United Food & Commercial Workers International Union v. King Soopers, Inc. , 743 F.3d 1310 ( 2014 )

FILED
United States Court of Appeals
Tenth Circuit
PUBLISH
February 28, 2014
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
UNITED FOOD & COMMERCIAL
WORKERS INTERNATIONAL UNION,
LOCAL NO. 7,
Plaintiff - Appellant,
v. No. 12-1409
KING SOOPERS, INC.,
Defendant - Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:11-CV-02449-BNB-KMT)
John P. Bowen (Jamie R. Scubelek, Associate General Counsel, on the briefs), United
Food and Commercial Workers International Union Local No. 7, Wheat Ridge, Colorado,
for Plaintiff – Appellant.
Raymond M. Deeny, (Matthew M. Morrison with him on the brief), Sherman & Howard
L.L.C., Denver, Colorado, for Defendant – Appellee.
Before HARTZ, HOLLOWAY, and HOLMES, Circuit Judges.
HARTZ, Circuit Judge.
The United Food and Commercial Workers International Union, Local No. 7 (the
Union) sued King Soopers, Inc. under § 301 of the Labor Management Relations Act of
1947 (LMRA), 29 U.S.C. § 185, to enforce an arbitration award. The United States
District Court for the District of Colorado ruled that the award did not draw its essence
from the Union’s collective bargaining agreement (CBA) with King Soopers and refused
to enforce it. We reverse. Although King Soopers could have brought a timely action to
vacate the award on the ground adopted by the district court, it did not do so. As we
decided in International Brotherhood of Electrical Workers, Local Union No. 969 v.
Babcock & Wilcox, 826 F.2d 962 (10th Cir. 1987), it therefore cannot raise that defense
against the Union’s action to enforce the award. For the same reason, we also hold that
King Soopers cannot raise the defense that the arbitrator lacked authority to impose a
remedy. We have jurisdiction under 28 U.S.C. § 1291 and reverse with instructions to
enforce the award.
I. BACKGROUND
The Union represents some of the employees of King Soopers, which operates
retail grocery stores throughout Colorado. The CBA between King Soopers and the
Union provides for arbitration of grievances.
In 2002 an employee filed a grievance complaining that King Soopers had created
a hostile work environment when it failed to protect him from a disagreeable customer.
2
For reasons not disclosed by the record, the processing of the grievance was prolonged
and an arbitration hearing was not held until February 2011. In a decision issued on
June 3, 2011, the arbitrator concluded that the dispute was arbitrable even though it
related to customers, who are not subject to the CBA. And based on statutes providing
workplace protections, the policies of King Soopers’ parent company, and other
considerations, he concluded that King Soopers had a duty to protect employees against a
hostile work environment and found that King Soopers had breached that duty. He
ordered King Soopers to “take all steps necessary” to protect against a hostile work
environment, including establishing a “zero-tolerance policy for violence, with
appropriate notices to employees and the general public,” and excluding the problematic
customer “until the parties are satisfied with his behavior.” Aplt. App., Vol. II at 120.
King Soopers neither complied with the award nor sought to vacate it in court.
On September 16, 2011 (after expiration of the time to seek to vacate the award),
the Union filed its complaint in federal district court to enforce the award under § 301 of
the LMRA. It filed an amended complaint 11 days later. King Soopers answered that the
award was unenforceable for various reasons, including (1) that the parties did not agree
to arbitrate disputes relating to a hostile work environment created by a customer; (2) that
the award conflicted with the CBA’s reservation to King Soopers of the right to
promulgate workplace policies; (3) that nothing in the CBA authorized the award and the
arbitrator had “unlawfully imposed his own brand of industrial justice,” Aplt. App.,
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Vol. II at 11; and (4) that the arbitrator did not have authority to impose a remedy once he
determined that the CBA had been violated. Both parties moved for summary judgment.
The district court granted summary judgment for King Soopers. It ruled that King
Soopers’ affirmative defenses were time-barred because they could have been, but were
not, raised as the basis for an action to vacate the award within the 90-day limitations
period under the Colorado Uniform Arbitration Act, C.R.S. § 13-22-223.1 See Babcock
& Wilcox, 826 F.2d at 964 (timeliness of action under LMRA § 301 to vacate arbitration
award is determined by reference to appropriate state statute). Nevertheless, it declined
to enforce the award because the award did not draw its essence from the CBA. The
Union appeals.
II. DISCUSSION
“As in other cases in which the district court grants summary judgment, we review
the grant of summary judgment in a labor arbitration case de novo.” Champion Boxed
Beef Co. v. Local No. 7 United Food & Commercial Workers Int’l Union, 24 F.3d 86, 87
(10th Cir. 1994). We apply “the same standards that the district court should have
applied.” Carolina Cas. Ins. Co. v. Nanodetex Corp., 733 F.3d 1018, 1022 (10th Cir.
