Source: https://supreme.justia.com/cases/federal/us/363/574/
Timestamp: 2019-04-20 22:17:21+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 363 › Steelworkers v. Warrior & Gulf Co.
United Steelworkers of America v. Warrior & Gulf Navigation Co.
"Should differences arise . . . as to the meaning and application of the provisions of this Agreement, or should any local trouble of any kind arise,"
the grievance procedure should be followed. The Court of Appeals ruled that deciding whether to contract out work was "strictly a function of management" within the meaning of the agreement, and it sustained a judgment of the District Court dismissing the complaint.
Held: It erred in doing so, and the judgment is reversed. Pp. 363 U. S. 575-585.
(a) In a suit under §301(a), judicial inquiry must be strictly confined to the question whether the reluctant party did agree to arbitrate the grievance or to give the arbitrator power to make the award he made; an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute; and doubts should be resolved in favor of coverage. Pp. 363 U. S. 582-583.
(b) In the absence of any express provision excluding a particular grievance from arbitration, only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail, particularly where, as here, the exclusion clause is vague, and the arbitration clause quite broad. Pp. 363 U. S. 583-585.
arbitration, it was for the arbitrator, not the courts, to decide whether the contracting out here involved violated the agreement. P. 363 U. S. 585.
269 F. 2d 633, reversed.
"We are hereby protesting the Company's actions of arbitrarily and unreasonably contracting out work to other concerns that could and previously has been performed by Company employees. "
there are a number of employees that have been laid off for about 1 and 1/2 years or more for allegedly lack of work. "
"Confronted with these facts, we charge that the Company is in violation of the contract by inducing a partial lock-out, of a number of the employees who would otherwise be working were it not for this unfair practice."
"Issues which conflict with any Federal statute in its application as established by Court procedure or matters which are strictly a function of management shall not be subject to arbitration under this section. "
"Should differences arise between the Company and the Union or its members employed by the Company as to the meaning and application of the provisions of this Agreement, or should any local trouble of any kind arise, there shall be no suspension of work on account of such differences but an earnest effort shall be made to settle such differences immediately in the following manner:"
"First, between the aggrieved employees, and the Foreman involved;"
"Second, between a member or members of the Grievance Committee designated by the Union, and the Foreman and Master Mechanic."
the United States Conciliation Service for suggestion of a list of umpires from which selection shall be made. The decision of the umpire will be final."
"the contracting out of repair and maintenance work, as well as construction work, is strictly a function of management not limited in any respect by the labor agreement involved here."
Ibid. The Court of Appeals affirmed by a divided vote, 269 F.2d 633, 635, the majority holding that the collective agreement had withdrawn from the grievance procedure "matters which are strictly a function of management," and that contracting out fell in that exception. The case is here on a writ of certiorari. 361 U.S. 912.
Thus, the run of arbitration cases, illustrated by Wilko v. Swan, 346 U. S. 427, becomes irrelevant to our problem. There, the choice is between the adjudication of cases or controversies in courts with established procedures or even special statutory safeguards, on the one hand, and the settlement of them in the more informal arbitration tribunal, on the other. In the commercial case, arbitration is the substitute for litigation. Here, arbitration is the substitute for industrial strife. Since arbitration of labor disputes has quite different functions from arbitration under an ordinary commercial agreement, the hostility evinced by courts toward arbitration of commercial agreements has no place here. For arbitration of labor disputes under collective bargaining agreements is part and parcel of the collective bargaining process itself.
The collective bargaining agreement states the rights and duties of the parties. It is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. See Shulman, Reason, Contract, and Law in Labor Relations, 68 Harv.L.Rev.
and the governmental nature of the collective bargaining process demand a common law of the shop which implements and furnishes the context of the agreement. We must assume that intelligent negotiators acknowledged so plain a need unless they stated a contrary rule in plain words."
"a compilation of diverse provisions: some provide objective criteria almost automatically applicable; some provide more or less specific standards which require reason and judgment in their application; and some do little more than leave problems to future consideration with an expression of hope and good faith."
which underlie the agreement may be unknown, except in hazy form, even to the negotiators. Courts and arbitration in the context of most commercial contracts are resorted to because there has been a breakdown in the working relationship of the parties; such resort is the unwanted exception. But the grievance machinery under a collective bargaining agreement is at the very heart of the system of industrial self-government. Arbitration is the means of solving the unforeseeable by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. The processing of disputes through the grievance machinery is actually a vehicle by which meaning and content are given to the collective bargaining agreement.
