McKinney Restoration, Co. v. Illinois District Council No. 1 of the International Union of Bricklayers & Allied Craftworkers , 392 F.3d 867 ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-3253
MCKINNEY RESTORATION, CO., INC., MCKINNEY
CONSTRUCTION, MC CONSTRUCTION, et al.,
Plaintiffs-Appellants,
v.
ILLINOIS DISTRICT COUNCIL NO. 1 OF THE
INTERNATIONAL UNION OF BRICKLAYERS
AND ALLIED CRAFTWORKERS, AFL-CIO and
BRICKLAYERS UNION LOCAL NO. 21, Affiliated
with the Illinois Dist. Council No. 1 of the Int’l
Union of Bricklayers and Allied Craftsmen,
Defendants-Appellees.
____________
Appeal from the United States District Court for
the Northern District of Illinois, Eastern Division.
No. 01 C 1514—Blanche M. Manning, Judge.
____________
ARGUED JUNE 10, 2004—DECIDED DECEMBER 15, 2004
____________
Before CUDAHY, RIPPLE, and ROVNER, Circuit Judges.
ROVNER, Circuit Judge. This appeal concerns two arbi-
tration awards entered as a result of a dispute between:
Illinois District Council No. 1 of the International Union of
Bricklayers and Allied Craftworkers, AFL-CIO, and its
2 No. 03-3253
affiliated Local 21 (“Union”); and McKinney Restoration
Co., Inc., McKinney Construction, MC Construction, and
Lee McKinney (collectively “Employer”). The Employer filed
suit in the district court to vacate two labor arbitration
awards entered in favor of the Union, and the Union coun-
terclaimed seeking enforcement of those awards. Because
the Employer’s challenge to the first arbitration award was
untimely, the district court granted the Union’s motion for
partial summary judgment enforcing the first award based
on the statute of limitations. The court subsequently granted
the parties’ joint motion for direction of entry of final judg-
ment pursuant to Rule 54(b), and the Employer appealed.
The sole issue before this court on appeal is whether the
Employer’s action to vacate the first arbitration award was
filed outside the statute of limitations.
The Employer argues that the first arbitration left open
issues that were decided in the second award, and therefore
that it was not a final appealable decision until after the
second arbitration award. Accordingly, it argues that the
statute of limitations for both awards commenced only after
the second arbitration award was entered, and that the
action is thus timely as to both awards. The history of the
arbitration is therefore critical to this case.
McKinney Restoration is a construction contracting bus-
iness that was formerly incorporated, and Lee McKinney
was the president and sole shareholder. McKinney
Construction and MC Construction are unincorporated busi-
nesses in the construction contracting industry and are owned
and operated by Lee McKinney. In the first arbitration, the
Union filed a grievance against the Employer, alleging vio-
lations of the collective bargaining agreement. According to
that collective bargaining agreement, all disputes had to be
submitted initially to the joint arbitration board (“JAB”).
The JAB conducted a hearing on that grievance on Decem-
ber 1, 1999,and reconvened on March 8, 2000, to hear
additional evidence. Notice of the hearing was provided to
No. 03-3253 3
Lee McKinney as well as to all three of the McKinney
business entities, and Lee McKinney and an attorney ap-
peared at the hearing on behalf of the those three business
entities. Following those hearings, the JAB issued a written
decision. It found that McKinney Restoration was the only
signatory to the collective bargaining agreement, but that
McKinney Restoration, McKinney Construction, and MC
Construction were effectively the same business and there-
fore that all three were bound to the terms of the agree-
ment. The JAB further determined that those businesses
had performed more than 2,000 hours of bargaining unit
work in violation of the agreement, and it ordered them to
pay $77,576.24 in damages. A written copy of the decision
was sent to Lee McKinney, and receipt of that decision was
acknowledged on May 1, 2000. Accordingly, this decision is
known as the May award.
The three business entities failed to comply with that
May award, however, resulting in a second grievance by the
Union against the Employer. In a letter dated October 13,
2000, the Union informed the Employer of the grievance
and informed it that a hearing would be held before the
JAB to consider “claims related to liability for and com-
pliance with” the May decision. The JAB conducted that
hearing on October 25, 2000, and held that McKinney was
personally bound by the collective bargaining agreement
and therefore was jointly liable for the obligations under the
May award. Accordingly, the JAB ruled that a bond Lee
McKinney had previously posted could be applied towards
satisfaction of that obligation. Lee McKinney received a
copy of that award in December 2000, which is thereby
termed the “December award.”
