International Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local Union No. 117 v. Washington Employers, Inc.

• Decision Date: 25 July 1977
• Docket Number: No. 75-3343,75-3343
• Citation: 557 F.2d 1345
• Parties: 96 L.R.R.M. (BNA) 2096, 82 Lab.Cas. P 10,061 INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, LOCAL UNION NO. 117, Plaintiff-Appellant, v. WASHINGTON EMPLOYERS, INC., Booth Fisheries, Main Fish Company, Inc., McCallum Legaz Fish Company, Inc., New England Fish Company, Perfection Smokery, Inc., Whitney Fidalgo Seafoods, Inc., Seattle Seafoods, Inc., Washington Fish & Oyster Company, Inc., Diamond Ice & Storage Co., Nordic Cold Storage Co., Inc., Olympic Cold Storage and Warehouse Co., Rainier Ice & Cold Storage Co., Rainier Port Cold Storage, Inc., and SDC Cold Storage, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1345

557 F.2d 1345

96 L.R.R.M. (BNA) 2096, 82 Lab.Cas. P 10,061

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS WAREHOUSEMEN AND HELPERS OF AMERICA, LOCAL UNION NO. 117, Plaintiff-Appellant, v. WASHINGTON EMPLOYERS, INC., Booth Fisheries, Main Fish Company, Inc., McCallum Legaz Fish Company, Inc., New England Fish Company, Perfection Smokery, Inc., Whitney Fidalgo Seafoods, Inc., Seattle Seafoods, Inc., Washington Fish & Oyster Company, Inc., Diamond Ice & Storage Co. Nordic Cold Storage Co., Inc., Olympic Cold Storage and Warehouse Co., Rainier Ice & Cold Storage Co., Rainier Port Cold Storage, Inc., and SDC Cold Storage, Defendants-Appellees.

No. 75-3343.

United States Court of Appeals Ninth Circuit.

July 25, 1977.

William A. Roberts, argued, Vance, Davies & Roberts, Seattle, Wash., for plaintiff-appellant.

Peter M. Anderson, Seattle, argued for defendants-appellees.

Appeal from the United States District Court for the Western District of Washington.

Before LUMBARD, ^* WRIGHT and ANDERSON, Circuit Judges.

LUMBARD, Circuit Judge:

Plaintiff, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local Union No. 117 (the "Union"), appeals from a judgment of the Western District of Washington, McGovern, Judge, entered on October 8, 1975, refusing to enforce and setting aside an arbitrator's award. Defendant, Washington Employers, Inc., is an employers association acting on behalf of certain wholesale fish firms, also defendants herein (collectively referred to as the "Employers").

On January 9, 1974, pursuant to an agreement to arbitrate, arbitrator Norman A. Stoll found, on the basis of a written record, that the Employers had violated RCW 49.52.050 by willfully withholding wages due to their employees and awarded the employees double damages, pursuant to RCW 49.52.070. Appellants brought this suit to enforce the award, pursuant to section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185. The district court granted the Employers' motion for summary judgment and dismissed the complaint on the grounds that the Washington statutes applied by the arbitrator were in conflict with federal labor policy and were preempted. We hold that under the circumstances the Employers were precluded from attacking the arbitrator's jurisdiction on the ground that the state statutes he was asked to apply were in conflict with federal law. Accordingly, the judgment of the district court is reversed and the case is remanded with instructions to enter judgment enforcing the award.

The present controversy grew out of a dispute over the propriety of wage increases called for by a collective bargaining agreement between the parties. On November 8, 1971 the Employers and the Union entered into a collective bargaining agreement, which provided for three separate wage increases to be effected on November 13, 1971, April 1, 1972, and April 1, 1973. At the time the agreement was entered into the federal wage stabilization program was in effect. See Economic Stabilization Act of 1970, 12 U.S.C. § 1904 note. On November 14, 1971 the federal Pay Board put into effect certain regulations which set a ceiling of 5.5 percent on wage increases in new labor agreements. See 36 Fed.Reg. 21790 (November 13, 1971). By letter dated December 17, 1971 the Employers advised the Union that they would seek a "clarification" of the legitimacy of implementing the wage increases called for by the November 8 agreement, which were in excess of Pay Board guidelines, and that upon receipt of such clarification the wage increases called for by the contract would be paid retroactively. On December 20, 1971 the Employers filed a challenge with the Pay Board alleging that the contractually agreed upon wage increases were "unreasonably inconsistent" with Pay Board guidelines. However, it was not until October 2, 1972 that the Pay Board issued a decision approving the increases.

