United Steel, Paper and Forest v. PPG Industries, Incorporated , 751 F.3d 580 ( 2014 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 13-2468
UNITED STEEL, PAPER AND FORESTRY,
RUBBER, MANUFACTURING, ENERGY,
ALLIED INDUSTRIAL AND SERVICE
WORKERS INTERNATIONAL UNION,
AFL-CIO, CLC and LOCAL UNION
193-G,
Plaintiffs-Appellants,
v.
PPG INDUSTRIES, INC.,
Defendant-Appellee.
Appeal from the United States District Court for the
Central District of District of Illinois.
No. 09-2306 — Harold A. Baker, Judge.
ARGUED DECEMBER 6, 2013 — DECIDED MAY 9, 2014
2 No. 13-2468
Before KANNE and ROVNER, Circuit Judges, and DURKIN,
District Judge.*
ROVNER, Circuit Judge. Plaintiffs United Steelworkers and
Local Union 193-G (collectively, “the Union”) and defendant
PPG Industries disagreed about whether PPG timely presented
bargaining proposals under a collective bargaining agreement.
The parties entered into arbitration, and the arbitrator ruled
that some proposals were timely and others were not. The
Union then filed suit to enforce the arbitrator’s award. See 29
U.S.C. § 185(a). According to the Union, PPG violated the
award by implementing certain economic proposals that the
arbitrator had deemed untimely. The district court granted
summary judgment to PPG, concluding that the arbitrator’s
award did not preclude PPG from implementing those
proposals. The Union argues on appeal that the district court
misconstrued the award. But neither the text of the arbitrator’s
decision nor the arbitration record supports the Union’s
desired interpretation of the award. To accept the Union’s
arguments, we would have to substantively alter the award in
the Union’s favor. Because we may not do so, we affirm.
I.
PPG manufactures flat glass at a facility located in Mt. Zion,
Illinois. The Union represents a bargaining unit comprising
production and maintenance employees at the Mt. Zion plant.
The relationship between PPG and the Union has long been
governed by a collective bargaining agreement.
*
Of the United States District Court for the Northern District of Illinois,
sitting by designation.
No. 13-2468 3
PPG informed the Union in April 2009 that it wanted to
modify the agreement in an effort to reduce labor costs. Article
XXXIV, Section 2 of the agreement specifies how the parties
can propose modifications to the agreement. A party seeking
to alter the agreement must provide 30 days’ notice of its intent
to seek changes. The parties are then required to meet in
conference at least 10 days before the agreement expires. Any
proposed changes “shall be presented not later than the first
day of the conference” by the party seeking to modify the
agreement.
After PPG informed the Union of its intent to modify the
agreement, the parties’ representatives attended an informal
meeting on May 14, 2009. At the meeting PPG explained why
it was seeking to alter the agreement and set forth, in general
terms, its desired changes. According to PPG, its labor costs
exceeded its competitors’ by $10 an hour; to remain competi-
tive it required a reduction in labor costs from $37 to $27 per
hour. One possible method of achieving this reduction in costs,
PPG explained, would be to implement a “two-tier” wage
system, in which “first-tier” wages would be paid to existing
employees and lower “second-tier” compensation would be
paid to new hires and employees recalled from layoff. PPG
intended to buy out some existing employees, thereby reduc-
ing the number of workers receiving first-tier compensation.
PPG had recently implemented a similar system at its plant in
Fresno, California.
The Union asked whether it would be possible to achieve
the $10 per hour labor-cost reduction without requiring wage
concessions from existing employees. PPG responded that it
was indifferent about how to achieve the cost reductions, but
4 No. 13-2468
suggested that implementing only the “Fresno pattern”—the
two-tiered system—would not be enough to meet the $10
target. Before the meeting adjourned, the Union requested that
PPG provide the details of the Fresno arrangement. The Union
also asked PPG to calculate the labor-cost reductions that could
be achieved based on the Fresno two-tier model alone, without
concessions from current employees.
