Troy Chem. Corp. v. Teamsters Un., Local 408 ( 1994 )

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
9-30-1994
Troy Chem. Corp. v. Teamsters Un., Local 408
Precedential or Non-Precedential:
Docket 93-5638
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Recommended Citation
"Troy Chem. Corp. v. Teamsters Un., Local 408" (1994). 1994 Decisions. Paper 145.
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
NO. 93-5638
____________
TROY CHEMICAL CORPORATION,
Appellant
v.
TEAMSTERS UNION LOCAL NO. 408
Appellee
____________
Appeal from the United States District Court
for the District of New Jersey
D.C. No. 93-cv-02244
____________
Argued June 7, 1994
Before: MANSMANN, ALITO, and ROSENN, Circuit Judges
Opinion Filed September 30, 1994
____________
HARRY N. TURK, ESQUIRE (Argued)
Epstein, Becker & Green
250 Park Avenue
New York, New York 10177
Attorneys for Appellant
KENNETH I. NOWAK, ESQUIRE (Argued)
Zazzali, Zazzali, Fagella & Nowak
One Riverfront Plaza
Newark, New Jersey 07102
____________
OPINION OF THE COURT
ROSENN, Circuit Judge.
This appeal presents an interesting question concerning
the authority of a federal district court to preliminarily decide
procedural issues as well as the arbitrability of a labor
grievance where the union party seeks arbitration. Troy Chemical
Corporation (Troy Chemical) and the Teamsters Union Local No. 408
(the Union) are parties to a collective bargaining agreement
(CBA). On April 23, 1991, Troy Chemical discharged four
employees for theft of company property and immediately notified
the union shop steward of the discharges. No grievances were
filed by the Union or the individuals pursuant to the CBA.
On January 28, 1993, the Union notified the New Jersey
State Board of Mediation that a dispute existed over the
discharge of one of the four employees, and requested that an
arbitrator be selected. On May 14, 1993, the mediation board
advised the parties that an arbitrator had been selected and a
hearing was scheduled for October 20, 1993. On May 24, 1993,
Troy Chemical commenced an action in the United States District
Court for the District of New Jersey seeking a declaratory
judgment that any disputes over the discharged four employees
were not arbitrable because the Union had not complied with the
grievance procedure.1
The parties filed cross-motions for summary judgment.
The district court denied Troy Chemical's motion and granted the
Union's motion for summary judgment, holding that the parties had
modified by past practice the CBA provision pertaining to the
1
. The district court exercised subject matter jurisdiction
pursuant to section 3 of the Labor Management Relations Act, 29
U.S.C. § 185. We have jurisdiction over this appeal from a final
order under 28 U.S.C. § 1291.
grievance procedure for discharges and that the grievances
regarding the four employees were arbitrable. Troy Chemical
appealed. We reverse.
I.
The Union represents production and maintenance
employees of Troy Chemical's Newark, New Jersey specialty
chemicals manufacturing facility. Article 11 of the CBA2
2
. The pertinent provisions of the Article 11 are:
A. Should any difference, grievance, dispute
or complaint between the Company and the
Union or any employees arise out of the
interpretation or application of the
Agreement, there shall be an earnest effort
on the part of both parties to settle same
promptly and through the steps hereinafter
set forth, it being understood and agreed
that no grievance shall be accepted for
consideration unless reduced to writing and
presented in the first step within two (2)
working days of the occurrence of the
incident causing the grievance. This shall
not, however, apply to grievances involving
payroll calculation.
* * *
The dispute referred to herein shall include,
but shall not be limited to disputes
concerning the discharge of an employee . . .
.
* * *
C. Except as expressly provided otherwise in
this Agreement, with respect to any dispute
which is required to be submitted to
arbitration pursuant to the Agreement,
including strikes, stoppages, lockouts and
any and all claims, demands and acts arising
therefrom which are subject to arbitration,
the procedure established in this Agreement
provides that no grievance shall be accepted for consideration
unless reduced to writing and presented within two working days
of the occurrence of the incident causing the grievance. The
only exception to this requirement is grievances involving
payroll calculations. Step two of the grievance procedure
requires a conference between representatives of Troy Chemical
and the Union within three days of the incident giving rise to
the grievance. If there is no settlement of the dispute after
the completion of these two steps, then the matter may be
submitted to arbitration. Paragraph A of article 11 states,
"[t]he dispute referred to herein shall include, but shall not be
limited to disputes concerning the discharge of an employee."
