# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 3- 15 65

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Garag e Ma in te na nc e, Mac hi ne W areh ou se m en , Rep ai rm en , Ins id e Me n a nd Help ers an d P la st ic Em

pl oyees, Lo cal No. 9 74 , affi li at ed wit h t he Int ern at io na l

Bro th erh oo d o f Team st ers

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Great er Me tro po li ta n Au to m ob il e Deal ers Ass oc ia ti on of M in ne so ta , Inc ., do in g bu si ne ss as M in ne ap ol is Aut om ob il e Deal ers Ass oc ia ti on (MADA); Gol de n Vall ey Mo to rs , Inc ; Lu th er Au to m ot iv e Gro up , Inc .; Mo to rs Man ag em en t, In c.; T h e L u t h e r C o m p a n y L i m i t e d P a

r t n e r s h i p , d o i n g b u s ine ss as Ru dy L uth er T oy ota /S c i o n

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

__ __ __ __ __ __

Su bm it te d: Decem

be r 17 , 20 13
Fil ed : M arch 26 , 20 14

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Befo re WOL LMAN, LOKEN , and KELLY , Cir cu it Ju dg es

.

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KELLY, Cir cu it Ju dg e.

Lo cal No. 97 4 (“ Uni on ”) se ek s to se t as id e an arb it rat io n award th at ru le d in

fav or of th e Mi nn eap ol is Au t om ob il e Deal ers Ass oc ia ti on (“ MADA”) an d se ve ralm em

be r car de al ers hi ps

. Fi nd in g no gr ou nd s to va cat e th e award

, th e di st ric t co ur t 1

gr an te d th e de fen da nt s’ m ot io n to di sm is s pu rs ua nt to Fed

. R. Ci v. P. 12 (b )(6 ). W it h
juri sd ic ti on un de r 28 U.S.C. § 1 29 1, we af fir m

.

I. Ba ck gr ou nd

The Uni on an d MADA ha ve n e g o t ia te d a se rie s of co ll ect iv e ba rg ai ni ng

ag r e em en ts (“ CBAs ”) m em or ia li zi ng th e te rm s of th ei r rel at io ns hi p. Each on e typic al ly en ds im m ed ia te ly b e f or e th e ne xt be gi ns

. At is su e he re is th e tra ns it io n
be twee n th e 20 06 CBA an d th e 20 10 CBA an d it s i mp a c t on ab ov e-s cal e ti m e

a l lo wan ces

. Si nc e th e in tro du ct io n of th e Toyota Pri us in 20 01 , Un io n te c h n i c i a n s

wor k i n g o n hybri d cars at Ru dy Lut he r Toyota (“ Lut he r Toyota ”) ha ve rece iv ed

in cen ti ve pa y , as su ch wor k was es pe ci al ly di ffi cu lt an d da ng ero us

. One ho ur sp en t

wor ki ng on hybri d cars was fact or ed in to th ei r week ’s pr od uc ti vi ty as on e an d a ha lf

to two ho ur s, de pe nd in g on th e pa rti cu la r ta sk

. Thi s di ffer en ti a l is kn own as an
ab ov e-s cal e ti m e al lo wan ce, an acco un ti ng m et ho d t ha t i nd iv id ua l M ADA m em be r
de al ers hi ps ha ve us ed t o c o mp en sa te Uni on te ch ni ci an s fo r va rio us types of wor k

si nc e th e 1 97 0s . Luth er To y ot a was th e on ly MADA m em be r to pr ov id e su ch ti m e

al lo wan ces fo r hybri d car warra nt y an d reca ll wor k, an d it in tro du ced th e al lo wan ces

un il at eral ly—wit ho ut ne go ti at io n wi th th e Uni on

.

