Court Opinion

ID: 2657937
Source: CourtListenerOpinion
Date Created: 2014-03-26 15:27:33.799343+00
Date Added: 2024-06-11T12:36:43.060352
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 13-1565
                        ___________________________

   Garage Maintenance, Machine Warehousemen, Repairmen, Inside Men and
  Helpers and Plastic Employees, Local No. 974, affiliated with the International
                           Brotherhood of Teamsters

                        lllllllllllllllllllll Plaintiff - Appellant

                                            v.

 Greater Metropolitan Automobile Dealers Association of Minnesota, Inc., doing
   business as Minneapolis Automobile Dealers Association (MADA); Golden
 Valley Motors, Inc; Luther Automotive Group, Inc.; Motors Management, Inc.;
The Luther Company Limited Partnership, doing business as Rudy Luther Toyota/Scion

                      lllllllllllllllllllll Defendants - Appellees
                                       ____________

                    Appeal from United States District Court
                   for the District of Minnesota - Minneapolis
                                  ____________

                          Submitted: December 17, 2013
                             Filed: March 26, 2014
                                 ____________

Before WOLLMAN, LOKEN, and KELLY, Circuit Judges.
                         ____________

KELLY, Circuit Judge.

      Local No. 974 (“Union”) seeks to set aside an arbitration award that ruled in
favor of the Minneapolis Automobile Dealers Association (“MADA”) and several
member car dealerships. Finding no grounds to vacate the award, the district court1
granted the defendants’ motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). With
jurisdiction under 28 U.S.C. § 1291, we affirm.

                                  I. Background

       The Union and MADA have negotiated a series of collective bargaining
agreements (“CBAs”) memorializing the terms of their relationship. Each one
typically ends immediately before the next begins. At issue here is the transition
between the 2006 CBA and the 2010 CBA and its impact on above-scale time
allowances. Since the introduction of the Toyota Prius in 2001, Union technicians
working on hybrid cars at Rudy Luther Toyota (“Luther Toyota”) have received
incentive pay, as such work was especially difficult and dangerous. One hour spent
working on hybrid cars was factored into their week’s productivity as one and a half
to two hours, depending on the particular task. This differential is known as an
above-scale time allowance, an accounting method that individual MADA member
dealerships have used to compensate Union technicians for various types of work
since the 1970s. Luther Toyota was the only MADA member to provide such time
allowances for hybrid car warranty and recall work, and it introduced the allowances
unilaterally—without negotiation with the Union.

       In negotiating the 2006 CBA—which would be effective from April 16, 2006,
through April 15, 2009—MADA wanted to eliminate all above-scale time
allowances. The Union rejected the proposal but accepted a compromise: MADA
member dealers could reduce higher time allowances for new employees hired on or
after April 16, 2006. The 2006 CBA was initially extended by mutual agreement
through April 15, 2010, and then—so as not to chance a strike on a Friday, which

      1
       The Honorable Michael J. Davis, Chief Judge, United States District Court for
the District of Minnesota.

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would disappoint customers—through April 17, 2010. Union and MADA
representatives met on April 13, 2010, to conclude negotiation of the 2010 CBA and
produced a “Tentative Contract Agreement.” Copies of the Agreement were
distributed to Union members on April 15; the members’ ballots were counted on
April 16, and the Agreement was overwhelmingly approved.

      On April 15, Luther Toyota delivered to Union representatives a letter stating:
“Please be advised that as of April 15, 2010 Rudy Luther Toyota will no longer pay
any above scale wage rate or time allowance on Hybrid vehicles.” On April 29, the
Union filed a grievance against MADA, challenging Luther Toyota’s letter as an
unlawful breach of contract or failure to bargain under § 8(a)(5) of the National Labor
Relations Act. After the grievance went to arbitration and the arbitrator ruled in favor
of MADA, the Union sought to set aside the arbitration award in federal court. The
Union here appeals the district court’s grant of MADA’s motion to dismiss.

                                    II. Discussion

       We review de novo the district court’s grant of a motion to dismiss an action
under Fed. R. Civ. P. 12(b)(6) and the court’s legal determination as to whether CBA
language is ambiguous. Local 38N Graphic Commc’ns Conference/IBT v. St. Louis
Post-Dispatch, LLC, 638 F.3d 824, 825 (8th Cir. 2011); John Morrell & Co. v. Local
Union 304A of United Food & Commercial Workers, 913 F.2d 544, 550 (8th Cir.
1990). Our review of the arbitration award itself, however, is far more deferential:
“[a]s long as the arbitrator’s award draws its essence from the collective bargaining
agreement, and is not merely his own brand of industrial justice, the award is
legitimate.” United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 35 (1987)
(quotation omitted). If “the arbitrator is even arguably construing or applying the
contract and acting within the scope of his authority, that a court is convinced he
committed serious error does not suffice to overturn his decision.” Id. at 38.

