Summary
finding that arbitration process was not complete under the parties' CBA, therefore the Court lacked subject matter jurisdiction over the dispute
Summary of this case from Scott v. Ameritech Publ'g, Inc.Opinion
Case Number 02-10059-BC
January 22, 2003.
OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS, DENYING PLAINTIFF'S MOTION FOR ORAL ARGUMENT, AND DISMISSING CASE
The plaintiff labor union filed a complaint in this Court to enforce the decision of a grievance committee assembled pursuant to a collective bargaining agreement to hear a dispute over the interpretation of a certain provision of that contract concerning the use of "foreign drivers" to haul loads from the defendant's terminal facility located in Midland, Michigan. The committee, known as the Joint Area Committee, issued an interpretation of the contract which favored the union, and directed that specific violations of the agreement be referred to a subcommittee. The defendant has filed a motion for judgment on the pleadings on the ground that since the union has not pursued any specific violations at the subcommittee level, the union has not exhausted its contractual remedies and therefore either this Court lacks subject matter jurisdiction or the complaint fails to state a claim upon which relief may be granted. The plaintiff has filed an answer in opposition to the motion, together with a motion for oral argument. The Court has reviewed the submissions of the parties and finds that the relevant law and facts have been set forth adequately in the motion papers and that oral argument will not aid in the disposition of the motion. Accordingly, it is ORDERED that the plaintiff's motion for oral argument [dkt #10] is DENIED, and that the defendant's motion to dismiss be decided on the papers submitted. See E.D. Mich. LR 7.1(e)(2).
The Court finds that the decision of the Joint Area Committee is not enforceable as such by this Court under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, because it amounts to no more than a declaration of what the contract provides, and directs that the arbitration process continue. In order to enforce remedies awarded, or to be awarded, by the Joint Area Committee or its designated subcommittee, the plaintiff is obliged to pursue and complete the grievance procedure for which it bargained, and which is set forth in the collective bargaining agreement. The Court, therefore, will grant the defendant's motion for judgment on the pleadings and dismiss the complaint.
I.
The defendant is a motor carrier involved in the interstate transportation of bulk liquids. Some of the defendant's loads originate at its Midland, Michigan terminal facility, where the drivers are members of Teamsters Local 486 and are covered by a November 15, 1998 collective bargaining agreement. Article 38.3 of that Agreement seeks to protect the exclusive right of Local 486 members to haul loads from the Midland terminal, while accommodating the company's need to use "foreign drivers" who operate equipment in "continuous movement" hauling loads which originate outside the jurisdiction of the union local. That section of the Agreement states:
SYSTEM DRIVER RECIPROCITY: (a) The parties to this Agreement recognize that the current state of deregulation of the bulk hauling industry has created a totally new concept of competition for carriers operating under this Agreement. In order to attempt to meet this competition, the Employer must obtain maximum utilization of equipment and maximum loaded miles within its operating system. It is agreed that the respective local unions shall waive their opposition to the use of foreign drivers to haul loads out of the union's jurisdiction if such use of foreign drivers is part of a continuous movement of equipment in the Employer's system in order to maximize loaded miles. It is also agreed that this flexibility in the use of system equipment and drivers will not be extended to those foreign drivers unless the drivers covered by this agreement are granted reciprocal privileges within the terminal jurisdiction of those respective foreign drivers. It is also agreed by the Employer that the employees at a terminal covered by this Agreement shall be given full opportunity to participate in the Employer's system of continuous freight movement. . . .
(d) It is also understood that if the Local Union considers that a significant deviation has been experienced in the employment level of the terminal operating in its jurisdiction due to the continuous movement system, a complaint or grievance may be filed by the Local Union requesting that the Subcommittee or Joint Area Committee investigate the matter and determine if a violation exists. If the Subcommittee or the Joint Area Committee finds that a violation exists or has existed, it shall have the authority to impose all monetary penalties or other remedies.
Agreement, § 38.3(a), (d) (emphasis added).
