Int'l Union Eng 139 v. J.H. Findorff & Son ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-1834
INTERNATIONAL UNION OF OPERATING
ENGINEERS, LOCAL 139, AFL-CIO,
Plaintiff-Appellee,
v.
J.H. FINDORFF & SON, INC.,
Defendant-Appellant.
____________
Appeal from the United States District Court for
the Eastern District of Wisconsin.
No. 02-C-0358—Charles N. Clevert, Jr., Judge.
____________
ARGUED SEPTEMBER 21, 2004—DECIDED DECEMBER 30, 2004
____________
Before EASTERBROOK, RIPPLE, and WILLIAMS, Circuit
Judges.
EASTERBROOK, Circuit Judge. J.H. Findorff & Son belongs
to the Allied Construction Employers Association in
Milwaukee. On behalf of its members, the Association nego-
tiated a collective bargaining agreement with Local 139 of
the Operating Engineers’ Union. Members of the Association
recognized Local 139 as the bargaining agent for “all heavy
equipment operators and other workers in the jurisdiction
2 No. 04-1834
of the Union as set forth in Article VI, and Article IX”.
Article IV requires all employers to ensure that, when “work
covered by this Agreement” is subcontracted, the subcon-
tractor must subscribe to the Agreement and use members
of Local 139 to do the work.
Findorff was awarded a contract to build a dormitory at
the University of Wisconsin’s Milwaukee campus. An older
structure at the site had to be gutted. Findorff subcontracted
that task to J.C. Construction, whose collective bargaining
agreement with the Laborers Union assigned its members
most of the work. To help break up and remove concrete
floor slabs and old drywall, laborers used skid-steer loaders,
forklift-sized machines with fittings for attachments such
as scoops and jackhammers that can be swapped to suit the
task. (J.C. Construction uses Bobcat skid-steer loaders,
whose features are described at .) Local 139 asserted that operating
engineers, rather than laborers, should do any of the demo-
lition work that required the use of skid-steer loaders.
Findorff disagreed, and the dispute proceeded to arbitration.
After hearing testimony about how skid-steer loaders
are used, and which workers operate them at Findorff, ar-
bitrator Neil Gundermann ruled in Findorff’s favor. It is
undisputed that employees of many trades—laborers, iron
workers, and carpenters, as well as operating engineers—
use skid-steer loaders in the course of their work. Arbitrator
Gundermann asked how it could be, given the language of
Article IV, that laborers on Findorff’s payroll may use skid-
steer loaders, but that laborers on a subcontractor’s payroll
may not. If all skid-steer work belongs to Local 139, that
assignment must hold for Findorff and its subcontractors
alike. Witnesses for Local 139 made it clear that they do not
claim all skid-steer-loader work, but they insisted that the
machine be assigned to Local 139’s members when its use
is more than “intermittent.” The arbitrator thus concluded
that use of skid-steer loaders is not the bailiwick of operat-
No. 04-1834 3
ing engineers alone. Article IV requires subcontractors to
use Local 139 for “work covered by this Agreement” but
does not define “covered.” Arbitrator Gundermann de-
termined that “work covered by this Agreement” is the work
that “heavy equipment operators” perform exclusively for
the Association’s members under the collective bargaining
agreement. As use of skid-steer loaders is not exclusively
operating engineers’ work, a subcontractor likewise need
not ensure that it is performed by Local 139’s members.
The district court vacated the award. As the judge saw
matters, the arbitrator had neglected the collective bargain-
ing agreement’s plain language. The judge started with lan-
guage we have quoted from §1.1—that the bargaining unit
comprises “all heavy equipment operators and other workers
in the jurisdiction of the Union as set forth in Article VI,
and Article IX” plus a comparable provision in §1.3—and
moved to Article VI, which says that each employer
agrees to assign any equipment within the jurisdic-
tion as described below to bargaining unit employ-
ees: the operation of all hoisting and portable engines
on building and construction work . . . including but
not limited to, all equipment listed in Section 9.1
(Wage Classification) of this Agreement.
