Ganton Technologies v. Int'l Union 627 , 358 F.3d 459 ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-2952
GANTON TECHNOLOGIES, INC.,
d/b/a INTERMET RACINE PLANT
AND INTERMET RACINE MACHINING
OF RACINE, INC.,
Plaintiff-Appellant,
v.
INTERNATIONAL UNION, UNITED
AUTOMOBILE, AEROSPACE AND
AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA, U.A.W.,
LOCAL 627,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 02-C-0587—Rudolph T. Randa, Chief Judge.
____________
ARGUED JANUARY 16, 2004—DECIDED FEBRUARY 12, 2004
____________
Before FLAUM, Chief Judge, and RIPPLE and ROVNER,
Circuit Judges.
FLAUM, Chief Judge. Plaintiff-Appellant Ganton Tech-
nologies, Inc., (“Ganton”) appeals the judgment of the
district court upholding an arbitrator’s decision in favor
of International Union, United Automobile, Aerospace
2 No. 03-2952
and Agricultural Implement Workers of America, U.A.W.,
Local 627 (“the Union”). For the reasons stated below,
we affirm the judgment of the district court.
I. Background
Prior to 1999, Ganton owned and operated two machin-
ing and die casting facilities in Racine, Wisconsin, and a
third in Pulaski, Tennessee. In December 1999, Intermet
Corporation (“Intermet”) purchased all of Ganton’s issued
and outstanding stock and Ganton became a wholly-owned
subsidiary of Intermet. Ganton continues to own and
operate its three facilities, although they now do business
as “Intermet Racine Machining”, “Intermet Racine Plant”,
and “Intermet Pulaski Plant.”
The employees of the two Racine plants were repre-
sented by the Union both before and after Ganton became a
wholly-owned subsidiary of Intermet. On February 14,
2000, the parties executed a new collective bargaining
agreement entitled “Labor Agreement between Intermet
Racine Machining, Intermet Racine Plant and International
Union, United Automobile, Aerospace and Agricultural
Implement Workers of America (UAW) Local Union No.
627.”
The collective bargaining agreement includes four terms
relevant to this litigation. The “AGREEMENT” provision,
which follows the preamble and precedes Article I, states
that:
This agreement made and entered into this February
14, 2000 by and between INTERMET-Racine Plant and
INTERMET Racine Manufacturing of Racine, WI (for-
merly Ganton Technologies Inc. herein after [sic] re-
ferred to as the Company), or its successors, and the
International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America,
No. 03-2952 3
U.A.W., Local 627 (herein after [sic] referred to as the
Union).
Other relevant terms include Article 5, Sections 1 and 2(b),
which require the parties to submit unsettled grievances
to arbitration, and Article 5, Section 3, which states
that “[t]he decision of the arbitrator shall be final and
binding upon both parties.” Finally, the “PLANT WORK
TRANSFER” provision, Article 15, Section 8, states that:
The Company agrees that they will not move any
production from its Racine facilities to any other
Company owned facility, if such transfer of work re-
sults in any job losses in Racine.
This dispute arose in February 2000 when Ganton laid
off employees from the Racine tool room and began to
outsource new tool work to companies not owned by
Ganton. In April 2000, the Union filed two grievances
charging the “Company” with violating Article 15, Section
8, by improperly transferring “tooling work” and “produc-
tion,” and demanding that the tool work be returned to
Local 627 Bargaining Unit employees. The parties were
unable to resolve the grievances and the matter was
submitted to arbitration.
In September 2000, the parties appeared before an
arbitrator. The arbitrator phrased the issue before him
as whether “the Company violate[d] Article 15, Section 8,
of the contract when it outsourced tool room work from its
Racine, Wisconsin, facility and, if so, what is the approp-
riate remedy?”
Neither party presented the definition of the term “Com-
pany” as an issue before the arbitrator. However, it was
stipulated at the arbitration hearing that “Ganton Technol-
ogies was taken over and purchased by the Intermet
corporation on December 20, 1999.” In every brief sub-
mitted to the arbitrator by Ganton, the “Intermet Corpora-
tion” was indicated as the employer and the company.
4 No. 03-2952
Ganton did not clarify in any of its briefs that the com-
pany’s identity was defined in the “Agreement” section of
the collective bargaining agreement as “INTERMET-Racine
Plant and INTERMET Racine Manufacturing of Racine, WI
(formerly Ganton Technologies Inc. herein after [sic]
referred to as the Company), or its successors.” Ganton
selected two other sections of the collective bargaining
agreement, however, to highlight in its pre-hearing brief
as the “relevant contract provisions” before the arbitator.
