Court Opinion

ID: 3002080
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:24:44.299633+00
Date Added: 2024-06-11T09:49:17.547835
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit
                          ____________

Nos. 05-2574, 05-3553 & 06-4256

A MERITECH C ORPORATION D/B/A SBC M IDWEST,

                                                  Plaintiff-Appellant,
                                                      Cross-Appellee,
                                  v.

INTERNATIONAL B ROTHERHOOD OF
E LECTRICAL W ORKERS, L OCAL 21,
                                                 Defendant-Appellee,
                                                    Cross-Appellant.
                          ____________
            Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
           No. 04 C 6149—Samuel Der-Yeghiayan, Judge.
                          ____________

  A RGUED S EPTEMBER 26, 2007—D ECIDED S EPTEMBER 10, 2008
                          ____________

 Before M ANION, E VANS, and S YKES, Circuit Judges.
  S YKES, Circuit Judge. These appeals stem from a drawn-
out labor dispute between Ameritech and the Interna-
tional Brotherhood of Electrical Workers, Local 21, involv-
ing three arbitrations centering on what may fairly be
2                          Nos. 05-2574, 05-3553 & 06-4256

described as the same issue. The first and third awards
favored Ameritech; the second favored the Union. The
question now is whether the third arbitration award
trumps the second.
   The third arbitration was the product of a settlement
agreement resolving the parties’ first two appeals in this
court. Ameritech had appealed the district court’s order
enforcing the second arbitration award; the Union then
appealed an order denying its motion to enforce that
judgment and hold Ameritech in contempt. In their
settlement the parties agreed to resolve this “protracted
litigation” by submitting their dispute to a third arbitrator
for a “final resolution” via a “special, bifurcated arbitra-
tion proceeding.” This third arbitration was held, the
arbitrator sided with Ameritech, and Ameritech sought
to enforce the award by moving to vacate the earlier
judgment pursuant to Rule 60(b) of the Federal Rules of
Civil Procedure. The district court summarily denied this
motion because the first two appeals were still pending
here. Ameritech then appealed this order, and we con-
solidated all three.
  We now dismiss the first two appeals based on the
parties’ settlement. Following the procedure described
in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership,
513 U.S. 18, 29 (1994), and Marseilles Hydro Power LLC v.
Marseilles Land & Water Co., 481 F.3d 1002, 1003-04 (7th Cir.
2007), we reverse the district court’s order denying
Ameritech’s Rule 60(b) motion and remand with instruc-
tions to vacate the earlier judgment enforcing the second
award and enter judgment for Ameritech enforcing the
Nos. 05-2574, 05-3553 & 06-4256                            3

third arbitration award. Because the parties agreed that
the third arbitration would finally resolve their dispute,
and the third arbitrator’s award is inconsistent with the
second, Ameritech is entitled to relief from the earlier
judgment under Rule 60(b).

                      I. Background
  These three consolidated appeals are the result of a
lengthy and procedurally complex labor arbitration, but
the crux of the dispute is a single provision in the parties’
collective-bargaining agreement. Ameritech and the
Union disagreed over the meaning of § 1.03 in that agree-
ment, which provides as follows:
      This Agreement covers the work customarily per-
    formed by the employees defined in Section . . . 1.01,
    above. However, during the tenure of this Agreement,
    [Ameritech] may continue to contract out such work as
    is now customarily contracted out and has been
    customarily contracted out by [Ameritech] under the
    previous collective bargaining agreements . . . repre-
    sented by [the Union] . . . . If such work to be con-
    tracted out will cause layoffs, or part-timing or prevent
    the rehiring of employees with seniority standing,
    such contracting out of work will be reviewed by
    [Ameritech] with the Union and allotted on the basis
    of what [Ameritech] is equipped to perform and what
    the employees represented by the Union are able
    and trained to perform.
Section 1.03 thus governs Ameritech’s ability to contract
out work to nonunion workers and provides the Union
4                          Nos. 05-2574, 05-3553 & 06-4256