On March 2, 2001, the Employer filed an action in the
district court seeking to vacate both the May and December
awards pursuant to the Labor-Management Relations Act
(LMRA), 29 U.S.C. § 185. The Union countersued seeking en-
forcement of the awards. The district court bifurcated the
4 No. 03-3253
proceedings, addressing first whether the action to vacate
the May award was barred by the statute of limitations.
The court held that it was barred by the limitations period,
and the Employer appealed.
I.
It is well-settled law in this circuit that “the failure to
challenge an arbitration award within the applicable limi-
tations period renders the award final.” Int’l Union of
Operating Engineers, Local 150, AFL-CIO v. Centor Con-
tractors, Inc., 831 F.2d 1309, 1311 (7th Cir. 1987); Sullivan
v. Gilchrist, 87 F.3d 867, 871 (7th Cir. 1996); Sullivan v.
Lemoncello, 36 F.3d 676, 681 (7th Cir. 1994). All parties
agree that the appropriate limitations period in this case is
90 days, and our cases are in accord. Centor, 831 F.2d at
1311 (applicable limitations period to vacate an arbitration
award in Illinois is 90 days); Gilchrist, 87 F.3d at 870
(same); Lemoncello, 36 F.3d at 681 (same). That would seem
to end the case because the suit to vacate the May award
was filed well beyond that 90-day period. The Employer,
however, seeks to avoid that consequence by contending
that the May award was not in fact a final decision by the
JAB because the issue of McKinney’s personal liability was
before the JAB at the initial hearing and was not decided
until the December award. Accordingly, the Employer
maintains that the May and December awards were
actually one decision by the JAB and therefore the limita-
tions period did not begin to run until the December award
was issued. That argument is both factually and legally
insupportable.
A.
The argument is factually flawed because there is no evi-
dence whatsoever that Lee McKinney’s personal liability
No. 03-3253 5
was before the JAB for the hearings culminating in the May
award. The Employer points to a compendium of innocuous
facts to support its position. First, it notes that in a Novem-
ber 12, 1999, letter apprising the Employer of the December
hearing for the first arbitration, the Union stated:
Local 21 believes that the relationship among each of
the named business entities and the relationship of Mr.
McKinney to those entities is such that each of the
named entities and Mr. McKinney personally are liable
for the obligations imposed by the labor contract be-
tween District Council No. 1 and McKinney Restoration
Co.
The Employer contends that this letter establishes that the
issue of Lee McKinney’s personal liability was before the
JAB prior to the May award. In addition, the Employer
points out that each letter regarding the hearings was
addressed to Lee McKinney as well as the three business
entities. That is the only evidence that Lee McKinney iden-
tifies indicating that his personal liability was before the
JAB at the first arbitration.
In addition, Lee McKinney asserts that certain aspects of
the October hearing for the second arbitration indicate that
it was a continuation of the first arbitration. Specifically, he
notes that the two JAB decisions were heard and authored
by the same JAB panel and that the October 13, 2000, letter
regarding the second arbitration provided: “Although the
claim raised by the Union has to do with compliance, you
will be given an opportunity if you wish to request that the
Joint Arbitration Board consider any arguments or evidence
you wish to present.” Although the connection is far from
self-evident, the Employer contends that this statement
demonstrates that the evidence at the October hearing “was
not limited to the personal liability of McKinney which had
not been addressed or decided at the prior Hearing . . . [but
6 No. 03-3253
rather] that the purpose of the Hearing was to reopen the
prior Hearing for whatever the parties wanted to dis-
cuss. . . .”
Those arguments by the Employer fall far short of estab-
lishing that the May and December awards were actually
one comprehensive decision by the JAB. In fact, the record
demonstrates that the opposite is true. Although the
November 12 letter preceding the hearings for the first arbi-
tration evidenced the Union’s belief that Lee McKinney
should be held personally liable, there is absolutely no evi-
dence that his personal liability was presented to the JAB.
The JAB determined the liability of the three business en-
tities and never discussed Lee McKinley’s liability, nor did
it indicate that his personal liability had ever been raised.
