Titan Tire Corp. of Freeport, Inc. v. United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union
734 F.3d 708
7th Cir.2013Background
- Titan bought a Freeport, Illinois tire facility in December 2005 and, from 2006 through October 2008, paid Local 745 President Vanderheyden and Benefit Representative Balsamo their full-time union salaries.
- The union also represents four classifications in the Freeport School District, and Titan argued theDual representation raised Section 302(a) concerns because the School District employees were not Titan workers and Titan did not control the union officers’ time.
- Titan ceased direct full-time salary payments in October 2008, instead paying union time for union business and leaving the President and Benefit Rep on the union payroll with fringe benefits—still funded by Titan indirectly.
- The arbitrator upheld the union’s grievance, concluding payments were made ‘by reason of’ the former Titan employment and within the collective bargaining agreement, thus legal under §302(c).
- The district court granted enforcement of the arbitrator’s award; Titan challenged, arguing §302(a) prohibits such payments and §302(c) does not cover this arrangement because the payments were not vested fringe benefits tied to former employment.
- The Seventh Circuit held the payments violate §302(a) because the salaries are paid for current union service, not by reason of past Titan employment; it reversed and remanded for further proceedings consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does paying full-time salaries to the union president and benefits rep violate LMRA §302(a)? | Titan | Local 745 | Yes; unlawful under §302(a) |
| Does §302(c)(1) exempt such payments as ‘by reason of’ former employment? | Titan | Local 745 | No; not ‘by reason of’ former Titan employment |
| Is Caterpillar, Inc. v. Int’l Union controlling on whether no-docking-like arrangements justify full-time union salaries? | Titan | Local 745 | Caterpillar does not control; payments are not exempt |
| Should the court consider public policy under W.R. Grace and related precedents to void the arbitrator’s award? | Titan | Local 745 | Public policy supports vacating the award; enforceability denied |
| Do no-docking-like provisions permit full-time union salaries for officers who are not current Titan employees? | Titan | Local 745 | No; case not a no-docking scenario; full-time salaries to former employees not allowed |
Key Cases Cited
- Caterpillar, Inc. v. Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., 107 F.3d 1052 (3d Cir.1997) (en banc held payments to union officials may be exempt under §302(c)(1))
- Toth v. USX Corp., 883 F.2d 1297 (7th Cir.1989) (limits of §302(c)(1); weighed ‘by reason of’ former employment and bargaining context)
- BF Goodrich Aerospace Aerostructures Grp. v. Int’l Union, UAW, 387 F.3d 1046 (9th Cir.2004) (rejects Caterpillar’s reasoning on no-docking; distinguishes full-time union salaries)
- BASF Wyandotte Corp. v. Local 227, Int’l Chem. Workers Union, 791 F.2d 1046 (2d Cir.1986) (limits on ‘by reason of’ payments; no implied broad exception)
- W.R. Grace & Co. v. Local Union 759, Int’l Union of United Rubber, 461 U.S. 757 (1983) (public policy exception to arbitration awards; legality central to review)
- Hall Street Assoc., LLC v. Mattel, Inc., 552 U.S. 576 (2008) (exclusive grounds for vacating or modifying arbitration awards under FAA)