In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 05-4468

STEVENS CONSTRUCTION CORP.,

Plaintiff/Counter-Defendant-Appellee,

v.

CHICAGO REGIONAL COUNCIL OF CARPENTERS,

UNITED BROTHERHOOD OF CARPENTERS

& JOINERS OF AMERICA,

Defendant/Counter-Plaintiff-Appellant.

____________

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 04-C-1144—Thomas J. Curran, Judge.

____________

ARGUED MAY 30, 2006—DECIDED SEPTEMBER 19, 2006

____________

Before POSNER, KANNE, and WOOD, Circuit Judges.

WOOD, Circuit Judge. Stevens Construction Corporation was, for a number of years, a member of the Associated

General Contractors of Greater Milwaukee, Inc., (AGC), one

of several employers’ associations that bargain collectively

with the Chicago Regional Council of Carpenters. In 2003,

prior to the expiration of a 1999-2004 agreement between

the AGC and the Carpenters (the “1999 CBA”), Stevens

withdrew from the AGC. The AGC subsequently negotiated
2 No. 05-4468

a new agreement with the Carpenters for the years 2004-

2008 (the “2004 CBA”). The union requested that Stevens

give its assent to be covered by this new agreement, but the

company refused.

After the new agreement went into effect, the Carpenters

filed a grievance against Stevens, alleging that it was

violating the 2004 CBA with regard to certain carpentry

work done by its employees. In response, Stevens filed

suit in federal court, seeking a declaratory judgment that it

was not covered by the 2004 agreement and an injunction

prohibiting the union from pursuing its grievance in

arbitration. After a bench trial, the district court granted

judgment for Stevens, concluding that since the company

had properly terminated the 1999 CBA, it was not bound by

the 2004 agreement. In this appeal, the Carpenters contend

that the district court erred by deciding the termination

question instead of requiring Stevens to arbitrate the issue.

Finding no error in the district court’s judgment, we affirm.

I

In January 1999, Stevens gave written authority to the

AGC to negotiate a collective bargaining agreement on its

behalf with the Carpenters. The resulting agreement, the

1999 CBA, covered commercial carpentry work in Milwaukee, Waukesha, Washington, and Ozaukee counties in

southeastern Wisconsin. In March 2003, while the 1999

CBA still remained in force, Stevens canceled its AGC

membership. Stevens did not, however, notify the Carpenters of its withdrawal from the AGC at this time.

On February 10, 2004, the AGC provided notice to the

Carpenters of its intention to negotiate a new collective

bargaining agreement. (The 1999 CBA required a party who

wished to terminate the agreement to give notice to the

other side before February 28, 2004.) On March 4, 2004, the

Allied Construction Employers Association (ACEA), another
No. 05-4468 3

signatory to the agreement, sent a letter to the union listing

the companies for whom the ACEA and the AGC held

bargaining authorization. The letter also noted that the

associations no longer held bargaining authority for some

companies who had given authorization during the 1999 to

2004 contract period and specifically listed those companies,

including Stevens.

On June 1, 2004, the Carpenters and the employer

associations reached a new agreement. The geographic

scope of the agreement was expanded to cover Racine and

Kenosha counties. On June 7, 2004, the Carpenters sent

Stevens a letter requesting that it agree to be bound by

the new 2004 CBA. The company declined to do so.

In October 2004, the Carpenters filed a grievance against

Stevens, claiming that work it was doing in Caledonia,

Wisconsin (which is in Racine County), violated the 2004

CBA. In response to the grievance, Stevens filed this suit,

seeking a declaration that “it is not bound by the 2004 CBA,

had no obligation to arbitrate the Grievance or to participate in any grievance-arbitration matters arising under or

relating to the 2004 CBA,” and a permanent injunction

prohibiting the Carpenters from arbitrating the grievance.

The Carpenters filed two counterclaims, seeking either to

compel Stevens to arbitrate the termination of the 1999

agreement or, in the alternative, a declaratory judgment

that Stevens was bound by the 2004 CBA based on its

failure to terminate the 1999 agreement. The district court

ruled for Stevens, and this appeal followed.

