Certco, Inc. v. International Brotherhood of Teamsters, Local Union No. 695

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 12-3387 and 12-3487
C ERTCO , INC.,
Plaintiff-Appellant,
Cross-Appellee,
v.
INTERNATIONAL B ROTHERHOOD OF T EAMSTERS,
L OCAL U NION N O . 695,
Defendant-Appellee,
Cross-Appellant.
Appeals from the United States District Court
for the Western District of Wisconsin.
No. 11-cv-258-wmc—William M. Conley, Chief Judge.
A RGUED A PRIL 17, 2013—D ECIDED JULY 17, 2013
Before E ASTERBROOK, Chief Judge, and W OOD and SYKES,
Circuit Judges.
E ASTERBROOK, Chief Judge. Ten years ago Certco had
one food-distribution warehouse in Madison, Wisconsin.
Today it has four. As the labor force at the new ware-
houses grew, jobs at the original site on Verona Road
2 Nos. 12-3387 and 12-3487
dwindled. Certco staffed the three new locations
(Helgesen, Femrite, and Daniels) with non-union labor.
It paid them more per hour than the union members
received and offered a defined-contribution pension plan,
saving money compared with the expensive defined-
benefit plan that the Teamsters Union sponsors. Local
695 of the Teamsters Union, which represents Certco’s
warehouse employees, asked an arbitrator to order
Certco to return bargaining-unit work to its members. It
pointed out that Certco had closed the Verona Road’s
freezer facility, which used to employ 20 to 25 persons,
and built a new freezer at Femrite. Certco maintained
that there is not enough room at Verona Road for the
larger freezer installed at Femrite, but the union replied
that the tasks of moving food into and out of a freezer
remain bargaining-unit work, and that there had been a
net flow of 15 or so jobs from Verona Road to Femrite
even though Certco had expanded some other facilities
at Verona Road.
The arbitrator concluded that much of the labor at
Certco’s two newest warehouses is bargaining-unit work
under Article 12 of the collective-bargaining agree-
ment—which, the arbitrator pointed out, covers all
of Certco’s warehouse labor without limitation to a par-
ticular site and forbids the transfer of bargaining-unit
work to non-union workers. The arbitrator directed
Certco to return to bargaining-unit employees “all work
on the transferred freezer products” that had moved to
the Femrite warehouse and “work on products that
were stored at Verona Road as of July 27, 2009 and trans-
ferred to the Daniels facility.”
Nos. 12-3387 and 12-3487 3
Certco then asked a district judge to deny enforcement.
It observed that in 2006 the National Labor Relations
Board had decided that federal labor law did not deem
the jobs at Helgesen to be “accretions” to the bargaining
unit and thus automatically within Local 695’s jurisdic-
tion. Certco Distribution Centers, 346 N.L.R.B. 1214 (2006).
Moreover, Certco asserted, in 2010 the Board had made
the same decision about Femrite. An arbitrator cannot
contradict the Board’s decisions, see Carey v. Westinghouse
Electric Corp., 375 U.S. 261 (1964), and Certco asserted
that the Union’s grievance therefore was not arbitrable.
The district court concluded, however, that the dispute
was arbitrable and enforced the award, as the Union
had requested by a counterclaim—though the judge
stayed that decision pending the outcome of this appeal.
The judge wrote that accretion presents questions of
federal law and labor policy within the Board’s domain,
subjects that trump contracts, while the arbitrator had
addressed a different topic: the meaning and effect of
Article 12 in a particular CBA. If Certco wants to
employ non-union labor to perform the same jobs Local
695’s members had been doing at Verona Road, it
has only to negotiate different language in the next
collective-bargaining agreement.
What the NLRB concluded in 2006 is that work at the
Helgesen facility did not accrete to Local 695, as a matter
of federal law under §8(a)(5) of the National Labor Rela-
tions Act, 29 U.S.C. §158(a)(5). The administrative law
judge, whose decision on this issue the Board adopted,
concluded that, although the staff at the Helgesen ware-
house was doing the same kind of work as the staff
4 Nos. 12-3387 and 12-3487
at Verona Road, the General Counsel had not shown
that the employees at Helgesen supported the Teamsters
Union or otherwise met the Board’s requirements for
accretion under §8(a)(5).
In reaching this conclusion, the ALJ observed that “[t]he
determination of questions of representation, accretion,
and appropriate unit do not depend upon contract inter-
pretation but involve the application of statutory policy,
standards, and criteria. These are matters for decision
of the Board rather than an arbitrator” (346 N.L.R.B. at
1224, quoting from Marion Power Shovel Co., 230 N.L.R.B.
576, 577–78 (1977)). See also Litton Financial Printing
Division of Litton Business Systems, Inc. v. NLRB, 501 U.S.
190 (1991). The arbitrator, and later the district judge,
made precisely this point when concluding that the
Board had not resolved any question about Article 12
of the CBA, which remained open to consideration in
arbitration.
