Summary
holding that grievance procedure in collective bargaining agreement governed breach of contract claim brought by employer against union
Summary of this case from Gipson Mech. Contractors, Inc. v. U.A. Local 572 of the United Ass'n of the JourneymanOpinion
Case No. 04-4028-JAR.
February 4, 2005
MEMORANDUM ORDER AND OPINION GRANTING MOTION TO DISMISS COUNTERCLAIM AND RENEWED MOTION TO DISMISS COUNTERCLAIM
This matter comes before the Court on Plaintiff's Motion to Dismiss Defendant-Counterclaimant Wichita Electric Company, Inc.'s ("Wichita Electric") Counterclaim (Doc. 10). In its Motion to Dismiss, Plaintiff Local Union No. 226 of the International Brotherhood of Electrical Workers ("the Union") seeks dismissal of Wichita Electric's Counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. The Union has also filed a Renewed Motion to Dismiss Wichita Electric's Counterclaim (Doc. 38). For the reasons set forth below, both motions are granted.
I. Background
The Union and Wichita Electric are parties to a collective bargaining agreement ("CBA") that sets forth specific procedures to settle grievances arising between the Union, employers, and Union members. On September 19, 2003, the Union notified Wichita Electric of grievances involving three Union members who alleged that Wichita Electric had violated various provisions of the CBA. The grievances were not resolved by representatives of the Union and Wichita Electric, and pursuant to the CBA, the parties submitted the grievances to the Union's Labor-Management Committee ("the LMC") for resolution. The LMC considered the grievances at a November 18, 2003, hearing and determined that Wichita Electric violated the CBA on all counts. On November 25, 2003, the LMC advised Wichita Electric of its decision in writing. Wichita Electric did not pay any of the award amounts listed in the LMC decision letter.
On April 1, 2004, the Union filed a complaint against Wichita Electric for breach of the CBA and for an order enforcing an arbitration award. Wichita Electric answered and filed a counterclaim seeking a declaratory judgment that Wichita Electric has no obligation to the Union under the CBA; an order vacating or rendering void the LMC decision; an order dismissing the Union's complaint; and an order for "formal" arbitration. Wichita Electric also brings a breach of contract counterclaim for negligent selection of Union workers. The Union now asks the Court to dismiss Wichita Electric's counterclaim.
II. Standard of Review for Motion to Dismiss
A court may dismiss a counterclaim for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. The purpose of Federal Rule of Civil Procedure 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint (or counterclaim) is true.
Hishon v. King Spalding, 467 U.S. 69, 73 (1984) (citation omitted).
Mounkes v. Conklin, 922 F. Supp. 1501, 1506 (D. Kan. 1996) (quotation omitted).
On a 12(b)(6) motion, a court judges the sufficiency of the complaint, accepting as true the well-pleaded factual allegations and drawing all reasonable inferences in favor of the plaintiff. The court construes the allegations in the light most favorable to the plaintiff. These deferential rules, however, do not allow the court to assume that a plaintiff can prove facts that it has not alleged or that the defendants have violated the laws in ways that have not been alleged. If the facts narrated by the plaintiff "do not at least outline or adumbrate" a viable claim, the complaint cannot pass Rule 12(b)(6) muster. Dismissal is a harsh remedy to be used cautiously so as to promote the liberal rules of pleading while protecting the interest of justice.
Shaw v. Valdez, 819 F.2d 965, 968 (10th Cir. 1987).
Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir. 1991).
Associated Gen. Contractors v. California State Council of Carpenters, 459 U.S. 519, 526 (1983).
Mounkes, 922 F. Supp. at 1506 (D. Kan. 1996) (citing Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988) (quotation omitted)).
Id.
III. Analysis
Motion to Vacate the LMC Decision
The Union seeks dismissal of Wichita Electric's motion to vacate the LMC decision on the grounds that a motion to vacate an arbitration award must be brought within ninety days after delivery of a copy of the award to the applicant, and therefore, Wichita Electric's motion is untimely. In response, Wichita Electric suggests that the LMC decision should be rendered void because: (1) it is not a final and binding arbitration award; (2) it is overreaching and unlawful; and (3) Wichita Electric was never informed that the LMC decision was an arbitration. At the very least, Wichita Electric urges that its ignorance of the alleged arbitration award should lengthen the statute of limitations for filing a motion to vacate an arbitration award.A. Final and Binding Arbitration
Wichita Electric argues that the LMC decision is not a final and binding arbitration award pursuant to the grievance procedure in the CBA. Sections 1.05 through 1.09 of the CBA, to which Wichita Electric signed an assent, set forth specific procedures to resolve grievances between the parties, as follows:
Section 1.05 There shall be a Labor-Management Committee of three representing the Union and three representing the Employers. It shall meet regularly at such stated times as it may decide. However, it shall also meet within 48 hours when notice is given by either party. It shall select its own Chairman and Secretary. The Local Union shall select the Union representatives and the Chapter shall select the management representatives.