On May 28, 2009, PPG sent an e-mail to the Union that
detailed potential labor cost reductions and followed up on the
May 14 conversation. The e-mail included a chart1 calculating
the estimated average labor costs, including benefits, under the
two-tier system without any concessions from current employ-
ees. PPG calculated that, without concessions from current
employees, the company’s total labor costs per hour would be
$30.21, still more than $3 per hour above PPG’s $27 target. The
e-mail explained: “We can save more money by more Tier 1
folks leaving and being replaced at [] Tier II rates for the higher
skill jobs. That would certainly be the best scenario. However,
[we] really think it will be difficult to get to the $27 without
significant concessions from current employees.”
1
The Union contends that the version of the chart it received was
“garbled” and impossible to understand. We decline to consider this
assertion, which the Union mentioned for the first time in its reply brief,
see Marcatante v. City of Chicago, 657 F.3d 433, 438 (7th Cir. 2011), and which
the Union did not present in its statement of material facts before the
district court, see Everroad v. Scott Truck Sys., Inc., 604 F.3d 471, 476 (7th Cir.
2010). In any event, the Union does not assert that it had any problems
comprehending the body of the e-mail, which explained the chart’s
significance.
No. 13-2468 5
The parties’ official negotiating conference began on June
1, 2009, which was the last day to present new proposals under
the collective bargaining agreement. PPG delivered an opening
statement in which it reiterated its desire to reduce labor costs
to $27 per hour and implement a two-tiered wage structure.
On that day, PPG did not present particular dollar amounts of
wage or benefit cuts targeted at reaching the $27 per hour goal.
Instead PPG introduced, and the parties discussed, several
non-economic bargaining proposals such as changes to the
drug-testing policy and overtime administration.
During the next two days of the conference, June 2 and 3,
PPG put forward other proposals. Among those proposals was
a two-tier wage system that set forth compensation cuts for
employees on both tiers at specified dollar amounts. The Union
responded that it was not required to bargain about proposals
made on June 2 and 3, because Article XXXIV, Section 2 of the
collective bargaining agreement barred new proposals from
being made after the conference’s first day. PPG disagreed. The
Union filed a grievance, and the parties arbitrated the follow-
ing questions: “Did [PPG] violate Article XXXIV, Section 2? If
so, what should be the remedy?”
After taking evidence and considering the parties’ written
and oral submissions, the arbitrator issued an opinion ruling
some proposals timely and others untimely. After recounting
the history of the parties’ dispute, the arbitrator concluded that
by the beginning of the bargaining conference, the Union
“knew or should have know[n] some of [PPG’s] economic
proposals—specifically [PPG’s] labor cost goals as well as the
two-tier wage structure.” The arbitrator determined that PPG
6 No. 13-2468
“has preserved these proposals.” The opinion closed with a
three-sentence “Award”:
The Company’s proposal regarding $10 reduction in
costs is a viable contract proposal as is the two-tiered
system. Also, the Company’s non-economic proposals
made on June 1, 2009 are proper for consideration. The
Company proposals made on June 2 and 3, 2009 are
discretionary items for bargaining.
After the arbitrator issued his opinion, PPG put forward its
final offer, which included a two-tier wage system that cut
existing employees’ compensation. In the wake of the arbitra-
tor’s decision, PPG removed several items from its previous
offer because the items had been proposed after June 1 and
were not directly related to the $10 per hour reduction in labor
costs or the two-tiered system. For example, PPG removed
proposals that would have restricted certain severance benefits
and altered the pension agreement. The Union responded that,
despite the changes, the offer violated the arbitrator’s award,
and it threatened to go to court to “enforce” the award. The
Union did not make any more proposals of its own. Ultimately
PPG determined that the parties were at an impasse and
unilaterally implemented the final offer.