2013) (internal quotation marks omitted). Summary judgment is appropriate “if the
movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
1
The limitations period was expanded to 91 days (13 weeks), effective July 1, 2012.
See S. 12-175, 68th Gen. Assemb., 2d Reg. Sess. (Colo. 2012).
4
This appeal is controlled by our decision in Babcock & Wilcox, 826 F.2d 962.
That case involved a dispute between Babcock & Wilcox (B&W) and the International
Brotherhood of Electrical Workers, Local Union No. 969 (Local 969). A joint
conference committee (JCC) had resolved a grievance by ordering B&W to pay
additional travel reimbursements. See id. at 964. B&W denied receiving notice of the
hearing before the JCC, but it did receive notice of the award. See id. It responded to the
notice by contending that a different procedure should have been followed in the dispute
and that the grievance should not have been submitted to the JCC. See id. B&W did not
comply with the award or go to court to vacate it within the 90-day limit set by Colorado
law. See id. After expiration of the 90 days, Local 969 filed an enforcement action in
federal court under § 301 of the LMRA. See id. B&W answered that the award was
unenforceable because B&W had not received notice of the JCC hearing and the JCC
lacked jurisdiction to decide the dispute. See id. The district court did not consider the
merits of B&W’s defenses because B&W had not moved to vacate the award within the
limitations period. See id.
We affirmed. We held that “the passing of the time limitation period for an action
to vacate an arbitration award completely bars, in a subsequent confirmation proceeding,
the raising of . . . defenses” that “could have been raised as grounds to vacate the award.”
Id. at 964–65. We specifically noted that B&W could have raised in proceedings to
vacate the award both its claim that the JCC lacked jurisdiction and its claim that it had
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not received notice of the hearing. See id. at 965, 966. We supported our ruling by
explaining that time is of the essence in resolving labor disputes:
[T]he role of arbitration as a mechanism for speedy dispute resolution
disfavors delayed challenges to the validity of an award. In addition
to cutting off stale defenses, a 90-day limitations period such as that
specified in the Colorado statute serves the federal policy of favoring
voluntary arbitration as the most expedient method of resolving labor
disputes. The purpose of the relatively short limitations period is to accord
the arbitration award finality in a timely fashion. To permit a party to
forego [sic] a timely challenge to the validity of an award and then raise
its objections in an otherwise summary confirmation proceeding would be
contrary to the policy of promoting quick and final resolution of labor
disputes.
Id. at 966 (citations and internal quotation marks omitted).
We cannot distinguish Babcock & Wilcox from this case. King Soopers has not
suggested, and we cannot see, why it could not have gone to court to vacate the
arbitrator’s award on the same grounds that it later invoked to oppose its confirmation.
Under the rule of Babcock & Wilcox, it cannot evade the time limit to bring an action to
vacate an award by waiting until an enforcement proceeding before it raises its challenge.
Our conclusion is supported by the decisions of the other circuits to address the
issue. In Sheet Metal Workers International Ass’n, Local Union No. 36 v. Systemaire,
Inc., 241 F.3d 972, 976 (8th Cir. 2001), a union sued under § 301 to enforce an award
seven months after it had been issued. Systemaire had never tried to vacate the award,
and the 90-day time limit for doing so had expired. See id. at 975–76. Nevertheless, it
asserted that the award was unenforceable because it did not draw its essence from the
CBA. See id. The district court did not address the merits of Systemaire’s defense and
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granted summary judgment for the union based solely on the untimeliness of
Systemaire’s challenge. See id. at 975. The Eighth Circuit affirmed, reasoning that the
trial court was precluded from considering whether the award drew its essence from the
CBA because Systemaire had failed to timely move to vacate the award. See id. at 976.
Similarly, in Sullivan v. Lemoncello, 36 F.3d 676, 681 (7th Cir. 1994), a joint arbitration
board had issued two awards against Lemoncello (the employer), Lemoncello never
moved to vacate or modify them, and the union sued to enforce them after expiration of
the limitations period to move to vacate them. See id. at 679–80. Lemoncello asserted
that they were unenforceable because they did not draw their essence from the CBA. See
id. at 681. The Seventh Circuit held that Lemoncello was barred from attacking the
awards because he had not challenged them within the required time period. See id. It
said that “[t]he well settled case law in this circuit holds that failure to challenge an
arbitration award within the applicable limitations period renders the award final.” Id.(internal quotation marks omitted). It proceeded to conclude, “for the sake of
completeness,” that the awards did draw their essence from the CBA, but only after
noting that “we are not obligated to do so in light of our disposition of the statute of
limitations issue.” Id. at 682. See also Serv. Emps. Int’l Union, Local No. 36 v. Office
Ctr. Servs., Inc., 670 F.2d 404, 406 n.5, 412 (3d Cir. 1982) (rejecting all of employer’s
defenses (which included contention that the grievance committee’s decision did not
draw its essence from the CBA) because employer had not moved to vacate the award
within the limitations period).