Section 1.06 All grievances or questions in dispute shall be adjusted by the duly authorized representative of each of the parties to this Agreement. In the event that these two are unable to adjust any matter within 48 hours, they shall refer the same to the Labor-Management Committee.
Section 1.07 All matters coming before the Labor-Management Committee shall be decided by a majority vote. Four members of the Committee, two from each of the parties hereto, shall be a quorum for the transaction of business, but each party shall have the right to cast the full vote of its membership and it shall be counted as though all were present and voting.
Section 1.08 Should the Labor-Management Committee fail to agree or adjust any matter; such shall then be referred to the Council on Industrial Relations for the Electrical Contracting Industry for adjudication. The Council's decisions shall be final and binding.
Section 1.09 When any matter in dispute has been referred to conciliation or arbitration for adjustment, the provisions and conditions prevailing prior to the time such matters arose shall not be changed or abrogated until agreement has been reached or a ruling has been made.
Wichita Electric urges that the LMC decision is not a final arbitration award because section 1.07 does not state that a decision by the LMC is "final and binding," nor does it provide that an adjustment by the LMC is an "arbitration." In Wichita Electric's view, pursuant to the plain language of the CBA, only a decision by the Council on Industrial Relations for the Electrical Contracting Industry is a final and binding arbitration award.
Wichita Electric's plain language arguments fall flat. As Judge Lungstrum recently noted, these arguments "have been rejected by every court that has analyzed contractual language identical to the language in the agreement here and has addressed the precise issue before this court — whether proceedings before a Labor-Management Committee constitute final and binding arbitration." Indeed, other courts considering grievance provisions virtually identical to the CBA at issue here have consistently held that the provisions "authorize joint labor-management committees to issue arbitration awards that are entitled to judicial enforcement." The same courts have held that labor-management committee decisions are final and binding arbitration awards. In fact, the word "arbitration" need not appear in a collective bargaining agreement, nor must it appear in a specific section, to make a decision final and binding.
Lackey Elec., Inc. v. Local 226, Int'l Bhd. of Elec. Workers, ___ F. Supp. 2d ___, No. 04-2217, 2005 WL 78284 at *4 (D. Kan. Jan. 12, 2005).
Local Union 1253, Int'l Bhd. of Elec. Workers v. S/L Constr., 217 F. Supp. 2d 125, 132 (D. Me. 2002); see also Tecam Elec. M.V., Inc. v. Local Union 701 of the Int'l Bhd. of Elec. Workers, No. 01-3333, 2001 WL 1338985, at *3 (N.D.Ill. Oct. 29, 2001); Zorn v. Kans. City Cmty. Constr. Co., 812 F. Supp. 948, 953 (W.D. Mo. 1992).
See Tecam, 2001 WL 1338985 at *3 (citing cases and noting that "Courts have found, that as a general proposition, labor-management committee decisions are final and binding arbitration awards.").
See id. at *4; see also Zorn, 812 F. Supp. at 953.
Moreover, courts analyzing similar grievance provisions have identified the inconsistencies in the view advanced by Wichita Electric. Analyzing a collective bargaining agreement similar to the agreement in this case, one court stated:
[I]f the Agreement was interpreted as argued by [the employer], the only time that a final and binding decision would be made is if the LMC failed to agree or adjust a matter referred to the Council on Industrial Relations as found in Section 1.08. Therefore, any actions and decisions made pursuant to Sections 1.05, 1.06, and 1.07 would be useless. Such a result is inconsistent with Congress's intent to make arbitration a fast, efficient, and inexpensive substitution to litigation in federal court.
Lackey Elec., ___ F. Supp. 2d ___, 2005 WL 78284 at *4 (quoting Tecam, 2001 WL 1338985 at *4) (citing Int'l Bhd. of Elec. Workers No. 226 v. O.K. Johnson Elec. Co., No. 03-4222, 2004 WL 2005796 at *1 (D. Kan. August 5, 2004) and Zorn, 812 F. Supp. at 953).