with the right to review certain layoffs and the allotment
of some of this work. The condition under which the
Union may exercise its review-and-allotment right is the
primary subject of the parties’ dispute.
  The genesis of this case was in late 2002, when
Ameritech, facing flagging demand for its products,
announced a plan to lay off some of the Union’s members.
Ameritech believed that it was not required to participate
in the review-and-allotment process specified in § 1.03
because poor economic conditions—not the customary
contracting out covered by § 1.03—had precipitated the
layoffs. The Union maintained that it was entitled to a
formal review and allotment under § 1.03, and when
Ameritech disagreed, the parties proceeded to the first of
the three arbitrations at issue here.
  Arbitrator John Flagler concluded this first arbitration
in December 2002, and he resolved the dispute in
Ameritech’s favor. Flagler agreed with Ameritech’s
interpretation of § 1.03, namely, that the Union must first
establish that the layoffs in question were caused by
customary contracting out (as opposed to some other
cause) before being entitled to the review-and-allotment
process. Because Ameritech established that the layoffs
were caused by poor economic conditions (not con-
tracting out), Flagler concluded that the Union was not
entitled to review and allotment.
  The Union filed a second grievance in the spring of 2004,
arguing that it was entitled to review and allotment
because Ameritech’s continued use of outside contractors
prevented the rehiring of the laid-off Union members.
Nos. 05-2574, 05-3553 & 06-4256                             5

Arbitrator Richard Kasher conducted the second arbitra-
tion, and this time the result favored the Union. Kasher
distinguished his postlayoff analysis from Flagler’s
prelayoff analysis and did not require the Union to
first show that continued contracting out had caused
the failure to rehire the laid-off employees. Instead, he
ordered Ameritech to provide the Union with informa-
tion for a formal review and allotment without that
threshold showing.
   The parties then moved their dispute to the District
Court for the Northern District of Illinois. Ameritech
filed a complaint to vacate the Kasher award, and the
Union counterclaimed to enforce the award. On cross-
motions for summary judgment, the district court entered
judgment for the Union, upholding Kasher’s decision
based on the broad judicial deference that courts tradi-
tionally afford to arbitration awards. See, e.g., United
Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593,
597 (1960) (holding that any award would be enforceable
so long as it “draws its essence from the collective bar-
gaining agreement”); Ethyl Corp. v. United Steelworkers
of Am., 768 F.2d 180, 183-84 (7th Cir. 1985) (same). But
when the court denied the Union’s subsequent motions
to hold Ameritech in contempt, the stage was set for
two cross-appeals. Ameritech appealed the order
denying its motion for summary judgment and granting
judgment for the Union (Appeal No. 05-2574), and the
Union appealed the denial of its motion to enforce
the judgment and hold Ameritech in contempt (Appeal
No. 05-3553).
6                          Nos. 05-2574, 05-3553 & 06-4256

   The parties were then directed into appellate media-
tion under Rule 33 of the Federal Rules of Appellate Proce-
dure. They emerged from that process on September 16,
2005, with an agreement to submit their dispute to a third
arbitration, to be conducted in two phases. This third
arbitration was conducted before Arbitrator Robert
Perkovich pursuant to a detailed Joint Pre-Conference
Statement negotiated and signed by the parties. The
statement provided that “this special, bifurcated arbitra-
tion proceeding” was “the culmination of protracted
litigation between the parties through two different
arbitrations, and civil actions in the U.S. District Court
and 7th Circuit Court of Appeals.” The statement memori-
alized that “the parties agreed to resolve their dispute
regarding Article 1.03 through this bifurcated process”
and that this third arbitration would be the “final resolu-
tion of the proper interpretation and application of
Section 1.03 of the parties’ Collective Bargaining Agree-
ment relative to [the 2002 layoffs].”
   Perkovich’s award favored Ameritech. He held that the
first award (Arbitrator Flagler’s) had been incorporated
into the parties’ collective-bargaining agreement and
was therefore controlling on the proper interpretation of
§ 1.03 and that Arbitrator Kasher had erred by disre-
garding it. Armed with Perkovich’s award, Ameritech
returned to the district court with a Rule 60(b) motion
seeking to vacate the earlier judgment based on this third
arbitration and the parties’ settlement. The district court
summarily denied this motion, saying only that it could
not consider the motion because the two earlier appeals
were still pending. Ameritech appealed this order (Appeal
Nos. 05-2574, 05-3553 & 06-4256                            7

No. 06-4256), and we consolidated all three appeals
for briefing and disposition.

