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Administrative District Council 1 of Illinois of v. Masonry Company

October 25, 2012

ADMINISTRATIVE DISTRICT COUNCIL 1 OF ILLINOIS OF THE INTERNATIONAL UNION OF BRICKLAYERS AND ALLIED CRAFTWORKERS, AFL-CIO, PLAINTIFF,
v.
MASONRY COMPANY, INC., DEFENDANT.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiff Administrative District Council of Illinois of the International Union of Bricklayers and Allied Craftworkers, AFLCIO's (Union) motion for summary judgment. This matter is also before the court on Defendant Masonry Company, Inc.'s (Masonry) motion for summary judgment. For the reasons stated below, Union's motion for summary judgment is granted and Masonry's motion for summary judgment is denied.

BACKGROUND

Union contends that in May 2009, Masonry entered into a collective bargaining agreement (CBA) with Union. Masonry allegedly participated in a kickback scheme in which bricklayers were required to pay a kickback to supervisors in order to keep their jobs. Union contends that the kickback scheme violated a wage provision in the CBA. Masonry refused to pay the amounts sought by Union under the CBA and the parties proceeded to arbitration to resolve the dispute. A Joint Arbitration Board (JAB) issued an award (Arbitration Award), ruling for Union. Union brought the instant action to compel Masonry to comply with the Arbitration Award. Masonry then filed a motion to vacate the Arbitration Award, which essentially constituted a counterclaim in this action. Union now moves for summary judgment on its claim to enforce the Arbitration Award. Masonry also moves for summary judgment to vacate the Arbitration Award in full or in part, or to remand this matter to the JAB for further proceedings.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, reveals that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Smith v. Hope School, 560 F.3d 694, 699 (7th Cir. 2009). A "genuine issue" of material fact in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus.

Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). In ruling on a motion for summary judgment, the court must consider the record as a whole, in the light most favorable to the non-moving party, and draw all reasonable inferences in favor of the non-moving party. Anderson, 477 U.S. at 255; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000). When there are cross motions for summary judgment, the court should "construe the evidence and all reasonable inferences in favor of the party against whom the motion under consideration is made." Premcor USA, Inc. v. American Home Assurance Co., 400 F.3d 523, 526-27 (7th Cir. 2005).

DISCUSSION

It is undisputed: (1) that Union and Masonry are parties to the CBA, (2) that the CBA provides for the resolution of disputes before the JAB, and (3) that JAB issued an award in favor of Union. (R USF Par. 4-7, 12-13). Union argues that this court should enforce the arbitration award pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and the federal policy favoring the enforcement of arbitration awards. The Seventh Circuit has recognized that there is a "federal policy favoring arbitrability" when disputants have agreed to arbitrate a dispute. Karl Schmidt Unisia, Inc. v. International Union, United Auto., Aerospace, and Agr. Implement Workers of America, UAW Local, 2357, 628 F.3d 909, 913 (7th Cir. 2010). In addition, the Federal Arbitration Act "embodies both a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract." Gore v. Alltel Communications, LLC, 666 F.3d 1027, 1032 (7th Cir. 2012)(internal quotations omitted)(quoting AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745 (2011)). In furtherance of the federal policy favoring arbitration, the Seventh Circuit has broadly construed arbitration clauses, presuming that the parties have agreed to arbitrate disputes, and has extremely limited the scope of judicial review of arbitrators' decisions. See, e.g., Prate Installations, Inc. v. Chicago Regional Council of Carpenters, 607 F.3d 467, 470 (7th Cir. 2010)(stating that "[j]udicial review of arbitration awards is extremely limited, and the merits of the arbitrator's decision will not be reviewed"); United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Indus. and Service Workers Intern. Union v. TriMas Corp., 531 F.3d 531, 536 (7th Cir. 2008)(stating that "[w]here the arbitration clause is broad, there is a presumption in favor of arbitrability," and that "[a]ny 'ambiguities as to the scope of the arbitration clause are resolved in favor of arbitration'")(quoting in part Volt Info. Sci., Inc. v. Board of Trs. of Leland Stanford, Jr. Univ., 489 U.S. 468, 475-76 (1989)).

