Opinion
No. CIV. S-05-1208 WBS JFM.
July 25, 2006
MEMORANDUM AND ORDER RE: RESPONDENT'S MOTION TO STAY ARBITRATION AND PETITIONER'S MOTION TO HOLD RESPONDENT IN CONTEMPT
Pursuant to 29 U.S.C. § 185, petitioner General Teamsters Union Local No. 439 filed a petition to compel respondent Sunrise Sanitation Services, Inc. to arbitrate a labor grievance. On April 25, 2006, the court granted petitioner's motion to compel arbitration and denied respondent's motion for summary judgment. Soon thereafter, respondent lodged an appeal of that judgment with the Ninth Circuit Court of Appeals and now seeks a stay of the arbitration proceedings pending appeal. Petitioner has responded with a motion to hold respondent in contempt for its failure to proceed to arbitration in a timely manner. For the following reasons, both motions will be denied.
I. Factual and Procedural Background
The facts underlying this dispute are largely uncontested. Respondent, a waste collection and disposal company located in Stockton, California, had a longstanding collective bargaining relationship with an independent union known as the Sunrise/Sunset Employees Association ("the Association"). (Resp't Statement of Undisputed Facts ("SUF") No. 2.) However, on October 28, 2004, members of the Association voted, by a show of hands, to merge their existing bargaining representative with petitioner's international organization. (Id. Nos. 15-17.) The merger agreement provided that, "effective October 28, 2004, the Association `will cease to exist as an independent entity and shall be consolidated into' Local 439." (Id. No. 19.)
Concurrent with these events, Shane Thomasson, a refuse truck driver for respondent, "was involved in his second on-the-job vehicular accident in less than a month." (Basso Decl. ¶ 3.) He was suspended and later terminated on December 13, 2004, following a determination by respondent that his accidents were preventable. (Id.)
Subsequently, petitioner attempted to submit for arbitration a grievance pertaining to Thomasson's discharge, pursuant to the terms of the collective bargaining agreement ("CBA") entered into by respondent and the Association. This agreement was intended to be in effect from January 1, 2002 through December 31, 2004 and thereafter subject to termination or renegotiation upon 60 days notice "by either party to the other party prior to December 31, 2004." (Palacio Decl. Ex. A at TEMO024.) Respondent refused petitioner's request to arbitrate, reasoning that the existing CBA terminated once the Association ceased to exist and respondent was therefore no longer bound by the terms of the agreement. (Resp't Cross-Mot. for Summ. J. 11.)
This litigation ensued, and the court granted petitioner's motion to compel arbitration on April 25, 2006. Respondent filed a notice of appeal regarding that judgment on May 11, 2006 and sought to stay the court's order compelling arbitration on June 13, 2006 (after attempts to persuade petitioner to stipulate to a stay failed). (Resp't Mot. to Stay 1.) Respondent's motion to stay is now before the court, in addition to petitioner's motion to hold respondent in contempt for its failure to move forward with the ordered arbitration.
II. Discussion
A. Motion to Stay
A notice of appeal divests the district court "of jurisdiction over the matters being appealed." Natural Res. Def. Council, Inc. v. Sw. Marine Inc., 242 F.3d 1163, 1166 (9th Cir. 2001). However, "[t]he principle of exclusive appellate jurisdiction is not . . . absolute." Id. Rather, the trial court retains the inherent power "during the pendency of an appeal to act to preserve the status quo", id., "and to ensure the effectiveness of the eventual judgment", Tribal Vill. of Akutan v. Hodel, 859 F.2d 662, 663 (9th Cir. 1988) (quoting 11 Charles Alan Wright et al., Federal Practice and Procedure § 2904, at 315 (1973)). Specifically, Federal Rule of Civil Procedure 62(c) permits a district court to "in its discretion . . . suspend, modify, restore, or grant an injunction during the pendency of the appeal upon such terms as . . . it considers proper for the security of the rights of the adverse party. . . ." See also Fed.R.App.P. 8(a)(1) (noting that "[a] party must ordinarily move first in the district" to obtain "a stay of the judgment or order of a district court pending appeal").
