Wren v. Sletten Const. Co., 77-2092

Citation654 F.2d 529
Decision Date05 February 1981
Docket NumberNo. 77-2092,77-2092
Parties24 Wage & Hour Cas. (BN 1232, 25 Wage & Hour Cas. (BN 93, 90 Lab.Cas. P 33,975, 92 Lab.Cas. P 34,058 Michael E. WREN, William R. Kajin, James N. Curl, and Carrold L. Gordon, on behalf of themselves and other employees of Sletten Construction Co. similarly situated, Plaintiffs-Appellees, v. SLETTEN CONSTRUCTION COMPANY, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Urban L. Roth, Poore, Roth, Robischon & Robinson, P. C., Butte, Mont., for defendant-appellant.

McKittrick & Duffy, Joseph W. Duffy, Great Falls, Mont., for plaintiffs-appellees.

Appeal from the United States District Court for the District of Montana, Great Falls Division.

Before WALLACE and ANDERSON, Circuit Judges, and MURRAY, * District Judge.

PER CURIAM:

The complaint in this case involves the effort of the plaintiffs, former employees of appellant Sletten Construction Company (Sletten) on certain construction projects, to recover unpaid wages, overtime compensation and other monies from Sletten under the provisions of the Fair Labor Standards Act of 1938, as amended (29 U.S.C. § 216(b)) (FLSA), and the Montana Wage Claim Act (Title 41 of the Revised Codes of Montana The district court characterized this action as a continuance of a previous controversy and we briefly refer to that dispute. On the previous occasion, at a time when Sletten and the Union were involved in contract undertakings of certain construction projects, a dispute arose between them as to which of two collective bargaining agreements applied to the projects. Sletten requested the Union to submit the dispute to arbitration, but the Union declined. Sletten petitioned the United States District Court to compel arbitration of the issue, and the court entered a judgment "directing the (Union) to submit the disputes arising under the collective bargaining agreements to arbitration". Sletten Construction Co. v. International Union of Operating Engineers, Local 400, 383 F.Supp. 853, 855 (D.Mont.1974). Thereupon, the parties submitted the dispute to Garth Magnum as arbitrator, who rendered an award that

Chapters 13 and 23). Each plaintiff was a member of International Union of Operating Engineers, Local 400 (the Union), a labor organization that was party to collective bargaining agreements with Sletten. This action was brought in the Montana state court and was removed by Sletten to the federal district court.

The Company is found to be in violation for having applied the heavy and highway agreement to work which was more properly, according to area practice in interpretation of the two agreements, within the scope of the building agreement.

In his opinion the arbitrator stated, in part, that

To conclude that the building agreement should have been applied from the beginning of the three projects leaves unresolved the question of remedy. Neither the pay issue nor the issue of appropriate remedy was submitted to the arbitrator.... The arbitrator cannot decide on a binding basis what was not submitted for decision. Nevertheless some suggestion of appropriate remedy seems necessary.

(I)t is the arbitrator's decision that the building agreement should apply to any uncompleted work on these contracts, but his opinion that no retroactive change of pay should result.

The Union did not challenge the award.

This action was brought following publication of the award rendered by Garth Magnum. The arbitrator's determination that the "building agreement" applied to the construction projects in question sustained the contention of the Union. The plaintiffs in this action, members of the Union, were employed by Sletten on construction projects involved in the arbitration. The Union is not a party to these proceedings. Although the complaint in this case is silent as to the previous arbitration and award, plaintiffs in their brief make clear that they seek to recover in this action on the rates of pay, including the overtime rates, under the "building agreement", and retroactive payments based on these rates. Plaintiffs maintain that the award "establishes the rate of pay these Plaintiffs are allowed to claim". Brief for Plaintiffs at 8.

