Teamsters Local No. 579 v. B & M Transit, Inc., s. 88-2962

• Decision Date: 17 August 1989
• Docket Number: Nos. 88-2962,88-3172,s. 88-2962
• Citation: 882 F.2d 274
• Parties: 132 L.R.R.M. (BNA) 2255, 112 Lab.Cas. P 11,422, 14 Fed.R.Serv.3d 803 TEAMSTERS LOCAL NO. 579, Plaintiff-Appellee, v. B & M TRANSIT, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 274

882 F.2d 274

132 L.R.R.M. (BNA) 2255, 112 Lab.Cas. P 11,422,

14 Fed.R.Serv.3d 803

TEAMSTERS LOCAL NO. 579, Plaintiff-Appellee, v. B & M TRANSIT, INC., Defendant-Appellant.

Nos. 88-2962, 88-3172.

United States Court of Appeals Seventh Circuit.

Argued April 5, 1989.

Decided Aug. 17, 1989.

Frederick Perillo, Previant, Goldberg, Uelman, Gratz, Miller & Brueggeman, Milwaukee, Wis., for plaintiff-appellee.

John H. Zawadsky, Whyte & Hirschboeck, Madison, Wis., for defendant-appellant.

Before BAUER, Chief Judge, WOOD, Jr., Circuit Judge, and WILL, Senior District Judge. ^*

HARLINGTON WOOD, Jr., Circuit Judge.

Teamsters Local Union 579 (the Union) and B & M Transit (B & M or the Company) disputed whether certain B & M employees were required under the collective bargaining agreement to become members of the Union. This case is a product of that discord. An arbitration panel ruled in favor of the Union and the Union sought confirmation from the district court. The district court confirmed the arbitration award and sanctioned the Company under Rule 11 of the Federal Rules of Civil Procedure for its conduct during the litigation. The Company appeals, arguing that the district court incorrectly ruled that the Company was barred from raising affirmative defenses because it failed to move that the court vacate the award within the three-month statute of limitations. The Company also claims that the district court exceeded its authority by interpreting an ambiguous arbitration award and that the sanctions were unwarranted because some of the Company's arguments had merit. We reject the Company's assertions and affirm the district court.

I. FACTUAL BACKGROUND

On May 12, 1987 the Union filed a grievance against the Company protesting that B & M casual drivers and owner-driver Thomas G. McCaffrey had not joined the Union as required by the collective bargaining agreement. ¹ The Union demanded that the Company order the casual drivers and McCaffrey to join the Union and terminate (within seventy-two hours of notification by the Union) those who refused to comply.

On July 21, 1987 the Union requested arbitration of its grievance. A Joint Grievance Committee panel (the Committee), composed of both management and labor representatives, held a hearing on August 31, 1987 to address the issues raised by the Union. At the hearing the Company contended that the Committee should postpone deciding the casual drivers issue because a related unfair labor practice charge (that the Company had filed ten days after the Union requested arbitration) was then pending before the National Labor Relations Board (NLRB). ² After a recess, the Committee rejected the Company's argument and ruled that the Company should address both issues before the Committee. The Committee then issued this decision:

Thomas G. McCaffrey comes within the bargaining unit covered by the labor agreement between the parties. The company is instructed to comply with the terms of its labor agreement with Local 579 including the Addendum thereto.

No one questioned the decision when it was rendered. The Company advised McCaffrey of the decision on September 1, 1987 and McCaffrey quit driving for the Company on September 30, 1987.

On May 10, 1988, approximately eight months after the Committee issued its decision, the Union filed a complaint with the district court to enforce the decision. Both parties moved for summary judgment; the district court granted summary judgment in favor of the Union and requested that the Union submit an itemized list of its attorney's fees and costs. On October 14, 1988 the district court ordered the judgment amended to award $7,025 in attorney's fees to the Union. The Company appeals.

The district court had jurisdiction to entertain a motion to enforce the arbitration award under Sec. 301(a) of the Labor-Management Relations Act, 29 U.S.C. Sec. 185(a). We review the district court's decision pursuant to 28 U.S.C. Sec. 1291.

II. DISCUSSION

The Company raises three discrete issues. It claims that the district court incorrectly held that the Company was barred from raising affirmative defenses to the motion for confirmation because the Company failed to move that the court vacate the Committee's award within three months of when it was rendered. The Company further argues that the district court erred in enforcing the Committee's decision because the decision was ambiguous. Finally, the Company contends that the district court erred in awarding attorney's fees to the Union under Rule 11 of the Federal Rules of Civil Procedure. We find no error in the district court's findings and conclusions; we affirm the grant of summary judgment and the award of attorney's fees in favor of the Union.