A dispute arose between the parties as to whether the term "foreign drivers" included independent contractors, or whether it was limited to employees of the company. Local 486 claimed that the defendant was violating the Agreement by using independent contractors to haul loads from the Midland terminal under the "continuous movement" provision in Article 38.3. This dispute was submitted to the Joint Area Committee pursuant to Section 8.1(c) of the Agreement, which states that "all matters pertaining to the interpretation of any provision of this Contract may be referred, at the request of either the Secretary or Chairman of the Joint State Committee with reasonable notice to the Employer and Local Union involved, to the Joint Area Committee at any time for final decision." In its grievance dated March 28, 2001, Local 486 asked that the defendant be required to "cease and desist in the use of foreign power where such foreign power is not covered by agreement [ sic] containing language similar to . . . Article 38 of the Agreement." Compl. Ex. "Background Material." The Joint Area Committee held a hearing on December 5, 2001 in Rosemont, Illinois and, although agreeing with the union's interpretation of the contract language in dispute, did not order the company to "cease and desist." Rather, the Committee ruled:
The claim of the Union is upheld to the extent that this Committee finds only employees of Quality Carriers are entitled to the benefits of Article 38 of the Local 486 and Quality Carriers Collective Bargaining Agreement. For purposes of this decision, "employee" means company driver, company owner driver or an owner driver who is considered an employee under the NLRA.
A subcommittee will be designated when specific complaints of grievances are filed under Article 38. 12/5/2001 Decision, No. 1-01, Compl. Ex. 2. The plaintiff contacted the defendant to inquire about its plans to comply with the decision of the Committee, but the defendant did not respond. Compl. ¶ 10. The defendant allegedly continues to violate Section 38 by dispatching "independent contractors and employees of subcontractor `affiliates' to haul loads into and out of the Midland terminal in violation of the collective bargaining agreement and the grievance committee Decision." Id. ¶ 11.
This suit was filed on March 6, 2002 seeking to enforce the decision of the grievance committee, pursuant to 29 U.S.C. § 185, and thereafter the defendant filed its motion under Fed.R.Civ.P. 12(c) for judgment on the pleadings.
II.
A motion for judgment on the pleadings by a defendant pursuant to Rule 12(c) of the Federal Rules of Civil Procedure is equivalent to a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Games Galore of Ohio, Inc. v. Masminster, 154 F. Supp.2d 1292, 1297 (S.D.Ohio 2001). To survive a motion to dismiss, the plaintiff must allege facts that if proved would result in the requested relief. Helfrich v. PNC Bank, Kentucky, Inc., 267 F.3d 477, 480 (6th Cir. 2001). The complaint "must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988). Where the plaintiff offers multiple factual scenarios for a particular claim, only one need be sufficient. Briggs v. Ohio Elections Comm'n, 61 F.3d 487, 494 (6th Cir. 1995).
When considering a motion under Rule 12(b)(6), the district court must construe the plaintiff's well-pleaded allegations in the light most favorable to the plaintiff and accept the allegations as true. Ruffin-Steinback v. dePasse, 267 F.3d 457, 461 (6th Cir. 2001). However, the district court need not accept legal conclusions unsupported by the facts pleaded. Lillard v. Shelby County Bd. of Educ., 76 F.3d 716, 726 (6th Cir. 1996). More is ordinarily required to satisfy the federal notice pleading requirements. Scheid, 859 F.2d at 436 (citing 5A C. Wright A. Miller, Federal Practice Procedure § 1357, at 596 (1969)). Although it is generally improper to consider matters outside of the pleadings on a motion to dismiss, that rule does not apply to documents referenced by the pleadings themselves that are central to the plaintiff's claim. Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir. 1999). Similarly, the plaintiff bears the burden of proof when the defendant contests the Court's subject matter jurisdiction pursuant to Rule 12(b)(1). Mich. S.R.R. Co. v. Branch St. Joseph Counties Rail Users Ass'n, 287 F.3d 568, 573 (6th Cir. 2002). On a facial attack which simply challenges the sufficiency of the claims pled, the pleadings are viewed in the light most favorable to the plaintiff, and any arguable basis in law for a claim will defeat the motion. Id. The question for the Court is not whether the plaintiff will ultimately prevail, but whether he is entitled to present evidence in support of his claims. Kroll v. United States, 58 F.3d 1087, 1090 (6th Cir. 1995). If the attack on the court's subject matter jurisdiction is a factual one, however, no such presumption of validity is accorded to the plaintiff's allegations, and the Court decides for itself the factual disputes relevant to the motion. Id. The defendant contends that the union local improperly ignored the Joint Area Committee's statement referring specific disputes to a subcommittee and suggests that this lawsuit is nothing more than a follow-up grievance. It insists that the lawsuit is thus premature and beyond the power of the Court to adjudicate. The plaintiff responds that it is not seeking application of the Committee's decision — which would require a new grievance addressing new conduct — but rather is endeavoring to enforce the award itself because the defendant never discontinued its activity and continues to dispatch non-employee drivers from the Midland terminal. The plaintiff argues that the Committee's decision was final, and that the union has no other recourse than this Court.
