REFINERY EMPLOYEES UNION OF LAKE CHARLES AREA, Appellant, v. CONTINENTAL OIL COMPANY, Appellee.
No. 17344.
United States Court of Appeals Fifth Circuit.
June 25, 1959.
268 F.2d 447
The two motions were considered together, and, accompanied by a lengthy written opinion, orders were entered below granting the motions and dismissing the two complaints.
The lower court examined appellant‘s allegations and tested their validity by applying to them well-established principles governing one‘s right to recover in the three fields of tort law that the complaints indicated might be applicable: conspiring to injure by agreeing to perform and by performing unlawful acts in concert, malicious prosecution, and improper abuse of legal process. It also found them insufficient to support a claim of prima facie tort.
Essential material facts were held to be lacking in each of the four fields. We find no error in the result reached below, and the judgments are affirmed.
John R. Brown, Circuit Judge, dissented.
George W. Liskow, Lake Charles, La., Liskow & Bond, Lake Charles, of counsel, for appellant.
William R. Tete, Lake Charles, La., Keith W. Blinn, Houston, Tex., Jones, Kimball, Harper, Tete & Wetherill, Lake Charles, La., of counsel, for appellee.
Before HUTCHESON, Chief Judge, and BROWN and WISDOM, Circuit Judges.
WISDOM, Circuit Judge.
This appeal concerns the interpretation of an arbitration clause in a collective bargaining agreement. Two ques-
The Refinery Employees Union of the Lake Charles Area, plaintiff-appellant, and the Continental Oil Company, defendant-appellee, are parties to a collective bargaining agreement. The Union sued for specific performance of the arbitration provision, under Section 301 of the
I.
The agreement regulates, among other matters, observance of craft lines separating the duties of employees in a particular job classification from the duties of employees in another job classification.2 One of the purposes of job classification is to provide a basis for the equa-
During a night shift at the Lake Charles refinery, March 3, 1957, a dispute arose between the Company‘s shift foreman and the Union‘s representative over the foreman‘s assignment of an employee to work four hours overtime in a job that did not fit into his permanent classification, to the detriment of another employee who was allegedly entitled to that particular overtime assignment because of his job classification. March 13, after discussions in which the Company agreed that the foreman had made a mistake, the Union representative filed a formal grievance, requesting four hours pay for the aggrieved employee, “since his four hours were taken away from him and given to another classification“.
March 18 the Company replied, “regretting the error” and promising to make every effort to see that this type of mistake would not be repeated but refusing to pay anything to the aggrieved employee, because “it is the policy of the Company to pay only for work performed.”
A number of letters were then exchanged between the Company and the Union. The Company changed its position from admitting having made a mistake to arguing that the terms of the agreement referring to permanent or temporary assignment are vague, that the shift foreman was confronted with an emergency, that anyway he tried to call an employee in the proper classification who was off duty, thereby showing good faith, and that the employee who did perform the work received premium pay. But the Company insisted on maintaining its policy of no work—no pay. The Union charged that the Company was guilty of “a deliberate violation of the terms of our signed agreement” and that the improper work assignment was one of a long series of such violations; “management [says] ‘we are sorry‘, and the infractions continue“. There were more letters. The Company offered to make concessions in order to end the dispute. It was willing to give the aggrieved employee “four hours overtime work as Cat Reformer Controlman 1st * * * to be ‘made work‘, not vacation or sick relief * * * [so that his] assignment will not reduce any overtime conceivably worked by another employee“. Still the Company would not budge from its policy of paying only for work performed.
The proposed solution was unsatisfactory. The Union invoked arbitration. The Company agreed to arbitration, “provided, however, that the arbitrator‘s decision shall be limited to a determination of whether such violation occurred and if the arbitrator shall determine that such violation occurred, the remedy shall be the subject of negotiation between the company and the union“. The Union rejected the Company‘s proposed limitation on the arbitration. The Union called it “an attempt in very bad faith by the company to avoid coming to grips with the real problem“. The real problem, said the Union, was “difference of opinion as to the award rather than a difference of opinion as to the error committed“. The Union stated that:
“It is our position that the question of whether or not the arbitrator has the right to make an award is a matter of interpretation of the contract to be made by the arbitrator. * * * [T]he interpretation of the contract [is] a matter to be left to the arbitrator.”
