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Ameritech Corp. v. International Brotherhood of Electrical Workers

September 10, 2008


Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 04 C 6149-Samuel Der-Yeghiayan, Judge.

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


Before MANION, EVANS, and SYKES,Circuit Judges.

These appeals stem from a drawnout labor dispute between Ameritech and the International Brotherhood of Electrical Workers, Local 21, involving three arbitrations centering on what may fairly be described as the same issue. The first and third awards favored Ameritech; the second favored the Union. The question now is whether the third arbitration award trumps the second.

The third arbitration was the product of a settlement agreement resolving the parties' first two appeals in this court. Ameritech had appealed the district court's order enforcing the second arbitration award; the Union then appealed an order denying its motion to enforce that judgment and hold Ameritech in contempt. In their settlement the parties agreed to resolve this "protracted litigation" by submitting their dispute to a third arbitrator for a "final resolution" via a "special, bifurcated arbitration proceeding." This third arbitration was held, the arbitrator sided with Ameritech, and Ameritech sought to enforce the award by moving to vacate the earlier judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. The district court summarily denied this motion because the first two appeals were still pending here. Ameritech then appealed this order, and we consolidated all three.

We now dismiss the first two appeals based on the parties' settlement. Following the procedure described in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 29 (1994), and Marseilles Hydro Power LLC v. Marseilles Land & Water Co., 481 F.3d 1002, 1003-04 (7th Cir. 2007), we reverse the district court's order denying Ameritech's Rule 60(b) motion and remand with instructions to vacate the earlier judgment enforcing the second award and enter judgment for Ameritech enforcing the third arbitration award. Because the parties agreed that the third arbitration would finally resolve their dispute, and the third arbitrator's award is inconsistent with the second, Ameritech is entitled to relief from the earlier judgment under Rule 60(b).

I. Background

These three consolidated appeals are the result of a lengthy and procedurally complex labor arbitration, but the crux of the dispute is a single provision in the parties' collective-bargaining agreement. Ameritech and the Union disagreed over the meaning of § 1.03 in that agreement, which provides as follows:

This Agreement covers the work customarily performed by the employees defined in Section . . . 1.01, above. However, during the tenure of this Agreement, [Ameritech] may continue to contract out such work as is now customarily contracted out and has been customarily contracted out by [Ameritech] under the previous collective bargaining agreements . . . represented by [the Union] . . . . If such work to be contracted out will cause layoffs, or part-timing or prevent the rehiring of employees with seniority standing, such contracting out of work will be reviewed by [Ameritech] with the Union and allotted on the basis of what [Ameritech] is equipped to perform and what the employees represented by the Union are able and trained to perform.

Section 1.03 thus governs Ameritech's ability to contract out work to nonunion workers and provides the Union with the right to review certain layoffs and the allotment of some of this work. The condition under which the Union may exercise its review-and-allotment right is the primary subject of the parties' dispute.

The genesis of this case was in late 2002, when Ameritech, facing flagging demand for its products, announced a plan to lay off some of the Union's members. Ameritech believed that it was not required to participate in the review-and-allotment process specified in § 1.03 because poor economic conditions-not the customary contracting out covered by § 1.03-had precipitated the layoffs. The Union maintained that it was entitled to a formal review and allotment under § 1.03, and when Ameritech disagreed, the parties proceeded to the first of the three arbitrations at issue here.

Arbitrator John Flagler concluded this first arbitration in December 2002, and he resolved the dispute in Ameritech's favor. Flagler agreed with Ameritech's interpretation of § 1.03, namely, that the Union must first establish that the layoffs in question were caused by customary contracting out (as opposed to some other cause) before being entitled to the review-and-allotment process. Because Ameritech established that the layoffs were caused by poor economic conditions (not contracting out), Flagler concluded that the Union was not entitled to review and allotment.

The Union filed a second grievance in the spring of 2004, arguing that it was entitled to review and allotment because Ameritech's continued use of outside contractors prevented the rehiring of the laid-off Union members.

Arbitrator Richard Kasher conducted the second arbitration, and this time the result favored the Union. Kasher distinguished his postlayoff analysis from Flagler's prelayoff analysis and did not require the Union to first show that continued contracting out had caused the failure to rehire the laid-off employees. Instead, he ordered Ameritech to provide ...

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