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Dreis & Krump Manufacturing Co. v. International Association of Machinists and Aerospace Workers

decided: September 22, 1986.


Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 85 C 1250--James F. Holderman, Judge.

Cummings, Chief Judge, Posner, Circuit Judge, and Gordon, Senior District Judge.*fn*

Author: Posner

POSNER, Circuit Judge.

Dreis & Krump, a manufacturer of industrial equipment, appeals from a judgment dismissing on summary judgment its suit (brought under section 301 of the Taft-Hartley Act, 29 U.S.C. ยง 185) to set aside an arbitrator's award to the machinists union. The union cross-appeals from the court's refusal to award it attorney's fees under Fed. R. Civ. P. 11, and also requests attorney's fees for defending the appeal.

The company and the union were the parties to a collective bargaining agreement, dated October 1, 1981, which contained a provision for arbitration of disputes arising under the agreement. The company had financial problems and in 1982 laid off a welder named Larry Crawford. A few months later the company decided as a cost-saving measure that rather than recall Crawford it would subcontract the welding work that he had been doing. In March 1983 the union filed a grievance on Crawford's behalf. The grievance was referred to an arbitrator, who on April 30, 1984, found that the subcontracting of Crawford's work was a breach of the collective bargaining agreement. The arbitrator ordered the company to stop subcontracting welding as long as its welders were laid off, to recall Crawford, and to make him whole for the wages and benefits that he had lost as a result of the breach, "the amount thereof to be determined by the parties after a joint review of Company records." The order provided that "the Arbitrator will retain jurisdiction for 90 days to resolve any remaining or unforeseen issues as to relief." The company did not comply with the arbitrator's order. Instead, on June 11, 1984, it asked the arbitrator to reconsider the order; this request was denied on September 5. After the union refused to accept the company's tender of seven weeks' backpay to Crawford, the company filed this suit on February 8, 1985.

The timetable suggests something profoundly wrong about this litigation. Labor arbitration is supposed to be a speedy and efficacious remedy for disputes arising out of the administration of collective bargaining agreements. Yet almost three and a half years have passed since the union filed its grievance on behalf of Crawford, and the grievance is still unresolved. It should have been resolved more than two years ago, when the arbitrator issued his decision. The company had no ground for challenging the decision in court; also, it filed this suit after the statute of limitations had run.

The statute of limitations that applies to a suit brought in Illinois under section 301 of the Taft-Hartley Act to set aside an arbitrator's award is 90 days. Plumbers' Pension Fund, Local 130 v. Domas Mechanical Contractors, Inc., 778 F.2d 1266 (7th Cir. 1985). The present suit was filed nine months after the arbitrator made his award. The company argues that the statute did not begin to run till the ninety-first day after the award, because the arbitrator expressly reserved jurisdiction till then, and in any event was tolled while the company's request for reconsideration was under advisement. Even if these arguments are correct, they do not bring the suit within the 90-day limit. The company's request for reconsideration was turned down on September 5, 1984, yet it did not file this suit till February 8, five months later. The only way the suit could be timely would be if the company's further argument, that when the arbitrator denied the request for reconsideration he implicitly reserved jurisdiction for another 90 days, were accepted; but it is an absurd argument.

There is more wrong with the company's position on timeliness than arithmetic. A reservation of jurisdiction -- which is implicit in any order that grants equitable relief (as this one did, in ordering Dreis & Krump to recall Crawford and stop subcontracting), but not in an order that merely refuses to reconsider a previous order -- would not extend the time for appeal. See University Life Ins. Co. v. Unimarc Ltd., 699 F.2d 846, 849-50 (7th Cir. 1983); 9 Moore's Federal Practice para. 110.08[1] at p. 118 (1985). And while a suit to set aside an arbitrator's award is not an appeal, it is like an appeal; that is one reason for the very short statute of limitations for bringing such suits. Therefore the arbitrator's reservation of jurisdiction for 90 days -- not to mention any supposed implicit reservation for another 90 days after the arbitrator denied the request to reconsider his award -- did not suspend the statute of limitations for filing suit to set aside the award.

It is not even clear that the company's request for reconsideration suspended the statute of limitations. Continuing with the analogy to an appeal, we point out that Rule 4(a)(4) of the Federal Rules of Appellate Procedure delays the time for appealing if the appellant files a motion to reconsider (see Fed. R. Civ. P. 59(e)) within 10 days after judgment was rendered. There is no counterpart provision for arbitral proceedings. Although section 9 of the Uniform Arbitration Act, Ill. Rev. Stat. ch. 10, para. 109, allows 20 days to file a request with the arbitrator to change an award, the grounds are limited to clerical and other formal errors in the award. Compare para. 109 with para. 113(a)(1) and (3). And the idea that an arbitrator might have an inherent power to modify his award is made problematic by the ad hoc status of most arbitrators, compared to courts and administrative agencies. See Elkouri & Elkouri, How Arbitration Works 283-85 (4th ed. 1985). The arbitrator renders his award, then quits. What power can he retain to reconsider his award after quitting? If a judge resigns his office, he can't be asked to reconsider his rulings. A further point is that if the parties to arbitration can badger the arbitrator to reconsider his award for some indefinite time after he has made it, the speed and finality of arbitration are impaired.