                      II. Discussion
   The parties ask us to reconcile their arbitration trilogy
on the merits, but the proper resolution of these
appeals begins—and ends—with the settlement that
brought about the third arbitration. The parties engaged
in appellate settlement negotiations under Rule 33 of the
Federal Rules of Appellate Procedure and explicitly agreed
to submit their dispute to a third and final arbitration as
a “final resolution” and “culmination” of the “protracted
litigation” between them—i.e., the first two arbitrations,
the district court’s first and second orders, and the first
two appeals in this court.
  Rule 33 authorizes the court of appeals to implement
a settlement reached while the case is on appeal.
Herrnreiter v. Chi. Hous. Auth., 281 F.3d 634, 637 (7th Cir.
2002). Unlike in the district court, however, settlement
negotiations in this court are not overseen by a judicial
officer; instead, they are handled by a settlement confer-
ence attorney and what occurs during negotiations is not
revealed to the court. Id. We have held that the implemen-
tation of a settlement reached on appeal entails the dis-
missal of the appeal upon the filing of either (a) a
written agreement of the parties dismissing the appeal
under Rule 42(b) of the Federal Rules of Appellate Procedure,
or (b) a motion to dismiss under Rule 42(b) filed by the
appellant. Id.
8                          Nos. 05-2574, 05-3553 & 06-4256

  Here we have something close to the former. At the
conclusion of their settlement negotiations, the parties
signed a handwritten document agreeing to be bound by
the third arbitration and specifying the questions to be
posed to the arbitrator in the first and second phases of
this arbitration. Later, the parties signed a lengthy Joint
Pre-Conference Statement describing in greater detail
the parameters of the third arbitration. As we have
noted, this statement outlined the “agreement between
the parties to suspend litigation currently pending in the
U.S. Court of Appeals for the Seventh Circuit” for the
purpose of submitting the dispute to a third arbitrator
for “a final resolution of the proper interpretation and
application of Section 1.03 of the parties’ Collective Bar-
gaining Agreement relative to [the 2002 layoffs].” These
documents are properly before this court in connection
with Ameritech’s appeal from the district court’s denial
of its Rule 60(b) motion.
   That the parties did not move to dismiss under Rule
42(b)—the proper procedure described in Herrnreiter—does
not mean they retained the right to continue to litigate the
appeal if dissatisfied with the results of the arbitration.
That strikes us as absurd. An agreement to suspend
appellate litigation for the purpose of submitting the
dispute to arbitration as a “final resolution” cannot possi-
bly mean that the loser of the arbitration gets to
disregard the results and continue to litigate the appeal.
Such an agreement would be meaningless, accomplishing
nothing except for delay. We must take the third arbitra-
tion for what it was: a settlement finally resolving the
first two appeals.
Nos. 05-2574, 05-3553 & 06-4256                             9

  The Union maintains that the Perkovich award applies
only to a limited number of subcontracts—not to the
subcontracts primarily at issue on appeal. The third
arbitration was a bifurcated proceeding in which Arbitra-
tor Perkovich was asked first to definitively interpret § 1.03
and then in the second phase apply that interpretation
to a set of “new” subcontracts (new because they were
in addition to those already involved in the parties’
dispute). That structure, the Union argues, means that
Perkovich’s interpretation of § 1.03 applies only to
those subcontracts enumerated in phase two of the third
arbitration.
  Notably, however, this suggested limitation is not found
in the parties’ agreement, which nowhere states that
Perkovich’s interpretation of § 1.03 in phase one of the
arbitration is limited to the subcontracts involved in
phase two. Quite the contrary, the parties’ agreement
expressed their intention to bring their prolonged fight to
a close—in their own words, to seek “a final resolution” of
the “protracted litigation” involving the first two arbitra-
tions. We doubt the settlement agreement was intended
only to add yet another layer of complexity to § 1.03 by
creating one more interpretation—one applicable only to
a limited number of subcontracts. Rather, the third ar-
bitration by its terms accomplished two things: first, it
resolved the parties’ dispute over the interpretation of
§ 1.03 and contracting out (necessarily resolving the
issues on appeal), and, second, it applied that resolution
to the new subcontracts identified in phase two.
Perkovich’s decision on § 1.03 was the final one, and
that decision binds the parties.
10                          Nos. 05-2574, 05-3553 & 06-4256

