Oil, Chemical and Atomic Workers Intern. Union, Local 7-1 v. Amoco Oil Co.

• Decision Date: 11 October 1989
• Docket Number: No. 89-1051,89-1051
• Citation: 883 F.2d 581
• Parties: 132 L.R.R.M. (BNA) 2283, 112 Lab.Cas. P 11,410 OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, LOCAL 7-1, Plaintiff-Appellee, v. AMOCO OIL COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 581

883 F.2d 581

132 L.R.R.M. (BNA) 2283, 112 Lab.Cas. P 11,410

OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, LOCAL

7-1, Plaintiff-Appellee,

v.

AMOCO OIL COMPANY, Defendant-Appellant.

No. 89-1051.

United States Court of Appeals, Seventh Circuit.

Argued May 26, 1989.

Decided Aug. 25, 1989.

Rehearing and Rehearing In Banc Denied Oct. 11, 1989.

Stephen A. Yokich, Daniel I. Koen, Cornfield & Feldman, Chicago, Ill., for plaintiff-appellee.

Steven H. Adelman, Gloria M. Longest, Keck, Mahin & Cate, Chicago, Ill., Joel C. Levy, Terence M. Austgen, Michael O. Martin, Singleton, Levy & Crist, Highland, Ind., for defendant-appellant.

Before WOOD, Jr., MANION, and KANNE, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

This appeal involves the arbitrability of a dispute between Amoco Oil Company (Amoco) and the Oil, Chemical and Atomic Workers International Union, Local 7-1 (Union) regarding the contracting out of certain work previously performed by bargaining unit employees at Amoco's Whiting, Indiana refinery. The district court granted summary judgment to compel arbitration in favor of the Union. Amoco appeals, claiming that under the parties' collective bargaining agreement it was not obligated to arbitrate contracting out disputes. We reverse the district court's grant of summary judgment to the Union and remand to the district court with instructions to enter summary judgment in favor of Amoco.

I. FACTUAL BACKGROUND

Amoco and the Union are parties to a collective bargaining agreement governing the hours, wages, working conditions, and terms of employment of bargaining unit Union employees in Amoco's Whiting Refinery. Amoco has, for many years, used outside contractors to perform a variety of maintenance and labor tasks at the Whiting Refinery. The practice of an employer hiring independent contractors to perform work instead of using bargaining unit employees is known as "contracting out."

We begin with a summary of the history of disputes between Amoco and the Union surrounding Amoco's practice of contracting out. In 1960, the Union brought an action to compel arbitration over Amoco's decision to contract out certain maintenance and repair work at the Whiting Refinery. Based upon Amoco's history of contracting out and the bargaining history of the parties, this court found that the collective bargaining agreement did not require arbitration over the contracting out dispute. Independent Petroleum Workers of America, Inc. v. Standard Oil Co., 275 F.2d 706 (7th Cir.1960). In 1963, the Union again sought to compel arbitration of a contracting out dispute. This court again concluded that Amoco was not contractually obligated to arbitrate contracting out disputes. Independent Petroleum Workers of America, Inc. v. American Oil Co., 324 F.2d 903 (7th Cir.1963), aff'd 379 U.S. 130, 85 S.Ct. 271, 13 L.Ed.2d 333 (1964). ¹

In subsequent contract negotiations the Union unsuccessfully sought restriction on Amoco's right to contract out, or in the alternative, provision for arbitration of contracting out disputes. The Union has filed unfair labor practice charges regarding contracting out at the Whiting Refinery and in each case the NLRB Regional Director has refused to issue a complaint on the charge. The Union has also filed over fifty grievances concerning contracting out disputes over the past twenty-five years. Amoco has consistently maintained that it is not contractually obligated to arbitrate contracting out issues and has refused to submit to arbitration.

The Union points to an instance in which it claims Amoco did arbitrate a contracting out dispute in 1974. Amoco had employed an independent contractor to recondition barrels. Normally the warehousemen in the barrel department brought the barrels to the truck. However, on one particular Saturday Amoco had failed to assign warehousemen to do the work and the contractor's employees had to do their own loading. The Union filed a grievance over Amoco's failure to assign the loading work to a bargaining unit employee and Amoco agreed to arbitrate the dispute. The Union points to Amoco's voluntary arbitration of this 1974 dispute in asserting the arbitrability of the grievance in the instant case.

