Orlando v. Interstate Container ( 1996 )

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
11-6-1996
Orlando v. Interstate Container
Precedential or Non-Precedential:
Docket 96-1085
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 96-1085
____________
JOSEPH ORLANDO,
Appellee
v.
INTERSTATE CONTAINER CORPORATION,
Appellant
____________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
(D.C. Civ. No. 95-cv-01075)
____________
Argued September 11, 1996
Before: COWEN, LEWIS, and WEIS, Circuit Judges
Filed November 6, 1996
____________
Stephen V. Yarnell, Esquire
Brian Kirby, Esquire (ARGUED)
Joseph C. Ragaglia, Esquire
Harvey, Pennington, Herting & Renneisen, LTD.
Eleven Penn Center
1835 Market Street, 29th Floor
Philadelphia, PA 19103
Attorneys for Appellant
Russell W. Scianna, Esquire (ARGUED)
Russell W. Scianna, P.C.
300 Kenhorst Boulevard
Post Office Box 7622
Reading, PA 19603-7622
Attorney for Appellee
____________
OPINION OF THE COURT
____________
WEIS, Circuit Judge.
In this labor relations case, the district court concluded that, in
the
absence of appropriate language in a collective bargaining agreement, an
arbitration award in a grievance proceeding was not final. We agree and
will
affirm.
Plaintiff, a long-time employee of Interstate Container Corporation,
underwent heart bypass surgery in 1992 and collected benefits for several
months, as provided by a collective bargaining agreement. In January
1993,
his application for a disability pension was approved by the Paper
Industry
Union-Management Fund. He also applied for and received disability
insurance benefits from the Social Security Administration.
As a result of these developments, Interstate treated plaintiff as a
retired
employee and terminated his medical insurance as of January 19, 1993.
When his physical condition improved, plaintiff applied for reinstatement
of
employment with Interstate. When the Company denied his request, his
union filed grievances on his behalf. They were processed through the
steps
set out in the collective bargaining agreement and culminated in an
arbitrator's decision favorable to Interstate.
Plaintiff subsequently brought a breach of contract suit in state
court
and Interstate removed the action to federal court. The district judge
granted
partial summary judgment to Interstate, but held that on two breach of
contract counts, the case would have to proceed because the grievance
arbitration was not final and binding. The district court then certified
the
issue as a controlling question of law under 28 U.S.C. § 1292(b) and we
granted leave to appeal.
Article VII of the collective bargaining agreement directs that
"grievances shall be processed in the following manner" and lays out a
four-
step procedure beginning with the participation of a supervisor and
working
up through the plant manager and general manager. Step 4 provides that if
the dispute has not been settled at that point, the union can give the
company
"notice of its intention to submit the grievance to arbitration" and
request the
American Arbitration Association to supply a list of arbitrators. The
arbitrators' authority is limited to "interpreting and/or applying the
language
of the existing Labor Agreement"; they cannot "amend, modify, or alter in
any manner whatsoever, any provision of the Agreement." The words "final"
or "binding" do not appear in Article VII.
The preface to the entire collective bargaining agreement includes
the
following statement: "The terms herein stated are the exclusive terms for
collective bargaining between the respective parties. It is mutually
agreed by
the parties that all claims under prior contracts shall be considered null
and
void with the effective date of this Agreement."
The district court first noted the absence of such terms as "binding"
or
"final" in Article VII and then looked to the collective bargaining
agreement
in its entirety to determine whether the parties intended to preclude a
suit
under section 301 of the Labor Management Relations Act, 29 U.S.C. §
185(a). Although the company relied on the preface to the collective
bargaining agreement for its assertion that arbitration was exclusive and
binding, the court disagreed, finding that the paragraph "does not compel
the
conclusion that the arbitration provision . . . is final and binding."
Finally,
the district judge pointed out that although "the grievance procedures are
mandatory [that] does not necessarily mean they are final and binding."
Although the district court did not articulate the controlling
question of
law that it certified under 28 U.S.C. § 1292(b), from the briefs and
arguments
presented to us, we construe the question to be whether an arbitration
award
precludes review on the merits under section 301 when the collective
bargaining agreement does not provide that arbitration is the final,
binding,
or exclusive means of resolving the dispute. The answer to that question
requires consideration of several cross-currents in labor law.
I.
National labor policy favors access to a judicial forum to resolve
labor
disputes. Section 301 provides that "suits for violations of contracts
between
an employer and a labor organization . . . may be brought in any district
court
of the United States." 29 U.S.C. § 185(a).
Although section 301 facially appears to be only a jurisdictional
statute, it has been construed broadly to establish a cause of action as
well.
See Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456 (1957).
"Section 301 contemplates suits by and against individual employees as
well
as between unions and employers . . . § 301 suits encompass those seeking
to
vindicate `uniquely personal' rights of employees such as wages, hours,
overtime pay, and wrongful discharge." Hines v. Anchor Motor Freight,
Inc.,
424 U.S. 554, 562 (1976); Smith v. Evening News Ass'n, 371 U.S. 195, 198-
200 (1962).