The Ninth Circuit has been careful to point out that Rule 62(c) simply codifies the exception to the general rule of exclusive appellate jurisdiction and "does not restore jurisdiction to the district court to adjudicate anew the merits of the case." McClatchy Newspapers v. Cent. Valley Typographical Union No. 46, 686 F.2d 731 (9th Cir. 1982).
In deciding whether to grant an injunction pending appeal, courts apply the standard employed when considering a motion for a preliminary injunction. Akutan, 859 F.2d at 663; Lopez v. Heckler, 713 F.2d 1432, 1435 (9th Cir. 1983). Accordingly, respondent here must demonstrate "either (1) a combination of probable success on the merits and the possibility of irreparable injury, or (2) that serious questions are raised and the balance of hardships tips sharply in its favor." Akutan, 859 F.2d at 663 (internal quotation marks omitted). Additionally, under either test, the court must separately consider the public interest, if one is at stake, when determining whether to grant equitable relief. Sammartano v. First Judicial Dist. Court, 303 F.3d 959, 974 (9th Cir. 2002) ("If the public interest is involved, the district court must also determine whether the public interest favors the [movant]." (quoting Westlands Water Dist. v. Natural Res. Def. Council, 43 F.3d 457, 459 (9th Cir. 1994)) (emphasis added)).
The Ninth Circuit has explained that the two aspects of each test are inversely correlated. Earth Island Inst. v. U.S. Forest Serv., 351 F.3d 1291, 1310 (9th Cir. 2003). For example, "the required degree of irreparable harm increases as the probability of success decreases." W. Land Exch. Project v. Dombeck, 47 F. Supp. 2d 1216, 1217 (D. Or. 1999) (quoting Oakland Tribune, Inc. v. Chronicle Publ'g Co., 762 F.2d 1374, 1376 (9th Cir. 1985)). Furthermore, they are considered to be "interrelated" and therefore their application need not be independent of one another. Lopez, 713 F.2d at 1435; Sammartano, 303 F.3d at 965 (recognizing as proper analysis the consideration of success on the merits and balance of the hardships); Protect Our Water v. Flowers, 377 F. Supp. 2d 882, 884 (E.D. Cal. 2004) (treating success on the merits and a serious legal question as one consideration and irreparable harm/balance of the hardships as another).
1. Success on Merits/Serious Legal Question
As this court has previously noted, the "`success on the merits factor cannot be rigidly applied,' because if it were, an injunction would seldom, if ever, be granted. . . ." Protect Our Water, 377 F. Supp. 2d at 884 (quoting Or. Natural Res. Council v. Marsh, Civ. No. 85-6433-E, 1986 WL 13440, at *1 (D. Or. Apr. 3, 1986)). A rigid application would require the district court "`to conclude that it was probably incorrect in its determination on the merits.'" Id. Accordingly, "district courts properly `stay their own orders when they have ruled on an admittedly difficult legal question and when the equities of the case suggest that the status quo should be maintained.'" Id. Injunctions are thus "frequently issued where the trial court is charting new and unexplored ground and the court determines that a novel interpretation of the law may succumb to appellate review." Stop H-3 Ass'n v. Volpe, 353 F. Supp. 14, 16 (D. Haw. 1972).
In this case, respondent's chances of succeeding on the merits of its appeal are entirely speculative. In opposition to petitioner's motion to compel arbitration, respondent argued that a Third Circuit case, the underpinnings of which have been overruled by the Supreme Court, should guide this court's analysis. See Sun Oil Co. of Penn. v. NLRB, 576 F.2d 553 (3d Cir. 1978), abrogated in part by NLRB v. Fin. Inst. Employees of Am., 475 U.S. 192, 199 n. 5 (1986). The court rejected this proposition, however, and instead relied on a decision from the Sixth Circuit which, when applied to the facts of this case, led the court to grant petitioner's motion. See Cincinnati Newspaper Guild, Local 9 v. Cincinnati Enquirer, Inc., 863 F.2d 439, 445 (6th Cir. 1988). Respondent's appeal, as described in its motion to stay arbitration, rests on, inter alia, an argument that Cincinnati Newspaper is both factually distinguishable and contrary to Supreme Court guidance. While the Court of Appeals may eventually find respondent's, and not the court's, analysis more persuasive, the court can only hazard a guess as to the probability that respondent will succeed.