As a last “effort to find an amicable basis for settlement * * * [the Company] offered to permit [the aggrieved employee] to work four hours any time selected by him at the applicable rate of pay“. The Company “refuse[d] to arbitrate on the question of pay for work not performed, since it related neither to the interpretation nor performance of the contract“. The Union then filed a suit for specific performance of the arbitration clause.
The Union contends that determination of the remedy, including payment of damages, is implicit in arbitrating grievances; that this is a matter for arbitrators, not courts, the power to arbitrate an underlying problem carrying with it the power to dispose of the whole problem. The Union asserts that the district court went into the merits of the grievance, foreclosed any independent decision by an arbitrator, and put the Union in a position of having a right without a remedy.
The district court held that “the determination of whether the disputed issues is arbitrable is inescapably for the court“. [160 F.Supp. 733.] It could “find nothing in the terms of the carefully drawn agreement to warrant a conclusion that the parties to it agreed therein to submit to arbitration the question of a penalty or of an award“. The district court held that although the Union was entitled to an order requiring the Company to proceed with arbitration of the issue of work assignment, “the arbitrator‘s authority will be limited to a determination of that issue alone and shall not extend to the formulation of any penalty or the fixing of damages“. We affirm.
II.
The Union now concedes, contrary to its position in the district court, that arbitrability of a grievance, meaning the underlying problem, is a preliminary question within the province of the court. The Union contends however that the court may go that far and no farther; that in this case the court could not restrict the arbitration to a decision as to whether there was a violation of the contract and could not prohibit the arbitrators from awarding damages; an arbitrator‘s authority is for arbitrators to decide.
This amounts to saying that a court may order parties to arbitrate, but cannot tell the arbitrator what to arbitrate.
We cannot accept such a proposition. Private arbitration fits in well with responsible industrial self-government and is favored by the courts.3 But whether an issue is an arbitrable one is a legal question for the court rather than for the arbitrator. Lodge No. 12, Dist. No. 37, International Association of Machinists v. Cameron Iron Works, 5 Cir., 1958, 257 F.2d 467, certiorari denied 358 U.S. 880, 79 S.Ct. 120, 3 L.Ed.2d 110; Engineers Association v. Sperry Gyroscope Co., 2 Cir., 1953, 251 F.2d 133; International Union, United Automobile Aircraft v. Benton Harbor Malleable Industries, 6 Cir., 1957, 242 F.2d 536; Local No. 149, American Federation of Technical Engineers (A. F. L.) v. General Electric Company, 1 Cir., 1957, 250 F.2d 922, certiorari denied, 1958, 356 U.S. 938, 78 S.Ct. 780, 2 L.Ed.2d 813; United Steelworkers of America v. American Manufacturing Co., 6 Cir., 264 F.2d 624. The power to determine arbitrability carries with it the power to define and limit the arbitrable issue. See Council of Western Electric Technical Employees v. Western Electric Company, 2 Cir., 1956, 238 F.2d 892, and Boston Mutual Life Insurance Co. v. Insurance Agents International Union, 1 Cir., 1958, 258 F.2d 516. Even giving the “broadest liberalities” to private arbitration, parties to a contract cannot be forced to arbitrate an issue they did not agree to arbitrate. “[W]hen one of the parties needs the aid of a court, and asks the court for a decree ordering specific performance of a contract to arbitrate, we think that the court, before rendering such a decree, has the inescapable obligation to determine as a preliminary matter that the defendant has contracted to refer such issue to arbitration, and has broken this promise.” Local No. 149, American Federation of Technical Engineers (A. F. L.) v. General Electric Co., 1 Cir., 1957, 250 F.2d 922, 927, certiorari denied 1958, 356 U.S. 938, 78 S.Ct. 780, 2 L.Ed.2d 813.4
The process of deciding just what the parties did agree to arbitrate brings the court to a definition of the arbitrable issue. That definition marks the jurisdictional boundaries of the arbitration tribunal and necessarily limits the authority of the arbitrators.
The plaintiff‘s pleadings support these views. The plaintiff moved for a summary judgment on the ground that it was “entitled as a matter of law to a judgment ordering the defendant to proceed with arbitration of the grievance without limitation on the arbitrator to provide and order a remedy for breach of contract as set forth in said grievance“. This motion directly raised the preliminary question of the arbitrator‘s authority. The district court was confronted squarely with the question: does the arbitrable issue include, “without limitation“, matters relating to the remedy for breach of contract as set forth in the grievance? Faced with the question by the plaintiff‘s motion, it was proper for the trial court to decide it.
