363 U.S. 574 (1960), 443, United Steelworkers of America v. Warrior & Gulf Navigation Co.

Docket Nº:No. 443
Citation:363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409
Party Name:United Steelworkers of America v. Warrior & Gulf Navigation Co.
Case Date:June 20, 1960
Court:United States Supreme Court

Page 574

363 U.S. 574 (1960)

80 S.Ct. 1347, 4 L.Ed.2d 1409

United Steelworkers of America


Warrior & Gulf Navigation Co.

No. 443

United States Supreme Court

June 20, 1960

Argued April 27, 1960




This suit under § 301 (a) of the Labor Management Relations Act, 1947, was brought by a labor union to compel arbitration of a grievance based upon the employer's practice of contracting out work while laying off employees who could have performed such work. The collective bargaining agreement between the parties contained "no strike" and "no lock-out" provisions, and set up a grievance procedure culminating in arbitration. It provided that "matters which are strictly a function of management shall not be subject to arbitration," but it also provided that,

Should differences arise . . . as to the meaning and application of the provisions of this Agreement, or should any local trouble of any kind arise,

the grievance procedure should be followed. The Court of Appeals ruled that deciding whether to contract out work was "strictly a function of management" within the meaning of the agreement, and it sustained a judgment of the District Court dismissing the complaint.

Held: It erred in doing so, and the judgment is reversed. Pp.575-585.

(a) In a suit under §301(a), judicial inquiry must be strictly confined to the question whether the reluctant party did agree to arbitrate the grievance or to give the arbitrator power to make the award he made; an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute; and doubts should be resolved in favor of coverage. Pp. 582-583.

(b) In the absence of any express provision excluding a particular grievance from arbitration, only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail, particularly where, as here, the exclusion clause is vague, and the arbitration clause quite broad. Pp. 583-585.

(c) Since, in this case, the parties had agreed that any dispute "as to the meaning of this Agreement" would be determined by

Page 575

arbitration, it was for the arbitrator, not the courts, to decide whether the contracting out here involved violated the agreement. P. 585.

269 F.2d 633, reversed.

DOUGLAS, J., lead opinion

Opinion of the Court by MR. JUSTICE DOUGLAS, announced by MR. JUSTICE BRENNAN.

Respondent transports steel and steel products by barge and maintains a terminal at Chickasaw, Alabama, where it performs maintenance and repair work on its barges. The employees at that terminal constitute a bargaining unit covered by a collective bargaining agreement negotiated by petitioner union. Respondent, between 1956 and 1958, laid off some employees, reducing the bargaining unit from 42 to 23 men. This reduction was due in part to respondent's contracting maintenance work, previously done by its employees, to other companies. The latter used respondent's supervisors to lay out the work and hired some of the laid-off employees of respondent (at reduced wages). Some were in fact assigned to work on respondent's barges. A number of employees signed a grievance which petitioner presented to respondent, the grievance reading:

We are hereby protesting the Company's actions of arbitrarily and unreasonably contracting out work to other concerns that could and previously has been performed by Company employees.

This practice becomes unreasonable, unjust and discriminatory in lieu [sic] of the fact that, at present,

Page 576

there are a number of employees that have been laid off for about 1 and 1/2 years or more for allegedly lack of work.

Confronted with these facts, we charge that the Company is in violation of the contract by inducing a partial lock-out, of a number of the employees who would otherwise be working were it not for this unfair practice.

The collective agreement had both a "no strike" and a "no lockout" provision. It also had a grievance procedure which provided in relevant part as follows:

Issues which conflict with any Federal statute in its application as established by Court procedure or matters which are strictly a function of management shall not be subject to arbitration under this section.

Should differences arise between the Company and the Union or its members employed by the Company as to the meaning and application of the provisions of this Agreement, or should any local trouble of any kind arise, there shall be no suspension of work on account of such differences but an earnest effort shall be made to settle such differences immediately in the following manner:

[80 S.Ct. 1350]

A. For Maintenance Employees:

First, between the aggrieved employees, and the Foreman involved;

Second, between a member or members of the Grievance Committee designated by the Union, and the Foreman and Master Mechanic.

