Pietro Scalzitti Co. v. International U. of Op. Eng., Local No. 150

• Decision Date: 07 October 1965
• Docket Number: No. 14947.,14947.
• Parties: PIETRO SCALZITTI COMPANY, an Illinois corporation, Plaintiff-Appellant, v. INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL NO. 150, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

351 F.2d 576 (1965)

PIETRO SCALZITTI COMPANY, an Illinois corporation, Plaintiff-Appellant, v. INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL NO. 150, Defendant-Appellee.

No. 14947.

United States Court of Appeals Seventh Circuit.

October 7, 1965.

Emmett J. McCarthy, Charles J. Reed, Chicago, Ill., for appellant.

Bernard M. Baum and Daniel S. Shulman, Chicago, Ill., for appellee.

Before HASTINGS, Chief Judge, and DUFFY and CASTLE, Circuit Judges.

HASTINGS, Chief Judge.

Pietro Scalzitti Company brought this action in the district court against International Union of Operating Engineers, Local No. 150. The complaint was grounded on Section 301 of the Labor Management Relations Act of 1947, 29 U.S.C.A. § 185, as amended (Act). Company seeks to recover damages for expenses and losses claimed to have resulted from an alleged breach of a no-strike clause in the collective bargaining agreement between Company and Union.

Company appeals from an order of the district court sustaining Union's motion to stay the proceedings pending arbitration of the issues raised in the complaint.

Company and Union entered into a written agreement on July 15, 1963, specifically adopting the terms and conditions of a collective bargaining agreement dated February 1, 1963.

The agreement provided in Article I, Section 4(F):

"Notice on Leaving Job — No employee shall leave his job without giving due notice to his Employer and the Union."

and provided in Article I, Section 6:

"Work Stoppage — There shall be no stoppage of work by the Union officers and business representatives until all of the procedures set forth in the foregoing Section 5, Article I, have been exhausted."

The agreement contained the following provisions for settlement of grievances:

"(A) Grievances and Arbitration — Whenever any difference or dispute shall arise as to interpretation or application of the terms of this Agreement, such dispute or difference shall be resolved in the following order:

(1) In conference between the business agent and the designated representative of the employer.

(2) In the event the dispute cannot be so resolved within twenty-four hours, it shall then be referred to conference between designated officers of the Union and the Associations.

(3) Unless so resolved within forty-eight hours, the matter shall then be submitted to a Board of five arbitrators, who shall commence the Arbitration talks within 48 hours after they have received notice of complaint. Two to be selected by the Union, two to be selected by the Associations, and the fifth to be chosen by the four so selected. Upon the failure to so select a fifth arbitrator within 48 hours, the selection shall then be made in accordance with the rules and procedures of the American Arbitration Association.

"(B) Hearing — The Board of Arbitration so selected shall hear all evidence and render its decision by a majority vote based on evidence and the contract.

"(C) Decision — The decision so rendered shall be final and binding upon both the Union and the Employer."

The pleadings disclose the following factual background leading to this appeal. Company was engaged in the construction business. In February, 1963, it became a subcontractor for the construction of an intercepting sewer project in Cook County, Illinois and entered upon the performance of its contract.

On August 7, 1963, all of Company's employees who were Union members left the job. Company requested Union to furnish the same or other employees for work the following day. Union failed to comply with this request.

As a result of Union's failure to comply with Company's request for employees, Company alleges it was unable to secure workers to complete the work. As a consequence, the Company forfeited its rights to complete the performance of its contract. Company claims damages of $500,000 for its resulting expenses and loss of profits.

Company's complaint was served on Union in December, 1963. On December 30, 1963, Union sent a telegram to Company denying any alleged violation of the collective bargaining agreement and demanding arbitration of issues raised in the complaint pursuant to the agreement. On January 6, 1964, Company replied to the telegram and refused to submit the issues to arbitration.

On January 20, 1964, Union filed, with a supporting affidavit, its motion to stay the action pending arbitration. In its motion to stay, Union does not deny the walkout by its members, nor does it deny it failed to furnish Company with employees as demanded by Company. However, Union does deny it violated the agreement in any respect. This must be taken to mean that Union denies responsibility for the strike and denies it was required by the agreement to furnish Company with employees after the walkout.

It does not appear that Union had knowledge of a contract dispute until it was served with a copy of the complaint. In its supporting affidavit, Union declares it requested arbitration as soon as it received a copy of the complaint filed in the district court.

Company resists the motion to stay on the grounds that the collective bargaining agreement does not contemplate arbitration of a breach of the no-strike clause under the facts of this case; that Section 1 of the United States Arbitration Act precludes the district court from enforcing arbitration as required by the agreement; that Union was in default in proceeding with arbitration; and that the issues of fact presented are properly triable only by the district court.

Arbitration and arbitrable issues are to be determined from the bargaining agreement between the parties. John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-547, 84 S.Ct. 909, 11 L.Ed.2d 898 (1963); Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S.Ct. 1318, 8 L.Ed.2d 462 (1961); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-583, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1959).

Close scrutiny of the arbitration clause in the contract is required. If the issues can be fairly said to come within the coverage of the arbitration clause, a motion to stay proceedings pending arbitration or an order directing arbitration, as the case requires, necessarily must follow. Drake Bakeries, Inc. v. Local 50, American Bakery and Confectionery Workers, 370 U.S. 254, 263-265, 82 S.Ct. 1346, 8 L.Ed.2d 474 (1962); United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960).

The Court said in the latter case, "The function of a court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the...