Ameristeel v. Int'l Teamsters Chauffeurs et al.

• Decision Date: 26 September 2001
• Docket Number: TEAMSTERS,No. 00-3366,ARBITRATION,AFL-CI,00-3366
• Parties: (3rd Cir. 2001) AMERISTEEL CORPORATION, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA,ASSOCIATION INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA,LOCAL 430, APPELLANT
• Court: U.S. Court of Appeals — Third Circuit

Page 264

267 F.3d 264 (3rd Cir. 2001)

AMERISTEEL CORPORATION, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO, ARBITRATION ASSOCIATION

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO, TEAMSTERS LOCAL 430, APPELLANT

No. 00-3366

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued November 30, 2000

Filed September 26, 2001

On Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. Civil No. 99-CV-02131)

Ira H. Weinstock, Esq. (Argued), Joseph P. Milcoff, Esq., Ira H. Weinstock, P.C., 800 North Second Street, Suite 100 Harrisburg, PA 17102, Counsel for Appellant

John G. Creech, Esq. (Argued), D. Rangle Moody, II, Esq., Haynsworth, Baldwin, Johnson & Greaves, 918 South Pleasantburg Drive Greenville, SC 29607 and Mark J. Manta, Esq., Klett, Rooney, Lieber & Schorling, 810 Bear Tavern Road, Mountain View Office Park, Suite 302 West Trenton, NJ 08628, Counsel for Appellee

Before: Becker, Chief Judge, Rendell, and MAGILL,^* Circuit Judges Rendell, Circuit Judge.

RENDELL, Circuit Judge,

I. Introduction

This appeal presents the question whether a successor employer who has expressly refused to be bound by its predecessor's collective bargaining agreement may nonetheless be forced to arbitrate grievances pertaining to the agreement. Because an unconsenting successor cannot be bound by the substantive provisions of its predecessor's agreement, we hold that the successor in this case, appellee AmeriSteel Corporation, cannot be forced to arbitrate the extent of its obligations under the agreement. AmeriSteel, quite simply, has no obligations under the agreement--and thus no arbitration award for the appellant, Teamsters Local 430, could possibly receive judicial sanction. In such circumstances, the arbitration forum designated in the collective bargaining agreement is an inappropriate vehicle by which to settle the parties' dispute. Therefore, we will affirm the District Court's order which enjoins the Union and the American Arbitration Association from including AmeriSteel as a party in pending arbitration proceedings, or any other arbitration proceedings involving the collective bargaining agreement.

Our resolution of this case avoids creating the incongruous situation in which a successor employer may be forced to arbitrate the extent of its obligations under its predecessor's agreement, and yet the arbitrator is powerless to enforce these obligations because they are not binding on the successor employer. While we recognize the vital importance of arbitration as a means of settling labor disputes, we think it clear that arbitration should not proceed when ultimately it can serve no purpose. Furthermore, our decision recognizes the sound principle that arbitration cannot be used as a means to accomplish illegitimate ends. More specifically, given that AmeriSteel has no obligations under the collective bargaining agreement, any arbitration award to the appellant Union would necessarily reach beyond the agreement itself and into the realm of the arbitrator's own notion of industrial justice, a practice expressly forbidden by the United States Supreme Court.

II. Facts and Procedural Background

Appellee AmeriSteel is a Florida corporation engaged in the manufacture and sale of steel products. On April 29, 1999, AmeriSteel purchased various assets of Brocker Rebar, including a manufacturing facility in York, Pennsylvania, and AmeriSteel commenced operations at the York facility on May 3, 1999. Appellant Teamsters Local 430 ("Local 430" or "Union") represents certain employees at the facility, namely truck drivers, warehousemen, material handlers, and other helpers. A collective bargaining agreement ("CBA") existed between Local 430 and Brocker Rebar, effective from December 1, 1996 to November 30, 1999. The purchase agreement between AmeriSteel and Brocker Rebar included various provisions expressly stating that AmeriSteel was not to be bound by the terms of the CBA. In its dealings with the Union, AmeriSteel has consistently and repeatedly maintained that it is not bound by the terms of the CBA, and therefore that it is not bound to arbitrate under the agreement.

AmeriSteel hired roughly 50 employees to work in the York facility, and all but six members of Local 430 who had worked for Brocker Rebar were hired by AmeriSteel. In addition, AmeriSteel retained four Brocker Rebar executives. Because it had hired a majority of the Local 430 members who had worked for Brocker Rebar, AmeriSteel was obligated to bargain with the Union. Bargaining with the Union broke down, however, on May 10, 1999, when AmeriSteel withdrew recognition of the Union based on a petition purportedly signed by a majority of the Union employees, in which they supposedly stated that they no longer wanted to be represented by Local 430. The Union then initiated an unfair labor practices action against AmeriSteel before the NLRB, but that action is not before us on appeal.