Yet where as in the present case the arbitrator does not quit immediately but retains jurisdiction to make sure his award is complied with, maybe this empowers him to consider requests for reconsideration filed before he does quit. If so, a request filed within that period would be timely. By this reasoning the company's request in this case, which was filed 42 days after the award was rendered, was timely. But the premise that the arbitrator could by retaining jurisdiction act on requests for reconsideration is not secure, especially where as in the present case the arbitrator retained jurisdiction for the limited purpose of supervising relief -- not of entertaining requests to reconsider his determination of liability. And even if he could act on such a request, it would not follow that the statute of limitations was tolled while the request was under advisement. Requests for reconsideration under Fed. R. Civ. P. 60(b) do not toll the period for appeal; why should a request for reconsideration of an arbitrator's award toll the period for seeking judicial review of the award? But cf. Arch Mineral Corp. v. Director, Office of Workers' Compensation Programs, 798 F.2d 215, slip op. at 2-8 (7th Cir. 1986). And even putting all these doubts to one side, the suit was still untimely; it wasn't filed till five months after the request for reconsideration was denied.

The only thing that could save the timeliness of the suit would be if the arbitrator's reservation of jurisdiction had somehow deprived the award of its finality. Again by analogy to appeals, the party who has lost the arbitration should not be required, and perhaps not permitted either, to bring suit to set aside the award until the award is in some sense final, definitive; until it becomes such, the "loser" really hasn't been hurt and his quarrel with the arbitrator is undefined. There are two reasons, however, why this argument must be rejected in the setting of the present case. First, all that was in doubt was the precise amount of backpay, for which the company's records had to be consulted but which once they were consulted would be determined automatically, without an exercise of judgment or discretion. This was, therefore, a "ministerial" detail, such as would not have prevented the judgment from being deemed final for purposes of appeal, Love v. Pullman Co., 569 F.2d 1074, 1076 (10th Cir. 1978); see Parks v. Pavkovic, 753 F.2d 1397, 1401-02 (7th Cir. 1985); no more did it prevent the award from becoming final for purposes of starting the statute of limitations running. Second, and more interesting, the analogy between a suit to set aside an arbitration award and an appeal from a regular judgment is just an analogy, and not an identity, and it breaks down on the issue of finality. A suit to set aside an arbitration award under section 301 of the Taft-Hartley Act is a suit for breach of contract, the contract being the arbitration clause of the collective bargaining agreement; and the suit is ripe as soon as the breach is definitive. Quite apart from the details of backpay, the rendition of an award which if the company is correct ordered it to do things (namely stop subcontracting and reinstate Crawford) that were in excess of the arbitrator's authority to order was a breach of contract that set the statute of limitations running.

The company argues that we should not apply the Domas decision (holding that 90 days is the statute of limitations in suits in Illinois under section 301 to set aside an arbitrator's award) retroactively. But as the decision was clearly foreshadowed by our decision in Chauffeurs, Teamsters, Warehousemen & Helpers, Local Union No. 135 v. Jefferson Trucking Co., 628 F.2d 1023, 1026-27 (7th Cir. 1980), we reject the argument. True, in Jefferson we were borrowing from an Indiana statute which, unlike the Illinois statute involved in Domas and this case (see Ill. Rev. Stat. ch. 10, paras. 112(b), (e)), did not except labor arbitrators' awards from the 90-day period for suits to set aside arbitrators' awards. But Dreis & Krump could not reasonably have believed that such an exception would control in a suit under section 301. The process of borrowing a state statute of limitations for use in a federal suit for which federal law has provided no statute of limitations involves finding the closest counterpart in state law to the federal cause of action, and the closest counterpart in Illinois law to a suit to set aside a labor arbitrator's award is a suit to set aside another kind of arbitrator's award. The fact that Illinois may have decided not to apply portions of its arbitration statute to labor arbitration may signify nothing more than that suits to enforce labor arbitration under Illinois law are unimportant because of the preemptive effect of section 301.

A 90-day deadline is certainly reasonable. Since as we said a suit to set aside an arbitration award is analogous to an appeal, the appropriate statute of limitations is one closer to the time for taking an appeal (30 or 60 days in the federal system, see Fed. R. App. P. 4(a)) than to the time for filing an ordinary lawsuit. To file an ordinary suit one must investigate facts; to file a suit to set aside an arbitrator's award all one must do is read the arbitrator's opinion and decide whether there is a legal ground for challenging it. Moreover, all the company argues is that it thought it had six months to file such a suit, and since it took nine months, the argument has rather a hollow ring.

Ordinarily we would stop, having found one ground on which the company must lose this appeal. But since we must decide the cross-appeal, which seeks attorney's fees for the bringing of a frivolous suit, we shall go on and consider the two other grounds on which the company must lose. The first is that by consenting to submit the grievance to arbitration without any reservations, the company waived the argument that is the premise of its suit -- that the arbitrator acted outside of his jurisdiction. The company's argument on the merits is that the management-rights clause in the collective bargaining agreement is so broad that it makes a decision to subcontract work non-arbitrable. But if this is so the company should either have refused to arbitrate the dispute, thus forcing the union to bring a suit to compel arbitration -- a suit in which the district court would decide the issue of arbitrability -- or have submitted to arbitration under protest. By failing to do either of these things it admitted that the subject of subcontracting was ...

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