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FANSTEEL, INC. v. INTERNATIONAL ASSN. OF MACHINIST

March 7, 1989

FANSTEEL, INC., Plaintiff,
v.
INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, LODGE NO. 1777, Defendant. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, LODGE NO. 1777, Plaintiff, v. FANSTEEL, INC., Defendant



The opinion of the court was delivered by: SHADUR

 MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE

 Fansteel, Inc. ("Fansteel"), a manufacturer of tantalum metal products, has sued International Association of Machinists and Aerospace Workers, Lodge No. 1777 ("Union") to vacate a September 29, 1988 Arbitrator's Opinion and Award (the "Award," FMCS No. 87-25922, Fansteel Complaint Ex. 1). Union has retorted by suing Fansteel for enforcement of the Award. Both parties have now moved for summary judgment in each case under Fed. R. Civ. P. ("Rule") 56. For the reasons stated in this memorandum opinion and order, Fansteel's motion is granted in principal part and Union's is denied to the same extent.

 Facts1

 In May 1987 Fansteel and Union were parties to a collective bargaining agreement ("CBA") due to expire May 31, covering about 80 employees at Fansteel's North Chicago plant. Before May 31 the parties engaged in extensive bargaining sessions but were unable to reach agreement. Fansteel warned Union that in the event of a strike it intended to hire replacement workers and continue operations. Union rejected Fansteel's final offer and went on strike June 1.

 Fansteel began to hire replacements -- 39 of them. It assigned 31 of the new hires to Labor Grade 8, the entry-level classification.

 After intervention of a federal mediator, Fansteel and Union resumed negotiations. In part Union sought the discharge or layoff of the replacements so the strikers could return to work. Fansteel rejected that position.

 Before the final negotiation session on July 10 Fansteel prepared a draft Strike Settlement Agreement (Fansteel Complaint Ex. 2). *fn2" Several of its provisions have particular relevance here:

 
2. Jobs filled by employees hired by the Company on or after June 1, 1987 as replacements for striking employees (new hires) shall not be considered vacancies to which returning strikers shall be returned unless and until such jobs are vacated by the strike replacements. Such new hires shall not be bumped or displaced by the return of strikers. Such newly-hired employees shall become members of the Union(s) as stated in the Collective Bargaining Agreement and their respective seniorities shall be measured from their individual hire date.
 
3. A newly-hired employee shall not be "displaced" or "bumped" as a result of an employee returning to work after an illness or injury leave of absence (industrial or non-occupational). The returning employee may exercise his/her seniority affecting other employees other than those newly-hired and otherwise in conformance with the Collective Bargaining Agreements(s).
 
* * * *
 
14. The Company and the Unions agree that neither of them shall take any action against an employee because he participated in or failed to participate in the strike.
 
15. Any dispute arising in the implementation of this Agreement shall be referred to the Grievance Procedure of the new Collective Bargaining Agreement.

 Union rejected the draft as tendered. Further negotiations resulted in a number of handwritten changes that found their way into the final Settlement Agreement (the "Agreement"): *fn3"

 
1. Draft Items 2 and 3 remained physically in the Agreement, but the parties added this marginal note:
 
Items 2 and 3 represent the position of the Company and are not agreed to by the Union or waived by the Company.
 
2. This unnumbered new paragraph was inserted immediately after Item 3:
 
The rights as stated in items 2 and 3, if any, of the persons put to work after the start of the strike will be determined by mutual agreement of the parties, or the NLRB or an agency or a court of competent jurisdiction subject to all rights of appeal and all applicable rules and regulations of the NLRB or such agencies or courts.
 
3. Draft Item 13 was deleted entirely.
 
4. This sentence was added to draft Item 14:
 
Any action by the Union or any employee taken before the NLRB or court concerning the persons put to work after the start of the strike is not prohibited by this item 14.
 
5. In Item 15 the word "shall" was changed to "may" and a key addition (indicated by emphasis in the following quotation) was made, so that the final version read this way:
 
Any dispute arising in the implementation of this Agreement may be referred to the Grievance Procedure of the new Collective Bargaining Agreement or to other appropriate Governmental Agency.

