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Chicago Area Vending Employers Association v. Custom Coffee Service

April 5, 1984

CHICAGO AREA VENDING EMPLOYERS ASSOCIATION, PLAINTIFF-APPELLANT AND CROSS-APPELLEE,
v.
CUSTOM COFFEE SERVICE, DEFENDANT-APPELLEE AND CROSS-APPELLANT, AND LOCAL UNION NO. 761, A/W INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. William T. Hart, Judge.

Author: Kelleher

Before CUMMINGS, Chief Judge, CUDAHY, Circuit Judge, and KELLEHER, Senior District Judge.*fn*

KELLEHER, Senior District Judge. This is an appeal from an order of the District Court for the Northern District of Illinois, dismissing the complaint of Chicago Area Vending Employers Association ("Association") against defendants Custom Coffee Service ("CCS") and Local Union 761, International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America ("Union"). There is also a cross-appeal by CCS from the ruling of the District Court that it had jurisdiction over CCS by reason of Section 301 of the Labor Relations Management Act of 1947, as amended, 29 U.S.C. § 185 ("Section 301").

The Association is a multi-employer bargaining unit that was created in 1978 and is maintained to represent nine employers engaged in the vending machine business in their negotiations with the Union. CCS is one of the employers which the Association represents in the Union negotiations. Pursuant to the collective bargaining agreement in force between the parties, the employees of CCS were to receive a salary increase on October 1, 1982. In July, 1982, CCS began bargaining directly with the Union and the Union and CCS agreed that the October 1 salary increase would be postponed. After this agreement was reached, CCS informed the Association of the side agreement between the Union and CCS by letter. As a result of this separate agreement, CCS has not been paying its employees the same wage rates that the other employer members of the Association have been.

On January 31, 1983, the Association filed suit in federal district court against the Union and CCS. The complaint asserted jurisdiction pursuant to Section 301 and sought relief pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, in addition to damages. The Association alleged that CCS and the Union had breached the collective bargaining agreement negotiated between the Union, Association and CCS by entering into the separate agreement to withhold pay raises otherwise due to CCS employees. The complaint included pendent claims against CCS for breach of the association agreement whereby the Association was created and against the Union for tortious interference with contractual relations.

On February 22, 1983, CCS filed a motion to dismiss the complaint on the grounds that the District Court lacked jurisdiction to hear the matter under Section 301 and further that the Association had failed to exhaust the grievance and arbitration remedies outlined in the collective bargaining agreement. Thereafter, on March 1, 1983, the Union filed a motion to dismiss the complaint on several jurisdictional grounds including the failure of the Association to submit the dispute to arbitration as required by the collective bargaining agreement.

On May 9, 1983, the District Court entered a Memorandum of Decision and Order dismissing the complaint in its entirety with prejudice. The Court ruled that it had jurisdiction over CCS under Section 301(a) and that the Association had failed to exhaust its grievance and arbitration remedies under the collective bargaining agreement, and therefore had failed to state a claim upon which relief could be granted. The pendent claims were then dismissed due to the absence of a cognizable federal claim.

The Association filed a motion under Fed. R. Civ. Proc. 60(b) seeking relief from the order of the court dismissing the complaint. This motion was denied. The Association and CCS now appeal the order of the District Court.

A. THE APPEAL BY THE ASSOCIATION

Section 301 of the Labor Management Relations Act of 1947, as amended, 29 U.S.C. § 185, provides that suits for the violation of contracts may be brought in any District Court having jurisdiction over the parties.The authority of a federal district court to exercise its broad power under Section 301 is limited however to the extent that contractual dispute resolution mechanisms are chosen by the parties. These chosen mechanisms are to be given full consideration and should not be limited or usurped by the courts. See Hines v. Anchor Motor Freight Inc., 424 U.S. 554, 562, 96 S. Ct. 1048, 47 L. Ed. 2d 231 (1976); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 583, 588-89, 80 S. Ct. 1358, 1362, 41 L. Ed. 2d 1424 (1960). If a party sidesteps the grievance mechanism chosen by the parties by suing in federal court without having first attempted to invoke the chosen mechanism, the claim must be dismissed. Republic Steel Corp. v. Maddox, 379 U.S. 650, 651-53, 85 S. Ct. 614, 616-17, 13 L. Ed. 2d 500 (1965).

The presence of an arbitration clause however does not mean that every dispute is subject to arbitration. The dispute must be contemplated by the arbitration clause and not excluded by it. United Steelworkers v. American Manufacturing Co., 363 U.S. 582-83, 80 S. Ct. at 1353.There must be judicial deference to the chosen contractual machinery "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation which covers the asserted dispute." United Steelworkers v. Warrior & Gulf Navigation Co., Inc., 363 U.S. 574, 582, 80 S. Ct. 1347, 1353, 41 L. Ed. 2d 1409 (1960).Any "doubts should be resolved in favor of coverage." Id.

The arbitration clause in the collective bargaining agreement between the Association, CCS and the Union provides:

Article XII -- Arbitration

Should any difference arise out of the agreement between the Employer and the Union concerning other than the discharge or discipline . . . such difference shall be submitted to an impartial arbitrator . . . [T]he decision shall be final and binding upon all parties.

The parties do not dispute the applicable legal standards. The Association's only argument in this appeal is that the arbitration clause does not apply to this dispute. The Association alleges that the arbitration clause in the agreement contemplates disputes with the Union on one side and the Association or Employers on the other. According to the Association, "here in contrast the dispute is between a group of Employers allied on one side and on the other side, a single Company and the Union. This alignment of parties was wholly unanticipated when the language of Article ...


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