In fact, in the May award, the JAB identifies the parties
notified of the hearing and the representatives present,
in each case mentioning only the three business entities.
For instance, the JAB records that the “contractor” was
notified of the hearing, and then defines contractor as the
three business entities. The JAB further identifies the “[r]ep-
resentative present for McKinney Restoration Co., Inc.,
McKinney Construction, and MC Construction” as Lee
McKinney and Gerard Smetana. At no time is Lee McKinney
identified as a party, and no representative of his interests
is identified. This is in contrast to the December award,
which reflects that Lee McKinney as well as the three
business entities were notified of the hearing, and identifies
Lee McKinney and Gerard Smetana as “representative[s]
present for McKinney Restoration Co., Inc., McKinney
Construction, MC Construction, and Mr. Lee McKinney”
(emphasis added). That establishes that the JAB in the first
hearing addressed claims only against the three business
entities, whereas claims against Lee McKinney were
included in the second arbitration. Moreover, the JAB in its
May award defined the matter before it as concerning the
charges that the contractor violated the collective bar-
No. 03-3253 7
gaining agreement; as was stated, the term “contractor”
in the decision was limited to the three business entities.
There is, in short, absolutely no evidence that the personal
liability of Lee McKinney was presented to the JAB, and
therefore its decision reflected a final determination of all
issues before it.
The use of the same JAB panel for the second arbitration
is unexceptional, and the openness to other issues in no way
indicates that it was meant as a continuation of the prior
arbitration hearings. In fact, the October 13 letter notified
the Employer that the hearing was held to address prob-
lems concerning compliance with the prior decision of the
JAB. In contrast, when notifying the Employer of the
second hearing to be conducted in the course of the first
arbitration, the letter stated that the JAB was scheduled “to
reconvene, to decide certain unresolved matters, from the
December 1, 1999 Joint Arbitration Board hearing.” No
similar language concerning unresolved matters was pre-
sent for the second arbitration.
B.
In addition to its failure to comport with the facts, the
Employer’s argument is legally incorrect as well. The case
law in this circuit establishes that the May award was a
final decision that commenced the running of the limita-
tions period.
The Employer rests its claim entirely on Ameritech
Services, Inc. v. Local Union No. 336, IBEW, AFL-CIO, No.
96 C 5897, 1997 WL 222439 (N.D. Ill. April 30, 1997). In
Ameritech, the district court noted that it had jurisdiction
under § 301 of the LMRA to vacate or enforce a labor ar-
bitration award, but held that ordinarily the arbitrator’s
award must be final and binding before such review is un-
dertaken. Id. at 5. According to that court, the finality
rule—called the “complete arbitration” rule—defined a
8 No. 03-3253
“final” arbitration award as one “intended by the arbitrator
to be his complete determination of every issue submitted
to him.” Id., citing Anderson v. Norfolk and Western Ry. Co.,
773 F.2d 880, 883 (7th Cir. 1985). Where a substantive task
remained for the arbitrator to perform, the ruling was not
final. Id.; see also Millmen Local 550, United Brotherhood of
Carpenters and Joiners of America, AFL-CIO v. Wells
Exterior Trim, 828 F.2d 1373 (9th Cir. 1987); Public Service
Elec. and Gas Co. v. System Council U-2, IBEW, AFL-CIO,
703 F.2d 68 (3d Cir. 1983).
We reached a similar conclusion in Smart v. IBEW, 315
F.3d 721 (7th Cir. 2002), which was brought under both the
LMRA and the Federal Arbitration Act (FAA), but in which
we focused our discussion on the FAA provisions. See
International Union of Operating Engineers v. Murphy Co.,
82 F.3d 185, 188-89 (7th Cir. 1996)(citing case for the
proposition that the FAA and the LMRA establish the same
governing principles and that courts routinely cite decisions
under one statute as authority for decisions under the
other). In Smart, we addressed issues of the finality and
ripeness of arbitration awards, holding that “[o]ne thing is
clear, . . . if the arbitrator himself thinks he’s through with
the case, then his award is final and appealable . . ..” 315
F.3d at 725. That is true even if the award was incomplete
in that the arbitrators did not complete their assignment
but believed they had, or where the award was so poorly
drafted that the party against whom the award is entered
does not know how to comply with it. Id. In such a case, the
award is properly before the court, and the court then may
vacate it pursuant to § 10(a)(4) of the Federal Arbitration
Act. Id.; 9 U.S.C. § 10(a)(4)(requiring a court to vacate an
arbitration award where “the arbitrators . . . so imperfectly
executed [their powers] that a mutual, final, and definite
award upon the subject matter submitted was not made”).
