K&M Installation, Inc. v. United Bhd. of Carpenters
| Decision Date | 18 April 2016 |
| Docket Number | Case No. 15-cv-05265-MEJ |
| Court | U.S. District Court — Northern District of California |
| Parties | K&M INSTALLATION, INC., Plaintiff, v. UNITED BROTHERHOOD OF CARPENTERS, LOCAL 405, et al., Defendants. |
On August 12, 2015, an arbitrator issued a Decision and Award in favor of Defendants United Brotherhood of Carpenters, Local 405 ("Local 405") and Carpenters 46 Northern California Counties Conference Board ("Conference Board") (collectively, "Defendants") and against Plaintiff K&M Installation, Inc. ("K&M"). See Compl., Ex. A (Decision & Award, "Award"), Dkt. No. 1. K&M filed this action on November 17, 2015 seeking to vacate the Award under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., and the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 141, et seq. See Compl.
Now pending before the Court is Defendants' Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and so-called "Counter-Motion" to Confirm the Award.1 Mot., Dkt. No. 6. Although K&M has not filed a motion to vacate, Defendants seem to treat the Complaint as both a complaint and a motion. See Mot. It is unclear whether K&M intended its Complaint to operate as a motion to vacate the award. On one hand, K&M vaguely asserts it "brought the [sic]within Complaint to vacate an Arbitration Award[,]" which could indicate it meant for its Complaint to serve as motion to vacate. Opp'n at 10, Dkt. No. 15. However, elsewhere in its Opposition, K&M requests leave to amend if the Court dismisses the Complaint. Id. at 6 ("[E]ven if the Court agrees to dismiss the Complaint, it should grant leave to amend because Defendants have not shown that the pleadings could not possibly be cured by the allegation of other facts." (citing Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000)).
Despite this somewhat unusual procedural posture, the Court ultimately concludes it is unnecessary to resolve the question of whether K&M has filed a motion to vacate. Defendants have filed a Motion to Confirm the Award, and K&M has had an opportunity to defend against that Motion and the enforcement of the Award. See Opp'n. Having considered the parties' arguments and the relevant legal authority, the Court now GRANTS Defendants' Motion to Confirm the Award for the reasons set forth below.
K&M is a California corporation in the business of, among other things, installing lockers in building construction. Compl. ¶¶ 5, 9. Defendant Conference Board is a labor organization, and Defendant Local 405 is one of its affiliated local unions. Id. ¶¶ 6-7; Mot. at 1.
Defendants sought to form an agreement with K&M approximately five years ago. Compl. ¶ 11. They allegedly represented that K&M could perform work on lockers and locker systems using employees covered by the Office Modular Systems Addendum (the "Modular Agreement") to the 46 Northern California Counties Carpenter Master Agreement for Northern California (the "Master Agreement"),2 and that the Modular Agreement would govern any locker installation work. Id. K&M signed the most recent extension to the Modular Agreement on or about September 26, 2014. Id.
K&M also employs members of the Sheet Metal Workers International Association Local Union No. 104 ("Local 104") to install lockers and has done so for nearly 20 years. Id. ¶ 10. K&M signed its most recent agreement with Local 104 (the "Sheet Metal Agreement") in June2015. Id. Most of K&M's locker installation jobs have utilized composite crews of employees working under both the Sheet Metal Agreement and the Modular Agreement, and K&M alleges it has reported and paid all hours worked for its locker installation work under both Agreements. Id. ¶ 12. According to K&M, Defendants had been aware of K&M's use of composite crews since they first approached K&M about signing an agreement, and Defendants never objected to this arrangement. Id. ¶¶ 13-14.
Local 405 filed a grievance3 against K&M on July 7, 2015 when a dispute arose between them regarding the installation of metal lockers on a California public works project for the Milpitas Unified School District. Id. ¶ 8; see also Award at 1. Defendants insisted that all locker installation work should be performed pursuant to the Master Agreement, a collective bargaining agreement to which K&M, the Conference Board, and Local 405 are signatories. Compl. ¶ 14; Declaration of Ezekiel Carder ¶ 3, Dkt. No. 8 (); Master Agmt., Dkt. No. 19-(1-2). K&M alleges the "purpose and the object of the Grievance was to force K&M to assign locker installation work away from employees covered by the Modular Agreement and the Sheet Metal Workers Agreement." Compl. ¶ 18.
