International Union of Operating Engineers, Local 150 v. Flair Builders, Inc 8212 41

• Decision Date: 30 May 1972
• Docket Number: No. 71,AFL-CI,P,71
• Citation: 406 U.S. 487,92 S.Ct. 1710,32 L.Ed.2d 248
• Parties: INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150,etitioner, v. FLAIR BUILDERS, INC. —41
• Court: U.S. Supreme Court

406 U.S. 487

92 S.Ct. 1710

32 L.Ed.2d 248

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150, AFL-CIO, Petitioner,

v FLAIR BUILDERS, INC.

No. 71—41.

Argued April 10, 1972.

Decided May 30, 1972.

Syllabus

Petitioner union brought an action in June 1968 seeking damages and injunctive relief for respondent's alleged breach of their collective-bargaining agreement, charging that respondent had 'continually violated' the contract since June 1966 by refusing to abide by any of its terms. The agreement provided for arbitration 'of any difference . . . which cannot be settled . . . within 48 hours of the occurrence.' The District Court held that respondent 'was bound by the memorandum agreement to arbitrate labor disputes within the limits of the arbitration clause,' but found the union guilty of laches and dismissed the action. The Court of Appeals affirmed. Held: As the District Court found, the parties did agree to arbitrate and, the existence and scope of an arbitration clause being matters for judicial decision, the phrase 'any difference' encompasses the issue of laches within the broad sweep of its arbitration coverage. Pp. 490—492.

7 Cir., 440 F.2d 557, reversed.

Bernard M. Baum, Chicago, Ill., for petitioner.

J. Robert Murphy, as amicus curiae, in support of the judgment below.

Mr. Justice BRENNAN delivered the opinion of the Court.

In November 1968, petitioner brought an action in the United States District Court for the Northern District of Illinois, seeking damages and injunctive relief for an alleged breach by respondent of their collective-bargaining agreement. The complaint charged that since June 1, 1966, respondent had 'continually violated' the contract by refusing to abide by any of its terms, including wage, hiring hall, and fringe benefit provisions. The agreement, which incorporated the terms of master contracts between petitioner and a local contractors' association, provided for arbitration of 'any difference . . . between the parties hereto which cannot be settled by their representatives, within 48 hours of the occurrence.'

The District Court dismissed petitioner's action for failure to state a claim and noted, but did not pass upon, two additional contentions of the company—' that (1) no contract was ever created, and (2) . . . if consummated, the agreement was subsequently abandoned by the union.' No. 68—C—2091 (April 14, 1969) (unreported). The court suggested that the parties arbitrate the binding effect of their contract. When the company refused to arbitrate either that issue or 'the subsequent issues of possible violations,' petitioner filed an amended complaint to compel arbitration.

In moving to dismiss the amended complaint, respondent again denied the existence of a binding agreement and argued that the Union's delay in seeking arbitration constituted laches barring enforcement of the contract. The District Court initially denied the motion, holding that 'if the employer consented to the alleged collective bargaining agreement, the laches issue should be decided by the arbitrator rather than the federal courts.' Id. (Aug. 26, 1969) (unreported). But after conducting an evidentiary hearing on the scope of the ar- bitration clause, the court entered an order dismissing the complaint. Id. (Dec. 4, 1969) (unreported). Though agreeing that respondent 'was bound by the memorandum agreement to arbitrate labor disputes within the limits of the arbitration clause,' the court found that there had been no contact between the parties from the time of the signing in 1964 until the summer of 1968. It therefore concluded that the Union was guilty of laches in seeking enforcement:

'The master agreement contemplates initiation of arbitration proceedings if any dispute is not settled within 48 hours of its occurrence, and further provides that the Board of Arbitrators shall meet 'within six (6) days.' Yet demand for arbitration was not made in this case until April, 1969, almost five years from Flair's first alleged failure to comply with the contract and nearly three years from the inception of the alleged breach sought to be arbitrated.

'To require Flair to respond, through arbitration, to general charges of noncompliance with contract provisions allegedly beginning more than two years before this suit was filed would impose an extreme burden on its defense efforts. . . . (T)o compel arbitration would reward plaintiff for its own inaction and subject defendant to the risk of liability because of actions taken or not taken in reliance on plaintiff's apparent abandonment.'