7
The authority cited by King Soopers is readily distinguished. First, King Soopers
relies on the following language in United Steelworkers v. Enterprise Wheel & Car
Corp., 363 U.S. 593, 597 (1960): “[A]n arbitrator . . . does not sit to dispense his own
brand of industrial justice. . . . [H]is award is legitimate only so long as it draws its
essence from the [CBA]. When the arbitrator’s words manifest an infidelity to this
obligation, courts have no choice but to refuse enforcement of the award.” (emphasis
added). But there was no issue in Enterprise about the timeliness of the challenge to the
enforcement of the arbitrator’s award, and the Supreme Court saw no need to address the
matter.
There is nothing peculiar about ruling that a potentially meritorious argument is
barred by delay in raising it. As the Supreme Court has pointed out, “It goes without
saying that statutes of limitations often make it impossible to enforce what were
otherwise perfectly valid claims. But that is their very purpose . . . .” United States v.
Kubrick, 444 U.S. 111, 125 (1979). In the specific context of arbitration, the Second
Circuit has explained that “[t]he role of arbitration as a mechanism for speedy dispute
resolution disfavors delayed challenges to the validity of an award.” Florasynth, Inc. v.
Pickholz, 750 F.2d 171, 177 (2d Cir. 1984). Hence, “[w]hen the three month limitations
period has run without vacation of the arbitration award, the successful party has a right
to assume the award is valid and untainted, and to obtain its confirmation in a summary
proceeding.” Id. That is particularly true in labor arbitration, where labor peace is
threatened by the prolongation of disputes. See Posadas de Puerto Rico Assocs., Inc. v.
8
Asociacion de Empleados de Casino de Puerto Rico, 873 F.2d 479, 483 (1st Cir. 1989)
(“[A] brief window of opportunity [for challenging labor arbitration awards] abets the
speedy adjudication of workplace grievances, promoting both the smooth operation of
efficient mechanisms for private dispute resolution established in [CBAs] and the federal
interest in industrial stability.”).
The five lower-court cases cited by King Soopers also do not support its assertion
that courts can always “independently review[] the enforceability of an arbitrator’s
award, even when the party opposing enforcement has waived its affirmative defenses by
failing to move to vacate the award within the applicable limitations period.” Aplee. Br.
at 24. We discuss each.
In D.H. Blair & Co. v. Gottdeiner, 462 F.3d 95 (2d Cir. 2006), timeliness was not
an issue. Both parties had moved to vacate in part and enforce in part within 90 days
after the award had been issued. See id. at 101–02. Likewise, timeliness was not raised
by the parties or addressed by the court in Hoeft v. MVL Group, Inc., 343 F.3d 57, 61
(2d Cir. 2003) (Hoeft sought enforcement a month after award was issued and MVL
responded by moving to vacate), overruled on other grounds by Hall Street Assocs.,
L.L.C. v. Mattel, Inc., 552 U.S. 576, 585 (2008), or in Local 339 United Service Workers
Union v. Advanced Ready Mix Corp., No. 12-CV-4811(RRM)(VMS), 2013 WL 685447(E.D.N.Y. Feb. 24, 2013).
King Soopers can get slightly more sustenance from New York City District
Council of Carpenters Pension Fund v. Eastern Millennium Construction, Inc.,
9
No. 03 Civ. 5122(DAB), 2003 WL 22773355 (S.D.N.Y. Nov. 21, 2003). First the court
said that the opponent of enforcement of the arbitration award had “made no showing as
to any of the statutory grounds for vacation, correction or modification.” Id. at *2.
Appended to that sentence was a footnote stating that the opponent had “waived its right
to contest confirmation” by not filing a timely motion to vacate. Id. at *2 n.2. The court
then proceeded, however, to state, “Furthermore, the arbitrator . . . acted within the
authority given to him by the Collective Bargaining Agreement.” Id. at *2. One might
infer that the court was holding that despite the waiver it had an obligation to examine
whether the arbitrator had authority to issue the award. But that may read too much into
the opinion. It is not unusual for courts to provide alternative grounds for their decisions.
In any event, if the court was adopting the view advanced by King Soopers, it provides
no reasoning to support that view.
