School City of East Chicago, Ind. v. East Chicago Federation of Teachers, Local No. 511, A.F.T.

• Decision Date: 25 June 1981
• Docket Number: No. 3-580A143,3-580A143
• Citation: 422 N.E.2d 656
• Parties: SCHOOL CITY OF EAST CHICAGO, INDIANA, Defendant-Appellant, v. EAST CHICAGO FEDERATION OF TEACHERS, LOCAL # 511, A.F.T., Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 656

422 N.E.2d 656

SCHOOL CITY OF EAST CHICAGO, INDIANA, Defendant-Appellant, v. EAST CHICAGO FEDERATION OF TEACHERS, LOCAL # 511, A.F.T. Plaintiff-Appellee.

No. 3-580A143.

Court of Appeals of Indiana, Third District.

June 25, 1981.

Nick T. Stepanovich, Stepanovich & Stevens, East Chicago, William M. Evans, Bose, McKinney & Evans, Indianapolis, for defendant-appellant.

George M. Fisher, Fisher & Von Willer, Hammond, for plaintiff-appellee.

GARRARD, Judge.

In early January, 1979, after a prior collective bargaining agreement between the appellant (school) and the appellee (union) had expired, all the school facilities operated by the school corporation were picketed. On January 17th a new agreement was reached and made effective as of January 1, 1979. This agreement contained provisions for dues deductions and for final and binding arbitration of grievances.

Subsequently, a dispute arose concerning the school's refusal to make dues deductions. The matter was submitted to arbitration. An award adverse to the school was entered, and copies thereof were mailed to the parties on July 10, 1979. Nothing further transpired until October 12, 1979, when the union filed a motion in the Lake Superior Court to secure an order confirming the arbitration award. See IC 34-4-2-12. The school appeared and filed an answer in which it questioned the applicability of the Uniform Arbitration Act, IC 34-4-2-1 et seq. and sought to attack the correctness of the arbitrator's decision.

After hearing, the court concluded that the Uniform Arbitration Act applied. It held that the school was precluded from challenging the correctness of the award because it had taken no action to have the award vacated or modified within ninety (90) days after copies of the award were mailed to the parties. The school appeals and challenges both the correctness of that determination and the propriety of the award itself.

Indiana adopted the Uniform Arbitration Act, IC 34-4-2-1 et seq., in 1969. Section 1 recognizes the validity and enforceability of written agreements to arbitrate. ¹ In part it states,

"This act also applies to arbitration agreement between employers and employees or between their respective representatives (unless otherwise provided in the agreement)."

In essence the act provides a mechanism for enforcing agreements to arbitrate and for securing judicial review and enforcement of awards made.

By its plain language the statute applies to the facts before us unless application is precluded by the terms of the certificated educational employee bargaining act, IC 20-7.5-1-1 et seq., which was not enacted until 1973. That act expressly recognizes the propriety of including in a collective bargaining agreement a grievance procedure culminating in final and binding arbitration. IC 20-7.5-1-4. We, however, find no expression of any intent to exclude public employee arbitration cases from the application of the Uniform Arbitration Act.

Moreover, we must reject the school's contention that the parties contractually precluded application of the uniform act through their agreement to apply the voluntary labor arbitration rules of the American Arbitration Association. ² These rules concern the selection of arbitrators and conduct of the ensuing proceedings. While they constitute a contractually agreed procedure to be followed by the parties, and to that extent supplant procedures provided by the uniform act, ³ they do not purport to apply to the judicial review or enforcement of awards. ⁴

We hold, therefore, that the Indiana Uniform Arbitration Act applies to the present proceedings.

We are thus presented with the principal question in this appeal. Was the school entitled to litigate grounds for vacating or modifying the award in its answer to the union's petition for court confirmation of the award? The question arises because of provisions of the uniform act.

IC 34-4-2-12 provides,

"Upon application of a party, but not before ninety (90) days after the mailing of a copy of the award to the parties, the court shall confirm an award, unless within the time limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award, in which case the court shall proceed as provided in sections 13 and 14 (34-4-2-13, 34-4-2-14) of this act. Upon confirmation, the court shall enter a judgment consistent with the award and cause such entry to be docketed as if rendered in an action in said court."

Section 13 sets forth grounds for vacating an award, and Section 14 provides for modifying or correcting an award. Each section provides that an application for relief thereunder shall be made within ninety (90) days after the mailing of a copy of the arbitration award to the applicant for relief. Therefore the issue can be restated by asking whether the school is barred from challenging the correctness of the arbitrator's award because it failed to move for a vacation, modification or correction of the award within the ninety day period?

