United States District Court, Southern District of Illinois
March 26, 1987
ROADMASTER CORPORATION, PLAINTIFF,
PRODUCTION &MDASH; MAINTENANCE EMPLOYEES' LOCAL 504, LABORERS' INTERNATIONAL UNION OF NORTH AMERICA, AFL-CIO, DEFENDANT.
The opinion of the court was delivered by: Foreman, Chief Judge:
MEMORANDUM AND ORDER
Plaintiff, Roadmaster Corporation (Roadmaster), has brought
this suit seeking vacation of an arbitration award rendered
against it and in favor of defendant, Production & Maintenance
Employees Local 504 (Local 504). Local 504 has counterclaimed
asking this Court to find the award enforceable, however the
union does not seek enforcement of the entire award at this time.
Both sides have moved for summary judgment on their claims and
this Court heard argument addressing the motions on March 20,
1987. The factual and procedural background surrounding the
ongoing dispute between union and company is somewhat
complicated. Though the issue before the Court is whether or not
the arbitrator exceeded his authority, the Court finds it
provident to outline the factual and procedural background
Roadmaster is a privately held Delaware corporation licensed to
do business in Illinois. Its principal place of business is a
bicycle manufacturing plant located in Olney, Illinois. In
November, 1982, Roadmaster entered into a collective bargaining
agreement with United Employees Union Number One covering the
terms and conditions of employment of Roadmaster plant employees.
The agreement was to be effective from December 1, 1982 to
February 28, 1986.
In the summer of 1985 the bargaining unit employees struck over
wage concessions being sought in a company initiated wage
re-opener. During the strike, the company hired between 500 and
600 permanent replacements. Also, during the strike, members of
United Employees Union Number One voted to merge with Local 771
of the Laborers' International Union of North America. The
officers of both unions sent notification to the company on
August 6, 1987 stating that the two unions accepted Roadmaster's
last offer and that employees would return to work the next day.
The company took the position that the employees were not
entitled to return immediately as permanent replacements had been
The merger between Union Number One and Local 771 had not been
finalized at the time the employees voted to return to work.
Thereupon, another meeting was held to decide whether the
employees should affiliate directly with the Laborers Union by
establishing a separate local union. As union officials did not
have a list of replacement employees, they requested Roadmaster
to post notice of the meeting at the plant and to provide a list
of the names of all bargaining unit employees. The company
refused both requests. The meeting was held after notice was
published in the local media and the employees voted in favor of
affiliating. Local 504 was thereafter chartered.
From August, 1985 until March 6, 1986, Roadmaster expressed
reservations and concerns as to which union was actually entitled
to recognition. Grievances were filed by Local 504 over actions
taken by the company allegedly out of concern over which labor
organization was entitled to recognition. On December 16, 1985,
Roadmaster sent identical letters to officials of Local 504,
Local 771 and United Employees Union Number One. The letters were
the same except for the name of the union. The letter to Local
Pursuant to Article 34 of the current collective
bargaining agreement between United Employees Union
Local No. 1 and Roadmaster Corporation, and pursuant
to Section 8(d) of the National Labor Relations Act,
this letter constitutes notice of the intent of
Roadmaster Corporation to terminate the collective
bargaining agreement between Roadmaster corporation
and United Employees Union Local No. 1 at 12 o'clock
midnight, February 28, 1986.
This letter and notice is not to be construed as
recognition of Production and Maintenance Employees
Local 504 as the collective bargaining representative
of the Production and Maintenance Employees at
Roadmaster Corporation. Further, this notice does not
constitute a waiver and is without prejudice of any
rights the employer has or may have to assert that
Production and Maintenance Employees Local 504 is not
the collective bargaining representative of
Roadmaster Corporation's Production and Maintenance
Employees under the National Labor Relations Act.
This notice is given solely for purposes of
terminating the collective bargaining agreement set
to expire at 12 o'clock midnight, February 28, 1986.
Between the time the letters were sent and the date the
contract was to expire grievances were filed and suits to compel
arbitration were started. The company did not offer to negotiate
with Local 504 over possible terms of a new contract. This Court
ordered the parties to arbitration on two grievances and after
the contract date had expired more grievances were filed. Orders
to compel were made and various awards rendered. After the dust
settled, the four grievances left at the time were submitted to
arbitrator Robert G. Howlett for resolution. It is arbitrator
Howlett's award, or at least a portion of it, which is the
subject matter of the instant suit.
Arbitrator Howlett decided in favor of Roadmaster on two
grievances dealing with employee recall and job bidding
respectively. His award as to those grievances is not questioned.