  This brings us to the third appeal involving Ameritech’s
motion to vacate under Rule 60(b). The district court could
have considered Ameritech’s motion when it was pre-
sented with two facially inconsistent arbitration
awards—Kasher’s and Perkovich’s—the latter of which
was in settlement of the dispute over the former. It is
true that a district court is divested of jurisdiction once
a notice of appeal is filed; that has long been procedural
diktat. E.g., Griggs v. Provident Consumer Disc. Co., 459 U.S.
56, 58 (1982); Berman v. United States, 302 U.S. 211, 214
(1937); United States v. McHugh, 528 F.3d 538, 540 (7th Cir.
2008); United States v. Vitek Supply Corp., 151 F.3d 580, 584
(7th Cir. 1998). This rule conserves judicial resources by
preventing overlapping and potentially inconsistent
decisions; whipsawing litigants between two courts is
just as inconvenient for courts as it is for parties.
   There are exceptions, however, and this instance is one.
Boyko v. Anderson, 185 F.3d 672, 674 (7th Cir. 1999) (citing
Kusay v. United States, 62 F.3d 192, 194 (7th Cir. 1995)
(listing exceptions)). District courts possess limited au-
thority to deny Rule 60(b) motions while an appeal is
still pending, allowing the court of appeals to make its
resolution a final one, knowing that a district court has
no desire to amend its ruling. This creates no risk of
overlapping decisions, and it has been our practice to
encourage district courts to respond promptly to these
motions because a quick response expedites the resolu-
tion of a pending appeal. Brown v. United States, 976 F.2d
1104, 1110-11 (7th Cir. 1992); Graefenhain v. Pabst Brewing
Co., 870 F.2d 1198, 1211 (7th Cir. 1989). Conversely, in the
event a district court is inclined to grant the motion, it can
make us aware of its intention and we will remand the
Nos. 05-2574, 05-3553 & 06-4256                            11

entire case for that purpose. See 7 TH C IR. R. 57; Boyko, 185
F.3d at 675; see also Brown, 976 F.2d at 1110-11; Graefenhain,
870 F.2d at 1211. We may also employ a limited remand
to a district court, permitting it to conduct a hearing
before ruling on the merits of the Rule 60(b) motion in
this situation. Boyko, 185 F.3d at 675.
  So the district judge had an option other than a sum-
mary denial of Ameritech’s Rule 60(b) motion based on
the still-pending appeals. In the circumstances here—
where the parties agreed to settle the case through a final
arbitration and the ensuing arbitration award was incon-
sistent with the prior judgment—the district judge had
the authority under Circuit Rule 57 to advise us whether
he was inclined to grant the Rule 60(b) motion.
  We have previously noted that the use of Rule 60(b) in
this situation is appropriate. Marseilles Hydro Power, 481
F.3d at 1003 (suggesting the applicability of Rule 60(b)(6)
after a settlement on appeal). However, it is for the
district court, not us, to vacate the prior judgment in
light of a settlement on appeal. The general rule is that
we can enforce settlement agreements reached on ap-
peal by dismissing the appeal, but not by vacating the
underlying judgment. Bonner Mall, 513 U.S. at 29;
Herrnreiter, 281 F.3d at 638. That is, settlements on
appeal generally result in the dismissal of an appeal.
Herrnreiter, 281 F.3d at 638.
  The Supreme Court explained in Bonner Mall that the
parties to an appeal generally relinquish their right to
challenge the judgment below when they agree to settle
their dispute during their appeal. 513 U.S. at 29. Vacatur is
a remedy rooted in equity, and where an appeal is dis-
12                         Nos. 05-2574, 05-3553 & 06-4256

missed as moot, vacatur traditionally requires some
happenstance or fortuity that prevents a party from
obtaining a review of a judgment’s merits (i.e., circum-
stances unattributable to the parties or when mootness
results from the unilateral action by the prevailing party
below). Id. at 23. That has been the rule since United
States v. Munsingwear, Inc., 340 U.S. 36, 40 (1950), and the
Court in Bonner Mall held that mootness due to an ap-
pellate settlement was not the sort of “vagar[y] of cir-
cumstance” justifying a reviewing court’s use of vacatur
on the judgment of a lower court. 513 U.S. at 25.
  But we do have the power to remand for the district
court to vacate the inconsistent judgment under Rule 60(b).
Id. at 29; Marseilles Hydro Power, 481 F.3d at 1003.
Ameritech tried the Rule 60(b) route, and its appeal of
the district court’s denial of that motion is here, along
with the first two. The parties settled the first two
appeals by way of the third arbitration; the resulting
award favored Ameritech and was inconsistent with
the prior judgment for the Union. This is a proper
ground for relief from that judgment under Rule 60(b)(6).
Marseilles Hydro Power, 481 F.3d at 1003. Accordingly, in
light of the appellate settlement, we D ISMISS the cross-
appeals (Nos. 05-2574 & 05-3553); on Ameritech’s appeal
of the denial of its Rule 60(b) motion (No. 06-4256), we
R EVERSE and R EMAND to the district court with instruc-
tions to vacate the judgment enforcing the second arbitra-
tion award and enter judgment enforcing the third ar-
bitration award.

                           9-10-08