TEAMSTERS LOCAL 177 v. UNITED PARCEL SERVICE
No. 19-3150
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
July 16, 2020
PRECEDENTIAL
Argued April 14, 2020
Before: AMBRO, JORDAN, and SHWARTZ, Circuit Judges
(Opinion filed July 16, 2020)
Edward H. O‘Hare (Argued)
Raymond M. Baldino
Zazzali Fagella Nowak Kleinbaum & Friedman
570 Broad Street, Suite 1402
Newark, NJ 07102
Counsel for Appellant
Michael T. Bissinger
Michael H. Dell (Argued)
Day Pitney
One Jefferson Road
Parsippany, NJ 07054
Counsel for Appellee
AMBRO, Circuit Judge
Wе address how Article III standing principles apply in proceedings to confirm arbitration awards under
We reverse and hold that the District Court had subject-matter jurisdiction to confirm the Award even in the absence of a new dispute about it. We agree with the Second Circuit that “the confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court.” Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984). Confirmation is the process through which a party to arbitration completes the award process under the FAA, as the award becomes a final and enforceable judgment. See
I. FACTUAL AND PROCEDURAL BACKGROUND
UPS and the Union are parties to a collective bargaining agreement (the “Agreement“). It was in effect from August 1, 2013 through July 31, 2018, and it governed the terms and conditions of employment of bargaining unit employees, including package car drivers who operate the ubiquitous brown UPS trucks and provide delivery and pick-up services.
Local 177 represents more than 9,000 workers employed at various UPS facilities in northern and central New Jersey, and New York City and Orange County in New York. Article 46, Section 3 of the Agreement groups areas of principal responsibility. Drivers are assigned to particular UPS buildings, called “home centers,” but mаy be assigned to other buildings in other areas, subject to the restrictions of Section 2 of Article 46. That Article provides in relevant part:
SECTION 2
It is understood that employees may be assigned in classification to work in their home center or at places other than their home center, as follows:
(a.) Employees will be required to accept assignments, within classification, when ordered, anywhere within their area.
(b.) Any employee who refuses an assignment out of his/her classification under the above conditions will forfeit their rights to report pay.
SECTION 3
For the purposes оf other assignments, the following areas are applicable:
(1) Lakewood, Tinton Falls, Trenton
(2) Edison, Staten Island, Gould Avenue, Meadowlands (3) Parsippany, Bound Brook, Mt. Olive
(4) Chester, New Windsor
(5) Saddle Brook, Spring Valley.
J.A. 24. Section 3 is known as the “sister building” provision. When drivers are assigned to work at a place outside their home center, as permitted in Section 2, then Section 3 governs where those drivers may be sent. The locations grouped in subsections (1) through (5) represent those groupings, known as “sisters.” For example, a Lakewood domiciled driver may be assigned to work in the sister building in Tinton Falls or Trenton. Forbidden, however, would be the assignment of a Lakewood driver to Staten Island. These restrictions are the product of nеgotiations spanning several decades.
Article 44 of the Agreement contains mandatory grievance and arbitration procedures. It provides that if a matter is brought to arbitration, the arbitrator has the authority to decide the grievance, and that decision “shall be final and binding on the parties and employees involved.” J.A. 17–18.
The Union filed two grievances, one in July 2014 and the other in February 2015, respectively, alleging that UPS violated Article 46. The July 2014 grievance alleged that New Windsor drivers were improperly assigned to Spring Valley. The February 2015 grievance alleged a Chester driver was also improperly assigned to Spring Valley.
UPS denied the grievances, and the Union filed a demand for arbitration. During the arbitration hearing, both parties were represented by counsel and had the opportunity to present testimony along with documentary evidence and to make arguments. The Arbitrator sustained the grievances and ordered UPS to “cease and desist assigning package car drivers to work in buildings outside the areas designated in Article 46, Section 3 of the parties’ Agreement.” J.A. 47. UPS “accept[ed] the Award,” and has never sought to challenge or vаcate it. J.A. 49.