A grievance dealing with union security provisions, specifically
dues checkoffs which the company refused to make or tender, was
decided in favor of the union. The company does not contest the
finding of liability in the award, however the exact amount owing
is dependent on another part of the award which is challenged.
Roadmaster challenges the arbitrator's award in favor of the
union on the grievance concerning the termination of rollover of
It is the union's contention that the collective bargaining
agreement between the parties rolled over and became effective
for another year after midnight on February 28, 1986. Local 504
argues that Article 34 of the contract was not complied with by
Roadmaster, as they failed to offer to negotiate after giving
notice of termination. Roadmaster argues that notice was all that
was required of the company in order to terminate the contract
under Article 34. Article 34 reads:
A. This Agreement made and entered into and
executed at Olney, Illinois, shall remain in full
force and effect as of December 1, 1982, and
terminating at 12 o'clock midnight February 28, 1986.
This agreement shall continue in full force from year
to year thereafter, unless either party desiring to
amend or terminate this Agreement shall serve upon
the other party written notice, by certified mail, at
least sixty (60) days prior to the date it desires to
amend or terminate the Agreement.
In deciding in favor of the union, Arbitrator Howlett dedicated
eighteen pages of his written decision to the termination or
rollover grievance. In reading these eighteen pages it becomes
clear that Howlett was bent on expanding or redefining the roll
of an arbitrator. In doing so he stepped out of his roll as
interpreter of the contract and into the realm of law making. For
that reason, this Court cannot find that portion of his award
enforceable and is obliged to vacate it.
Arbitrator Howlett found that Roadmaster had violated Section
8(d) of the National Labor Relations Act (29 U.S.C. § 158(d)) by
refusing to offer to bargain with the union
prior to the termination of the contract.*fn1 Roadmaster claims
that by invoking the statute the arbitrator improperly trumped
the contract with the positive law. Both the union and arbitrator
Howlett maintain that a collective bargaining agreement
automatically includes all applicable law and thus when an
arbitrator makes an award based on applicable law he is actually
deciding the case within the framework of the agreement.
This Court cannot side with the position taken by the
arbitrator and the union. Collective bargaining agreements often
contain a provision incorporating applicable law or empowering an
arbitrator to do so in interpreting the contract. That is not the
case in the agreement between Roadmaster and the union. If one
adopts the arbitrator and union's position, not only would
incorporation provisions in a contract be rendered meaningless,
but the process of contract negotiation and interpretation would
be unreasonably burdened with constant reflection as to meaning
in light of the ever changing statutory and common law.
It is true that an arbitrator may find an implied condition or
fill in gaps in the contract using applicable law. Ethyl Corp. v.
United Steelworkers of America, 768 F.2d 180 (7th Cir. 1985).
However, an arbitrator may not ignore the plain language of the
contract and invoke statutory law. McDonald v. City of West
Branch, Michigan, 466 U.S. 284, 104 S.Ct. 1799, 80 L.Ed.2d 302
(1984); Barrentine v. Arkansas-Best Freight Systems, Inc.,
450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981); Alexander v.
Gardner-Denver Company, 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d
147 (1974). In fact, in Barrentine the Supreme Court stated that
an arbitrator was required to effectuate the intent of the
parties rather than enforce the Fair Labor Standards Act. Hence
he must choose to deny a statutory right if it is inimical to the
contract, for his duty and expertise do not include independent
statutory interpretation. Barrentine, 450 U.S. at 744, 101 S.Ct.
at 1446. This Court finds arbitrator Howlett's reliance on a
violation of the National Labor Relations Act no different from
the proscribed enforcement of the FLSA in lieu of contract
provisions to the contrary.
If arbitrator Howlett's decision could be read as ambiguous,
then this Court would be persuaded to grant the high deference
appropriate in review and uphold the award. If the arbitration
decision could be read as interpreting "termination," as the
union argues, then this Court would have to find it enforceable.
United Steelworkers of America v. Enterprise Wheel & Car Corp.,
363 U.S. 593, 597-98, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960).
However, the arbitrator's decision is not ambiguous. In fact,
arbitrator Howlett makes it very clear that he is relying on a
statutory breach in making his award. At page 45 of his award
Howlett states: "The award will uphold the grievance, as the
notice was void because of Roadmaster's breach of the statute.
For this reason, the contract is extended for the year
terminating February 28, 1987." There is nothing in the
arbitrator's decision which
would indicate that he found the intent of the parties was to
include the requirements of Section 8(d) of the NLRA in Article
34 of the collective bargaining agreement.
