Court Opinion

ID: 7798834
Source: CourtListenerOpinion
Date Created: 2022-08-08 17:00:50.861435+00
Date Added: 2024-06-11T16:28:51.970987
License: Public Domain

RECOMMENDED FOR PUBLICATION
                               Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                      File Name: 22a0173p.06

                   UNITED STATES COURT OF APPEALS
                                  FOR THE SIXTH CIRCUIT

                                                            ┐
 GREENHOUSE HOLDINGS, LLC,
                                                            │
                                   Plaintiff-Appellee,      │
                                                             >        No. 21-6164
                                                            │
        v.                                                  │
                                                            │
 INTERNATIONAL UNION OF PAINTERS AND ALLIED                 │
 TRADES DISTRICT COUNCIL 91,                                │
                             Defendant-Appellant.           │
                                                            ┘

Appeal from the United States District Court for the Western District of Kentucky at Owensboro.
                 No. 4:21-cv-00029—Joseph H. McKinley, Jr., District Judge.

                                    Argued: July 26, 2022

                              Decided and Filed: August 8, 2022

                 Before: GILMAN, GRIFFIN, and THAPAR, Circuit Judges.
                                 _________________

                                           COUNSEL

ARGUED: Kera L. Paoff, WIDMAN & FRANKLIN, LLC, Toledo, Ohio, for Appellant.
Robert D. Martin, MERIDIAN LAW, PLLC, Brentwood, Tennessee, for Appellee. ON BRIEF:
Kera L. Paoff, WIDMAN & FRANKLIN, LLC, Toledo, Ohio, for Appellant. Robert D. Martin,
MERIDIAN LAW, PLLC, Brentwood, Tennessee, for Appellee.
                                     _________________

                                            OPINION
                                     _________________

       THAPAR, Circuit Judge. Arbitrators have broad authority. The question here is whether
that authority allows the arbitrator to bind a non-signatory (someone who hasn’t signed an
underlying arbitration agreement) to an arbitration award.                He could if there’s clear and
 No. 21-6164             Greenhouse Holdings, LLC v. Int’l Union of Painters                                  Page 2

unmistakable evidence that the non-signatory agreed to arbitrate that question. But the district
court didn’t resolve this fact-intensive threshold issue. So we vacate and remand.

                                                         I.

       Two companies are relevant to this appeal. Greenhouse Holdings, LLC operates under
the name Clearview Glass and Glazing and cuts and installs glass products in Kentucky.
Clearview Glass and Glazing Contractors of Tennessee LLC (Clearview Tennessee) does similar
work in Tennessee. Greenhouse’s owners own ninety percent of Clearview Tennessee. Suffice
to say, there’s a lot of overlap between the two companies.

       The parties to this appeal are Greenhouse and the International Union of Painters and
Allied Trades District Council 91.            They agree that the Union has a collective-bargaining
agreement (CBA) with Clearview Tennessee. But they dispute whether Greenhouse is also
bound by the CBA.

       The Union filed a grievance against “Clearview Glass,” alleging that it violated the CBA.
R. 17-2, Pg. ID 256–57. But the grievance didn’t specify whether “Clearview Glass” meant
Greenhouse, Clearview Tennessee, or both. The grievance eventually moved to arbitration.
Both before and during arbitration, the Union made clear that it thought Greenhouse was bound
by and in violation of the CBA. In response, Daniel Kinney—part-owner of Greenhouse and
Clearview Tennessee and the only non-union party representative at arbitration—argued that
Greenhouse was a non-union shop.

       The arbitrator sided with the Union and ordered “Clearview Glass and Glazing” to “pay
to the Union the amount of underpaid wages and benefits due its non-Tennessee shop
employees,”1 apparently referring to those employees working out of Greenhouse’s shop in
Kentucky. R. 17-3, Pg. ID 259, 272. And in a supplemental award, it specified the amount of
damages owed to the Union.

       1The   award also reached the Tennessee shops, but those portions of the award aren’t at issue here.
 No. 21-6164          Greenhouse Holdings, LLC v. Int’l Union of Painters                  Page 3

        Greenhouse challenged that award in federal court. Because it wasn’t convinced “that
Greenhouse ever assented to the CBA,” the district court vacated the award “to the extent it
applies to Greenhouse.” R. 27, Pg. ID 565–66. The Union appeals.

                                                II.