Local 430 filed a grievance on behalf of all its members against Brocker Rebar and AmeriSteel on April 22, 1999, challenging unilateral changes that would occur in working conditions at the York facility when the AmeriSteel purchase agreement was consummated. Closing under the purchase agreement occurred on April 29, 1999. In May 1999, after the parties were unable to resolve the grievance, the Union requested arbitration pursuant to the arbitration clause in the CBA. AmeriSteel filed a Complaint and motion for injunctive relief in the United States District Court for the Middle District of Pennsylvania on December 9, 1999, seeking to enjoin Local 430 and the American Arbitration Association from proceeding to arbitration with AmeriSteel as a party. On March 17, 2000, the District Court granted AmeriSteel a preliminary injunction, reasoning that AmeriSteel could not be bound to arbitrate under the pre-existing CBA because AmeriSteel was not the "alter ego" of Brocker Rebar, nor had AmeriSteel agreed to abide by the CBA. App. at 256-57.

Local 430 complains on appeal that the District Court should not have granted the preliminary injunction in the first place, and that the court compounded its error by, in effect, granting a permanent injunction without analyzing the applicable standard for granting a permanent injunction. Unfortunately, the District Court might have caused some unnecessary confusion by not explicitly stating that it was, in fact, granting a permanent injunction, and not merely a preliminary one. We have in the past admonished district courts to avoid this type of oversight. E.g., CIBA-GEIGY Corp. v. Bolar Pharm. Co., 747 F.2d 844, 847 (3d Cir. 1985) (observing that although the Third Circuit could convert the district court's opinion into a permanent injunction, "we would much prefer that the district court recast its own opinion in the language of the standard it is applying. This would eliminate the possibility of confusion as to what the district court intended and would, in the long run, promote judicial economy").

Nonetheless, it is apparent that the District Court implicitly granted a permanent injunction, and we find no reversible error in the court's procedure. In its opinion, the District Court announced a legal standard under which Local 430 could prevail only if it could prove that AmeriSteel was the "alter ego" of Brocker Rebar, or that AmeriSteel had agreed to abide by the CBA. It is undisputed that AmeriSteel is not the "alter ego"¹ of Brocker Rebar and that AmeriSteel has expressly rejected the CBA. Thus, there were no triable issues of fact and no need for a trial on the merits. In other words, AmeriSteel had already prevailed on the merits, and therefore the District Court's order, in effect, grants AmeriSteel a permanent injunction. Any further proceedings in the District Court would have served no purpose. Consequently, we are squarely presented with the question of whether AmeriSteel can be bound to arbitrate under the CBA.

III. Jurisdiction and Standard of Review

The District Court had jurisdiction over this action pursuant to 28 U.S.C. S 1331 and 29 U.S.C.S 185. Because the District Court's order, in effect, grants a permanent injunction, we have appellate jurisdiction pursuant to 28 U.S.C. S 1291, which provides for appeals of all final decisions of the federal district courts.

We review a district court's decision to grant or deny a permanent injunction under an abuse of discretion standard. E.g., ACLU v. Black Horse Pike Reg'l Bd. of Educ., 84 F.3d 1471, 1476 (3d Cir. 1996). However, because an abuse of discretion exists where the district court's decision "rests upon a clearly erroneous finding of fact, an errant conclusion of law, or an improper application of law to fact," id., we apply plenary review to the District Court's legal conclusions.

IV. Discussion

This case requires us to navigate the treacherous waters of the Supreme Court's labor law successorship doctrine, which has, at times, imposed extra-contractual duties upon successor employers. Appellant Local 430 argues that AmeriSteel, as a successor employer to Brocker Rebar, must arbitrate grievances brought by the Union under the collective bargaining agreement between the Union and Brocker Rebar. AmeriSteel counters that it was never a party to the CBA, expressly rejected it during its asset purchase negotiations with Brocker Rebar, and has consistently maintained in its dealings with the Union that it is not bound by the terms of the CBA, including its arbitration clause. Accordingly, AmeriSteel argues that it cannot be compelled to submit to arbitration.

As an initial matter, we note that labeling AmeriSteel a "successor employer" to Brocker Rebar does little to help resolve the issue in this case. As the Supreme Court has explained, a new employer, like AmeriSteel, "may be a successor for some purposes and not for...