Int'l Brohd Elec 176 v. Balmoral Racing Club ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 01-2035
INTERNATIONAL BROTHERHOOD
OF ELECTRICAL WORKERS, LOCAL 176,
Plaintiff-Appellee,
v.
BALMORAL RACING CLUB, INC.
and BALMORAL PARK TROT, INC.,
Defendants-Appellants.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 98 C 5846—James B. Zagel, Judge.
____________
ARGUED OCTOBER 26, 2001—DECIDED JUNE 13, 2002
____________
Before POSNER, MANION, and DIANE P. WOOD, Circuit
Judges.
DIANE P. WOOD, Circuit Judge. The issue before us
in this case is whether Balmoral Racing Club, Inc. and
Balmoral Park Trot, Inc. (collectively Balmoral) must ar-
bitrate a labor dispute between itself and IBEW Local 176
(Local 176) arising out of Balmoral’s brief direct employ-
ment of certain camera workers. As is normal with such
cases, the answer depends on the language of the agree-
ment—both its arbitration clause and other related provi-
2 No. 01-2035
sions. In addition, in this particular instance the resolution
of the arbitrability question is closely tied to the merits of
the underlying dispute. That is because the central ques-
tion—whether the camera workers were covered by the
relevant agreement—is also the most important issue for
the merits of the dispute. Our responsibility, however, is
limited to the arbitrability issue, even if there are some
inevitable overlaps between that and the merits. The
district court found that the relevant workers fell within the
scope of a collective bargaining agreement that Balmoral
had with Local 176 and that the dispute is therefore ar-
bitrable; it therefore dismissed the case entirely. We agree
and accordingly affirm the district court’s judgment.
I
Balmoral has owned and run horse racing facilities in
Illinois since at least 1983. It employs electricians at its
race tracks who perform a variety of tasks customarily
assigned to electricians. At all relevant times, the electri-
cians at the race track were covered by a collective bargain-
ing agreement (the Agreement) between Balmoral and
Local 176. Balmoral also uses the services of camera work-
ers who record the races and transmit them to off-track
betting parlors. For a number of years, Balmoral contracted
with a separate company, World Wide Broadcasting (World
Wide), to provide the personnel needed to perform the
camera work; until 1996, World Wide’s camera workers
were covered by a separate agreement between World Wide
and Local 176, to which Balmoral was not a party.
In September 1996, the World Wide camera workers hon-
ored the picket line of another union that was on strike
at the time. Because World Wide could not provide its em-
ployees to Balmoral during this period, Balmoral termi-
nated its contractual relationship with World Wide and
announced to the union that it no longer had any use for
No. 01-2035 3
Local 176 members for camera work; around the same time,
it hired non-union personnel to perform those tasks. Local
176 was not happy with this arrangement and began
discussing alternatives with Balmoral. On September 26,
Balmoral agreed to hire the former World Wide camera
workers and to give them the same pay and benefits that
World Wide had provided under its contract with Local 176.
The workers thereafter performed both camera work and
occasional general electrical work of a type normally done
by “inside electrical workers” (a term defined in the IBEW
Constitution, about which we have more to say later).
Balmoral and Local 176 met to try to reduce this tempo-
rary agreement to a more permanent one, but they failed.
At this point, Balmoral decided once again to terminate the
union camera workers who had previously worked for World
Wide and to employ non-union camera workers instead.
The standstill, coupled with Balmoral’s actions, prompted
Local 176 in November 1996 to file two grievances with
Balmoral pursuant to the Agreement, in which it challenged
the termination of the former World Wide camera workers
and the pay practices of Balmoral with respect to these
workers. The union took the position that the World Wide
camera workers had come within the coverage of the Agree-
ment, and because the Agreement contains a broad arbitra-
tion clause, its dispute with Balmoral was therefore subject
to the full grievance procedure set forth in the Agreement,
up to and including arbitration. Balmoral disagreed, claim-
ing that the camera workers had never come within the
scope of the Agreement, and for that reason it refused to
arbitrate. Local 176 then filed this action seeking an order
compelling arbitration of the grievances.
