Warehouse, Processing, Distribution Workers Union, Local 26 v. Hugo Neu Proler Co.

• Decision Date: 21 July 1998
• Docket Number: No. B114148,B114148
• Court: California Court of Appeals Court of Appeals
• Parties: , 158 L.R.R.M. (BNA) 2935, 135 Lab.Cas. P 10,210, 98 Cal. Daily Op. Serv. 5703, 98 Daily Journal D.A.R. 7913 WAREHOUSE, PROCESSING, DISTRIBUTION WORKERS UNION, LOCAL 26, Plaintiff and Appellant, v. HUGO NEU PROLER COMPANY, Defendant and Respondent.

Page 814

76 Cal.Rptr.2d 814

65 Cal.App.4th 732, 158 L.R.R.M. (BNA) 2935,

135 Lab.Cas. P 10,210,

98 Cal. Daily Op. Serv. 5703,

98 Daily Journal D.A.R. 7913

WAREHOUSE, PROCESSING, DISTRIBUTION WORKERS UNION, LOCAL 26, Plaintiff and Appellant, v. HUGO NEU PROLER COMPANY, Defendant and Respondent.

No. B114148.

Court of Appeal, Second District, Division 5, California.

July 21, 1998.

Van Bourg, Weinberg, Roger & Rosenfeld, James G. Varga and James Rutkowski, Los Angeles, for Plaintiff and Appellant.

Hill, Farrer & Burrill, Jonathan M. Brandler and Michael S. Turner, Los Angeles, for Defendant and Respondent.

TURNER, Presiding Justice.

I. INTRODUCTION

The present case had its genesis in a collective bargaining agreement which required labor and management to arbitrate the application of its terms to a dispute over the seniority rights of a union member. Warehouse, Processing, Distribution Workers Union, Local 26 (the union) appeals from an order awarding $13,840 in attorney's fees to Hugo Neu Proler Company (the employer) pursuant to Labor Code section 1128 ¹. Section 1128 governs attorney's fee awards in actions involving arbitration under a collective bargaining agreement. ² The United States Supreme Court has held that in state court litigation to enforce arbitration awards under collective bargaining agreements within the purview of section 301 of the Labor Management Relations Act of 1947 (61 Stat. 156; see 29 U.S.C.A. § 185) (LMRA), as here, federal law must be applied. ³ We conclude the preemptive scope of LMRA section 301 extends to the attorney's fee award in this case which involved: a dispute over the terms of a collective bargaining agreement; an arbitration conducted in compliance with the terms of the collective bargaining agreement; and post-award litigation concerning the scope of the arbitrator's powers under the collective bargaining agreement. Therefore, section 1128, as applied in this case, is preempted by federal law. Further, there has been no assertion or finding consistent with the federal standard for attorney's fee awards, that the union acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Accordingly, we reverse the order granting attorney fees to the employer.

II. BACKGROUND

The union, pursuant to a collective bargaining agreement, filed a grievance on behalf of an employee. The matter was heard by an arbitrator. At issue was the application of the collective bargaining contract's terms to a dispute concerning seniority. In his written award, the arbitrator framed the issue as follows: "Did the Company violate the Contract when it refused to allow the Grievant, who was working the first shift at the time, to bump a less senior Crane Operator from his third shift assignment after the Grievant's start time was changed from 6:00 a.m. to 9:00 a.m. and then to 10:00 a.m., or when it assigned overtime to the less senior employee?" The arbitrator's award incorporated by reference portions of articles 2 and 6 of the collective bargaining agreement. The arbitrator's written analysis explicitly applied the largely undisputed facts to the provisions of the collective bargaining agreement. The award was as follows: "The Company did not violate the Contract when it refused to allow the Grievant, who was working on the first shift at the time, to bump a less senior Crane Operator from his third shift assignment after the Grievant's start time was changed from 6:00 a.m. to 9:00 a.m. and then to 10:00 a.m., or when it assigned overtime to the less senior employee."

The union filed a petition to vacate the arbitration award on the grounds the arbitrator had exceeded his powers. The employer filed a petition to confirm the award. The grounds for the petition to vacate the award were as follows: "The Union hereby alleges that the Arbitration Award must be vacated because the Arbitrator exceeded his powers when he read into the contract that the Employer had the right to assign various start times to employees when in fact the collective bargaining agreement only provides for recognition of 'shifts' and not 'starting times.' The Arbitrator added to the contract, when [he] found the Employer had the right to start employees at various starting times thereby vitiating the contractual shift times and employees' seniority rights. The Arbitrator further denied the opportunity for overtime to the Grievant based on the premise that the Employer did not transfer Mr. Garcia's shift but simply changed his start time. By adding to the contract, the Arbitrator exceeded his power and the Award [cannot] be corrected without [a]ffecting the merits of the decision upon the controversy submitted." The prayer for relief in the petition to vacate the award sought a rehearing of the dispute before the same or a different arbitrator. The papers which were filed in connection with the proceedings which ultimately led to the award being confirmed discussed whether the arbitrator exceeded his powers in applying the collective bargaining contract. The trial court entered an order denying the union's petition to vacate the award. Also, the trial court granted the employer's petition to confirm the award. The employer sought attorney's fees pursuant to section 1128. The union argued the state statute was preempted by federal law. The trial court granted the request for attorney's fees.