The Union alleges, and UPS does not deny, that the latter has subsequently violated the Award. In April 2018 it did so by assigning a driver outside his contractually designated area. Local 177 Secretary-Treasurer Chris Eltzholtz informed UPS District Labor Manager Steve Radigan of the violation. Eltzholtz later became aware of two more violations. Radigan acknowledged them and assured Eltzholtz that the situation was corrected and would not occur again. In June 2018, Eltzholtz learned that UPS had nonetheless violated the Award by assigning a driver to work outside a designated area. He informed Radigan of the new violation. Eltzholtz then traveled to a UPS facility in New Windsor, New York, and personally witnessed UPS about to violate the Award yet again by assigning a driver outside his assigned area. Eltzholtz brought this to the attention of management, and it stopped the violation from occurring. The Union ultimately obtained a monetary settlement for these violations.
Thereafter, the Union moved for confirmation of the Award under
[i]f the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.
In its decision, Teamsters Local Union No. 177 v. United Parcel Servs., 409 F. Supp. 3d 285, 290 (D.N.J. 2019), the District Court acknowledged a circuit divide on whether a court may confirm an award in a labor arbitration absent a then-existing dispute about the arbitration award. Id. at 290. It noted that the First Circuit has held that confirmation is not proper without an active controversy, see Derwin v. Gen. Dynamics Corp., 719 F.2d 484, 492–93 (1st Cir. 1983), while the Second Circuit has held that a district court must confirm an arbitration award if the statutory requirements are mеt even absent a new dispute, see Zeiler v. Deitsch, 500 F.3d 157 (2d Cir. 2007); see also Ottley v. Schwartzberg, 819 F.2d 373 (2d Cir. 1987); Florasynth, 750 F.2d 171. When the District Court followed Derwin, the Union appealed to us.
II. JURISDICTION
The District Court had statutory subject-matter jurisdiction under
That there is federal statutory and federal question jurisdiction is clear. The harder question—the one before us here—is whether there was a sufficient “case or controversy” under Article III so as to confer jurisdiction on the District Court.
We have appellate jurisdiction pursuant to
III. DISCUSSION
To repeat, UPS argues that the District Court lacked subject-matter jurisdiction to confirm the arbitration award under FAA
A. Confirmation — the Final Step and Remedy in Arbitration
To establish that a “case or controversy” exists, a party seeking relief must have, among other things, standing. In legal jargon this requires that a plaintiff show “(1) an injury in fact,’ (2) a sufficient ‘causal connection between the injury and the conduct complained of,’ and (3) a ‘likel[ihood]’ that the injury ‘will be redressed
The parties do not dispute that the causation and redressability prongs of the standing analysis are satisfied; only at issue is whether Local 177 was injured. UPS argues that, because it has agreed to abide by the аrbitration award and has remedied any violations of it thus far, the case-or-controversy requirement is not satisfied, as the Union has not suffered and will not imminently suffer an injury.
We disagree. Under the FAA a party‘s injuries are only fully remedied by the entry of a confirmation order. The statute “creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate ....” Moses H. Cone Mem‘l Hosp., 460 U.S. at 25 n.32. Congress enacted the FAA to “reverse the longstanding judicial hostility to arbitration agreements . . . and to place arbitration agreements upon the same footing as other contracts.” EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (citation and internal quotation marks omitted). Once parties contract to settle their disputes by arbitration, federal courts become involved only in limited circumstances for limited purposes.
The FAA “authorizes district court involvement in the arbitration process primarily in two ways.” John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 136 (3d Cir. 1998). The first is “when a party resists arbitration under an existing arbitration clause.” Id. (citing
Thus, barring any dispute whether the arbitration award shall be vacated, modified, or corrected, it is confirmation under
The FAA explicitly requires that arbitration awards be confirmed. What could be stronger than languаge that, upon application, a district court “must grant [a confirmation] order” unless the arbitration award is “vacated, modified, or corrected.”
