Occidental Chemical Corp. v. International Chemical Workers Union

• Decision Date: 01 August 1988
• Docket Number: No. 87-1728,87-1728
• Citation: 853 F.2d 1310
• Parties: 128 L.R.R.M. (BNA) 3161, 57 USLW 2089, 109 Lab.Cas. P 10,644 OCCIDENTAL CHEMICAL CORPORATION, Plaintiff-Appellant, v. INTERNATIONAL CHEMICAL WORKERS UNION; Local 820 International Chemical Workers Union, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1310

853 F.2d 1310

128 L.R.R.M. (BNA) 3161, 57 USLW 2089,

109 Lab.Cas. P 10,644

OCCIDENTAL CHEMICAL CORPORATION, Plaintiff-Appellant, v. INTERNATIONAL CHEMICAL WORKERS UNION; Local 820

International Chemical Workers Union, Defendants-Appellees.

No. 87-1728.

United States Court of Appeals, Sixth Circuit.

Argued April 29, 1988.

Decided Aug. 1, 1988.

Thomas P. Gies (argued), Crowell & Moring, Washington, D.C., Keith Fischler, William H. Fallon, Miller, Johnson, Snell and Cuminskey, Grand Rapids, Mich., for plaintiff-appellant.

Salvatore J. Falletta (argued), General Counsel, Akron, Ohio, for defendants-appellees.

Before LIVELY, KRUPANSKY and BOGGS, Circuit Judges.

LIVELY, Circuit Judge.

This appeal requires us to determine the most appropriate statute of limitations to apply in a case from Michigan, brought pursuant to Sec. 301 of the Labor Management Relations Act of 1947 (LMRA) to vacate an arbitration award. The employer filed this action approximately five months after the arbitrator released his opinion and award. The district court applied the three-month limitations period found in Sec. 12 of the United States Arbitration Act (USAA) and dismissed the suit as untimely.

I.

The district court did not reach the merits of the case and we will not discuss the facts in detail. Suffice it to say that an arbitrator found in favor of a former employee of Occidental in a dispute over the calculation of pension benefits. Occidental then brought this action directly under Sec. 301 of the LMRA, 29 U.S.C. Sec. 185, to vacate the award. Occidental filed a motion for summary judgment vacating the award and the defendant union filed a similar motion on its counterclaim for enforcement of the award. After considering several possible limitations periods the district court concluded that Sec. 12 of the USAA, 9 U.S.C. Sec. 12, "best accommodates the federal interests at stake in suits to vacate arbitration." Occidental Chemical Corp. v. Local 820, International Chemical Workers Union, 614 F.Supp. 323, 328 (1985).

The judgment dismissing Occidental's suit to vacate was subsequently amended to grant the union's motion to enforce the arbitration award. The court found in its amended opinion, 691 F.Supp. 1049, that the union's motion was timely since the USAA contains a one-year limitations period for an action to confirm an arbitration award, and that Occidental's failure to bring a timely action to vacate the award precluded it from objecting to its enforcement. Occidental appealed from the judgment, as amended.

II.

Congress did not prescribe a limitations period for actions under Sec. 301. The Supreme Court held in United Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966), that selection of the appropriate statute of limitations in a Sec. 301 action is controlled by federal law "fashion[ed] from the policy of our national labor laws." Id. at 701, 86 S.Ct. at 1111, quoting Textile Workers v. Lincoln Mills, 353 U.S. 448, 456, 77 S.Ct. 912, 918, 1 L.Ed.2d 972 (1957). The Court then discussed the rule dating at least from 1830 that "state statutes of limitations govern the timeliness of federal causes of action unless Congress has specifically provided otherwise." 383 U.S. at 703-04, 86 S.Ct. at 1111-12. Applying this rule, the Court held that "the timeliness of a Sec. 301 suit, such as the present one, is to be determined, as a matter of federal law, by reference to the appropriate state statute of limitations." Id. at 704-05, 86 S.Ct. at 1112-13. Hoosier Cardinal was a "straightforward" Sec. 301 suit by a union to recover money claimed to be due to employees under the terms of a collective bargaining agreement and oral contracts, and the Court applied Indiana's six-year limitations period governing contracts not in writing.

In United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981), the Supreme Court was required to determine the appropriate statute of limitations in an employee's Sec. 301 action against his employer. The Court concluded that the employee's action was, in effect, one to vacate the award of an arbitration panel, not a straight contract action. Id. at 62, 101 S.Ct. at 1563. On this basis, the Court held that the district court had properly dismissed the action as untimely on the basis of New York's ninety-day statute of limitations for actions to vacate arbitration awards.

