Dist. No. 1 v. Liberty Mar. Corp.
Dist. No. 1 v. Liberty Mar. Corp.
Opinion of the Court
This case involves a dispute between a labor union and a shipping company. On August 14, 2017, plaintiff District No. 1, Pacific Coast District, Marine Engineers' Beneficial Association AFL-CIO ("MEBA" or "the union") brought this action against *453defendant Liberty Maritime Corporation ("Liberty") pursuant to Section 301 of the Labor Management Relations Act,
The union contends that it is entitled to an order compelling arbitration as a matter of law based on the terms of the Agreement. Pl.'s Mem. at 1-2. Liberty has opposed the motion, arguing that arbitration is premature because the union failed to negotiate in good faith prior to invoking the arbitration clause. Def.'s Opp. to Pl.'s Mot. [Dkt. # 9] ("Def.'s Opp.") at 1, 7-18. But the union maintains that the determination of whether the parties have engaged in good faith negotiations is itself a question that must be decided by an arbitrator, and not by the Court, under the terms of the Agreement. Pl.'s Mem. at 15. It also seeks attorneys' fees to cover the cost of bringing this case and preparing the instant motion.
Because the Court agrees that the predicate question of whether the parties complied with the good faith negotiation requirement in the wage reopener provision of the Agreement must be resolved by an arbitrator, it will grant plaintiff's motion for judgment on the pleadings, enter judgment in favor of MEBA, and enjoin Liberty from refusing to participate in the arbitration of the parties' wage dispute on the grounds that the union failed to engage in good faith negotiations before invoking the arbitration clause. But the union's request for attorneys' fees will be denied.
BACKGROUND
Plaintiff MEBA is a labor union that represents employees in the U.S. maritime industry who are located at ports throughout the United States and on oceangoing vessels. Compl. ¶ 2. Liberty is a shipping company that operates various seagoing vessels, and many of its employees are represented by MEBA.
On January 23, 2012, MEBA and Liberty signed a Memorandum of Understanding ("MOU" or "Agreement"), a collective bargaining agreement that is in effect until at least June 15, 2019. Compl. ¶¶ 8-9; Ex. A to Compl. [Dkt. # 1-1] ("MOU") at 1. The Agreement contains a "wage reopener provision," which states that "[e]ither party may reopen this Agreement, effective as of October 1, 2015, by giving the other party written notice at least 60 days and no more than 90 days prior to the reopener date." MOU § 3(f); Compl. ¶ 10. According to the MOU, "[i]n the event the Agreement is reopened, the parties agree to negotiate over the wages, benefits, and other economic terms and conditions for subsequent years of the extended Agreement." MOU § 3(f); Compl. ¶ 11. The Agreement goes on:
If, after engaging in good faith negotiations ... the parties are unable to reach an agreement regarding changes in wages, benefits or other economic terms and conditions, the parties agree to submit on an expedited basis their dispute to a mutually selected arbitrator in accordance with the provisions set forth in the [collective bargaining agreement]. The arbitrator's decision will be final and binding on the parties.
MOU § 3(g); Compl. ¶ 12.
By letter on January 24, 2017, MEBA notified Liberty of its intent to reopen the *454Agreement for negotiations pursuant to the wage reopener provision, and it proposed several available dates for conducting the negotiations. Compl. ¶ 13; Ex. B to Compl. [Dkt. # 1-2]; see Am. Ans. ¶ 13; Def.'s Opp. at 3. One week later, MEBA provided Liberty with its first bargaining proposal. Compl. ¶ 14; Am. Ans. ¶ 14. The pleadings contain considerable detail about what happened next.
The parties exchanged emails concerning the proposal over the course of the next month. Compl. ¶¶ 15-16; Am. Ans. ¶¶ 15-16. While the union claims that Liberty did not provide a counterproposal during this time, and that it did not suggest any dates for the start of the negotiations, see Compl. ¶¶ 15-17, Liberty asserts that it responded to MEBA's proposal by requesting information, and that MEBA refused to provide it with the information it needed in order to bargain. Am. Ans. ¶¶ 15-17; see also Def.'s Opp. at 3.