        Before we proceed to the merits, we must confirm that we have jurisdiction over this
dispute. Greenhouse brought this motion to vacate under section 10 of the Federal Arbitration
Act. But that section doesn’t give federal courts subject-matter jurisdiction. See Badgerow v.
Walters, 142 S. Ct. 1310, 1318 (2022).        Instead, there must be an independent basis for
jurisdiction. And that basis must be clear on “the face of the [motion to vacate] itself.” Id. at
1316.

        The Labor Management Relations Act (LMRA) can supply an independent basis for
jurisdiction. The LMRA confers jurisdiction over “[s]uits for violation of contracts between an
employer and a labor organization . . . .” 29 U.S.C. § 185(a); see 13D Charles Alan Wright,
Arthur R. Miller & Richard D. Freer, Federal Practice and Procedure § 3581 (3d ed.). And it’s
well-established that the LMRA “authorizes courts to enforce or vacate labor arbitration
awards.” UAW Int’l v. TRW Auto. U.S. LLC, 850 F. App’x 929, 940 (6th Cir. 2021); accord
United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 595–96 (1960)
(exercising jurisdiction over a suit to enforce (or confirm) an arbitration award); Textile Workers
Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448, 450–51 (1957) (holding that the LMRA
grants broad authority to enforce arbitration agreements).

        Here, the LMRA supplies us with jurisdiction that’s clear on the face of Greenhouse’s
motion to vacate. Properly understood, the arbitrator’s award is a “contractual resolution of the
parties’ dispute.” Badgerow, 142 S. Ct. at 1317; cf. Enter. Wheel & Car Corp., 363 U.S. at 599
(noting that the parties “bargained for” the arbitrator’s construction of the CBA ). So refusal to
comply with a labor-arbitration award is itself a contract violation over which the LMRA grants
jurisdiction. See 20 Williston on Contracts § 56:106 (4th ed.); Textile Workers Union of Am. v.
Cone Mills Corp., 268 F.2d 920, 925 (4th Cir. 1959). Simply put, when a party moves to vacate
 No. 21-6164             Greenhouse Holdings, LLC v. Int’l Union of Painters                            Page 4

a labor-arbitration award, the LMRA provides an independent basis for jurisdiction that’s clear
“on the face of the [motion to vacate] itself.” Badgerow, 142 S. Ct. at 1316.2

                                                       III.

        Turning to the merits, the Union makes two arguments: (1) Greenhouse’s motion to
vacate was untimely; and (2) the district court erred in determining that Greenhouse couldn’t be
bound by the arbitration award. We address each in turn.

                                                       A.

        Under the FAA, a party has three months after an arbitration award is “filed or delivered”
to serve notice of a motion to vacate. 9 U.S.C. § 12. Here, the arbitrator issued its initial award
on January 27, 2021. And Greenhouse didn’t move to vacate until May 19, 2021—more than
three months after the initial award. So, the Union argues, Greenhouse’s motion is untimely.

        But the Union misses the mark. A party can challenge only a “final” award. Savers
Prop. & Cas. Ins. Co. v. Nat’l Union Fire Ins. Co., 748 F.3d 708, 719 (6th Cir. 2014). And an
award is final only if it determines both liability and damages. Id. But the arbitrator’s initial
award didn’t establish damages; it left the total damages amount “to be determined.” R. 17-3,
Pg. ID 272. The arbitrator didn’t determine the amount of damages until it issued a supplemental
award on February 19, 2021. So that’s when Greenhouse’s three-month period began to run.
And because Greenhouse filed its motion within three months of the supplemental award, the
motion was timely filed under the FAA.

                                                       B.

        Next, the Union argues that the district court erred in analyzing whether the arbitration
award could bind Greenhouse. The district court held that Greenhouse wasn’t a party to the
CBA and thus the arbitrator acted outside his authority to the extent the award applied to
Greenhouse. But, in the Union’s view, Greenhouse consented to arbitrate. If that’s right, the

          2It’s irrelevant that we’re dealing with a motion to vacate rather than to confirm—those claims are flip
sides of the same coin. See PG Publ’g, Inc. v. Newspaper Guild of Pittsburgh, 19 F.4th 308, 312–13 (3d Cir. 2021).
 No. 21-6164              Greenhouse Holdings, LLC v. Int’l Union of Painters                                Page 5

Union argues, the district court erred by taking a fresh look at whether the award could bind
Greenhouse.