We agree with the Second Circuit that “the confirmation of an arbitration award is а summary proceeding that merely makes what is already a final arbitration award a judgment of the court.” Florasynth, 750 F.2d at 176 (citation omitted). That Circuit has long held that district courts have jurisdiction to confirm arbitration awards even in the absence of a new dispute about them. In Florasynth, it reasoned that an “[a]n examination of the underlying purposes of the arbitration mechanism” supported this conclusion, as confirmation arms the winning party of an arbitration “with a court order . . . [and] a variety of remedies available to enforce the judgment.” 750 F.2d at 176; see also Zeiler, 500 F.3d at 169 (“Confirmation ... is a summary proceeding ..., which is not intended to involve complex factual determinations, other than a determination of the limited statutory conditions for confirmation or grounds for refusal to confirm. At the confirmation stage, the court is not required to consider the subsequent question of compliance.“); Ottley, 819 F.2d at 377 (“[A]ctions to confirm arbitration awards ... are straightforward proceedings in which no other claims are to be adjudicated. . . . [I]n a confirmation proceeding, the court properly may consider only the statutory bases for modifying or vacating an award and challenges to the award‘s clarity.“).
Confirming an arbitration award under
Thus, like the Second Circuit, we view the confirmation of an arbitration award as the final step in arbitration proceedings under the FAA where there is no dispute about the validity or accuracy of that award under
B. Summary Proceedings and the District Court‘s Imprimatur
In the interest of further explaining the path forward, we analogize the confirmation of arbitration awards to other summary proceedings in which a district court enters orders without the parties filing complaints and appearing before it to litigate a matter in full. For example, courts enter investigatory subpoenas ex parte without the filing of a formal complaint and hold summary proceedings to enforce Securities and Exchange Commission orders. See, e.g., S.E.C. v. McCarthy, 322 F.3d 650, 657 (9th Cir. 2003) (holding that Section 21(e) of the Exchange Act of 1934 permits the use of summary proceedings in district courts to enforce Commission orders); S.E.C. v. Sprecher, 594 F.2d 317, 319–20 (2d Cir. 1979) (holding that the Securities Act of 1933 authorizes district
The Supreme Court has held summary proceedings permissible where expressly authorized by statute. See New Hampshire Fire Ins. Co. v. Scanlon, 362 U.S. 404, 406–07 (1960). Confirmation of arbitration awards is also a summary proceeding. And it is authorized by
The summary proceeding perhaps most analogous to the confirmation of arbitration awards is the entry of consent decrees. They are orders or judgments that reflect the settlement terms agreed by the parties and contain an injunction. See United States v. ITT Cont‘l Baking Co., 420 U.S. 223, 236 n.10 (1975) (stating that consent decrees “have attributes both of contracts and of judicial decrees” and a “dual character“); FTC v. Enforma Natural Prods., Inc., 362 F.3d 1204, 1218 (9th Cir. 2004) (“[A] consent decree is ‘no more than a settlement that cоntains an injunction.‘” (quoting In re Masters Mates & Pilots Pension Plan & IRAP Litig., 957 F.2d 1020, 1025 (2d Cir. 1992))). District courts have the power to enter consent decrees without first determining that a statutory or constitutional violation has occurred. See Swift & Co. v. United States, 276 U.S. 311, 327 (1928). Cf. Rufo v. Inmates of Suffolk Cty. Jail, 502 U.S. 367, 389 (1992). They “must spring from and serve to resolve a dispute within the court‘s subject-matter jurisdiction . . . . and must further the objectives of the law upon which the complaint was based.” Local No. 93, Int‘l Ass‘n of Firefighters, AFL-CIO C.L.C. v. City of Cleveland, 478 U.S. 501, 525 (1986) (citations omitted); see also Sansom Committee by Cook v. Lynn, 735 F.2d 1535, 1538 (3d Cir. 1984) (stating that a district court has authority to enter a consent decree “as long as [its] terms . . . come within the general scope of the case made by the pleadings . . . [and] if the pleadings state a claim over which a federal court has jurisdiction.” (internal citations and quotation marks omitted)).
Here the FAA provides for confirmation proceedings to be summary proceedings akin to the entry of consent decrees by requiring that the parties “apply” for confirmation rather than file a complaint.