Arbitrator Robert M. Hirsch heard the dispute4 on August 11, 2015 and issued his decision on August 12, 2015. Id. ¶ 20; see Award. The Arbitrator found that K&M was a party and bound to the current Master Agreement. Award at 2. The Arbitrator thus ordered K&M to (1) cease and desist any further violations of and comply with the Master Agreement for the remainder of its term; (2) pay a total of $369.60 in wages as the wage differential between the Modular Agreement and the Master Agreement; (3) cease and desist from improperly reporting and untimely payingTrust Fund contributions as required by the Master Agreement; (4) correctly report and timely pay all required Trust Fund contributions; (5) submit to an audit of its books and records; and (6) pay $300 for its share of the costs of the proceedings. Id. at 2-4.
Section 301 of the LMRA grants district courts the authority to enforce or vacate a final arbitration award. 29 U.S.C. § 185. Likewise the FAA provides another statutory basis for confirming or vacating an arbitration award. See 9 U.S.C. § 9-11. "Confirmation is a summary proceeding that converts a final arbitration award into a judgment of the court." Ministry of Def. & Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc., 665 F.3d 1091, 1094 n.1 (9th Cir. 2011) (citation omitted).
Despite courts' ability to confirm or vacate arbitration awards, "judicial review of an arbitration award is both limited and highly deferential." Sheet Metal Workers' Int'l Ass'n Local Union No. 359 v. Madison Indus., Inc. of Ariz., 84 F.3d 1186, 1190 (9th Cir. 1996) (citation omitted). This is true under both the FAA and the LMRA. The FAA permits a district court to vacate an arbitration award only:
(1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption [on the part of the arbitrators]; (3) where the arbitrators were guilty of . . . . misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
9 U.S.C. § 10(a); Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584 (2008) ().
The court's review of an arbitrator's decision under section 301 of the LMRA is likewise "extremely limited." Sheet Metal Workers Intern. Ass'n, Local No. 359, AFL-CIO v. Ariz. Mech. & Stainless, Inc., 863 F.2d 647, 653 (9th Cir. 1988).
The arbitrator's factual determinations and legal conclusions generally receive deferential review as long as they derive their essence from the contract. If, on its face, the award represents a plausible interpretation of the contract, judicial inquiry ceases and the award must be enforced. This remains so even if the basis for the arbitrator's decision is ambiguous and notwithstanding the erroneousness of any factual findings or legal conclusions.
Id. (internal citations omitted). In general, "as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision." Garvey v. Roberts, 203 F.3d 580, 588 (9th Cir. 2000) (quoting United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987)). Nonetheless, the Ninth Circuit has "identified four instances in which vacatur of an arbitration award under section 301 is warranted: (1) when the award does not draw its essence from the collective bargaining agreement; (2) when the arbitrator exceeds the scope of the issues submitted; (3) when the award runs counter to public policy; and (4) when the award is procured by fraud." Sprewell v. Golden State Warriors, 266 F.3d 979, 986 (9th Cir. 2001) (citations omitted); see also S. Cal. Gas Co. v. Util. Workers Union of Am., Local 132, AFL-CIO, 265 F.3d 787, 792-93 (9th Cir. 2001).5
Although Defendants have moved to confirm the Award, K&M bears the burden of defending against enforcement. See BraunHagey & Borden LLP v. GMP Haw., Inc., 2014 WL 662496, at *3 (N.D. Cal. Feb. 20, 2014) ("The burden of proof in a proceeding to confirm an arbitration award is on the party defending against enforcement." (citing Injazat Tech. Fund, B.S.C. v. Najafi, 2012 WL 1535125, at *2 (N.D. Cal. May 1, 2012)); see also U.S. Life Ins. Co. v. Superior Nat. Ins. Co., 591 F.3d 1167, 1173 (9th Cir. 2010) . K&M presents three reasons to vacate the Award under both the LMRA and the FAA. See Compl. ¶ 23(a)-(c). K&M argues the Award should be vacated under the LMRA because the Award (1) does not draw its essence from a collective bargaining agreement because it ignored the Master Agreement'splain language and is based on the Arbitrator's own brand of industrial justice, and...
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