The Union does not appear immediately to have objected to the Employers' withholding of the wage increases. However, by letter dated April 10, 1972 the Union demanded to know whether the Employers intended immediately to implement the wage increases called for by the contract as of November 13, 1971 and April 1, 1972. On April 17, 1972 the Employers responded by letter stating that although two 5.5 percent increases would be put into effect as of November 14, 1971 and April 1, 1972, further increases would have to await the Pay Board's determination. The Union responded on April 21, 1972, stating that the Employers were obligated to pay the contractually agreed upon increases and demanding that the issue be settled through the grievance and arbitration procedures provided for by the collective bargaining agreement. ¹ In addition, the Union claimed that the Employers were obligated to pay double damages to each employee affected by the withholding of the wage increases, in accordance with Washington statutes. RCW 49.52.050 ² and 49.52.070 ³ provide that where an employer has willfully paid an employee a lower wage than is provided for by contract, the employer is guilty of a misdemeanor and is subject to a civil action by the employee for judgment in an amount twice the sum of the wages withheld. The Union continued to press for arbitration and reiterated its demand for double damages under Washington law. By letter dated August 11, 1972 the Employers stated, "We continue to believe that the instant question is not an appropriate subject for arbitration under the Agreement, . . . However, . . . we would be willing to present the sole question of whether this matter is an appropriate subject for arbitration to an arbitrator."

On September 7, 1972 the Union filed suit in district court seeking to compel arbitration of the dispute under the collective bargaining agreement. On October 2, 1972 the Pay Board approved the wage increases and shortly thereafter the employers paid the full amount of the wage increases, retroactive to November 13, 1971. Thus, the only unresolved matter was the Union's claim that the employees were entitled to double damages under Washington law.

In a letter dated March 15, 1973 counsel for the Employers advised the Union that, "As discussed, we agree to arbitrate . . . and do, of course, agree to be bound by any decision rendered. . . . Trust this is satisfactory and you will now proceed to finalize and enter the order of dismissal in District Court case filed in this matter." Pursuant to this agreement, the Union's suit was dismissed without prejudice and the parties executed a stipulation to arbitrate, which provided as follows: "The sole issue before the Arbitrator is whether the Employers' failure to pay the full amount of the specified wage increases until they received a decision of the Pay Board was a violation of RCW 49.52.050 entitling the employees to double damages as provided in RCW 49.52.070." The stipulation also stated that it was the Employers' position that they were not required to pay the wage increases until such payment was authorized by the Pay Board and that the employees had received all the compensation to which they were entitled.

The issue was presented to the arbitrator on a written record. In their brief to the arbitrator the Employers argued that they had acted in good faith in withholding the wage increases pending a determination of their legality. The Employers also argued that double damages were a drastic remedy and that an award of such punitive damages under the circumstances would be in conflict with the remedial purposes of section 301 of the LMRA. The Employers conceded, however, that punitive damages could be awarded "in those cases where the conduct can be characterized as 'willful' or 'outrageous.' " ⁴

In his decision of January 9, 1974 arbitrator Stoll found that by April 21, 1972, the day the Union first made a formal demand for immediate compliance with the November 8 agreement, "it was abundantly clear that the (Pay Board) regulations permitted payment 'unless and until' the Pay Board acted favorably upon the (Employers') challenge." Accordingly, Mr. Stoll found that as of April 22, 1972 the Employers had willfully withheld wages due to the employees and consequently from that date forward the employees were entitled to double damages in accordance with the applicable Washington statutes. Turning to the Employers' argument that punitive damages were not an appropriate remedy, Mr. Stoll indicated that he was bound by the stipulation requiring a determination of whether the Washington statutes had been violated and held that under the circumstances the relevant statutes made the award of double damages mandatory; however, Mr. Stoll also found that an award of punitive damages in this case was " 'within the remedial purpose of the labor laws,' " quoting Sidney Wanzer & Sons, Inc. v. Milk Drivers Union, Local 753, 249 F.Supp. 664, 671 (N.D.Ill.1966).

The Employers subsequently moved for reconsideration and for the first time argued that the arbitrator had exceeded his jurisdiction by basing his award on a state statute that was in conflict with and was preempted by federal law. The Union responded that the arbitrator had no authority to reconsider his decision.

After corresponding with the parties, Mr. Stoll denied the motion for reconsideration on April 19, 1974. He concluded that his opinion had applied the Washington law and had dealt completely with the issues as defined in the stipulation and that there was no basis upon which to reopen the decision. His ruling concluded by stating:

The present problem could easily have been avoided by the Employers' insisting upon a somewhat different statement of the issue or by the Employers' noting an appropriate reservation in the Stipulation. In that event the original written arguments undoubtedly would have included a more complete briefing on the jurisdictional issues now raised for the first time. In...