In ne go ti at in g th e 20 06 CBA— whi ch wou ld be effe ct iv e fro m Apr il 16

, 20 06

, th ro ug h Apr il 15

, 20 09 —M ADA wan te d to el im in a t e a l l ab ov e-s cal e ti m e

al lo w a n c e s

. The Uni on reject ed th e pr op os al bu t acce pt ed a co m pr om is e: MADA

m em be r de al ers co ul d red uc e hi gh er ti m e al lo wan ces fo r ne w em pl oyees hi red on or

aft er Apr il 16

, 20 06

. The 20 06 CBA was in it ia ll y ex t e n d e d b y m ut ua l ag reem en t

t h r o u g h A p r il 15

, 20 10

, an d th en —s o as no t to ch an ce a st rik e on a Fri da y , whi ch

The Hon or ab le Mi ch ael J. Dav is

, Ch ie f Ju dg e, Uni te d St at es Dis tri ct Co ur t fo r 1

th e Dis tri ct of M in ne so ta

.

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-wou ld di sa pp oi nt cu st om ers —t hr ou gh Apr il 17

, 20 10

. Uni on an d MADA

rep res en ta ti ve s m et on Apr il 13

, 20 10

, to co nc lu de ne go ti at io n of th e 20 10 CBA an d

p r od uc ed a “ Ten ta ti ve Co nt ract Agr eem en t.” Co pi es of th e Agr eem en t w e r e
di st rib ut ed to Uni on m em be rs o n A pr il 15 ; th e m em be rs ’ ba ll ot s were co un te d on Apr il 16 , and th e Agr eem en t was ov erwh el m in gl y ap pr ov ed

.

On Apr il 15

, Lut he r Toyota de li ve red to Uni on rep res en ta ti ve s a le tt er st at in g:

“ Pl eas e be ad vi se d th at as of Apr il 15

, 20 10 Ru dy Lut he r Toyota wil l no lo ng er pay

an y ab ov e sc al e wag e rat e or ti m e al lo wan ce on Hy br id ve hi cl es .” On Apr il 29

, th e
Uni on fil ed a gr ie va nc e ag ai ns t MADA, ch a l l e ng in g Lut he r Toyota ’s le tt er as an

un la wfu l br each of co nt ract or fai lu re to ba rg ai n un de r § 8( a)(5 ) of th e Nati on al Lab or
Rel at io ns Act. Afte r th e gr ie va nc e wen t to arb it rat io n an d th e arb it rat or ru le d in fav or

of MADA, th e Uni on so ug ht to se t as id e th e arb it rat io n award in fed eral co ur t. The

Uni on he re ap pe al s t he di st ric t co ur t’s g ran t o f MADA’s m ot io n t o d is m is s.

II . Dis cus si on

W e rev ie w de n ov o t he di st ric t co ur t’s gr an t o f a m ot io n t o d is m is s an act io n

un de r Fed

. R. Ci v. P. 12 (b )(6 ) an d th e co ur t’s le ga l de te rm in at io n as to whe th er CBA

la ng ua ge is am

bi gu ou s. Loc al 38 N Grap hi c Co m m c’ns Co nf

eren ce/ IBT v. St

. Lou is

Po st -Dis pa tc h, LLC, 63 8 F.3 d 82 4, 82 5 (8 th Ci r. 20 11 ); Jo hn Mo rrel l & Co

. v. Loc al

Uni on 30 4A of Uni te d Fo od & C o mm erci al W or ke rs , 91 3 F.2 d 54 4, 55 0 (8 th Ci r.

19 90 ). Our rev ie w o f th e arb it rat io n award it se lf, ho wev er, i s far m or e de fere nt ia l:

“ [a]s lon g as th e arb it rat or ’s award dr aws it s ess en ce from th e co ll ect iv e ba rg ai ni ng

ag reem en t, an d is no t m erel y hi s ow n br an d of in du st ria l jus ti ce, th e award is

le gi ti m at e.” Uni te d Pap erwo rk ers In t’l Uni on v. Mi sc o, In c., 48 4 U.S. 29

, 35 (1 98 7)
(q uo ta ti on om it te d)

. If “ th e arb it rat or is ev e n a r g u a b ly co ns tru in g or ap pl y in g th e

co nt ract an d act in g wit hi n th e sc op e o f h i s a u t h or it y , th at a co ur t is co nv in ced he

co m m it te d s eri ou s er ro r do es no t s uf fic e to ov ert ur n h is de ci si on .” Id . at 3 8.