In its post-hearing brief, Ganton continued to repre-
sent itself as “Intermet.” The brief states that “Intermet
demonstrated that: (1) not one piece of tooling work that
was in process at the Racine plant was transferred to
any other Intermet-owned facility; (2) . . . the Company
has the exclusive right to determine where new tooling
work will occur, including the right to transfer some
or all of that new tooling work to non-Intermet-owned
companies . . . .” (Emphasis in original.)
The arbitrator found that he was unable to resolve issue
presented without first determining whether “Company
owned facility,” as stated in Article 15, Section 8, referred
only to those facilities owned by Ganton, or whether
it encompassed all facilities owned by Ganton’s par-
ent company, Intermet Corporation. In concluding that
“Company-owned facility” “means all of Intermet’s facil-
ities” (emphasis in original), the arbitrator noted that the
Union “ratified the contract after Intermet purchased
Ganton Technologies, Inc.” (Emphasis in original.) The
arbitrator found additional support for his conclusion in
the preamble and front page of the collective bargain-
ing agreement, both of which state that the agreement
binds “Intermet-Racine Machining and Intermet-Racine
Plant.” However, it appears that the arbitrator did not
consider the “Agreement” term that defines “Company”, as
the arbitration award does not reference or discuss that
term.
No. 03-2952 5
Having determined that the scope of Article 15, Section 8,
was not limited to Ganton’s facilities, but rather included
all facilities owned by Intermet, the arbitrator concluded
that “the Company did in fact violate Article 15, Section 8,
when it transferred . . . work to its other Company-owned
facilities and when those transfers caused some or all of
the job losses in the tool room.” The arbitrator ordered
Ganton to retransfer all work that had been transferred
from the Racine tool room to other Intermet facilities and
to recall all tool room employees who had been laid off or
whose hours had been reduced because of the transfer. The
arbitrator also forbade Ganton from transferring any fu-
ture production work from the Racine facility if those
transfers would result in future job losses or reduced
work hours at the Racine tool room.
Ganton brought suit under 29 U.S.C. § 185 seeking
to vacate the arbitration award on the ground that the
arbitrator exceeded his authority by disregarding relevant
provisions of the bargaining agreement, specifically, the
definition of “Company” found in the “Agreement” term.
The district court entered summary judgment in favor of
the Union, holding that Ganton failed to properly present
the argument to the arbitrator, and further that the
arbitrator’s decision reflected an interpretation of the
collective bargaining agreement and therefore must be
affirmed under the high degree of deference given to
arbitral orders. Ganton now appeals.
II. Analysis
Judicial review of an arbitrator’s decision is limited.
Butler Mfg. Co. v. United Steelworkers of Am., 336 F.3d 629,
632 (7th Cir. 2003). The Court may not “consider the
disputants’ arguments afresh,” Dean v. Sullivan, 118 F.3d
1170, 1171 (7th Cir. 1997), nor may it overturn the arbi-
trator’s decision on the ground that the arbitrator commit-
6 No. 03-2952
ted serious error. Major League Baseball Ass’n v. Garvey,
532 U.S. 504, 509 (2001). Rather, the role of the reviewing
court is to determine whether the arbitrator’s award “draws
its essence from the collective bargaining agreement,”
United Steelworkers of Am. v. Enterprise Wheel & Car
Corp., 363 U.S. 593, 597 (1960), and “only if ‘there is no
possible interpretative route to the award, so [that] a
noncontractual basis can be inferred,’ may the award be set
aside.” International Truck and Engine Corp. v. United
Steel Workers of Am., Local 3740, 294 F.3d 860 (7th Cir.
2002) (quoting Chicago Typographical Union No. 16 v.
Chicago Sun-Times, Inc., 935 F.2d 1501, 1506 (7th Cir.
1991)). Further, the “scope for a federal court to review
tardy arguments is compressed still further, to nil.” Dean,
118 F.3d at 1172.
Ganton argues that the arbitration award must be
vacated because the arbitrator disregarded the defini-
tion of “Company” provided in the “Agreement” term of the
collective bargaining agreement. The district court held
that Ganton waived this argument because it did not
present it to the arbitrator. We agree.
The failure to pose an available argument to the arbitra-
tor waives that argument in collateral proceedings to
enforce or vacate the arbitration award. See United
Steelworkers of America, AFL-CIO-CLC v. Danly Mach.
