Opinion ID: 358135
Heading Depth: 1
Heading Rank: 4

Heading: enforceability of the arbitration award

Text: 32 The District Court declined enforcement of the arbitrator's award on the ground that to do so would present an irreconcilable conflict with the NLRB's certification of the IAM as the exclusive bargaining agent for the Denison employees. Standard asserts that enforcement would impinge upon the rights of the Denison employees to bargain collectively with respect to rates of pay, wages, hours of employment, and other conditions of employment, as guaranteed them by §§ 7 and 9(a) of the National Labor Relations Act, 29 U.S.C. §§ 157, 159(a). 6 Denison employees would suddenly be paid different (and, most likely, lower) wage rates and benefits for the same work. They would become junior to the transferees from Dallas even though they possessed greater plant seniority than the transferees. The nub of the dispute is that if this Court directs enforcement of the arbitrator's award, it may be affirmatively causing the employer to be ordered to commit an unfair labor practice under 29 U.S.C. § 158(a)(1). 7 This cannot be done. 33 The starting point of our inquiry is, of course, the seminal decision in Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957), where the Supreme Court held that § 301 authorized the courts to fashion a body of federal common law for the enforcement of collective bargaining agreements and, more specifically, the enforcement of promises to arbitrate. Four years later, in the Steelworkers Trilogy, the Court further shaped that body of federal common law by endorsing arbitration as the preferred method of settling grievances arising from collective bargaining agreements. United Steelworkers v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). In the latter case, the Court specifically addressed the question of a court's proper role in reviewing an arbitrator's interpretation of provisions of a collective bargaining agreement: his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award. 363 U.S. at 597, 80 S.Ct. at 1361. Further, in Carey v. Westinghouse Electric Corp., 375 U.S. 261, 84 S.Ct. 401, 11 L.Ed.2d 320 (1964), a case cited extensively by the parties here, the Court endorsed arbitration as a means to solve either work assignment or representation disputes, even though the NLRB could entertain unfair labor practice charges if the dispute were over representation. The Court also noted that the arbitration procedure must have been fair and the results not repugnant to the National Labor Relations Act. 375 U.S. at 271, 84 S.Ct. 401. In addition, if the NLRB were to rule contrary to the arbitrator, the Board's ruling would take precedence. Id. at 272, 84 S.Ct. 401. See also New Orleans Typographical Union v. NLRB, 5 Cir. 1966, 368 F.2d 755, 767. Presumably, in such a case, the system of private law, Warrior & Gulf Navigation Co., supra, 363 U.S. at 581, 80 S.Ct. 1347, must yield to the system of public law expressed in the NLRA and administered by the NLRB. 34 Thus, there Must be : (1) an agreement to arbitrate and the parties must be covered by that agreement; (2) an award which draws its essence from the agreement and does not exceed the scope of the issues presented to the arbitrator; and (3) an award which is not repugnant to the NLRA. 8 There is no dispute in this case that item 1 is present; there was a valid, binding agreement which covered both Standard and the Teamsters. Standard claims that the second criterion has not been met, I. e., that the arbitrator's award did not draw its essence from the contract. We think, however, that if the Denison plant had not been organized prior to the award, it would have been readily enforceable in its entirety against Standard. Therefore, we cannot say that the award exceeded the four corners of the contract. Cf. Local 369, Bakery & Confectionery Workers International Union of America v. Cotton Baking Co., Inc., 5 Cir. 1975, 514 F.2d 1235, Cert. denied, 423 U.S. 1055, 96 S.Ct. 786, 46 L.Ed.2d 644 (1976). Unfortunately for the Teamsters, however, the Denison plant had been organized by the IAM, which was then certified as the bargaining agent by the NLRB. This fact, then, narrows the issue to compliance with the third criterion. 35 We think that the award was repugnant to the NLRA and accordingly affirm the District Judge on that point. 36 The right of employees to bargain collectively is at the heart of our federal policy governing labor management relations. Unions are vitally concerned, and properly so, with their right to bargain over wages, benefits, seniority and working conditions. Section 9(a) of the NLRA expressly recognizes such a right for a union if it is certified by the NLRA. If a contract or an arbitration award conflicts with that policy, the statutory policy must prevail. We think that a contract specifying that an employee transferring to another plant operated by the same employer would continue to receive the same wages and benefits that he received at the old plant, despite the existence of a contract with another union at the new location, would be unenforceable. It necessarily follows that an arbitration award which seeks to achieve the same impermissible result cannot be enforced. 