DREIS & KRUMP MANUFACTURING COMPANY,
Plaintiff-Counterdefendant-Appellant- Cross-Appellee,
v.
INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE
WORKERS, DISTRICT NO. 8,
Defendant-Counterplaintiff-Appellee-
Cross-Appellant.
Nos. 85-3136, and 85-3155.
United States Court of Appeals,
Seventh Circuit.
Argued June 13, 1986.
Decided Sept. 22, 1986.
John A. McDonald, Keck Mahin & Cate, Chicago, Ill., for Dreis & Krump.
David Mathews, Carmel Charone Widmer & Mathews, Chicago, Ill., for Intern. Assoc. of Machinists.
Before CUMMINGS, Chief Judge, POSNER, Circuit Judge, and GORDON, Senior District Judge.*
POSNER, Circuit Judge.
Dreis & Krump, a manufacturer of industrial equipment, appeals from a judgment dismissing on summary judgment its suit (brought under section 301 of the Taft-Hartley Act, 29 U.S.C. Sec. 185) to set aside an arbitrator's award to the machinists union. The union cross-appeals from the court's refusal to award it attorney's fees under Fed.R.Civ.P. 11, and also requests attorney's fees for defending the appeal.
The company and the union were the parties to a collective bargaining agreement, dated October 1, 1981, which contained а provision for arbitration of disputes arising under the agreement. The company had financial problems and in 1982 laid off a welder named Larry Crawford. A few months later the company decided as a cost-saving measure that rather than recall Crawford it would subcontract the welding work that he had been doing. In March 1983 the union filed a grievance on Crawford's behalf. The grievance was referred to an arbitrator, who on April 30, 1984, found that the subcontracting of Crawford's work was a breach of the collective bargaining agreement. The arbitrator ordered the company to stop subcontracting welding as long as its welders were laid off, to recall Crawford, and to make him whole for the wages and benefits that he had lost as a result of the breach, "the amount thereof to be determined by the parties after a joint review of Company records." The order provided that "the Arbitrator will retain jurisdiction for 90 days to resolve any remaining or unforeseen issues as to relief." The company did not comply with the arbitrator's order. Instead, on June 11, 1984, it asked the arbitrator to reconsider the order; this request was denied on September 5. After the union refused to accept the company's tender of seven weeks' backpay to Crawford, the company filed this suit on February 8, 1985.
The timetable suggests something profoundly wrong about this litigation. Labor arbitration is supposed to be a speedy and efficacious remedy for disputes arising out of the administration of collective bargaining agreements. Yet almost three and a half years have passed since the union filed its grievance on behalf of Crawford, and the grievance is still unresolved. It should have been resolved more than two years ago, when the arbitrator issued his decision. The company had no ground for challenging the decision in court; also, it filed this suit after the statute of limitations had run.
The statute of limitations that applies to a suit brought in Illinois under section 301 of the Taft-Hartley Act to set aside an arbitrator's award is 90 days. Plumbers' Pension Fund, Local 130 v. Domas Mechanical Contractors, Inc.,
There is more wrong with the company's position on timeliness than arithmetic. A reservation of jurisdiction--which is implicit in any order that grants equitable relief (as this one did, in ordering Dreis & Krump to recall Crawford and stop subcontracting), but not in an order that merely refuses to reconsider a previous order--would not extend the time for appeal. See University Life Ins. Co. v. Unimarc Ltd.,
It is not even clear that the company's request for reconsideration suspended the statute of limitations. Continuing with the analogy to an appeal, we point out that Rule 4(a)(4) of the Federal Rules of Appellate Procedure delays the time for appealing if the appellant files a motion to reconsider (see Fed.R.Civ.P. 59(e)) within 10 days after judgment was rendered. There is no counterpart provision for arbitral proceedings. Although section 9 of the Uniform Arbitration Act, Ill.Rev.Stat. ch. 10, p 109, allows 20 days to file a request with the arbitrator to change an award, the grounds are limited to clerical and other formаl errors in the award. Compare p 109 with p 113(a)(1) and (3). And the idea that an arbitrator might have an inherent power to modify his award is made problematic by the ad hoc status of most arbitrators, compared to courts and administrative agencies. See Elkouri & Elkouri, How Arbitration Works 283-85 (4th ed. 1985). The arbitrator renders his award, then quits. What power can he retain to reconsider his award after quitting? If a judge resigns his office, he can't be asked to reconsider his rulings. A further point is that if the parties to arbitration can badger the arbitrator to reconsider his award for some indefinite time after he has made it, the speed and finality of arbitration are impaired.
