Court Opinion

ID: 2995330
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:19:45.889776+00
Date Added: 2024-06-11T13:07:39.667718
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 00-3413

CK Witco Corporation,

Plaintiff/Counterclaim
Defendant-Appellee,

v.

Paper Allied Industrial, Chemical
& Energy Workers International Union,
Local 60-807, AFL-CIO,

Defendant/Counterclaimant/
Third-Party Plaintiff-Appellant,

v.

Goldschmidt Chemical Corporation,

Third-Party Defendant-Appellee.

Appeal from the United States District Court
for the Central District of Illinois, Peoria Division.
No. 00-1022--Michael M. Mihm, Judge.

Argued April 18, 2001--Decided November 9, 2001

  Before Harlington Wood, Jr., Diane P. Wood,
and Williams, Circuit Judges.

  Williams, Circuit Judge. In this case,
we are called upon to determine the
arbitrability of several labor disputes
governed by collective bargaining
agreements. The case is unique, however,
because the disputes all involve
twoseparate employers, two separate union
bargaining units, and two separate,
although identical, collective bargaining
agreements. But contrary to the arguments
of the employers, and the decision of the
district court, this novelty does not
affect the conclusion we must reach that
under the collective bargaining
agreements the disputes are subject to
arbitration. Therefore, we reverse.

I.   BACKGROUND

A.   The Facts
  The seeds of this dispute were planted
early, back when Witco singly owned and
operated a chemical manufacturing plant
in Mapleton, Illinois. The plant
consisted of two separate facilities: the
Main Plant and the Metal Organics Plant
("MOP"), which together were referred to
as the Mapleton Plant. On August 31,
1999, Witco sold the Main Plant to
Goldschmidt. In the sale, Goldschmidt
hired the employees who were working at
the Main Plant, some 245 employees. Witco
retained the MOP and the 20 employees
working there.

  While the physical division of the plant
and the employees appears to have been
rather effortless, contractual rights
between the employees and the employers
were not so easily divisible. The
employees were represented by Paper
Allied Industrial, Chemical & Energy
Workers International Union, Local
60-807, AFL-CIO ("the Union")./1 More
importantly, several years before the
sale, Witco and the Union entered into a
collective bargaining agreement ("CBA"),
which covered the employees at both the
Main Plant and the MOP. The CBA addressed
a wide variety of topics, including
employee seniority and transfer
rightsbetween the two facilities.

  In the CBA, Witco and the Union agreed
that the "contract shall be binding upon
the parties hereto, their successors,
transferees and assignees" and that "[i]n
the event [Witco] sells or transfers the
Mapleton Plant, this contract shall
remain in full force and effect and be
binding upon the purchaser or
transferee." As a consequence of this
full force and effect provision it seems,
in the Purchase Agreement between Witco
and Goldschmidt for the sale of the Main
Plant, Goldschmidt agreed, without
exception, to "assume the agreements
listed on Schedule 7.8," which included
the CBA.

  Both Witco and Goldschmidt individually
informed the employees that Goldschmidt
had agreed to assume the CBA. Witco
stated in its letter that Goldschmidt had
agreed to assume the CBA, and that all
terms and conditions of the CBA would
remain in full force and effect after the
sale. However, Goldschmidt stated in its
letter that it had agreed to assume the
CBA, with the exception of the MOP
employees.

  After the partition of the Mapleton
Plant, Witco and Goldschmidt each
prepared separate seniority lists. In
addition, neither allowed transfers from
the other’s facility, which arguably
would have been allowed prior to the sale
under the CBA. The Union, therefore,
objected and requested that the employers
prepare a unified list and allow the
transfers. But the disputes could not be
resolved amicably, because the employers
refused to change practices and denied
any violation of the CBA./2 The Union
filed grievances with the Federal
Mediation and Conciliation Service
("FMCS"), requesting that the FMCS
designate an arbitrator to resolve the
contested issues. Witco and Goldschmidt
refused to arbitrate.

  Instead, Witco filed a unit
clarification petition with the Regional
Office of the National Labor Relations
Board ("NLRB"). Goldschmidt intervened.
After an investigation and its
consideration of the evidence, the NLRB
found that the MOP workers constituted a
separate bargaining unit from the Main
Plant workers and granted Witco’s unit
clarification petition.