II
Both parties moved for summary judgment on whether
the workers were covered by the Agreement, which in turn
4 No. 01-2035
(all agreed) governed whether arbitration was required. The
district court entered summary judgment for Balmoral and
denied Local 176’s motion on June 24, 1998. It did not rule
on the merits per se; instead, the court found that a con-
dition precedent to arbitration had not been satisfied. Un-
der the terms of the Agreement, the International President
of the IBEW had to make a formal determination concern-
ing the jurisdictional scope of the Agreement before the
camera workers’ grievance could be entertained, and no
such determination had been requested or produced by the
time the grievance was filed. In that procedural posture,
Local 176 was not entitled to prevail in its effort to compel
arbitration. Nonetheless, the district court hinted in its
decision that Local 176 (which by the time of the decision
had obtained the necessary ruling from the IBEW Presi-
dent) could refile its grievances against Balmoral.
Local 176 took the hint and filed a new action. Presented
with new cross-motions for summary judgment, in an order
dated March 27, 2001, the district court this time agreed
with the union. The court relied on a letter from the Inter-
national President that (the court was satisfied) concluded
that the camera workers were covered by Local 176 and
that Balmoral was required to arbitrate the disputes.
Balmoral appeals that judgment.
III
The usual Rule 56 standard of review applies to cross-
motions for summary judgment, and our review is de novo.
Lac Courte Oreilles Band of Lake Superior Chippewa
Indians v. Voigt, 700 F.2d 341, 349 (7th Cir. 1983). To the
extent that Balmoral challenges the court’s decision to
grant summary judgment in favor of the union, we con-
strue the record in the light most favorable to Balmoral.
Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th
Cir. 1998). To the extent that Balmoral asserts that the
No. 01-2035 5
court erred in refusing to grant its own motion for summary
judgment, the record is evaluated in the light most favor-
able to Local 176. Id. Either way, summary judgment is
proper if the record demonstrates that there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law under the familiar
standards of FED. R. CIV. P. 56(c).
Before turning to the details of this case, it is important
to clarify what is and what is not before us. Our focus is on
whether this dispute is arbitrable, and to a certain degree
it is about who should decide certain issues. Normally, the
question of the arbitrability of a labor-management dispute
is a matter to be resolved by the courts. Chicago Dist.
Council of Carpenters Pension Fund v. K & I Construction,
Inc., 270 F.3d 1060, 1066 (7th Cir. 2001). A court asked
to compel arbitration must “interpret[ ] the relevant lan-
guage of [the parties’] collective bargaining agreement in
light of well-worn principles of labor contract interpretation,
including the rule that where the agreement contains a
mandatory arbitration provision, there is generally a pre-
sumption in favor of finding arbitrability.” Id. See also
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).
Usually it is obvious whether there is some kind of ar-
bitration agreement between the disputing parties, and the
only question relates to the scope of that agreement. See,
e.g., Penn v. Ryan’s Family Steak Houses, Inc., 269 F.3d
753, 755 (7th Cir. 2001). This would have been the case, for
example, if a dispute had arisen between Balmoral and
its ordinary electricians, in which instance the existence
of the arbitration agreement would have been plain. The
issue would be equally simple on the other side if an utter
stranger were asked to arbitrate: she need not do so, unless
she executed an agreement to that effect. Here, however, we
face something between those two extremes. The issue be-
6 No. 01-2035
fore us is whether the camera workers Balmoral employed
between September and November 1996 were covered by
Balmoral’s agreement with Local 176. If they are, then this
is an arbitrable dispute; if not, then the company was with-
in its rights to refuse to arbitrate.
