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Oil v. AMOCO Oil Co.

: August 25, 1989.


Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 87 C 599 -- James T. Moody, Judge.

Wood, Jr., Manion, and Kanne, Circuit Judges.

Author: Wood

WOOD, Jr., Circuit Judge

This appeal involves the arbitrability of a dispute between Amoco Oil Company (Amoco) and the Oil, Chemical and Atomic Workers International Union, Local 7-1 (Union) regarding the contracting out of certain work previously performed by bargaining unit employees at Amoco's Whiting, Indiana refinery. The district court granted summary judgment to compel arbitration in favor of the Union. Amoco appeals, claiming that under the parties' collective bargaining agreement it was not obligated to arbitrate contracting out disputes. We reverse the district court's grant of summary judgment to the Union and remand to the district court with instructions to enter summary judgment in favor of Amoco.


Amoco and the Union are parties to a collective bargaining agreement governing the hours, wages, working conditions, and terms of employment of bargaining unit Union employees in Amoco's Whiting Refinery. Amoco has, for many years, used outside contractors to perform a variety of maintenance and labor tasks at the Whiting Refinery. The practice of an employer hiring independent contractors to perform work instead of using bargaining unit employees is known as "contracting out."

We begin with a summary of the history of disputes between Amoco and the Union surrounding Amoco's practice of contracting out. In 1960, the Union brought an action to compel arbitration over Amoco's decision to contract out certain maintenance and repair work at the Whiting Refinery. Based upon Amoco's history of contracting out and the bargaining history of the parties, this court found that the collective bargaining agreement did not require arbitration over the contracting out dispute. Independent Petroleum Workers of America, Inc. v. Standard Oil Co., 275 F.2d 706 (7th Cir. 1960). In 1963, the Union again sought to compel arbitration of a contracting out dispute. This court again concluded that Amoco was not contractually obligated to arbitrate contracting out disputes. Independent Petroleum Workers of America, Inc. v. American Oil Co., 324 F.2d 903 (7th Cir. 1963), aff'd 379 U.S. 130, 13 L. Ed. 2d 333, 85 S. Ct. 271 (1964).*fn1

In subsequent contract negotiations the Union unsuccessfully sought restriction on Amoco's right to contract out, or in the alternative, provision for arbitration of contracting out disputes. The Union has filed unfair labor practice charges regarding contracting out at the Whiting Refinery and in each case the NLRB Regional Director has refused to issue a complaint on the charge. The Union has also filed over fifty grievances concerning contracting out disputes over the past twenty-five years. Amoco has consistently maintained that it is not contractually obligated to arbitrate contracting out issues and has refused to submit to arbitration.

The Union points to an instance in which it claims Amoco did arbitrate a contracting out dispute in 1974. Amoco had employed an independent contractor to recondition barrels. Normally the warehousemen in the barrel department brought the barrels to the truck. However, on one particular Saturday Amoco had failed to assign warehousemen to do the work and the contractor's employees had to do their own loading. The Union filed a grievance over Amoco's failure to assign the loading work to a bargaining unit employee and Amoco agreed to arbitrate the dispute. The Union points to Amoco's voluntary arbitration of this 1974 dispute in asserting the arbitrability of the grievance in the instant case.

The dispute at issue here arose in November 1986 when Amoco began using an outside contractor to distribute toolboxes at the refinery on Sundays. Previously, Amoco had assigned this task to bargaining unit employees on an overtime basis. The Union then filed a grievance asserting that the contracting out of this work constituted a violation of the collective bargaining agreement and demanding that Amoco pay equipment handlers eight hours of overtime for every Sunday that Amoco contracted out the toolbox distribution work. Amoco denied the grievance and the Union requested arbitration. Amoco refused to arbitrate and asserted that it has the right to contract out work which does not reduce the workforce and that such contracting out decisions are not subject to the arbitration clause in the collective bargaining agreement.

When Amoco refused to arbitrate, the Union then filed suit to compel arbitration under the collective bargaining agreement pursuant to § 301 of the Labor Management Relations Act, 29 U.S.C. § 185. Amoco and the Union both moved for summary judgment. In granting the Union's motion for summary judgment, the district court held that the arbitration clause may be susceptible to an interpretation that covers the contracting out dispute. Amoco appeals.*fn2


We review de novo the district court's entry of summary judgment. EEOC v. Sears, Roebuck & Co., 839 F.2d 302, 354 (7th Cir. 1988). Summary judgment should only be granted when there are no genuine issues of material fact and when the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In reviewing an entry of summary judgment, we view the record and the inferences drawn from it in the light most favorable to the nonmoving party. Schlifke v. Seafirst Corp., 866 F.2d 935, 937 (7th Cir. 1989).

The first issue is whether this court's decisions in Standard Oil and American Oil have a preclusive effect upon the present action.*fn3 Amoco argues that the doctrine of collateral estoppel should bar the Union's current litigation. The district court concluded that the two previous decisions do not bar the Union from bringing the present claim because the issue of the application and ...

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