In Groves v. Ring Screw Works, 498 U.S. 168, 173 (1990), the
Supreme Court commented on the "strong federal policy favoring judicial
enforcement of collective-bargaining agreements." The Court observed that
"there is a strong presumption that favors access to a neutral forum for
the
peaceful resolution of disputes." Id. In that case, the alternative to
resolution
of a grievance by a section 301 action was "economic warfare" between the
parties. In those circumstances, resort to the courts was preferable.
In Clayton v. International Union Automobile Workers, 451 U.S. 679
(1981), the Court recognized the importance of following contractually-
mandated grievance procedures. Thus, before resorting to a section 301
suit,
an employee "must attempt to exhaust any exclusive grievance and
arbitration procedures established by [a collective bargaining]
agreement."
Id. at 681. The Court observed that it was important "to protect the
integrity
of the collective-bargaining process and to further that aspect of
national
labor policy that encourages private rather than judicial resolution of
disputes
arising over the interpretation and application of collective-bargaining
agreements." Id. at 687.
Yet another consideration enters into the picture. In section 203(d)
of
the Labor Management Relations Act, 29 U.S.C. § 173(d), Congress
emphasized that: "Final adjustment by a method agreed upon by the parties
is declared to be the desirable method for settlement of grievance
disputes
arising over the application or interpretation of an existing collective-
bargaining agreement." Commenting on this admonition in United
Steelworkers v. American Mfg. Co., 363 U.S. 564, 566 (1960), the Court
noted that the policy "can be effectuated only if the means chosen by the
parties for settlement of their differences under a collective bargaining
agreement is given full play." Consequently, courts "should not undertake
to
review the merits of arbitration awards but should defer to the tribunal
chosen by the parties finally to settle their dispute." Hines, 424 U.S.
at 563.
Arbitration, however, is a question of contract and "a party cannot
be
required to submit to arbitration any dispute which he has not agreed so
to
submit." United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S.
574, 582 (1960). Finally, where the contract contains an arbitration
clause,
there is a presumption of arbitrability in the sense that it should apply
"unless
it may be said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted dispute." Id.
at 582-
83. The question of the arbitrability of an issue is ordinarily for the
court, but
once arbitration is found to be applicable, the court should not address
the
merits of the grievance. AT&T Technologies, Inc. v. Communications
Workers, 475 U.S. 643, 649 (1986).
From this brief review of these familiar cases in labor law, we
derive
the following policies. Section 301 suits provide a judicial remedy for
violations of a collective bargaining agreement. Hines, 424 U.S. at 562.
Exhaustion of collective bargaining grievance procedures is encouraged as
a
prerequisite to a section 301 suit. Clayton, 451 U.S. at 681; Republic
Steel
Corp. v. Maddox, 379 U.S. 650, 652 (1965). Collective bargaining
agreement grievance provisions may give rise to a presumption of
arbitrability. AT&T Technologies, 475 U.S. at 650. If the parties agree
that
they may not institute civil suits and that the grievance procedures are
final,
those provisions will be enforced. "[P]lenary review by a court of the
merits
would make meaningless the provisions that the arbitrator's decision is
final." United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S.
593,
599 (1960).
II.
Reconciling these sometimes conflicting policies is the task
presented
in this case. The parties do not dispute that the grievance is
arbitrable, that
arbitration is mandatory, and that it has resulted in an award. The issue
is
whether the award is "final" in the sense that the courts may not
rejudicate
the grievance. Preliminarily, we agree with the district court's view
that the
preface to the collective bargaining agreement does not govern the issue
here.
The quoted paragraph is simply a standard integration clause.
It is important to distinguish between terms sometimes used
interchangeably in this field. Arbitration may be mandatory in the sense
that
the parties are required to use that procedure. Although appellate
rulings
have used the word "exclusive," they do not govern the issue of whether
the
arbitration awards are "final" in the sense that they preclude resort to a
section 301 suit on the merits, but rather the opinions refer to the
requirement
that the grievance procedures be exhausted before filing suit. See, e.g.,
Clayton, 451 U.S. at 681; Maddox, 379 U.S. at 652.
Extrapolating from the general principles, we conclude that because
the
court must determine the duty to arbitrate from an interpretation of the
collective bargaining agreement, it also has the task of determining the
dispositive effect to be given to an award -- again, by construing the
contract.
Although a presumption in favor of arbitrability exists, that procedure
may
not be imposed upon the parties except by agreement. A contract that is
silent on the method of resolving grievances cannot be said to require
arbitration, despite the policy that favors that procedure. Warrior &
Gulf
Navigation, 363 U.S. at 582.
In this case, the employer argues that because the contract makes
arbitration mandatory, it must necessarily be final as well. That
argument
finds support in the policy favoring arbitration as a means of resolving
disputes, but fails to meet the requirement of authorization by agreement
of
the parties. It is one thing to say that the collective bargaining
agreement
may be liberally construed to give an expansive definition to the subject
matter of arbitration, but quite another to interpret the contract to
impose
finality on all grievances.