On March 10, 2017, MEBA sent Liberty a letter asserting that it had attempted to negotiate in good faith, but because Liberty had not yet engaged in negotiations, the union intended to invoke section 3(g) of the MOU and begin arbitration proceedings. Compl. ¶¶ 18-19; Ex. C to Compl. [Dkt. # 1-3]; see Am. Ans. ¶¶ 18-19. MEBA attached another bargaining proposal to the letter, which it characterized as the union's "last, best and final offer" that it would present to the arbitrator. Compl. ¶¶ 18-19; Ex. C to Compl. [Dkt. # 1-3]; see Am. Ans. ¶¶ 18-19.
MEBA's counsel then contacted Liberty and invited its assistance in selecting an arbitrator. Compl. ¶ 20; Am. Ans. ¶ 20. Liberty rejected the arbitration demand and subsequently transmitted its first counter-proposal and offered to meet with MEBA and negotiate. Compl. ¶ 21; Am. Ans. ¶ 21.
MEBA then offered a third proposal, and the parties met on April 18, 2017 to begin negotiations. Compl. ¶ 22; Am. Ans. ¶ 22. At the end of the meeting, Liberty responded with its second counter-proposal. Compl. ¶ 22; Am. Ans. ¶ 22. In response, MEBA gave Liberty the fourth and fifth versions of its proposal. Compl. ¶ 23; Am. Ans. ¶ 23.
On June 13, 2017,
On July 12, 2017, Liberty notified MEBA that it would not participate in the upcoming meeting because it did not want to engage in wage negotiations until a pending grievance issue involving both parties had been resolved. Compl. ¶ 28; Am. Ans. ¶ 28. MEBA immediately objected, and it insisted that Liberty's decision to suspend negotiations "amount[ed] to a failure to bargain in good faith." Compl. ¶ 29; Ex. D to Compl. [Dkt. # 1-4]; see Am. Ans. ¶ 29. MEBA then again invoked section 3(g) of the Agreement and sought to bring the wage reopener dispute before an arbitrator. Compl. ¶ 30; Ex. D to Compl. [Dkt. # 1-4].
On July 17, 2017, Liberty rejected MEBA's demand for arbitration. Compl. ¶ 31; Ex. E to Compl. [Dkt. # 1-5]; Am. Ans. ¶ 31. Liberty stated in a letter that the demand for arbitration was premature, *455and it explained that the grievance had to be decided first because resolution of the contract interpretation issue at stake could "have a major economic impact which will affect [the] wage re-opener discussions." Ex. E to Compl. [Dkt. # 1-5] at 2.
At that point, the union went to court. On August 14, 2017, it filed a complaint seeking to compel arbitration of the wage reopener issues. Compl. And on November 6, 2017, while the case was pending, the parties settled the grievance that Liberty had cited as the reason for putting negotiations on hold in July. Decl. of Counsel William G. Miossi in Supp. of Def.'s Opp. [Dkt. # 9-1] ("Miossi Decl."); Ex. A to Miossi Decl.; Def.'s Opp. at 6.
On November 8, 2017, then, Liberty notified MEBA that it was prepared to restart the wage reopener negotiations. Ex. A to Miossi Decl. [Dkt. # 9-1]. But MEBA refused to continue negotiations, see Ex. B to Miossi Decl. [Dkt. # 9-1]; Ex. C to Miossi Decl. [Dkt. # 9-1]; Ex. D to Miossi Decl. [Dkt. # 9-1], explaining that "[t]he fact that [Liberty] is now willing to bargain does nothing to absolve its conduct that has placed the parties in this situation." Pl.'s Reply in Supp. of Pl.'s Mot. [Dkt. # 11] ("Pl.'s Reply") at 4.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(c) authorizes a party to move for judgment on the pleadings at any time "after the pleadings are closed." Fed. R. Civ. P. 12(c).