II

The Carpenters’ sole contention before this court is that

the district court erred by reaching and deciding the

termination issue rather than requiring Stevens to submit

this question to arbitration. The union does not contest
4 No. 05-4468

the district court’s resolution of the termination issue on

the merits.

Section 301(a) of the Labor Management Relations Act of

1947, provides federal jurisdiction over “[s]uits for violation

of contracts between an employer and a labor organization

representing employees in an industry affecting commerce

. . . without respect to the amount in controversy or without

regard to the citizenship of the parties.” 29 U.S.C. § 185(a).

As a general matter, § 301(a) applies only to “suits that

claim a contract has been violated,” not to “suits that claim

a contract is invalid.” Textron Lycoming Reciprocating

Engine Div., Avco Corp. v. United Automobile, Aerospace,

Agricultural Implement Workers of America, Int’l. Union,

523 U.S. 653, 657-58 (1998). There is an exception to this

general rule, however, for situations in which, “in the

course of deciding whether a plaintiff is entitled to relief for

the defendant’s alleged violation of a contract, the defendant interposes the affirmative defense that the contract

was invalid.” Id. at 658. In such cases, “a declaratory

judgment plaintiff accused of violating a collective-bargaining agreement may ask a court to declare the agreement

invalid.” Id.

The theory behind the Carpenters’ grievance was that, by

operation of the 1999 CBA’s rollover provisions, Stevens’s

failure to terminate the 1999 agreement resulted in the

company’s automatically being bound by the 2004 CBA. The

provisions of the 1999 CBA on which the Carpenters rely

stated:

Section 25.1. This Agreement shall be binding upon the

parties, their successors and assigns, and shall continue

in full force and effect until May 31, 2004 provided,

however, that written notice of the proposed termination or modification of the contract, by the party desiring to terminate or modify the contract, shall be served

upon the other party, on or before February 28th prior

to the expiration date. . . .
No. 05-4468 5

Section 25.2. Upon failure to meet with the other

party for the purpose of collective bargaining upon

service of the written notice referred to in Section 25.1,

the party so failing to meet is to be deemed to have

conceded the changes desired by the party present with

respect to wage rates and conditions of employment for

the new contract year.

The 1999 agreement also contained a dispute settlement

provision stating that “in case of any disagreements

between [the] parties over terms of this Agreement, the

same shall be submitted to a Board of Arbitration.” Based

on this provision, the Carpenters argue that any dispute

over whether or how the 1999 CBA’s rollover provisions

apply to Stevens must be settled in arbitration rather

than in court.

Although we reiterate that the Carpenters do not challenge the merits of the district court’s resolution of

the termination issue, we note that we are somewhat

mystified by the argument underlying the union’s position.

Even if the Carpenters were to prevail before an arbitrator

on the factual question whether Stevens properly terminated the 1999 CBA, the only remedy the 1999 agreement

appears to provide would be to bind Stevens to any contractual changes in “wage rates and conditions of employment.”

There is no suggestion that Stevens’s failure to terminate

would bind it to all the provisions of a new contract. Since

the work that is the subject of the Carpenters’ grievance is

in Racine County, a location not covered by the 1999 CBA,

it is unclear what relief an arbitrator could give the union.

On the assumption that there is some nuance we are

missing, however, we return to the subject at hand. The

district court disagreed with the Carpenters on both the

question of the court’s authority to decide the termination

question and the merits of that issue. As to its authority,

the court explained that since “[b]oth sides agree that
6 No. 05-4468

arbitration [of the union’s grievance] is a matter of contract,” the court was thus required “to determine whether

or not there was a valid contract.” The resolution of this

question, of course, turned on whether Stevens was bound

to the 2004 CBA by the rollover provisions of the 1999 CBA.

Addressing the merits of this issue, the court concluded that

there was no valid 2004 contract between the Carpenters

and Stevens, because the Carpenters “became aware that

[Stevens] would not be bound by whatever negotiations led

to a new CBA” before the negotiations for the new agreement started. In reaching this conclusion, the court emphasized Stevens’s cancellation of its AGC membership, the

ACEA’s March 4, 2004, notice to the Carpenters stating

that the AGC did not hold bargaining authority for Stevens,

and the Carpenters’ own June 7, 2004, letter requesting

that Stevens assent to the 2004 CBA. The court took the

June 7 letter as “an indication that the carpenters did not

consider that they had a binding contract with the plaintiff.”