-3

-The arb it rat or fram ed th e is su e pr es en te d as : “ Did th e Em pl oyer vi ol at e th e la w [Nat io na l Lab or Rel at io ns Act § 8 (a)( 5) ] or th e [Co ll ect iv e Bar ga in in g] Agre em en t

whe n it te rm in at ed ab ov e-s cal e wag e rat es an d ti m e al lo wan ces on hybri d ve hi cl es ? ” 2

To an swe r th e qu es ti on , b ot h pa rti es po in te d to two sp eci fic pr ov is io ns in th e 20 06

an d 20 10 CBAs : (1 ) “In c e nt iv e Opt io n,” pr ov id in g pr ot ect io ns fo r th e type of

in cen ti ve pa y at is su e he re, an d ( 2 ) “ Mai nt en an ce of St an da rd s,” req ui rin g cert ai n

co nd it io ns to be main ta in ed ba se d on th os e in effe ct on a sp eci fic da te

. Afte r 3

sp eci fy in g t he in cen ti ve pa y at v ari ou s h ou rs of p ro du ct io n a nd for each y ear i n t he

CBA te rm , th e sa m e la ng ua ge on in cen ti v e p a y i s p res en t in bo th th e 20 06 an d th e

20 10 C B A s , u p d a t in g on ly th e rel ev an t da te s: “ If, ho wev er, on Apr il 15

, 20 10 an

Em pl oyer was pa y in g a hi gh er tim e al lo wan ce to te ch ni ci an s fo r an y op erat io n th an

th e fact or y fla t rat e m an ua l al lo ws, th at al lo wan ce wil l no t be red uc ed

. The Em pl oyer
sh al l no t be pr ecl ud ed fro m red uc in g an y su ch hi gh er ti m e al lo wan ce wit h res pe ct to

th os e em pl oyees th at were hi red on or aft er Apr il 16

, 20 06 .” 20 10 CBA, Arti cl e VIII,

Sect io n 8.3 ; 20 06 CBA, Arti cl e VIII, Sect io n 3. Si m il arl y , b o t h CBAs pr ov id e fo r

The Uni on arg ue s th at th e arb it rat or m is co ns tru ed th e di sp ut e by fo cu si ng on 2

th e m et ho d us ed by MADA deal ers to di sc on ti nu e th e ab ov e-s cal e ti m e al lo wan ces
rat he r th an th ei r ri gh t t o d o s o. Se e App el la nt s’ Br. at 18 –2 0. The is su e as ph ras ed by th e arb it rat or al lo wed hi m to reac h bo th is su es , ho wev er, an d th e qu es ti on s of rig ht

an d of m et ho d in he ren tl y m erg e to ge th er. If a ti m el y le tt er se nt by a MADA m em be r
to th e Uni on was an ag reed -u p o n met h o d t o en d ti m e al lo wan ces , th en th e MADA

m em be r ha d t he rig ht to en d t he ti m e al lo wan ces un il at eral ly.

Al t h o u g h t he Uni on arg ue d be fo re th e di st ric t co ur t th at ad di ti on al CBA 3

pr ov is io ns su pp o r t e d i t s po si ti on , th e Uni on di d no t ci te th es e pr ov is io ns at arb it rat io n. The is su es rai se d by ot he r CBA pr ov is io ns were no t be fo re th e arb it rat or si m pl y be cau se th e en ti re CBA was pa rt of th e arb it rat io n r e c or d. Bo eh rin ge r In ge lh ei m Vetm ed ic a, In c. v. Unit ed Fo od & Com m erci al W or ke rs , 73 9 F.3d 11 36

, 11 40 (8 th Ci r. 20 14 ). Mo reo ve r, gi ve n ou r li m it ed rev ie w in th is co nt ex t an d ab se nt

ex cep ti on al ci rcu m st an ces , ou r de te rm in at io n in th e or di na ry cas e as to whe th er the
arb it rat io n award dr aws it s es se nc e fro m th e CBA is co nf in ed to th e CBA pr ov is io ns rai se d b efo re an d i nt erp ret ed by the arb it rat or . Id.