While there are opinions in this district that state that the standards of review for a Rule 12(b)(6) motion and a Rule 12(c) motion are "essentially the same" or "virtually identical," see, e.g., Nat'l Shopmen Pension Fund v. Disa ,
Wright's Federal Practice and Procedure makes the same observation, noting that a Rule 12(c) motion asks a court to address the merits of the parties' claims and defenses and not simply procedural barriers or pleading deficiencies. 5C Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1369 (3d ed. 2017) (commenting that the appropriate standard of review for a Rule 12(c) motion is more similar to a Rule 56 motion for summary judgment, except that the Court may only consider the contents of the pleadings); see also Jones v. Dufek,
If on a Rule 12(b)(6) or 12(c) motion, "matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56." Fed. R. Civ. P. 12(d) ; see Marshall Cnty. Health Care Auth. v. Shalala ,
ANALYSIS
I. The union is entitled to judgment on the pleadings.
MEBA seeks to compel arbitration of the parties' failure to come to terms under the wage reopener provision of the collective bargaining agreement. See Compl.; Pl.'s Mem. at 2. Liberty does not deny that the parties agreed in the MOU to arbitrate disputes arising under that provision. See Am. Answer ¶¶ 11-12. But it highlights the language in the MOU that requires the parties to negotiate first, see Def.'s Opp. at 1 ("According to its express terms, the arbitration agreement in this case is available only to resolve differences concerning wage rates and benefit contributions the parties cannot settle themselves *457after first engaging in good faith bargaining."), and it maintains that MEBA's invocation of the arbitration provision is premature because the union did not negotiate in good faith before demanding arbitration. Id. at 7.
Each party has advanced its own characterization of the series of events set forth above. They plainly disagree about whether the good faith negotiation requirement has been satisfied, but more important, they disagree about who should decide that question. See Compl. ¶¶ 13-31; Pl.'s Mem. at 13, 15; Def.'s Opp. at 8-19; Pl.'s Reply at 3-4, 8. MEBA contends that pursuant to the MOU, and in the absence of any evidence of the parties' intent to submit the matter to a court, the threshold question must be referred to an arbitrator, see Pl.'s Mem. at 13-15; Pl.'s Reply at 7-8, while the employer is equally adamant that the Court must decide it. Def.'s Opp. at 8-18; see also id. at 3 ("The arbitration provision contained in Section 3(g) applies only to the parties' reopener negotiations and no other type of dispute."). Since the Court will resolve the arbitration question in favor of the union, it will not address the adequacy of the negotiations, and nothing in this opinion should be read as expressing any view on the matter.
While there is a strong "federal policy favoring arbitration agreements," Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. ,
Courts presume that the parties intend courts, not arbitrators, to decide questions of "arbitrability." BG Grp. ,
But, "courts presume that the parties intend arbitrators, not courts, to decide disputes about the meaning and application of particular procedural preconditions for the use of arbitration." BG Grp. ,
The Supreme Court has said that these procedural "gateway" matters include claims of "waiver, delay, or a like defense to arbitrability." BG Grp. ,
In BG Group, PLC v. Republic of Argentina , the Supreme Court had to determine "who - court or arbitrator - bears primary responsibility for interpreting and applying [the] local court litigation provision" contained in a treaty's arbitration clause.
In making its decision, the Court also observed that the local litigation requirement was highly analogous to procedural provisions that other courts have found to be for arbitrators, not courts, to interpret. BG Grp. ,
In Dialysis Access Center , the parties entered into a management services agreement which stated in part, "[the parties] shall use good faith negotiation to resolve any dispute that may arise under this Agreement .... In the event [the parties] cannot reach agreement on any issue, such issue will be settled by binding arbitration."