Corp., 852 F.2d 1024, 1027 (7th Cir. 1998) (stating that “it
was incumbent upon [the employer] to raise all
arguments . . . at the arbitration proceeding”). Arbitration
would not be an efficient and cost-effective method of resolv-
ing labor disputes if federal courts indulged late ar-
guments that were not brought to the attention of
the arbitrator below. See National Wrecking Co. v.
International Broth. of Teamsters, Local 731, 990 F.2d 957,
960-61 (7th Cir. 1993).
Ganton claims that, to preserve an argument for presen-
tation in an enforcement proceeding, a party need only
No. 03-2952 7
present the information that underlies the argument at
the arbitration proceeding. Ganton contends that it did
not waive its argument regarding the definition of “Com-
pany” provided in the “Agreement” term because it ade-
quately apprised the arbitrator of the argument by offering
him a copy of the collective bargaining agreement, which
included the “Agreement” term, as well as a copy of
Ganton’s response to the Union’s grievance, which defined
“company owned facility” as “the Pulaski, Tennessee fa-
cility.” In support, Ganton cites Chicago Newspaper Guild
v. Field Enterprises, Inc., 747 F.2d 1153, 1157 (7th Cir.
1984) for the proposition that parties need only present
“available information” to the arbitrator in order to pre-
serve a defense to an adverse award.
In Chicago Newspaper, the union and employer appeared
before an arbitrator to resolve a grievance that the union
had submitted on behalf of a discharged employee. During
the pendency of the arbitration, the employer laid off
550 employees, yet neither party informed the arbitrator
of the layoffs. Id. at 1155. The arbitrator issued an
award ordering the employee reinstated and paid back
pay from the date of his wrongful discharge. Id. When the
employer paid the employee only the back pay and bene-
fits owed from the time period between the employee’s
discharge and the mass layoff, the union brought an
enforcement action seeking reinstatement and the remain-
der of the back pay owed. Id. At the enforcement pro-
ceeding, the employer argued that it had fully complied
with the award because the employee would have been
terminated during the mass layoff. Id. at 1156. This Court
found that the employer had waived its opportunity to pre-
sent that argument because it had failed to apprise
the arbitrator of the “available information bearing on
the appropriate remedy.” Id. at 1158.
That Chicago Newspaper holds that waiver is effec-
tuated by failing to furnish pertinent information to the
8 No. 03-2952
arbitrator does not mean that the presentation of infor-
mation, standing alone, is sufficient to avoid waiver.
Rather, parties must “present . . . arguments to the arbi-
trator below” in order to avoid waiver. Id. at 1158. If, as
Ganton suggests, the mere submission of the collective
bargaining agreement, union grievance, and the employ-
er’s response to the grievance was adequate to preserve
all arguments arising from the text of a collective bar-
gaining agreement, then it would be impossible for this
Court to find waiver in any enforcement proceeding.
“Arbitration would just be the first of a series of steps
that always culminated in court litigation, and it would
lose its raison d’être.” Butler, 336 F.3d at 632.
That “Company,” as defined in the “Agreement” term
of the collecting bargaining agreement meant “INTER-
MET Racine Plant and INTERMET Racine Manufactur-
ing of Racine, WI (formerly Ganton Technologies Inc. here-
in after [sic] referred to as the Company), or its successors”
is not an argument that the arbitrator would have likely
found on his own. Ganton obfuscated the issue in its pre-
hearing brief by indicating that two other provisions of
the collective bargaining agreement were the only “rele-
vant contract provisions” to the resolution of the dispute.
Ganton also misinformed the arbitrator by identifying the
employer as “Intermet” and arguing in its post-hearing
brief that no tooling work had been transferred to “any
other Intermet-owned facility.” (Emphasis in original).
Ganton concedes that its briefs to the arbitrator omit-
ted any mention of the definition of “Company” or the
“Agreement” term. Yet, Ganton argues that this omission
was excusable because neither party believed the defini-
tion to be at issue. See United Food & Commercial Workers
Local 100A, AFL-CIO & CLC v. John Hofmeister and Son,
Inc., 950 F.2d 1340, 1344-45 (7th Cir. 1991) (“Of course,
parties cannot be expected to anticipate every possible de-
fense or datum that might influence an arbitrator’s
No. 03-2952 9
award.”) In this case, however, Ganton knew that the term
was, in its words, “indispensable to any determination of
whether Ganton violated the Agreement.” Ganton had
plenty of opportunities to present the argument and can-
not now, having received an unfavorable ruling from the
arbitrator, object to the award on thebasis that the arbitra-
tor ignored the definition of “Company” provided in the
collective bargaining agreement.
III. Conclusion
The district court’s grant of summary judgment to the
Union is AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—2-12-04