* * * *

Fifth, if agreement has not been reached the matter shall be referred to an impartial umpire for decision. The parties shall meet to decide on an umpire acceptable to both. If no agreement on selection of an umpire is reached, the parties shall jointly petition

Page 577

the United States Conciliation Service for suggestion of a list of umpires from which selection shall be made. The decision of the umpire will be final.

Settlement of this grievance was not had, and respondent refused arbitration. This suit was then commenced by the union to compel it.1

The District Court granted respondent's motion to dismiss the complaint. 168 F.Supp. 702. It held, after hearing evidence, much of which went to the merits of the grievance, that the agreement did not "confide in an arbitrator the right to review the defendant's business judgment in contracting out work." Id. at 705. It further held that

the contracting out of repair and maintenance work, as well as construction work, is strictly a function of management not limited in any respect by the labor agreement involved here.

Ibid. The Court of Appeals affirmed by a divided vote, 269 F.2d 633, 635, the majority holding that the collective agreement had withdrawn from the grievance procedure "matters which are strictly a function of management," and that contracting out fell in that exception. The case is here on a writ of certiorari. 361 U.S. 912.

We held in Textile Workers v. Lincoln Mills, 353 U.S. 448, that a grievance arbitration provision in a collective agreement could be enforced by reason of § 301(a) of the Labor Management Relations Act2 and that the policy to be applied in enforcing this type of arbitration

Page 578

was that reflected in our national labor laws. Id. at 456-457. The present federal policy is to promote industrial stabilization through the collective bargaining agreement.3 Id. at 453-454. A major factor in achieving industrial peace is the inclusion of a provision for arbitration of grievances in the collective bargaining agreement.4

[80 S.Ct. 1351] Thus, the run of arbitration cases, illustrated by Wilko v. Swan, 346 U.S. 427, becomes irrelevant to our problem. There, the choice is between the adjudication of cases or controversies in courts with established procedures or even special statutory safeguards, on the one hand, and the settlement of them in the more informal arbitration tribunal, on the other. In the commercial case, arbitration is the substitute for litigation. Here, arbitration is the substitute for industrial strife. Since arbitration of labor disputes has quite different functions from arbitration under an ordinary commercial agreement, the hostility evinced by courts toward arbitration of commercial agreements has no place here. For arbitration of labor disputes under collective bargaining agreements is part and parcel of the collective bargaining process itself.

The collective bargaining agreement states the rights and duties of the parties. It is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. See Shulman, Reason, Contract, and Law in Labor Relations, 68 Harv.L.Rev.

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999, 1004-1005. The collective agreement covers the whole employment relationship.5 It calls into being a new common law -- the common law of a particular industry or of a particular plant. As one observer has put it:6

. . . [I]t is not unqualifiedly true that a collective bargaining agreement is simply a document by which the union and employees have imposed upon management limited, express restrictions of its otherwise absolute right to manage the enterprise, so that an employee's claim must fail unless he can point to a specific contract provision upon which the claim is founded. There are too many people, too many problems, too many unforeseeable contingencies to make the words of the contract the exclusive source of rights and duties. One cannot reduce all the rules governing a community like an industrial plant to fifteen or even fifty pages. Within the sphere of collective bargaining, the institutional characteristics

Page 580

and the governmental nature of the collective bargaining process demand a common law of the shop which implements and furnishes the context of the agreement. We must assume that intelligent negotiators acknowledged so plain a need unless they stated a contrary rule in plain words.

A collective bargaining agreement is an effort to erect a system of industrial self-government. When most parties enter [80 S.Ct. 1352] into contractual relationship, they do so voluntarily, in the sense that there is no real compulsion to deal with one another, as opposed to dealing with other parties. This is not true of the labor agreement. The choice is generally not between entering or refusing to enter into a relationship, for that in all...

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