Sysco Minnesota, Inc. v. Teamsters Local 120

United States Court of Appeals
For the Eighth Circuit
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No. 18-3491
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Sysco Minnesota, Inc.
lllllllllllllllllllllPlaintiff - Appellee
v.
Teamsters Local 120
lllllllllllllllllllllDefendant - Appellant
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Appeal from United States District Court
for the District of Minnesota
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Submitted: December 11, 2019
Filed: May 13, 2020
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Before SMITH, Chief Judge, GRASZ and STRAS, Circuit Judges.
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GRASZ, Circuit Judge.
Sysco Minnesota, Inc. (“Sysco Minnesota”) brought this action against
Teamsters Local 120 (“Local 120”) under section 301 of the Labor Management
Relations Act (“LMRA”), 29 U.S.C. § 185, for violating their collective bargaining
agreement (“CBA”). The district court1 concluded Local 120 waived its right to
arbitrate this dispute and granted summary judgment in favor of Sysco Minnesota in
the amount of $1,238,315. Local 120 appeals, and we affirm.
I. Background
Sysco Minnesota is one of Sysco, Inc.’s many wholly-owned distribution
companies. Local 120 is a local union affiliated with the International Brotherhood
of Teamsters and represents a bargaining unit of employees working at Sysco
Minnesota’s distribution facility in Mounds View, Minnesota. In 2017, Sysco
Minnesota and Local 120 successfully negotiated and executed the CBA which is
effective through August 2021.
Article 23 of the CBA contains a “No Strike; No Lockout” clause that states
“there shall be no lockout, strike or any other interference with the operation of the
business during the life of this Agreement.” And Article 24 contains a “Picket Lines”
clause that states “no employee shall be requested or instructed to go through a
primary picket line where a union is on primary strike.”
A separate union, International Brotherhood of Teamsters Local Union No. 41
(“Local 41”), began representing a bargaining unit of employees working at Sysco
Kansas City, Inc. (“Sysco KC”) in 2014. In November 2017, after years of
unsuccessful attempts to negotiate their own collective bargaining agreement, Local
41 struck Sysco KC. To gain leverage, Local 41 decided to set up a picket line
hundreds of miles away, outside Sysco Minnesota’s distribution facility. Again,
Local 41 did not represent workers at Sysco Minnesota, and it was not on strike
against Sysco Minnesota. Officials of Local 120, who did represent workers at Sysco
1
The Honorable Paul A. Magnuson, United States District Judge for the District
of Minnesota.
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Minnesota, told members they could either cross or respect Local 41’s picket line, and
all but four of Local 120’s members respected Local 41’s picket line and refused to
work. This caused significant disruption to Sysco Minnesota’s operations.
Sysco Minnesota then brought this action for damages against Local 120 under
section 301 of the LMRA, 29 U.S.C. § 185, claiming Local 120 breached the CBA’s
No Strike clause. In its answer and in its Rule 26(f) report, Local 120 asserted Sysco
Minnesota’s claim was barred by its failure to exhaust the CBA’s prescribed
grievance procedures, including arbitration. But Local 120 never moved to stay or
dismiss the case on this basis. In addition to answering Sysco Minnesota’s initial
complaint and submitting a Rule 26(f) report, Local 120 stipulated to limited
expedited discovery, answered the amended complaint, and participated in an initial
pretrial conference. Shortly before the conclusion of discovery, Sysco Minnesota
moved for summary judgment, and, after discovery concluded, Local 120 cross-
moved for summary judgment on the merits. Local 120 had not asked the district
court for relief under the CBA’s prescribed grievance procedures before submitting
its summary judgment briefs.
The district court granted Sysco Minnesota’s summary judgment motion and
denied Local 120’s cross-motion. The district court concluded Local 120 waived its
right to arbitration and that the undisputed facts showed Local 120 breached the
CBA’s no-strike clause. Sysco Minnesota submitted evidence, including an expert
report, showing damages in the amount of $1,238,315, and Local 120 submitted no
evidence or argument to the contrary. So the district court entered judgment in favor
of Sysco Minnesota for that amount.