37 Decisions of three other courts of appeals support this analysis. In Sperry Systems Management Division, Sperry Rand Corp. v. NLRB, 2 Cir. 1974, 492 F.2d 63, Cert. denied, 419 U.S. 831, 95 S.Ct. 55, 42 L.Ed.2d 57 (1976), the Second Circuit was faced with a situation similar to that before us. A union representing a New York unit sought, through arbitration, to have its entire contract applied to a small unit in California, where three draftsmen performing work similar to that done in New York were receiving lower wages. The arbitrator ordered the application of all terms of the prior contract (except the representation provision) to the new bargaining unit. The company resisted the award and filed a complaint with the NLRB charging that the union's attempt to enforce the award amounted to an unfair labor practice. A divided NLRB dismissed the company's complaint, but the Second Circuit reversed, finding that the union's activities constituted a Sub rosa attempt to gain recognition as the bargaining agent for the California workers, who had previously rejected that union in an election conducted by the NLRB. Furthermore, the union had committed an unfair labor practice because the subject of the wages and working conditions of the Vallejo employees was not a permissible subject of bargaining in the New York City unit. 492 F.2d at 69. 38 The Seventh Circuit reached a similar conclusion in Local 7-210, Oil, Chemical & Atomic Workers v. Union Tank Car Co., 7 Cir. 1973, 475 F.2d 194, Cert. denied, 414 U.S. 875, 94 S.Ct. 68, 38 L.Ed.2d 120. In that case, an arbitrator had ordered Union Tank Car Co. to apply its agreement with the OCAW to certain operations once performed by the OCAW but subsequently transferred to a plant covered by a contract with another union, the Boilermakers. The court denied enforcement. 39 The court felt that the NLRB's certification of the Boilermakers as exclusive bargaining agent precluded application of the OCAW contract at the second plant. Finding no breach of contract at all, the court also declined to enforce the arbitrator's order that the company make the OCAW-represented employees whole for any lost wages or monetary fringe benefits. 40 Finally, the Fourth Circuit in Glendale Manufacturing Co. v. Local No. 520, ILGWU, 4 Cir. 1960, 283 F.2d 936, Cert. denied, 366 U.S. 950, 81 S.Ct. 1902, 6 L.Ed.2d 1243 (1961), refused to enforce an arbitration award ordering the employer to bargain with a decertified, minority union. Judge Haynsworth, writing for the court, concluded that the employer should not be forced to commit an unfair labor practice by dealing with the union as the representative of the employees. 283 F.2d at 940. The court, however, was not unmoved by the plight of the employees and remanded the case to the arbitrator to fashion a new award, which would not cause the employer to commit an unfair labor practice, and suggested that ordering the employer to negotiate directly with the individual employees might be proper. 41 We find the reasoning of these cases persuasive. Although the union here has consistently disclaimed any attack on the IAM's certification, its repeated appeals to the NLRB on the certification issue indicate otherwise. In fact, at oral argument, counsel for the Teamsters, perhaps realizing that its position was becoming less tenable, suggested that possibly the best resolution of this case would be to remand to the arbitrator for a determination of lump sum damages. 42 In its brief, the Teamsters cite authority to indicate that contractual provisions such as those at issue in this case have become a common feature in collective bargaining agreements nationwide. The movement of plants from one location to another, the transfer of functions between plants, and the movement of workers between plants are subjects of vital concern for both labor and management. Employees are interested in continuity of employment, income, and seniority rights. Employers, on the other hand, need flexibility to respond to competitive forces and to increase efficiency. Such agreements are important, perhaps necessary, features of the modern mixed economy and are entitled to be respected. But when one contract conflicts with the overriding statutory policy of the NLRA, it cannot be enforced through specific performance. To do so would, to an unacceptable degree, interfere with the equally important right of other workers to organize themselves into a union and bargain collectively with their employer. 43 Therefore, we cannot direct enforcement of the arbitrator's award, but, like the District Judge below, we are not unmoved by the employees' situation. We also accept the findings of the arbiter and we do not condone the company's conduct. It is noteworthy that Standard itself does not deny the contractual violations; it asserts that This award cannot be enforced. We agree, but we are unwilling to agree that the choice is an on-off, all-or-nothing one. In Lincoln Mills, supra, the Supreme Court declared that the courts must fashion federal common law from the policy of the national labor laws and that (t)he range of judicial inventiveness will be determined by the nature of the problem. 353 U.S. at 457, 77 S.Ct. at 918. We believe that that federal common law requires us to vacate the arbitrator's award but it also permits us to remand for the reformulation of an award in damages. See Glendale Mfg. Co., supra, 283 F.2d at 940-41. 9 Since, in his award, the arbitrator stated that he would retain jurisdiction, we think that the best course here would be to allow him the first opportunity to calculate lump sum damages and to compute a lump sum damage award. He may, of course, consider lost wages, vacations, pension benefits and other such entitlements in fixing his damage award. The fact that the contract which was breached was due to expire April 30, 1976, is controlling as to the period for which damages may be awarded. Nothing in that contract could have created an expectation that the employees would have continued to enjoy the same wages and benefits beyond the expiration of the contract. Since Standard originally offered to allow the Dallas employees to transfer to Denison we assume that it can still find equivalent jobs for any Dallas employees who may yet wish to transfer at this late date, if indeed there are any. Regardless of whether those employees now wish to transfer they are entitled to damages, to be ascertained and computed according to law.