The Court of Appeals affirmed the order by divided vote. 7 Cir., 440 F.2d 557 (1971). Its opinion read the memorandum of the District Court to hold that the collective-bargaining agreement was still in effect and that therefore the question for decision was 'whether a court may properly dismiss the complaint on the basis of laches resulting from dilatory notification of the exist- ence of a dispute in a suit brought to compel arbitration with regard to the dispute.' Id., at 557—558. The court then addressed this Court's decision in John Wiley & Sons v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). There an employer refused to arbitrate on the ground that the union, among other things, had failed to follow grievance procedures required by the collective-bargaining agreement. We ordered arbitration, holding that '(o)nce it is determined . . . that the parties are obligated to submit the subject matter of a dispute to arbitration, 'procedural' questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator.' Id., at 557, 84 S.Ct., at 918. The Court of Appeals distinguished Wiley on the ground that the procedural question there concerned 'intrinsic' untimeliness, relating solely to the requirements of the contract. Here, on the other hand, the question was one of 'extrinsic' untimeliness, based not on a violation of contract procedures but on the failure to give timely notice under the equitable doctrine of laches. Therefore, according to the court, the matter was within its province to decide, for "we are not indulging in the judicially unwarranted task of interpreting the collective bargaining agreement." 440 F.2d, at 560, quoting Amalgamated Clothing Workers v. Ironall Factories Co., 386 F.2d 586, 591 (CA6 1967). We granted certiorari, 404 U.S. 982, 92 S.Ct. 445, 30 L.Ed.2d 366 (1971).

Petitioner contends that the Court of Appeals erred in limiting Wiley to cases of 'intrinsic' delay because the issue of delay, whether 'intrinsic' or not, 'necessarily involves a determination of the merits of the dispute and bears directly upon the outcome and is accordingly for an arbitrator and not the federal court to decide.' Brief for Petitioner 21. In other words, petitioner argues that even if the parties have not agreed to arbitrate the laches issue, Wiley requires that the arbitrator resolve the question as an integral part of the underlying contract dispute.

We need not reach the question posed by petitioner, for we find that the parties did in fact agree to arbitrate the issue of laches here. Although respondent denies that it ever signed a binding contract with petitioner, the District Court found to the contrary and held that the company 'was bound by the memorandum agreement to arbitrate labor disputes within the limits of the arbitration clause.' That clause applies to 'any difference,' whatever it may be, not settled by the parties within 48 hours of occurrence. There is nothing to limit the sweep of this language or to except any dispute or class of disputes from arbitration. In that circumstance, we must conclude that the parties meant what they said—that 'any difference,' which would include the issue of laches raised by respondent at trial, should be referred to the arbitrator for decision.^* The District Court ignored the plain meaning of the clause in deciding that issue.

Of course, nothing we say here diminishes the responsibility of a court to determine whether a union and employer have agreed to arbitration. That issue, as well as the scope of the arbitration clause, remains a matter for judicial decision. See Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S.Ct. 1318, 1320, 8 L.Ed.2d 462 (1962). But once a court finds that, as here, the parties are subject to an agreement to arbitrate, and that agreement extends to 'any difference' between them, then a claim that particular grievances are barred by laches is an arbitrable question under the agreement. Compare Iowa Beef Packers, In. v. Thompson, 405 U.S. 228, 92 S.Ct. 859, 31 L.Ed.2d 165 (1972). Having agreed to the broad clause, the company is obliged to submit its laches defense, even if 'extrinsic,' to the arbitral process. The judgment of the Court of Appeals is reversed.

Judgment reversed.

Mr. Justice POWELL, with whom THE CHIEF JUSTICE joins, dissenting.

Through the exercise of formal logic the majority reaches a result that I believe is injust. A full statement of the facts is necessary to put this case in proper perspective. Flair Builders, Inc. (Flair), is a small independent construction firm. The International Union of Operating Engineers, Local 150, AFL—CIO (the Union), had a master collective-bargaining agreement in effect with many contractor associations in Flair's area. On May 12, 1964, the Union and Flair signed a memorandum agreement which adopted the terms of the then-existing master bargaining agreement. The memorandum provided that Flair would be bound by any future master agreement entered between the Union and the contractor associations. Flair had only one employee at the time it signed the memorandum agreement with the Union. This employee joined the Union, but left Flair's employment about two weeks later. His job was filled successively by employees who operated the only piece of equipment owned by Flair. None of these successor employees belonged to...