Opinions of the United 1994 Decisions States Court of Appeals for the Third Circuit

9-30-1994

Troy Chem. Corp. v. Teamsters Un., Local 408 Precedential or Non-Precedential:

Docket 93-5638

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Recommended Citation "Troy Chem. Corp. v. Teamsters Un., Local 408" (1994). 1994 Decisions. Paper 145. http://digitalcommons.law.villanova.edu/thirdcircuit_1994/145

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FOR THE THIRD CIRCUIT

____________

NO. 93-5638 ____________

TROY CHEMICAL CORPORATION, Appellant

v.

TEAMSTERS UNION LOCAL NO. 408 Appellee

____________

Appeal from the United States District Court for the District of New Jersey D.C. No. 93-cv-02244 ____________

Argued June 7, 1994 Before: MANSMANN, ALITO, and ROSENN, Circuit Judges Opinion Filed September 30, 1994 ____________

HARRY N. TURK, ESQUIRE (Argued) Epstein, Becker & Green 250 Park Avenue New York, New York 10177 Attorneys for Appellant

KENNETH I. NOWAK, ESQUIRE (Argued) Zazzali, Zazzali, Fagella & Nowak One Riverfront Plaza Newark, New Jersey 07102 ____________

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal presents an interesting question concerning

the authority of a federal district court to preliminarily decide procedural issues as well as the arbitrability of a labor

grievance where the union party seeks arbitration. Troy Chemical

Corporation (Troy Chemical) and the Teamsters Union Local No. 408

(the Union) are parties to a collective bargaining agreement

(CBA). On April 23, 1991, Troy Chemical discharged four

employees for theft of company property and immediately notified

the union shop steward of the discharges. No grievances were

filed by the Union or the individuals pursuant to the CBA.

On January 28, 1993, the Union notified the New Jersey

State Board of Mediation that a dispute existed over the

discharge of one of the four employees, and requested that an

arbitrator be selected. On May 14, 1993, the mediation board

advised the parties that an arbitrator had been selected and a

hearing was scheduled for October 20, 1993. On May 24, 1993,

Troy Chemical commenced an action in the United States District

Court for the District of New Jersey seeking a declaratory

judgment that any disputes over the discharged four employees

were not arbitrable because the Union had not complied with the

grievance procedure.1

The parties filed cross-motions for summary judgment.

The district court denied Troy Chemical's motion and granted the

Union's motion for summary judgment, holding that the parties had

modified by past practice the CBA provision pertaining to the

1 . The district court exercised subject matter jurisdiction pursuant to section 3 of the Labor Management Relations Act,

. We have jurisdiction over this appeal from a final order under

. grievance procedure for discharges and that the grievances

regarding the four employees were arbitrable. Troy Chemical

appealed. We reverse.

I.

The Union represents production and maintenance

employees of Troy Chemical's Newark, New Jersey specialty

chemicals manufacturing facility. Article 11 of the CBA2

2 . The pertinent provisions of the Article 11 are:

A. Should any difference, grievance, dispute or complaint between the Company and the Union or any employees arise out of the interpretation or application of the Agreement, there shall be an earnest effort on the part of both parties to settle same promptly and through the steps hereinafter set forth, it being understood and agreed that no grievance shall be accepted for consideration unless reduced to writing and presented in the first step within two (2) working days of the occurrence of the incident causing the grievance. This shall not, however, apply to grievances involving payroll calculation.

* * *

The dispute referred to herein shall include, but shall not be limited to disputes concerning the discharge of an employee . . . .

* * *

C. Except as expressly provided otherwise in this Agreement, with respect to any dispute which is required to be submitted to arbitration pursuant to the Agreement, including strikes, stoppages, lockouts and any and all claims, demands and acts arising therefrom which are subject to arbitration, the procedure established in this Agreement provides that no grievance shall be accepted for consideration

unless reduced to writing and presented within two working days

of the occurrence of the incident causing the grievance. The

only exception to this requirement is grievances involving

payroll calculations. Step two of the grievance procedure

requires a conference between representatives of Troy Chemical

and the Union within three days of the incident giving rise to

the grievance. If there is no settlement of the dispute after

the completion of these two steps, then the matter may be

submitted to arbitration. Paragraph A of article 11 states,

"[t]he dispute referred to herein shall include, but shall not be

limited to disputes concerning the discharge of an employee."