The starting point in our inquiry is naturally the lan-
guage of the Agreement—and we stress, in light of some of
the arguments Balmoral has made, that we are referring
to the agreement Balmoral itself signed with the union,
not with any agreement that may have existed between
World Wide and the union. We interpret collective bargain-
ing agreements in the same way we approach other con-
tracts. Alexander v. City of Evansville, 120 F.3d 723, 727
(7th Cir. 1997). The source of law, however, is different:
while the arbitrability of a dispute is ordinarily regulated
by state law, see Penn v. Ryan’s Family Steak Houses, Inc.,
269 F.3d at 758-59, collective bargaining agreements are
interpreted under federal law. Chicago Painters and Dec-
orators Pension, Health and Welfare and Deferred Sav. Plan
Trust Funds v. Karr Bros., Inc., 755 F.2d 1285, 1290 (7th
Cir. 1985); see also Sweeney v. Westvaco Co., 926 F.2d 29,
36 (1st Cir. 1991) (Breyer, C.J.) (“Congress has said that
courts, when they interpret . . . collective bargaining agree-
ments, must apply federal law. Indeed, they are to create
a body of federal common law that applies to disputes
arising out of collective bargaining agreements.”). As the
Supreme Court has made clear, however, we may draw
guidance from state law principles if they are compatible
with federal labor law policies. See Textile Workers Union
v. Lincoln Mills, 353 U.S. 448 at 456-57 (1957); see also
Merk v. Jewel Food Stores Div. of Jewel Companies, Inc.,
945 F.2d 889, 892 (7th Cir. 1991) (common law contract
principles are brought into the labor context with sensitiv-
ity to considerations of national labor policy).
Looking at the Agreement, we find in Section 2.03(a)
language defining the scope of the work covered to include
the following:
No. 01-2035 7
. . . the installation, operation, maintenance and repair
of all electrical wiring and electrical equipment used in
the construction, alteration, and repair of buildings,
structures, bridges, street and highway work, tunnels,
subways, shafts, dams, river and harbor work, airports,
mines, all electrical raceways for electrical wires and
cables, and such other work as by custom has been
performed by members of IBEW when determined to be
within the Inside branch in accordance with section (c)
below.
(Emphasis added.) The highlighted phrase with which this
section ends is obviously more open-ended than the earlier
examples of covered work, but the Agreement also includes
a mechanism for resolving coverage disputes. Section
2.03(d) has the following to say on that subject:
The Employer understands that the Local’s jurisdiction
both trade and territorial is not the subject for negotia-
tions but rather is determined solely within the IBEW
by the International President and therefore, agrees to
recognize and be bound by such determination.
Elsewhere in the Agreement, we find Section 2.02, rec-
ognizing Local 176’s authority over “all employees in the
different employee and work classifications set forth in
Section 5.04.” Section 5.04, in turn, provides that “[w]ages
for Apprentices, Journeymen, Foremen and General Fore-
men shall be equal to wages paid for Zone I on the Inside
Agreement.” Balmoral infers from this that, under common
trade usage, “apprentices, journeymen, foremen and general
foremen” are terms used for electricians, and not for camera
workers, and thus that the contract is at best ambiguous.
But it is well established that we are to read collective
bargaining agreements as a whole, Irvin H. Whitehouse &
Sons Co. v. N.L.R.B., 659 F.2d 830, 835 (7th Cir. 1981), and
when one reads the list of types of employees covered
(Section 5.04) in conjunction with the list of kinds of work
8 No. 01-2035
covered (Section 2.03(a)), we see no ambiguity that needs to
be resolved.
Under a unified reading of Sections 2.03(a) and 2.04(d), as
well as the other parts of the Agreement we have just
mentioned, we are prepared to agree with Balmoral that the
camera workers were not performing any of the enumerated
tasks set forth in Section 2.03(a), and that if they are cov-
ered at all, it is because they were doing work customarily
performed by members of the IBEW. Balmoral urges that
a natural reading of the Agreement does not evince an
intent that it cover camera workers, even under the resid-
ual clause. This may be correct; the district court expressed
exactly that view in its first summary judgment decision.
But it would be inappropriate for us to rule on that is-
sue, because that is not the question before us. As we have
been emphasizing, we must decide only whether this in-
dustrial dispute belongs before an arbitral tribunal, and
under this Agreement and in the circumstances here pre-
sented, the parties have agreed that the answer to the
coverage question is for the International President to give.
This court is certainly not in the business of reviewing the
wisdom of contractual obligations parties decide to enter
into—absent special circumstances, the parties will be
bound by their agreement. See Beanstalk Group, Inc. v. AM
General Corp., 283 F.3d 856, 860 (7th Cir. 2002). We must
therefore look to see what the International President of the
IBEW had to say on the matter.
Section 2.03(d) of the Agreement gave the International
President unfettered discretion to make his determination.
Balmoral is now trying to resist that language, insofar as
it is arguing that the court must retain some power to su-
pervise the propriety of the International President’s de-
cision. We disagree. There is no reason why the parties
could not contract for the International President’s decision
to be final and unreviewable, and the language set forth
above shows that they did exactly that in the Agreement.
