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Dugan v. City of West Chicago

March 19, 2009

WILLIAM E. DUGAN, ET AL., PLAINTIFFS,
v.
CITY OF WEST CHICAGO, DEFENDANT-COUNTERPLAINTIFF,
v.
INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150, COUNTERDEFENDANT.



The opinion of the court was delivered by: Harry D. Leinenweber, Judge United States District Court

Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court is Counterdefendant International Union of Operating Engineers' Motion for Reconsideration of the Court's earlier denial of its Motion to Dismiss the Counterclaim. For the following reasons, the Union's Motion is denied.

I. BACKGROUND

The instant dispute arises out of an action brought by the Trustees of the Midwest Operating Engineers Welfare Fund (the "Fund") against the City of West Chicago (the "City"). The Fund claims that the City has breached its obligations under the Employee Retirement Income Security Act of 1974 ("ERISA") to make payment of contributions due to the Fund and/or submit contribution reports to the Fund in a timely manner. The City filed a First Amended Counterclaim (the "Counterclaim") against the Fund and the International Union of Operating Engineers, Local 150 (the "Union"), seeking, among other things, joinder of the Union and a declaratory judgment clarifying the City's and the Union's obligations under the Agreement Between City of West Chicago and International Union of Operating Engineers, Local 150, 2005-2009 (the "Collective Bargaining Agreement" or "CBA").

The Union moved to dismiss the City's Counterclaim and argued, for the first time in its reply brief, that the Counterclaim is subject to the arbitration provision found in Article V, entitled "Grievance Procedure," of the Collective Bargaining Agreement. Because the Union raised its arbitration defense for the first time in its reply brief, the Court refused to consider it and denied the Union's motion to dismiss on December 29, 2008. Shortly thereafter, on January 8, 2009, the Union filed the pending Motion for Reconsideration asking the Court to reconsider its denial of the Union's motion to dismiss on the grounds that the Union did not waive its arbitration defense by raising it for the first time in its reply brief and that the Court erred in its joinder of the Union pursuant to Federal Rule of Civil Procedure 20.

At the presentment of the Union's Motion for Reconsideration on January 15, 2009, the Court denied the Union's Motion with respect to the joinder issue and but reserved ruling and set a briefing schedule on the Union's arbitration defense. Thus, the only issues now before the Court are (1) whether the Union waived its arbitration defense by raising it for the first time in its reply brief in support of its motion to dismiss the Counterclaim and (2) whether the Counterclaim is arbitrable under the terms of the CBA.

II. DISCUSSION

A. Standard of Review

The Court has inherent power to modify or rescind interlocutory orders prior to final judgment. See Peterson v. Lindner, 765 F.2d 698, 704 (7th Cir., 1985), citing Diaz v. Indian Head, Inc., 686 F.2d 558, 562 (7th Cir., 1982). Reconsideration of an interlocutory order is committed to the Court's sound discretion. See Cima v. Wellpoint Health Networks, Inc., No. 05-4127, 2008 WL 4831676, at *1 (S.D.Ill., 2008). However, "motions for reconsideration generally are not encouraged [because] a district court's rulings are not intended as mere first drafts, subject to revision and reconsideration at a litigant's pleasure." Id. (internal citations omitted). Nonetheless, reconsideration will be granted where the court has misunderstood a party, the court has made a decision outside the adversarial issues presented to the court by the parties, the court has made an error of apprehension (not of reasoning), a significant change in the law has occurred, or significant new facts have been discovered. Id.

B. Waiver of the Arbitration Defense

The Court turns now to the question of whether the Union waived its arbitration defense by asserting it for the first time in its reply brief in support of its motion to dismiss the Counterclaim. In determining whether a party has waived the right to enforce an arbitration clause, the court must determine whether, based on all the circumstances, the party against whom the waiver is to be enforced has acted inconsistently with the right to arbitrate. Armstrong v. LaSalle Bank Nat. Ass'n, 552 F.3d 613, 616 (7th Cir., 2009). That analysis encompasses a variety of factors, and the court should give significant weight to a party's diligence or lack thereof. Id. It is not enough to demonstrate any conduct inconsistent with an intent to seek arbitration and it is well-settled that a party does not waive its right to seek arbitration merely by filing a motion to dismiss. Id.; Sharif v. Wellness Intern. Network, Ltd., 376 F.3d 720, 726 (7th Cir., 2004). Instead, the focus is properly on the actions taken as a whole, and whether they are consistent with an intent to arbitrate. Armstrong, 552 F.3d at 616. Factors which weigh in favor of finding waiver include where party participated in pretrial activities such as discovery prior to invoking the arbitration clause or unreasonably delayed in making its arbitration demand. Halim v. Great Gatsby's Auction Gallery, Inc., 516 F.3d 557, 562 (7th Cir., 2008).

The only action the Union has taken in this case consisted of filing a motion to dismiss and the Union asserted its right to arbitrate in the briefing on that motion. Contrary to the Union's assertions, the Union could have, and should have, raised its arbitration defense in its initial memorandum in support of its motion to dismiss because the Counterclaim seeks clarification of the parties' obligations under the CBA. The Union admitted as much in its initial memorandum when it characterized the Counterclaim as asking the Court for an order "[d]eclaring the obligations of the respective parties under the CBA." While the Union's failure to raise its arbitration defense until its reply brief has resulted in a separate briefing schedule on the arbitration ...


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