The Union then filed this lawsuit in the Central District of
Illinois under the Labor Management Relations Act, seeking to
“[c]onfirm and enforce” the arbitration award by rescinding
PPG’s unilateral implementation of its final offer and awarding
No. 13-2468 7
back pay and other relief.2 See 29 U.S.C. § 185(a) (authorizing
suits “for violation of contracts between an employer and a
labor organization”). Both parties moved for summary
judgment, and the district court granted summary judgment to
PPG. The court considered the arbitrator’s opinion and the
record before the arbitrator and determined that the Union was
aware on or before June 1 that economic concessions from
existing employees were on the table. Recognizing that the
arbitrator had approved as timely PPG’s proposals to cut labor
costs by $10 per hour and implement a two-tier wage system,
the court concluded that the arbitrator’s award did not prohibit
PPG from unilaterally implementing its final offer, including
the economic concessions that the Union opposed. The Union
moved for reconsideration and the court denied the motion.
II.
The Union raises a myriad of arguments on appeal, all
driving home the same basic point: the district court miscon-
strued the arbitration award. The Union argues that the
arbitrator’s decision was a resounding win for its side; it
believes that the arbitrator rejected as untimely almost all of
PPG’s economic proposals and barred PPG from implementing
these rejected proposals.3 If the district court had properly
2
Both parties also unsuccessfully pursued unfair labor practice charges
before the National Labor Relations Board.
3
Although the Union at times asserts that aspects of the arbitrator’s
opinion are ambiguous, its counsel acknowledged at oral argument that the
Union is “going for broke”; it seeks a federal-court order barring PPG from
implementing the challenged proposals rather than a remand to allow the
(continued...)
8 No. 13-2468
construed the arbitration award, the Union contends, it would
have entered summary judgment in the Union’s favor.
Despite labeling its suit as an action to “enforce” the award,
the Union in substance asks the federal courts to alter it; to
write in the margins of the arbitrator’s decision and add
language favorable to the Union. But the federal courts have an
extremely limited role in reviewing an arbitrator’s decision that
interprets a collective bargaining agreement. A court will not
overturn an arbitrator’s award, even if the arbitrator’s decision
is wrong on the law or the facts; an arbitrator’s award is
unenforceable only if he “strays from interpretation and
application of the agreement and effectively dispenses his own
brand of industrial justice.” Major League Baseball Players Ass’n
v. Garvey, 532 U.S. 504, 509 (2001) (internal quotation marks
and brackets omitted); see Johnson Controls, Inc. v. Edman
Controls, Inc., 712 F.3d 1021, 1025–26 (7th Cir. 2013); Local 15,
Int’l Bhd. of Elec. Workers v. Exelon Corp., 495 F.3d 779, 782–83
(7th Cir. 2007). A court will enforce the arbitrator’s award as
written and “may not interject itself into the arbitration process
by elaborating on or rewriting an arbitrator’s award.” United
Steelworkers of Am. v. Danly Machine Corp., 852 F.2d 1024, 1027
(7th Cir. 1988); see Brown v. Witco Corp., 340 F.3d 209, 216 (5th
Cir. 2003) (“[A] court is required to enforce an arbitration
award only as written by the arbitrator.”). If the arbitrator’s
decision as written is “too ambiguous to be enforced,” a court
may remand the case to the arbitrator for clarification. Bhd. of
3
(...continued)
arbitrator to clarify his decision. See Bhd. of Locomotive Eng’rs v. Union Pac.
R.R. Co., 500 F.3d 591, 592 (7th Cir. 2007).