The intent of arbitrator Howlett to rely on a statutory breach
as grounds for his award is even more clear in light of the
extent to which he attempts to support his position.*fn2 Howlett
maintains that an arbitrator's power with respect to the NLRA has
been recognized consistently by the National Labor Relations
Board. In support he cites to the NLRB cases of Spielberg
Manufacturing Co., 112 NLRB 1080, 36 LRRM 1152 (1952) and Collyer
Insulated Wire Co., 192 NLRB 837, 77 LRRM 1931 (1971). Calling
this case a Collyer type case, where the NLRB defers to an
ongoing arbitration involving mixed questions of contract and
law, he then cites to a previous arbitration award, Sam Garvin
Co., 58 LA 1 (1971), where he decided the case under the NLRA and
did not reach the contractual issue. For good measure Howlett
cites as well to a position paper he presented before the
National Academy of Arbitrators as well as a paper taking a
contrary viewpoint. (See Howlett, The Arbitrator, The NLRB and
The Courts, Proceedings of the 20th Annual Meeting of the
National Academy of Arbitrators, p. 67. But see, Meltzer,
Ruminations about Ideology, Law and Labor Arbitrator, Proceedings
of the 20th Annual Meeting of the National Academy of
Arbitrators, p. 1.)
It is apparent that arbitrator Howlett felt that he was
empowered with the ability to reach his decision by utilizing the
requirements of the NLRA. However, Howlett was wrong. Why this
situation differs from the Collyer NLRB decision and his own
award in the Garvin arbitration is readily apparent. In those
cases there was a complaint or petition put before the NLRB at
the same time the issues were before an arbitrator. This is
important because though the NLRB deferred, it retained the power
to review any interpretation of the NLRA made by the arbitrator.
Howlett points out that very fact in his Garvin award. Garvin at
2. In this case, the union never went to the NLRB complaining of
a Section 8(d) violation. Therefore, Howlett's determining a
violation of the NLRA and his remedy for the violation stands
unchecked. As the Supreme Court has stated, the arbitral process
is not equipped to adequately determine federal statutory rights.
McDonald v. City of West Branch, Michigan, 466 U.S. 284, 289-91,
104 S.Ct. 1799, 1802-03, 80 L.Ed.2d 302 (1984). An arbitrator's
invocation of the NLRA cannot stand unchecked by the NLRB or the
It may seem unfair or inefficient to vacate an arbitration
award which, though lacking authority to invoke, does properly
point to a violation of the NLRA. But the remedy fashioned by
arbitrator Howlett for violation of Section 8(d) is somewhat
extreme and not necessarily what the NLRB or a federal court
would have affixed as proper for an 8(d) violation. Howlett has
awarded a one year rollover of the contract. There is every
indication that if the union sought to enforce such an award the
company would be forced to liquidate.*fn3 It is unlikely that
the NLRB would fashion such a possibly harsh remedy for a
violation which was not without arguable reason.*fn4 Therefore,
that portion of the arbitration award must be vacated.
Roadmaster gave notice of its intent to terminate the contract
as required by Article 34. Local 504 filed a grievance because it
felt that Article 34 was still violated in some manner. The
arbitrator did not agree
with the union, rather he found that Roadmaster had violated the
NLRA. He then fashioned a remedy for the statutory breach as if
the company had breached the contract.
In the latest Seventh Circuit case, Judge Posner reiterated the
key question in these matters.
As we have said too many times to want to repeat
again, the question for decision by a federal court
asked to set aside an arbitration award . . . is not
whether the arbitrator or arbitrators erred in
interpreting the contract; it is not whether they
clearly erred in interpreting the contract; it is not
whether they grossly erred in interpreting the
contract; it is whether they interpreted the
Hill v. Norfolk and Western Railway Co., 814 F.2d 1192, 1194-95
(7th Cir. 1987). In this instance, the arbitrator did not
interpret the contract. The arbitrator invoked federal
legislation instead. When an arbitrator bases his award on his
view of legislative requirements, he has exceeded the scope of
submission. United Steelworkers of America v. Enterprise Wheel &
Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424
Accordingly, plaintiff's Motion for Summary Judgment (Document
No. 16) is GRANTED. That portion of the arbitration award in
American Arbitration Association case No. 51 300 0257 86R finding
in favor of Local 504 on the Termination of the Contract or
Rollover Grievance is hereby ORDERED VACATED. The parties are
ORDERED back before Arbitrator Robert G. Howlett for his
determination of the amounts owing to Local 504 by Roadmaster on
the remaining portions of his award. That amount is to be
determined in light of this Court's ruling and the monies already
ordered paid by Roadmaster to Local 504 by District Judge William
IT IS SO ORDERED.