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Beck v. Reliance Steel Products Company. United Steelworkers of America

argued: October 6, 1988.


On Appeal from the United States District Court for the Western District of Pennsylvania, D.C. Civ. No. 85-2214.

Higginbotham, Mansmann and Greenberg, Circuit Judges.

Author: Greenberg


GREENBERG, Circuit Judge.

This matter is before the court on appeal from an order for summary judgment entered in the district court on April 28, 1988, in this action brought by appellant United Steelworkers of America, Local Union No. 1142, to compel appellee Reliance Steel Products Company to arbitrate a grievance. The district court had jurisdiction under 29 U.S.C. § 185(a). The order for summary judgment was a final order denying arbitration and thus we have jurisdiction under 28 U.S.C. § 1291.

The germane facts are as follows. Reliance owned and operated a manufacturing plant in McKeesport, Pennsylvania, at which the production and maintenance workers were represented by Local 1142. Between 1977 and 1979, Reliance laid off between 75 and 90 employees represented by Local 1142, causing Local 1142 to file a grievance seeking severance pay in accordance with a 1978 collective bargaining agreement. On November 3 1980, the grievance was settled when Local 1142 and Reliance extended the agreement for three years in a short handwritten agreement which provided, among other things, that:

All pending grievances . . . shall be dropped by the union. Provided, the union retains the right to claim & grieve severance pay for employees laid off after the date of this agreement.

On November 8, 1980, the local and Reliance entered into a new formal collective bargaining agreement for the new three-year period. In 1981 three additional employees were laid off and in 1983 the plant was closed and the remaining employees were terminated.

Thereafter, Local 1142 sought to arbitrate a claim for severance pay for the employees working at the time of the closing, but then terminated, as well as those then on layoff.*fn1 Two arbitrators were selected, one to hear claims for employees laid off prior to November 1980 and one to consider claims for employees terminated in 1983. These designations seem to have been incomplete as no provision was made for an arbitrator to consider claims for the employees laid off in 1981. Local 1142 subsequently canceled the arbitration hearing for claims for the employees laid off before November 1980. It asserted however, that the arbitrator for the claims for the 1983 terminations could consider claims for employees laid off before November 1980 and during 1981, as it contended that the plant closing terminated the employment of the employees laid off earlier. thus entitling them to severance pay. The arbitrator, however ruled that he was authorized by the parties to consider only claims for persons still employed in 1983. Substantively he agreed with Local 1142's contentions regarding the 1983 terminations and he thus awarded severance pay with interest to a total of 18 employees terminated in 1983, ten who were working until the closing and eight laid off earlier in the year. When Reliance rejected Local 1142's subsequent renewed demand that it arbitrate the claims for the employees laid off before 1983, Local 1142 brought this action to compel it to submit the claims to arbitration.*fn2

Reliance and the Local 1142 filed cross-motions for summary judgment.*fn3 The matter was referred to a magistrate who in his report and recommendation indicated that while the courts favor arbitration, inasmuch as Local 1142 had "dropped" the grievances pending on November 3, 1980, there was "no basis for compelling arbitration." Thus, he recommended that a summary judgment should be granted to Reliance. The magistrate made no reference to the claims on behalf of employees laid off during 1981. Local 1142 filed objections to the report and recommendation, contending that an arbitrator should determine the effect of the November 3, 1980 agreement, as the November 8, 1980 collective bargaining agreement contains a broad arbitration clause. The district judge, however, on April 28, 1988, entered an order adopting the magistrate's report and recommendation and this appeal ensued.*fn4

The contentions of the parties on this appeal are not complicated. Local 1142 contends that the broad grievance provisions of the November 8, 1980 collective bargaining agreement, culminating in binding arbitration, which provide for resolution of disputes involving an interpretation or application of, or compliance with, the provisions of the agreement relating to wages or other conditions of employment, govern the claims which it advances. Local 1142 further argues that arbitration is favored, the function of the court is limited to determining whether the contract provides for arbitration of the dispute. and any defense based on the November 3, 1980 settlement agreement relates to procedural arbitrability which can only be considered by the arbitrator. Local 1142 also points out that Reliance now sets forth no defense to arbitration of claims of employees laid off in 1981.*fn5

Reliance, though not denying that the November 8, 1980 collective bargaining agreement contains a broad grievance procedure culminating in arbitration, contends that the district court properly determined the arbitrability of claims from the pre-contract layoffs, i.e., those before November 8, 1980, and correctly concluded that the November 3, 1980 settlement agreement removed these claims from arbitration. Reliance seems to advance no basis on this appeal to avoid arbitration of claims for employees laid off in 1981, though it asserted in the district court that those claims were barred as Local 1142 waived them by canceling the arbitration hearing. It additionally asserted in the district court that the arbitration award for the 1983 claims had the preclusive effect of barring claims for employees laid off earlier but does not now make that contention.

The law governing this dispute is quite familiar and was recently restated by the Supreme Court in AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986), a case in which the Court considered whether a court asked to order arbitration of a grievance filed under a collective bargaining agreement must first determine that the parties intended to arbitrate the dispute or may leave that determination to the arbitrator. 475 U.S. at , 106 S. Ct. at 1416. The Court, citing the famous Steelworkers Trilogy,*fn6 reiterated the following principles. First, as arbitration is a matter of contract, a party cannot be required to arbitrate any dispute which it has not agreed to submit to arbitration. Second, the question of arbitrability, i.e., whether a collective-bargaining agreement creates a duty for the parties to arbitrate a particular grievance, is undeniably an issue for judicial determination unless the parties clearly and unmistakably provide that an arbitrator will decide the issue. Third, a court in deciding whether the parties have agreed to submit a particular grievance to arbitration is not to rule on the potential merits of the underlying claims even if a party's position appears frivolous. Fourth, when a contract contains an arbitration clause, there is a presumption of arbitrability of a grievance so that an order to arbitrate a grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. 475 U.S. at , 106 S. Ct. at 141819. See also Morristown Daily Record, Inc. v. Graphic Communications Union, 832 F.2d 31, 33 (3d Cir. 1987).

In considering the merits of this appeal, we preliminarily observe that it is difficult to understand how the settlement agreement could bar claims for the few employees laid off after November 3, 1980, but before 1983, as the agreement preserved Local 1142's right to "claim & grieve severance pay" for employees laid off after November 3, 1980.*fn7 There is, however, a more far-reaching flaw in Reliance's argument. The November 3, 1980 settlement agreement, though providing that pending grievances would be dropped, did not exclude claims on behalf of employees laid off before its execution from arbitration. It is one thing to say that a claim for an employee is "dropped" and something else to say that an arbitrator may not entertain a new claim asserted on his behalf. Thus, while it is conceivable that by reason of the November 3, 1980 agreement the arbitrator may conclude that claims for severance pay for employees previously laid off are barred, even though Local 1142 ties ...

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