-4

-“ [m ]ain te na nc e of [s ]tan da rd s” : “ Th e Emp lo y er ag rees th at al l co nd it io ns of

em pl oym en t in hi s/ he r in di vi du al op erat io n rel at in g to wag e g u a r an te e, ho ur s of

wor k, ov ert i me d iff

eren ti al s an d ge ne ral wor ki ng co nd it io ns sh al l be m ai nt ai ne d at

no t le ss th an th e hi gh es t m in im um st an da rd s in effe ct at th e ti m e of th e si gn in g of th is
Agr eem en t.” 20 10 CBA, Arti cl e XXVII (al te red fro m 20 06 CBA on ly to be ge nd erne ut ral ); 2 00 6 C BA, Arti cl e XXVII.

The Uni on arg ue s th at t h e l a ng ua ge ab ov e un am bi gu ou sl y ev in ces a m

ut ua l

in te nt to ke ep co ns ta nt cert ai n te rm s of em pl oym en t, in cl ud in g ab ov e-s c a l e t i me

al lo wan ces , d ur in g a gi ve n CBA te rm

. Si nc e th e 20 06 CBA was ex te nd ed th ro ug h
Apr il 15

, 20 10

, an d th en th ro ug h Apr il 17

, 20 10

, Lut he r Toyo t a ’s A p r i l 15 le tt er

st at in g th at su ch ti m e al lo wan ces wou ld no lo ng er be av ai la bl e effe ct iv e as of th at da y

was no t a la wfu l way to te rm in at e th em

. In st ead

, acco rd in g to th e Uni on , su ch

ch an ge s pr es um ab ly sh ou ld ha ve be en do ne th ro ug h th e us u a l C B A ne go ti at io n

pr oc es s. MADA al so ta ke s th e po si ti on th at th es e CBA pr ov is io ns are un am bi gu ou s
bu t arri ve s at a di ffer en t co nc lu si on

. Si nc e ne w h ire s were sp eci fic al ly n ot en ti tl ed

to su ch al lo wan ces , th e Mai nt en an ce of St an da r d s r e qu ire m en t is no t ab so lu te an d

do es no t req ui re th es e al lo wan ces to co nt in ue fro m on e CBA te rm to th e ne xt

. Eve n

if it di d, MADA co nt en ds

, it wou ld ap pl y o nl y to th os e al lo wan ces in effe ct on th e
da te th at th e 20 10 CBA was si gn ed

, whi ch was Apr il 16

, 20 10 —an d Lut he r Toyota

di sc on ti nu ed ab ov e-s cal e ti m e al lo wan ces on Apri l 1 5.

The arb it rat or fo un d it un am bi gu ou s th at th e pa r t i e s i n te nd ed fo r em pl oyees

rece iv in g ab ov e-s cal e ti m e al lo wan ces in effe ct on Apr il 15 to co nt in ue rece iv in g th e

sa m e al lo wan ces du r i n g t h e 20 10 CBA te rm

. He al so fo un d, ho wev er, th at

“ co nt ract ua l la ng ua ge in a ba rg ai ni ng ag reem en t whi ch m ig ht ap pe ar cl ear on it s face

c a n b e c o me un cl ear whe n an effo rt is m ad e to ap pl y it in a real li fe si tu at i o n

. ”

A r b i t r at io n Award at 8. He cred it ed MADA’s arg um en t th at th e Mai nt en an ce o f

St an da rd s pr ov is io n pr o t e c t e d c o n di ti on s in effe ct “ at th e ti m e of si gn in g of th e

-5

-ag reem en t,” whi ch to ok pl ace on Apr il 16

, 20 10 ; an y co nd it io ns la wfu ll y el im in at ed

on Ap r i l 15 were no t pr ot ect ed go in g in to th e ne w CBA te rm

. Id

. at 21

. Si nc e th e

CBA la ng ua ge di d no t ad dr es s th e te rm in at io n m et ho d, “ th e co nt ract ’s si le nc e crea te s

a la te nt am

bi gu it y .” Id

. at 20

. The arb it rat or th eref or e ha d to lo ok to th e “ pa rt i e s ’

ba rg ai ni ng hi st or y an d da y -to -d ay pr act ic es wit h res pe ct to th e [ti m e al lo wan ces ]” to

as cert ai n t he ir i nt en t. Id . at 2 1.

