Int'l Brohd 75 v. Schreiber Foods, Inc ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-3480
Local 75, International Brotherhood of Teamsters,
Chauffeurs, Warehousemen & Helpers,
Plaintiff-Appellee,
v.
Schreiber Foods, Inc.,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 98 C 1151--Myron L. Gordon, Judge.
Argued February 16, 2000--Decided May 22, 2000
Before Kanne, Diane P. Wood and Evans, Circuit
Judges.
Kanne, Circuit Judge. The question in this case
is whether Schreiber Foods, Inc. ("Schreiber")
must arbitrate the grievance of its employees’
union, Local 75 of the International Brotherhood
of Teamsters ("Teamsters"), pursuant to the
arbitration clause of their collective bargaining
agreement. Although grievances arising under the
agreement are arbitrable, Schreiber insists this
grievance over scheduling is nonarbitrable
because the agreement gives Schreiber absolute
discretion over "administration" of certain
programs and exempts questions of
"administration" from the arbitration clause.
However, we find that scheduling is not covered
by the administration clause or exempted from
arbitration because Schreiber’s discretion over
scheduling is restricted by a different provision
of the agreement limiting scheduling to
"reasonable times and frequencies." We affirm
summary judgment in favor of the Teamsters.
I. History
During the summer of 1992, Schreiber and the
Teamsters were in the midst of negotiations for
a new collective bargaining agreement to begin
the following year. Schreiber proposed a series
of "Pay for Performance" programs ("PP programs")
in which Schreiber employees could earn
compensation above their regular wage by
participating in a variety of work safety
activities. On September 28, 1992, while still
negotiating their collective bargaining
agreement, the parties codified their agreement
on PP programs in a "Memorandum of Agreement of
Pay for Performance" ("Memorandum"). Exhibit B-1
of the Memorandum described one PP program,
called the "Safe Work Program," which Schreiber
instituted on October 4, 1992.
The Memorandum also delineated basic guidelines
for the establishment and administration of PP
programs. Paragraph 5 of the Memorandum declares
the following:
The administration (for example, including but
not limited to, the content of any program,
training, questions asked on any exam, grading of
the exam, etc.) of the Pay for Performance
program is in the exclusive discretion of the
Company and it will not be subject to
arbitration.
However, Paragraph 2 of the Memorandum adds the
following stipulation:
The Company agrees to establish a training
schedule at reasonable times and frequencies to
afford employees who desire to participate in the
Company’s pay for performance programs the
opportunity to successfully complete such program
before the anniversary date of the agreement as
set forth in the parties’s collective bargaining
agreement. Should the Company fail to provide
this opportunity, the employee will be provided
the benefits of such program until the employee
has been provided such opportunity.
In addition, Paragraph 3 of the Memorandum states
that "[t]he Company will post training schedules
no less than four (4) months prior to any pay for
performance effective date to assure adequate
training time." The parties eventually reached
agreement on a new collective bargaining
agreement ("CBA") that incorporated the
Memorandum and ran to September 27, 1997. Later,
the parties would effectively extend the relevant
terms of the CBA to September 29, 2002.
On April 23, 1993, as part of the Safe Work
Program discussed in the Memorandum, Schreiber
instituted a pre-workday exercise program that
trained employees how to perform various
exercises designed to prevent carpal tunnel
syndrome. Schreiber permitted employees to
perform their exercises during the fifteen
minutes before their regular shifts and paid them
overtime for the extra quarter-hour of work. The
Memorandum does not refer specifically to a
carpal tunnel syndrome prevention program, but
Exhibit B-1 of the Memorandum briefly alludes to
carpal tunnel syndrome prevention, stating that
"in the event an employee is diagnosed with
Carpal Tunnel Syndrome, the employee will not
lose Safe Work pay, provided the employee fully
participates in Company sponsored Carpal Tunnel
prevention programs."
At the beginning of October 1997, Schreiber
unilaterally abrogated the pre-workday period for
carpal tunnel exercises and instructed employees
to perform their exercises during their regular
shifts instead. Employees participating in the
carpal tunnel syndrome prevention program were
therefore no longer able to collect overtime pay
for their exercises, and employee participation
in the program consequently plummeted from around
50 percent to 31 percent. On October 27, 1997,
the Teamsters filed a grievance protesting that
Schreiber violated the CBA by eliminating the
fifteen-minute overtime period.