This Court agrees with the reasoned analysis of other courts considering the language at issue here. Thus, the Court rejects Wichita Electric's interpretation of the CBA and concludes that pursuant to the plain language of the CBA, the LMC decision is a final and binding arbitration award. In so doing, the Court similarly rejects Wichita Electric's argument that the grievance provisions are ambiguous making dismissal at this stage improper.
Wichita Electric also argues that the LMC decision is not an arbitration award because the LMC hearing does not comport with the definition of "arbitration" set forth in Kansas Statutes. Wichita Electric refers the Court to provisions of the Kansas Uniform Arbitration Act and the Kansas Dispute Resolution Act. For instance, Wichita Electric relies upon K.S.A. 5-502(g), which defines arbitration as "a proceeding in which a neutral person or panel hears a formal case presentation and makes an award, which can be binding or nonbinding upon the parties relative to a prior agreement." Wichita Electric also refers to K.S.A. 5-405(b), which states that a party is "entitled to be heard, to present evidence material to the controversy and to cross-examine witnesses appearing at the hearing." Because no cross-examination or formal case presentation was allowed at the LMC hearing, Wichita Electric urges that no arbitration occurred.
Wichita Electric's arguments construing the Kansas statutes all fail, for Kansas law is inapplicable to this case. The Union seeks to enforce the arbitration award pursuant to § 301 of the Labor Management Relations Act, not Kansas law. The Supreme Court has held that "the substantive law to apply in suits under § 301(a) is federal law, which the courts must fashion from the policy of our national labor laws." The Court further explained that "state law, if compatible with the purpose of § 301, may be resorted to in order to find the rule that will best effectuate the federal policy. . . . Any state law applied, however, will be absorbed as federal law and will not be an independent source of private rights." Because both a motion to enforce and a motion to vacate the arbitration award are governed by § 301, it is federal law, not Kansas law, that applies to this dispute.
29 U.S.C. § 185.
Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456 (1957).
Id. at 457. One such state rule applicable to cases arising under § 301 is the relevant state statute of limitations period. See Int'l Bhd. of Elec. Workers, Local Union No. 969 v. Babcock Wilcox, 826 F.2d 962, 964 (10th Cir. 1987).
Moreover, the Kansas Arbitration Act and Kansas Dispute Resolution Act are, by their terms, inapplicable to this case. The Kansas Arbitration Act expressly excludes from its coverage "contracts between an employer and employees, or their respective representative." The Kansas Dispute Resolution Act is similarly inapposite. Thus, the Court concludes that notwithstanding provisions found in the Kansas statutes, the LMC hearing was an arbitration such that the LMC's decision constitutes a final and binding arbitration award.
See K.S.A. 5-501(b), 5-502(a)-(b).
B. The LMC decision was overreaching and unlawful
Wichita Electric argues that the LMC decision was unfair, overreaching and unlawful. Because the LMC decision is a final and binding arbitration award, Wichita Electric must challenge any alleged improprieties in the grievance process pursuant to a timely filed motion to vacate the arbitration award. The limitations period for a motion to vacate an arbitration award pursuant to § 301 of the Labor Management Relations Act is "determined as a matter of federal law, by reference to the appropriate state statute of limitations." The relevant period is often the same period as that in the state arbitration statute. The Kansas Uniform Arbitration Act requires a party seeking vacation of an arbitration award to file within 90 days after delivery of a copy of the award to the applicant.
See Babcock Wilcox, 826 F.2d at 965-66.
Id. at 964 (quoting Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 704-05 (1966)) (construing the limitations period found in Colorado's Uniform Arbitration Act).
See United Parcel Serv. v. Mitchell, 451 U.S. 56, 63-64 (1981); see also Premier Private Sec., Inc. v. Int'l Union, United Plant Guard Workers, Local No. 796, Case No. 98-6233 1999 WL 218944 at *3-4 (10th Cir. April 15, 1999).
Here, Wichita Electric admits that it received a copy of the LMC decision on November 25, 2003. Despite Wichita Electric's disagreement with the award, it waited a time span of nearly twice the limitations period before filing its counterclaim on May 18, 2004. Therefore, even assuming, arguendo, that Wichita Electric's allegations of an improper process and unfair award are true, Wichita Electric is now time-barred from seeking vacation of the LCM decision.
