O-N Minerals Co. v. International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers, Cement, Lime, Gypsum, & Allied Workers, 563 F. App'x 380

Background

O-N Minerals (Company) and the Cement, Lime, Gypsum & Allied Workers Division (Union) are parties to a CBA that sets hourly wage scales (Article VII), pension contribution rates to the Boilermaker-Blacksmiths National Pension Trust (Appendix A), and a multi-step grievance procedure culminating in binding arbitration (Article XII).
Appendix A fixed employer pension contributions per hour for each contract year; the Pension Trust later demanded substantially higher mandatory minimum contributions and expelled the Company when it refused.
The Company stopped contributions and placed withheld amounts into an escrow-like account; the Union demanded those amounts be paid instead as additional hourly wages and initiated the CBA grievance procedure, then sought arbitration.
The CBA’s arbitration clause allows an arbitrator to "interpret and apply" the agreement "insofar as shall be necessary to the determination of such grievance," but expressly prohibits an arbitrator from "alter[ing] in any way the provisions of the agreement."
The Company sued for a declaratory judgment that the Union may not compel arbitration; the district court granted summary judgment for the Company, concluding the Union’s requested remedy (converting pension contributions into wages) would alter the CBA and thus fall outside arbitrator authority.
The Sixth Circuit affirmed, holding that the arbitrator could not be given power to convert pension contribution scales into wage scales and that the restriction on altering the CBA foreclosed arbitration here.

Issues

Issue	Plaintiff's Argument (Union)	Defendant's Argument (Company)	Held
Whether the dispute over failure to make pension contributions is arbitrable under the CBA	The grievance challenges the Company’s compliance with Appendix A and thus is a grievance subject to arbitration; arbitrator can fashion remedies (including converting contributions to wages) or other solutions	The requested remedy would alter two separate express contract scales (wage and pension), which the arbitration clause forbids; therefore arbitration may be enjoined	Court held dispute not arbitrable because granting Union’s requested remedy would require altering the CBA, beyond arbitrator authority
Proper judicial standard for pre-arbitration injunction against arbitration	Arbitration presumption favors arbitrability; arbitrator should decide remedies first	Where arbitration clause expressly prohibits altering the agreement, a court may enjoin arbitration if it can say with positive assurance arbitrator lacks power to award the requested remedy	Court applied presumption favoring arbitration but found it could say with positive assurance the clause barred the remedy, so injunctive relief was proper
Whether converting pension contributions to wages is an interpretation or an alteration of the CBA	Such conversion is a permissible interpretation/application to preserve negotiated economic package for employees	Conversion would combine two distinct contract scales into a new scale, changing contract terms and producing tax/benefit consequences not contemplated by the CBA	Court held conversion would alter the contract (not merely interpret it) and so arbitrator lacks jurisdiction to award it
Whether the arbitrator’s remedial discretion could produce an award that does not alter the CBA	Union: arbitrator has broad authority to craft remedies and could adopt alternatives that respect the CBA	Company: the only remedy sought is conversion to wages, which necessarily alters express terms	Court held that because the Union’s sought remedy necessarily alters the CBA, arbitration may be enjoined at the threshold

Key Cases Cited

United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960) (courts decide whether parties agreed to arbitrate grievances and whether arbitrator had authority to render award)
AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643 (1986) (judicial inquiry confined to whether parties agreed to arbitrate and whether arbitrator had power to make the award)
W.R. Grace & Co. v. Local Union 759, 461 U.S. 757 (1983) (scope of arbitrator’s authority is a matter of contract interpretation delegated to arbitrator)
United Steelworkers of Am. v. Mead Corp., 21 F.3d 128 (6th Cir. 1994) (broad arbitration clauses construed to cover grievances unless clearly excluded)
Morgan Services, Inc. v. Local 323, 724 F.2d 1217 (6th Cir. 1984) (arbitrators may not disregard or modify plain and unambiguous contract provisions)
Teamsters Local Union No. 89 v. Kroger Co., 617 F.3d 899 (6th Cir. 2010) (strong presumption in favor of arbitrability under broad arbitration clauses)