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II. Analysis
Local 120 appeals the district court’s waiver determination and grant of
summary judgment on Sysco Minnesota’s breach claim. Having jurisdiction under
28 U.S.C. § 1291, we address these issues in order.
A. Waiver
“The courts have jurisdiction to enforce collective-bargaining contracts; but
where the contract provides grievance and arbitration procedures, those procedures
must first be exhausted and courts must order resort to the private settlement
mechanisms without dealing with the merits of the dispute.” United Paperworkers
Int’l Union v. Misco, Inc., 484 U.S. 29, 37 (1987). However, a party waives its right
to these procedures if it: (1) knew of its right to these procedures, (2) acted
inconsistently with that right, and (3) prejudiced the other party with these
inconsistent acts. ABF Freight Sys., Inc. v. Int’l Bhd. of Teamsters, 728 F.3d 853, 862
(8th Cir. 2013). “We review de novo the legal determination of waiver but examine
the factual findings underlying that ruling for clear error.” Lewallen v. Green Tree
Servicing, L.L.C., 487 F.3d 1085, 1090 (8th Cir. 2007). Because there is a “strong
federal policy in favor of arbitration,” we will resolve “any doubts concerning waiver
of arbitrability” in favor of arbitration. Id. (quoting Dumont v. Saskatchewan Gov’t
Ins., 258 F.3d 880, 886 (8th Cir. 2001)).
Local 120 waived its right to the CBA’s prescribed non-judicial grievance
procedures, including arbitration. First, Local 120 knew it had this right because it
negotiated the CBA’s terms and listed the CBA’s grievance procedures as a defense
to Sysco Minnesota’s breach claim in its answer. See Messina v. N. Cent. Distrib.,
Inc., 821 F.3d 1047, 1050 (8th Cir. 2016) (finding a party “knew of its existing right
to arbitration because it possessed the arbitration agreement”).
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Second, Local 120 acted inconsistently with its right to proceed under the
CBA’s grievance procedures. “A party acts inconsistently with its right to arbitrate
if the party ‘[s]ubstantially invoke[s] the litigation machinery before asserting its
arbitration right.’” Lewallen, 487 F.3d at 1090 (quoting Ritzel Commc’ns v. Mid-Am.
Cellular Tel. Co., 989 F.2d 966, 969 (8th Cir. 1993)). “A party substantially invokes
the litigation machinery when, for example, it files a lawsuit on arbitrable claims,
engages in extensive discovery, or fails to move to compel arbitration and stay
litigation in a timely manner.” Id. “To safeguard its right to arbitration, a party must
‘do all it could reasonably have been expected to do to make the earliest feasible
determination of whether to proceed judicially or by arbitration.’” Id. at 1091(quoting Cabintree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 391 (7th
Cir. 1995)).
Here, Local 120 answered Sysco Minnesota’s initial and amended complaints,
stipulated to some expedited discovery, participated in a pretrial scheduling
conference, jointly filed a Rule 26(f) report, and then, after all discovery concluded,
responded to Sysco Minnesota’s motion for summary judgment and cross-moved for
summary judgment. Local 120 never moved to compel arbitration or to otherwise
dismiss or stay the case in favor of the CBA’s prescribed non-judicial grievance
procedures. It first asked the district court to compel arbitration in its summary
judgment briefing, nearly nine months after Sysco Minnesota filed its initial
complaint. Given this procedural history, we have no trouble concluding Local 120
invoked the litigation machinery and failed to timely seek relief from the district court
based on the CBA’s prescribed grievance procedures. See id. at 1090; see also
Messina, 821 F.3d at 1050 (finding waiver where a party proceeded in court for over
eight months “by removing the case to federal court, filing an answer, participating
in a pretrial hearing, filing a scheduling report which recommended a trial date and
discovery deadlines, and filing a motion to transfer venue”).
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Third, had the district court ordered arbitration at the summary judgment stage,
Sysco Minnesota would have been prejudiced. “Whether inconsistent actions
constitute prejudice is determined on a case-by-case basis.” Stifel, Nicolaus & Co.
v. Freeman, 924 F.2d 157, 159 (8th Cir. 1991). “The prejudice threshold, however,
is not onerous.” Hooper v. Advance Am., Cash Advance Ctrs. of Mo., Inc., 589 F.3d
917, 923 (8th Cir. 2009). “A party is . . . prejudiced when the ‘parties use discovery
not available in arbitration, when they litigate substantial issues on the merits, or
when compelling arbitration would require a duplication of efforts.’” Lewallen, 487
F.3d at 1093 (quoting Kelly v. Golden, 352 F.3d 344, 349 (8th Cir. 2003)).