To the extent that a court excludes as non-arbitrable the real bone of contention, here the remedy, not the underlying dispute, of course the court forecloses the arbitrator‘s determination of the merits of the non-arbitrable issue. But that is an inevitable consequence of the difference of opinion between the Court and the Union as to what is arbitrable under the contract. Boston Mutual Life Ins. Co. v. Insurance Agents Int. Union, 1 Cir., 1958, 258 F.2d 516. There is no disservice to the principle of arbitration and no denial of the expertise of arbitrators on the merits of the grievance, if, as we think, the arbitrable grievance is limited to the question of whether the overtime work was assigned in accordance with proper job classification.
A contract is before us, a firm agreement presumably made after the usual labor-management negotiations. It is important to labor5 and management to have a collective bargaining agreement enforced according to the intention of the parties, shielded against the risk of an arbitrator‘s abuse of authority arising out of a possible predilection for arbitration. The parties are free to bargain as to the width of the coverage of an arbitration clause but, in the absence of an express provision allowing the arbitrators to decide arbitrability, courts
III.
The difficult question in this case is whether the district court correctly limited the arbitrable issue in holding that the parties to the collective bargaining contract did not intend to submit to arbitration the remedy for misassignment of overtime work, including authority to award wages for work not performed.
This Court is committed to the policy that “private arbitration in the labor-management field is to be afforded broad liberalities“. Lodge No. 12, Dist. No. 37, International Association of Machinists v. Cameron Iron Works, 5 Cir., 1958, 257 F.2d 467, 474, certiorari denied 358 U.S. 880, 79 S.Ct. 120, 3 L.Ed.2d 110. But this policy does not permit the Court to find agreement where there is no agreement.
The arbitration clause in the case at bar6 is not a broad grant of authority to the arbitrators, a quid pro quo for giving up the right to strike. The Union
The underlying problem as to whether the overtime work was assigned to an employee in the proper classification is plainly a difference expressly covered by the arbitration clause. The real dispute as to whether the Company should pay for time not worked, as a penalty imposed on the Company to discourage future violations, is plainly not covered in the contract—unless, giving a broad interpretation to the arbitration clause, the Court should hold that the authority of an arbitrator to make awards and fix damages is implied in the arbitration of every grievance.
In Marchant v. Mead-Morrison Mfg. Co., 1929, 252 N.Y. 284, 169 N.E. 386, 390, 391, a case decided when he was on the Court of Appeals of New York, Mr. Justice Cardozo stated some fundamental principles we think are applicable in the instant case, even though a commercial arbitration was involved:
“The question is one of intention, to be ascertained by the same tests that are applied to contracts generally. Courts are not at liberty to shirk the process of construction under the empire of a belief that arbitration is beneficent, any more than they may shirk it if their belief happens to be the contrary. No one is under a duty to resort to these conventional tribunals, however helpful their processes, except to the extent that he has signified his willingness. Our own favor or disfavor of the cause of arbitration is not to count as a factor in the appraisal of the thought of others. * * * Parties to a contract may agree, if they will, that any and all controversies growing out of it in any way shall be submitted to arbitration. If they do, the courts of New York will give effect to their intention. A submission so phrased, or in form substantially equivalent, does not limit the authority of the arbitrators to an adjudication of the breach. It is authority to assess the damages against the party in default.”
The arbitration clause in question was similar to the arbitration clause before us:
“It does not say that any and all controversies growing out of the contract shall be settled by arbitration, though the plaintiff would have us hold that its effect is nothing less. The submission is to be confined to controversies or differences of opinion as to ‘the construction of the
terms and conditions’ of the contract, and controversies or differences as to the ‘performance’ of the contract. * * * We think there was no intention to clothe the arbitrators with power to settle every difference having its genesis in the contract. Their function was more modest. Questions might arise as to the meaning of the contract or the plans and specifications. The arbitrators were to give the answer. Questions might arise as to the performance of covenants and conditions where there was no doubt as to the meaning. Again the arbitrators would answer. * * * They did not limit themselves to fixing the value of what had been done as compared with that omitted, according to the practice in recoupment. Mondel v. Stell, 8 M. & W. 858. They charged the dilatory seller with consequential damages of nearly $1,000,000, on the ground that the effect of the delay was to plunge the buyer into ruin. * * * It is not a question whether the damages awarded proceed from the default so directly and certainly that the plaintiff might have recovered them if he had been suing in the courts. The judgment of the arbitrators within the lines of the submission is not to be impeached for misconception of the law. It is rather a question whether the damages are of such a nature that arbitrators so commissioned may consider them at all.”