The labor arbitrator performs functions which are not normal to the courts; the considerations which help him fashion judgments may indeed by foreign to the competence of courts.
"A proper conception of the arbitrator's function is basic. He is not a public tribunal imposed upon the parties by superior authority which the parties are obliged to accept. He has no general charter to administer justice for a community which transcends the parties. He is rather part of a system of self-government created by and confined to the parties. . . ."
common law -- the practices of the industry and the shop -- is equally a part of the collective bargaining agreement, although not expressed in it. The labor arbitrator is usually chosen because of the parties' confidence in his knowledge of the common law of the shop and their trust in his personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment. The parties expect that his judgment of a particular grievance will reflect not only what the contract says but, insofar as the collective bargaining agreement permits, such factors as the effect upon productivity of a particular result, its consequence to the morale of the shop, his judgment whether tensions will be heightened or diminished. For the parties' objective in using the arbitration process is primarily to further their common goal of uninterrupted production under the agreement, to make the agreement serve their specialized needs. The ablest judge cannot be expected to bring the same experience and competence to bear upon the determination of a grievance, because he cannot be similarly informed.
We do not agree with the lower courts that contracting-out grievances were necessarily excepted from the grievance procedure of this agreement. To be sure, the agreement provides that "matters which are strictly a function of management shall not be subject to arbitration." But it goes on to say that, if "differences" arise or if "any local trouble of any kind" arises, the grievance procedure shall be applicable.
however, that the language, "strictly a function of management," has no meaning.
express provision excluding a particular grievance from arbitration, we think only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail, particularly where, as here, the exclusion clause is vague and the arbitration clause quite broad. Since any attempt by a court to infer such a purpose necessarily comprehends the merits, the court should view with suspicion an attempt to persuade it to become entangled in the construction of the substantive provisions of a labor agreement, even through the back door of interpreting the arbitration clause, when the alternative is to utilize the services of an arbitrator.
See Textile Workers v. Lincoln Mills, 353 U. S. 448.
In § 8(d) of the National Labor Relations Act, as amended by the 1947 Act, 29 U.S.C. § 158(d), Congress indeed provided that where there was a collective agreement for a fixed term, the duty to bargain did not require either party "to discuss or agree to any modification of the terms and conditions contained in" the contract. And see National Labor Relations Board v. Sands Mfg. Co., 306 U. S. 332.
Complete effectuation of the federal policy is achieved when the agreement contains both an arbitration provision for all unresolved grievances and an absolute prohibition of strikes, the arbitration agreement being the "quid pro quo" for the agreement not to strike. Textile Workers v. Lincoln Mills, 353 U. S. 448, 353 U. S. 455.
"Contracts which ban strikes often provide for lifting the ban under certain conditions. Unconditional pledges against strikes are, however, somewhat more frequent than conditional ones. Where conditions are attached to no-strike pledges, one or both of two approaches may be used: certain subjects may be exempted from the scope of the pledge, or the pledge may be lifted after certain procedures are followed by the union. (Similar qualifications may be made in pledges against lockouts.)"
"Most frequent conditions for lifting no-strike pledges are: (1) the occurrence of a deadlock in wage reopening negotiations; and (2) violation of the contract, especially noncompliance with the grievance procedure and failure to abide by an arbitration award."
"No-strike pledges may also be lifted after compliance with specified procedures. Some contracts permit the union to strike after the grievance procedure has been exhausted without a settlement, and where arbitration is not prescribed as the final recourse. Other contracts permit a strike if mediation efforts fail, or after a specified cooling-off period."
Collective Bargaining, Negotiations and Contracts, Bureau of National Affairs, Inc., 77:101.
Cox, Reflections Upon Labor Arbitration, 72 Harv.L.Rev. 1482, 1498-1499 (1959).