C. Wichita Electric's alleged ignorance of the arbitration award
Lastly, Wichita Electric contends that its untimely motion to vacate should be excused pursuant to K.S.A. 5-412(b) because the arbitration award was procured by fraud and undue means. K.S.A. 5-412(b) provides:
An application under this section shall be made within ninety (90) days after delivery of a copy of the award to the applicant, except that, if predicated upon corruption, fraud or other undue means, it shall be made within ninety (90) days after such grounds are known or should have been known.
For an arbitration award to be procured by fraud or undue means, there must be fraud in the actual arbitration proceedings itself. For instance, that a party committed perjury during the hearing or that the arbitrator exhibited bias toward one of the party are types of procedural fraud contemplated by K.S.A. 5-412.
Prof'l Builders, Inc. v. Sedan Floral, Inc., 819 P.2d 1254, 1258 (Kan. 1991).
Id.
Wichita Electric argues that the Union procured the arbitration award by fraud or undue means by failing to disclose that the LMC meeting was an arbitration. Thus, Wichita Electric alleges fraud in the actual arbitration proceeding. Even construing all inferences in Wichita Electric's favor, however, the Court cannot find that the Union's failure to inform Wichita Electric of a provision in the CBA, or of the law governing the CBA, constitutes fraud. It is settled that one who signs a contract is conclusively presumed to know its contents and to have assented to them. A collective bargaining agreement is no exception to this rule; indeed, this court has held that a party has a duty to be knowledgeable concerning collective bargaining agreement grievance procedures. In addition, parties to a contract are presumed to know the law governing such contract. As discussed, supra, courts interpreting grievance provisions identical to those found in the CBA to which Wichita Electric signed an assent have uniformly held that a decision of the LMC is a final and binding arbitration award. Wichita Electric simply cannot use its ignorance of the CBA provisions and the law governing those provisions as a predicate for any alleged fraud by the Union. Consequently, the Court rejects Wichita Electric's argument that its untimely motion to vacate is excused because the arbitration award was procured by fraud or undue means.
Ridgway v. Shelter Ins. Co., 913 P.2d 1231, 1235 (Kan.Ct.App. 1996) (citations omitted); Wayman v. Amoco Oil Co., 923 F. Supp. 1322, 1341 (D. Kan. 1996) ("[Kansas] law does not reward a commercial party for not having enough sense to read and understand a contract in its entirety before signing it.").
Nicolaisen v. Chicago N.W. Transp. Co., No. 89-2430, 1991 WL 237619 at *11 (D. Kan. Oct. 30, 1991) (citing Roman v. United States Postal Serv., 821 F.2d 382, 390 (7th Cir. 1987)).
Storts v. Hardee's Food Sys., Inc., 919 F. Supp. 1513, 1519 (D. Kan. 1996); Beckman v. Kan. Dept. of Human Res., 43 P.3d 891, 896 (Kan.Ct.App. 2002).
Breach of Contract
Wichita Electric claims that the Union breached its contractual duty to Wichita Electric pursuant to the Labor Management Relations Act and Kansas law by negligently selecting workers who were unqualified and unmotivated. Wichita Electric claims that the workers in question took extended breaks, were unqualified and unmotivated, and held unauthorized meetings, causing the job progress to slow. These actions allegedly violated section 3.02 of the CBA, which sets out the work day, work week, and lunch periods and section 3.25, which, in part, prevents a Union steward from causing a work stoppage. Wichita Electric also claims that section 3.08, which holds workers responsible for the employer's tools, was violated when the workers allegedly took or lost tools valued at approximately $800. The Union argues that Wichita Electric's negligent selection counterclaim fails to state a claim pursuant to either federal or state law.
At the outset, the Court notes that Wichita Electric may not bring a state law breach of contract claim predicated upon violations of the CBA. State law is preempted by federal law when resolution of a state law claim is substantially dependent upon an analysis of the terms of an agreement made between parties in a labor contract. In other words, federal law preempts state causes of action whose existence requires an "examination of the [collective bargaining agreement] to ascertain what duties were accepted by each of the parties and the scope of those duties." If the presence of the necessary elements of a state law claim can be ascertained without recourse to interpretation of the collective bargaining agreement, however, the state law remedy is not preempted.
Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 220 (1985).
Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 406 n. 4 (1988); see also United Mine Workers of Am. v. Rag Am. Coal Co., 392 F.3d 1233, 1241 (10th Cir. 2004) (commenting on the "broad presumption erected by § 301" and noting that the Supreme Court has made clear that state law claims dependent upon or determined by reference to a collective bargaining agreement are preempted by § 301).