Lik e th e di st ric t co ur t

, w e f in d th at th e arb it rat or was “ warra nt ed ” in

de te rm in in g th e CBA’s pl ai n la ng ua ge to be “ si le nt or am bi gu ou s wit h res pe ct to th e
di sp ut ed is su e—h ow th e ab ov e-s cal e ti m e a ll owa nc es co ul d be le gi ti m at el y

te rm in at ed .” Garag e Mai nt

., Loc al No. 9 74 v. Grea te r Met ro . Aut o. Dea le rs Ass ’n

of Mi nn es ot a, In c., No. 11 -0 23 33

, 20 13 W L 50 03 69

, at *6 (D. Mi nn

. Feb

. 11

, 20 13 ).

Bo th th e I n c e n t i v e Opt io n an d th e Mai nt en an ce of St an da rd s pr ov is io ns sh ow th e

pa rti es ’ in te nt to ke ep in cen ti ve pa y arra ng em en ts co ns ta nt du rin g a gi ve n CBA te rm

. Howev er, ne it he r pr ov is io n ad dr es se s h o w in cen ti ve pa y m ay be ch an ge d: whe th er

a ch an ge m

us t be m ut ua ll y ag reed up on fo r it to be va li d an d whe th er su ch a ch an ge

m us t be m em or ia li zed in a ne w CBA. The pa rti es po i nt ed to no sp eci fic CBA

pr ov is io n th at de fin it iv el y in di cat es th e Uni on ’s an d MADA’s in te nt reg ard in g th e

qu es ti on be fo re t he arb it rat or

.

Alt ho ug h th e arb it r a t o r f ou nd se ve ral fact s fro m ex tri ns ic ev id en ce, we fin d

m os t rel ev an t th e te st im on y of MADA at to rn ey St ep he n Bu rto n, who m th e arb it rat or
de em ed to be cred ib le

. Bu rto n de sc rib ed th e ne go ti at io n pr act ic es of MADA an d th e
Uni on in 20 06 an d in 20 10

. See Arb it rat io n Tr. at 15 8– 65

, 1 73 –7 7. Bu rto n st at ed

th at in 20 06

, Uni on Secr et ary Tho m as Tweet pr op os ed a m ech an is m fo r te rm in at in g
ab ov e-s cal e ti m e al lo wan ces th at

, un be kn own st t o B u r t on , so m e de al ers hi ps were

al read y us in g: se nd in g a le tt er t o t he Uni on “ pr io r to co nt ract ex pi rat io n pu tt in g th e

un io n on no ti ce th at it was th e de al er’s in te nt io n to el im in at e th os e ab ov e-s cal e ti m e

al lo wan ces , a nd th at go in g fo r w a r d t h ey wou ld no lo ng er ex is t.” Id . a t 16 2: 15 –2 5.

-6

-On cro ss -ex am in at io n, Tweet di d no t de ny th at he ha d ap pr ov ed su ch a m et ho d. Id

.

at 67 :2 3– 68 :1 2. Bu rto n t ho ug ht th is pro ced ur e wou ld be “ an acce pt ab le m et ho d o f

ha nd li ng th e is su e on a st or e-b y -s to re ba si s whi ch wou ld no t req ui re it to be br ou gh t

up in ne go ti at io ns fo rev erm or e.” Id

. at 16 3: 17 –1 9. Bu rto n fu rth er te st ifi ed th at ot he r

th an th e in st an t di sp ut e, th e Uni on ha d ne ve r ob jecte d to th e us e of th at pr oc ed ur e at

th e en d of a co nt ract te rm

. Id

. at 17 3: 24 –1 74 :2

. Fi na ll y , B u r t o n d e s c rib ed a

co nv ers at io n wit h Tweet ab ou t th e ex act qu es ti on at is su e: wha t wou ld ha pp en if a