Neither party disputes the well-settled principle that parties to a collective bargaining agreement containing an alternative dispute resolution procedure must first exhaust their remedies through that process prior to filing suit in this Court. See United Ass'n of Journeymen and Apprentices of the Plumbing Pipefitting Indus., Local No. 577 v. Ross Bros. Const. Co., 191 F.3d 714, 717 (6th Cir. 1999). A party's failure to do so waives the right to pursue that claim in federal court. Id. Furthermore, the district court cannot review the ruling of an arbitrator unless it is a final resolution of the matter. See Island Creek Coal Sales Co. v. City of Gainesville, Fla., 764 F.2d 437, 440 (6th Cir. 1985) (holding that incomplete or ambiguous arbitration awards are properly remanded to the arbitrator for further proceedings). Otherwise, interlocutory appeals could easily undermine the streamlined process which makes arbitration so attractive as an alternative method of resolving disputes. See Michaels v. Mariforum Shipping, S.A., 624 F.2d 411, 414-415 (2d Cir. 1980) (vacating district court order addressing the merits of an interlocutory appeal challenging the arbitration panel's "Decision and Interim Award"). Although both Island Creek and Michaels interpreted arbitration proceedings governed by the Federal Arbitration Act rather than the Labor Management Relations Act, the Supreme Court has recognized that decisions interpreting the former are extremely persuasive in devising the federal common law of the latter. United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 40 n. 9 (1987). Thus, federal courts lack the power to adjudicate over an arbitration decision that "does not purport to resolve finally the issues submitted." Michaels, 624 F.2d at 414.
In order to be final, an arbitration award must be intended by the arbitrators to be their complete determination of all claims submitted to them, which generally entails a decision on the issues of liability and damages. Federated Rural Elec. Ins. Exch. v. Nationwide Mut. Ins. Co., 134 F. Supp.2d 923, 932 (S.D.Ohio 2001) (citing Michaels, 624 F.2d at 412-13) (finding arbitration award to be final because it completely disposed of the parties' claims). When the arbitrator retains jurisdiction to determine further issues, the award likely was not considered to be final. Orion Pictures Corp. v. Writers Guild of America, West, Inc., 946 F.2d 722, 724 (9th Cir. 1991) (finding arbitrator's decision resolving his jurisdiction to arbitrate the matter not to be a final award subject to immediate judicial review). Phrased more generally, the "arbitrator's ruling is not final if there is a substantive task left for the arbitrator to perform in the proceeding, even if not all of the parties agree that such further action is warranted." Id. at 725. The arbitrator's intent is objectively determined from the language and nature of the award itself. Any subjective intent to the contrary is irrelevant. United Mineworkers of Amer. v. Sunnyside Coal Co., 841 F. Supp. 382, 387 (D.Utah 1994) (rejecting arbitrator's subsequent reconsideration of his earlier declaration that the claimant was entitled to relief, as the initial determination was final on its face).
