Chicago Typographical Union No. 16 v. Chicago Sun-Times, Inc.

• Decision Date: 25 June 1991
• Docket Number: 90-3503,D,P,No. 16,INCORPORATE,Nos. 90-3501,SUN-TIME,16,s. 90-3501
• Citation: 935 F.2d 1501
• Parties: 137 L.R.R.M. (BNA) 2731, 119 Lab.Cas. P 10,815, 20 Fed.R.Serv.3d 74 CHICAGO TYPOGRAPHICAL UNIONlaintiff-Appellant, v. CHICAGOefendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1501

935 F.2d 1501

137 L.R.R.M. (BNA) 2731, 119 Lab.Cas. P 10,815,

20 Fed.R.Serv.3d 74

CHICAGO TYPOGRAPHICAL UNION No. 16, Plaintiff-Appellant, v. CHICAGO SUN-TIMES, INCORPORATED, Defendant-Appellee.

Nos. 90-3501, 90-3503.

United States Court of Appeals Seventh Circuit.

Argued May 13, 1991.

Decided June 25, 1991.

Gilbert A. Cornfield, Gail E. Mrozowski, Cornfield & Feldman, Chicago, Ill., for Chicago Typographical Union No. 16.

Jonathan Vegosen, Damon E. Dunn, Ellen B. Epstein, Levin & Funkhouser, Chicago, Ill., Thomas M. Seger, David G. Holcombe, Elliot S. Azoff, Lawrence Pollack, Baker & Hostetler, Cleveland, Ohio, for Chicago Sun-Times, Inc.

Before POSNER, FLAUM and EASTERBROOK, Circuit Judges.

POSNER, Circuit Judge.

We have consolidated for decision these two appeals because though they arise from separate cases before different district judges, the parties and counsel are the same, both appeals involve arbitration issues, and both cases derive ultimately from the same arbitration award.

Chicago Typographical Union No. 16, the plaintiff and appellant in both cases, represents the composing-room employees of both the Chicago Sun-Times, Inc.--the publisher of Chicago's second-largest newspaper, and the defendant and appellee in these cases--and the publisher of Chicago's largest newspaper, the Chicago Tribune. We shall call the respective publishers the Sun-Times and the Tribune. The union and the Sun-Times had long operated under a succession of term collective bargaining agreements. In 1975 they added a "Supplemental Agreement" that conferred certain rights on the workers and that by its terms was to be a part of all future collective bargaining agreements between the parties and could be amended only by mutual agreement.

The most recent term agreement--what we shall call the "Main Agreement"--expired in 1989, but the parties agreed to keep it in force, subject to cancellation upon 48 hours' notice by either party. Section 7(a) of the Main Agreement is a "most favored nations" clause: it entitles the Sun-Times to any concessions that the union grants the Tribune. Section 7(b), however, states that "it is understood that the provisions of the Supplemental Agreement of 1975 are neither superseded, affected, or supplanted by the language of" section 7(a). The Main Agreement contains an arbitration clause; the Supplemental Agreement does not.

In 1989 the union signed a collective bargaining agreement with the Tribune that, in the Sun-Times' view, made significant concessions to the Tribune. In July of that year, in reliance on the most favored nations clause in the Main Agreement and over the opposition of the union, the Sun-Times changed some of the terms and conditions of employment in its composing room. The union filed a grievance, which was submitted to arbitrator Fred Witney, who in a written opinion issued later in 1989 found that some of the changes were authorized by the most favored nations clause and others were not. To the objection that even the former changes were forbidden because they violated the Supplemental Agreement and hence (the union argued) were excluded from the most favored nations clause by section 7(b), Witney in his opinion responded in a single sentence: "Nor is there need to determine the application of Section 7(b) to the circumstances of this case."

On January 10, 1990, the union filed suit in federal district court challenging Witney's award insofar as it permitted the Sun-Times to make changes that infringed rights conferred by the Supplemental Agreement. The basis of federal jurisdiction was section 301 of the Taft-Hartley Act, 29 U.S.C. Sec. 185, which creates federal jurisdiction over suits to enforce labor contracts. There is no doubt of the applicability of section 301. A suit to throw out a labor arbitrator's award is, in the usual case anyway--including this case--a suit to enforce the labor contract that contained the clause authorizing the arbitration of disputes arising out of the contract. For in arguing against the award, the plaintiff normally will be pointing to implicit or explicit limits that the contract places on the arbitrator's authority--principally that he was to interpret the contract and not go off on a frolic of his own--and arguing that the arbitrator exceeded those limits. Kallen v. District 1199, 574 F.2d 723, 725 (2d Cir.1978); Harry Hoffman Printing, Inc. v. Graphic Communications, International Union, 912 F.2d 608, 612 (2d Cir.1990).