In Smart, the arbitrator found liability, holding that
Smart violated the collective bargaining agreement by fail-
No. 03-3253 9
ing to make required contributions to the union’s welfare
fund. The arbitrator did not, however, determine the amount
owed the union, directing the parties to calculate the amount
owed. Id. at 724. Because the arbitrator believed that the
arbitration was completed, the award was final and appeal-
able. The Smart court noted that unlike litigation, arbitra-
tion allows parties flexibility in dispute resolution, thus
allowing them to proceed to arbitration solely on liability
and leaving damages to their mutual agreement. Id. at 726.
Accordingly, the award was enforceable even though it de-
termined only liability, not damages, because it was clear
that the arbitrators “had finished their assignment and
clear as well what their award required.” Id.
That contrasts with the facts present before the Ameritech
court, in which the arbitrator had apparently not completed
the assignment. In Ameritech, the parties agreed at the
onset of the arbitration hearing that if a violation of the
collective bargaining agreement was found, the arbitrator
should not determine the remedy but should return the
matter to the parties for them to resolve it, although the
arbitrator was to retain jurisdiction. 1997 WL 222439 at 2.
Accordingly, when the arbitrator subsequently determined
that a violation existed, he retained jurisdiction for “ninety
days, or longer if the parties so require, while the parties
attempt to fashion the appropriate remedy.” Id. at 3. The
parties did not attempt to fashion an appropriate remedy,
and instead filed a suit seeking to vacate the agreement and
a counterclaim seeking enforcement. Id. The court held that
the arbitration decision had all the characteristics of an
interim order, in that neither the parties nor the arbitrator
intended the award to be final, and the substantive task of
determining a remedy remained to be performed, with the
arbitrator retaining jurisdiction presumably for that
purpose. Id. at 7.
Accordingly, where an arbitrator believes the assignment
is completed, the award is final and appealable, and the
10 No. 03-3253
court may then vacate the award for that reason. Where the
evidence establishes that the arbitrator does not believe the
assignment is completed, the award is not final and ap-
pealable.
The present case contains none of those markers of a non-
final order. In this case, nothing in the May award indicates
that the JAB believed that any issues remained to be
decided. The award determined liability and imposed a
remedy. The JAB did not retain jurisdiction, and in fact
stated that if the Union obtained evidence of additional
work performed in violation of the agreement, they could
file a new grievance and the JAB would consider awarding
additional damages. The award further declared that if the
contractor failed to abide by its terms and legal action was
necessary to enforce the award, then the contractor would
be responsible for costs, legal fees, and interest. That is the
language of a final award disposing of all issues before the
arbitrators, not an interim one. Accordingly, the district
court properly held that the May award was final, thus
commencing the statute of limitations, and that the action
to vacate that award was untimely.
II.
The Employer raised a second argument in its brief, as-
serting that if the May award is deemed to be final and
appealable, then the counterclaim by the Union to enforce
that award was commenced beyond the six-month statute
of limitations for enforcement actions. The Union argues
that the Employer is simply wrong in stating that the lim-
itations period for enforcement actions is six months, but
points out that the argument is waived as well because it
was not raised in the district court. The Employer concedes
that it failed to present this issue to the district court, but
asserts that it is jurisdictional and therefore can be raised
at any time. We have repeatedly held that statutes of lim-
No. 03-3253 11
itations, as opposed to true limitations on judicial power,
are not jurisdictional. Central States, Southeast and
Southwest Areas Pension Fund v. Safeway, Inc., 229 F.3d
605, 610 (7th Cir. 2000). The Employer makes no argument
that this is a limitation on judicial power such as 28 U.S.C.
§ 2101 or Federal Rule of Appellate Procedure 4 (specifying
the times in which an appeal must be filed with the Supreme
Court and in the court of appeals respectively.) Id. Instead,
the Employer identifies this as a traditional limitations
period, in this case arguing that it is a limitations period
borrowed from state statutes of limitations. The limitations
period is not jurisdictional, and the issue is waived.
The decision of the district court is AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—12-15-04