While the D.C. Circuit has not directly considered who should decide whether the parties have complied with a good faith negotiation provision that is a condition precedent to arbitration, other courts appear to be in agreement that it is a question for the arbitrator. See, e.g., Dialysis Access Ctr. ,
*460Mike Rose's Auto Body, Inc. v. Applied Underwriters Captive Risk Assurance Co. , No. 16-1864,
In an effort to avoid the application of these principles, defendant attempts to *461characterize the good faith negotiation requirement in the MOU as a substantive limit on topics subject to arbitration, instead of a procedural precondition to arbitration. See Def.'s Opp. at 15. According to Liberty, the good faith negotiation provision establishes the "scope" of the parties' agreement to arbitrate: that is, the arbitration clause is limited to those reopener disputes that have been first narrowed through the parties' good faith bargaining efforts. Id. at 11. Thus, according to Liberty, the presumption that a court must decide any questions related to the scope of an arbitration provision applies in this case. Id. at 9-13.
But defendant cannot transform this issue into a question concerning arbitrability simply by calling it one in a legal pleading. There is no dispute that the parties have agreed to arbitrate wage reopener issues. And defendant has already admitted that the good faith negotiation requirement is merely a "precondition" to arbitrating those issues. See, e.g. , Def.'s Opp. at 15 ("[T]he good faith bargaining requirement is the essential precondition to the parties' agreement to arbitrate anything related to the reopener negotiations.") (emphasis added); id. at 7 ("[T]he Union has not satisfied the condition precedent to having an arbitrator decide the wages and benefits Liberty Maritime will pay its employees."); id. at 15 ("Here, the terms of the MOU arbitration provision require the Union to have first engaged in good faith bargaining as the condition precedent to interest arbitration ...."). Also, Liberty's own characterization of the contractual clause at issue shows that it falls well within the Supreme Court's definition of a procedural precondition.
As noted above, in BG Grp. PLC , the Supreme Court explained that a procedural condition precedent to arbitration "determines when the contractual duty to arbitrate arises, not whether there is a contractual duty to arbitrate at all." BG Grp. ,
*462Ultimately, defendant does not point to any evidence to indicate that the parties intended to have a court, and not an arbitrator, determine whether the good faith negotiation requirement has been satisfied. And there is no language in the Agreement "that might overcome the ordinary assumption," or that "demonstrates a contrary intent as to the delegation of decisional authority between judges and arbitrators." BG Grp. ,
II. Plaintiff's request for attorney's fees will be denied.
In one sentence at the end of its memorandum, the union makes a very summary request for attorneys' fees and costs because Liberty forced it to "resort *463to litigation in order to enforce the parties' clear contractual arbitration provision." Pl.'s Mem. at 15. However, MEBA does not point to any legal authority in support of its entitlement to a fee award. Therefore, the Court will deny the request.
CONCLUSION
For the foregoing reasons, the Court will grant plaintiff's motion for judgment on the pleadings and deny its request for attorneys' fees.
A separate order will issue.
One letter erroneously describes this meeting as taking place on June 18 rather than June 13. See Ex. E to Compl. [Dkt # 1-5] at 2; Def.'s Opp. at 4 n.3.
On November 30, 2017, the Court issued an order compelling MEBA to show cause why the action should not be dismissed as moot since the separate grievance had been resolved and Liberty had proposed dates for renewed negotiations. Order [Dkt. # 10]. Plaintiff responded that the case is not moot because defendant's actions prior to the abrupt end of negotiations showed a "pattern and practice of conduct" aimed at delaying negotiation proceedings. Pl.'s Reply at 2-3. Thus, the question of whether either party has engaged in good faith negotiations remains a live dispute.
Pleadings are closed for Rule 12(c) purposes when a complaint and an answer have been filed. See Fed. R. Civ. P. 7(a) ; Maniaci v. Georgetown Univ. ,
See also Landmark Am. Ins. Co. v. VO Remarketing Corp. ,
The Supreme Court has also noted that the Revised Uniform Arbitration Act of 2000 supports this position.
