Leyva v. Certified Grocers of California, Ltd.

• Decision Date: 19 March 1979
• Docket Number: No. 77-2116,77-2116
• Citation: 593 F.2d 857
• Parties: 101 L.R.R.M. (BNA) 2101, 24 Wage & Hour Cas. (BN 87, 86 Lab.Cas. P 33,771 Antonio R. LEYVA et al., Plaintiffs-Appellants, v. CERTIFIED GROCERS OF CALIFORNIA, LTD., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 857

593 F.2d 857

101 L.R.R.M. (BNA) 2101, 24 Wage & Hour Cas. (BN 87,

86 Lab.Cas. P 33,771

Antonio R. LEYVA et al., Plaintiffs-Appellants, v. CERTIFIED GROCERS OF CALIFORNIA, LTD., Defendant-Appellee.

No. 77-2116.

United States Court of Appeals Ninth Circuit.

March 19, 1979.

Neil M. Herring (argued), of Finkel & Herring, Los Angeles, Cal., for plaintiffs-appellants.

Thomas S. Kerrigan (argued), of McLaughlin & Irvin, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before SNEED and KENNEDY, Circuit Judges, and CALLISTER, ^* District Judge.

KENNEDY, Circuit Judge:

This is an appeal from the district court's order for a stay of the action "until arbitration has been had in accordance with the collective bargaining agreement." We have jurisdiction under 28 U.S.C. § 1292(a)(1). See Beckley v. Teyssier, 332 F.2d 495, 495 n. 2 (9th Cir. 1964).

The appellants are thirty-five delivery truck drivers employed by Certified Grocers of California Limited (Certified). They are members of the Wholesale Delivery Drivers & Salesmen's Local 848, an affiliate of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America. The Union and Certified were parties to a collective bargaining agreement in force during the period relevant to this dispute. The appellants filed suit against Certified, alleging Fair Labor Standards Act violations and breach of the collective bargaining agreement.

The action against Certified was begun in state court. The first count is based on the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 Et seq. The employees allege that Certified failed to pay time and one half for work in excess of forty hours per week, and they seek unpaid overtime wages for the three year period prior to the date of filing, liquidated damages in an equal amount, and attorneys' fees pursuant to 29 U.S.C. § 216(b). The second claim for relief, also based on failure to pay wages due, alleges that such failure was a violation of the collective bargaining agreement. Recovery is sought on this claim for a four year period prior to the date of the action. The action was removed by Certified to the United States District Court for the Central District of California. Both the claim under the FLSA and the claim based on a breach of the collective bargaining agreement present federal questions. 29 U.S.C. § 185.

The bargaining agreement to which the Union and Certified are parties is known as the Wholesale Delivery Drivers Agreement. Certified alleges that this master contract has been modified by an addendum known as the Long Haul Agreement. One of the issues in the case is whether or not the Long Haul Agreement is a proper modification of the principal contract, the employees contending that it has not been ratified by the Union membership. Appellants' contract claim under count II of the complaint is based solely on the overtime pay provisions of the principal contract, and not the addendum.

Both the Wholesale Drivers Delivery Agreement and the Long Haul Agreement provide for a multi-step grievance procedure culminating in binding arbitration to resolve disputes pertaining to the contract. In reliance on the arbitration provisions, the district court granted Certified's motion to stay both the FLSA and contract claims until after arbitration. The court acted pursuant to section 3 of the United States Arbitration Act, 9 U.S.C. § 3, which provides that suits raising issues referable to arbitration shall be stayed on application of one of the parties. Appellants argue that the contract claim is not referable to arbitration and that even if it were the action should not be stayed in the circumstances of this case because of the Union's position on the claim. The appellants contend further that the FLSA claim is not referable to arbitration because it is a statutory action independent of the contract.