Local 120’s failure to seek relief under the CBA’s prescribed grievance
procedures in a timely manner caused the parties to complete all discovery and
litigate the merits of Sysco Minnesota’s breach claim. Moreover, it is hard to imagine
how compelling arbitration at this stage of the case — after Sysco Minnesota had
engaged in months of litigation — would not have required a duplication of effort,
which is itself sufficient to constitute prejudice. See Hooper, 589 F.3d at 923–24
(“Compelling arbitration presumably would require a duplication of effort insofar as
[the defendant] in arbitration would reargue issues upon which the district court
ruled.”).
Local 120 contends it did not waive its right to the CBA’s grievance
procedures because it had no choice but to defend itself against Sysco Minnesota’s
lawsuit and because it asserted in its answers and the Rule 26(f) report that Sysco
Minnesota failed to comply with the CBA’s grievance procedures. These arguments
are unavailing. Local 120 had the choice to file a motion to dismiss or compel
arbitration and chose not to. See Lewallen, 487 F.3d at 1090 (explaining that failing
to move to compel arbitration and stay litigation in a timely manner is inconsistent
with the right to arbitrate). And preserving the CBA’s grievance procedures as a
defense in its answers and in the Rule 26(f) report is not the same as actually asking
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the district court for the appropriate relief under the CBA in a motion. See Hooper,
589 F.3d at 923 (“A reservation of rights is not an assertion of rights.”).
The district court did not err in finding Local 120 waived its right to the CBA’s
grievance procedures, including arbitration.
B. Grant of Summary Judgment
The district court granted Sysco Minnesota’s motion for summary judgment on
its claim that Local 120 breached the No Strike clause in Article 23 of the CBA. On
appeal, Local 120 argues the district court erred because the refusal to cross Local
41’s picket line was permitted by the Picket Lines clause in Article 24 of the CBA
and protected by section 7 of the National Labor Relations Act (“NLRA”), 29 U.S.C.
§ 157, which protects sympathy strikes. Local 120 also argues it is not liable for its
members’ refusal to cross Local 41’s picket line. These arguments lack merit.
We review the grant of summary judgment de novo. Farver v. McCarthy, 931
F.3d 808, 811 (8th Cir. 2019). Summary judgment is appropriate when “there is no
genuine issue as to any material fact and the movant is entitled to judgment as a
matter of law.” Id. (quoting Fed. R. Civ. P. 56(a)).
1. The Picket Lines Clause
“Federal substantive law applies in suits under § 301, but we may look to
consistent common law rules of contractual interpretation for guidance as long as
their application is consistent with federal labor policies.” Allied Sales Drivers, Local
No. 289 v. Sara Lee Bakery Grp., 746 F.3d 342, 346 (8th Cir. 2014) (quoting Int’l
Union of Operating Eng’rs Local 571 v. Hawkins Constr. Co., 929 F.2d 1346, 1349
(8th Cir. 1991)). When interpreting a collective bargaining agreement, “we begin by
examining the language of the documents which form the basis of the agreement.”
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Hawkins, 929 F.2d at 1349. We construe the agreement as a whole giving meaning
to all its terms and reading them in context. Sara Lee, 746 F.3d at 346. “When the
intent of the parties is unambiguously expressed in a [collective bargaining
agreement], that expression controls, and the court’s inquiry should proceed no
further.” CNH Indus. N.V. v. Reese, 138 S. Ct. 761, 766 (2018) (quoting M & G
Polymers USA, LLC v. Tackett, 574 U.S. 427, 443 (2015) (Ginsburg, J., concurring)).
Article 24’s Picket Lines clause states “no employee shall be requested or
instructed to go through a primary picket line where a union is on primary strike,”
and Local 120 maintains this clause allowed its members to refuse to cross Local 41’s
picket line. The district court rejected Local 120’s position, concluding Local 41’s
picket line was not a primary picket line where a union was on primary strike. On
appeal, Local 120 argues the district court misinterpreted the term “primary.”
Sysco Minnesota and Sysco KC are distinct entities that separately bargain with
Local 120 and Local 41 respectively. Local 41 struck Sysco KC and had no dispute
with Sysco Minnesota; it only picketed Sysco Minnesota to gain leverage in
bargaining with Sysco KC. Local 120 contends Local 41’s picket line outside Sysco
Minnesota’s facility was nevertheless “a primary picket line where [it] [was] on
primary strike” because Sysco Minnesota and Sysco KC are both wholly-owned
subsidiaries of Sysco, Inc. In other words, Sysco Minnesota and Sysco KC are
effectively the same employer due to their common-ownership, making Local 41’s
labor actions against Sysco Minnesota primary. We disagree.