         Courts are presumptively responsible for deciding threshold arbitrability questions such
as who’s agreed to arbitrate what. See First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944–
45 (1995). Of course, parties can instead agree to submit these questions to arbitration. But
there must be “clear and unmistakable evidence” that they did so. Id. at 944 (cleaned up); see
Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 527, 530 (2019).

         Despite this demanding standard, an agreement to arbitrate arbitrability need not be in
writing. Cf. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009). In fact, we may infer
agreement when a party willingly participates in the arbitration without objecting to the
arbitrator’s jurisdiction. See PolyOne Corp. v. Westlake Vinyls, Inc., 937 F.3d 692, 698 (6th Cir.
2019) (collecting cases).3         That’s true for both signatories and non-signatories alike.                    See
Equitable Res. v. United Steel Workers Int’l Union, AFL-CIO/CLC, 621 F.3d 538, 545–49 (6th
Cir. 2010) (affirming an arbitration award against a non-signatory where it agreed to arbitration);
cf. Town & Country Salida, Inc. v. Dealer Comput. Servs., Inc., 521 F. App’x 470, 474 (6th Cir.
2013) (stating that a non-signatory might be bound if it “clearly submitted” to arbitration).4

         So did Greenhouse consent to arbitrate arbitrability? The district court didn’t address this
threshold question. After finding that Greenhouse hadn’t signed the CBA, it concluded that the
arbitrator exceeded his authority by “determining the rights or obligations of a non-party to the
arbitration.” R. 27, Pg. ID 566 (cleaned up).

         3Simply   showing up at arbitration doesn’t constitute consent. Thus, an agreement to arbitrate can’t be
inferred when a party announces at the front end its objection to the arbitrator’s jurisdiction. See First Options, 514
U.S. at 945–46. And when a party is compelled to arbitrate, it of course doesn’t waive any such objections simply
by participating in arbitration. See PolyOne, 937 F.3d at 698.
         4See   also, e.g., Loc. 36 Sheet Metal Workers’ Int’l v. Whitney, 670 F.3d 865, 869 (8th Cir. 2012)
(explaining that a non-signatory can waive “the right to have a court determine” arbitrability “through participation
in the proceeding or otherwise”); Carpenters 46 N. Cal. Cntys. Conf. Bd. v. Zcon Builders, 96 F.3d 410, 414–15 (9th
Cir. 1996) (suggesting that consent to arbitrate can be implied from the parties’ conduct at arbitration); Thomson-
CSF, S.A. v. Am. Arb. Ass’n, 64 F.3d 773, 777 (2d Cir. 1995) (“In the absence of a signature, a party may be bound
by an arbitration clause if its subsequent conduct indicates that it is assuming the obligation to arbitrate.”).
 No. 21-6164          Greenhouse Holdings, LLC v. Int’l Union of Painters                  Page 6

       But that skips a step. Before independently analyzing arbitrability, the district court must
first decide whether Greenhouse consented to arbitrate that question. See First Options, 514 U.S.
at 942–43. If Greenhouse consented to arbitrate the threshold arbitrability question, then the
arbitrator has the authority to determine whether Greenhouse is bound by the CBA.              See
PolyOne, 937 F.3d at 698; see also Equitable Res., 621 F.3d at 548 n.3 (listing ways “that a non-
signatory to an agreement to arbitrate may be bound by an arbitral award”). And our power to
review the arbitrator’s award would be limited. See Bhd. of Locomotive Eng’rs v. United
Transp. Union, 700 F.3d 891, 900–01 (6th Cir. 2012).

       Here, it’s disputed whether Greenhouse consented to arbitrate. For example, we have
dueling declarations—one from the Union’s attorney and the other from Kinney. On one hand,
the Union’s attorney suggests that Kinney spoke on behalf of Greenhouse at the arbitration. But
on the other, Kinney states that he participated only on behalf of Clearview Tennessee. This
dispute matters. If Greenhouse wasn’t at the arbitration, or if Kinney appeared on behalf of
Greenhouse merely to object to the arbitrator’s authority, then the court can decide de novo
whether Greenhouse was bound by the CBA. But if Greenhouse consented to arbitration and the
question of whether it was bound by the CBA was clearly before the arbitrator, then a higher
standard of review applies.

       Because the evidence should be weighed by the district court in the first instance, we
decline to address the fact-intensive question of consent. Cf. Moreno v. Zank, 895 F.3d 917, 926
(6th Cir. 2018).

                                        *       *       *

       We therefore vacate and remand for the district court to determine whether Greenhouse
consented to arbitration.