Article 12(1), a standard work-assignment clause,
provides that Certco “shall not direct or require its em-
ployees or persons other than the employee in the bar-
gaining units here involved, to perform work which is
recognized as the work of the employees in said units.”
The arbitrator decided that the freezer work moved
from Verona Road to Femrite, and some of the work
moved from Verona Road to Daniels, had been “recognized
as the work of the employees in said units” and there-
fore could be moved only with the Union’s agreement.
By contrast, new work that had never been done at
Verona Road is not covered by the award, and Certco
can assign it as it pleases.
Nos. 12-3387 and 12-3487 5
The Board’s ruling in 2006 had nothing to do with the
parties’ collective-bargaining agreement and therefore
did not affect the arbitrability of a dispute about the
meaning of Article 12(1). That’s equally true about
the decision in 2010 that workers at Femrite did not
accrete to the bargaining unit under §8(a)(5).
And there’s a further reason why the 2010 decision
does not affect arbitration: it was not the Board’s. After
Femrite opened, the Union charged Certco with unfair
labor practices. The Union made two arguments: that
Certco had refused to bargain over the move and had
discriminated against the Union’s members by refusing
to hire any at Femrite. The Board’s regional attorney
declined to issue a complaint. The Union appealed to
the General Counsel, who likewise declined to issue a
complaint. The General Counsel told the Union that
bargaining is not required when physical constraints
such as space, rather than economic issues, lead to a
transfer of work, and that there had not been any dis-
crimination since none of the Union’s members applied
for a job at Femrite. These decisions not only are
unrelated to the arbitrability of a claim under Article 12
but also are not by the Board. The General Counsel, not
the Board, decides whether to issue a complaint, and
the General Counsel’s exercise of prosecutorial discre-
tion lacks legal effect. See, e.g., NLRB v. Food Workers
Union, 484 U.S. 112, 126 (1987); Miller Brewing Co. v.
Brewery Workers, 739 F.2d 1159, 1166 (7th Cir. 1984).
The General Counsel’s analysis can be helpful when
a court must decide whether a dispute is within the
Act’s scope, see Hanna Mining Co. v. Marine Engineers,
382 U.S. 181, 192 (1965), but failure to issue a com-
6 Nos. 12-3387 and 12-3487
plaint is not equivalent to a decision by the Board on
the merits.
Certco tells us that Yellow Freight System, Inc. v. Automo-
bile Mechanics, 684 F.2d 526 (7th Cir. 1982), gives legal
force to a regional decision not to issue a complaint. We
do not understand the opinion so. The regional director
(an official different from the regional attorney) ordered
an election to be held so that employees could decide
whether they wanted to be represented by a union.
The regional director acts as the Board’s agent for the
purpose of holding and monitoring elections. Yellow
Freight concludes that, once the Board has prescribed an
election, an arbitrator cannot make a decision that
would foreclose that election. Arbitrators cannot override
decisions by federal agencies. That eminently sound
conclusion has nothing to do with the General Counsel’s
decision not to issue a complaint (which leaves no
decision by the Board)—and at all events our case does
not concern elections.
As we have explained, even the Board’s actual decision
in 2006 is compatible with the arbitrator’s interpretation
of Article 12(1) in this CBA. Certco treats the arbitrator’s
decision as requiring it to recognize the Union as the
representative of workers at Femrite and Daniels, but
what the arbitrator actually ordered is that the work
formerly done at Verona Road be returned there (where
the Union already is the exclusive bargaining representa-
tive), or be performed by bargaining-unit members,
unless the Union agrees to modify Article 12(1). Certco
may find compliance expensive, but the costs of keeping
one’s promise do not excuse performance.
Nos. 12-3387 and 12-3487 7
No more need be said about Certco’s appeal. The
Union’s cross-appeal asks us to reverse the district
court’s decision denying its motion for attorneys’ fees as
sanctions. There is a presumption in favor of sanctions
when the losing side in arbitration asks a judge to
disagree with the award. See, e.g., Continental Can Co. v.
Chicago Truck Drivers Pension Fund, 921 F.2d 126 (7th
Cir. 1990). The rationale for that presumption is that the
parties have agreed to resolve their dispute in one forum,
and the costs of moving the dispute to a second forum
should be borne by the person who initiates the new
round. Certco, unlike the loser in Continental Can and
similar cases, does not ask us to disagree with the arbitra-
tor’s decision. Instead it contends that the dispute was
not arbitrable. Arbitrability is a question for the court. See,
e.g., AT&T Technologies, Inc. v. Communications Workers,
475 U.S. 643 (1986). The American Rule, under which
each side bears its own fees, governs disputes about
arbitrability unless an exception applies. The Union does
not contend that any statute authorizes fee shifting, and
although it does contend that Certco’s position is
frivolous the district judge thought that it escapes that
epithet—weak, maybe, but not frivolous. Appellate
review of such a decision is deferential, see Cooter &
Gell v. Hartmarx Corp., 496 U.S. 384, 399–405 (1990), and
we conclude that the district judge did not abuse his
discretion in deciding that Certco’s arguments are not
frivolous.
A FFIRMED
7-17-13