Weighing decidedly in respondent's favor, however, is the fact that the parties have raised what appears to be a matter of first impression in this circuit. The Ninth Circuit has not yet considered whether presenting employees with a Hobson's choice between their interest in securing new representation and preserving their existing CBA is consistent with national labor policy. As the court has previously noted, while an abundance of authority addresses the implications of an existing CBA for successor employers, a paltry amount of analysis has been dedicated to the status of an existing CBA when the union is the successor. (Apr. 25, 2006 Order 7-8.) The courts of this circuit would benefit from a decision that clarifies the viability of an existing CBA in the aftermath of a change in representation and outlines what, if anything, a successor union can do to preserve the terms of an existing CBA while negotiating a CBA of its own.
Petitioner cites the lack of previous litigation on this issue as evidence that the circumstances of this case are unique and argues that "the legal question raised in this case will not be repeated." (Pet.'s Opp'n to Mot. to Stay 7.) From this, petitioner concludes that this case does not present a serious legal question. (Id.) However, petitioner cites no authority for this proposition. Moreover, courts have recognized that "novel" legal issues may support injunctive relief. See, e.g., Beaumont, Sour Lake W. Ry. Co. v. United States, 282 U.S. 74, 91 (1930); Stop H-3 Ass'n, 353 F. Supp. at 16. Consequently, because this case presents a novel legal question that may succumb to appellate review, respondent has satisfied the first half of the preliminary injunction test.
The parties appear to dispute whether the court's April 25, 2006 order compelling arbitration is even appealable. (See July 7, 2006 Grajski Decl. Exs. B-C.) The Ninth Circuit has held that "an order compelling arbitration may be immediately appealed [where, as here,] it is the complete relief sought." Abernathy v. S. Cal. Edison, 885 F.2d 525, 528 n. 13 (9th Cir. 1989);see also Goodall-Sanford, Inc. v. United Textile Workers of Am., A.F.L. Local 1802, 353 U.S. 550, 551-52 (1957) ("A decree under § 301(a) ordering enforcement of an arbitration provision in a collective bargaining agreement is . . . a `final decision' within the meaning of 28 U.S.C. § 1291"). However, other courts have questioned the finality of orders to arbitrate under § 301 when the trial court does not concurrently order that the arbitrator's decision will be final and binding (thereby surrendering "jurisdiction to confirm the arbitrator's decision"). Int'l Ass'n of Machinists Aerospace Workers Local Lodge 2121 AFL-CIO v. Goodrich Corp., 410 F.3d 204, 209 (5th Cir. 2005) (citation omitted). Nevertheless, because the parties did not brief this issue, the court will leave the appealability of its order for the Court of Appeals to decide.
2. Irreparable Harm/Balance of Hardships
However, a serious legal question, standing alone, cannot justify a stay. See PaineWebber Inc. v. Farnam, 843 F.2d 1050, 1052 (7th Cir. 1988) ("[E]ven a strong likelihood of reversal is not enough to get a stay of arbitration pending appeal."). As noted above, respondent also must show that requiring it to proceed with the ordered arbitration while an appeal is pending will cause it irreparable harm or a hardship that outweighs the burden that further delay will visit on petitioner. In support of this requirement, respondent argues that if this court denies a stay, the parties might needlessly waste time and incur expenses in pursuit of an arbitration thatcould later be deemed invalid. (Resp't Mot. to Stay Arbitration 9.)
