Local Joint Executive Bd. of Las Vegas, Culinary Workers Union, Local 226 v. Royal Center, Inc.

• Decision Date: 12 August 1986
• Docket Number: No. 84-1867,84-1867
• Parties: 123 L.R.R.M. (BNA) 2347, 55 USLW 2203, 105 Lab.Cas. P 12,021 LOCAL JOINT EXECUTIVE BOARD OF LAS VEGAS, CULINARY WORKERS UNION, LOCAL 226 and Bartenders Union, Local 165, Plaintiffs-Appellees, v. ROYAL CENTER, INC., Defendant-Appellant. . Re
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1159

796 F.2d 1159

123 L.R.R.M. (BNA) 2347, 55 USLW 2203,

105 Lab.Cas. P 12,021

LOCAL JOINT EXECUTIVE BOARD OF LAS VEGAS, CULINARY WORKERS UNION, LOCAL 226 and Bartenders Union, Local 165 Plaintiffs-Appellees, v. ROYAL CENTER, INC., Defendant-Appellant.

No. 84-1867.

United States Court of Appeals Ninth Circuit.

Resubmitted Aug. 1, 1986.

Decided Aug. 12, 1986.

Richard D. McCracken, Davis, Cowell & Bowe, San Francisco, Cal., for plaintiffs-appellees.

John A. Lawrence, Rudin, Richman & Appel, Beverly Hills, Cal., for defendant-appellant.

On Remand from the United States Supreme Court.

Before CHOY, FARRIS, and BEEZER, Circuit Judges.

FARRIS, Circuit Judge:

Royal Center, Inc. appeals the order of the District Court for Nevada, Foley, J., presiding, which had required RCI to submit to arbitration two grievances arising out of RCI's collective bargaining agreement with appellee Local Joint Executive Board of Las Vegas, Culinary Workers Union et al. RCI argues that the closure of its business terminated its collective bargaining agreement, along with any obligation to arbitrate grievances that arose after the closure occurred.

In early 1980, RCI completed its acquisition of a complex in Las Vegas, Nevada, consisting of a casino, hotel and entertainment facilities. At that time, RCI entered into a collective bargaining agreement with the Union, which represented approximately 60% of the restaurant, casino, bar and housekeeping employees at the complex.

The agreement provided an exclusive arbitration remedy for "all grievances." A "grievance" was broadly defined as "a dispute or difference of opinion between the Union and the Employer involving the meaning, interpretation, application to employees covered by this Agreement, or alleged violation of any provision of this Agreement." Section 29.02 of the agreement also provided that in the event RCI sold its business, RCI would require its successor to assume the Collective Bargaining Agreement with the Union.

In March 1982, accumulated operating losses caused RCI to close its complex and terminate all employees covered by the collective bargaining agreement. Several months later, RCI sold the complex to a limited partnership, 305 Convention Center Drive Associates. The sale contract did not require the 305 corporation to assume RCI's collective bargaining agreement with the Union, despite Section 29.02 of that agreement. The 305 corporation performed substantial alterations and reopened the complex in November 1983 as a family arcade with game center, cartoon theater, and slot machine and mechanical gaming devices. RCI continues to operate the gaming devices, employing approximately fifty employees, not all of whom fall within the job classifications covered by the collective bargaining agreement with the Union.

Shortly after the reopening, the Union filed unfair labor practice charges with the National Labor Relations Board. The NLRB dismissed the Union's charge that 1) RCI and the 305 corporation had improperly refused to bargain with the Union, and 2) that no bona fide sale of business had occurred to the 305 corporation. The Union's appeal to the General Counsel of the NLRB was denied in March 1984.

The Union sued RCI in Nevada state court in December 1983, charging that RCI had 1) violated Section 29.02 by failing to condition the sale of the complex on the 305 corporation's assumption of the collective bargaining agreement, and 2) violated the collective bargaining agreement's hiring and other substantive terms after resuming operations with the 305 corporation in November 1983. Under this second allegation, the Union argued that no bona fide, arms-length sale of the complex had occurred, and hence the new enterprise was still covered by the collective bargaining agreement between RCI and the Union.

RCI removed the action to the District Court of Nevada. The district court granted the Union's Motion to Compel Arbitration of the Union's two grievances.

RCI appeals, claiming that the district court erred in deciding 1) that the collective bargaining agreement had not been terminated by RCI's closure of the complex, and 2) that the Union's grievances fell within the scope of the arbitration clause. We have jurisdiction over RCI's timely filed appeal under 28 U.S.C. Sec. 1291.

I. DID THE ARBITRATION CLAUSE SURVIVE THE CLOSURE OF RCI'S OPERATIONS AND TERMINATION OF THE COLLECTIVE BARGAINING AGREEMENT?