  With this decision in hand, Witco then
filed an unfair labor grievance against
the Union in the Regional Office of the
NLRB, alleging that its pursuit of
arbitration was an unfair labor practice.
An Associate General Counsel in the NLRB
Division of Advice issued an advice
memorandum, solicited by the Regional
Director for the NLRB, in which he found
that the Union’s request for arbitration
was not an unlawful attempt to merge the
two bargaining units but an enforcement
of contractual rights that "arguably
could survive" the separation. Witco
withdrew its grievance.

B.   District Court Proceeding

  Still resisting arbitration, Witco filed
suit in the United States District Court
for the Central District of Illinois,
seeking a permanent injunction of the
Union’s arbitration proceedings. The
Union counterclaimed against Witco and
filed a third-party complaint against
Goldschmidt, seeking to compel both
parties to arbitrate in accordance with
the CBA and an award of damages for
breach of the CBA for their refusal to
arbitrate. All parties moved for summary
judgment.

  The district court granted summary
judgment in favor of Witco and
Goldschmidt (and denied it in favor of
the Union), finding that although the
employers had agreed to submit to
arbitration seniority and transfer issues
with respect to their own employees, they
had not agreed as to each other’s
employees. Furthermore, the district
court found that arbitration would
constitute an unlawful attempt to
overturn or modify the NLRB’s unit
clarification decision. The Union now
appeals.

II.    ANALYSIS

A.    Duty to Arbitrate

  It is fundamental that the right or duty
to arbitrate must arise out of a
contract, and without that agreement a
party cannot be required to submit a
dispute to arbitration. United
Steelworkers of Am. v. Warrior and Gulf
Navigation Co., 363 U.S. 574, 582 (1960);
R.J. Distrib. Co. v. Teamsters,
Chauffeurs & Helpers Local Union No. 627,
771 F.2d 211, 214 (7th Cir. 1985). At the
same time, when a contract contains an
arbitration clause, a strong presumption
in favor of arbitration exists and courts
have no choice but to order arbitration
"unless it may be said with positive
assurance that the arbitration clause is
not susceptible of an interpretation that
covers the asserted dispute." AT&T
Techs., Inc. v. Communications Workers,
475 U.S. 643, 650 (1986). We review the
district court’s grant and denial of
summary judgment on the issue of
arbitration de novo. Local 75, Int’l Bhd.
of Teamsters, Chauffeurs, Warehousemen &
Helpers v. Schreiber Foods, Inc., 213
F.3d 376, 379 (7th Cir. 2000).

  The CBA arbitration provisions provide
that a grievance is "any dispute
submitted by an employee or Union
representative involving an alleged
violation of the express provision of
this Agreement . . . and involving the
interpretation or application of the
provisions of the Agreement." If the
grievance is not resolved satisfactorily,
the Union is entitled to "appeal to
arbitration," and "[t]he arbitrator shall
have authority to make decisions only on
grievances relating to the interpretation
or performance of the express terms of
this Agreement." We turn now to consider
whether the disputes fit within this
arbitration clause.

  In its purest and most simple form, the
dispute the Union seeks to arbitrate is
whether Witco and Goldschmidt have
complied with the "full force and effect"
provision of the CBA. Indeed, the Union
can only make a plausible demand for
unified seniority and transfer rights
between both facilities because such
rights existed before the sale, and, as
the Union argues, must be maintained
after the sale via the full force and
effect provision. This dispute, of
course, fits within the scope of the
arbitration clause of the CBA. Therefore,
it is undeniable that Witco and the
Union, insofar as it represents current
employees of Witco, must arbitrate that
dispute under the CBA arbitration clause.
The same is true for Goldschmidt and the
Union, to the extent that it represents
current Goldschmidt employees. Neither
Witco nor Goldschmidt really contest this
determination as to its employees; rather
they implicitly concede this point. The
district court accepted this position as
well.

  However, Witco and Goldschmidt do argue
that the arbitration provisions create no
duty to arbitrate with non-employees,
i.e., employees from the other’s plant.
We are willing for the moment to accept
this argument as true, if only to explain
why it makes no difference to our
decision. As we have said, the employees
in each facility possess a contractual
entitlement against their respective
current employer to maintenance of the
"full force and effect" of the CBA in the
event of a sale./3 The scope of that
entitlement and the attendant duty on the
employers is a matter for the arbitrator
to resolve, not for us. We conclude only
that all the present disputes arise from
that entitlement, and therefore that
entitlement, along with the disputes,
must be arbitrated as they relate to each
respective current employer. See Genesco,
Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d
840, 846 (2d Cir. 1987) (citing
Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614,
625 n.13 (1985)) ("If the allegations
underlying the claims ’touch
matters’covered by the parties’
[contractual] agreements, then those
claims must be arbitrated, whatever the
legal labels attached to them.").

