O'Malley v. Wilshire Oil Co.

• Decision Date: 07 May 1963
• Citation: 30 Cal.Rptr. 452,59 Cal.2d 482,381 P.2d 188
• Parties: , 381 P.2d 188, 53 L.R.R.M. (BNA) 2159, 47 Lab.Cas. P 18,258 Emmett O'MALLEY, Plaintiff and Appellant, v. WILSHIRE OIL COMPANY, Defendant and Respondent. L. A. 26771
• Court: California Supreme Court

Page 452

30 Cal.Rptr. 452

59 Cal.2d 482, 381 P.2d 188, 53 L.R.R.M. (BNA) 2159,

47 Lab.Cas. P 18,258

Emmett O'MALLEY, Plaintiff and Appellant, v. WILSHIRE OIL COMPANY, Defendant and Respondent.

L. A. 26771.

May 7, 1963.

Levy, Russell, DeRoy & Glow and Mervin N. Glow, Los Angeles, for plaintiff and appellant.

Curtis, Laymon & Vail and Richard W. Curtis, Los Angeles, for defendant and respondent.

TOBRINER, Justice.

While the parties to a collective bargaining agreement may delineate the scope of an arbitration provision according to their design, neither the language of the provision in the instant case, nor the facts, support the contention that the arbitration procedure excluded the arbitrability of the present grievance of the union. We hold, for the reasons that follow, that the trial court, by accepting the posited contentions of the defendant, improperly resolved the merits of the dispute. Instead of narrowly and exclusively determining the question of arbitrability, the court invaded the province of the arbitrator.

Plaintiff O'Malley is president of, and sues in a representative capacity for, the Oil, Chemical and Atomic Workers International, Union Local 1-128, AFL-CIO (hereinafter termed 'union'). Defendant, the Wilshire Oil Company (hereinafter termed 'company') is engaged in the manufacture and processing of petroleum in interstate commerce. Since 1948 the union has been the certified bargaining agent of the company's employees.

In April of 1959 the union and the company entered into a collective bargaining agreement covering wages, hours and working conditions of the company's employees. Among other matters, the agreement contained a recognition cluse, a nostrike clause, and a provision relating to contracting out of work. The agreement established a grievance procedure culminating in arbitration for the resolution of disputes with regard to the agreement. ¹

In December 1960 the union submitted a grievance, which, in substance, protested the contracting out by the company of some of its transportation work. Subsequently, the company rejected the grievance. The union, pursuant to the established procedure, sought arbitration of the dispute. The company refused to submit the dispute to arbitration. As a result, the union filed a petition for an order directing arbitration.

In its petition the union incorporated by reference the statement of the grievance contained in its letter to the company, which alleged as to contract work the company's violation of Article 15 ² and 'any other Article or Articles that may be found to be violated in the process of settling the complaint.' The petition concluded that a dispute therefore existed with regard to 'the interpretation and application' of the contract, thereby requiring arbitration.

In its answer to the petition the company relied on language in Article 22 of the agreement with respect to arbitration to the effect that: 'Under no circumstances may an arbitration decision in any manner nullify, amend, modify, extend, reduce or otherwise change any of the terms or conditions of this Agreement * * *.' The company then set out efforts of the union, prior to and after the grievance, to modify Article 15 in order to include more explicit and stringent limitations upon the company's right to contract out work. The company contended that since the practice of contracting out transportation work had long been a company policy and since the union's permitted such policy and rejected at the collective bargaining table, the agreement permitted such policy and the grievance was specifically excluded from arbitration.

The trial court denied the request of the petition, concluding that: '(I) nterpreting the Articles of Agreement of April 10, 1959 in accordance with the intentions of the parties as therein expressed and in the light of all of the facts and circumstances surrounding the negotiations for and execution of prior and subsequent agreements, no agreement can be found between Respondent and Petitioner which requires the arbitration of grievances ariseing out of or based upon the contracting out of transportation work.'

