Local 670, United Rubber, Cork, Linoleum and Plastic Workers of America, AFL-CIO v. International Union, United Rubber, Cork, Linoleum and Plastic Workers of America, AFL-CIO

• Decision Date: 13 August 1987
• Docket Number: 86-5877,AFL-CIO,Nos. 86-5774,s. 86-5774
• Citation: 822 F.2d 613
• Parties: 125 L.R.R.M. (BNA) 2969, 56 USLW 2055, 106 Lab.Cas. P 12,436, 107 Lab.Cas. P 10,098, 8 Fed.R.Serv.3d 483 LOCAL 670, UNITED RUBBER, CORK, LINOLEUM AND PLASTIC WORKERS OF AMERICA, AFL- CIO, in its own behalf and in behalf of its individual members, Plaintiff- Appellant, Cross-Appellee, v. INTERNATIONAL UNION, UNITED RUBBER, CORK, LINOLEUM AND PLASTIC WORKERS OF AMERICA,; Milan Stone; Bob G. Long and Local 703, Defendants- Appellees, v. ARMSTRONG RUBBER COMPANY; R.G. DeAngelo and Russell Weymouth, Defendants- Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 613

822 F.2d 613

125 L.R.R.M. (BNA) 2969, 56 USLW 2055,

106 Lab.Cas. P 12,436,

107 Lab.Cas. P 10,098, 8 Fed.R.Serv.3d 483

LOCAL 670, UNITED RUBBER, CORK, LINOLEUM AND PLASTIC WORKERS

OF AMERICA, AFL- CIO, in its own behalf and in

behalf of its individual members, Plaintiff- Appellant, Cross-Appellee, v. INTERNATIONAL UNION, UNITED RUBBER, CORK, LINOLEUM AND PLASTIC WORKERS OF AMERICA, AFL-CIO; Milan Stone;

Bob G. Long and Local 703, Defendants- Appellees, v. ARMSTRONG RUBBER COMPANY; R.G. DeAngelo and Russell

Weymouth, Defendants- Appellees, Cross-Appellants.

Nos. 86-5774, 86-5877.

United States Court of Appeals, Sixth Circuit.

Argued March 19, 1987.

Decided June 26, 1987.

Rehearing and Rehearing En Banc Denied Aug. 13, 1987.

Michael J. Passino, Passino, DeLaney and Hildebrand, Nashville, Tenn., Jane P. North (argued), for Local 670.

Charles Hampton White, Corneluis and Collins, Nashville, Tenn., for defendants-appellees.

Cecil D. Branstetter, Nashville, Tenn., Joby Dupuis, Barry J. Bennett, Fresno, Cal., for Local 703.

Frederick A. Stuart, John N. Raudabaugh (argued), Powell, Goldstein, Frazer, Murphy, Atlanta, Ga., for Armstrong Rubber.

Before ENGEL and GUY, Circuit Judges, and PECK, Senior Circuit Judge.

RALPH B. GUY, Jr., Circuit Judge.

Local 670 of the United Rubber, Cork, Linoleum and Plastic Workers of America (URW) appeals the dismissal of its hybrid breach of contract/duty of fair representation claim pursuant to section 301 of the Labor Management Relations Act, 29 U.S.C. Secs. 185 and 159(a). ¹ The district court, after a hearing on the matter, specifically found Local 670's grievance to be arbitrable but dismissed the suit in its entirety due to its inability to join a sister local out of California (Local 703), which the court found to be an indispensable party under Fed.R.Civ.P. 19 without which the court could not, in equity and good conscience, proceed. The employer, Armstrong Rubber Company (company) cross-appeals the finding of arbitrability. Although we agree that Local 670's claim is properly arbitrable, we find the district court's dismissal due to the absence of Local 703 improper under the circumstances of this case. Therefore, the decision below is affirmed in part and reversed in part, and the case is hereby remanded to the district court for further proceedings in accordance with this opinion.

I.

The facts relative to this appeal are simple and largely undisputed. Local 670, an unincorporated labor organization with principal offices in Madison, Tennessee, is one of five URW locals signatory to a master collective bargaining agreement with the company. Together the five locals comprise what is known as the "Armstrong chain," a nationwide group of local unions bargaining in concert with a common employer. The actual contract negotiating is conducted through the International Policy Committee (IPC), on which each local has at least one representative. In addition to the single master agreement, each local union also enters into local supplemental agreements addressing issues specific to that local and supplementing, but not contradicting or amending, the master agreement.