Moreover, courts do not resolve these applications for relief using procedures for ordinary civil actions because the FAA provides for applications to be made and heard as motions rather than the filing of a
Accordingly, we hold that the District Court had jurisdiction to confirm the Award under
C. The Illogical Consequences of Requiring a New Dispute Before Confirmation
We also note the practical absurdity and harmful consequences of holding that district courts cannot confirm arbitration awards in the absence of a new dispute. First, if we allow UPS to challenge confirmation of the arbitration award at this stage, we would be allowing it to upend and undermine the statutory scheme of the FAA. That scheme expressly gives more time to the parties to move for confirmation than to dispute the award. While the statute of limitations for confirmation of arbitration awards under the FAA is one year,
Second, requiring a new dispute about the arbitration award would allow, or even incentivize, the party that lost at arbitration to defeat confirmation simply by claiming it agrees to abide by the Award. In the worst-case scenario, the losing party could wait until after the statute of limitations to confirm an award has run to start violating it, and the winning party wоuld be left to relitigate the case. That UPS says it will stop moving employees outside of their home centers does not mean there was no injury to the Union‘s members who were moved when the Award was violated previously, and it does not mean that the Union does not have a right to seek compliance with the Award in
D. Parting With First Circuit Precedent
In light of these considerations, we are not persuaded by the approach taken by the First Circuit in Derwin, 719 F.2d 484, and adopted by the District Court. In Derwin, representatives of a union sought confirmation of an arbitration award issued under a collective bargaining agreement between the union and a corporate employer. The former did not allege any instances where the employer refused to abide by the award. Rather, it relied on the language of the applicable state statute, which, like the FAA, provided for a right to confirmation when no party had challenged the award within 30 days after issuance of it. Id. at 486. Derwin held that confirmation was “unwarranted,” and noted that
[t]he union‘s application for confirmation—unlike the usual complaint seeking confirmation of an arbitrator‘s award—does not seek resolution of a concrete dispute between the parties. The union does not allege that the company has repudiated or violated the award in some particular calling for judicial resolution. No relief involving specific enforcement of the . . . award is requested.
Id. The Court declined to “put its imprimatur upon an arbitral award in a vacuum” and dismissed the action to confirm it. Id. at 491-93. It reasoned that judicial economy counseled against the entry of a confirmatory award, and that a more economical approach was to require that confirmation petitions allege an actual violation or other dispute entitling the party to some relief. Id. at 492.
However, the First Circuit did not consider the mandatory language of the FAA, it did not consider whether an arbitration dispute was ongoing until confirmation of the arbitration award, and, puzzlingly, it considered instead how the limitations period in the state statute affected its jurisdiction. It reasoned that because in the case before it the time to sue was either six or twenty years, the union would have plenty of time to seek to enforce the award if a dispute arose. Recognizing the need for confirmation under certain circumstances, the Court nonetheless allowed that there would be a “most compelling basis” for confirmation even without a pending dispute in some instances:
If there were a strict limitations period for actions to confirm, one could reasonably argue that, even in the absence of any current dispute over an award‘s effort, a party should be entitled to obtain judicial confirmation in order to protect its rights under the award from lapse due to the passage of time.
Id. The Court did not explain why the statute of limitations would affect whether it has jurisdiction to hear the case.
The District Court here followed the First Circuit and specifically relied on the latter‘s statute-of-limitations reasoning. In its analysis the District Court held that “two potentially dispositive factors” emerged from the case law: “(1) whether there is an ongoing dispute over the terms or enforcement of the award; and (2) whether there is a realistic probability that the employer can wait out the limitations period and violate the arbitration award when it is too late for the union to obtain judicial relief.” United Parcel Servs., 409 F. Supp. 3d at 293. It acknowledged that if a one-year statute of limitations applied, like in the FAA, there would “surely be a
Neither the First Circuit nor the District Court here explained, however, how the ability of the winning party in an arbitration to file suit later has any bearing on the existence of a “case or controversy.” Both ignored that statutes of limitations and a court‘s power to hear a case are separate questions. Accordingly, we decline to follow the First Circuit‘s holding that a new dispute is required before an arbitration award can be confirmed, and we reverse the judgment of the District Court.
We remand with instruction for the Court to confirm the Award unless the statutory grounds for rejecting it are satisfied.