A. Timeliness of Defense to Arbitration Decision

The Company raised a number of defenses in response to the Union's request for confirmation of the arbitration decision but dropped all but one on appeal. On appeal it contends that the Committee did not have jurisdiction to render a decision while related NLRB charges were pending. The district court refused to address the Company's contention and held that the Company was barred from challenging the Committee's award because it did not make a timely motion to vacate the award.

Because Sec. 301 of the Labor-Management Relations Act does not identify a statute of limitations to apply when examining the timeliness of a challenge to an arbitration decision, we look to the statute of limitations for a comparable action in the forum state. Chauffeurs, Teamsters, Warehousemen and Helpers, Local Union No. 135 v. Jefferson Trucking Co., 628 F.2d 1023, 1026 (7th Cir.1980) (quoting UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 704-05, 86 S.Ct. 1107, 1113, 16 L.Ed.2d 192 (1966)) ("The timeliness of a Section 301 suit is to be determined, as a matter of federal law, 'by reference to the appropriate state statute of limitations.' "), cert. denied, 449 U.S. 1125, 101 S.Ct. 942, 67 L.Ed.2d 111 (1981). Both parties agree that we must consider Wisconsin law but they part ways on which statute of limitations to apply. The Company argues that we should refer to the one-year statute of limitations for filing a complaint in the district court to confirm an arbitration decision, WIS.STAT. Sec. 788.09, but the Union argues that we should adopt the statute of limitations for vacating an arbitration award, which in Wisconsin is three months, WIS.STAT. Sec. 788.13.

The Company's position is untenable. We specifically stated in Jefferson Trucking, 628 F.2d at 1025, that "a defendant's failure to move to vacate [an] arbitration award within the prescribed time period for such a motion precludes it from seeking affirmative relief in a subsequent action to enforce the award." This holding is intended to enhance the speed and effectiveness of arbitration, to provide fair review of the arbitrator's decision, and to preclude the losing party from dragging out proceedings in order to dilute the integrity of the arbitration award. Cf. Dreis & Krump Mfg. Co. v. International Ass'n of Machinists, 802 F.2d 247, 249-50 (7th Cir.1986). Based on this substantive rule of law, we have repeatedly borrowed the state statute of limitations for the timely filing of motions to vacate arbitration awards when analyzing the timeliness of defenses raised in a confirmation action. See International Union of Operating Eng'rs v. Centor Contractors, Inc., 831 F.2d 1309, 1311 (7th Cir.1987); Plumbers' Pension Fund v. Domas Mechanical Contractors, Inc., 778 F.2d 1266, 1268 (7th Cir.1985).

The Company insists that the Wisconsin Supreme Court's decision in Milwaukee Police Ass'n v. City of Milwaukee, 92 Wis.2d 145, 285 N.W.2d 119 (1979), controls our decision. In Milwaukee Police the Wisconsin Supreme Court held that a party to an arbitration decision governed by Wisconsin statutes could respond in an enforcement proceeding with affirmative defenses, even though the three-month statutory time period for filing motions to vacate had expired. Although the Company would like us to adopt this position, we are not bound by a state's interpretation of how to apply its statute of limitations when we borrow to fill a statute of limitations gap in federal law. See Centor Contractors, 831 F.2d at 1311 ("As the Domas decision itself indicates, the limitations period only is borrowed, as a matter of federal law."). "[W]hen it is necessary for us to borrow a statute of limitations for a federal cause of action, we borrow no more than necessary." West v. Conrail, 481 U.S. 35, 39-40, 107 S.Ct. 1538, 1542, 95 L.Ed.2d 32 (1987). See Central States, Southeast & Southwest Areas Pension Fund v. Jordan, 873 F.2d 149, 154 (7th Cir.1989). Section 301 actions are based on federal law. Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957). We therefore look to the Wisconsin statutes only to identify the most appropriate time period for raising defenses to the arbitrator's decision. ³

The Company has mischaracterized the Wisconsin Supreme Court's holding in Milwaukee Police by suggesting that the Wisconsin Supreme Court stated that the new statute of limitations for raising defenses in confirmation actions would be one year. If the Wisconsin court had explicitly stated as much, we would be facing an entirely different situation--one in which we would have to reexamine this court's prior practice of adopting the statute of limitations applicable to motions to vacate in light of a seemingly more analogous statute of limitations. The Wisconsin Supreme Court, however, in Milwaukee Police, simply held that the three-month statute of limitations for motions to vacate did not bar a party from raising similar issues as defenses in a confirmation action. 285 N.W.2d at 128. The Wisconsin court did not create a new statute of limitations; it interpreted an existing one.

At best, the Milwaukee Police decision suggests to us that the statute of...