Finally, King Soopers asserts that the Ninth Circuit in Brotherhood of Teamsters
Local No. 70 v. Celotex Corp., 708 F.2d 488 (9th Cir. 1983), “reject[ed] the argument
that ‘a court faced with a petition to confirm [an arbitration award] has no choice but to
confirm the award entirely if the party opposing the confirmation had failed to previously
move to vacate the award within the applicable statutory period.’” Aplee. Br. at 24–25
(quoting Celotex Corp., 708 F.2d at 491 n.4; brackets in original). This misreads the
opinion. Although the court noted that “none of the cases the Union cites supports th[at]
contention,” it expressly declined to resolve the issue because it did not need to address it
under the facts of the case. Celotex Corp.,708 F.2d at 491 & n.4. Moreover, the Ninth
10
Circuit’s reluctance to endorse the view that courts must always confirm an award that
was not timely challenged is not necessarily inconsistent with our holding. The
reluctance could stem from concern about awards challenged on grounds that could not
have been raised in a timely motion to vacate, awards whose substance is contrary to
public policy (such as an award requiring racial discrimination), or awards imposed on
persons not parties to the arbitration agreement.
Accordingly, we hold that the district court erred in setting aside the arbitration
award on the ground that it did not draw its essence from the CBA.
As an alternative ground to affirm the district court’s judgment, King Soopers
argues that even if the arbitrator had authority to decide that it had breached the CBA, he
had no authority to order a remedy. But our decision in Babcock & Wilcox also disposes
of this argument. B&W had argued that the JCC lacked jurisdiction to hear the particular
dispute because the issue should have been decided under the grievance procedure
established in a different agreement. See Babcock & Wilcox, 826 F.2d at 963‒64. We
held that the argument was barred because it had not been timely raised in a motion to
vacate. In this case, King Soopers is arguing that even if the arbitrator could hear the
dispute, he did not have authority to order a remedy. But if untimeliness can bar a
challenge that the arbitration agreement did not authorize the arbitrator to decide the
merits of the dispute and impose a remedy, a fortiori it bars a challenge that the
arbitration agreement, even if it authorized the arbitrator to decide the merits of the
dispute, did not authorize the arbitrator to impose a remedy. We note that King Soopers
11
cites no case in which a court has held that a party to an arbitration agreement can raise
such an argument to oppose enforcement of an arbitration award despite the party’s
failure to move to vacate the award within the limitations period.
To be sure, the lack of subject-matter jurisdiction of the federal court can be raised
at any time; and King Soopers insists that the arbitrator’s lack of authority deprives the
federal court of subject-matter jurisdiction. But a lack-of-authority defense does not
implicate federal-court jurisdiction. Federal courts have jurisdiction under § 301 over
suits “that claim a [labor] contract has been violated.” Textron Lycoming Reciprocating
Engine Div., Avco Corp. v. United Auto. Workers, 523 U.S. 653, 657 (1998); see United
Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 37 (1987) (“The courts have
jurisdiction to enforce collective-bargaining contracts . . . .”). Here, the Union claims that
King Soopers violated the CBA by not complying with the arbitration award. Hence, its
claim falls squarely within our jurisdiction under the LMRA. See Textile Workers Union
v. Lincoln Mills, 353 U.S. 448, 456 (1957) (Section 301 was designed to “place[]
sanctions behind agreements to arbitrate grievance disputes.”). Once a federal court has
§ 301 jurisdiction, the defendant’s affirmative defenses do not ordinarily deprive it of
subject-matter jurisdiction. As the Supreme Court wrote in Textron:
[Section 301(a)] simply erects a gateway through which parties may pass
into federal court; once they have entered, it does not restrict the legal
landscape they may traverse. Thus, if in the course of deciding whether
a plaintiff is entitled to relief for the defendant’s alleged violation of a
contract, the defendant interposes the affirmative defense that the contract
was invalid, the court may, consistent with § 301(a), adjudicate that
defense.
12
523 U.S. at 657–58. If the federal court’s jurisdiction is not impaired by the defense that
the agreement to arbitrate is invalid, we fail to see how it could be impaired by the
defense that the arbitrator exceeded his authority under a valid arbitration agreement. We
conclude that King Soopers’ argument does not raise a jurisdictional question.
Finally, at oral argument, King Soopers argued on policy grounds that it should be
allowed to wait until an enforcement action before raising its objection to an arbitration
award. It claimed that requiring it always to move to vacate an improper award would be
a waste of resources because the Union may not bother to try to enforce the award. Not
only is that argument contrary to our binding precedent in Babcock & Wilcox, it is also
unpersuasive. King Soopers provides no evidence that unions regularly, or even
occasionally, do not pursue their arbitration victories. If a union does not often bring
actions to enforce awards, that is likely because employers generally comply. There is no
evidence that there would be any significant saving in resources by allowing an employer
to refuse to comply with an arbitration award and wait to see whether the union brings an
enforcement action.
King Soopers could have raised its arguments in a motion to vacate. Its failure to
do so forecloses it from raising them to challenge an enforcement action under § 301
initiated after the time to move to vacate had expired.
III. CONCLUSION
We REVERSE with instructions to enforce the award.
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