Inlandboatmens Union of Pacific v. Dutra Group

• Decision Date: 07 February 2002
• Docket Number: No. 00-15522.,00-15522.
• Parties: INLANDBOATMENS UNION OF THE PACIFIC, Plaintiff-Appellant, v. DUTRA GROUP, dba Dutra Construction Co. Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

279 F.3d 1075

INLANDBOATMENS UNION OF THE PACIFIC, Plaintiff-Appellant, v. DUTRA GROUP, dba Dutra Construction Co. Inc., Defendant-Appellee.

No. 00-15522.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 12, 2001.

Filed February 7, 2002.

Dmitri Iglitzin, Schwerin Campbell Barnard LLP, Seattle, Washington, for the appellant.

Paul V. Simpson, Simpson, Garrity & Innes, San Francisco, California, for the appellee.

Appeal from the United States District Court for the Northern District of California, Charles A. Legge, District Judge, Presiding. D.C. No. CV-99-04899-CAL.

Before: REINHARDT, HAWKINS and RAWLINSON, Circuit Judges.

OPINION

REINHARDT, Circuit Judge.

The Inlandboatmens' Union of the Pacific ("IBU") brought this action against the Dutra Group, alleging that Dutra violated the terms of a settlement agreement between the two parties. Dutra contends that because the IBU failed to seek arbitration of this dispute as required by the collective bargaining agreement between the parties, the federal courts lack jurisdiction over the case. The district court granted Dutra's motion to dismiss, and the IBU appeals.

I. BACKGROUND

Dutra is a marine construction, towing, and dredging company based in Northern California. The IBU represents deckhands employed by Dutra on its barges and tugboats that operate in the San Francisco Bay and its tributaries. In November, 1997, the IBU filed a grievance with Dutra regarding a subcontracting arrangement which, according to the IBU, violated the parties' collective bargaining agreement ("CBA"). The IBU contended that Dutra leased one of its barges, the "Harry B," to another company, Master's Tug & Tow, and subcontracted with Master's to complete work for Dutra. The CBA provides that Dutra will use only IBU-represented personnel to perform Dutra's work; however, Master's did not employ IBU members. The IBU contended that three of its members were laid off when the non-union employer took over the operation of the Harry B in Dutra's stead.

The CBA between Dutra and the IBU contains a reasonably broad arbitration provision; it governs "[a]ny dispute concerning... wages, working conditions, or any other matters referred to in this [CBA]." After the IBU filed the "Harry B" grievance, the parties arranged for an arbitration of the dispute, as required by the CBA. Prior to that formal proceeding, however, the parties engaged in less formal mediation. The mediation succeeded in resolving the dispute, and resulted in a settlement agreement between the parties that was concluded on August 23, 1999.

The settlement agreement had five elements to it. First, Dutra agreed to compensate IBU workers who would have worked on the Harry B jobs had the work not been subcontracted and performed by non-union workers. Second, the parties agreed to renew the CBA and agreed upon its general terms.¹ Third, Dutra agreed that it would subcontract work to Master's only if the subcontractor agreed to employ IBU members for labor to be performed on behalf of Dutra. Fourth, Dutra agreed to support the IBU in a jurisdictional dispute with another union. Finally, the parties agreed that the settlement agreement would resolve "all outstanding disputes and grievances" between them, and that any payments that Dutra owed under the settlement agreement would be made by September 15, 1999.

The IBU contends that shortly after the settlement agreement was concluded, Dutra breached its third provision by once again subcontracting with Master's, even though Master's continued to use the services of workers who did not belong to the IBU to perform the sub-contracted work. Soon thereafter, the IBU filed this action under § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a), seeking enforcement of the settlement agreement's subcontracting provision, as well as damages for its breach.

Dutra asserts that because the dispute is governed by the arbitration clause of the CBA, and because the IBU failed to exhaust its non-judicial remedies, the district court lacked jurisdiction over the action. The district court granted Dutra's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1).² The IBU appeals that decision. We review the grant of a motion to dismiss de novo. Mundy v. United States, 983 F.2d 950, 952 (9th Cir. 1993).