The Teamsters anticipated arbitration of the
dispute because Article 10 of the CBA provides
that "[g]rievances which arise during the term of
this Agreement and are filed before the
expiration date of the Agreement and have been
timely processed through the Grievance Procedure
but which have not been settled may be appealed
to arbitration" and Article 9 of the CBA defines
"grievance" as "a dispute arising under a
provision of this Agreement." However, on March
5, 1998, Schreiber responded to the grievance by
citing Paragraph 5 of the Memorandum, which
states that "[t]he administration . . . of the
Pay for Performance Program is in the exclusive
discretion of the Company." Schreiber explained
that it "[did] not believe there is any binding
agreement or practice obligating the Company to
continue the ’15 minutes of overtime.’" On August
25, 1998, after the Teamsters pressed for
arbitration of its complaint, Schreiber answered
that it "made the determination that this matter
is not arbitrable under our Collective Bargaining
Agreement. . . . This rescheduling of a program
is part of the administration of the Safe Work
Program under the Safe Work Memorandum of
Agreement. Paragraph 5 of that Memorandum
explicitly states that administration of the
Program is not subject to arbitration."
On October 29, 1998, the Teamsters brought suit
against Schreiber before the Wisconsin Employment
Relations Commission to compel arbitration of the
grievance pursuant to Article 10 of the CBA.
Schreiber removed the case under 28 U.S.C. sec.
1441(b) to federal district court on November 24,
1998. After cross-motions for summary judgment,
the district court granted summary judgment in
favor of the Teamsters on September 1, 1999.
Schreiber now appeals.
II. Analysis
The duty to arbitrate is prescribed by
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). The Teamsters’ grievance is that
Schreiber violated the Memorandum by changing
scheduling for carpal tunnel exercises, and both
parties agree that the Memorandum is part of the
CBA. Thus, the Teamsters sued to compel
arbitration pursuant to Article 10 of the CBA,
which provides that disputes arising under the
CBA "may be appealed to arbitration" as a matter
of right. The district court granted summary
judgment in favor of the Teamsters, finding that
this dispute must be arbitrated under Article 10.
However, Schreiber contends that Paragraph 5 of
the Memorandum, which states that "[t]he
administration . . . of the Pay for Performance
Program is in the exclusive discretion of the
Company and it will not be subject to
arbitration," removes the Teamsters’ grievance
from the ambit of Article 10 of the CBA.
Schreiber argues that "administration" in
Paragraph 5 covers all the "day-to-day details of
running" PP programs, including scheduling
changes like the one about which the Teamsters
filed its grievance. Paragraph 5 specifies that
disputes over such "administration" are "not
subject to arbitration," and Schreiber claims
that this scheduling change of the carpal tunnel
exercise period is nonarbitrable as a result. We
review summary judgment de novo. See Oil,
Chemical & Atomic Workers Int’l Union, Local 7-1
v. Amoco Oil Co., 883 F.2d 581, 583-84 (7th Cir.
1989).
The problem with Schreiber’s contraposition is
that Paragraph 2 of the Memorandum limits the
scope of Paragraph 5. Paragraph 2 expressly
confines Schreiber’s authority over scheduling PP
program training to "reasonable times and
frequencies to afford employees who desire to
participate in the Company’s pay for performance
programs the opportunity to successfully complete
such program." When read in conjunction with
Paragraph 2, Paragraph 5 cannot be read to vest
Schreiber with absolute discretion in scheduling.
If Paragraph 5 meant that Schreiber could
unilaterally schedule PP program training
whenever it desired, Paragraph 2’s express
restriction on scheduling to "reasonable times
and frequencies" would retain no meaning. See
Florida Polk County v. Prison Health Servs.,
Inc., 170 F.3d 1080, 1084 (11th Cir. 1999)
(reading a forum-selection clause to be mandatory
because interpreting it to be permissive would
render the clause meaningless under the
circumstances); United States v. Brye, 146 F.3d
1207, 1211 (10th Cir. 1998) (interpreting
ambiguous language in a plea agreement to avoid
rendering part of the agreement superfluous); In
re Chicago, Rock Island & Pac. R.R. Co., 860 F.2d
267, 271 (7th Cir. 1988) (refusing to interpret
an agreement as settling an issue the resolution
of which would be dispositive of another dispute
that the agreement expressly excluded from
settlement).