III. DISCUSSION

A. Federal Substantive Law Governs Enforcement of Arbitration under Collective Bargaining Agreements

Section 301 of the LMRA provides: "Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce ... may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." (29 U.S.C.A. § 185(a).) The United States Supreme Court has observed that Congress never explicitly stated the extent to which it intended LMRA section 301 to preempt state law. (Allis-Chalmers Corp. (1985) 471 U.S. 202, 208-209, 105 S.Ct. 1904, 85 L.Ed.2d 206; Evans v. Einhorn (7th Cir.1988) 855 F.2d 1245, 1249; Paige v. Henry J. Kaiser Co. (9th Cir.1987) 826 F.2d 857, 861.) The general parameters of federal preemption in the absence, as here, of an express preemption clause, were summarized by the United States Supreme Court in Freightliner Corp. v. Myrick (1995) 514 U.S. 280, 287, 115 S.Ct. 1483, 131 L.Ed.2d 385, as follows: "We have recognized that a federal statute implicitly overrides state law either when the scope of a statute indicates that Congress intended federal law to occupy a field exclusively, English v. General Elec. Co. [ (1990) 496 U.S. 72, 78, 110 S.Ct. 2270, 110 L.Ed.2d 65], or when state law is in actual conflict with federal law. We have found implied conflict pre-emption where it is 'impossible for a private party to comply with both state and federal requirements,' [id. at p. 79, 110 S.Ct. 2270], or where state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' Hines v. Davidowitz, 312 U.S. 52, 67 [61 S.Ct. 399, 85 L.Ed. 581] (1941)." As discussed below, with respect to the enforcement of arbitration under a collective bargaining agreement, the United States Supreme Court has held that federal substantive law governs and must be uniformly applied.

The United States Supreme Court has construed LMRA section 301 expansively. It has held that section 301 of the LMRA: confers federal court jurisdiction over controversies involving collective bargaining agreements; authorizes the United States courts to develop a body of federal law for enforcement of those agreements; reserves to the state courts concurrent jurisdiction over claims within the purview of LMRA section 301; but requires that state courts apply federal law in deciding those cases. (Lingle v. Norge Division of Magic Chef, Inc. (1988) 486 U.S. 399, 403, & fn. 2, 108 S.Ct. 1877, 100 L.Ed.2d 410.) Further, the United States Supreme Court has held that LMRA section 301 "governs claims founded directly on rights created by collective-bargaining agreements, and also [state law] claims 'substantially dependent on analysis of a collective bargaining agreement.' " (Caterpillar Inc. v. Williams (1987) 482 U.S. 386, 394-395, 107 S.Ct. 2425, 96 L.Ed.2d 318; accord, Lingle v. Norge Division of Magic Chef, Inc., supra, 486 U.S. at p. 410, fn. 10, 108 S.Ct. 1877.) We are here concerned with an action to enforce an arbitration provision, a right specifically created by a collective bargaining agreement. We are not concerned with whether a state law contract or tort cause of action is preempted by LMRA section 301.

That federal substantive law applies to claims founded directly on rights created by a collective bargaining agreement was established in Textile Workers v. Lincoln Mills (1957) 353 U.S. 448, 457, 353 U.S. 448, 1 L.Ed.2d 972. In Lincoln Mills, a union brought suit in federal district court to compel arbitration of grievances under a collective bargaining agreement. The issue was whether the federal courts had authority to order arbitration under a collective bargaining agreement. The United States Supreme Court held LMRA section 301 is not just jurisdictional; rather, the court held, "[I]t authorizes federal courts to fashion a body of federal law for the enforcement of ... collective bargaining agreements...." (Id. at pp. 450-451, 77 S.Ct. 912.) The Supreme Court examined the legislative history of LMRA section 301 and concluded the legislation "expresses a federal policy that federal courts should enforce these agreements on behalf of or against labor organizations and that industrial peace can be best obtained only in that way." (Id. at p. 455, 77 S.Ct. 912.) Moreover, the court held that the substantive law to be applied in suits under LMRA section 301 "is federal law, which the courts must fashion...