It is clear that, under both the agreement in this case and that involved in American Manufacturing Co., ante, p. 363 U. S. 564, the question of arbitrability is for the courts to decide. Cf. Cox, Reflections Upon Labor Arbitration, 72 Harv.L.Rev. 1482, 1508-1509. Where the assertion by the claimant is that the parties excluded from court determination not merely the decision of the merits of the grievance, but also the question of its arbitrability, vesting power to make both decisions in the arbitrator, the claimant must bear the burden of a clear demonstration of that purpose.
"In my research, I have located 64 published decisions which have been concerned with this issue covering a wide range of factual situations, but all of them with the common characteristic -- i.e., the contracting-out of work involved occurred under an Agreement that contained no provision that specifically mentioned contracting-out of work."
particular matters specifically submitted; [Footnote 2/1] that the contract under which matters are submitted to arbitrators is at once the source and limit of their authority and power; [Footnote 2/2] and that their power to decide issues with finality, thus ousting the normal functions of the courts, must rest upon a clear, definitive agreement of the parties, as such powers can never be implied. United States v. Moorman, 338 U. S. 457, 338 U. S. 462; [Footnote 2/3] Mercantile Trust Co. v. Hensey, 205 U. S. 298, 205 U. S. 309. [Footnote 2/4] See also Fernandez & Hnos. v. Rickert Rice Mills, 119 F.2d 809, 815; [Footnote 2/5] Marchant v. Mead-Morrison Mfg. Co., 252 N.Y. 284, 299, 169 N.E. 386, 391; [Footnote 2/6] Continental Milling & Feed Co.
v. Doughnut Corp., 186 Md. 669, 676, 48 A.2d 447, 450; [Footnote 2/7] Jacob v. Weisser, 207 Pa. 484, 489, 56 A. 1065, 1067. [Footnote 2/8] I believe that the Court today departs from the established principles announced in these decisions.
the right of the [employer] to continue the practice of contracting out such work."
The labor agreement involved here provides for arbitration of disputes respecting the interpretation and application of the agreement and, arguably, also some other things. But the first paragraph of the arbitration section says: "[M]atters which are strictly a function of management shall not be subject to arbitration under this section." Although acquiescing for 19 years in the employer's interpretation that contracting out work was "strictly a function of management," and having repeatedly tried -- particularly in the negotiation of the agreement involved here -- but unsuccessfully, to induce the employer to agree to a covenant that would prohibit it from contracting out work, the union, after having agreed to and signed the contract involved, presented a "grievance" on the ground that the employer's contracting out work, at a time when some employees in the unit were laid off for lack of work, constituted a partial "lockout" of employees in violation of the anti-lockout provision of the agreement.
Being unable to persuade the employer to agree to cease contracting out work or to agree to arbitrate the "grievance," the union brought this action in the District Court, under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, for a decree compelling the employer to submit the "grievance" to arbitration. The District Court, holding that the contracting out of work was, and over a long course of dealings had been, interpreted and understood by the parties to be "strictly a function of management," and was therefore specifically excluded from arbitration by the terms of the contract, denied the relief prayed, 168 F.Supp. 702, 705. The Court of Appeals affirmed, 269 F.2d 633, and we granted certiorari. 361 U.S. 912.
"No one is under a duty to resort to these conventional tribunals, however helpful their processes, except to the extent that he has signified his willingness. Our own favor or disfavor of the cause of arbitration is not to count as a factor in the appraisal of the thought of others."
"that the intention of the parties to submit their contractual disputes to final determination outside the courts should be made manifest by plain language"
(emphasis added), 338 U.S. at 338 U. S. 462; nor with this Court's statement in Hensey that "to make such [an arbitrator's] certificate conclusive requires plain language in the contract. It is not to be implied." (Emphasis added.) 205 U.S. at 205 U. S. 309.
"A party is never required to submit to arbitration any question which he has not agreed so to submit, and contracts providing for arbitration will be carefully construed in order not to force a party to submit to arbitration a question which he did not intend to be submitted."
