LOCAL 710 v. MONTGOMERY WARD & CO., INC.

• Decision Date: 16 March 1989
• Docket Number: No. 88 C 1206.,88 C 1206.
• Court: U.S. District Court — Northern District of Illinois
• Parties: LOCAL 710, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Plaintiff, v. MONTGOMERY WARD & COMPANY, INCORPORATED, Defendant.

708 F. Supp. 209

LOCAL 710, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Plaintiff, v. MONTGOMERY WARD & COMPANY, INCORPORATED, Defendant.

No. 88 C 1206.

United States District Court, N.D. Illinois, E.D.

March 16, 1989.

MEMORANDUM ORDER

PRENTICE H. MARSHALL, District Judge.

Plaintiff Local 710, International Brotherhood of Teamsters ("Local 710") brought this action against defendant Montgomery Ward & Co., Inc. ("Montgomery Ward") challenging defendant's subcontracting of work previously performed by union members to a wholly owned subsidiary not subject to the union contract. Plaintiff's complaint alleges that defendant's actions violate the terms of their collective bargaining agreement. Count I seeks an order compelling arbitration of the dispute. Alternatively, Count II asks that, if arbitration is not ordered, the court find defendant in violation of the contract and order an appropriate remedy. Before us now are the parties' agreed stipulation of facts and cross motions for summary judgment.

Local 710 and Montgomery Ward are parties to a collective bargaining agreement effective from April 1, 1985 through March 31, 1988. On May 2, 1987, Montgomery Ward laid off members of Local 710 when it transferred the work previously performed by these employees to a wholly owned subsidiary, American Delivery Service. American Delivery Service offered employment to the laid off employees, but only under terms not subject to the agreement between Local 710 and Montgomery Ward.

Article VII of the agreement sets forth a four step grievance procedure. The first three steps provide for review by various levels of management and a joint committee of management and union representatives. Step four allows either party to submit the dispute to arbitration if the grievance involves "discharge, suspension or the question of seniority" and remains unresolved after exhausting the first three steps. Defendant's Exhibit B, Article VII.

Local 710 submitted a grievance concerning the lay off, alleging that Montgomery Ward's actions violated a number of contractual provisions, including Articles V and IX governing seniority and discharge. See Plaintiff's Exhibit B. After the first three steps of the procedure failed to resolve the dispute, Local 710 demanded arbitration. Montgomery Ward refused to submit the matter to arbitration and this action ensued.

Local 710 first seeks an order compelling arbitration of their grievance. Such an order is available if, and only if, the parties have contractually agreed to arbitrate the dispute at issue. Steel Workers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409 (1960). Our task is thus to determine whether the arbitration clause in the parties' collective bargaining agreement, limited as it is to grievances involving "discharge, suspension or the question of seniority," is applicable to Local 710's challenge to Montgomery Ward's subcontracting of the delivery work.

In AT & T Tech., Inc. v. Communications Workers, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986), the Supreme Court outlined the limited scope of inquiries of this nature:

In deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims. Whether "arguable" or not, indeed even if it appears to the court to be frivolous, the union's claim that the employer has violated the collective-bargaining agreement is to be decided, not by the court asked to order arbitration, but as the parties have agreed, by the arbitrator. "The courts, therefore, have no business weighing the merits of the grievance, considering whether there is equity in a particular claim, or determining whether there is particular language in the written instrument which will support the claim. The agreement is to submit all grievances to arbitration, not merely those which the court will deem meritorious."

Finally, where it has been established that where sic the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that "an 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."

475 U.S. at 649-50, 106 S.Ct. at 1418-19 (quoting Steelworkers v. American Mfg. Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 1346, 4 L.Ed.2d 1403 (1960), and Warrior & Gulf, 363 U.S. at 582-83, 80 S.Ct. at 1352-53).

Here, the arbitration clause states that arbitration is available for disputes involving discharge and questions of seniority. Local 710 asserts in its grievance that Montgomery Ward's actions violate the provisions of the collective bargaining agreement pertaining to discharge and seniority. Under the standards above, our inquiry ends here and the matter must be referred to arbitration.¹ See also Mobil Oil v. Local 8-766, Oil, Chemical & Atomic, 600 F.2d 322, 327-28 (1st Cir.1979) (allegations that subcontracting violated recognition, seniority, and wage provisions are sufficient to invoke arbitration clause applicable to interpretations of "express" contractual provisions only).

Montgomery Ward argues that the collective bargaining agreement here contains an "explicit reservation" of the right to subcontract work performed by union members. This explicit reservation, it contends, is found in Article VI which provides:

It is the mutual concern of the Company and the Union to preserve present employment to the extent reasonable, practical and consistent with sound business practices. To provide further protection for the senior drivers in the event the Company subcontracts work presently being performed by the Company, the Company will make every reasonable effort to have the carrier employ drivers who otherwise would be displaced by the subcontracting.

Defendant's Exhibit B, Article VI. Defendant concludes that there can therefore be no implied restrictions on subcontracting arising from the other provisions of the contract.

We agree with Local 710 that these arguments pertain to the merits of the dispute and, while possibly persuasive to the arbitrator, they are not grounds for denying arbitration. Montgomery Ward's position might prevail if the contract contained a clause specifically stating that disputes over subcontracting are not subject to arbitration. Similarly, if there was a clause specifically stating that, notwithstanding other provisions, management reserves the right to subcontract work, one might argue that subcontracting raises no questions regarding the scope of the discharge and seniority provisions, therefore the arbitration clause does not apply. The language relied on by Montgomery Ward, however, falls far short of these hypothetical provisions. At best, there exists a question of which implication should control, and resolution...