MADA m em

be r wan te d to en d ab ov e-s cal e ti m e al lo wan ces go in g in to th e 20 10 CBA

te rm , gi ve n th e rep eat ed ex te ns io ns of th e 20 06 CBA. Bu rto n te st ifi ed th at whe n he

as ke d Tw e e t w h et he r it wou ld be pe rm is si bl e fo r de al ers hi ps to “ te rm in at e th os e

pr act ic es as of Apr il 15 [, 20 10 ], ev en th ou gh th e [2 00 6] ag reem en t was ex te nd ed to

th e 1 7t h,” Tweet “ ha d n o p ro bl em wit h t ha t wh at so ev er.” Id . at 1 77 :2 2– 25

.

In ad di ti on , th e arb it rat or cit ed ex am pl es , do cu m en te d b y

let te rs pre se nt ed at

th e arb it rat io n he ari ng , of ot he r MADA m em be rs who ha d at te m

pt ed to ceas e pa y in g
ab ov e-s cal e ti m e al lo w a n c e s

. A rb it rat io n Award at 7. Key Cad il la c, fo r in st an ce,

tri ed to do so by se nd in g a le tt er to th e Uni on da te d Mar ch 12

, 20 09

, pr io r to th e en d

o f t h e 2 00 6- 20 09 CBA te rm

. Ci ti ng (am on g ot he rs ) th e CBA’s Mai nt en an ce o f

St an da rd s pr ov is io n, Tweet wro te to Key Cad il la c th at be cau se th e 20 06 CBA ha d

al read y be en ex te nd ed th ro ug h Apr il 15

, 20 10

, Key ’s le tt er “ was no t ti m el y ” an d th e
de al ers hi p t he refo re co ul d no t “ im pl em en t a red uc ti on of co nd it io ns .” In hi s l et te r,

Twe e t d id no t co nt es t Key ’s ab il it y to ch an ge in cen ti ve pa y un il at eral ly or th e
de al ers hi p’s m et ho d of co m m un ic at in g su ch a ch an ge

. Key Cad il la c la te r no ti fie d th e
Uni on of it s in te nt to “ el im in at e an y ab ov e sc al e wag e gu aran te es an d in cen ti ve rat es [in cl ud in g] an y ti m e al lo wan ces th at are in ex ces s of th e ap pl ic ab le m an uf act ur er’s

fla t rat e m an ua l” effe ct iv e Apr il 14

, 20 10

, ba se d on a le tt er to th e Uni on da te d Apr il

5, 2 01 0. Th e arb it rat or fou nd th at “ whi le Key Cad il la c’s 20 09 at te m

pt to eli m in at e

al lo wan ces was m et wit h op po si ti on by th e Uni on , K ey ’s su bs eq ue nt 20 10

el im in at io n to ok pl ace wit ho ut co m pl ai nt an d in th e m an ne r de sc rib ed by Mr.

-7

-Bu rto n.” Arbi tra ti on Award at 2 3. Si nc e “ it is th e arb it rat or ’s vi ew of th e fact s .

. .

th at [ t he pa rti es ] ha ve ag reed to acce pt ,” we m ay no t co ns id er ch al le ng es to th os e

fact s in th i s c o n t e x t a s we do whe n “ rev ie win g de ci si on s of lo wer co ur ts .” Mi sc o,

48 4 U.S. at 37 –3 8.

W it h Bu rto n’s un reb ut te d te st im on y an d th e le tt ers do cu m e n t i n g ot he r
de al ers hi ps ’ s i mi l a r c o nd uc t to he lp in te rp ret th e pa rti es ’ pa st pr act ic e wit h res pe ct

to th e am bi gu ou s CBA la ng ua ge at is su e, we co nc lu de th at th e arb it rat io n award dr ew

it s es se nc e fro m th e CBA. W e th eref or e fin d no ba si s to va cat e th e arb it rat io n award

.

II I. Co ncl us io n

W e affi rm th e di st ric t co ur t’s or de r g r a n t in g MADA’s m ot io n to di sm is s th e

m at te r wit h p reju di ce.

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