The Ninth Circuit has made clear "that unnecessarily undergoing arbitration proceedings [does not] constitute irreparable injury" and consequently, respondent's success hinges on whether the balance of hardships tips in its favor. Camping Constr. Co. v. Dist. Council of Iron Workers, 915 F.2d 1333, 1349 (9th Cir. 1990) (noting that "the party objecting to arbitration might well suffer no harm at all, irreparable or otherwise, for the arbitration panel might decide in its favor");see also Graphic Commc'ns Union v. Chi. Tribune Co., 779 F.2d 13, 15 (7th Cir. 1986) (holding that even where the appellate court might determine that the trial court erroneously ordered the parties arbitrate a dispute they had not agreed to arbitrate (because the CBA had expired), "the cost of the arbitration, whether it is an opportunity cost of time or an out-of-pocket expense . . . does not show irreparable harm"). Accordingly, the court must consider the impact that granting or denying respondent's motion will have on the respective parties. Int'l Jensen, Inc. v. Metrosound U.S.A., Inc., 4 F.3d 819, 827 (9th Cir. 1993).
Respondent attempts to distinguish Camping Construction, reasoning that the cited language is inapplicable here because the discussion in that case focused on the arguably more stringent standards for injunctive relief required by the Norris-LaGuardia Act. It urges the court to instead rely on cases holding that irreparable harm would result from requiring an employer to arbitrate a dispute prior to determining the dispute at issue was arbitrable. McLaughlin Gormley King Co. v. Terminix Int'l Co., 105 F.3d 1192, 1194 (8th Cir. 1997). Such cases are clearly distinguishable from the instant litigation, given that the court has already determined that this disputeis arbitrable. See McLaughlin, 105 F.3d at 1194 (distinguishing cases "in which irreparable was discussed only after the court concluded that the dispute was, in fact, arbitrable"); see also Chi. Sch. Reform Bd. of Trs. v. Diversified Pharm. Servs., Inc., 40 F. Supp. 2d 987, 996 (N.D. Ill. 1999) (opining that "forcing a party to arbitrate a dispute that it did not agree to arbitrate constitutes per se irreparable harm" in an order holding that the parties had not agreed to arbitrate). Moreover, the discussion of irreparable harm in Camping Construction speaks generally of what constitutes irreparable harm and respondent cites no authority for applying a different definition of "irreparable" in the context of a Rule 62 analysis.
As noted, the only harm that respondent faces if its motion is denied is the expense of a potentially uncalled for arbitration proceeding. At oral argument, the court learned that such proceedings might cost respondent as little as $750. Meanwhile, petitioner describes a hardship consisting of Mr. Thomasson having to wait for arbitration "to return himself to his former position" and "ensure that any other or further employment is not denied or tarnished by an unjustified termination. . . ." (Pet.'s Opp'n to Resp't Mot. to Stay 6.)
In the context of a due process challenge to the allegedly wrongful discharge of public employees, Justice Marshall discussed at length the plight of a wrongfully terminated employee, observing that while an employee awaits the proper grievance procedures, he
is left in limbo, deprived of his livelihood and of wages on which he may well depend for basic sustenance. In that time, his ability to secure another job might be hindered, either because of the nature of the charges against him, or because of the prospect that he will return to his prior . . . employment if permitted. . . . [T]he personal trauma experienced during the long months in which the employee awaits decision, during which he suffers doubt, humiliation, and the loss of an opportunity to perform work, will never be recompensed, and indeed probably could not be with dollars alone.Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 549 (1985) (Marshall, J., concurring in part). Although the Third Circuit has stated that such injuries "ordinarily will not [per se] warrant injunctive relief", Morton v. Beyer, 822 F.2d 364, 373 n. 14 (3d Cir. 1987), they nonetheless are "very real", id., and in this court's opinion, more significant than "the short time and slight expense involved in the typical arbitration",Camping Constr. Co., 915 F.2d at 1349. Therefore, although it appears that neither side will clearly suffer irreparable harm if the court grants or denies a stay, the balance of hardships favors petitioner's, and not respondent's, position. Consequently, because respondent has failed to satisfy the second prong of either test, a stay is not warranted in this case.
Furthermore, arbitration of Mr. Thomasson's grievance, which will either (1) ensure that petitioner receives prompt relief after enduring delay while this matter is on appeal or (2) bring this matter to a close, is worth a mere $1,500 ($750 per party).
