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Smart v. International Brotherhood of Electrical Workers Local 702

November 15, 2002


Appeal from the United States District Court for the Southern District of Illinois. No. 99 C 956--David R. Herndon, Judge.

Before Bauer, Posner, and Ripple, Circuit Judges.

The opinion of the court was delivered by: Posner, Circuit Judge


The plaintiff in this racial discrimination case appeals from the grant of summary judgment to the defendant, a local of the electrical workers union. Two plaintiffs are listed, but one is a sole proprietorship and the other the proprietor, so they are one, not two, in the eyes of the law (with an irrelevant exception for the case in which an individual is charged under RICO with using for nefarious ends an enterprise consisting of a sole proprietorship, McCullough v. Suter, 757 F.2d 142, 143-44 (7th Cir. 1985)), and the one is the proprietor, Ronald Smart, not the proprietorship. Troelstrup v. Index Futures Group, Inc., 130 F.3d 1274, 1277 (7th Cir. 1997); Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997); Vega v. National Life Ins. Services, Inc., 188 F.3d 287, 293 (5th Cir. 1999) (en banc).

Smart, an electrical contractor who is white, hired Robert Thompson, who is black, to work for him as an electrician; Thompson was and is Smart's only employee. Smart had not signed on to the collective bargaining agreement that the IBEW local had signed with the area's other electrical contractors. Deciding to do so, he went to the union office and signed a letter of assent to the agreement. With him on this visit he took Thompson so that the latter could join the union. At the office Smart learned that the union had a program for subsidizing union contractors to enable them to compete more effectively with nonunion contractors, and he requested the application form. That was in July 1998. By October, the union had neither furnished the form nor arranged to swear in Thompson as a member of the union. Smart complained to the union and Thompson was sworn in; but still the form did not arrive. Between October 1998 and March 1999, Smart called the union officer with whom he had been dealing, Jim Nolen, 16 times requesting the form and also requesting that Thompson be enrolled in a union training program.

He never got through to Nolen and the messages he left were never returned. Meanwhile in January 1999 Smart's union dues had been tripled, and two months later Smart wrote Nolen that he was terminating his relation with the union. Nolen promptly called him and asked him why. Smart explained that it was because of the delay in Thompson's swearing in and enrollment in the training program, the failure to send Smart the application form for the subsidy, and the tripling of his dues. Nolen said that Smart's dues had been raised because he was "working with the tools"--the union charges higher dues to a union contractor who is not merely engaged in management and supervision but is actually working as an electrician. As for the enrollment of Thompson in the training program, Nolen said that if Smart wanted the "little bastard in school, he [Nolen] would get him there."

Smart was not satisfied, and so his termination as a union contractor stood. The union, however, filed a grievance against him pursuant to the collective bargaining agreement because he had failed to make required contributions to the union's welfare ("fringe benefits") fund. The grievance was arbitrated, and the arbitrators found Smart "guilty of non-payment of fringes as required. Further, the parties are encouraged to meet as soon as possible to resolve the current delinquencies." But the arbitrators did not specify the dollar amount that he owed the union.

Smart's suit challenges the arbitrators' award as invalid primarily because of lack of finality, and also claims that the union discriminated against him, because of his employing a black person, in violation of 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964. Smart lays great stress on the fact that Thompson is also his son-inlaw; the implication is that the union's real objection to Smart is not that he has a black employee, because the union has other black members, but that his daughter married one. There is, however, no evidence of this.

Insofar as the suit challenges the arbitrators' award, it is founded both on section 301 of the Taft-Hartley Act, 29 U.S.C. § 185, which creates a federal judicial remedy for breach of a collective bargaining agreement, pursuant to which the award was issued, and the Federal Arbitration Act (Title 9 of the United States Code), which creates federal judicial remedies for disputes arising from certain agreements to arbitrate, including collective bargaining and other employment agreements, with an irrelevant exception for employment agreements involving transportation workers. 9 U.S.C. § 1; see Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001); Pryner v. Tractor Supply Co., 109 F.3d 354, 358 (7th Cir. 1997). Section 301 is of course more than a jurisdictional and procedural statute; the Supreme Court has held that it is a directive to the courts to create a federal common law of collective bargaining contracts. The Federal Arbitration Act has no particular reference to such contracts and so if there were a conflict between the two statutes we would resolve it in favor of section 301. See Coca-Cola Bottling Co. of New York, Inc. v. Soft Drink & Brewery Workers Union Local 812, 242 F.3d 52, 54-55 (2d Cir. 2001). Where there is no conflict, however, and the FAA provides a procedure or remedy not found in section 301 but does not step on section 301's toes, then, as in Pryner, we apply the Federal Arbitration Act. We doubt that there was such a conflict in the Coca-Cola case either, though the court there thought there was; but that doubt doesn't have to be resolved in this case.