If the plaintiff were challenging the award on grounds neither explicitly nor implicitly contractual, it might seem problematic to base federal jurisdiction on a statute (section 301) that authorizes only "suits for violations of [labor] contracts." We are sympathetic to the view of the Second Circuit in Kallen, however, that the statute can and should be stretched a bit to embrace all suits arising out of awards by arbitrators appointed under labor contracts, whether it is a suit to enforce or to set aside the award, and if the latter whether the suit is based on contractual or noncontractual grounds. 574 F.2d at 725; cf. International Brotherhood of Electrical Workers v. Sign-Craft, Inc., 864 F.2d 499, 502 (7th Cir.1988). It would not only be odd, it would be pointless, to make federal jurisdiction depend on whether the winner was seeking to enforce the arbitration award or the loser to challenge it, since the loser could by disregarding the award force the winner to sue, and by this oblique means gain access to the federal court (if necessary removing the case to that court). In any event, since the suit here was based on contractual grounds, it was a suit to enforce a labor contract and the district court therefore unquestionably had jurisdiction. The court upheld Witney's award. The union's appeal from that decision is No. 90-3503.

Throughout this period the parties were negotiating over possible terms of a new collective bargaining agreement to replace the expired Main Agreement. Two weeks after the union filed the suit challenging Witney's award, the Sun-Times declared a bargaining impasse and made what it described as a "final offer" of a new agreement. The offer incorporated, among other proposals, the changes that Witney had said the most favored nations clause of the Main Agreement authorized the company to make unilaterally. The union responded not only by rejecting the "final offer" but also by demanding arbitration on the ground that the offer created a "disagreement as to interpretation or enforcement of the terms of this Agreement [the Main Agreement]," the operative language of the Main Agreement's arbitration clause. The company refused to arbitrate but also did not implement its "final offer," as it was entitled to do if the parties really were at an impasse. Richmond Recording Corp. v. NLRB, 836 F.2d 289, 293 (7th Cir.1987); Local Union No. 47 v. NLRB, 927 F.2d 635, 642 (D.C.Cir.1991). Instead, bargaining continued. In April the union sued the Sun-Times, seeking an order to compel arbitration. This suit, claiming as it did that the Sun-Times had violated the arbitration clause of the Main Agreement by refusing to submit to arbitration, and seeking an order compelling it to submit, was based squarely on section 301. So we need not decide the applicability to labor disputes of the federal arbitration code (Title 9), which authorizes federal judicial assistance--including the issuance of an order to compel arbitration, 9 U.S.C. Sec. 4--for the arbitration of certain disputes that if litigated would fall within federal jurisdiction. Harry Hoffman Printing, Inc. v. Graphic Communications, International Union, supra, 912 F.2d at 611. The question of the applicability of Title 9 to labor contracts is unsettled, Gilmer v. Interstate/Johnson Lane Corp., --- U.S. ----, 111 S.Ct. 1647, 1659-60, 114 L.Ed.2d 26 (1991) (dissenting opinion), and also unimportant as a practical matter since the Supreme Court has told us that we can look to that title in formulating rules for suits under section 301 arising from the alleged breach of an arbitration clause. United Paperworkers v. Misco, 484 U.S. 29, 40 n. 9, 108 S.Ct. 364, 372 n. 9, 98 L.Ed.2d 286 (1987).

The district court held that the Sun-Times' unimplemented final offer had not created a disagreement within the meaning of the clause, because the dispute between the parties had not yet ripened into an arbitrable controversy. The court therefore refused to order arbitration. The union's appeal from this ruling is No. 90-3501. We learned at argument that in February of this year, following some further negotiating sessions, the company laid another "final offer" on the table, much like the previous one, and again did not move to implement it when the union rejected the offer. No further negotiations to replace the expired, although still operative, Main Agreement have taken place since the company made its last "final offer," but they could resume at any time.

The appeal from the decision upholding the arbitration award is the easier, so let us take it first. Federal courts do not review the soundness of arbitration awards. An agreement to submit a dispute over the interpretation of a labor or other contract to arbitration is a contractual commitment to abide by the arbitrator's interpretation. If the parties want, they can contract for an appellate arbitration panel to review the arbitrator's award. But they cannot contract for judicial review of that award; federal jurisdiction cannot be created by contract. Unless the award was procured by fraud, or the arbitrator had a serious conflict of interest--circumstances that invalidate the contractual commitment to abide by the arbitrator's result--his interpretation of the contract binds the court asked to enforce the award or to set it aside. The court is forbidden to substitute its own interpretation even if convinced that the arbitrator's interpretation was not only wrong, but plainly...