Indeed, the Revised Uniform Arbitration Act of 2000 (RUAA), seeking to "incorporate the holdings of the vast majority of state courts and the law that has developed under the [Federal Arbitration Act]," states that an "arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled." And the comments add that "in the absence of an agreement to the contrary, issues of substantive arbitrability ... are for the court to decide and issues of procedural arbitrability, i.e. , whether prerequisites such as time limits , notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate have been met, are for the arbitrators to decide."
Howsam ,
Liberty does not address this authority in its opposition. It points to one case involving a good faith negotiation provision, see Def.'s Opp. at 13-14, citing Local 743 Int'l Bhd. of Teamsters v. Rush Univ. Med. Ctr. , No. 15-2457,
The court first addressed the preliminary question of whether it had subject matter jurisdiction over the case under Section 301 of the Labor Management Relations Act, which grants jurisdiction over "[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce." Id. at *3 (alteration in original), quoting
Liberty argues that this Court should follow a similar approach and make its own assessment of whether the case is ripe for arbitration. But in the Rush case, the court's factual analysis flowed from its legal determination that the particular agreement in question contained an express provision excluding certain grievances from arbitration. See
Here, Liberty has not pointed to an express provision that overcomes the presumption of arbitration. Moreover, the Rush court did not explicitly evaluate whether the negotiation and impasse provision was a procedural condition precedent or a substantive provision. By contrast, a court in this district has observed that arbitration provisions requiring reaching a "deadlock" prior to arbitration raise procedural questions for an arbitrator to decide. M.R.S. Enters., Inc. v. Sheet Metal Workers' Int'l Ass'n, Local 40 ,
The parties appear to dispute whether the good faith negotiation provision even qualifies as a condition precedent to arbitration. See Pl.'s Mem. at 15 ("Contrary to Liberty's suggestion, good faith bargaining is not a precondition to proceeding to interest arbitration. Rather, it is merely [a] term of the parties' labor contract that is subject to interpretation by an arbitrator."); Def.'s Opp. at 7 ("[T]he Union has not satisfied the condition precedent to having an arbitrator decide the wages and benefits Liberty Maritime will pay its employees."); id. at 15 ("Here, the terms of the MOU arbitration provision require the Union to have first engaged in good faith bargaining as the condition precedent to interest arbitration ...."). This is also a question reserved for the arbitrator. See Dialysis Access Ctr. ,
The fact that the procedural and substantive issues involved in the parties' dispute are intertwined supplies another reason why they are best taken up together by an arbitrator. See John Wiley ,
The Court held that this question was best left for the arbitrator in order to avoid duplicative efforts by courts and arbitrators.
Liberty attempts to distinguish this case from the John Wiley decision on the grounds that the policy considerations underlying the case are not implicated here. It argues that the parties did not agree to arbitrate the issue of whether the parties have complied with the good faith negotiation requirement, and that there is no need for an arbitrator to deal with this question because "there is no overlap between the predicate good faith bargaining obligation and the ultimate merits of the parties' dispute." Def.'s Opp. at 8-9, 11-12, 15-16. However, a decision concerning whether the parties did indeed bargain in good faith may rest in part on evaluating the substance of the parties' various proposals to one another, and this analysis bears on the merits of the dispute over the appropriate wage and economic benefits to be negotiated under the collective bargaining agreement. Thus, the reasoning underlying the John Wiley decision is equally applicable here.
The Agreement does not appear to contain a provision for the award of attorneys' fees, and the Labor Management Relations Act does not expressly authorize the award of attorneys' fees. See Nat'l Ass'n of Letter Carriers, AFL-CIO v. U.S. Postal Serv. ,
Reference
- Full Case Name
- DISTRICT NO. 1, PACIFIC COAST DISTRICT, MARINE ENGINEERS' BENEFICIAL ASSOCIATION AFL-CIO v. LIBERTY MARITIME CORPORATION
- Cited By
- 4 cases
- Status
- Published