CK Witco Corp. v. Paper Allied Industrial

• Decision Date: 09 November 2001
• Docket Number: AFL-CI,No. 00-3413,D,00-3413
• Citation: 272 F.3d 419
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: (7th Cir. 2001) CK Witco Corporation, Plaintiff/Counterclaim Defendant-Appellee, v. Paper Allied Industrial, Chemical & Energy Workers International Union, Local 60-807,efendant/Counterclaimant/ Third-Party Plaintiff-Appellant, v. Goldschmidt Chemical Corporation, Third-Party Defendant-Appellee

Page 419

272 F.3d 419 (7th Cir. 2001)

CK Witco Corporation, Plaintiff/Counterclaim Defendant-Appellee, v. Paper Allied Industrial, Chemical & Energy Workers International Union, Local 60-807, AFL-CIO, Defendant/Counterclaimant/ Third-Party Plaintiff-Appellant, v. Goldschmidt Chemical Corporation, Third-Party Defendant-Appellee.

No. 00-3413

United States Court of Appeals For the Seventh Circuit

Argued April 18, 2001

Decided November 9, 2001

Appeal from the United States District Court for the Central District of Illinois, Peoria Division. No. 00-1022--Michael M. Mihm, Judge.

Before Harlington Wood, Jr., Diane P. Wood, and Williams, Circuit Judges.

Williams, Circuit Judge.

In this case, we are called upon to determine the arbitrability of several labor disputes governed by collective bargaining agreements. The case is unique, however, because the disputes all involve two separate employers, two separate union bargaining units, and two separate, although identical, collective bargaining agreements. But contrary to the arguments of the employers, and the decision of the district court, this novelty does not affect the conclusion we must reach that under the collective bargaining agreements the disputes are subject to arbitration. Therefore, we reverse.

I. BACKGROUND

A. The Facts

The seeds of this dispute were planted early, back when Witco singly owned and operated a chemical manufacturing plant in Mapleton, Illinois. The plant consisted of two separate facilities: the Main Plant and the Metal Organics Plant ("MOP"), which together were referred to as the Mapleton Plant. On August 31, 1999, Witco sold the Main Plant to Goldschmidt. In the sale, Goldschmidt hired the employees who were working at the Main Plant, some 245 employees. Witco retained the MOP and the 20 employees working there.

While the physical division of the plant and the employees appears to have been rather effortless, contractual rights between the employees and the employers were not so easily divisible. The employees were represented by Paper Allied Industrial, Chemical & Energy Workers International Union, Local 60-807, AFL-CIO ("the Union").¹ More importantly, several years before the sale, Witco and the Union entered into a collective bargaining agreement ("CBA"), which covered the employees at both the Main Plant and the MOP. The CBA addressed a wide variety of topics, including employee seniority and transfer rights between the two facilities.

In the CBA, Witco and the Union agreed that the "contract shall be binding upon the parties hereto, their successors, transferees and assignees" and that "[i]n the event [Witco] sells or transfers the Mapleton Plant, this contract shall remain in full force and effect and be binding upon the purchaser or transferee." As a consequence of this full force and effect provision it seems, in the Purchase Agreement between Witco and Goldschmidt for the sale of the Main Plant, Goldschmidt agreed, without exception, to "assume the agreements listed on Schedule 7.8," which included the CBA.

Both Witco and Goldschmidt individually informed the employees that Goldschmidt had agreed to assume the CBA. Witco stated in its letter that Goldschmidt had agreed to assume the CBA, and that all terms and conditions of the CBA would remain in full force and effect after the sale. However, Goldschmidt stated in its letter that it had agreed to assume the CBA, with the exception of the MOP employees.

After the partition of the Mapleton Plant, Witco and Goldschmidt each prepared separate seniority lists. In addition neither allowed transfers from the other's facility, which arguably would have been allowed prior to the sale under the CBA. The Union, therefore, objected and requested that the employers prepare a unified list and allow the transfers. But the disputes could not be resolved amicably, because the employers refused to change practices and denied any violation of the CBA.² The Union filed grievances with the Federal Mediation and Conciliation Service ("FMCS"), requesting that the FMCS designate an arbitrator to resolve the contested issues. Witco and Goldschmidt refused to arbitrate.

Instead, Witco filed a unit clarification petition with the Regional Office of the National Labor Relations Board ("NLRB"). Goldschmidt intervened. After an investigation and its consideration of the evidence, the NLRB found that the MOP workers constituted a separate bargaining unit from the Main Plant workers and granted Witco's unit clarification petition.

With this decision in hand, Witco then filed an unfair labor grievance against the Union in the Regional Office of the NLRB, alleging that its pursuit of arbitration was an unfair labor practice. An Associate General Counsel in the NLRB Division of Advice issued an advice memorandum, solicited by the Regional Director for the NLRB, in which he found that the Union's request for arbitration was not an unlawful attempt to merge the two bargaining units but an enforcement of contractual rights that "arguably could survive" the separation. Witco withdrew its grievance.

B. District Court Proceeding

Still resisting arbitration, Witco filed suit in the United States District Court for the Central District of Illinois, seeking a permanent injunction of the Union's arbitration proceedings. The Union counterclaimed against Witco and filed a third-party complaint against Goldschmidt, seeking to compel both parties to arbitrate in accordance with the CBA and an award of damages for breach of the CBA for their refusal to arbitrate. All parties moved for summary judgment.

The district court granted summary judgment in favor of Witco and Goldschmidt (and denied it in favor of the Union), finding that although the employers had agreed to submit to arbitration seniority and transfer issues with respect to their own employees, they had not agreed as to each other's employees. Furthermore, the district court found that arbitration would constitute an unlawful attempt to overturn or modify the NLRB's unit clarification decision. The Union now appeals.

II. ANALYSIS

A. Duty to Arbitrate

It is fundamental that the right or duty to arbitrate must arise out of a contract, and without that agreement a party cannot be required to submit a dispute to arbitration. United Steelworkers of Am. v. Warrior and Gulf Navigation Co., 363 U.S. 574, 582 (1960); R.J. Distrib. Co. v. Teamsters, Chauffeurs & Helpers Local Union No. 627, 771 F.2d 211, 214 (7th Cir. 1985). At the same time, when a contract contains an arbitration clause, a strong presumption in favor of arbitration exists and courts have no choice but to order arbitration "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." AT&T Techs., Inc. v. Communications Workers, 475 U.S. 643, 650 (1986). We review the district court's grant and denial of summary judgment on the issue of arbitration de novo. Local 75, Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers v. Schreiber Foods, Inc., 213 F.3d 376, 379 (7th Cir. 2000).

The CBA arbitration provisions provide that a grievance is "any dispute submitted by an employee or Union representative involving an alleged violation of the express provision of this Agreement . . . and involving the interpretation or application of the provisions of the Agreement." If the grievance is not resolved satisfactorily, the Union is entitled to "appeal to arbitration," and "[t]he arbitrator...