In a concurring opinion Justice Stewart stated that he did not read Hoosier Cardinal to constrain the Court to choose between state limitations periods, and stated that he would have applied the six-month limitations period of Sec. 10(b) of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 160(b). 451 U.S. at 65-71, 101 S.Ct. at 1565-68. He reasoned that Hoosier Cardinal was a straightforward breach of contract damages suit whereas Mitchell was actually a hybrid action joining a Sec. 301 claim against the employer with a claim against the plaintiff's union for breach of its duty of fair representation. While the Sec. 301 claim was based on a contract, the duty of fair representation claim derived from the NLRA. Since the suit was an "amalgam of Sec. 301, which has no limitations period, and the NLRA," which contains a six-month statute of limitations, Justice Stewart concluded that policy considerations underlying the adoption of NLRA's limitations period dictated that it be applied in a hybrid case. Id. at 67-68, 101 S.Ct. at 1566-67. Justice Stewart summarized his view as follows:

In Sec. 10(b) of the NLRA, Congress established a limitations period attuned to what it viewed as the proper balance between the national interests in stable bargaining relationships and finality of private settlements, and an employee's interest in setting aside what he views as an unjust settlement under the collective-bargaining system. That is precisely the balance at issue in this case. The employee's interest in setting aside the "final and binding" determination of a grievance through the method established by the collective-bargaining agreement unquestionably implicates "those consensual processes that federal labor law is chiefly designed to promote--the formation of the ... agreement and the private settlement of disputes under it." Hoosier, 383 U.S., at 702 . Accordingly, "[t]he need for uniformity" among procedures followed for similar claims, ibid., as well as the clear congressional indication of the proper balance between the interests at stake counsels the adoption of Sec. 10(b) of the NLRA as the appropriate limitations period for lawsuits such as this.

Id. at 70-71, 101 S.Ct. at 1567-1568 (footnote omitted).

The Supreme Court essentially adopted Justice Stewart's view for hybrid cases in DelCostello v. Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983). The Court distinguished Mitchell by noting that the union in that case had not appealed the arbitration panel's finding of a violation of the duty of fair representation; thus the only issue that reached the Supreme Court concerned the employee's Sec. 301 breach of contract claim against his employer. Id. at 154 n. 1, 103 S.Ct. at 2285 n. 1. Hoosier Cardinal required that the most analogous state statute of limitations be applied to that claim. However, the Court noted that there is no state cause of action that is closely analogous to a hybrid Sec. 301/fair representation claim. Id. at 165, 103 S.Ct. at 2291. State laws governing commercial arbitration do not offer a perfect parallel as they tend to contain too short a limitations period to permit an unsophisticated employee, typically represented only by a union, to take the necessary steps, such as hiring a lawyer, making further investigation and preparing a suit. Id. at 166, 103 S.Ct. at 2291. After rejecting other possible state-law parallels, the Court concluded that in Sec. 10(b) Congress had supplied a "federal statute of limitations actually designed to accommodate a balance of interests very similar to that at stake" in a hybrid Sec. 301/fair representation case. Id. at 169, 103 S.Ct. at 2293.

The Court stressed that it was not departing from its practice of borrowing limitations periods for federal causes of actions and that resort to state law "remains the norm" when borrowing. However, the borrowing rule is not ironclad:

Nevertheless, when a rule from elsewhere in federal law clearly provides a closer analogy than available state statutes, and when the federal policies at stake and the practicalities of litigation make that rule a significantly more appropriate vehicle for interstitial lawmaking, we have not hesitated to turn away from state law.

Id. at 171-72, 103 S.Ct. at 2294-95.

III.

A.

As the district court noted there are three statutes of limitations which arguably could be applied in this case. These are the twenty-one day period contained in the Michigan arbitration act, the three-month period in Sec. 12 of the USAA, and the six-month period in Sec. 10(b) of the NLRA. The district court concluded that the limitations period applicable to an action to vacate an award under the Michigan arbitration act should not be borrowed because that act, by its terms, does not apply to labor disputes. The court based this conclusion on a provision of that act contained in Michigan Compiled Laws Annotated (MCLA) Sec. 600.5001(3):

(3) Collective labor contracts excepted. The provisions of this chapter shall not apply to collective contracts between employers and employees or associations of employees in respect to terms or conditions of employment.

In making this determination the district court relied on this court's decision in a hybrid action where the court refused to apply the limitations period in Michigan's arbitration act because of its exclusionary language. Badon v. General Motors Corp., 679 F.2d 93, 98 (6th Cir.1982). The district court also found the six-month limitations period in Sec. 10(b) of the NLRA...