There is a difference between arbitration of a commercial dispute and arbitration of a labor dispute. That difference is not so great when there is a limited arbitration clause, as in this case. In Marchant v. Mead-Morrison the court found that the parties did not intend to arbitrate “every difference having its genesis in the contract“, but only differences as to the “construction” and “performance” of the contract.9 Such a submission withholds from the arbitrators authority to give consequential damages. Citing this case as authority, several courts have held squarely that “unless the arbitrator is [expressly] given the power to award damages * * * an award attempting to do this is void as beyond the power of the Board [of arbitrators]“. Lone Star Cotton Mills v. Thomas, Tex. Civ.App., 1959, 227 S.W.2d 300, 307. Guidry v. Gulf Oil Corporation, Tex.Civ. App., 1959, 320 S.W.2d 691, is to the same effect. “It is not lawful for arbitrators to fix damages arising out of the matters submitted to them unless the issue of such damages is also specifically submitted“. Publishers’ Association of New York City v. New York Typographical Union No. 6, 1938, 168 Misc. 267, 5 N.Y.S.2d 847, 853.
The precise question at issue, however, has not been decided in any reported decision, as far as our research goes.10
The contract in the instant case covers forty-two pages, detailing wages and hours of work, overtime, premium time, shifts and shifts differentials, job classification, seniority, craft seniority preference lists, military leave, holidays, vacations, jury duty, severance notice and pay, annuities and benefits, funeral leave, grievance procedure, arbitration, strikes and lock-outs, working conditions, and other matters. With all of that, there is no list of job classifications and rate ranges and, as in Local No. 149 of American Federation of Technical Engineers (A. F. L.) v. General Electric Company, “no language by way of job descriptions which could be interpreted or applied for the purpose of determining whether the duties performed by a particular em-
Section 8-1 provides that “work peculiar to a classification shall be performed by employees assigned to that classification“. Nowhere in Section 8 is there any provision for a penalty or for damages for a misassignment. But a remedy is expressly provided or probably implied in other sections of the contract, such as those dealing with vacations, jury duty, severance pay, annuities, and funeral leaves. Section 5-7, dealing with overtime, states: “It is the intent of the Company to equalize overtime among employees of the same job classification insofar as it may be practical.” This provision declares that the Company intends to equalize “overtime” (work), but it imposes no absolute obligation, refers to no remedy, and contains no inference that damages will be awarded in case of misassignment. (In making this statement, and in the opinion generally, this Court is not passing on any remedy the aggrieved employee or the Union may have for misassigned overtime work. That issue is not before us. We are simply pointing out that the contract contains no express or implied provision covering a money award for misassignment of overtime, from which might be drawn the inference that the remedy was a matter of “interpretation” or “performance” of the contract and therefore an arbitrable issue.)
We return to our starting point. The Company did not agree to submit all differences to arbitration but “only differences relating to the interpretation or performance” of the agreement. The Company policy is against paying two employees for overtime worked by one. Granted broad approval of arbitration, this Court must consider whether the parties intended a third person to alter basic Company policy through the medium of an arbitration procedure. The correctness of the work assignment is a matter of concern to the individual aggrieved employee. It is also a matter of concern to a union interested in strict observance of craft lines and generally equal distribution of overtime benefits. But subjecting the Company to punitive damages in order to discourage future misassignments and overturning the Company‘s policy of paying only for work performed goes beyond rectifying individual grievances and beyond the ordinary arbitrative process. There is not much of a contract between the parties and there is not much stability of the company-union relationship, if an important term may be added to a contract and a fundamental change made in the operation of a plant because a dispute is
The real difference between the parties is over the company policy: no work—no pay. The bone of contention between the Company and the Union is whether a mistake in work assignment should be rectified by damages to the aggrieved employee or by equivalent pay for work performed. This is an over-all labor-management issue that involves, on the one hand, efficient plant management and the economics of production, and, on the other hand, protection of an individual worker through union organization. The proper forum for settlement of the dispute is the bargaining table. The
Judgment is affirmed.
HUTCHESON, Chief Judge (concurring specially).