The underlying dispute centers on events during and just after negotiations for the parties' 1985 master agreement. A few weeks after all parties had signed both the master agreement and all five local supplemental agreements, the company approached Local 703 of Hanford, California, in an attempt to enter into a wage reduction agreement with that local due to the unprofitability of the California plant. The company contended that, due to excess production capacity, the Hanford operation would be closed unless significant wage reductions were accepted. The company and Local 703 drafted two versions of the wage reduction agreement (the Hanford memoranda). The first Hanford memorandum provided that the agreement was "subject to approval by a majority of the local unions representing a majority of the membership and the International Executive Board." This memorandum was then submitted to a vote of the entire Armstrong chain and was soundly defeated. Immediately thereafter, the parties prepared the second Hanford memorandum with an even larger wage reduction objective than the first. ² In this memo, however, there was no longer a statement regarding the necessity of majority approval. The agreement was framed as one involving "labor grade changes," stating as follows:

[I]n accordance with longstanding and clearly established practices by the parties and consistent with the Collective Bargaining Agreement, the Company and Union have negotiated the following labor grade changes for each specific job classification listed below....

Despite deletion of the approval language, the International again submitted this memorandum to a majority vote. It was again defeated by a majority vote of all five locals, although it was approved by a majority of the members of Local 703. At this point, and with the approval of the vice-president of the International, the company implemented the agreement.

It was and is Local 670's contention that, by the express terms of the 1985 master agreement, the company had no right to alter the basic wage structure of one local in a local supplemental agreement, and, further, that the only way that any local supplemental agreement can be altered is upon approval by a majority of the local unions representing a majority of the union membership in the Armstrong chain. ³ Because the International had been active in effecting the implementation of the Hanford agreement, Local 670 filed an internal union appeal against it for violations of Local 670's rights under the union constitution. The International Executive Board denied the appeal, stating in part that, since their "argument as to the proper interpretation of Paragraph 56 is obviously one of contract and not Constitutional interpretation ... the proper remedy is to pursue the matter through the grievance procedure." ⁴

On the day its internal union appeal was denied, the company laid off 64 members of Local 670. It is Local 670's contention that these layoffs were a direct result of the implementation of the drastic wage reductions accomplished by agreement with Local 703 in California. Local 670 then filed a grievance challenging the implementation of the Hanford memorandum and the attendant layoffs pursuant to Article VI of the master agreement. ⁵ The company refused to process the grievance, stating in part, "we do not think that Local 670, as a representative of the International, is in a position to claim that a breach has occurred." Local 670 then initiated the instant suit, after which the company furloughed an additional 141 employees from the Madison, Tennessee plant, bringing the number of displaced workers to over two hundred.

Defendants interposed motions to dismiss for failure to state a claim and failure to join an indispensable party, Local 703. Although the court found that the complaint stated a claim and that the company should be ordered to submit the grievance to arbitration, it further found that Local 703 was an indispensable party within the meaning of Fed.R.Civ.P. 19(a) since "it is the other contracting party with the defendant, Armstrong Rubber Company, in the contract which is the subject of the grievance which the court is directing to be arbitrated." It therefore ordered Local 670 to join Local 703 within ten days. Local 670 issued a summons and complaint to Local 703, along with a letter in which it offered to arbitrate the grievance in California at Local 703's customary site for arbitrations. Although Local 703 did not respond to the offer to arbitrate in California, they did file a motion to quash the service of summons due to lack of personal jurisdiction.

After a further hearing, the district court issued its second order, concluding that the court lacked personal jurisdiction over Local 703 and that its presence was so essential to the proceedings that the court was unable to satisfactorily resolve the issues or fashion an adequate remedy in its absence. Noting that "it appears that Local 670 has the ability to pursue its claims elsewhere," the court dismissed the suit.

II. Arbitrability of the Grievance

It is well-settled that while arbitration is a matter of contract, the question whether the parties have bound themselves contractually to arbitrate a particular dispute is a question for judicial determination. United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). The court is to look to the language of the agreement to determine whether "it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Id. at 582-83, 80 S.Ct. at 1352-53. Moreover, given the existence of an arbitration clause, a presumption of arbitrability arises, with all doubts resolved in favor of coverage. AT & T Technologies, Inc. v. Communication Workers of America, 475 U.S. 643, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986) (citing Warrior & Gulf, 363 U.S. at 582-83, 80 S.Ct. at 1352-53).

Looking to the parties' 1985 master agreement, we find that the arbitration clause, Article VI, Section 10, simply provides that any grievance which is not successfully resolved internally may be appealed to arbitration. A "grievance" is defined as:

A complaint, dispute, or controversy in which it is acclaimed [sic] that the Company has failed to comply with an obligation assumed by it under the terms of this Agreement or the supplement thereto, and which involved [sic] either ... (2) a question concerning the meaning, interpretation, scope, or application of this Agreement or the supplements thereto.

Local 670's grievance alleged that the company's actions violated Article VIII, Section 18, of the master agreement, which addresses basic wage rates and provides that "[t]he Basic Wage Rates in...