Toyota of Berkeley v. Automobile Salesman's Union, Local 1095, United Food and Commercial Workers Union

• Decision Date: 14 December 1987
• Docket Number: No. 87-1555,87-1555
• Citation: 834 F.2d 751
• Parties: 127 L.R.R.M. (BNA) 2112, 56 USLW 2392, 108 Lab.Cas. P 10,286 TOYOTA OF BERKELEY, a corporation, Plaintiff/Appellee, v. AUTOMOBILE SALESMEN'S UNION, LOCAL 1095, UNITED FOOD AND COMMERCIAL WORKERS UNION, Defendant/Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 751

834 F.2d 751

127 L.R.R.M. (BNA) 2112, 56 USLW 2392,

108 Lab.Cas. P 10,286

TOYOTA OF BERKELEY, a corporation, Plaintiff/Appellee, v. AUTOMOBILE SALESMEN'S UNION, LOCAL 1095, UNITED FOOD AND COMMERCIAL WORKERS UNION, Defendant/Appellant.

No. 87-1555.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 7, 1987.

Decided Dec. 14, 1987.

John R. Bobay, San Anselmo, Cal., for plaintiff/appellee.

David A. Rosenfeld, San Francisco, Cal., for defendant/appellant.

Appeal from the United States District Court for the Northern District of California.

Before HUG, BOOCHEVER and BRUNETTI, Circuit Judges.

BOOCHEVER, Circuit Judge:

The Automobile Salesmen's Union, Local 1095, United Food and Commercial Workers Union (Union) appeals the district court order vacating an arbitration award on the grievance of a discharged employee. The district court held that the ex parte arbitration hearing was improper and the arbitrator was biased. We reverse.

At issue is the right to proceed ex parte with an arbitration after both parties have agreed to arbitration and the time and place of arbitration. We also must decide the proper standard for determining bias of an arbitrator and whether the district court erred in deciding that there was bias because the arbitrator proceeded ex parte, was named a defendant in a civil suit filed by a party to the arbitration seeking injunctive relief from the arbitration, and later sought sanctions against the attorney for the plaintiff in that suit.

FACTS

Toyota of Berkeley (Toyota) and the Union were parties to a collective bargaining agreement. Section 4 of the agreement covers the discharge of employees. Section 17 of the agreement calls for the arbitration of disputes arising from the interpretation of its specific provisions. The section requires that grievances be submitted in writing within seven days of the alleged violation of the agreement, and that demands for arbitration be submitted within 30 days.

Toyota discharged Edward Fontes, an automobile salesman, on a date which is unclear. Toyota alleges that it fired Fontes on December 2, 1982. On February 15, 1983, the Union submitted a grievance to Toyota. Toyota replied that it had insufficient information about the grievance, and asked for particulars without waiving any rights as to procedural defects, including More than six months later, Toyota wrote to the arbitrator, Joe Henderson, confirming an April 15, 1985 date for the hearing on Fontes' discharge. Just before the scheduled hearing, the parties agreed to postpone the hearing because of another pending matter involving timeliness of arbitration demands, which was resolved by a memorandum decision of this court upholding arbitrability dated March 26, 1986. ¹

                the timeliness of the grievance.  Four months later, in a letter of June 23, 1983, the Union responded to Toyota's "recent" position that the Union had failed to demand arbitration timely with a claim that Toyota had "always been on notice that the Union intended to proceed to arbitration."    Not until August 1, 1984, did the Union submit its formal demand for arbitration
                

On June 9, 1986, Toyota wrote Henderson that it would not participate in the arbitration because of the Union's failure to comply with procedural requirements (i.e., the failure to file a grievance and demand arbitration timely). The Union's response was to write Henderson (with a copy to Toyota) requesting him to set a date and to proceed, whether or not Toyota participated. Henderson scheduled the arbitration for August 6, and Toyota responded on July 3 that the dispute over timeliness was not arbitrable and it would not participate. On July 28, Henderson rescheduled the hearing to 10:00 on September 3, to allow Toyota to seek a court order prohibiting arbitration.

On September 2, Toyota told Henderson that it planned to seek a temporary restraining order in district court on September 3, the day of the hearing. Henderson waited until 10:45 a.m. on September 3, and then began the hearing without Toyota. A half-hour later, the hearing was over when a call from Toyota informed Henderson and the Union that Toyota had obtained a restraining order. Toyota's complaint named Henderson as a codefendant, and alleged that he conspired with the Union to violate the collective bargaining agreement by holding an ex parte hearing to determine arbitrability. It asked that he be enjoined from arbitrating the dispute, rendering an award, or demanding a cancellation fee.