Paragraph C of article 11 provides that, "the procedure

established in this Agreement for the adjustment of said dispute

shall be the exclusive means for its determination." Article 11

has remained unchanged in the more than 15 years of successive

three year collective bargaining agreements between the parties.

The district court acknowledged that express contract

language made it "abundantly clear that a written grievance is to

be submitted . . . for all disputes concerning discharged

employees." Nevertheless, the court found that the parties had

historically acquiesced in the waiving of the grievance procedure

in connection with discharges. Relying on New Jersey law, the

court held that the parties had modified the CBA by their

(..continued) for the adjustment of said dispute shall be the exclusive means for its determination. practice of ignoring steps 1 and 2 of the grievance procedure in

connection with discharges, and therefore, the grievances

regarding the four employees were arbitrable. In his opinion,

the arbitrator repeatedly noted that he was bound by the district

court's legal and factual conclusions that the grievance was

procedurally and substantively arbitrable.

On appeal, Troy Chemical contends that the district

court erred in ruling on matters of procedural arbitrability and

in holding that parties had modified the express terms of the CBA

by disregarding the grievance procedure provisions pertaining to

employee discharge. The Union takes the position that the

district court correctly found a waiver of the grievance

procedure steps based on the past practices of the parties.

II.

This court exercises plenary review over a grant of

summary judgment, and we apply the same test the district court

should have utilized initially. Oritani Sav. and Loan Ass'n v.

Fidelity and Deposit Co.,

, 637 (3d Cir. 1993).

Summary judgment is appropriate only when it is demonstrated that

there is no genuine issue as to any material fact and the moving

party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett,

(1986); Fed.R.Civ.P. 56(c). An

issue of material fact is genuine "if the evidence is such that a

reasonable jury could return a verdict for the nonmoving party."

Anderson v. Liberty Lobby, Inc.,

(1986). In

deciding a motion for summary judgment, all reasonable inferences

must be drawn in favor of the non-movant. Oritani, 989 F.2d at 638. We therefore conclude that the appropriate standard of

review is plenary, rather than clearly erroneous, as suggested by

the Union.

The law governing the proper forum for determining

various issues of arbitrability is set forth by the United States

Supreme Court in John Wiley & Sons, Inc. v. Livingston,

(1964). In that case, a dispute arose between the employer

and the union over whether the contract covered the merged

employees of the successor company, and whether the union's

failure to follow the grievance procedure foreclosed arbitration.

The Court stated that the first issue was a matter of substantive

arbitrability to be decided by the court, but that the issue of

whether the failure to adhere to the grievance mechanism barred

arbitration was a procedural question for the arbitrator. The

Court explained: It would be a curious rule which required that intertwined issues of "substance and procedure" growing out of the same facts had to be carved up between two different forums, one deciding after the other. Neither logic nor considerations of policy compel such a result.

. The Court concluded:

Once it is determined, as we have, that the parties are obligated to submit the subject matter of a dispute to arbitration, "procedural" questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator.

Several years later, the Supreme Court reiterated its

view that procedural arbitrability should be resolved by

arbitrators, not the courts. In International Union of Operating

Engineers v. Flair Builders, Inc.,

(1972), the

company opposed arbitration on the grounds that the union's long

delay in filing for arbitration constituted laches. The court of

appeals upheld the district court's ruling that the issue of

whether laches existed was one to be decided by the court, not

the arbitrator. The Supreme Court disagreed, observing that the

contract between the parties stated that the grievance and

arbitration procedure should be applied to "any difference" that

arose between the parties, and the question whether the

arbitration was barred by laches was "a difference" to be decided

by the arbitrator.

. Relying on Wiley, the Court

emphasized that a court should determine in the first instance

whether the parties had in fact agreed to arbitrate the subject

matter, "[b]ut once a court finds, as here, the parties are

subject to an agreement to arbitrate, and that agreement extends

to 'any difference' between them, then a claim that particular

grievances are barred by laches is an arbitrable question under

the agreement."