No. 01-2035 9
Whether or not the International President had a contrac-
tual duty of performing his job in good faith, see, e.g.,
Interim Health Care of Northern Ill., Inc. v. Interim Health
Care, Inc., 225 F.3d 876, 884 (7th Cir. 2000), is beside the
point. The contract itself put his decision beyond judicial
review, and we will respect that limit. It may also be worth
noting that the President is not deemed to be a party to
this Agreement. Thus, this is not a situation in which one
party unilaterally forced another into arbitration. See, e.g.,
Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126
(7th Cir. 1997). Using the procedures on which both sides
had agreed, Local 176 had to petition the International
President for a ruling; had the ruling been adverse to its
position, it would be Balmoral now who would be insisting
on strict compliance with the Agreement.
IV
While the first phase of this litigation was underway, on
November 6, 1997, Local 176 wrote the International Pres-
ident formally asking for a determination of jurisdiction
pursuant to Section 2.03. It did not specifically ask the
International President to find that the camera workers
were “within the Inside branch,” even though the final sen-
tence of Section 2.03(a) seems to require such a finding.
Nonetheless, the intent to obtain a jurisdictional determina-
tion was clear. The International President, Mr. J. J. Barry,
responded with the following letter:
This correspondence is in reply to your letter forwarded
to this office by International Vice President O’Connor.
The IBEW Constitution, Article XXVII, Section 6(a)
states:
Sec. 6. These shall include the following divisions
and classifications: (a) Radio, television and record-
ing engineers, technicians, operators, installers, in-
spectors, maintenance and repairmen and service
10 No. 01-2035
men, engaged in the application of electricity to the
transmission and transference of voice, sound and
vision for commercial, educational and entertain-
ment purposes, excepting employees of common
carrier companies. They shall have jurisdiction over
the following work: The installation, operation,
inspection, maintenance, repair and service of ra-
dio, television, recording, voice, sound and vision
production and reproduction apparatus, equipment
and appliances used for domestic, commercial, ed-
ucational and entertainment purposes.
The IBEW and its local unions represent cameramen in
all facets of video production. Some members are cov-
ered under national agreements between the IBEW and
the major television networks and many others are
covered by collective bargaining agreements with our
local unions. Our members are also the cameramen for
numerous in-house closed circuit productions at major
sport arenas.
To simplify my answers, yes, cameramen are under the
jurisdiction of the IBEW and Local 176.
The trouble with this response was that, apart from the last
sentence, it had little to do with the Agreement between
Balmoral and Local 176. The key question was whether
these cameramen were part of the Inside branch: if so, they
fell within the scope of the Balmoral agreement; if not, they
did not.
To be part of the Inside branch (as the Agreement re-
quires) is not the same as to be part of Local 176 more
generally. Local 176 is divided into several branches: the
Inside Electrical Workers, the Outside and Utility Work-
ers, the Communications Workers, the Railroad Electri-
cal Workers, and the Electrical Manufacturing Workers.
Balmoral argues that the International President’s answer
was insufficient for purposes of Section 2.03 without a spe-
No. 01-2035 11
cific sentence about the branch to which the cameramen
belonged. Indeed, Balmoral argues that by citing from Sec-
tion 6(a) of the IBEW Constitution, which is about the Com-
munications branch, it is obvious that the International
President was at best confused about the question posed
to him.
We agree that there may have been some confusion lead-
ing up to the affirmative answer, but we conclude that the
correspondence with the International President, taken as
a whole, adequately responded to the coverage question.
The International President’s letter unambiguously an-
swers one question: that the camera workers were under
the jurisdiction of the IBEW and Local 176. Deposition
testimony shows that all members of Local 176 were al-
so members of the Inside branch and thus that an affirma-
tive answer to the question about Local 176 was also
necessarily an affirmative answer to the question about the
Inside branch. Furthermore, even disregarding that dep-
osition testimony, it is appropriate to look at the letter from
Local 176 to which the International President was re-
sponding. In a two-page letter to the President, Local 176
explained the relation between itself and Balmoral and the
nature of the grievance. Local 176 even quoted the relevant
passages of the Agreement, Section 2.03(a) and Section
2.03(c). This gives the necessary context to the Interna-
tional President’s final response, where he stated “yes,
cameramen are under the jurisdiction of the IBEW and
Local 176.” He was not answering a question in the ab-
stract: he was dealing with the Agreement between Local
176 and Balmoral. As the International President was
not unaware of what he was being asked, his answer can
only be read to confer jurisdiction to Local 176 over the
camera workers at Balmoral in the context of the Agree-
ment. And that determination also settles the question of
arbitrability in favor of Local 176.