Yet where as in the present case the arbitrator does not quit immediately but retains jurisdiction to make sure his award is complied with, maybe this empowers him to consider requests for reconsideration filed before he does quit. If so, a request filed within that period would be timely. By this reasoning the company's request in this case, which was filed 42 days after the award was rendered, was timely. But the premise that the arbitrator could by rеtaining jurisdiction act on requests for reconsideration is not secure, especially where as in the present case the arbitrator retained jurisdiction for the limited purpose of supervising relief--not of entertaining requests to reconsider his determination of liability. And even if he could act on such a request, it would not follow that the statute of limitations was tolled while the request was under advisement. Requests for reconsideration under Fed.R.Civ.P. 60(b) do not toll the period for appeal; why should a request for reconsideratiоn of an arbitrator's award toll the period for seeking judicial review of the award? But cf. Arch Mineral Corp. v. Director, Office of Workers' Compensation Programs,
The only thing that could save the timeliness of the suit would be if the arbitrator's reservation of jurisdiction had somehow deprived the award of its finality. Again by analogy to appeals, the party who has lost the arbitration should not be required, and perhaps not permitted either, to bring suit to set aside the award until the award is in some sense final, definitive; until it becomes such, the "loser" really hasn't been hurt and his quarrel with the arbitrator is undefined. There are two reasons, however, why this argument must be rejected in the setting of the present case. First, all that was in doubt was the precise amount of backpay, for which the company's records had to be consulted but which once they were consulted would be determined automatically, without an exercise of judgment or discretion. This was, therefore, a "ministerial" detail, such as would not have prevented the judgment from being deemed final for purposes of appeal, Love v. Pullman Co.,
The company argues that we should not apply the Domas decision (holding that 90 days is the statute of limitations in suits in Illinois under section 301 to set aside an arbitrator's award) retroactively. But as the decision was clearly foreshadowed by our decision in Chauffeurs, Teamsters, Warehousemen & Helpers, Local Union No. 135 v. Jefferson Trucking Co.,
A 90-day deadline is certainly reasonable. Since as we said a suit to set aside an arbitration award is analogous to an appeal, the appropriate statute of limitations is one closer to the time for taking an appeal (30 or 60 days in the federal system, see Fed.R.Apр.P. 4(a)) than to the time for filing an ordinary lawsuit. To file an ordinary suit one must investigate facts; to file a suit to set aside an arbitrator's award all one must do is read the arbitrator's opinion and decide whether there is a legal ground for challenging it. Moreover, all the company argues is that it thought it had six months to file such a suit, and since it took nine months, the argument has rather a hollow ring.
Ordinarily we would stop, having found one ground on which the company must lose this appeal. But since we must decide the cross-appeal, which seeks attorney's fees for the bringing of a frivolous suit, we shall go on and consider the two other grounds on which the company must lose. The first is that by consenting to submit the grievance to arbitration without any reservations, the company waived the argument that is the premise of its suit--that the arbitrator acted outside of his jurisdiction. The company's argument on the merits is that the management-rights clause in the collective bargaining agreement is so broad that it makes a decision to subcontract work nonarbitrable. But if this is so the company should either have refused to arbitrate the dispute, thus forcing the union to bring a suit to compel arbitration--a suit in which the district court would decide the issue of arbitrability--or have submitted to arbitration under protest. By failing to do either of these things it admitted that the subject of subcontracting was within the scope of the clause. See Jones Dairy Farm v. Local No. P-1236, United Food & Commercial Workers Int'l Union,
In any event the management-rights clause does not so clearly withdraw the subject of subcontracting from the scope of the arbitration clause as to deprive the arbitrator of jurisdiction. See Edward Hines Lumber Co. v. Lumber & Sawmill Workers Local No. 2588,
Section 2.2 Management Rights
(A) The Company retains the exclusive right to manage its business and plant, to direct its working force and to exercise all the functions and prerogatives of management in the operation of its business, in such manner as it deems advisable without being restricted or limited in any respect, subject only to the conditions expressly contained in this agreement.
(B) The management of the Company and the direction of its working force, reserved exclusively to the Company, includes, but is not limited to, the right to suspend or discharge for proper cause and to transfer employees, to lay off employees because of lack of work or for any other legitimate reasons, to determine the days (including Saturdays and Sundays) аnd hours of work and the extent to which the plant shall be operated and to adopt such rules and regulations and to institute such methods as the Company from time to time may deem necessary for the conduct of its business; including timestudies, standards control and modern management methods, except that no piece work, bonuses or premium system shall be introduced unless the terms thereof shall be agreed upon by the Company and the Union.