II. DISCUSSION

This case presents the question of when disputes regarding the terms or provisions of side agreements not included in the parties' basic written collective bargaining agreement are covered by the arbitration clause contained in the CBA. The IBU contends that when a side agreement, such as the settlement agreement at issue here, does not expressly include a requirement for arbitration within its terms, the union should be able to pursue its rights under that agreement in federal court pursuant to § 301 of the LMRA.³ Dutra responds that in this case the dispute over the terms of the third provision of the settlement agreement is governed by the arbitration clause of the CBA, and that the union must accordingly exhaust its non-judicial remedies before proceeding to court.

A. ARBITRABILITY OF SIDE AGREEMENTS BY PARTIES TO A COLLECTIVE BARGAINING AGREEMENT

We start by recognizing two general principles of labor law. The first is that federal labor policy as declared by the Supreme Court provides a strong preference for the arbitration of labor-management disputes:

[W]here the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that `[a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.'

AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). Where, as here, the arbitration provision of a CBA is reasonably broad in scope, the presumption of arbitration is "particularly potent." Dennis L. Christensen Gen'l Bldg. Contractor v. Southern Calif. Conf. of Carpenters, 952 F.2d 1073, 1077 (9th Cir.1991). The burden thus falls upon the party contesting arbitrability to show how the language of the arbitration clause excludes a dispute from the clause's purview. Phoenix Newspapers, Inc. v. Phoenix Mailers Union Local 752, 989 F.2d 1077, 1080 (9th Cir.1993).

The second general principle is that a collective bargaining agreement is not a narrow document limited to its specific terms and provisions; rather, it is a means of ordering more generally the labor-management relationship between the parties to it. As the Supreme Court has explained:

The collective bargaining agreement states the rights and duties of the parties. It is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. The collective agreement covers the whole employment relationship.... A collective bargaining agreement is an effort to erect a system of industrial self-government.

Warrior & Gulf Navigation Co., 363 U.S. at 578-80, 80 S.Ct. 1347 (citations omitted). Thus, a collective bargaining agreement is not limited solely to the specific provisions of the basic labor contract formally executed by the parties, but it may also include, among other things, written side agreements and oral understandings entered into by the parties to the collective bargaining relationship, including settlement agreements.

In this case, the settlement agreement resolved a dispute that the parties agree was in the first instance arbitrable under the CBA.⁴ The question presented here, then, is whether the present dispute over the alleged breach of the settlement agreement falls within the CBA's arbitration clause as well. We have not previously addressed the arbitrability of disputes regarding side agreements, such as settlement agreements, that are not set forth in the parties' basic written collective bargaining agreement. Several other circuits, however, have spoken to the issue.

In determining whether a dispute arising under a side agreement must be arbitrated pursuant to an arbitration clause of a CBA, the Second and Fourth Circuits consider the similarity of the subject matter of the side agreement to that of the CBA. Where the subject matter is dissimilar, these circuits deem the side agreement "collateral" to the CBA and do not apply the CBA's arbitration clause. Where the side agreement is "integral" to the CBA, these courts have held that a dispute over its provisions is arbitrable. See Cornell Univ. v. UAW Local 2300, 942 F.2d 138, 140 (2d Cir.1991) (holding that a "letter of understanding" was "collateral" to the CBA and therefore not governed by the CBA arbitration clause); Adkins v. Times-World Corp., 771 F.2d 829, 830-31 (4th Cir.1985) (holding that an "addendum" to the CBA was integral to it and therefore subject to the arbitration clause).

Two other circuits, the Third and Seventh, have adopted a different approach. These circuits have held that unless the parties specify otherwise, disputes involving a side agreement are arbitrable if the subject matter of the side agreement is within the scope of the arbitration clause of the CBA. See Niro v. Fearn Int'l., Inc., 827 F.2d 173, 175 (7th Cir.1987) (holding that "a settlement agreement is an arbitrable subject when the underlying dispute is arbitrable"); L.O. Koven & Bro., Inc. v. Local Union No. 5767, United Steelworkers of America, 381 F.2d 196, 204-05 (3rd Cir.1967) (concluding that a dispute over a side agreement that was silent as to arbitrability was governed by the CBA arbitration clause because the underlying subject was one "ordinarily a matter for consideration by an arbitrator" under the CBA.).

We...