                                          -3-
       The arbitrator framed the issue presented as: “Did the Employer violate the law
[National Labor Relations Act § 8(a)(5)] or the [Collective Bargaining] Agreement
when it terminated above-scale wage rates and time allowances on hybrid vehicles?”2
To answer the question, both parties pointed to two specific provisions in the 2006
and 2010 CBAs: (1) “Incentive Option,” providing protections for the type of
incentive pay at issue here, and (2) “Maintenance of Standards,” requiring certain
conditions to be maintained based on those in effect on a specific date.3 After
specifying the incentive pay at various hours of production and for each year in the
CBA term, the same language on incentive pay is present in both the 2006 and the
2010 CBAs, updating only the relevant dates: “If, however, on April 15, 2010 an
Employer was paying a higher time allowance to technicians for any operation than
the factory flat rate manual allows, that allowance will not be reduced. The Employer
shall not be precluded from reducing any such higher time allowance with respect to
those employees that were hired on or after April 16, 2006.” 2010 CBA, Article VIII,
Section 8.3; 2006 CBA, Article VIII, Section 3. Similarly, both CBAs provide for

      2
        The Union argues that the arbitrator misconstrued the dispute by focusing on
the method used by MADA dealers to discontinue the above-scale time allowances
rather than their right to do so. See Appellants’ Br. at 18–20. The issue as phrased
by the arbitrator allowed him to reach both issues, however, and the questions of right
and of method inherently merge together. If a timely letter sent by a MADA member
to the Union was an agreed-upon method to end time allowances, then the MADA
member had the right to end the time allowances unilaterally.
      3
        Although the Union argued before the district court that additional CBA
provisions supported its position, the Union did not cite these provisions at
arbitration. The issues raised by other CBA provisions were not before the arbitrator
simply because the entire CBA was part of the arbitration record. Boehringer
Ingelheim Vetmedica, Inc. v. United Food & Commercial Workers, 739 F.3d 1136,
1140 (8th Cir. 2014). Moreover, given our limited review in this context and absent
exceptional circumstances, our determination in the ordinary case as to whether the
arbitration award draws its essence from the CBA is confined to the CBA provisions
raised before and interpreted by the arbitrator. Id.

                                         -4-
“[m]aintenance of [s]tandards”: “The Employer agrees that all conditions of
employment in his/her individual operation relating to wage guarantee, hours of
work, overtime differentials and general working conditions shall be maintained at
not less than the highest minimum standards in effect at the time of the signing of this
Agreement.” 2010 CBA, Article XXVII (altered from 2006 CBA only to be gender-
neutral); 2006 CBA, Article XXVII.

        The Union argues that the language above unambiguously evinces a mutual
intent to keep constant certain terms of employment, including above-scale time
allowances, during a given CBA term. Since the 2006 CBA was extended through
April 15, 2010, and then through April 17, 2010, Luther Toyota’s April 15 letter
stating that such time allowances would no longer be available effective as of that day
was not a lawful way to terminate them. Instead, according to the Union, such
changes presumably should have been done through the usual CBA negotiation
process. MADA also takes the position that these CBA provisions are unambiguous
but arrives at a different conclusion. Since new hires were specifically not entitled
to such allowances, the Maintenance of Standards requirement is not absolute and
does not require these allowances to continue from one CBA term to the next. Even
if it did, MADA contends, it would apply only to those allowances in effect on the
date that the 2010 CBA was signed, which was April 16, 2010—and Luther Toyota
discontinued above-scale time allowances on April 15.

      The arbitrator found it unambiguous that the parties intended for employees
receiving above-scale time allowances in effect on April 15 to continue receiving the
same allowances during the 2010 CBA term. He also found, however, that
“contractual language in a bargaining agreement which might appear clear on its face
can become unclear when an effort is made to apply it in a real life situation.”
Arbitration Award at 8. He credited MADA’s argument that the Maintenance of
Standards provision protected conditions in effect “at the time of signing of the

                                          -5-
agreement,” which took place on April 16, 2010; any conditions lawfully eliminated
on April 15 were not protected going into the new CBA term. Id. at 21. Since the
CBA language did not address the termination method, “the contract’s silence creates
a latent ambiguity.” Id. at 20. The arbitrator therefore had to look to the “parties’
bargaining history and day-to-day practices with respect to the [time allowances]” to
ascertain their intent. Id. at 21.