Read literally and by itself this language is certainly broad enough to make subcontracting a рrerogative of management, yet really it does no more than spell out the implications of the contractual provision held insufficient in United Steelworkers of America v. Warrior & Gulf Navigation Co.,
The company thus concedes that promiscuous subcontracting would violate the implied terms of the agreement notwithstanding the broad provision on management prerogatives, and this concession sinks its argument that the provision deprived the arbitrator of jurisdiction to consider whether the company's subcontracting of work when it had workers on layoff who do the identical work (namely, welding) violated the collective bargaining agreement. All the company is left with is a disagreement with the arbitrator over the precise meaning of the agreement in the circumstances of the present case, where the layoffs were made at a time when the company was experiencing financial difficulties and the union had not objected to earlier instances of subcontracting, though none had caused or perpetuated layoffs. But an arbitrator's award cannot be set aside just because the arbitrator may have interpreted the collective bargaining agreement incorrectly. "The judiciary has no power to reach and determine the merits of arbitration awards merely because of disagreement, even strong disagreement, with the arbitrator's interpretation of the contract. As here, so long as the arbitrator interpreted the contract in making his award, his awаrd must be affirmed even if he clearly misinterpreted the contract." E.I. DuPont de Nemours & Co. v. Grasselli Employees Independent Ass'n of East Chicago, Inc.,
The arbitrator's 35-page opinion makes clear that the task he set himself was to interpret the collective bargaining agreement. Referring to the company's argument that the management-rights provision "negates any implied prohibition on subcontracting" (a position abandoned in this court, as we noted), the arbitrator said (footnotes omitted):
This position of the Company is untenable. It has been rejected by most arbitrators who hold that as a general rule an employer does not have an unqualified right to subcontract bargaining unit work to outsiders. This position is based on the theory that a collective bargaining relationship impliedly imposes an obligation on management to not enter upon a unilateral course of conduct, the effect of which would render the contractually protected scope of the bargaining unit null and void.... The cases are legion in which arbitrators have implied limits on subcontracting from the recognition, seniority, wage and other contract clauses similar to those found here. The essence of these cases is that the employer must act reasonably and in good faith in exercising its right to subcontract. Whether it has acted in such manner must be measured in the context of the facts and circumstances of each case. In applying the subjective standard of reasonableness, arbitrators have been guided by various objective measures such as:
1. Past subcontracting practices; who normally performed the work;
2. Whether there wеre sound business reasons for subcontracting ...;
3. The effect on the bargaining unit; whether there is anti-union animus or deliberate undermining of the Union;
4. The effect on members of the bargaining unit in terms of job opportunities, layoffs or overtime;
5. Whether the work is subcontracted regularly or intermittently or for long, short or indefinite periods of time;
6. The history, if any, of negotiations regarding subcontracting.
Having set forth the test, the arbitrator proceeded to apply it to the company's conduct in this case.
The test is a test for determining the meaning of thе collective bargaining agreement. The fact that it looks to practices and consequences does not deprive it of genuineness as a test of contractual meaning, for practices and consequences are frequently consulted in determining the meaning of a contract; a recent example is Northern Indiana Public Service Co. v. Carbon County Coal Co.,
The present case is thus covered by the following observation in our Ethyl opinion (rendered before the appeal in this case) (
we want to make clear that we take seriously the twin propositions that (1) the reviewing court's function (whether the district court's, or this court's) is at an end when it concludes that what the arbitrator did was interpretation of the contract, and (2) when in doubt the court must find that it was interpretation. We do not want to be plagued by cases in which companies or unions refuse to comply with arbitration awards merely because they think the arbitrator clearly misinterpreted the collective bargaining agreement. If parties to collective bargaining contracts are unhappy with arbitration awards they can bargain for a different method of selecting arbitrators, or for panels of arbitrators, trial or appellate.
We have gone on at such length not because the question of the validity of the arbitrator's award is difficult but to make clear that the company's attack on the award was frivolous, thus entitling the union to attorney's fees both in the district court and in this court. The company should have realized that its suit was barred by the statute of limitations, barred by its having submitted to arbitration without any reservations, and barred by the arbitrator's opinion which made clear that he was interpreting the collective bargaining agreement--whether correctly or not could make no difference in court. In Miller Brewing Co. v. Brewery Workers Local Union No. 9,
Obviously the people who run Dreis & Krump feel strongly that the subcontracting of Crawford's work did not violate the collectivе bargaining contract. It is human nature to crave vindication of a passionately held position even if the position lacks an objectively reasonable basis in the law. But the amended Rule 11 makes clear that he who seeks vindication in such circumstances and fails to get it must pay his opponent's reasonable attorney's fees. A company dissatisfied with the decisions of labor arbitrators need not include an arbitration clause in its collective bargaining contracts, but having agreed to include such a clаuse it will not be permitted to nullify the advantages to the union by spinning out the arbitral process unconscionably through the filing of meritless suits and appeals. For such conduct the law authorizes sanctions that this court will not hesitate to impose. In re TCI Ltd.,
Mounting federal caseloads and growing public dissatisfaction with the costs and delays of litigation have made it imperative that the federal courts impose sanctions on persons and firms that abuse their right of access to these courts. The rules, whether statutory or judge-made, designеd to discourage groundless litigation are being and will continue to be enforced in this circuit to the hilt--as a recital of opinions published by this court since the first of the year imposing sanctions for groundless litigation should make clear. See Bacon v. American Federation of State, County & Municipal Employees Council, # 13,
The judgment dismissing the company's suit is affirmed, but the dismissal of the union's motion for attorney's fees is reversed and the case is remanded for an award of the attorney's fees reasonably incurred by the union both in the district court and in this court.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Notes
Hon. Myron L. Gordon, Senior District Judge of the Eastern District of Wisconsin, sitting by designation