In contesting the district court’s authority to decide the

termination issue on appeal, the Carpenters rely heavily on

the Supreme Court’s decision in AT&T Techs., Inc. v.

Commc’ns Workers of Am., 475 U.S. 643 (1986). There the

Court said that “in deciding whether the parties have

agreed to submit a particular grievance to arbitration, a

court is not to rule on the potential merits of the underlying

claims,” and that, more generally, “where the contract

contains an arbitration clause, there is a presumption of

arbitrability.” Id. at 649-50. Based on these and similar

statements by the Supreme Court in a series of cases known

as the Steelworkers Trilogy, see id. at 648, the union

contends that “the district court in this case committed

reversible error when it encroached on the jurisdiction of

the Board of Arbitration by deciding the issue of whether

Stevens terminated the 1999 CBA according to its terms.”
No. 05-4468 7

One difficulty with the Carpenters’ argument is that the

“underlying claim” in the union’s grievance against Stevens

was not that the company failed to terminate the 1999 CBA,

but that the company was not complying with the substance

of the 2004 agreement. This is clear when one looks at the

actual grievance notice, which said that “[i]t is the Union’s

position that Stevens Construction Corporation is in

violation of the entire 2004-2008 Commercial Carpenters &

Floor Coverers Agreement, to which you are bound.”

Although the Carpenters’ counterclaims sought to compel

Stevens to arbitrate the termination issue under the 1999

CBA, there is no mention in the record of any grievance

based on the 1999 CBA that Stevens could have been

ordered to arbitrate. For the same reason, the Carpenters’

attempt to recharacterize their claim as a “post-expiration

grievance”—that is, a “dispute [that], although governed by

the contract, arises after its termination,” Nolde Bros., Inc.

v. Local No. 358, Bakery & Confectionery Workers Union,

AFL-CIO, 430 U.S. 243, 244 (1977)—is unavailing. A postexpiration grievance must be a grievance based on an

agreement that has expired; the Carpenters filed no such

grievance here.

It is of course true that the district court had to interpret

the termination provisions of the 1999 CBA in order to

decide whether the Carpenters’ grievance was arbitrable

under the 2004 agreement, and that this necessity created

some tension with the presumption of arbitrability. But the

rule that a court should not rule on the merits of a claim

when deciding a question of arbitrability is not as absolute

as the union would have us believe. As the Supreme Court

explained in Litton Fin. Printing Div. v. NLRB, 501 U.S.

190 (1991),“[a]lthough doubts should be resolved in favor of

coverage [by a contract’s arbitration provisions], we must

determine whether the parties agreed to arbitrate this

dispute, and we cannot avoid that duty because it requires

us to interpret a provision of a bargaining agreement.” Id.
8 No. 05-4468

at 209 (quotation and citation omitted). We have interpreted this statement to mean “that the rule that courts

must decide arbitrators’ jurisdiction takes precedence over

the rule that courts are not to decide the merits of the

underlying dispute.” Indep. Lift Truck Builders Union v.

Hyster Co., 2 F.3d 233, 236 (7th Cir. 1993) (“If the court

must, to decide the arbitrability issue, rule on the merits, so

be it.”). In a case like this one, where “[the] court’s decision

on arbitrability collapses into the same inquiry as [the]

decision on the merits,” BCS Ins. Co. v. Wellmark, Inc., 410

F.3d 349, 352 (7th Cir. 2005) (quotation marks omitted), a

court may need to touch on the merits of an issue that

ordinarily would be decided in arbitration.

In sum, the Carpenters’ grievance raised the issue of the

arbitrability of the 2004 CBA. Therefore, despite the law’s

general presumption of arbitrability, the district court did

not err by deciding the question whether Stevens had

terminated the 1999 CBA, where this was necessary in

order to resolve the question of the arbitrability of the

grievance under the 2004 agreement.

III

The district court’s judgment is AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—9-19-06