 Union ended the strike July 11, and the parties entered into two contracts: the new CBA *fn4" and the Agreement. On July 13 Union filed an unfair labor practice charge with NLRB. On July 15 approximately 30 of the strikers returned to work. That same day Union filed the grievance at issue here, charging (Fansteel Complaint Ex. 5, copied verbatim):

 
The Company is using new hires (probationary) and salaried personnel to keep it's Union and senior employees from returning to work.
 
This is a violation of the current collective bargaining agreement, and i in particular, articals 16-6-10-& 22 as well as the letters on pages 111-112-113-118- and 119. *fn5"
 
We demand that any employees affected by this violation by compensated for all losses suffered.

 Fansteel and Union representatives met July 21. Union spokesman Richard Globis explained that Fansteel was violating the CBA by using new hires classified as Labor Grade 8 to do work that Labor Grade 8 employees could not perform (Award at 7-8). On July 28 Fansteel responded (id. at 8):

 Fansteel then upgraded all the replacements in Labor Grade 8 to the next higher grade in each department (either Labor Grade 6 or 5). These upgrades were performed administratively, without any job postings or bidding.

 On August 4 Union demanded arbitration of the grievance. On August 28 NLRB's Regional Director dismissed Union's unfair labor practice charge. On April 14, 1988 NLRB's General Counsel denied Union's appeal of that dismissal.

 On April 15, 1988 Arbitrator Aaron Wolff conducted the arbitration hearing (the "Hearing"). At the outset Fansteel argued the dispute was not arbitrable (Award at 16):

 
To the extent that this grievance arises concerning the implementation of the strike settlement agreement, it is clearly arbitrable. However, to the extent that the union is seeking in this grievance the reinstatement of the strikers who were replaced by permanent replacements during the strike, such relief is clearly not authorized by the collective bargaining agreement or strike settlement agreement which expressly recites the parties failure to reach agreement on reinstatement and which expressly provides for a forum to decide that dispute, which would be the National Labor Relations Board and not arbitration.
 
Therefore, any award of the relief that the union appears to be seeking in this case would be beyond the scope of the collective bargaining agreement and would not be legal and to that extent we believe that what the union is seeking is not authorized by the collective bargaining agreement.
 
We are willing to let the arbitrator make that determination in the first instance. However, we want to make it clear that we are in no way submitting to the arbitrator the question of the lawfulness of the union's [sic] hiring permanent replacements, which is an issue for the National Labor Relations Board.

 Fansteel then proceeded with the Hearing and addressed the merits of Union's claim.

 In part Arbitrator Wolff's comprehensive opinion said (Award at 15):

 
While it is no doubt true that courts may have the final say on the substantive arbitrability, a party may raise this issue before an arbitrator without waiving its right to court review of that issue at least where, as here (R. 5-6), the party stakes out its position or objection at the outset of the arbitration hearing.

 After rejecting Union's waiver argument, the Arbitrator identified the issues Union had submitted to arbitration in these terms (id. at 19-20):

 
1. Did the Company violate the CBA in the manner in which it used the new hires after the strike was over and before it reclassified them?
 
2. Did the Company violate the CBA or the SSA in the manner in which it reclassified and upgraded the new hires on or about July 28?
 
3. Did the Company, after the strike was over and the CBA was in effect, use foremen to perform bargaining unit work in violation of the CBA?
 
4. If the Company did violate provisions of the CBA or the SSA, what remedies are appropriate under the circumstances?

 Then Arbitrator Wolff held those issues arbitrable under CBA Art. 13 and Agreement Item 15 (id. at 20) and proceeded to the merits.

 As to the substantive issues, the Arbitrator found for the Union in all respects:

 
1. He found the new hires were performing work outside of their job classifications.
 
2. He found Fansteel had violated the CBA and the Agreement when it unilaterally upgraded the replacements.
 
3. He found Fansteel had also violated the CBA by using foremen to perform bargaining unit work. *fn6"

 By way of remedy, Arbitrator Wolff ordered Fansteel to post for bidding all job positions into which Fansteel had upgraded the replacements. Employees entitled to those positions were to "be made whole for any loss of earnings sustained" (Award at 40). Finally, the foremen were ordered to stop performing bargaining unit work.

 Positions of the Parties

 Fansteel advances a multi-pronged attack on the Award:

 
1. It should be vacated because the grievance was ...

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