United Food and Commercial Workers, Local 400 v. Marval Poultry Co., Inc.

• Citation: 876 F.2d 346
• Decision Date: 30 May 1989
• Docket Number: No. 88-2118,88-2118
• Parties: 131 L.R.R.M. (BNA) 2465, 57 USLW 2730, 111 Lab.Cas. P 11,206 UNITED FOOD AND COMMERCIAL WORKERS, LOCAL 400, Plaintiff-Appellant, v. MARVAL POULTRY COMPANY, INCORPORATED, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 346

876 F.2d 346

131 L.R.R.M. (BNA) 2465, 57 USLW 2730,

111 Lab.Cas. P 11,206

UNITED FOOD AND COMMERCIAL WORKERS, LOCAL 400, Plaintiff-Appellant, v. MARVAL POULTRY COMPANY, INCORPORATED, Defendant-Appellee.

No. 88-2118.

United States Court of Appeals,

Fourth Circuit.

Argued Dec. 8, 1988.

Decided May 30, 1989.

Robert Edward Paul (Zwerdling, Paul, Leibig, Kahn & Thompson, P.C., Washington, D.C., on brief) for plaintiff-appellant.

James W. Wimberly, Jr. (Monica M. Bekken, Wimberly, Lawson & Cobb, Atlanta, Ga., on brief) for defendant-appellee.

Before HALL, PHILLIPS and SPROUSE, Circuit Judges.

PHILLIPS, Circuit Judge:

The United Food and Commercial Workers, Local 400 (the Union) appeals from an order of the United States District Court for the Western District of Virginia denying its application for an award of attorney's fees. The Union requested the award on the grounds that Marval Poultry Company, Inc. (Marval) had challenged two arbitration awards in federal courts without justification. The district court held that the award of attorney's fees was unwarranted because Marval had challenged the arbitration awards under an arguable basis in law. We conclude, however, that Marval was clearly unjustified in challenging the merits of the arbitration awards in federal court and in raising there remedial issues that it had failed to raise at arbitration. Therefore, we hold that the district court erred in refusing to award attorney's fees to the union and accordingly reverse.

I

In the past, Marval and the Union have entered into collective bargaining agreements that covered certain maintenance and production employees. Each agreement contained a detailed grievance procedure, which, if necessary, culminated in arbitration deemed "final and binding" under the terms of the parties' agreements. The agreements further provided that the arbitrator's determination was enforceable in a court of competent jurisdiction.

Before the expiration of the last agreement on June 2, 1984, Marval terminated two covered employees. The grievance proceedings following these terminations form the background of the present action.

A

On November 1, 1983, Marval discharged John Thomas Rexrode, a truck driver who had been involved in a traffic accident while driving one of Marval's trucks. The Union immediately filed an appropriate grievance, but the Union and Marval failed to reach an agreement during grievance discussions. The Union therefore, in April 1984, formally submitted the grievance to arbitration pursuant to the terms of the collective bargaining agreement. At arbitration, Marval argued that Rexrode's negligence and the severity of the accident warranted his dismissal. The arbitrator rejected Marval's argument, holding instead that Rexrode was not terminated for "just and proper cause" as required by the collective bargaining agreement. Accordingly, in its award dated October 25, 1984, the arbitrator revoked Rexrode's discharge, imposed a sixty-day suspension effective retroactively to November 1, 1983, and ordered Marval to reinstate Rexrode at the effective conclusion of the suspension with appropriate back pay and benefits.

Marval offered Rexrode conditional reinstatement on October 31, 1984, the condition being that Rexrode was to be transferred immediately to a different position at a lower wage rate. Rexrode declined the offer. Shortly after making its offer to Rexrode, Marval wrote the arbitrator, allegedly "seeking clarification" of its award. Marval pointed out the arbitrator's "mere oversight" in determining that while Rexrode was grossly negligent, his dismissal was not warranted even though the company fleet safety rules provided for discharge of a driver on his first offense of gross carelessness. Recognizing that the arbitrator's jurisdiction over the matter ceased upon rendering of the initial decision, the Union agreed to grant the arbitrator renewed authority to respond to Marval's request. After delayed receipt of Marval's letter and a subsequent request for clarification, the arbitrator responded on January 2, 1985, pointing out that its identification of Rexrode's "gross negligence" referred only to whether the challenged conduct was a Class I or Class II offense under the new company policy, not whether the fleet safety rules were violated. Two weeks later, on January 16, Marval offered Rexrode full unconditional reinstatement which he also declined. Both parties agree that Rexrode's declination at this point tolls Marval's obligations as to reinstatement and back pay liability beyond January 16, 1985.

