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Karl Schmidt Unisia, Incorporated v. Internationalunion

December 17, 2010

KARL SCHMIDT UNISIA, INCORPORATED, PLAINTIFF/COUNTER-DEFENDANT/APPELLANT,
v.
INTERNATIONALUNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW LOCAL2357, ET AL., DEFENDANTS/COUNTER-PLAINTIFFS/APPELLEES.



Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 1:07-CV-297-Joseph S. Van Bokkelen, Judge.

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

ARGUED OCTOBER 1, 2010

Before POSNER, KANNE, and SYKES, Circuit Judges.

International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW Local No. 2357 ("Union"), filed grievances against Karl Schmidt Unisia, Inc. ("Com- pany"), on its own behalf and on behalf of Sam Jenkins and John Tony Smith. After initially participating in the grievance process, the Company reversed course and filed suit against the Union, Smith, and Jenkins in federal district court, seeking a declaratory judgment that the Union's grievances are not arbitrable. The Union filed a counterclaim to compel arbitration and subsequently filed a motion for summary judgment. The district court found the grievances arbitrable under the terms of the parties' collective bargaining agreement (CBA), and it therefore granted the Union's motion for summary judgment. We affirm.

I.BACKGROUND

In 2005, the parties negotiated the CBA that was in place at all relevant times of this dispute. Section 13.01 of the CBA includes a "Thirty and Out" provision, which provides eligibility for supplemental retirement benefits to an employee once he has reached the age and seniority requirements in the provision. Section 13.01 also provides that the Pension Plan, which sets forth other features of the Company's retirement policy, "shall continue in effect" for the term of the CBA. After the CBA had gone into effect, the Company unilaterally added language to § 5.03 of the Pension Plan. Based on this amendment to § 5.03, to be eligible to receive the supplemental retirement benefit, an employee must have reached the age and seniority requirements of the Thirty and Out provision "as of his date of termination of employment." Section 6.02 of the CBA provides the rules for loss of employee seniority. Section 4.01 of the CBA outlines a four-step dispute-resolution procedure for grievances; the fourth step is arbitration.

In April 2007, the Company notified the Union of im-pending layoffs at its Fort Wayne facility. Earlier in 2007, the Union had learned the Company planned to deny supplemental retirement benefits to employees who were on layoff when they met the requirements of § 13.01. Fearing the Company would deny the benefits of the Thirty and Out provision to otherwise eligible laid-off employees, the Union initiated the grievance procedure provided by the CBA. After completing the first three steps, and with the dispute still unresolved, the Union appealed the grievance to arbitration. At this stage, the Union also filed grievances on behalf of Smith and Jenkins, who had reached the age and seniority requirements of § 13.01, but to whom the Company was denying the Thirty and Out benefit. Pursuant to the process outlined in the CBA, the Company and Union each rejected one panel of arbitrators.

When the third panel was appointed, the Company refused to arbitrate. Instead, it filed suit in federal district court against the Union, Jenkins, and Smith, seeking a judgment declaring the parties' dispute not arbitrable. The Company asserted that the issue was governed by the terms of the Pension Plan and not by the terms of the CBA. The Union filed a counterclaim seeking an order to compel arbitration of the grievances and then moved for summary judgment. The district court granted the Union's motion for summary judgment and ordered arbitration. The Company now appeals.

II.ANALYSIS

When a district court has ordered arbitration, we review that decision de novo. United Steel Workers Int'l Union v. Trimas Corp., 531 F.3d 531, 535 (7th Cir. 2008). The court cannot compel a party to arbitrate a dispute unless that party has contractually agreed to do so. AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648-49 (1986). We keep in mind, however, the federal policy favoring arbitrability. See United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 578 n.4 (1960) (explaining that a broad arbitration clause promotes industrial stability, because the clause represents the union's consideration for its agreement not to strike while the CBA is in effect). If the parties' contract includes a broad arbitration clause, there is a presumption in favor of arbitrability. Trimas, 531 F.3d at 536. Finally, we must take care not to address the merits of the underlying claim. AT&T Techs., 475 U.S. at 650.

The language of the CBA's arbitration clause forms the basis of our analysis. Trimas, 531 F.3d at 536. Section 4.02(a) of the CBA provides, in relevant part, "The Union may grieve any violation of this agreement . . . . Each grievance arising under this agreement shall be resolved in accordance with the procedure described in this article of the agreement. The procedure shall provide the sole and exclusive remedy for any grievance." A grievance, as defined in § 4.01 of the CBA, is "a claim by the Union, an employee, or group of employees . . . that the Company has violated an express provision of this agreement by some conduct, act or omission occurring during the term of the agreement." The Union claims the Company violated the Thirty and Out provision of § 13.01. On its face, this claim is a grievance under the CBA.

Because the CBA contains a generally applicable arbitration clause, the Union's claim is presumed arbitrable. See AT&T Techs., 475 U.S. at 650. To overcome the presumption of arbitrability, a party must show either an "express provision excluding [the] grievance from arbitration" or "the most forceful evidence of a purpose to exclude the claim from arbitration." Warrior & Gulf, 363 U.S. at 584-85.

A. Express Exclusion from Arbitration

The Company argues the CBA's arbitration clause and the CBA's definition of "grievance" expressly exclude the Union's claim from arbitration. We disagree. According to the Company, because the CBA does not specifically address whether an employee may be laid off when he reaches the ยง 13.01 requirements, the Union has not alleged that the Company violated an express provision of the CBA. And because a grievance must claim a violation of an express term of the CBA, the Union's claim is not a grievance. The arbitration clause applies to grievances, the argument goes, so we should apply the interpretive rule of ...


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