The terms “primary picketing” and “primary strike” come from section 8(b)(4)
of the NLRA, 29 U.S.C. § 158(b)(4)(i)(B), which legalizes primary strikes and
primary picketing by labor unions2 but prohibits secondary activity intended “to
2
A primary strike is “directed against the employer with whom the union has
the dispute concerning terms of employment,” and primary picketing involves
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enmesh neutral secondary employers in primary labor disputes between the union and
another employer.” Ruzicka Elec. & Sons, Inc. v. Int’l Bhd. of Elec. Workers, Local
1, 427 F.3d 511, 519 (8th Cir. 2005) (quoting NLRB v. Constr. & Gen. Laborer’s
Union Local 1140, 577 F.2d 16, 18 (8th Cir. 1978)). Distinguishing between lawful
primary activity and unlawful secondary activity can be difficult, see id. at 519–20,
but federal courts have long rejected Local 120’s argument that picketing an
otherwise neutral employer is primary activity simply because the neutral employer
and the primary employer with whom the union has a labor dispute are commonly
owned. See, e.g., Bachman Mach. Co. v. NLRB, 266 F.2d 599, 605 (8th Cir. 1959);
see also Am. Fed’n of Television & Radio Artists, Washington-Baltimore Local v.
NLRB, 462 F.2d 887, 888, 892 (D.C. Cir. 1972). The inquiry is more fact intensive
than that. See Bachman Mach. Co., 266 F.2d at 605; see also Am. Fed’n of Television
& Radio Artists, 462 F.2d at 892.
Here, the only fact Local 120 relies on to establish that Local 41’s picket line
outside Sysco Minnesota was a primary picket line where it was on primary strike is
that Sysco Minnesota and Sysco KC are commonly owned. But because common
ownership alone is insufficient to establish Local 41’s picket line was a primary
picket line where it was on primary strike, Local 120 has failed to demonstrate that
Article 24’s Picket Lines clause allowed its members to refuse to cross Local 41’s
picket line.
“picketing, generally at the situs of the primary employer, that attempts or is intended
to increase the direct economic pressure on the primary employer by inducing others
to honor the strike.” Landgrebe Motor Transp., Inc. v. Dist. 72, Int’l Ass’n of
Machinists, 763 F.2d 241, 245 (7th Cir. 1985); see also United Steelworkers of Am.
v. NLRB, 376 U.S. 492, 499 (1964).
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2. Sympathy Strike
Next, Local 120 argues that refusing to cross Local 41’s picket line was a
statutorily protected sympathy strike.3 The district court concluded Local 120 waived
that protection in the CBA, and we agree.
“Section 7 of the [NLRA, 29 U.S.C. § 157], generally protects employees who
engage in sympathy strikes in support of a lawful, primary strike by another union.”
Amcar Div., ACF Indus. v. NLRB, 641 F.2d 561, 566 (8th Cir. 1981). “However, in
the collective bargaining agreement, employees may waive their right to engage in
sympathy strikes.” Id. (citing NLRB v. Rockaway News Supply Co., 345 U.S. 71,
80–81 (1953)). The waiver can be express or implied, but “an implied waiver must
be ‘clear and unmistakable.’” John Morrell, 913 F.2d at 551 (quoting Metro. Edison
Co. v. NLRB, 460 U.S. 693, 708 (1983)). In addition to the language and structure
of the collective bargaining agreement, courts may look to the parties’ bargaining
history and any other relevant conduct that shows their understanding of the contract.
Amcar, 641 F.2d at 567.
The No Strike clause in Article 23 of the CBA states: “In order to assure
stabilized employment and uninterrupted service, the parties hereto mutually agree
that there shall be no lockout, strike or any other interference with the operation of
the business during the life of this Agreement.” Citing our decisions in Amcar and
3
“A sympathy strike involves two unions; one is striking to force some
concession from the employer; the other strikes in sympathy with the first’s
objectives. Sympathy strikes are a common manifestation of traditional union
solidarity.” John Morrell & Co. v. Local Union 304A of United Food Workers, 913
F.2d 544, 548–49 n.4 (8th Cir. 1990) (quoting Sympathy strike, Black’s Law
Dictionary (5th ed. 1979)); Sympathy strike, Black’s Law Dictionary (11th ed. 2019)
(“A strike by union members who have no grievance against their own employer but
who want to show support for another union involved in a labor dispute.”).