Paragraph C of article 11 provides that, "the procedure
established in this Agreement for the adjustment of said dispute
shall be the exclusive means for its determination." Article 11
has remained unchanged in the more than 15 years of successive
three year collective bargaining agreements between the parties.
The district court acknowledged that express contract
language made it "abundantly clear that a written grievance is to
be submitted . . . for all disputes concerning discharged
employees." Nevertheless, the court found that the parties had
historically acquiesced in the waiving of the grievance procedure
in connection with discharges. Relying on New Jersey law, the
court held that the parties had modified the CBA by their
(..continued)
for the adjustment of said dispute shall be
the exclusive means for its determination.
practice of ignoring steps 1 and 2 of the grievance procedure in
connection with discharges, and therefore, the grievances
regarding the four employees were arbitrable. In his opinion,
the arbitrator repeatedly noted that he was bound by the district
court's legal and factual conclusions that the grievance was
procedurally and substantively arbitrable.
On appeal, Troy Chemical contends that the district
court erred in ruling on matters of procedural arbitrability and
in holding that parties had modified the express terms of the CBA
by disregarding the grievance procedure provisions pertaining to
employee discharge. The Union takes the position that the
district court correctly found a waiver of the grievance
procedure steps based on the past practices of the parties.
II.
This court exercises plenary review over a grant of
summary judgment, and we apply the same test the district court
should have utilized initially. Oritani Sav. and Loan Ass'n v.
Fidelity and Deposit Co., 989 F.2d 635, 637 (3d Cir. 1993).
Summary judgment is appropriate only when it is demonstrated that
there is no genuine issue as to any material fact and the moving
party is entitled to judgment as a matter of law. Celotex Corp.
v. Catrett, 477 U.S. 317, 322-32 (1986); Fed.R.Civ.P. 56(c). An
issue of material fact is genuine "if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In
deciding a motion for summary judgment, all reasonable inferences
must be drawn in favor of the non-movant. Oritani, 989 F.2d at
638. We therefore conclude that the appropriate standard of
review is plenary, rather than clearly erroneous, as suggested by
the Union.
The law governing the proper forum for determining
various issues of arbitrability is set forth by the United States
Supreme Court in John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543 (1964). In that case, a dispute arose between the employer
and the union over whether the contract covered the merged
employees of the successor company, and whether the union's
failure to follow the grievance procedure foreclosed arbitration.
The Court stated that the first issue was a matter of substantive
arbitrability to be decided by the court, but that the issue of
whether the failure to adhere to the grievance mechanism barred
arbitration was a procedural question for the arbitrator. The
Court explained:
It would be a curious rule which required
that intertwined issues of "substance and
procedure" growing out of the same facts had
to be carved up between two different forums,
one deciding after the other. Neither logic
nor considerations of policy compel such a
result.
Id. at 557. The Court concluded:
Once it is determined, as we have, that the
parties are obligated to submit the subject
matter of a dispute to arbitration,
"procedural" questions which grow out of the
dispute and bear on its final disposition
should be left to the arbitrator.
Id.
Several years later, the Supreme Court reiterated its
view that procedural arbitrability should be resolved by
arbitrators, not the courts. In International Union of Operating
Engineers v. Flair Builders, Inc., 406 U.S. 487 (1972), the
company opposed arbitration on the grounds that the union's long
delay in filing for arbitration constituted laches. The court of
appeals upheld the district court's ruling that the issue of
whether laches existed was one to be decided by the court, not
the arbitrator. The Supreme Court disagreed, observing that the
contract between the parties stated that the grievance and
arbitration procedure should be applied to "any difference" that
arose between the parties, and the question whether the
arbitration was barred by laches was "a difference" to be decided
by the arbitrator. 406 U.S. at 491. Relying on Wiley, the Court
emphasized that a court should determine in the first instance
whether the parties had in fact agreed to arbitrate the subject
matter, "[b]ut once a court finds, as here, the parties are
subject to an agreement to arbitrate, and that agreement extends
to 'any difference' between them, then a claim that particular
grievances are barred by laches is an arbitrable question under
the agreement." Id. at 491-92.