The dispute at issue here arose in November 1986 when Amoco began using an outside contractor to distribute toolboxes at the refinery on Sundays. Previously, Amoco had assigned this task to bargaining unit employees on an overtime basis. The Union then filed a grievance asserting that the contracting out of this work constituted a violation of the collective bargaining agreement and demanding that Amoco pay equipment handlers eight hours of overtime for every Sunday that Amoco contracted out the toolbox distribution work. Amoco denied the grievance and the Union requested arbitration. Amoco refused to arbitrate and asserted that it has the right to contract out work which does not reduce the workforce and that such contracting out decisions are not subject to the arbitration clause in the collective bargaining agreement.

When Amoco refused to arbitrate, the Union then filed suit to compel arbitration under the collective bargaining agreement pursuant to Sec. 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185. Amoco and the Union both moved for summary judgment. In granting the Union's motion for summary judgment, the district court held that the arbitration clause may be susceptible to an interpretation that covers the contracting out dispute. Amoco appeals. ²

II. ANALYSIS

We review de novo the district court's entry of summary judgment. EEOC v. Sears, Roebuck & Co., 839 F.2d 302, 354 (7th Cir.1988). Summary judgment should only be granted when there are no genuine issues of material fact and when the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In reviewing an entry of summary judgment, we view the record and the inferences drawn from it in the light most favorable to the nonmoving party. Schlifke v. Seafirst Corp., 866 F.2d 935, 937 (7th Cir.1989).

The first issue is whether this court's decisions in Standard Oil and American Oil have a preclusive effect upon the present action. ³ Amoco argues that the doctrine of collateral estoppel should bar the Union's current litigation. The district court concluded that the two previous decisions do not bar the Union from bringing the present claim because the issue of the application and interpretation of the 1974 award was not and could not have been raised or litigated in the prior cases.

The premise underlying the doctrine of collateral estoppel is that an issue should be adjudicated only once as between the same parties and their privies. 1B J. Moore, J. Lucas, & T. Currier, Moore's Federal Practice, p 0.443 (2d ed. 1988). Before collateral estoppel may be applied to preclude the litigation of an issue, the following elements must be present: (1) the party against whom the estoppel is asserted was a party to the prior adjudication; (2) the issue upon which the estoppel is based was actually litigated and decided on the merits in the prior suit; (3) the determination made of the issue was necessary to the resolution of the prior action; and (4) the issues in both proceedings must be the same. County of Cook v. Midcon Corp., 773 F.2d 892, 898 (7th Cir.1985).

The Union has based its present complaint on the arbitrability of the application and interpretation of a 1974 arbitration award. The 1974 award is viewed by the Union as an award concerning contracting out and therefore it seeks to arbitrate the current contracting out dispute based upon that award. The issue of the application and interpretation of the 1974 arbitration award could not have been litigated in the earlier cases. Therefore the district court properly found that the Union is not barred from bringing the present claim based upon the doctrine of collateral estoppel.

The central issue is whether the collective bargaining agreement between the parties requires Amoco to arbitrate the contracting out grievance underlying this action. The principles governing the arbitrability of disputes between a union and a company under collective bargaining agreements are well-established. See United Steelworkers v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960) (collectively referred to as the Steelworkers Trilogy ). The Supreme Court recently reaffirmed these principles in AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).

The foundational principle derived from the Steelworkers Trilogy is that the duty to submit a dispute to arbitration is contractual and therefore a party cannot be compelled to arbitrate a dispute when he has not agreed to do so. AT & T Technologies, 475 U.S. at 648, 106 S.Ct. at 1418. The second principle is that the question of whether the parties have agreed to submit a particular dispute to arbitration is an issue to be determined by the courts, not the arbitrator. Id. at 649, 106 S.Ct. at 1418-19. The third principle courts must follow in deciding the issue of arbitrability is to determine only whether the grievance is arbitrable. The court is not to rule on the potential merits of the underlying grievance, even if it appears to the court to be frivolous. 475 U.S. at 649, 106 S.Ct. at 1418-19. Finally, when the contract contains an arbitration clause there is a presumption of arbitrability unless the court determines "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." Warrior & Gulf, 363 U.S. at 582-83, 80 S.Ct. at 1353.

As an initial matter, we address the argument...