The Seventh Circuit has also made clear that "only if the arbitrator's decision fails to draw[ ] its essence from the collective bargaining agreement will a court refuse to enforce that decision." Carpenter Local No. 1027, Mill Cabinet-Industrial Div. v. Lee Lumber and Bldg. Material Corp., 2 F.3d 796, 797 (7th Cir. 1993)(internal quotations omitted)(quoting United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960))(stating, in addition, that "[a]n arbitration award draws its essence from the contract so long as that award is based on the arbitrator's interpretation of the contract-even if the court is convinced that interpretation is unsound or based on a factual or legal error"). In addition, the Seventh Circuit has created a limited exception to reverse an arbitration award when "the arbitrator deliberately disregards what he knows to be the law." Eljer Mfg., Inc. v. Kowin Development Corp., 14 F.3d 1250, 1254 (7th Cir. 1994)(stating that "[e]rrors in the arbitrator's interpretation of law or findings of fact do not merit reversal under this standard"). In the instant action, Masonry argues that the court should decline to enforce the Arbitration Award and should vacate the Arbitration Award, contending: (1) that the Arbitration Award did not draw its essence from the CBA and that the JAB exceeded its authority, and (2) that the Arbitration Award is unlawful.

I. Authority of JAB under CBA

Masonry argues that the Arbitration Award did not draw its essence from the CBA and that the JAB acted outside the scope of its authority: (1) by considering conduct that occurred prior to the effective date of the CBA, (2) by awarding relief for grievances that were untimely filed, and (3) by relying on public policy considerations. An arbitration award is deemed to draw its essence from a contract "as long as it is derived from the agreement, viewed in light of its language, its context, and any other indicia of the parties' intention. . . ." Johnson Controls, Inc. Systems & Srvs. Div. v. United Ass'n. of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the U.S.A. and Canada, AFL-CIO, 39 F.3d 821, 825 (7th Cir. 1994)(internal quotations omitted)(quoting Amoco Oil Co. v. Oil, Chem. & Atomic Workers Int'l Union, Local 7-1, Inc., 548 F.2d 1288, 1294 (7th Cir. 1977)). To the extent that there is any ambiguity as to whether an arbitration award derives its essence from a contract, a court should "resolve any reasonable doubt about whether an award draws its essence from the collective bargaining agreement in favor of enforcing the award." Polk Bros., Inc. v. Chicago Truck Drivers, Helpers and Warehouse Workers Union (Independent), 973 F.2d 593, 597 (7th Cir. 1992); see also Sullivan v. Lemoncello, 36 F.3d 676, 682-83 (7th Cir. 1994)(stating that "as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority a court cannot overturn an arbitration award").

A. Conduct that Occurred Prior to Effective Date of CBA Masonry argues that the JAB lacked authority under the CBA to consider conduct that occurred prior to the effective date of the CBA. It is undisputed that the CBA became effective May 29, 2009. (R MSF Par. 7). It is also undisputed that at least part of the calculation of the damages award by the JAB was based upon the hours worked in 2008 and 2009. (R MSF Par. 35). The court notes that Masonry does not contend that the JAB relied upon any conduct prior to the CBA to determine whether the CBA had been violated. The JAB merely relied, in part, upon certain conduct prior to the CBA to calculate an appropriate damages amount. An arbitrator's remedies that extend beyond the effective dates of a CBA are "not necessarily impermissible." Prate Installations, Inc., 607 F.3d at 471 (citing National Postal Mail Handlers Union v. American Postal Workers Union, 589 F.3d 437, 442, 389 (D.C. Cir. 2009)). An arbitrator can, for example, extend a remedy outside the effective dates of the CBA under the common law continuing violations doctrine. National Postal Mail Handlers, 589 F.3d at 442-43.

In the instant action, it is apparent that the JAB, in fashioning a remedy, deemed the violation of the CBA to be a continuing violation when it considered conduct that occurred prior to the effective date of the CBA. See id. at 442-44 (finding that an arbitrator "was arguably construing or applying the contract" by relying on a continuing violations theory to award damages for alleged conduct that occurred prior to the effective date of the agreement). The JAB stated in the Arbitration Award, for example, that the kickback scheme had "probably been going on in one form or another for many years." (AA 1). The JAB also indicated that the most difficult part of its decision was deciding "how long a time period was involved," but ...


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