Section 9.1.4 in turn lists:
Tamper-Compactors (riding type), Assistant Engineer,
A-frames and Winch trucks, Concrete auto breaker,
Hydrohammers (small), Brooms and Sweepers,
Hoist (tuggers), Stump chippers (large), Boats (tug,
safety, work barges and launch), Shouldering ma-
chine operator, Screed operator, Stone crushers and
Screening plants, Prestress machines, Screed oper-
ators (milling machine), Farm or Industrial Tractor
mounted equipment, Post hole digger, Fireman (as-
phalt plants), Air compressor (over and under 400
CFM), Generators (over and under 150 KW), Augers
4 No. 04-1834
(vertical and horizontal), Air, Electric, Hydraulic
Jacks (slipform), Skid steer loaders (with or without
attachments). . . .
Tracing back through the sequence, the judge found that
every piece of equipment listed in §9.1.4 is within the scope
of Article VI’s reference and thus must be assigned to oper-
ating engineers because of the initial reference to the “ju-
risdiction of the Union”. Whatever is in the “jurisdiction of
the Union” must be “work covered by this Agreement” for
purposes of Article IV’s subcontracting clause. And if Local
139 has not protested Findorff’s assignment of some skid-
steer-loader work to other crafts, that toleration does not
diminish its rights under the collective bargaining agree-
ment, the judge concluded.
The district judge’s fundamental assumption is that courts
rather than arbitrators interpret collective bargaining
agreements. Once the court finds an agreement’s meaning
clear, no arbitrator may read it otherwise. In other words,
arbitrators may apply agreements but are not free to err in
their construction. Yet Findorff and Local 139 agreed that
an arbitrator, not a judge, would interpret and apply this
contract. As the Supreme Court frequently explains,
Courts are not authorized to review the arbitrator’s
decision on the merits despite allegations that the
decision rests on factual errors or misinterprets the
parties’ agreement. Paperworkers v. Misco, Inc., 484
U.S. 29, 36 (1987). We recently reiterated that if an
“ ‘arbitrator is even arguably construing or applying
the contract and acting within the scope of his
authority,’ the fact that ‘a court is convinced he
committed serious error does not suffice to overturn
his decision.’ ” Eastern Associated Coal Corp. v.
Mine Workers, 531 U.S. 57, 62 (2000) (quoting
Misco, supra, at 38). It is only when the arbitrator
strays from interpretation and application of the
No. 04-1834 5
agreement and effectively “dispenses his own brand
of industrial justice” that his decision may be un-
enforceable. Steelworkers v. Enterprise Wheel & Car
Corp., 363 U.S. 593, 597 (1960).
Major League Baseball Players Ass’n v. Garvey, 532 U.S.
504, 509 (2001). If a gaffe authorized a court to set aside the
award, there would be little difference between arbitration
and litigation other than the extra cost and delay of pre-
senting the case to the arbitrator before taking it to court.
That would turn arbitration on its head; the process is
designed to achieve speed, lower cost, and expertise. That
can be accomplished only if courts enforce intellectually
honest arbitral decisions, even if the court thinks the arbi-
trator’s decision mistaken. It is why “the question for deci-
sion by a federal court asked to set aside an arbitration
award . . . is not whether the arbitrator or arbitrators erred
in interpreting the contract; it is not whether they clearly
erred in interpreting the contract; it is not whether they
grossly erred in interpreting the contract; it is whether they
interpreted the contract.” Hill v. Norfolk & Western Ry., 814
F.2d 1192, 1194-95 (7th Cir. 1987).
The principle is the same whether or not the district judge
deems the agreement “clear”—a decision that can be made
only after the extended and costly process of litigation that
arbitration is supposed to avert. Under Garvey and its pre-
decessors, misinterpretation of contractual language, no
matter how “clear,” is within the arbitrator’s powers; only a
decision to ignore or supersede language conceded to be
binding allows a court to vacate the award. There is a big
difference—a clear difference, a plain difference—between
misunderstanding and ignoring contractual language.
The district judge did not doubt that Arbitrator
Gundermann was construing this collective bargaining
agreement rather than supplying a rule that he preferred to
the parties’ agreement. Instead the judge applied a
6 No. 04-1834
“plain-meaning exception” to the normal rule that an
arbitrator’s power to decide includes the power to err. Apart
from what the Supreme Court has had to say about the
propriety of such an exception is the fact that what may
seem “plain” to a judge is not necessarily plain to persons
with greater experience in the business that the agreement
is designed to cover. Arbitrators, often chosen because of
their expertise in the industry, may see nuances that escape
generalist judges. Persons steeped in the specialized
language of a trade, or the business norms against which the
language was written, often eschew “plain meaning” in favor
of context, while generalists use a more text-bound ap-
proach because that is easier and less error- prone for
outsiders. See generally Frederick Schauer, The Practice
and Problems of Plain Meaning, 45 Vand. L. Rev. 715(1992); Schauer, Statutory Construction and the Coordinat-
ing Function of Plain Meaning, 1990 Sup. Ct. Rev. 231.