Whether the International President was right is beside
the point. Perhaps Balmoral is correct that he erroneously
12 No. 01-2035
looked to Section 6 of Article XXVII of the IBEW Constitu-
tion, which details the coverage of the Communications
branch (separate and distinct from the Inside branch), in-
stead of confining himself to the history of the camera work
at Balmoral and whether (having always been within the
Inside branch under the World Wide contract) it stayed
within the Inside branch when Balmoral briefly employed
these workers. The right to make an unreviewable decision,
for better or for worse, includes the right to make mistakes.
Having decided that the International President did make
the determination asked of him, we have done all that we
can, or should. As he clearly stated, “yes, cameramen are
under the jurisdiction of the IBEW and Local 176” in re-
sponse to a letter seeking to establish jurisdiction for the
current dispute, the reasons by which he arrived at this
result—right, wrong, or inapposite—are irrelevant.
V
For these reasons, we AFFIRM the judgment of the district
court.
MANION, Circuit Judge, dissenting. The issue on appeal
is relatively straightforward: Does the collective bargaining
agreement between Balmoral and Local 176 cover the for-
mer World Wide camera workers? The court’s opinion turns
on the last sentence of the IBEW International President’s
otherwise confusing letter. Not surprisingly, he concluded:
“Yes, cameramen are under the jurisdiction of the IBEW
and Local 176.” But in the absence of modification or nova-
tion of the parties’ collective bargaining agreement (CBA),
No. 01-2035 13
the cameramen are clearly not covered. The record demon-
strates that until September 1996 both parties interpreted
the CBA as only covering electrical work. See Restatement
of Contracts § 201(1) (1981) (noting that “[w]here the par-
ties have attached the same meaning to a promise or agree-
ment or a term thereof, it is interpreted in accordance with
that meaning.”). The threshold question then is whether
Balmoral’s decision to temporarily hire the camera workers
constituted a modification or novation of the parties’ CBA,
thus bringing the camera workers within its coverage. It
is well established that collective bargaining agreements
may be altered by the post-signing acts of the party sought
to be bound. See, e.g., Transp.-Communication Employees
Union v. Union Pacific R.R. Co., 385 U.S. 157, 160-61
(1966) (holding that “[i]n order to interpret . . . [a collective
bargaining] agreement it is necessary to consider the scope
of other related collective bargaining agreements, as well as
the practice, usage and custom pertaining to all such agree-
ments.”). See also Anheuser-Busch, Inc. v. Local Union No.
744, 280 F.3d 1133, 1146 (7th Cir. 2002) (Easterbrook, J.,
dissenting); Int’l Bus. Lists, Inc. v. American Telephone and
Telegraph, 147 F.3d 636, 641 (7th Cir. 1998); Matuszak v.
Torrington Co., 927 F.2d 320, 324 (7th Cir. 1991). In con-
cluding that the cameramen are covered by the CBA, the
court interpreted the language of the agreement without
reference to or consideration of the parties’ clearly estab-
lished understanding of its scope. See Restatement of
Contracts § 201 cmt. c (1981) (noting that “[t]he objective of
interpretation in the general law of contracts is to carry out
the understanding of the parties rather than to impose
obligations on them contrary to their understanding: ‘the
courts do not make a contract for the parties.’ ”). The
IBEW’s International President may have a great deal of
discretion under the terms of the CBA, but he does not have
the authority to modify the basis upon which the agreement
was originally struck. Perhaps a remand would be in order
to fill this gap. In any event, because I believe that genuine
14 No. 01-2035
issues of material fact remain with respect to the issue of
whether a modification or novation of the agreement oc-
curred, I respectfully dissent.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-97-C-006—6-13-02