The district court found that the collective bargaining agreement had not been extinguished when RCI closed its operations, and therefore that the agreement's arbitration clause continued to govern disputes arising after the closure. Because we find that the arbitration clause here survives closure regardless of whether the collective bargaining agreement generally remained in effect, we affirm the district court's decision to refer the dispute over section 29.02 to the arbitrator.

"Termination of a collective bargaining agreement does not necessarily extinguish a party's duty to arbitrate grievances arising under the contract." O'Connor Co. v. Carpenters Local Union No. 1408, 702 F.2d 824, 825 (9th Cir.1983); see Holly Sugar Corp. v. Distillery, Rectifying, Wine & Allied Workers, 412 F.2d 899, 903-04 (9th Cir.1969), cited with approval in George Day Construction Co., Inc. v. United Brotherhood of Carpenters, 722 F.2d 1471, 1479 (9th Cir.1984). In fact, when the agreement has been extinguished by closure, we must presume that the parties intended the arbitration duty to survive. Nolde Bros. Inc. v. Local No. 358, Bakery & Confectionery Workers Union, 430 U.S. 243, 255, 97 S.Ct. 1067, 1074, 51 L.Ed.2d 300 (1977). This presumption favoring arbitrability "must be negated expressly or by clear implication," Nolde, 430 U.S. at 255, 97 S.Ct. at 1074; see also United Steelworkers v. American Manufacturing Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 1346, 4 L.Ed.2d 1403 (1960); Federated Metals Corp. v. United Steelworkers, 648 F.2d 856, 859 (3d Cir.) cert. denied, 454 U.S. 1031, 102 S.Ct. 567, 70 L.Ed.2d 474 (1981), and draws its vitality from federal labor policy and the relative inexpensiveness and expertise of the arbitrator. Nolde, 430 U.S. at 253-55, 97 S.Ct. at 1073-74; Holly Sugar Corp., 412 F.2d at 904.

RCI presents no evidence to negate the presumption that its arbitration clause, which covers "all grievances," survives the termination of the agreement. The broad definition of arbitrable "grievances"--"a dispute or difference of opinion between the Union and the Employer involving the meaning, interpretation, application to employees covered by this Agreement, or alleged violation of any provision of this Agreement," is indistinguishable from arbitration provisions held to survive termination of the collective bargaining contract. See Nolde, 430 U.S. at 245, 252-55, 97 S.Ct. at 1072-74 (preserving duty to arbitrate "any grievances" following closure and expiration of contract); John Wiley & Sons v. Livingston, 376 U.S. 543, 553, 554, 84 S.Ct. 909, 916, 917, 11 L.Ed.2d 898 (1964) (preserving post-termination arbitration of "any differences, grievance or dispute between the Employer and the Union arising out of or relating to this agreement, or its interpretation or application, or enforcement"). The arbitration provision here survives regardless of whether the collective bargaining agreement was extinguished by RCI's closure.

II. DO THE GRIEVANCES FALL WITHIN THE SCOPE OF THE ARBITRATION CLAUSE?

We must next consider whether this particular controversy is covered by the duty to arbitrate. Like the survivability issue, the question of the scope of the arbitration duty is "a matter to be determined by the Court on the basis of the contract." John Wiley, 376 U.S. at 547, 84 S.Ct. at 913, citing Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S.Ct. 1318, 1320, 8 L.Ed.2d 462 (1962); see Frederick Meiswinkel, Inc. v. Laborers' Union Local 261, 744 F.2d 1374, 1376 (9th Cir.1984); Salinas Cooling Co. v. Fresh Fruit and Vegetable Workers, 743 F.2d 705, 707 (9th Cir.1984).

Following the Supreme Court, we have emphasized that the scope of the duty to arbitrate must be read quite broadly. As we recently held, "[w]e ordinarily will not except a controversy from coverage of a valid arbitration clause 'unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Marchese v. Shearson Hayden Stone, Inc., 734 F.2d 414, 419 (9th Cir.1984), citing 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). When, as in this instance, the parties have agreed to submit "all grievances" to an arbitrator, "[t]he courts ... 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." United Steelworkers of America v. American Manufacturing Co., 363 U.S. at 568, 80 S.Ct. at 1346 (footnote omitted); see John Wiley, 376 U.S. at 555, 84 S.Ct. at 917.

Applying this lenient standard, the Supreme Court has referred for arbitration a dispute over severance pay rights, see Nolde, and a dispute over contractual seniority rights, see Piano & Musical Instrument Workers, Local 2549 v. W.W. Kimball Co., 333 F.2d 761 (7th Cir.), rev'd per curiam, 379 U.S. 357, 85 S.Ct. 441, 13 L.Ed.2d 541 (1964), arising after a plant closing. The Court found dispositive the fact that "there is nothing in the arbitration clause that expressly excludes from its operation a dispute which arises under the contract, but which is based on events that occur after its termination." Nolde, 430 U.S. at 253, 97 S.Ct. at 1073 (emphasis added). Without such an express...