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Allis-Chalmers Corp. v. Lueck

471 U.S. 202 (1985)

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Allis-Chalmers Corp. v. Lueck

United States Supreme Court

471 U.S. 202 (1985)

Facts

Allis-Chalmers Corp. (the company) (defendant) and its employees’ union (the union) had a collective-bargaining agreement that incorporated by reference a health-insurance plan funded by the company and administered by third party Aetna. The collective-bargaining agreement established a grievance-and-arbitration procedure as well as a separate grievance process for insurance-related disputes. Employee and union member Roderick S. Lueck suffered a non-occupational back injury, properly submitted a claim, and began collecting disability payments. Subsequently, according to Lueck, the company periodically cut off his payments and required additional medical examinations before restoring his benefits. Lueck believed he was being harassed even though his claims were eventually paid. Lueck made no attempt to grieve his insurance dispute and filed suit against the company and Aetna in state court, alleging a bad-faith tort claim for withholding and/or unreasonably delaying insurance payments. On cross-motions for summary judgment, the trial court ruled in favor of the company and Aetna. The Wisconsin Supreme Court reversed, concluding that Lueck’s claim did not arise under § 301 of the Labor Management Relations Act and was not subject to dismissal for failure to exhaust the collective-bargaining agreement’s arbitration procedure. The matter came before the United States Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Blackmun, J.)

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