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International Union of Operating Engineers v. Carl A. Morse Inc.

decided: February 10, 1976.

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL UNION NO. 139, PLAINTIFF-APPELLEE,
v.
CARL A. MORSE, INC., DEFENDANT-APPELLANT



Appeal from the United States District Court for the Eastern District of Wisconsin. No. 74-C-235 ROBERT W. WARREN, Judge.

Stevens, Circuit Justice,*fn* Tone, Circuit Judge, and Julius J. Hoffman, Senior District Judge.*fn**

Author: Hoffman

HOFFMAN, Senior District Judge.

The question presented for decision is whether a court, before ordering arbitration, must first pass upon the employer's claim that it is not bound by the particular substantive provision of the collective bargaining agreement on which the grievance is based, or whether the binding effect of the provision under attack must be left to the arbitrator, when the underlying contract calls for arbitration of "all grievances, disputes or complaints of violations of any provisions" of the agreement, and gives the arbitrator "sole and exclusive jurisdiction to determine the arbitrability of such a dispute as well as the merits thereof."

The employer, Carl A. Morse, Inc., of Illinois, has appealed from an order entered by the District Court directing the parties to arbitrate. The foundation facts are not in dispute. The union (Local No. 139 of the International Union of Operating Engineers) represents operators of machinery and equipment in the building and heavy construction industry in the State of Wisconsin. On behalf of those employees, the union negotiated a master contract with the Wisconsin Chapter of the Associated General Contractors of America, Inc., applicable by its terms "to all counties in the State of Wisconsin" with the exception of six specified counties in the Milwaukee area. Under this form contract, a contractor agrees that he will sublet or contract out work covered by the agreement only to a subcontractor who is a party to a written labor agreement with this union.

The employer here was engaged as a general contractor in construction at two sites in Wisconsin in March of 1974, with one project at Madison and the other at Wausau. The company authorized its project superintendent at the Madison jobsite to enter into an agreement with the union, and he signed the form contract for the employer on March 25, 1974, "effective as of June 1, 1973." The next day, the union filed a grievance based on the fact that certain work at the Wausau site had been subcontracted to a masonry subcontractor whose employees were members of a different union (the Laborer's Union, rather than the Operating Engineers), and were operating forklift trucks there, work covered by the March 25 agreement. The employer refused to adjust the grievance or to submit to arbitration, and the union thereupon filed a complaint with the Wisconsin Employment Relations Commission, charging failure to arbitrate. The employer removed the proceeding to the United States District Court for the Eastern District of Wisconsin,*fn1 and the union there filed a petition to compel arbitration under the United States Arbitration Act, 9 U.S.C. ยง 1 et seq.

The employer thereupon filed its answer to the original complaint, alleging that "The contract was executed by the Madison project superintendent under the belief that it did not apply to subcontracts already entered into . . . and [was], therefore, not applicable to subcontracts already let on the Wausau project . . . several days or weeks prior to March 25, 1974." The answer also alleged that the union representative who negotiated the contract knew of the prior subcontracts in Wausau, and that the employer had responded to the union's grievance "by stating that the Wausau job was not covered by the Madison contract." In an oral hearing on the status of the case, after its transfer to a new judge, these positions were amplified by assertions that the clauses of the agreement concerning its geographic scope, its retroactivity, and its limitations on subcontracting should be altered by a decree of reformation for mistake, or invalidated for fraud in the inducement, and that the Madison project superintendent had no authority to make an agreement covering the Wausau project.

In a detailed memorandum of opinion, confirmed by a second written opinion on motion to vacate, the District Court ruled that the defenses asserted by the employer should be adjudicated by the arbitrator pursuant to the provisions of the collective bargaining agreement, and entered the order, directing arbitration, which is the subject of this appeal.

We affirm.

Settled principle, enunciated in the Steelworkers trilogy,*fn2 leaves a court with a narrow office in a suit seeking to compel arbitration. Two questions are dispositive here. Is there a valid agreement to arbitrate? Does the agreement cover the asserted dispute?

I.

The first requisite to arbitrability is self-evident. The need for a valid agreement, binding the party to submit his right to arbitration, was restated in Gateway Coal Co. v. United Mine Workers, 414 U.S. 368, 374, 38 L. Ed. 2d 583, 94 S. Ct. 629 (1974):

No obligation to arbitrate a labor dispute arises solely by operation of law. The law compels a party to submit his grievance to arbitration only if he has contracted to do so.

Here the employer has raised no question of the validity of the agreement to arbitrate. The objections of mistake, fraud, and want of authority are directed not to the arbitration clause of the collective bargaining agreement, but rather to those clauses concerning coverage, temporal and geographic, which would apply its provisions retroactively, to subcontracts already let, and spatially, to the Wausau project as well as the Madison job. The employer's position does not deny any contractual duty to arbitrate at all, no matter what the subject of the asserted grievance. Its attack is confined to the validity of the specific, substantive provisions of the contract which are claimed to outlaw its pre- existing ...


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