On February 7, 1985, the Union filed an enforcement action in district court under Sec. 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185 (1982), requesting that the court order Marval to tender the awarded back pay. Marval responded with an answer and a counterclaim, seeking both a vacatur of the arbitration award and, alternatively, a declaratory judgment that its liability extended only to June 2, 1984, the date the collective bargaining agreement expired, rather than to January 16, 1985, the date of Rexrode's rejection of full, unconditional reinstatement.

B

Geneva Shifflett, the second employee terminated by Marval before the expiration of the last collective bargaining agreement, was discharged on January 23, 1984 when she refused to accept alternative positions of employment after returning from an extended health-related leave of absence. Again the grievance discussions between Marval and the Union failed, and the Union formally submitted the grievance to arbitration. On February 15, 1985, the arbitrator awarded Shifflett reinstatement to her previous position and back pay from the date of termination to the date of reinstatement. Marval reinstated Shifflett at the end of March and a month later, on April 25, 1985, tendered back pay from the date of Shifflett's termination to the date the collective bargaining agreement expired. While Marval never sought to reopen the arbitration proceedings, it did file an action on May 6, 1985, in the district court in which the Union had earlier filed its enforcement action in the Rexrode case. In the Shifflett action, Marval sought to limit the arbitrator's back pay award to the life of the collective bargaining agreement.

II

After consolidating the Rexrode and Shifflett actions, the district court considered cross-motions for summary judgment. On September 23, 1986, the court reiterated its previous ruling--announced at a hearing on the parties' motions--that the arbitration awards properly drew their essence from the collective bargaining agreement and were therefore valid. 645 F.Supp. 1174, 1176 (W.D. Va.1986). The court then considered the "only issue remaining"--whether the awards were enforceable--and concluded that the expiration of the collective bargaining agreement did not preclude awards of back pay or reinstatement after the date of expiration. The court noted that "[i]f Marval wished to limit its liability for back pay awards to the date of expiration ..., such provisions could easily have been inserted into the agreement...." Id. at 1180.

With respect to the preclusive effect of the prior arbitration, the court reasoned that "[t]he final and perhaps most forceful factor in favor of upholding the arbitrator's remedy of back pay and reinstatement is simply that the company failed to raise the issue of the expiration of the collective bargaining agreement during the pendency of the arbitration proceedings...." Id. The court concluded that "Marval's failure to raise these various points prevents these contentions from being considered at this very late date.... Such afterthoughts should not form the basis of continued, protracted litigation in federal courts." Id. at 1181. ¹

Marval appealed to this court and we affirmed on the district court's reasoning, noting that Marval's contention that it failed to raise the remedial defenses at arbitration because the issue of back pay was not litigated was implausible. We reasoned that "[t]he fact that no evidence of back pay was introduced nor precise back pay awards ever calculated did not relieve [Marval] of its duty to raise at arbitration all questions or matters relevant to the outcome of the case[,]" including any effect the expiration of the collective bargaining agreement may have had and any issues pertaining to the employee's duty to mitigate damages through other employment. No. 86-1247, Unpub'd Op. at 4 n. 2 (4th Cir. May 20, 1987). [819 F.2d 1138 (Table) ]

Before we rendered our decision, the Union moved for an award of fees and costs incurred in connection with the district court litigation. Pursuant to 28 U.S.C. Sec. 636(b)(1)(B), the district court referred the matter to a magistrate who recommended awarding the Union $11,662.50 in attorneys' fees plus court costs because Marval had "embarked on a course of conduct that was a calculated assault" on federal courts' express reluctance to add to the layers of litigation in arbitrated matters and on the deference owed to decisions by arbitrators that draw from the essence of the labor contract. The magistrate reasoned that it could not

avoid the inferences from the record and the District Court's decisions that what Marval may have been doing as a matter of its principle was not substantially justified, reasonable or supported by a detached reading of the extant law. Therefore, [it found] that Marval's litigation stance before the District Judge was frivolous, unreasonable and without legal foundation, though subjectively not in bad faith.

After reviewing Marval's exceptions to the magistrate's findings, the district court rejected the magistrate's recommendation, reasoning that the award was inappropriate because Marval had challenged the arbitrator's awards "under an arguable basis in law." Nos. 85-0023-H, -0065-H, Unpub'd Op. at 5 (W.D. Va. May 24, 1988). The court noted that "in an appropriate case, where a...