1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-30-1994

Troy Chem. Corp. v. Teamsters Un., Local 408

Precedential or Non-Precedential:

Docket 93-5638

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Recommended Citation

"Troy Chem. Corp. v. Teamsters Un., Local 408" (1994). 1994 Decisions. Paper 145.

http://digitalcommons.law.villanova.edu/thirdcircuit_1994/145
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 ____________ 

 NO. 93-5638 

 ____________ 

 TROY CHEMICAL CORPORATION, 

 Appellant 

v. 

 TEAMSTERS UNION LOCAL NO. 408 

 Appellee 

 ____________ 

 Appeal from the United States District Court 

 for the District of New Jersey 

 D.C. No. 93-cv-02244 

 ____________ 

 Argued June 7, 1994 

 Before: MANSMANN, ALITO, and ROSENN, Circuit Judges

 Opinion Filed September 30, 1994 

 ____________ 

HARRY N. TURK, ESQUIRE (Argued) 

Epstein, Becker & Green 

250 Park Avenue 

New York, New York 10177 

 Attorneys for Appellant 

KENNETH I. NOWAK, ESQUIRE (Argued) 

Zazzali, Zazzali, Fagella & Nowak 

One Riverfront Plaza 

Newark, New Jersey 07102 

 ____________ 

 OPINION OF THE COURT 

ROSENN, Circuit Judge. 

 This appeal presents an interesting question concerning 

the authority of a federal district court to preliminarily decide 
procedural issues as well as the arbitrability of a labor 

grievance where the union party seeks arbitration. Troy Chemical 

Corporation (Troy Chemical) and the Teamsters Union Local No. 408 

(the Union) are parties to a collective bargaining agreement 

(CBA). On April 23, 1991, Troy Chemical discharged four 

employees for theft of company property and immediately notified 

the union shop steward of the discharges. No grievances were 

filed by the Union or the individuals pursuant to the CBA. 

 On January 28, 1993, the Union notified the New Jersey 

State Board of Mediation that a dispute existed over the 

discharge of one of the four employees, and requested that an 

arbitrator be selected. On May 14, 1993, the mediation board 

advised the parties that an arbitrator had been selected and a 

hearing was scheduled for October 20, 1993. On May 24, 1993, 

Troy Chemical commenced an action in the United States District 

Court for the District of New Jersey seeking a declaratory 

judgment that any disputes over the discharged four employees 

were not arbitrable because the Union had not complied with the 

grievance procedure.1

 The parties filed cross-motions for summary judgment. 

The district court denied Troy Chemical's motion and granted the 

Union's motion for summary judgment, holding that the parties had 

modified by past practice the CBA provision pertaining to the 

 

1. The district court exercised subject matter jurisdiction 

pursuant to section 3 of the Labor Management Relations Act, 29 

U.S.C. § 185. We have jurisdiction over this appeal from a final 

order under 28 U.S.C. § 1291. 
grievance procedure for discharges and that the grievances 

regarding the four employees were arbitrable. Troy Chemical 

appealed. We reverse. 

I. 

 The Union represents production and maintenance 

employees of Troy Chemical's Newark, New Jersey specialty 

chemicals manufacturing facility. Article 11 of the CBA2

 

2. The pertinent provisions of the Article 11 are: 

 A. Should any difference, grievance, dispute 

or complaint between the Company and the 

Union or any employees arise out of the 

interpretation or application of the 

Agreement, there shall be an earnest effort 

on the part of both parties to settle same 

promptly and through the steps hereinafter 

set forth, it being understood and agreed 

that no grievance shall be accepted for 

consideration unless reduced to writing and 

presented in the first step within two (2) 

working days of the occurrence of the 

incident causing the grievance. This shall 

not, however, apply to grievances involving 

payroll calculation. 

* * * 

 The dispute referred to herein shall include, 

but shall not be limited to disputes 

concerning the discharge of an employee . . . 

. 

* * * 

 C. Except as expressly provided otherwise in 

this Agreement, with respect to any dispute 

which is required to be submitted to 

arbitration pursuant to the Agreement, 

including strikes, stoppages, lockouts and 

any and all claims, demands and acts arising 

therefrom which are subject to arbitration, 

the procedure established in this Agreement 
provides that no grievance shall be accepted for consideration 

unless reduced to writing and presented within two working days 

of the occurrence of the incident causing the grievance. The 

only exception to this requirement is grievances involving 

payroll calculations. Step two of the grievance procedure 

requires a conference between representatives of Troy Chemical 

and the Union within three days of the incident giving rise to 

the grievance. If there is no settlement of the dispute after 

the completion of these two steps, then the matter may be 

submitted to arbitration. Paragraph A of article 11 states, 

"[t]he dispute referred to herein shall include, but shall not be 

limited to disputes concerning the discharge of an employee." 