The plaintiff properly notes that it was not required by the Agreement to seek relief in a subcommittee before filing suit to enforce an award. See Agreement, § 38.3(d) (noting that the Union may petition either the "Subcommittee or the Joint Area Committee" for an investigation and relief). However, the focus here is not what an arbitrator might have done under the Agreement, but rather what the Joint Area Committee intended to do and actually did. Although the Committee "upheld" Local 486's claim, it did so only "to the extent" that it determined company employees, as the Committee defined that term, to be the sole beneficiaries of Article 38. There was no finding that the defendant actually violated the Agreement. Nor were there any "monetary or other penalties" imposed, as the Committee surely had the authority to order. See Agreement, § 38.3(d). Specifically, the company was not ordered to cease and desist as the plaintiff has asked. If the company was found to be using non-employee drivers to haul loads from the Midland terminal, then an order to stop, monetary damages, or "other penalties" would likely have been appropriate. Thus, the conclusion is unavoidable that the Committee's decision was not intended to be a final award. First, the award determines neither liability nor damages. Fed. Rural Elec., 134 F. Supp.2d at 932. Rather, it merely issues a declaratory interpretation of the contract that no one appears to dispute in this lawsuit.
Second, there is language plainly indicating that the Committee believes further proceedings with respect to specific instances of misconduct must be brought to a subcommittee for review. See Decision ("A subcommittee will be designated when specific complaints of grievances are filed under Article 38."). The designation of a subcommittee to hear further proceedings suggests that the Committee was reserving its jurisdiction for further fact-finding, which is reasonably considered a substantive task yet to be performed. See Orion Pictures, 946 F.2d at 724-25. Having specifically agreed to the disposition of disputes through arbitration, the union may not now circumvent that process by prematurely proceeding to take the next step in the process in court rather than before a subcommittee. See Monroe Auto Equip. v. Int'l Union, United Auto., Aerospace Agr. Implement Workers of Am. (UAW), Monroe Auto Equip. Co., Unit of Local 878, 981 F.2d 261, 265 (6th Cir. 1992) (noting that the parties "have bargained for the arbitrator's decision and not the decision of a court").
The defendant points out that it is not entirely clear in this Circuit whether the failure to exhaust administrative remedies is a jurisdictional issue subject to Rule 12(b)(1) or a waiver of contractual remedies properly addressed under Rule 12(b)(6). Compare Durham v. Mason Dixon Lines, Inc., 404 F.2d 864, 865 (6th Cir. 1968) (ruling that the plaintiff's failure to exhaust administrative remedies deprived the district court of jurisdiction over the appeal) with Winston v. Gen. Drivers, Warehousemen Helpers, Local Union No. 89, 93 F.3d 251, 255 (6th Cir. 1996) (finding that entry of "judgment against" the plaintiffs was appropriate because "they have failed to exhaust the grievance procedures required by their collective bargaining agreement"). The governing cases from other circuits, however, view a lack of finality as a jurisdictional defect. See Michaels, 624 F.2d at 415 (Second Circuit) (finding that the district court "lacked power to review this interlocutory award" and that the effect of its decision was to reject the appeal without prejudice); Orion, 946 F.2d at 726 (Ninth Circuit) ("The district court lacked jurisdiction to vacate the arbitrator's ruling under section 103 of the LMRA."). See also Providence Journal Co. v. Providence Newspaper Guild, 271 F.3d 16, 19 (1st Cir. 2001) (electing to consider the "jurisdictional issue" of whether the award in question was final before proceeding to the merits of the appeal). Furthermore, to the extent that Durham and Winston are inconsistent, Durham governs because a published panel decision in this Circuit cannot be overruled by a subsequent panel. Valentine v. Francis, 270 F.3d 1032, 1035 (6th Cir. 2001).
Thus, although the defendant requested judgment on the pleadings under Rule 12(c) because the complaint fails to state a claim, it is more appropriate to adjudicate the motion under the alternate ground of Rule 12(b)(1), since a disposition on the merits equivalent to a ruling under Rule 12(b)(6) would not be favored.
III.
The Court finds that the Joint Area Committee's decision of December 5, 2001 was not a final decision that terminated the grievance process set forth in the parties' collective bargaining agreement, and therefore this Court does not have subject matter jurisdiction over this dispute brought under Section 301 of the Labor Management Relations Act.
Accordingly, it is ORDERED that the defendant's motion for judgment on the pleadings [dkt #7] is GRANTED and the case is DISMISSED for lack of subject matter jurisdiction. See Fed.R.Civ.P. 12(b)(1).