3. Public Interest
Consideration of the public interest will not change this outcome. Even if, as respondent argues, the public interest favoring arbitration should not apply in this case, this fact does not prove the converse — that the public has an important interest in not arbitrating this matter.
The court seriously doubts that the public has any interest in whether respondent is required, justifiably or not, to arbitrate this matter. See Tribal Vill. of Akutan, 859 F.2d at 663 (suggesting that the public interest consideration is only applicable "in certain cases"). This is not a case where shared natural resources are threatened. See id. Nor does this case involve an alleged infringement of important constitutional rights which will continue to afflict the masses unless the court intervenes. See Sammartano, 303 F.3d at 974 (public interest in upholding First Amendment principles). At most, the public has only a generic interest in seeing that federal law is properly applied — which is true of any case and thus cannot justify the extraordinary remedy sought by respondent. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) ("[A] preliminary injunction is an extraordinary and drastic remedy. . . ." (quotation omitted)); Reading Bates Petroleum Co. v. Musslewhite, 14 F.3d 271, 275 (5th Cir. 1994) ("Stays pending appeal constitute extraordinary relief. . . ."). Moreover, because this court's orders are not binding on other courts, including this one, the court's order granting petitioner's motion to compel arbitration, whether or not erroneous, has not created a practice that threatens to deny others the protections of labor laws intended by Congress. See id. ("The public interest inquiry primarily addresses impact on non-parties. . . ."). Consequently, the public interest does not favor a stay of the court's order regarding arbitration.
The court recognizes that further developments in this case might alter the balance of hardships to favor a stay. As respondent noted in its brief, "[i]f arbitration is resolved in Thomasson's favor before the Ninth Circuit reaches its decision, then Sunrise [might] suffer . . . irreparable injury by having to re-employ a driver who has [allegedly] demonstrated that he cannot operate a multi-ton refuse truck safely." (Resp't Mot. to Stay Arbitration 9.) Under such circumstances, the public interest might also come into play. Cf. Exxon Corp. v. Esso Worker's Union, Inc., 963 F. Supp. 58, 60 (D. Mass. 1997) (granting a stay of an award that reinstated a truck driver who used cocaine while off duty because the petitioner's "drug problem . . . might seriously endanger the public").
However, at this time, respondent's arguments are both conjectural and beyond the scope of this court's jurisdiction. Whether Mr. Thomasson was properly discharged is a matter for the arbitrator to decide at the impending arbitration proceedings.AT T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986) (opining that the merits of the underlying claims and whether language in the written agreement supports the claim are matters for the arbitrator). If and when respondent's feared outcome comes to pass, it can petition the court to stay enforcement of the arbitrator's judgement. See Sheet Metal Workers' Int'l Ass'n, Local 206 v. R.K. Burner Sheet Metal Inc., 859 F.2d 758, 760 (9th Cir. 1988) ("The district court has jurisdiction under section 301 of the Labor Management Relations Act . . . to vacate or enforce a final labor arbitration award."); see also S. Cal. Gas Co. v. Utility Workers Union of Am., Local 132, AFL-CIO, 265 F.3d 787, 796 (9th Cir. 2001) (noting that regardless of whether reinstatement is required by the terms of a CBA, courts can vacate an arbitration award directing reinstatement if reinstatement would violate public policy). Granting a stay now would be premature, given that the court will have other opportunities to control the impact of the arbitrator's decision.
B. Motion to Hold Respondent in Contempt
Also before the court is petitioner's motion to hold respondent in criminal and/or civil contempt for failing to meet its "demand", made on May 22, 2006, "that [respondent] agree immediately to arbitration. . . ." (July 7, 2006 Grajski Decl. Ex. A (Letter from David A. Rosenfeld, counsel for petitioner).) However, petitioner's motion is premature. Federal Rule of Civil Procedure 62(c) explicitly affords the losing party an opportunity to seek a stay pending appeal. This rule would be meaningless if, as here, parties could be held in contempt before the trial court was given an opportunity to consider such motions. See Donovan v. Mazzola, 716 F.2d 1226, 1240 (9th Cir. 1983) (noting that established law requires only that "[a]bsent a stay, `all orders and judgments of courts must be complied with promptly.'" (quoting Maness v. Meyers, 419 U.S. 449, 458 (1975)) (emphasis added)); Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1473 n. 6 (9th Cir. 1992) (noting that the court had previously "held that a district court cannot find a party in contempt because it has not complied with an order until all attempts to stay that order have been exhausted").