  The seniority rights dispute that the
Union argues violates the CBA is an
example. Goldschmidt’s failure to include
Witco employees in its seniority list may
violate Goldschmidt employees’
entitlement under the CBA to the "full
force and effect" of the agreement.
Goldschmidt employees who, under
Goldschmidt’s current practices, would be
at the bottom of Goldschmidt’s seniority
list, except for less senior employees at
Witco, have less protection from lay-offs
or "bump-backs" than they would have
received before the sale. Goldschmidt
employees, then, have a plausible and
arbitrable claim that they have been
denied the "full force and effect" of the
CBA by Goldschmidt and its current
practices. As another example, Witco’s
failure to recognize Goldschmidt
employees’ transfer rights may also
constitute a denial by Goldschmidt of its
employees’ entitlement to maintenance of
the "full force and effect" of the CBA in
the event of sale, another issue that
Goldschmidt and its employees must
arbitrate.

  For both disputes in these examples, the
same reasoning applies equally to Witco
employees against Witco. But as to Witco,
the Union need not proceed in such an
indirect manner. Current Goldschmidt
employees were once Witco employees and
were covered by the CBA. Witco’s failure
to maintain the "full force and effect"
of the CBA in the sale to Goldschmidt is
an arbitrable violation for former Witco
employees, regardless of the fact that
they are currently employed by
Goldschmidt. The claims relate to
violations that occurred while they were
Witco employees. The mere fact that they
were discharged and hired by a new
employer (Goldschmidt) did not vitiate
their rights or their ability, or that of
the Union on their behalf, to enforce
them through arbitration under the CBA.
And, we see no reason that it should
have, under the arbitration clause.

  So what remains of Witco’s and
Goldschmidt’s argument? Practically
nothing. Goldschmidt is correct in theory
that if the Union wants to enforce the
CBA against it on behalf of current Witco
employees who were never associated with
Goldschmidt, then the Union must haul
Goldschmidt into court, not into
arbitration. We can find no contractual
relationship between Witco employees and
Goldschmidt upon which to base a duty to
arbitrate, a conclusion which would
necessarily foreclose any court action.
But practically speaking, any claim
current Witco employees want to assert
directly against Goldschmidt, they may
assert in arbitration indirectly against
Witco, through the "full force and
effect" provision of the CBA.

B.   NLRB Decision

  Witco and Goldschmidt also assert,
however, that this conclusion cannot be
reconciled with the NLRB’s decision that
clarified the labor bargaining units.
They argue that the NLRB decision makes
it impossible to maintain crossrights of
employees who are part of separate
bargaining units, and allowing
arbitration would implicitly overrule the
NLRB decision. This is a red herring, and
we reject it.

  The NLRB decision merely clarified the
bargaining units, and did not (nor does
it now) in any way touch the merits of
the Union’s contract claims. The NLRB
stated as much in its decision ("These
contract interpretation disputes are
beyond the scope of this UC proceeding .
. . ."), and so did the Associate General
Counsel, in the NLRB Division of Advice,
when Witco tried to advance an unfair
labor grievance ("[The Union is] merely
seeking to enforce contractual transfer
rights which arguably could survive the
split of the bargaining unit.").

  But more to the point, we have not held
that the Union may arbitrate any non-
employee cross-rights, only those rights
to which the employees are entitled from
their current employer or which existed
from their former employer.

III.   CONCLUSION

  For the foregoing reasons, the judgment
of the district court is Reversed and the
case is Remanded. Witco’s motion for
sanctions against the Union is Denied.

FOOTNOTES

/1 The Union is the successor of the Oil, Chemical
and Atomic Workers International Union, AFL-CIO,
Local 7-807, the Union actually party to the
original collective bargaining agreement.

/2 Although we only refer to one "CBA," we recognize
that the employers each have separate collective
bargaining agreements. The written terms of the
agreements are identical, however, and therefore
when addressing the terms, we only refer to one
CBA.

/3 To the extent Goldschmidt limited this duty in
its letter to the employees, it only did so as to
whom that duty is owed, i.e., its employees, and
not the scope of that duty.