United Paperworkers Intern. Union, AFL-CIO, CLC v. Wells Badger Industries, Inc.

Citation835 F.2d 701
Decision Date10 December 1987
Docket NumberNo. 200,P,CLC,No. 87-1352,AFL-CI,200,87-1352
Parties127 L.R.R.M. (BNA) 2074, 56 USLW 2380, 108 Lab.Cas. P 10,264 UNITED PAPERWORKERS INTERNATIONAL UNION,& its Locallaintiffs-Appellees, v. WELLS BADGER INDUSTRIES, INC., Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Danuta Bembenista Panich, Mayer Brown & Platt, Chicago, Ill., for defendant-appellant.

Gerry M. Miller, Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, Milwaukee, Wis., for plaintiffs-appellees.

Before FLAUM, MANION, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

Wells Badger Industries ("Wells Badger") appeals the district court's grant of summary judgment ordering Wells Badger to arbitrate a dispute with its employee union, United Paperworkers International. The dispute between the parties arose because the company refused to arbitrate its dismissal of an employee, Donald Terpstra, who had been discharged after the collective bargaining agreement between the parties had expired. In this appeal, the company claims a factual dispute exists regarding the parties' intention to arbitrate post-contract disputes. The company contends further that it should have been granted summary judgment because no presumption of arbitrability applies here. Although we conclude that the district court was clearly erroneous in finding that the company had continued to arbitrate grievances even after the collective bargaining agreement expired, this does not affect our decision, and we affirm the district court.

I

Wells Badger had a collective bargaining agreement with the United Paperworkers International Union ("Union") which expired on January 1, 1985. However, by the terms of the agreement, the contract would extend past its stated termination date until notice was given by one party to the other. Wells Badger duly notified the Union on February 1 of its intention to terminate the agreement as of February 11, 1985. The parties sought to renegotiate their contract, but came to impasse by February 14. As a result, the company circulated a memo dated February 14 which informed employees that the company would unilaterally implement changes in "wages, hours and working conditions" based upon its final offer to the Union during the negotiations. In response to employee inquiries, the company circulated a follow-up memo on February 19 which emphasized that "[w]ith the exception of the modifications communicated ... by memo dated February 14, 1985, the Wages/Benefits, Hours of Work and Work Rules will remain the same as they were prior to February 14, 1985." Throughout the negotiations, the arbitration provision was never at issue, and in fact, the company had selected an arbitrator and agreed on an arbitration date for the Terpstra dismissal dispute. After further bargaining, the parties came to an agreement which was ratified by the Union on June 7, 1985, but which the Union had refused to sign because the company had unilaterally changed a holiday pay provision without discussing the change with the Union.

Terpstra, a member of the Union at the time of his discharge, was dismissed on September 24, 1985. The company discharged him on the basis of its new attendance policy, which it had implemented after the 1982-85 contract expired. The Union contends that either the new collective bargaining agreement became effective as of June 7, the date that the Union ratified it, or that an interim agreement existed because of the memoranda circulated by the company in February. The Union notes that Wells Badger disclaimed its obligation to arbitrate only after the National Labor Relations Board had ruled that, as to the agreement ratified June 7, there was not a "meeting of the minds" on the holiday pay provision. Under either contention, the Union argues that the company should have brought the Terpstra grievance to arbitration.

The company refutes these allegations by arguing that a contract did not exist at the time that the Terpstra grievance arose. The Union had not signed the new collective bargaining agreement at the time of Terpstra's discharge. Moreover, the company argues that an interim agreement did not exist either, since its memo of February 14 merely fulfilled the company's legal obligation to maintain the terms and conditions of its work arrangement with its employees. Finally, the company argues that although it processed employee grievances after the 1985 agreement had expired, it had not arbitrated those grievances. The company admits its legal obligation to process those grievances, but argues that arbitration is a separate, contractual duty.

The district court had original jurisdiction of this action under 28 U.S.C. Sec. 1331, and the Labor-Management Relations Act Sec. 301(a), 29 U.S.C. Sec. 185(a) (1982). In its order, the district court supported its grant of summary judgment by pointing out the strong national policy in favor of arbitration, and in finding that the parties had intended to arbitrate employee grievances even after the collective bargaining agreement had expired.

II

Wells Badger contends that a genuine issue of material fact exists as to whether the parties intended to arbitrate post-contract grievances. The company's memos of February 14 and February 19 indicate that it intended to extend the terms of the 1982-85 contract, and that the conditions outlined in the memos merely highlighted provisions where changes would be implemented. The memo of February 14 did not purport to cover all of the company's obligations, but merely "highlight[ed] certain changes in wages, hours and working conditions based upon the final offer made during negotiations." The arbitration clause of the 1982-85 contract was never mentioned in the memo, and throughout the negotiations for the new contract, the parties never disputed that the arbitration provision would be continued.

The company's own actions during the hiatus between contracts belie its claim. Not only did the company join the union in selecting an arbitrator, but it also agreed to a date for arbitrating the Terpstra grievance. The only time that the company indicated that it would disclaim its obligation occurred after the Regional Director of the National Labor Relations Board rendered its decision regarding the June 1985 agreement. When the Regional Director determined that no "meeting of the minds" had occurred over the holiday pay provision in the new contract, the company interpreted that to mean that the entire contract was ineffective as well. Wells Badger claims that it made a "mistake" and had only agreed to arbitration because it had assumed that the June 1985 agreement was binding. We believe that the company's memos and its actions in setting up the arbitration refute its disingenuous argument that it relied only on the June 1985 contract.

At this point, we are compelled to note that the intention of the parties under most circumstances must be determined on the basis of an objective standard--the parties' manifested mutual assent. It is well established that...

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