Henderson filed an opposition to Toyota's motion for injunctive relief, and Toyota dismissed the action as to Henderson on September 12. On September 26, the court dissolved the temporary restraining order, denied the application for a preliminary injunction, and set the case for hearing on cross-motions for summary judgment.

Henderson's decision is dated September 23, but he refused to issue it pending the payment of his arbitrator's fees by both parties and Toyota's payment of his attorney fees and costs incurred in the civil injunction suit. On September 29, the court ordered him to issue the decision. Henderson filed his decision in court on October 7. Henderson found that Fontes was fired on February 9, 1983 and that his grievance was timely. Henderson awarded Fontes back pay and benefits. The decision further stated that the issue of timeliness was arbitrable and the ex parte hearing was valid.

On November 21, Henderson filed a motion in the district court for sanctions against Toyota's attorney. Also pending in the district court were the parties' motions for summary judgment. Pursuant to stipulation, the motions were heard as cross-motions to vacate and confirm the award. After a hearing, the district court vacated the arbitration award on the grounds that the ex parte hearing was improper and the award was the result of Henderson's bias. Henderson's motion for Rule 11 sanctions was denied on the same day.

DISCUSSION

(1) The ex parte arbitration hearing

The Union argues that the district court erred in vacating the arbitration award on Toyota's purported reason for refusing to attend the hearing was that the timeliness of Fontes' grievance and the demand for arbitration was not arbitrable. While it is a court's duty to decide whether disputes over substantive interpretations of a labor agreement are to be resolved through arbitration, AT & T Technologies v. Communications Workers of Am., 475 U.S. 643, 106 S.Ct. 1415, 1420, 89 L.Ed.2d 648 (1986), procedural questions related to substantive issues that are arbitrable under the agreement are for the arbitrator to decide in the absence of a contrary provision. Local 370, Int'l Union of Operating Eng'rs v. Morrison-Knudsen Co., 786 F.2d 1356, 1358 (9th Cir.1986) (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 918, 11 L.Ed.2d 898 (1964)). This circuit has held that timeliness is a procedural question subject to arbitration. Retail Delivery Drivers Local 588 v. Servomation Corp., 717 F.2d 475, 478 (9th Cir.1983). The district court judge correctly concluded that the dispute over the timeliness of the Fontes grievance was arbitrable, and Toyota does not raise this issue on appeal. The issue is not whether Henderson had jurisdiction over the dispute, but rather whether he could proceed without Toyota present.

                the grounds that the September 3 arbitration hearing was improper because it was held ex parte, without Toyota's participation.  We review this question of law de novo.    United States v. McConney, 728 F.2d 1195, 1202-04 (9th Cir.)  (en banc), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984)
                

This court has yet to rule on the issues presented by ex parte arbitration, but the general trend of authority is clear. Under a collective bargaining agreement specifically providing for designation of an arbitrator without the participation of both parties, an arbitrator may issue an enforceable default award when one party fails to attend the hearing. Corallo v. Merrick Central Carburetor, 733 F.2d 248, 251 n. 1 (2d Cir.1984); F. Elkouri & E. Elkouri, How Arbitration Works 247 (4th ed. 1985). If an agreement provides that the parties shall jointly select an arbitrator, however, a court may refuse to enforce an award made following an ex parte hearing before an arbitrator selected without the defaulting party's cooperation, on the grounds that the party not in default should have sued to compel arbitration. Sam Kane Packing Co. v. Amalgamated Meat Cutters, 477 F.2d 1128, 1135-36 (5th Cir.), cert. denied, 414 U.S. 1001, 94 S.Ct. 355, 38 L.Ed.2d 237 (1973); Elkouri & Elkouri at 247-48. If the parties did cooperate in selecting an arbitrator as specified by the agreement, and the defaulting party has adequate notice of the hearing, the failure to attend does not nullify the award. See Sam Kane, 477 F.2d at 1136 ("we would be faced with a strong case for the award"); American Arbitration Association Voluntary Labor Arbitration Rule 27, 3 Lab.Rel.Rep. (BNA) (88 Lab.Arb.) 3 (June 17, 1987) ("Unless the law provides to the contrary, the arbitration may proceed in the absence of any party, who, after due notice, fails to be present or fails to obtain an adjournment.").

The district court held that the ex parte hearing was improper because the arbitration clause in the collective bargaining agreement was not "self-executing," that is, did not provide that either party could demand arbitration and select an arbitrator without the other's cooperation. Section 17 of the agreement provides that unresolved grievances are to be "referred to an impartial arbitrator," and outlines a procedure for selecting an arbitrator should the parties fail to agree. The Union and Toyota did agree on an arbitrator; Toyota confirmed the initial date and location of the hearing, agreed to a postponement, and otherwise showed every intention to participate over a period of nearly three years. When...