Opinion
No. C 03-2856 CW.
November 3, 2004
ORDER DENYING DEFENDANT'S MOTION FOR ATTORNEYS' FEES
Defendant Safeway, Inc. moves for attorneys' fees pursuant to § 301 of the Labor Management Relations Act of 1947 (LMRA), 29 U.S.C. § 185. Plaintiff United Food and Commercial Workers Union, Local 870, AFL-CIO (Local 870) opposes the motion. The matter was submitted on the papers. Having considered all of the papers filed by the parties, the Court DENIES Safeway's motion.
BACKGROUND
Local 870 originally brought suit against Safeway for declaratory and injunctive relief claiming that Safeway violated the collective bargaining agreement (CBA) by refusing to recognize certain grievances as substantiated.
Safeway denied that it had violated the CBA and argued that § 301 did not give this Court the power to grant the declaratory and injunctive relief sought by Local 870.
Both parties filed motions for summary judgment. This Court denied Local 870's motion for summary judgment and granted Safeway's cross-motion for summary judgment.
Safeway now moves for attorneys' fees claiming that, given the broad arbitration clause in the CBA, Local 870's refusal to arbitrate was without justification and in bad faith.
Local 870 opposes Safeway's motion for attorneys' fees on the ground that Safeway fails to meet the stringent evidentiary and legal burden required to overcome the American Rule against awarding attorneys' fees to prevailing litigants. Local 870 contends that: (1) Safeway fails to identify the relevant legal standard, (2) Safeway fails to prove bad faith, and (3) Safeway's fee application does not establish the reasonableness of the incurred fees.
LEGAL STANDARD
The American Rule which governs the allocation of attorneys' fees provides that each party bears the costs of its own attorneys' fees, regardless of the outcome of the action.Alyeska Pipeline Servs. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975). However, an award of attorneys' fees to the prevailing party is proper if (1) authorized by statute or (2) the court finds that the losing party has acted in bad faith.Int'l Union of Petroleum and Indus. Workers v. Western Indus. Maint., Inc., 707 F.2d 425, 428 (9th Cir. 1983). Under the bad faith exception to the American Rule, attorneys' fees may be awarded in the case of vexatious, wanton or oppressive conduct.F.D. Rich Co. v. United States ex rel. Indus. Lumber Co., 417 U.S. 116, 129 (1974). An award of attorneys' fees for bad faith is punitive and the penalty can be imposed "only in exceptional cases and for dominating reasons of justice." United States v. Standard Oil Co., 603 F.2d 100, 103 (9th Cir. 1979).
DISCUSSION
I. Statute
Citing United Steelworkers v. Butler Mfr. Co., 439 F.2d 1110, 1112 (8th Cir. 1971) and Gen. Drivers Helpers Union, Local 554 v. Young Hay Transp. Co., 522 F.2d 562, 568 (8th Cir. 1974), Safeway argues that an award of attorneys' fees in a suit brought under § 301 of the LMRA should be considered part of the damages awarded to the defendant and is thus compensatory rather than punitive in nature.
Section 301 states:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this Act, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.29 U.S.C. § 185(a).
The Ninth Circuit has stated, "The Labor Management Relations Act, 29 U.S.C.S. § 185, authorizes breach of contract actions between unions and employers, but does not specifically provide for an award of attorney's fees." Seattle Times Co. v. Seattle Mailer's Union, 664 F.2d 1366, 1370 (9th Cir. 1982).
Section 301 is devoid of language authorizing an award of attorneys' fees. This Court must follow the Ninth Circuit's ruling in Seattle Times rather than the Eighth Circuit's opinions in Steelworkers and Gen. Drivers. Safeway correctly states that there is a strong policy in favor of arbitration. However, this policy falls short of a statute mandating arbitration, much less one authorizing attorneys' fees. Because no statute authorizes an award of attorneys' fees, Safeway must prove that Local 870 filed the lawsuit in bad faith.
II. Bad Faith
Safeway argues that, given the broad arbitration clause in the CBA, Local 870's refusal to arbitrate was unjustified and in bad faith. Citing the Court's June 2, 2004 Order denying Local 870's motion for summary judgment and granting Safeway's cross-motion for summary judgment, which notes that the parties' dispute "does not implicate new categories of controversies, only resolution of controversies traditionally handled through arbitration" (June 2, 2004 Order 10:5-11), Safeway argues that Local 870 should not have brought suit but instead should have taken the issue to arbitration.
Safeway cites Int'l Bhd. of Elec. Workers Local Union No. 2022 v. Teletype Corp., 551 F. Supp. 676, 681-82 (E.D. Ark. 1982), stating that the factual circumstances in that case are similar "if not identical" to the facts of this case. In Int'l Bhd., the union brought a complaint against the employer under the LMRA arising from the employer's refusal to arbitrate a grievance. Id. at 678. On motions for summary judgment, the court held that the employer's refusal to proceed to arbitration on the basis that the grievances at issue were untimely was without justification and made in bad faith. Id. at 681. The court awarded attorneys' fees to the union because the defendant company had refused to arbitrate a clearly arbitrable grievance.Id.
Local 870 distinguishes Int'l Bhd. by pointing out that the labor agreement in that case addressed time requirements in a run-of-the-mill fashion, whereas Local 870 bought suit against Safeway using novel ideas based upon the unusual language of the CBA. Local 870 argues that it did not act in bad faith and that it brought suit because Safeway "persistently refused to convene timely boards of adjustment as required by § 18.2 of the parties' labor agreement." Pl.'s Opp'n. 1:11-12.
Despite this Court's June 2, 2004 Order awarding summary judgment to Safeway, there is no indication that Local 870 acted in bad faith.
CONCLUSION
For the reasons stated above, Safeway's motion for attorneys' fees is DENIED.
IT IS SO ORDERED.