. In the present action, article 11 of the CBA speaks of

"any difference, grievance, dispute or complaint" and

unambiguously states that "disputes concerning the discharge of

an employee" are subject to the grievance procedure and

arbitration. Thus, whether the Union and Troy Chemical had by

practice waived steps 1 and 2 of the grievance procedure was a question of procedure for the arbitrator and not the court. See

Association of Flight Attendants, AFL-CIO v. USAir, Inc.,

(3d Cir. 1992) (holding that once the court

determines that the underlying grievance is covered by the

arbitration clause, the court's role ends; "[b]eyond this, the

court usurps the exclusive function of the arbitrator when it

ventures to decide procedural matters, or the merits of a

grievance arising under the collective bargaining agreement").

It is only on appeal that the Union argues that the

district court properly considered whether the parties waived the

grievance procedure steps based on their past practices. In its

answer to the complaint for declaratory judgment, the Union

averred as an affirmative defense that the plaintiff has not

challenged the substantive arbitrability of the dispute, but

raises only questions of procedural arbitrability, which are for

the arbitrator not the court to decide. Moreover, before the

district court, the Union argued that under well-settled

principles of labor law the issues of arbitrability and waiver

are committed to the arbitrator. The Union stated in its brief,

"[t]he Union does not ask this Court to decide these questions.

On the contrary, it is not this Court's function to do so.

Rather, these issues are proper subjects for the arbitrator in

determining whether the grievance is barred by procedural

defects."

Therefore, once the district court found that the

discharges were subject to arbitration, the court should have

denied the declaratory judgment and held that the issue of whether the grievances were barred by procedural defects was

arbitrable. The district court erred in deciding the procedural

questions and foreclosing that issue from the arbitrator's

decision.

III.

Finally, the district court erred in granting the

Union's motion for summary judgment because the record shows that

there are disputed questions of fact. For example, the Union

lists the names of employees who previously arbitrated without

following the grievance procedure provisions, but it does not

give any specific dates or the names of the arbitrators, and all

of the cases alleged to have waived the grievance procedure were

written before the last CBA was entered into in 1989. In light of

the vagueness of the Union's evidence and the subsequent renewal

of the grievance procedure provisions in the CBA now before us

for construction, there is a question as to whether the Union's

evidence is credible.

Additionally, the Union avers by affidavit that

discharges were treated differently because the contract language

in article 11 treats the discharge as a unique part of grievance

with special rights, and that Union representatives met with

Alexander Gerardo, Troy Chemical's Vice President of Human

Resources, and that he advised them to wait to submit this matter

to arbitration because he expected a quick investigation of the

arrests by the law enforcement people.3 Yet, the Union fails to

3 . The Union further avers that as a practical matter, Troy Chemical knows what the grievance is in discharge cases, i.e., point to any such language that gives discharge cases any special

rights or shows that they are treated differently. In fact, the

grievance forms provided by the Union to its members specifically

cautioned that all complaints or grievances must be in writing,

properly signed by the members and shop steward. "Unless

completed in detail, the grievance will not be acted upon."

Moreover, Gerardo, by his affidavit, denies having met with Union

representatives and denies that he discussed the issue of the

timeliness of the filing or instructed the Union to delay in

pursuing this matter at any step in the required procedures.

Gerardo further avers that Troy Chemical did not enter into any

understandings or agreements which relieved the Union from their

obligation in the grievance procedure. Troy Chemical, as the

non-moving party, was entitled to all reasonable inferences.

Upon remand, these factual disputes are matters that should be

resolved by the arbitrator.

IV.

The district court exceeded its authority in

determining whether the grievance procedure had been complied

with and whether there had been a modification of article 11.

Once the court decided that the discharges were subject to

arbitration, it should have held that the dispute was arbitrable

and that matters relating to compliance with the grievance (..continued) the Union is aggrieving the discharge of particular persons. However, the purpose of the grievance procedure is not merely to give notice, but rather it is to give the parties the opportunity to confer, ascertain the facts, and promptly settle the matter in the workshop, if that is at all possible. procedure or a waiver were matters for the arbitrator.

Accordingly, the judgment of the district court will be

vacated and the case remanded to the district court with

instructions to return the case to the arbitrator for de novo

consideration. Costs taxed against the appellee.