A more sensible interpretation, giving life to
both provisions, is that "administration"
includes the management of PP programs, over
which Schreiber has exclusive, nonarbitrable
discretion, but that training for PP programs
must be scheduled in accordance with Paragraph 2
and disputes over such scheduling are arbitrable.
Reading the language in Paragraph 5 as broadly as
Schreiber urges would render Paragraph 2
purposeless, and "a proposed contractual
interpretation that would read out of a contract
language obviously important to one of the
parties faces and ought to face a distinctly
uphill struggle for judicial acceptance." In re
Kazmierczak, 24 F.3d 1020, 1022 (7th Cir. 1994).
Instead, Paragraph 2 limits Schreiber’s
discretion in scheduling and removes grievances
over scheduling of training from the arbitration
exemption in Paragraph 5 for "administration" of
PP programs.
Schreiber insists that Paragraph 2 does not
apply to this dispute because Paragraph 2 extends
only to "training schedule[s]." Schreiber
explains that some of the PP programs required
formal training during which employees needed to
attain certification or pass a qualification test
for extra compensation under the respective
program. Paragraph 2, according to Schreiber,
embraces these training drills but not the carpal
tunnel syndrome prevention exercises, which in
contrast to formal training, were ongoing
exercises without any completion dates. It is
difficult to determine whether the carpal tunnel
syndrome prevention exercises constituted
"training" as contemplated by Paragraph 2 because
"training" is not defined in the Memorandum or
CBA. The fact that "training" is referenced
expressly in Memorandum descriptions of several
PP programs, but not in the synopsis of the Safe
Work program, is unilluminating because the
carpal tunnel syndrome prevention program had not
yet been conceived when the parties drafted the
Memorandum and therefore is not mentioned as such
in the document. In the face of this contractual
ambiguity, we apply "a presumption of
arbitrability in the sense that ’[a]n order to
arbitrate the particular grievance should not be
denied unless it may be said with positive
assurance that the arbitration clause is not
susceptible of an interpretation that covers the
asserted dispute.’" Local Union 1393 Int’l Bhd.
of Elec. Workers v. Utilities Dist. of W. Ind.
Rural Elec. Membership Coop., 167 F.3d 1181, 1183
(7th Cir. 1999) (quoting United Steelworkers, 363
U.S. at 582-83). "[O]nly the most forceful
evidence of a purpose to exclude the claim from
arbitration can prevail, particularly where, as
here, the exclusion clause is vague and the
arbitration clause quite broad." United
Steelworkers, 363 U.S. at 585.
We cannot say with "positive assurance" that
this grievance is not covered by the arbitration
clause in Article 10. It is reasonable to
conclude that the carpal tunnel prevention
exercises were PP program training because the
definition of "training" comfortably encompasses
daily exercise aimed at preventive goals such as
health maintenance and injury avoidance.
Schreiber expected its employees to perform these
exercises each day to ward off carpal tunnel
syndrome, and even though these exercises had no
completion or qualification goals, Schreiber
conditioned Safe Work Program bonuses on
consistent participation in the carpal tunnel
syndrome prevention program. Guided in part by
the presumption in favor of arbitrability, we
interpret "training" in Paragraph 2 to cover the
carpal tunnel exercise program.
Once we establish that Paragraph 2 limits
Paragraph 5 and applies to the carpal tunnel
exercise program, the rest of this case falls
neatly into place. The Teamsters’ grievance
complains about an alleged violation of
Schreiber’s promise to schedule PP program
training at "reasonable times and frequencies"
memorialized in Paragraph 2 of the Memorandum and
thereby incorporated into the CBA. Thus, this
dispute arises under the CBA within the meaning
of "grievance" in Article 9 and is subject to
arbitration under Article 10.
The Teamsters, however, possess no implicit
right to a carpal tunnel exercise program. An
official carpal tunnel syndrome prevention
program was not mentioned in either the
Memorandum or the rest of the CBA. Indeed, the
program did not begin until April 23, 1993,
months after the CBA was finalized and ratified.
Schreiber never was obligated to institute a
carpal tunnel syndrome prevention program, but
once it decided to do so, Schreiber was obligated
to establish a training schedule for the program
"at reasonable times and frequencies" because it
had agreed to that stipulation for all PP
programs. Whether Schreiber’s decision to
terminate the pre-workday period and require
employees to perform their exercises during the
workday violates that stipulation is the question
for arbitration now to resolve.
III. Conclusion
For the foregoing reasons, we Affirm the decision
of the district court granting the Teamsters’
motion for summary judgment.