Moreover, the sequence of events following the court's April 25, 2006 order compelling arbitration do not establish grounds for holding respondent in contempt — criminal or civil. "To sustain a judgment of criminal contempt, willful disobedience must be proved beyond a reasonable doubt." Clemente v. United States, 766 F.2d 1358, 1367 (9th Cir. 1985). However, the party seeking contempt sanctions cannot make such a showing "when a stay has been immediately sought. . . ." Id. Petitioner attempts to distinguish this case from Clemente, where appellants filed their motion to stay concurrently with their notice of appeal, by focusing on the month-long gap between respondent's filing of a notice of appeal on May 11, 2006 and its filing of a motion to stay on June 13, 2006. However, respondent has a laudable excuse for its delay — it was attempting to secure from petitioner a stipulation to stay arbitration pending appeal. (July 7, 2006 Grajski Decl. Exs. A-C.) On June 5, 2006, when respondent refused to further discuss this possibility, respondent's counsel "completed [respondent's] pending motion to stay as promptly as [he] could." (Id. ¶ 4.) The court can hardly fault respondent for attempting to first resolve the issue of a stay before troubling the court with a motion for an order of the same. Its failure thus far to proceed with arbitration was not in willful and deliberate defiance of this court's order and therefore criminal contempt sanctions are not warranted.
Moreover, aside from its citations to 18 U.S.C. § 401(3) (empowering courts to punish contempt of their authority), petitioner has not actually requested relief in the form of criminal contempt sanctions. Petitioner requests that the court order respondent "to pay a compliance fine of $1000 per day until Respondent and Petitioner agree upon an arbitrator." (Pet.'s Mot. to Hold Resp't in Contempt 3.) This proposal appears to be more akin to a civil contempt sanction, which is designed to either "coerce the defendant into compliance with the court's order, [or] . . . compensate the complainant for losses sustained."United States v. Mine Workers, 330 U.S. 258, 303-04 (1947). The proposed sanction lacks a retroactive aspect and is not based on a completed act of disobedience — two of the telltale signs of a criminal contempt sanction. Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 828-29 (1994). Moreover, it can be avoided through immediate compliance, which is indicative of a civil contempt sanction. Id. at 829.
Likewise, the circumstances of this case do not support civil contempt sanctions. Civil contempt "consists of a party's disobedience to a specific and definite court order by failure to take all reasonable steps within the party's power to comply."In re Dual-Deck Video Cassette Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993) (emphasis added); see also Fed.R.Civ.P. 70 (allowing courts to hold parties in contempt when "a judgment directs a party . . . to perform any . . . specific act and the party fails to comply within the time specified"). As respondent astutely points out, "the Order granting the Union's motion to compel arbitration did not specify a time for compliance." (Resp't Opp'n to Pet. Mot. to Hold Resp't in Contempt 2.) Petitioner failed to request that the court include a deadline for the commencement of arbitration and consequently, the fact that arbitration is still not underway nearly three months later is not in violation of a specific and definite court order. Cf. Lifescan, Inc. v. Premier Diabetic Servs., Inc., No. C-00-4472, 2001 WL 590011, at *1 (N.D. Cal. May 16, 2001) (noting that petitioner could seek to hold respondent in contempt if andwhen respondent failed to "submit to arbitration within the 90 day deadline"). To prevent this situation from barring future contempt proceedings, the court will herein establish a firm deadline for arbitration.
IT IS THEREFORE ORDERED that
(1) respondent's motion to stay arbitration be, and the same hereby is, DENIED.
(2) petitioner's motion to hold respondent in contempt be, and the same hereby is, DENIED.
(3) unless and until, upon further application by respondent, the court orders otherwise, the parties shall submit their dispute to an arbitrator within 60 days of the date of this order.