John Morrell & Co. v. LOCAL UNION 304A

• Decision Date: 15 March 1989
• Docket Number: 89-5024.,Civ. No. 88-5143
• Citation: 708 F. Supp. 273
• Parties: JOHN MORRELL & CO., a corporation, Plaintiff, v. LOCAL UNION 304A OF THE UNITED FOOD AND COMMERCIAL WORKERS, AFL-CIO AND CLC; United Food and Commercial Workers International Union, AFL-CIO and CLC, Defendants. UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO & CLC; and United Food and Commercial Workers Local 304A, Plaintiffs, v. JOHN MORRELL & CO., a corporation, Defendant.
• Court: U.S. District Court — District of South Dakota

708 F. Supp. 273

JOHN MORRELL & CO., a corporation, Plaintiff, v. LOCAL UNION 304A OF THE UNITED FOOD AND COMMERCIAL WORKERS, AFL-CIO AND CLC; United Food and Commercial Workers International Union, AFL-CIO and CLC, Defendants.

UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO & CLC; and United Food and Commercial Workers Local 304A, Plaintiffs, v. JOHN MORRELL & CO., a corporation, Defendant.

Civ. Nos. 88-5143, 89-5024.

United States District Court, D. South Dakota, W.D.

March 15, 1989.

Jeremiah D. Murphy, Boyce, Murphy, McDowell & Greenfield, Sioux Falls, S.D., George Joseph, Michael P. Foradas, Leslie M. Smith, Kirkland & Ellis, Chicago, Ill., for plaintiffs.

Nicholas W. Clark, Richard R. Roesel, Assts. Gen. Counsel, United Food and Commercial Workers Intern. Union, Washington, D.C., Donald R. Shultz, Lynn, Jackson, Shultz & Lebrun, Rapid City, S.D., Michael I. Smith, Alan M. Geib, Myerson & Kuhn, New York City, for defendants.

MEMORANDUM OPINION AND ORDER VACATING ARBITRATOR'S AWARD

BATTEY, District Judge.

NATURE AND PROCEDURAL HISTORY

This matter comes before the Court on John Morrell & Co.'s (Morrell's) application to set aside the November 5, 1988, award of arbitrator William E. Rentfro. Local Union 304A of the United Food and Commercial Workers, AFL-CIO and CLC and United Food and Commercial Workers International Union, AFL-CIO and CLC (Union) apply for enforcement of the award. The arbitrator found that: "The 1987 sympathy strike was permitted by the clear, unambiguous and express provisions of this collective bargaining agreement." On March 10, 1988, more than seven months prior to the arbitrator's award, a jury empaneled in the Western Division of the District of South Dakota returned a verdict that the strikes at issue violated the collective bargaining agreement between the parties and were therefore illegal. The arbitrator, although possessing knowledge of the district court action, failed to follow the issues decided in the liability phase of the trial.¹ A separate jury empaneled in the Western Division of the District of South Dakota returned a damage verdict on November 10, 1988, in favor of Morrell in the amount of $24,600,000.

On November 8, 1988, Morrell filed an application and motion to set aside or stay the November 5, 1988, award of the arbitrator. The following day, on November 9, 1988, Union filed a complaint in United States District Court for the Northern District of Illinois, Eastern Division, seeking enforcement of the same award. The Illinois court, on February 10, 1989, transferred the Union's case to this Court pursuant to 28 U.S.C. § 1404(a). This Court then, pursuant to Fed.R.Civ.P. 42(a), consolidated the two cases by order dated March 6, 1989.

The Court has reviewed the extensive briefs in both cases. Having considered the arguments of the parties, the Court finds that the award of arbitrator William E. Rentfro of November 5, 1988, determining that "the 1987 sympathy strike was permitted by the clear, unambiguous and express provisions of this collective bargaining agreement," must be vacated for the reasons set forth below.

DISCUSSION

The issue before the Court is whether the parties agreed to arbitrate the legality of the May 1 to November 4, 1987, sympathy strike. As the United States Supreme Court held in United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960), "The judicial inquiry under § 301 must be strictly confined to the question whether the reluctant party did agree to arbitrate the grievance or did agree to give the arbitrator power to make the award he made."

In AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986), the Supreme Court applied the principles necessary to decide this issue as established in the Steelworkers Trilogy: Steelworkers v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); and Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). The Court concisely stated:

The first principle gleaned from the Trilogy is that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Warrior & Gulf, supra, 363 U.S. 574, at 582, 80 S.Ct. 1347, at 1353 4 L.Ed.2d 1409 (1960) ; American Mfg. Co., supra, 363 U.S. 564, at 570-571, 80 S.Ct. 1343, at 1364-1365 4 L.Ed.2d 1403 (1960) (BRENNAN, J. concurring). This axiom recognizes the fact that arbitrators derive their authority to resolve disputes only because the parties have agreed in advance to submit such grievances to arbitration. Gateway Coal Co. v. Mine Workers, 414 U.S. 368, 374, 94 S.Ct. 629, 635, 38 L.Ed.2d 583 (1974).