       Like the district court, we find that the arbitrator was “warranted” in
determining the CBA’s plain language to be “silent or ambiguous with respect to the
disputed issue—how the above-scale time allowances could be legitimately
terminated.” Garage Maint., Local No. 974 v. Greater Metro. Auto. Dealers Ass’n
of Minnesota, Inc., No. 11-02333, 2013 WL 500369, at *6 (D. Minn. Feb. 11, 2013).
Both the Incentive Option and the Maintenance of Standards provisions show the
parties’ intent to keep incentive pay arrangements constant during a given CBA term.
However, neither provision addresses how incentive pay may be changed: whether
a change must be mutually agreed upon for it to be valid and whether such a change
must be memorialized in a new CBA. The parties pointed to no specific CBA
provision that definitively indicates the Union’s and MADA’s intent regarding the
question before the arbitrator.

       Although the arbitrator found several facts from extrinsic evidence, we find
most relevant the testimony of MADA attorney Stephen Burton, whom the arbitrator
deemed to be credible. Burton described the negotiation practices of MADA and the
Union in 2006 and in 2010. See Arbitration Tr. at 158–65, 173–77. Burton stated
that in 2006, Union Secretary Thomas Tweet proposed a mechanism for terminating
above-scale time allowances that, unbeknownst to Burton, some dealerships were
already using: sending a letter to the Union “prior to contract expiration putting the
union on notice that it was the dealer’s intention to eliminate those above-scale time
allowances, and that going forward they would no longer exist.” Id. at 162:15–25.

                                         -6-
On cross-examination, Tweet did not deny that he had approved such a method. Id.
at 67:23–68:12. Burton thought this procedure would be “an acceptable method of
handling the issue on a store-by-store basis which would not require it to be brought
up in negotiations forevermore.” Id. at 163:17–19. Burton further testified that other
than the instant dispute, the Union had never objected to the use of that procedure at
the end of a contract term. Id. at 173:24–174:2. Finally, Burton described a
conversation with Tweet about the exact question at issue: what would happen if a
MADA member wanted to end above-scale time allowances going into the 2010 CBA
term, given the repeated extensions of the 2006 CBA. Burton testified that when he
asked Tweet whether it would be permissible for dealerships to “terminate those
practices as of April 15[, 2010], even though the [2006] agreement was extended to
the 17th,” Tweet “had no problem with that whatsoever.” Id. at 177:22–25.

        In addition, the arbitrator cited examples, documented by letters presented at
the arbitration hearing, of other MADA members who had attempted to cease paying
above-scale time allowances. Arbitration Award at 7. Key Cadillac, for instance,
tried to do so by sending a letter to the Union dated March 12, 2009, prior to the end
of the 2006-2009 CBA term. Citing (among others) the CBA’s Maintenance of
Standards provision, Tweet wrote to Key Cadillac that because the 2006 CBA had
already been extended through April 15, 2010, Key’s letter “was not timely” and the
dealership therefore could not “implement a reduction of conditions.” In his letter,
Tweet did not contest Key’s ability to change incentive pay unilaterally or the
dealership’s method of communicating such a change. Key Cadillac later notified the
Union of its intent to “eliminate any above scale wage guarantees and incentive rates
[including] any time allowances that are in excess of the applicable manufacturer’s
flat rate manual” effective April 14, 2010, based on a letter to the Union dated April
5, 2010. The arbitrator found that “while Key Cadillac’s 2009 attempt to eliminate
allowances was met with opposition by the Union, Key’s subsequent 2010
elimination took place without complaint and in the manner described by Mr.

                                         -7-
Burton.” Arbitration Award at 23. Since “it is the arbitrator’s view of the facts . . .
that [the parties] have agreed to accept,” we may not consider challenges to those
facts in this context as we do when “reviewing decisions of lower courts.” Misco,
484 U.S. at 37–38.

        With Burton’s unrebutted testimony and the letters documenting other
dealerships’ similar conduct to help interpret the parties’ past practice with respect
to the ambiguous CBA language at issue, we conclude that the arbitration award drew
its essence from the CBA. We therefore find no basis to vacate the arbitration award.

                                   III. Conclusion

      We affirm the district court’s order granting MADA’s motion to dismiss the
matter with prejudice.
                       ______________________________

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