No Indiana decisions have considered the question.

An early decision construing the federal arbitration act, 9 U.S.C. § 1 et seq., permitted a respondent to a motion for confirmation to assert such defenses to the propriety of the award. ⁵ The Hartbridge (2d Cir. 1932), 57 F.2d 672.

Two subsequent cases relied on The Hartbridge to hold that the three month limitation did not apply to a respondent's right to assert defenses to a motion to confirm. Paul Allison, Inc. v. Miniken Storage of Omaha, Inc. (D.Neb.1978), 452 F.Supp. 573; Riko Enterprises, Inc. v. Seattle Supersonics Corporation (S.D.N.Y.1973), 357 F.Supp. 521.

Those decisions have been distinguished by the federal district courts in Indiana. While arriving at different results, two Indiana decisions (discussed infra) noted that the Hartbridge court held that the petitioners could not preclude a respondent's right to contest the award in that fashion. It also considered the three month time limitation to be tolled by the appeal of the district court's ruling. We agree that The Hartbridge and cases relying upon it as decisive of the issue before us are properly distinguished.

In the first of the cases decided in Indiana, Judge Sharp concluded that a respondent could challenge the propriety of an arbitration award by answer to a motion for confirmation even though it had failed to move for a vacation or modification within the three month period. Chauffeurs, Teamsters, Warehousemen and Helpers Local Union No. 364 v. Ruan Transport Corporation (N.D.Ind.1979), 473 F.Supp. 298. After distinguishing The Hartbridge, he reached this result by determining that in the federal act Congress intended to follow the interpretations placed upon an earlier New York statute after which the federal act was modeled. 473 F.Supp. 302. ⁶

Eleven days after Judge Sharp's decision the district court for the Southern District of Indiana reached the contrary result in Chauffeurs, Teamsters, Warehousemen, and Helpers Local Union No. 135 v. Jefferson Trucking Company, Inc. (S.D.Ind.1979), 473 F.Supp. 1255. It viewed the question from a different perspective, predicating its jurisdiction on § 301 of the Labor Management Relations Act, 29 U.S.C. § 185. See Serstel Corporation v. Gibbs (1981), Ind.App., 417 N.E.2d 372 for a brief discussion of the application of federal law under such circumstances.

Noting that in the absence of a specific federal limitation, federal law called for the court to apply the state statute of limitations most appropriate to the type of action, Judge Steckler determined that the Indiana Uniform Arbitration Act applied. His opinion noted that (1) the plain language of the Indiana act appeared to require that objections to an award be raised within ninety (90) days; that (2) substantive federal labor law favors the use of bargained-for arbitration to settle disputes; and that (3) short limitation periods such as those provided by IC 34-4-2-13 and 14 foster the federal policy by according finality "so that the parties who contracted for the use of arbitration get the benefit of what they bargained for speedy resolution of disputes so that their business may go forward." 473 F.Supp. 1259.

On appeal, the Seventh Circuit affirmed overruling Ruan Transport, supra, sub silentio by holding that the question was governed by § 301 of the Labor Management Relations Act and federal substantive labor law. The Court of Appeals agreed that federal policy favoring arbitration and finality supports the conclusion that defenses to the award recognized by Sections 13 and 14 had to be asserted within the ninety (90) day period or they would be waived. Chauffeurs, Teamsters, Warehousemen and Helpers Local Union No. 135 v. Jefferson Trucking Company, Inc. (7th Cir. 1980), 628 F.2d 1023. Thus, were we here dealing with an employer subject to the National Labor Relations Act, as amended, Jefferson Trucking would require that we conclude the defenses were not timely asserted. See also United Parcel Service, Inc. v. Mitchell (1981), --- U.S. ----, 101 S.Ct. 1559, 68 L.Ed.2d ---.

This is not the case, however. The parties before us are not subject to the National Labor Relations Act, as amended. See 29 U.S.C. § 152(2). Moreover, in enacting the certificated educational employees bargaining act our legislature expressly declared four grounds upon which it determined that the relationship between school corporations and their certificated employees were not comparable to an employer-employee relationship in the private sector. IC 20-7.5-1-1(d). ⁷ Do these considerations indicate that we should reach a different result from that in Jefferson Trucking?

The enumerated policy considerations of (d) appear to be only tangentially related to the question we must resolve. On the other hand, IC 20-7.5-1-1(b) recognizes that the principles and procedure of collective bargaining between school corporations and school employee organizations can alleviate...