In the present action, article 11 of the CBA speaks of
"any difference, grievance, dispute or complaint" and
unambiguously states that "disputes concerning the discharge of
an employee" are subject to the grievance procedure and
arbitration. Thus, whether the Union and Troy Chemical had by
practice waived steps 1 and 2 of the grievance procedure was a
question of procedure for the arbitrator and not the court. See
Association of Flight Attendants, AFL-CIO v. USAir, Inc., 960
F.2d 345, 349 (3d Cir. 1992) (holding that once the court
determines that the underlying grievance is covered by the
arbitration clause, the court's role ends; "[b]eyond this, the
court usurps the exclusive function of the arbitrator when it
ventures to decide procedural matters, or the merits of a
grievance arising under the collective bargaining agreement").
It is only on appeal that the Union argues that the
district court properly considered whether the parties waived the
grievance procedure steps based on their past practices. In its
answer to the complaint for declaratory judgment, the Union
averred as an affirmative defense that the plaintiff has not
challenged the substantive arbitrability of the dispute, but
raises only questions of procedural arbitrability, which are for
the arbitrator not the court to decide. Moreover, before the
district court, the Union argued that under well-settled
principles of labor law the issues of arbitrability and waiver
are committed to the arbitrator. The Union stated in its brief,
"[t]he Union does not ask this Court to decide these questions.
On the contrary, it is not this Court's function to do so.
Rather, these issues are proper subjects for the arbitrator in
determining whether the grievance is barred by procedural
defects."
Therefore, once the district court found that the
discharges were subject to arbitration, the court should have
denied the declaratory judgment and held that the issue of
whether the grievances were barred by procedural defects was
arbitrable. The district court erred in deciding the procedural
questions and foreclosing that issue from the arbitrator's
decision.
III.
Finally, the district court erred in granting the
Union's motion for summary judgment because the record shows that
there are disputed questions of fact. For example, the Union
lists the names of employees who previously arbitrated without
following the grievance procedure provisions, but it does not
give any specific dates or the names of the arbitrators, and all
of the cases alleged to have waived the grievance procedure were
written before the last CBA was entered into in 1989. In light of
the vagueness of the Union's evidence and the subsequent renewal
of the grievance procedure provisions in the CBA now before us
for construction, there is a question as to whether the Union's
evidence is credible.
Additionally, the Union avers by affidavit that
discharges were treated differently because the contract language
in article 11 treats the discharge as a unique part of grievance
with special rights, and that Union representatives met with
Alexander Gerardo, Troy Chemical's Vice President of Human
Resources, and that he advised them to wait to submit this matter
to arbitration because he expected a quick investigation of the
arrests by the law enforcement people.3 Yet, the Union fails to
3
. The Union further avers that as a practical matter, Troy
Chemical knows what the grievance is in discharge cases, i.e.,
point to any such language that gives discharge cases any special
rights or shows that they are treated differently. In fact, the
grievance forms provided by the Union to its members specifically
cautioned that all complaints or grievances must be in writing,
properly signed by the members and shop steward. "Unless
completed in detail, the grievance will not be acted upon."
Moreover, Gerardo, by his affidavit, denies having met with Union
representatives and denies that he discussed the issue of the
timeliness of the filing or instructed the Union to delay in
pursuing this matter at any step in the required procedures.
Gerardo further avers that Troy Chemical did not enter into any
understandings or agreements which relieved the Union from their
obligation in the grievance procedure. Troy Chemical, as the
non-moving party, was entitled to all reasonable inferences.
Upon remand, these factual disputes are matters that should be
resolved by the arbitrator.
IV.
The district court exceeded its authority in
determining whether the grievance procedure had been complied
with and whether there had been a modification of article 11.
Once the court decided that the discharges were subject to
arbitration, it should have held that the dispute was arbitrable
and that matters relating to compliance with the grievance
(..continued)
the Union is aggrieving the discharge of particular persons.
However, the purpose of the grievance procedure is not merely to
give notice, but rather it is to give the parties the opportunity
to confer, ascertain the facts, and promptly settle the matter in
the workshop, if that is at all possible.
procedure or a waiver were matters for the arbitrator.
Accordingly, the judgment of the district court will be
vacated and the case remanded to the district court with
instructions to return the case to the arbitrator for de novo
consideration. Costs taxed against the appellee.