In the enforcement of provisions of collective bargaining agreements obligating the parties to arbitrate disputes, state courts exercise concurrent jurisdiction with federal courts. (Charles Dowd Box Co. v. Courtney (1962), 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483.) In so doing state courts must, however, in adjudicating an action which could have been brought in the federal courts under section 301 of the Labor Management Relations Act, apply federal law. (Local 174, Teamsters, etc. v. Lucas Flour Co. (1962), 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593.) Since in the instant case the company is engaged in interstate commerce, the parties agree that federal law must necessarily govern.

The wellspring of federal law respecting the enforcement of arbitration agreements consists of three cases decided by the Supreme Court in 1960. ³ As we shall point out, these decisions, recognizing the special nature of the collective bargaining agreement and the crucial role of the arbitrator in resolving disputes arising under it, narrowly confined the role of the court as contrasted with that of the arbitrator.

We have recently analyzed this trilogy of United States Supreme Court cases in Posner v. Grunwald-Marx, Inc. (1961), 56 Cal.2d 169, 14 Cal.Rptr. 297, 363 P.2d 313. In that case we criticized the prior doctrine of International Ass'n of Machinists, etc., v. Cutler-Hammer, Inc. (1947), 271 App.div. 917, 67 N.Y.S.2d 317; affd. 297 N.Y. 519, 74 N.E.2d 464. Cutler-Hammer had held that a court could properly reject a petition to arbitrate a matter which, in the court's view, did not compose an arbitrable issue because of petitioner's asserted interpretation of the contract transgressed the plain meaning of the words. ⁴

In Posner we described and adopted the ruling of the Supreme Court cases; we said: 'This rule is to the effect that, where the collective bargaining agreement provides for arbitration of all disputes pertaining to the meaning, interpretation and application of the collective bargaining agreement and its provisions, any dispute as to the meaning, interpretation and application of any specific matter covered by the collective bargaining agreement is a matter for arbitration. Doubts as to whether the arbitration clause applies are to be resolved in favor of coverage. The parties have contracted for an arbitrator's decision and not for that of the courts.' (56 Cal.2d at p. 175, 14 Cal.Rptr. at p. 299, 363 P.2d at p. 315.) Although the issue in Posner did not involve interstate commerce and therefore did not necessarily invoke the federal rule as described by the United States Supreme Court, we nevertheless as a matter of policy followed the federal approach. We held that the trial court, instead of confining itself to the issue of whether the dispute was subject to arbitration, improperly passed upon the merits of the issue.

We believe the United States Supreme Court cases are dispositive of the present problem. Thus in United Steelworkers of America v. American Mfg. Co., supra (1960) 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403, the union brought suit to compel arbitration, under an agreement providing for arbitration of all disputes 'as to the meaning, interpretation and application' of the provisions of the agreement. The grievance there related to a contractual provision that the employer would re-employ and promote employees on the principle of seniority 'where ability and efficiency (are) equal.' An employee left his job due to an injury and while absent brought an action for compensation benefits. The parties settled the case; the employee's physician indicated that he employee had become 25% 'permanently partially disabled.' Two weeks after the settlement the union filed a grievance charging that the employee was entitled to return to his job by virtue of the seniority provision of the collective bargaining agreement. The company refused to arbitrate the grievance; the union filed an action in the United States District Court. Stating that the employee's acceptance of the settlement estopped him from claiming seniority or employment rights, the District Court rendered a summary judgment against the union.

The Court of Appeals affirmed the District Court on a different basis than that which that court had expressed, holding that the grievance was 'a frivolous, patently baseless one, not subject to arbitration under the collective bargaining agreement.' (P. 566 of 363 U.S., p. 1345 of 80 S.Ct.) The Supreme Court reversed indicating that the Court of Appeals, in becoming embroiled in the merits, had misconstrued the role of the court.

The Supreme Court stated: 'The function of the court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator. In these circumstances the moving party should not be deprived of the arbitrator's judgment, when it was his judgment and all that it connotes that was bargained for.' The court concluded: '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. The processing of even frivolous claims may have therapeutic values of which those who are not a part of the plant environment may be quite unaware.' (363 U.S. at pp. 567-568, 80 S.Ct. at pp. 1346, 1347.)

Without more, the principles above...