No. 13-2468 9
Locomotive Eng’rs v. Union Pac. R.R. Co., 500 F.3d 591, 592 (7th
Cir. 2007). But such a remand is disfavored, and a court should,
if possible, resolve apparent ambiguities by examining the
arbitrator’s opinion and the record. See id.; Tri-State Business
Machines, Inc. v. Lanier Worldwide, Inc., 221 F.3d 1015, 1017 (7th
Cir. 2000); Teamsters Local No. 579 v. B & M Transit, Inc., 882
F.2d 274, 278–79 (7th Cir. 1989); Danly Machine Corp., 852 F.2d
at 1027. We review de novo the district court’s grant of sum-
mary judgment. Butler Mfg. Co. v. United Steelworkers of Am.,
336 F.3d 629, 632–33 (7th Cir. 2003).
The Union argues that the district court should have
recognized that the arbitrator barred PPG from implementing
any proposals that adversely affect existing employees (those
receiving first-tier compensation). The Union concedes that the
arbitrator approved wage cuts for employees receiving second-
tier compensation, but it argues that the arbitrator did not
approve wage cuts for existing employees. Nothing in the text
of the arbitrator’s opinion indicates that he made such a
distinction, so the Union relies instead on the arbitration
record. The Union contends that by June 1 (the deadline for
new proposals), PPG never suggested cuts to existing employ-
ees’ wages. Therefore, according to the Union, the arbitrator
could not possibly have approved these cuts as timely.
As the district court correctly concluded, however, the
record before the arbitrator establishes that by June 1, PPG had
raised the possibility of compensation cuts for existing employ-
ees. At the May 14 meeting, PPG explained that implementing
the “Fresno pattern”—the two-tiered system—would not be
sufficient on its own to achieve the desired reduction in labor
10 No. 13-2468
costs. In a May 28 follow-up e-mail, PPG calculated the
estimated savings from implementing the two-tiered system
without concessions from existing employees and determined
that it fell more than $3 per hour short of PPG’s cost-cutting
goals. The e-mail concluded: “[We] really think it will be
difficult to get to the $27 without significant concessions from
current employees.” PPG raised the possibility of compensa-
tion cuts for existing employees by June 1, and this court may
not “interject itself into the arbitration process” by reading into
the arbitrator’s opinion a conclusion that proposed wage cuts
for existing employees were untimely. See Danly Machine Corp.,
852 F.2d at 1027.
In a similar vein, the Union argues that the district court
should have recognized that the arbitrator barred PPG from
cutting employees’ benefits (as opposed to wages). Although
the arbitrator’s opinion does not distinguish between wages
and benefits, the Union insists that a distinction can be gleaned
from the arbitrator’s reference to a two-tier wage structure.
Relying on the arbitrator’s use of the word “wage” in describ-
ing the two-tier proposal, the Union argues “it is clear that . . .
the arbitrator did not mean to approve benefit reductions for
employees in either the lower tier or the higher tier.”
But it does not follow from the arbitrator’s use of the word
“wage” that he meant to distinguish between wages and
benefits, let alone to rule untimely any proposals cutting
benefits. Nor is the Union’s position supported by the arbitra-
tion record. In fact, PPG’s May 28 e-mail, which itemized the
estimated labor costs for different categories of employees
under a possible two-tier system, included a row entitled
“benefits”; according to that chart, the amount of hourly
No. 13-2468 11
benefits for second-tier employees was “$0.00,” a significant
reduction from the “$9.99” for other categories of employees.
In arguing that the district court should have recognized a
distinction between wages and benefits, the Union again seeks
relief that the arbitrator did not grant.
Finally, the Union contends that, by allowing PPG to
decrease the wages and benefits of existing employees, the
district court erroneously rendered the arbitrator’s award
“meaningless.” We reject this argument, because the Union is
wrong when it asserts that the court “interpreted the award as
imposing no obligation whatsoever on PPG.” It is true, as the
Union points out, that the arbitrator ruled some proposals
untimely and declared that proposals first introduced on June
2 and 3 were “discretionary items for bargaining.” But the
Union overlooks changes that PPG did make to its offer in the
wake of the arbitrator’s decision. PPG removed several
proposals that were introduced after June 1 and did not relate
to hourly labor cost reductions or the implementation of a two-
tier employment system. For example, PPG’s final offer excised
proposals that limited severance benefits and altered the
pension agreement. At oral argument, the Union’s attorney
acknowledged these changes but dismissed them as insignifi-
cant compared to the wage concessions. But PPG’s changes
made in response to the arbitrator’s award undermine the
Union’s argument that the award, as interpreted by both PPG
and the district court, imposed “no obligation whatsoever on
PPG.” The award may not have been as favorable to the Union
as it wanted, but it was not “meaningless.”
12 No. 13-2468
III.
For the foregoing reasons, we AFFIRM the judgment of
the district court.