See Lingle, 486 U.S. at 406 n. 5 n. 12 (noting that "not every dispute tangentially involving a provision of a collective-bargaining agreement is preempted by § 301").
In this case, Wichita Electric and the Union are parties to a collective bargaining agreement between an employer and a labor organization within the meaning of § 301 of the Labor Management Relations Act. Wichita Electric attempts to base its state breach of contract claims on a breach of certain provisions contained in the CBA. Obviously, whether or not the Union breached the CBA requires an examination of the particular provisions set forth in the CBA. Thus, federal law preempts Kansas law on Wichita Electric's breach of the CBA claim.
In the context of a § 301 claim, "[t]he term `employer' includes any person acting as an agent of an employer, directly or indirectly, but shall not include the United States or any wholly owned Government corporation, or any Federal Reserve Bank, or any State or political subdivision thereof, or any person subject to the Railway Labor Act [ 45 U.S.C.A. § 151 et seq.], as amended from time to time, or any labor organization (other than when acting as an employer), or anyone acting in the capacity of officer or agent of such labor organization." See 29 U.S.C. § 142 29 U.S.C. § 152(2). Similarly, "[t]he term `labor organization' means any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work." See 29 U.S.C. § 142 29 U.S.C. § 152(2).
Nor may Wichita Electric bring a claim pursuant to federal law. When a collective bargaining agreement sets forth a grievance procedure, that procedure is the exclusive and final remedy for disputes arising under that agreement. A § 301 claim will, therefore, lie only when a plaintiff has first exhausted the exclusive grievance and arbitration procedures provided in the collective bargaining agreement. Consequently, a plaintiff is precluded from suit until he has exhausted the arbitral procedure set forth in the collective bargaining agreement.
Sims v. Boeing Co., 60 F. Supp. 2d 1220, 1228 (D. Kan. 1999) (citing Vaca v. Sipes, 386 U.S. 171, 184, (1967)).
Cox v. Essex Group, Inc., 838 F. Supp. 1443, 1446 (D. Kan. 1993).
Harpp v. Gen. Elec. Co., 571 F. Supp. 426, 430 (N.D.N.Y. 1983).
The CBA in this case set forth provisions by which grievances were to be resolved. In particular, the CBA provides that in the event that a grievance or dispute is not adjusted by the parties' duly authorized representatives, the representatives "shall refer the same to the Labor-Management Committee." Wichita Electric failed to refer its grievance to the LMC. Because Wichita Electric has failed to follow the grievance procedure set forth in the CBA, its claim that the Union negligently selected workers in breach of the CBA must be dismissed as a matter of law.
See, e.g., Tecam, 2001 WL 1338985 at *4 (dismissing a portion of a breach of contract claim because of the employer's failure to seek the contractual remedies required by a similar or identical collective bargaining agreement); Int'l Bhd. Elec. Workers, Local Union No. 545 v. Hope Elec. Corp., 380 F.3d 1084, 1101 (8th Cir. 2004) ("To the extent that a particular issue is arbitrable, then, a party cannot refuse to participate in arbitration or fail in arbitration to raise a particular argument concerning the merits of the grievance and later seek judicial resolution of that same issue.").
IV. Conclusion
Wichita Electric's counterclaim is dismissed for failure to state a claim upon which relief can be granted. The LMC decision was an arbitration and therefore, is final and binding. Wichita Electric failed to file its motion to vacate the LMC decision within the limitations period and now is barred from asserting the claim. Its motion to vacate is thus dismissed, and the Court need not consider declaratory judgment of the parties' obligations under the LMC decision nor the motion to dismiss the Union's complaint to enforce the LMC decision and award. Nor must the Court require the parties to arbitrate. Wichita Electric's breach of contract claim simply fails to state a claim upon which relief can be granted, even if Wichita Electric's allegations concerning worker behavior are true. Therefore, the counterclaim is dismissed.
IT IS THEREFORE ORDERED BY THE COURT THAT Plaintiff's Motion to Dismiss Defendant's Counterclaim (Doc. 10) is GRANTED.
IT IS FURTHER ORDERED BY THE COURT THAT Plaintiff's Renewed Motion to Dismiss Defendant's Counterclaim (Doc. 38) is GRANTED.
IT IS SO ORDERED.