(Emphasis added.) Fernandez & Hnos. v. Rickert Rice Mills, supra, 119 F.2d at 815.
which are strictly a function of management shall not be subject to arbitration." The union, over the course of many years, repeatedly tried to induce the employer to agree to a covenant prohibiting the contracting out of work, but was never successful. The union again made such an effort in negotiating the very contract involved here, and, failing of success, signed the contract, knowing, of course, that it did not contain any such covenant, but that, to the contrary, it contained, just as had the former contracts, a covenant that "matters which are strictly a function of management shall not be subject to arbitration." Does not this show that, instead of signifying a willingness to submit to arbitration the matter of whether the employer might continue to contract out work, the parties fairly agreed to exclude at least that matter from arbitration? Surely it cannot be said that the parties agreed to such a submission by any "plain language." Moorman, supra, at 338 U. S. 462, and Hensey, supra, at 205 U. S. 309. Does not then the Court's opinion compel the employer "to submit to arbitration [a] question which [it] has not agreed so to submit"? Fernandez & Hnos., supra, 119 F.2d at 815.
of management," and "not subject to arbitration." That finding, I think, should be accepted here. Acceptance of it requires affirmance of the judgment.
I agree with the Court that courts have no proper concern with the "merits" of claims which by contract the parties have agreed to submit to the exclusive jurisdiction of arbitrators. But the question is one of jurisdiction. Neither may entrench upon the jurisdiction of the other. The test is: did the parties in their contract "manifest by plain language" (Moorman, supra, at 338 U. S. 462) their willingness to submit the issue in controversy to arbitrators? If they did, then the arbitrators have exclusive jurisdiction of it, and the courts, absent fraud or the like must respect that exclusive jurisdiction and cannot interfere. But if they did not, then the courts must exercise their jurisdiction, when properly invoked, to protect the citizen against the attempted use by arbitrators of pretended powers actually never conferred. That question always is, and from its very nature must be, a judicial one. Such was the question presented to the District Court and the Court of Appeals here. They found the jurisdictional facts, properly applied the settled law to those facts, and correctly decided the case. I would therefore affirm the judgment.
"Arbitrators are judges chosen by the parties to decide the matters submitted to them." Burchell v. Marsh, 17 How. 344, 58 U. S. 349.
"The agreement under which [the arbitrators] were selected was at once the source and limit of their authority, and the award, to be binding, must, in substance and form, conform to the submission."
(Emphasis added.) Continental Ins. Co. v. Garrett, 125 F. 589, 590 -- Opinion by Judge, later Mr. Justice, Lurton.
"It is true that the intention of parties to submit their contractual disputes to final determination outside the courts should be made manifest by plain language."
(Emphasis added.) United States Moorman, 338 U. S. 457, 338 U. S. 462.
"To make such [an arbitrator's] certificate conclusive requires plain language in the contract. It is not to be implied." (Emphasis added.) Mercantile Trust Co. v. Hensey, 205 U. S. 298, 205 U. S. 309.
( Emphasis added.) Fernandez & Hnos. v. Rickert Rice Mills, 119 F.2d 809, 815.
"The question is one of intention, to be ascertained by the same tests that are applied to contracts generally. . . . No one is under a duty to resort to these conventional tribunals, however helpful their processes, except to the extent that he has signified his willingness. Our own favor or disfavor of the cause of arbitration is not to count as a factor in the appraisal of the thought of others."
(Emphasis added.) Marchant v. Mead-Morrison Mfg. Co., 252 N.Y. 284, 299, 169 N.E. 386, 391.
"Sound policy demands that the terms of an arbitration agreement must not be strained to discover power to pass upon matters in dispute, but the terms must be clear and unmistakable to oust the jurisdiction of the court, for trial by jury cannot be taken away in any case merely by implication."
(Emphasis added.) Continental Milling & Feed Co. v. Doughnut Corp., 186 Md. 669, 676, 48 A.2d 447, 450.
"But, under any circumstances, before the decision of an arbitrator can be held final and conclusive, it must appear, as was said in Chandley Bros. v. Cambridge Springs, 200 Pa. 230, 49 Atl. 772, that power to pass upon the subject matter is clearly given to him."
"The terms of the agreement are not to be strained to discover it. They must be clear and unmistakable to oust the jurisdiction of the courts; for trial by jury cannot by taken away by implication, merely, in any case."
(Emphasis added.) Jacob v. Weisser, 207 Pa. 484, 489, 56 A. 1065, 1067.

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