When the case was removed to the district court Sletten moved for dismissal of the complaint on the ground, inter alia, that plaintiffs had failed to exhaust their contractual grievance and arbitration remedies. Subsequently, Sletten filed a motion for summary judgment. The district court denied the motion to dismiss and took no action on the motion for summary judgment. Although neither plaintiffs nor Sletten requested the district court to submit the case to further arbitration, the court sua sponte ordered Sletten to request arbitration, and stayed further proceedings in the case pending arbitration. Sletten has appealed from these orders. 1 Appellant contends that the order to it to request arbitration is appealable as a "final decision" under 28 U.S.C. § 1291, and that the stay order is appealable under section 1292(a)(1) as an interlocutory order granting an injunction. The order here was entered in proceedings still pending before the district court as a continuing action and thus is not a final decision. Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 179, 75 S.Ct. 249, 251, 99 L.Ed. 233 (1955). See Clark v. Kraftco Corp., 447 F.2d 933, 935 (2d Cir. 1971). Plaintiffs did not bring this action to compel arbitration, compare Goodall-Sanford, Inc. v. United Textile Workers of America, 353 U.S. 550, 77 S.Ct. 920, 1 L.Ed.2d 1031 (1957), and arbitration such as the district court ordered here cannot proceed to a final and enforceable result without further judicial action. Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80, 86 (2d Cir. 1961), cert. denied, sub nom. Dawson v. Lummus Co., 368 U.S. 986, 82 S.Ct. 601, 7 L.Ed.2d 524 (1962). It is true that the arbitration order here was unusual in that the district court sua sponte directed only Sletten to submit the request for arbitration, and made clear that the order was designed to preclude Sletten from raising in the arbitration proceedings an appropriate defense available under the collective bargaining agreement against plaintiffs' claims. The effect of the order was to confront Sletten with the dilemma whether to suffer the potential loss of a claim of right to raise the defense in the arbitration proceedings or to refuse to comply with the court's order. While the arbitration order has unusual coercive and prophetic aspects, we do not view the potential loss of the right to raise the defense as having the effect of disposing of important rights of appellant which may be lost irreparably if appellate consideration is delayed for a decision on the whole case. But cf. Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949); Theriault v. United States, 503 F.2d 390 (9th Cir. 1974). The adverse consequences to appellant of complying with an erroneous arbitration order, pending a decision on the issues raised in the complaint and answer, would seem to be the expense and frustration of involvement in proceedings which may ultimately result in an unenforceable arbitration award. Although it would be an unfortunate excursion, it would not be sufficiently serious to require us to deviate from the rule of finality. We conclude the order is not appealable under section 1291.

Appellate jurisdiction exists if the order staying the proceedings can be deemed an injunction appealable under 28 U.S.C. § 1292(a)(1), which allows appeals from "(i)nterlocutory orders ... granting, continuing, modifying, refusing or dissolving injunctions ...". An order of a district court staying its own proceedings in an action brought to establish basically legal claims pending arbitration has been held appealable under that statute. Leyva v.

Certified Grocers of California, Ltd., 593 F.2d 857 (9th Cir.), cert. denied, 444 U.S. 827, 100 S.Ct. 51, 62 L.Ed.2d 34 (1979); Beckley v. Teyssier, 332 F.2d 495 (9th Cir. 1964). Appealability of the stay order under section 1292(a)(1) entered in such an action is sanctioned under what is known as the Enelow-Ettelson rule. 2 The stay of the action pending arbitration is "regarded as an injunction if it can be analogized to an equitable restraint of legal proceedings", Alexander v. Pacific Maritime Ass'n, 332 F.2d 266, 267 (9th Cir.), cert. denied, 379 U.S. 882, 85 S.Ct. 150, 13 L.Ed.2d 88 (1964), or when invocation of the arbitration agreement raises an equitable defense. Shanferoke Coal & Supply Corp. v. Westchester Serv. Corp., 293 U.S. 449, 452, 55 S.Ct. 313, 314, 79 L.Ed. 583 (1935). There can be no doubt that the action brought by the plaintiffs for damages for breach of contract and violations of FLSA and the Montana Wage Claims Act appertains to distinctively legal claims as distinguished from the enforcement of equitable principles. See Bear v. Hayden, Stone, Inc., 526 F.2d 734 (9th Cir. 1975); Brannon v. Warn Bros., Inc., 508 F.2d 115 (9th Cir. 1974) (contract cases); Beckley v. Teyssier, supra (FLSA). Thus, we find jurisdiction under 28 U.S.C. § 1292(a)(1).

I

We see no need to discuss in great detail appellant's argument that the arbitrator had already decided against the plaintiffs the claims they present in this case for retroactive wage payments. The arbitrator spoke on that issue precisely, asserting that "(n)either the pay issue nor the issue of appropriate remedy was submitted" to him. Further, he carefully avoided making a "decision" on the pay issue. 3

The question is not, as appellant contends, whether formulation of a remedy on the pay issue was within contemplation of the question submitted: which of the two collective bargaining agreements applied. Rather, the only question is whether the arbitrator had authority to decide issues which were not submitted...

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