The second rule, which follows inexorably from the first, is that the question of arbitrability — whether a collective-bargaining agreement creates a duty for the parties to arbitrate the particular grievance — is undeniably an issue for judicial determination. Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agree to arbitrate is to be decided by the court, not the arbitrator.

(Citations omitted.) (Emphasis added.) The Supreme Court went on to note that: "The willingness of parties to enter into agreements that provide for arbitration of specified disputes would be `drastically reduced,' however, if a labor arbitrator had the `power to determine his own jurisdiction....' Cox, Reflections Upon Labor Arbitration, 72 Harv.L.Rev. 1482, 1509 (1959)."

The Eighth Circuit Court of Appeals in Centralab, Inc. v. Local 816, Elec., et al. Workers, 827 F.2d 1210 (8th Cir.1987), applying the principles set forth in AT & T, held that where an arbitrator decided issues not properly before him the district court correctly vacated the award. In vacating an arbitrator's award for exceeding the scope of his authority, a district court does not ignore the strong precedent requiring courts to give great deference to the arbitrator's remedial powers. The Eighth Circuit found:

Rather, whereas here, a court concludes that the arbitrator did not stay within the bounds of his authority, this principle of deference inevitably gives way, as recognized by the Supreme Court in Enterprise Wheel, to the greater principle that an award not drawing its essence from the agreement is not entitled to judicial enforcement.

Id. at 1217.

In his November 5, 1988, award, arbitrator Rentfro found it necessary to determine the legality of the sympathy strike from May 1 to November 4, 1987, as a threshold issue before addressing the seniority and discrimination provisions of the collective bargaining agreement. In so doing, the arbitrator considered the Eighth Circuit decision in John Morrell & Co. v. Local Union 304A, 804 F.2d 457 (8th Cir.1986) (Morrell I) and the jury verdict rendered in the liability phase of John Morrell & Co. v. Local Union 304A, 641 F.Supp. 803 (D.S.D. 1986) (Morrell II). The result arrived at by the arbitrator was that the language of the collective bargaining agreement was so clear that any evidence of waiver by the Union of its right to sympathy strike "pushes the language of the contract past the breaking point." The arbitrator's decision was reached without the benefit of any parol evidence on the issue of waiver. The arbitrator stated, "Further, the arbitrator has not had the benefit of a transcript of the trial, the instructions of the trial court, or any record evidence which would give credence to that court's decision to submit this issue to a jury." Thus the arbitrator specifically failed to abide by the final judgment of the district court — a decision which remains final until reversed by appropriate appeal process.

This Court need not relitigate the merits of the arbitrator's award in deciding whether the parties agreed to submit the legality of the sympathy strikes to arbitration. AT & T Technologies, Inc., 475 U.S. at 649, 106 S.Ct. at 1418. The Court, however, does find the lack of waiver evidence most telling in determining whether Morrell agreed to submit the legality of the sympathy strike for the arbitrator's consideration. It is difficult for the Court to fathom the notion that Morrell, after obtaining a successful jury verdict, would simply abandon that verdict, voluntarily resubmit the identical issue to arbitration, and then fail to introduce any evidence on the issue of waiver. This is particularly troubling in light of the fact that Morrell had daily copy of the trial transcript at its immediate disposal.

A review of the proceedings in district court prior to submission of the seniority and discrimination provisions of the collective bargaining agreement to arbitration is necessary to understand the strength of Morrell's position that it never agreed to place the legality of the sympathy strikes before the arbitrator. In Amcar Division ACF Industries, Inc. v. NLRB, 641 F.2d 561 (8th Cir.1981), the Eighth Circuit found that employees may waive their right to engage in sympathy strikes. Considering a collective bargaining agreement with no express sympathy strike waiver, the court held:

There are a number of relevant facts to examine in determining whether the Union intended to waive its right to engage in sympathy strikes. We look to the language of the contract, the structure of the contract, the bargaining history, and any other relevant conduct of the parties that shows their understanding of the contract.

Id. at 567 (citations omitted).

This evidence of bargaining history and relevant conduct was never before the arbitrator. The fact that neither party submitted such evidence suggests that the arbitrator was not to decide the issue. The jury empaneled in the liability phase (Morrell II) on the other hand, received...