The Act requires the court to vacate an arbitrator's award, so far as bears on this case, "where the arbitrators . . . so imperfectly executed [their powers] that a mutual, final, and definite award upon the subject matter submitted was not made." 9 U.S.C. § 10(a)(4). Smart seems to think that this means that an arbitration award must be vacated if the award, were it a district court's judgment, would be unappealable under 28 U.S.C. § 1291 because it was not a final judgment. That is incorrect. It is apparent from the wording of section 10(a)(4) that it is not a jurisdictional provision. Rather, it assumes that the award is properly before the court, and establishes a ground for vacating it. The purpose of the section is merely to render unenforceable an arbitration award that is either incomplete in the sense that the arbitrators did not complete their assignment (though they thought they had) or so badly drafted that the party against whom the award runs doesn't know how to comply with it. IDS Life Ins. Co. v. Royal Alliance Associates, Inc., 266 F.3d 645, 650 (7th Cir. 2001); ConnTech Development Co. v. University of Connecticut Education Properties, Inc., 102 F.3d 677, 686 (2d Cir. 1996); Michaels v. Mariforum Shipping, S.A., 624 F.2d 411, 414 (2d Cir. 1980).

There can be a jurisdictional question in cases challenging or seeking enforcement of arbitration awards, for although no statute corresponding to section 1291 tells the courts when an arbitration award is ripe for judicial enforcement or review, the courts are naturally reluctant to invite a judicial proceeding every time the arbitrator sneezes. But beyond that, generalization is difficult. In IDS Life Ins. Co. v. Royal Alliance Associates, Inc., supra, 266 F.3d at 650, we expressed skepticism about the propriety of engrafting Fed. R. Civ. P. 54(b) onto the arbitration statute and might have been understood to be implying a jurisdictional standard similar to that of section 1291. That seems to be the position of the Second Circuit as well. See Michaels v. Mariforum Shipping, S.A., supra, 624 F.2d at 41314. But an earlier panel of our court had said that "a ruling on a discrete, time-sensitive issue may be final and ripe for confirmation even though other claims remain to be addressed by arbitrators," and this sounds Rule 54(b)-ish. Publicis Communication v. True North Communications, Inc., 206 F.3d 725, 729 (7th Cir. 2000). The First Circuit is even more hospitable to what amount to interlocutory appeals of arbitral awards--to the extent of allowing review of the arbitrator's liability determination before he has made an award of damages, see Providence Journal Co. v. Providence Newspaper Guild, 271 F.3d 16, 19-20 (1st Cir. 2001); Hart Surgical, Inc. v. Ultracision, Inc., 244 F.3d 231, 233-35 (1st Cir. 2001), which Rule 54(b) does not permit, Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 742-44 (1976); Mercer v. Magnant, 40 F.3d 893, 896 (7th Cir. 1994); General Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 311 n. 3 (3d Cir. 2001), though later we shall note a minor exception to the rule that a judgment in a case seeking damages is not final and appealable under section 1291 until the amount of the damages has been computed and incorporated into the judgment.

One thing is clear, however: if the arbitrator himself thinks he's through with the case, then his award is final and appealable, Local 36, Sheet Metal Workers Int'l Association, AFL-CIO v. Pevely Sheet Metal Co., 951 F.2d 947, 949 (8th Cir. 1992), for that is the rule under section 1291 as well, Bankers Trust Co. v. Mallis, 435 U.S. 381, 387-88 (1978) (per curiam); Miller v. Artistic Cleaners, 153 F.3d 781, 783-84 (7th Cir. 1998); Student Loan Marketing Ass'n v. Lipman, 45 F.3d 173, 177 (7th Cir. 1995); and then section 10(a)(4) comes into play to guide the court in deciding whether the award is either incomplete (the arbitrator was wrong to think he was through with the case) or indefinite. Neither circumstance is present here. The question put to the arbitrators was whether Smart owed the "fringes," not how much he owed. The parties assumed that once that issue was resolved, if it was resolved against Smart, they could figure out readily enough how much he owed. And there is no ambiguity about what the arbitrators decided: they decided that Smart owed the fringes and they directed the parties to compute the amount owed.

This case illustrates why section 10(a)(4) should not be interpreted to incorporate the final-judgment rule of 28 U.S.C. § 1291. The idea behind arbitration is that it is good to allow parties to contracts to design the method of dispute resolution that is best for them. Since they bear the full expense--arbitration is not subsidized by the taxpayer, as litigation is--they naturally want to economize on the cost of the procedure and so they may decide to confine the arbitrator to deciding liability, on the theory that once that decision is made it will be easy enough to determine the proper relief themselves, especially when the amount of money in issue is likely to be modest. There are analogies in litigation: declaratory judgments, and the principle that a judgment in a money case can be final if the computation of the money owed the plaintiff is mechanical ("ministerial," as the cases say), so that no further adjudicative process is necessary to determine what the amount owed is. E.g., Mercer v. Magnant, supra, 40 F.3d at 896; Production & Maintenance Employees' Local 504 v. Roadmaster Corp., 954 F.2d 1397, 1401-02 (7th Cir. 1992).

Indeed, if the final-judgment rule applied to arbitrators' awards, the award in this case might pass muster anyway, because the computation of the fringes owed by Smart may be mechanical. But even if it would not be, if it were clear that the arbitrators had finished their assignment and clear as well what their award required the award would be enforceable even if ...

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