Imposing finality deprives a party of the right to present the merits
of
an arbitration award for review by a court. The opportunity to seek
correction of an allegedly incorrect resolution of a grievance is a
valuable
right and not one to be denied cavalierly. In that context, the
presumption of
arbitrability cannot bear the weight the employer attributes to it. It
cannot
create finality in the arbitration process when the collective bargaining
agreement is silent on the point. In short, the lack of a provision for
finality
or exclusivity does not overcome the presumption of access to the courts
for
review on the merits.
Our ruling in this respect is consistent with the policy of
recognizing
the compulsory nature of arbitration required by collective bargaining
agreements. Mandatory arbitration prior to resort to a court is a
different
concept from mandatory arbitration precluding resort to a court. We do
not
discourage, but continue to endorse, the submission of grievances to
arbitration. What we do decline to recognize is an expansive
interpretation of
the dispositive effect of arbitration when the collective bargaining
agreement
provides no basis for such a construction.
The parties have not cited any appellate cases directly on point, nor
has
our research uncovered any. Although Groves speaks of the strong
presumption in favor of access to a neutral forum, that case is not
precisely
applicable because the alternative was a strike, a course of action that
the
Court could not favor. To the same effect, see Dickeson v. DAW Forest
Prods. Co., 827 F.2d 627 (9th Cir. 1987) and Associated Gen. Contractors
v.
Illinois Conference of Teamsters, 486 F.2d 972 (7th Cir. 1973).
Interstate cites Communications Workers v. AT&T, 40 F.3d 426 (D.C.
Cir. 1994) as supporting its position. However, the issue in that case
was
whether arbitration was mandatory, not whether it was final. The Court
read
the collective bargaining provision as requiring mandatory arbitration.
Although the opinion said, in dictum, that the grievance procedure was
final,
it did not quote or cite the applicable language in the collective
bargaining
agreement. That case, therefore, is unhelpful.
Interstate also refers to district court decisions allegedly
demonstrating
that courts will not allow parties to "relitigate" arbitrated claims, even
in the
absence of a "finality clause" in the collective bargaining agreement.
Those
cases do not help Interstate, but simply present examples of wording in
collective bargaining agreements establishing finality -- language that is
lacking here. See, e.g, Sear v. Cadillac Auto Co., 501 F. Supp. 1350 (D.
Mass. 1980) aff'd 654 F.2d 4 (1st Cir. 1981) (agreement contained finality
clause); Frame v. B.F. Goodrich Co., 453 F. Supp. 63 (E.D. Pa. 1978)
(agreement provided that the specified grievance procedure was the
"exclusive" method of resolving all disputes); Los Angeles Newspaper Guild
v. Hearst Corp., 352 F. Supp. 1382 (C.D. Cal. 1973) aff'd 504 F.2d 636
(9th
Cir. 1974) (agreement stated that arbitrator's decision was "final").
We decline to consider an unpublished opinion of the Court of Appeals
for the Sixth Circuit, McInnes v. John Hancock Mut. Life Ins. Co., 53 F.3d
331 (6th Cir. 1995) (table), also cited by Interstate. That Court's rules
make
it clear that the opinion has no precedential value. Moreover, even if we
were to follow that case, we note that the Court did not analyze
contractual
language or the issue here, but rather accepted the district court's
interpretation of the collective bargaining agreement without discussion.
Our decision in Cady v. Twin Rivers Towing Co., 486 F.2d 1335 (3d
Cir. 1973) does not compel us to reach a different result. In that case,
a
seaman, who declined to pursue his grievance through arbitration, sought
damages in the district court under section 301. We held that his suit
was
barred because he failed to complete the "binding grievance procedures"
laid
out in his collective bargaining agreement and failed to prove that his
union
had breached its duty of fair representation. Id. at 1338-39.
Here, the parties rely solely on the wording of the contract for
their
positions, without any evidence of an established bargaining history or
course of conduct to support their interpretations. We do not rely solely
on
the absence of "talismanic" phrases, but we must give full credit to the
language the parties have chosen to include -- or not include -- in their
agreement.
Collective bargaining agreements almost invariably explain that
arbitration proceedings will be "final," "binding," or "exclusive," or use
other
words to that effect. This agreement was drafted by parties well-versed
in
labor matters and cognizant of that convention. The omission of any
indication that arbitration proceedings should be final and binding leads
us to
conclude that, if we nevertheless declared them to be so, we would not be
enforcing the will of the parties, as expressed in their agreement.
As we stated in Communication Workers v. AT&T, 932 F.2d 199, 210
(3d Cir. 1991), words such as "exclusive forum" support a finding that the
parties intended to preclude judicial review. Where the words "final,"
"binding," or "exclusive" fail to appear, and where the parties have not
shown a history of giving dispositive effect to arbitration decisions, we
cannot conclude that they intended to overcome the presumption favoring
access to a judicial forum.
The order of the district court will be affirmed.