Appellants argue their contract claim is not referable to arbitration. The principal contention in this regard stems from the limited nature of the relief which the arbitrator is empowered to provide under the contract. The arbitration article of the principal agreement, incorporated by reference in the Long Haul Agreement, provides that: "Any claims for compensation shall be limited to a maximum of six months retroactivity from the date the claim is submitted to the employer in writing." Appellants seek broader relief under the contract by demanding back pay for four years, relief which they contend they are entitled to under state law. ¹ That may or may not be the case, but the collective bargaining agreement binds them to arbitrate all issues arising out of the interpretation or application of the agreement. A limitation on the arbitrator's power is not a reason for bypassing arbitration where the claim is made upon the contract itself and is within the scope of the arbitration clause. ²

The employees say the contract issue is not referable to arbitration because an arbitrator would lack power to dispose of various claims concerning the contract. They contend that the Long Haul addenda are void because their key provisions were not submitted to the Union membership for ratification and that the arbitrator would be without power to adjudicate the validity of the addenda. ³ Appellants apparently argue that arbitration of this issue is precluded since the agreement provides that the arbitrator "shall not have authority to change, alter, or modify any of the terms or provisions of this Agreement." The Supreme Court has made clear that in construing an exception to an arbitration clause, all matters will be deemed subject to arbitration "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." United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960) (footnote omitted). The fact that the arbitrator lacks the power to modify the agreement does not compel the conclusion that he also lacks the power to determine which provisions are in fact a part of the contract. A necessary first step in interpreting any contract is to determine exactly what language is controlling in the case. Absent a clear limitation on the arbitrator's authority, we decline to read the exception clause in this contract to limit the arbitrator's power in the manner suggested by appellants.

The case of Prima Paint v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), is not to the contrary. There, in holding that a claim of fraud in the inducement of a contract is one generally referable to arbitration, the Supreme Court also observed that a specific attack on the validity of the arbitration clause is not. That rule is inapplicable to prevent arbitration here because the appellants challenge only the validity of certain provisions of the contract, not the validity of the arbitration clause itself. Thus, we conclude that the trial court was correct in ruling that proceedings under count II of the complaint for recovery on the contract should be stayed pending arbitration, as provided by the collective bargaining agreement. ⁴

We turn now to the objections the appellants make to the district court's order for a stay of proceedings on their claim for relief under the FLSA, alleged in count I of the complaint, pending arbitration of the claim pursuant to the collective bargaining agreement. We have determined that the FLSA claim is not subject to arbitration under the collective bargaining agreement and that the defendant was not entitled to a stay as a matter of right under the provisions of the Arbitration Act; we conclude further that the district court, nevertheless, has the authority to stay adjudication of the FLSA claim upon finding that certain express conditions, explained further below, pertain to the case.

At the outset we note that unless the parties have explicitly agreed to the contrary, it is a matter for the courts, not the arbitrator, to decide whether the parties have agreed to submit specific issues to arbitration. John Wiley & Sons v. Livingston, 376 U.S. 543, 546-47, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964); See Gangemi v. General Electric Co., 532 F.2d 861, 865 (2d Cir. 1976). This rule derives from the fact that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S.Ct. 1318, 1320, 1321, 8 L.Ed.2d 462 (1962). "No obligation to arbitrate a labor dispute arises solely by operation of law. The law compels a party to submit his grievance to arbitration only if he has contracted to do so." Gateway Coal Co. v. United Mine Workers of America, 414 U.S. 368, 374, 94 S.Ct. 629, 635, 38 L.Ed.2d 583 (1974). Of course, in construing arbitration clauses we must remain cognizant of the strong policy favoring arbitration of labor disputes, See United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960), and of the general principle that "(d)oubts should be resolved in favor of coverage." Warrior & Gulf, supra, 363 U.S. at 582-83, 80 S.Ct. at 1353.

The principal collective bargaining agreement, (the Wholesale Delivery Drivers Agreement) provides for arbitration of a defined class of disputes. Specifically, the arbitration clause applies to "any controversy, dispute, or disagreement aris(ing) during the period of this Agreement, out of the interpretation or application of the provisions of this Agreement . . . ." Whether the Long Haul Agreement is a proper addendum to the Wholesale Delivery Drivers Agreement...