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John Morrell, Local 120 contends this language is too general and cannot be read to
constitute a clear and unmistakable waiver of the right to engage in sympathy strikes.
We disagree.
In Amcar, we held that a no-strike clause stating “there shall be no lock out,
strike, stoppage of work or slow down” was “insufficient, in and of itself, to
constitute a waiver of the right to engage in sympathy strikes.” Id. Only after
considering the parties’ bargaining history and other relevant extrinsic evidence did
we conclude the union clearly and unmistakably waived the right to engage in
sympathy strikes. Id. But here, Article 23’s No Strike clause goes significantly
further than the no-strike clause in Amcar by prohibiting not only strikes generally
but “any other interference with the operation of the business.” (emphasis added); see
Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 31 (2004) (“Read naturally, the word ‘any’
has an expansive meaning, that is, ‘one or some indiscriminately of whatever kind.’”)
(quoting United States v. Gonzalez, 520 U.S. 1, 5 (1997)). In our view, this language
clearly and unmistakably encompasses sympathy strikes generally.
This view is reinforced by the CBA’s separate inclusion of Article 24’s Picket
Lines clause. Read together, Article 23 prohibits sympathy strikes in general, but
Article 24 then carves out the ability to engage in a specific kind of sympathy strike,
i.e., employees retain the right to respect another union’s primary picket line where
it is on primary strike. This structure indicates Article 23’s No Strike clause refers
to sympathy strikes of any other kind. See R.L. Coolsaet Constr. Co. v. Local 150,
Int’l Union of Operating Eng’rs, 177 F.3d 648, 658 (7th Cir. 1999) (explaining that
an “exception for certain sympathy strikes . . . strongly implies that sympathy strikes
in general were included in the no-strike clause”); W-I Canteen Serv., Inc. v. NLRB,
606 F.2d 738, 745 (7th Cir. 1979) (“It follows from the phrasing of this [picket-line]
clause as an express exception that the no-strike clause relates to sympathy strikes as
well.”). Accordingly, the CBA waived the right to engage in any sympathy strike not
expressly preserved in Article 24’s Picket Lines clause. And as discussed above,
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Local 120 failed to establish that its members’ refusal to cross Local 41’s picket line
was permitted by Article 24.
Local 120 also argues the district court should have considered extrinsic
evidence, including the parties’ bargaining history, in determining whether the right
to engage in sympathy strikes was waived. We have, in prior cases, taken this
approach. See Amcar, 641 F.2d at 567; Iowa Beef Processors, Inc. v. Amalgamated
Meat Cutters N. Am., 597 F.2d 1138, 1144 (8th Cir. 1979). But it is not necessary
where, as here, the language and structure of the collective bargaining agreement as
a whole are unambiguous and are, themselves, enough to clearly and unmistakably
prohibit the kind of sympathy strike engaged in by the union. See Sara Lee Bakery
Grp., 746 F.3d at 347 (explaining extrinsic evidence should not be considered unless
the language of the collective bargaining agreement is ambiguous or is reasonably
susceptible of another proposed meaning).
3. Union Liability
Finally, Local 120 argues it is not liable for its members’ refusal to cross Local
41’s picket line because Local 120 did not authorize, participate in, or ratify the
picket line.
The Supreme Court has explained that for claims under section 301(a),
Congress “stopped short of imposing liability upon a union for strikes not authorized,
participated in, or ratified by it.” Carbon Fuel Co. v. United Mine Workers of Am.,
444 U.S. 212, 216 (1979); see also Complete Auto Transit, Inc. v. Reis, 451 U.S. 401,
415–16 (1981) (stating “Congress deliberately chose to allow a damages remedy for
breach of the no-strike provision of a collective bargaining agreement only against
unions, . . . and . . . only when [the union] participated in or authorized the strike.”)
(emphasis on “unions” in original). Here, Local 120’s officers expressly authorized
members to respect Local 41’s picket line by telling them they had the option to either
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cross or respect the picket line. Further highlighting its authorization to respect Local
41’s picket line, Local 120 parked its tractor-trailer outside the Sysco Minnesota
facility near the picket line and provided refreshments to the strikers. Thus, we are
not persuaded that Local 120 did not authorize, participate in, or ratify the picket line.
III. Conclusion
We affirm the district court’s grant of summary judgment.
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