Paragraph C of article 11 provides that, "the procedure 

established in this Agreement for the adjustment of said dispute 

shall be the exclusive means for its determination." Article 11 

has remained unchanged in the more than 15 years of successive 

three year collective bargaining agreements between the parties. 

 The district court acknowledged that express contract 

language made it "abundantly clear that a written grievance is to 

be submitted . . . for all disputes concerning discharged 

employees." Nevertheless, the court found that the parties had 

historically acquiesced in the waiving of the grievance procedure 

in connection with discharges. Relying on New Jersey law, the 

court held that the parties had modified the CBA by their 

(..continued) 

for the adjustment of said dispute shall be 

the exclusive means for its determination. 
practice of ignoring steps 1 and 2 of the grievance procedure in 

connection with discharges, and therefore, the grievances 

regarding the four employees were arbitrable. In his opinion, 

the arbitrator repeatedly noted that he was bound by the district 

court's legal and factual conclusions that the grievance was 

procedurally and substantively arbitrable. 

 On appeal, Troy Chemical contends that the district 

court erred in ruling on matters of procedural arbitrability and 

in holding that parties had modified the express terms of the CBA 

by disregarding the grievance procedure provisions pertaining to 

employee discharge. The Union takes the position that the 

district court correctly found a waiver of the grievance 

procedure steps based on the past practices of the parties. 

II. 

 This court exercises plenary review over a grant of 

summary judgment, and we apply the same test the district court 

should have utilized initially. Oritani Sav. and Loan Ass'n v. 

Fidelity and Deposit Co., 989 F.2d 635, 637 (3d Cir. 1993). 

Summary judgment is appropriate only when it is demonstrated that 

there is no genuine issue as to any material fact and the moving 

party is entitled to judgment as a matter of law. Celotex Corp. 

v. Catrett, 477 U.S. 317, 322-32 (1986); Fed.R.Civ.P. 56(c). An 

issue of material fact is genuine "if the evidence is such that a 

reasonable jury could return a verdict for the nonmoving party." 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In 

deciding a motion for summary judgment, all reasonable inferences 

must be drawn in favor of the non-movant. Oritani, 989 F.2d at 
638. We therefore conclude that the appropriate standard of 

review is plenary, rather than clearly erroneous, as suggested by 

the Union. 

 The law governing the proper forum for determining 

various issues of arbitrability is set forth by the United States 

Supreme Court in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 

543 (1964). In that case, a dispute arose between the employer 

and the union over whether the contract covered the merged 

employees of the successor company, and whether the union's 

failure to follow the grievance procedure foreclosed arbitration. 

The Court stated that the first issue was a matter of substantive 

arbitrability to be decided by the court, but that the issue of 

whether the failure to adhere to the grievance mechanism barred 

arbitration was a procedural question for the arbitrator. The 

Court explained: 

 It would be a curious rule which required 

that intertwined issues of "substance and 

procedure" growing out of the same facts had 

to be carved up between two different forums, 

one deciding after the other. Neither logic 

nor considerations of policy compel such a 

result. 

Id. at 557. The Court concluded: 

 Once it is determined, as we have, that the 

parties are obligated to submit the subject 

matter of a dispute to arbitration, 

"procedural" questions which grow out of the 

dispute and bear on its final disposition 

should be left to the arbitrator. 

Id. 
 Several years later, the Supreme Court reiterated its 

view that procedural arbitrability should be resolved by 

arbitrators, not the courts. In International Union of Operating 

Engineers v. Flair Builders, Inc., 406 U.S. 487 (1972), the 

company opposed arbitration on the grounds that the union's long 

delay in filing for arbitration constituted laches. The court of 

appeals upheld the district court's ruling that the issue of 

whether laches existed was one to be decided by the court, not 

the arbitrator. The Supreme Court disagreed, observing that the 

contract between the parties stated that the grievance and 

arbitration procedure should be applied to "any difference" that 

arose between the parties, and the question whether the 

arbitration was barred by laches was "a difference" to be decided 

by the arbitrator. 406 U.S. at 491. Relying on Wiley, the Court 

emphasized that a court should determine in the first instance 

whether the parties had in fact agreed to arbitrate the subject 

matter, "[b]ut once a court finds, as here, the parties are 

subject to an agreement to arbitrate, and that agreement extends 

to 'any difference' between them, then a claim that particular 

grievances are barred by laches is an arbitrable question under 

the agreement." Id. at 491-92. 

