violated the ADEA. Compl. 47. Moilanen does not explain how the two-year cap
discriminates on the basis of age. Indeed, as Education Minnesota points out, the cap falls more
heavily on younger employees than on older employees. The Court therefore grants Education
Minnesotas motion for summary judgment with respect to Count IV.
ORDER
Based on the foregoing, and on all of the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1. Defendants motion for summary judgment [Docket No. 30] is GRANTED.
2. Count I of plaintiffs complaint [Docket No. 1] is DISMISSED WITHOUT
PREJUDICE for failure to exhaust the contractual grievance process.
-13-
3. The remainder of plaintiffs claims are DISMISSED WITH PREJUDICE AND
ON THE MERITS.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: February 17, 2009 s/Patrick J. Schiltz
Patrick J. Schiltz
United States District Judge
 

 
 
 

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