I concur fully in what is said and held, and the way in which it is said and held, in the majority opinion, including the use made of footnote 12, which our dissenting brother does not like, and, but for his animadversions and admonitions evoked by what he regards as our obdurate refusal to follow the teachings of his dissenting opinion in Lincoln Mills of Alabama v. Textile Workers, 5 Cir., 230 F.2d 81, 89, 92, I should be content. Since, however, apparently on the basis of the success in the Supreme Court of his dissenting opinion in the Lincoln Mills case, he has in this opinion set himself up as general critic and censor of the court in the field of arbitration, I feel it my right and duty, as one who was not in the Lincoln Mills case and whose withers are therefore unwrung by it, to speak up. Deprecating the ebullient enthusiasm of my younger brother as pioneer, teacher and guide in the role of judicial activist, which he seems to have assumed, I venture to suggest to him that before taking too seriously his role of leader in our court of an activist movement to deride and destroy the ancient landmarks of the law, he take a little time off to read and reflect upon these words from one of the great English legal historians:
“Philosophical speculation about law and politics is an attractive pursuit. A small knowledge of the rules of law, a sympathy with hardships which have been observed and a little ingenuity, are sufficient to make a very pretty theory. It is a harder task to become a master of Anglo-American law by using the history of that law to discover the principles which underlie its rules, and to elucidate the manner in which these principles have been developed and adapted to meet the infinite complexities of life in different ages. Such students of our law will learn even though at second hand, some-thing of the practical wisdom which comes from knowledge of affairs. They will for that reason be able to suggest solutions of present problems which will depend not merely on their own unaided genius, but on the accumulated wisdom of the past.” Holdsworth, Some Lessons from Our Legal History, 105.
JOHN R. BROWN, Circuit Judge (dissenting).
Perhaps I see more in this case than my Brothers. But, while I can enthusiastically adopt so many portions of the opinion, especially parts I and II, I think in the final analysis that what they do is the same old effort to sugar-coat what, to the judiciary, has long been a bitter pill—the idea that someone other than a court can properly adjudicate disputes; that in the field of human disputes lawyers and ex-lawyers as judges alone have the Keys to the Kingdom. Of course, the approach of many jurisdictions which, with jealous eye, scanned all such devices lest they infringe upon or oust the Courts from their historic role, was long ago rejected for Federal Courts. To this notion Judge Hough, in United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co., D.C.S.D.N.Y., 1915, 222 F. 1006, 1007, retorted: “A more unworthy genesis cannot be imagined.” See also Lincoln Mills of Alabama v. Textile Workers Union, CIO, 5 Cir., 1956, 230 F.2d 81, 89, 92 (dissenting opinion), note 7 and related text. But the feeling has a hardy tenacity and decisions of this kind are the transfusions that give a few more days, or years, to an idea that has long since earned a decent interment.
To reach this result the Court seizes onto a single case involving a commercial, not a labor-management, dispute, Marchant v. Mead-Morrison Mfg. Co., 1929, 252 N.Y. 284, 169 N.E. 386, and then drags in, see note 12, though wholly irrelevant, the supposed distinction between “major” and “minor” disputes flowing from the unique situation under the Railway Labor Act,
Running through the Court‘s opinion is the idea that a supposed policy of “no work—no pay” is evidence of an intent not to allow a third party to award damages. Of course, the fact of this case, as the Court acknowledges, is that a worker had a right to a specific task; the company wrongfully deprived him of it; what he seeks is what he would have earned at it. A court of law would award him no less and would pay scant heed to the suggestion that this was paying for work not done. Everyone who risks a claim of breach of contract understands that if a court rejects his denial of breach, he may end up paying twice. He will find no judicial succor on the plea that this is punitive.
The idea of a person deciding a controversy so that his decision may then become the subject of a new and further one—i. e., controversy in bargaining—is repugnant to the scheme of an orderly disposition of disputes before they ripen into the seeds of industrial conflict.
Here, three years later, we are back where we were in Lincoln Mills. There I stated that this court had concluded “that the court with power is yet powerless to proceed—it has power but no tools—in short, the door is open but the hall is empty.” 230 F.2d 81, 89. Perhaps today the hall is filled. But what takes place is mere stage acting since the players are engaged in a mere academic exercise, debating fiercely and resolving decisively, but actually delivering nothing further than the outline of tomorrow‘s controversy. The fight begins, then, after leaving the hall.
I therefore respectfully dissent.
JOHN R. BROWN
CIRCUIT JUDGE