 In the present action, article 11 of the CBA speaks of 

"any difference, grievance, dispute or complaint" and 

unambiguously states that "disputes concerning the discharge of 

an employee" are subject to the grievance procedure and 

arbitration. Thus, whether the Union and Troy Chemical had by 

practice waived steps 1 and 2 of the grievance procedure was a 
question of procedure for the arbitrator and not the court. See

Association of Flight Attendants, AFL-CIO v. USAir, Inc., 960 

F.2d 345, 349 (3d Cir. 1992) (holding that once the court 

determines that the underlying grievance is covered by the 

arbitration clause, the court's role ends; "[b]eyond this, the 

court usurps the exclusive function of the arbitrator when it 

ventures to decide procedural matters, or the merits of a 

grievance arising under the collective bargaining agreement"). 

 It is only on appeal that the Union argues that the 

district court properly considered whether the parties waived the 

grievance procedure steps based on their past practices. In its 

answer to the complaint for declaratory judgment, the Union 

averred as an affirmative defense that the plaintiff has not 

challenged the substantive arbitrability of the dispute, but 

raises only questions of procedural arbitrability, which are for 

the arbitrator not the court to decide. Moreover, before the 

district court, the Union argued that under well-settled 

principles of labor law the issues of arbitrability and waiver 

are committed to the arbitrator. The Union stated in its brief, 

"[t]he Union does not ask this Court to decide these questions. 

On the contrary, it is not this Court's function to do so. 

Rather, these issues are proper subjects for the arbitrator in 

determining whether the grievance is barred by procedural 

defects." 

 Therefore, once the district court found that the 

discharges were subject to arbitration, the court should have 

denied the declaratory judgment and held that the issue of 
whether the grievances were barred by procedural defects was 

arbitrable. The district court erred in deciding the procedural 

questions and foreclosing that issue from the arbitrator's 

decision. 

III. 

 Finally, the district court erred in granting the 

Union's motion for summary judgment because the record shows that 

there are disputed questions of fact. For example, the Union 

lists the names of employees who previously arbitrated without 

following the grievance procedure provisions, but it does not 

give any specific dates or the names of the arbitrators, and all 

of the cases alleged to have waived the grievance procedure were 

written before the last CBA was entered into in 1989. In light of 

the vagueness of the Union's evidence and the subsequent renewal 

of the grievance procedure provisions in the CBA now before us 

for construction, there is a question as to whether the Union's 

evidence is credible. 

 Additionally, the Union avers by affidavit that 

discharges were treated differently because the contract language 

in article 11 treats the discharge as a unique part of grievance 

with special rights, and that Union representatives met with 

Alexander Gerardo, Troy Chemical's Vice President of Human 

Resources, and that he advised them to wait to submit this matter 

to arbitration because he expected a quick investigation of the 

arrests by the law enforcement people.3 Yet, the Union fails to 

 

3. The Union further avers that as a practical matter, Troy 

Chemical knows what the grievance is in discharge cases, i.e., 
point to any such language that gives discharge cases any special 

rights or shows that they are treated differently. In fact, the 

grievance forms provided by the Union to its members specifically 

cautioned that all complaints or grievances must be in writing, 

properly signed by the members and shop steward. "Unless 

completed in detail, the grievance will not be acted upon." 

Moreover, Gerardo, by his affidavit, denies having met with Union 

representatives and denies that he discussed the issue of the 

timeliness of the filing or instructed the Union to delay in 

pursuing this matter at any step in the required procedures. 

Gerardo further avers that Troy Chemical did not enter into any 

understandings or agreements which relieved the Union from their 

obligation in the grievance procedure. Troy Chemical, as the 

non-moving party, was entitled to all reasonable inferences. 

Upon remand, these factual disputes are matters that should be 

resolved by the arbitrator. 

IV. 

 The district court exceeded its authority in 

determining whether the grievance procedure had been complied 

with and whether there had been a modification of article 11. 

Once the court decided that the discharges were subject to 

arbitration, it should have held that the dispute was arbitrable 

and that matters relating to compliance with the grievance 

(..continued) 

the Union is aggrieving the discharge of particular persons. 

However, the purpose of the grievance procedure is not merely to 

give notice, but rather it is to give the parties the opportunity 

to confer, ascertain the facts, and promptly settle the matter in 

the workshop, if that is at all possible. 
procedure or a waiver were matters for the arbitrator. 

 Accordingly, the judgment of the district court will be 

vacated and the case remanded to the district court with 

instructions to return the case to the arbitrator for de novo

consideration. Costs taxed against the appellee.