Arbitrator Gundermann doubted the wisdom of a “plain-
meaning approach” to this agreement not only because there
is neither a “clear” meaning (nor a definition of any kind)
for the vital phrase “work covered by this Agreement” in
Article IV, but also because the parties themselves did not
treat the operating engineers as entitled to perform all work
on skid-steer loaders. A collective bargaining agreement is
a long-term relational contract, whose interstices properly
may be fleshed out with what often goes by the name “the
law of the shop.” See, e.g., Consolidated Rail Corp. v. Railway
Labor Executives’ Ass’n, 491 U.S. 299, 310-12 (1989). Local
139 acknowledges this form of common law by its own
reluctance to claim for its members all skid-steer-loader
work at Findorff itself. Witnesses at the hearing estimated
that between 80% and 90% of all hours on skid-steer loaders
at the Association’s general contractors are logged by
workers represented by the Laborers’ Union. No wonder the
operating engineers were unwilling to advance the uncondi-
tional claim to jurisdiction that the district judge thought
No. 04-1834 7
“plain.” Arbitrator Gundermann treated the skid-steer
loader as a tool useful to many crafts rather than a job for
one craft; that tracks how the parties themselves behaved.
Other parts of §9.1.4 demonstrate that this language can-
not be read back into Article VI to establish exclusive ju-
risdiction. “Brooms and Sweepers” appear in the list. Does
Local 139 really have exclusive jurisdiction over every use
of a broom at every member of the Association and each
subcontractor? What then does the Laborers’ Union cover?
Must members of the Carpenters’ Union call on the heavy-
equipment operators of Local 139 to sweep sawdust? Must
the iron workers summon Local 139’s members to brush
away filings and shavings? There is no evidence that the
parties’ understand their own arrangement in that implau-
sible way.
Using “plain meaning” to trump the understanding and
practice of both parties to an agreement would do neither
side a favor. Some practical leavening was needed; that’s
why the parties gave the task to an arbitrator. See Pease v.
Production Workers Union, 386 F.3d 819, 823 (7th Cir.
2004). The view that the agreement gives to the operating
engineers every use of all equipment listed in §9.1.4 would
create a needless jurisdictional war that would require the
National Labor Relations Board to step in, for other col-
lective bargaining agreements allow members of other
unions to use some of the same equipment in their own
crafts. Arbitrator Gundermann’s resolution avoided that
risk.
Anheuser-Busch, Inc. v. Beer & Soft Drink Union, 280
F.3d 1133 (7th Cir. 2002), was the only decision on which
the district court relied for the proposition that, if the court
deems contractual language “plain,” the arbitrator is for-
bidden to select any other interpretation. The judge quoted
at length from what he styled the majority opinion in
Anheuser-Busch, but what he should have called the lead
8 No. 04-1834
opinion—for the three members of the panel wrote sepa-
rately, and none spoke for a majority. Language in the lead
opinion, taken out of context, could be understood to sup-
port the view that judges may override arbitrators’ decisions
by calling the language “clear” or “plain.” The dissenting
opinion disagreed with that view. See id. at 1146-49. Judge
Rovner, whose concurring opinion tipped the balance, thought
that the arbitrator had expressly declared unwillingness to
be bound by the contract’s language and had elected to
implement a pre-contractual policy instead. Id. at 1145-46.
She wrote: “I think it evident that [the arbitrator’s] decision
purporting to interpret the 1998 agreement relied substan-
tially on the unwritten understandings and lengthy course
of conduct that preceded that agreement—and resort to
such pre-signing conduct was verboten under the express
terms of the contract. To that extent, I agree that the arbi-
trator exceeded his authority, and that his award must be
vacated.” Id. at 1146. Anheuser-Busch thus does not commit
this court to the proposition that a judicial declaration of
“plain meaning” displaces an arbitrator’s interpretation.
Any such rule would be incompatible with Garvey and its
predecessors, as well as Hill and dozens of other decisions
in this circuit.
The judgment is reversed, and the case is remanded for
entry of a judgment enforcing the arbitrator’s award.
No. 04-1834 9
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—12-30-04