Opinion
Civil Action No. 04-753(JCL).
April 13, 2005
MEMORANDUM AND ORDER
Plaintiff New Jersey Regional Council of Carpenters ("the Union") brought suit seeking to enforce an arbitration award against Defendant Galco Drywall, Inc. ("Galco"). The award is based on Galco's use of non-union-represented individuals employed by T.G. Gallant Construction Co., Inc. to perform work within the jurisdiction of the Union, in violation of a collective bargaining agreement. Galco counterclaimed to vacate the arbitration award.
Now before the Court are the parties' cross-motions for summary judgment. The Union moves to enforce the arbitration award; to require Galco to make payment to the Union in the sum of $4000.00, as specified in the arbitration award; and to award pre- and post-judgment interest, costs, and reasonable attorneys' fees in connection with the filing of this action. Galco seeks to vacate the arbitration award on the basis that the award does not draw its essence from the collective bargaining agreement, to which the Union contends the parties are bound. For the reasons explained herein, the Union's Motion will be granted in part and Galco's Motion will be denied.
BACKGROUND
On May 1, 2000, Mr. Thomas Galante, President and Registered Agent for Galco, signed a Short Form Collective Bargaining Agreement ("SFA") with the Union, agreeing to employ carpenters from the Union on all of Galco's construction jobs and to be bound by every applicable current collective bargaining agreement between the Carpenters and the Building Contractors' Association of New Jersey ("BCA") governing wages, working conditions, and payment to fringe benefit funds (Coyne Cert., ¶ 2, Compl. Ex. A).
The SFA bound Galco to the terms of the then-effective collective bargaining agreement between the Carpenters and the BCA, as well as a subsequent collective bargaining agreement ("CBA"), effective May 1, 2002 through April 30, 2007. The SFA also spoke to renewal of the agreements:
This agreement shall continue in effect for the duration of the [New Jersey Building Contractors Association/Carpenter Union] agreement and shall be deemed renewed on the same basis as the above referred to agreement is renewed by renegotiations or otherwise, including any amendments and/or modifications thereto, and shall continue in full force and effect from year to year unless at least 90 days before termination of the then current collective bargaining agreement, either party notifies the other in writing of cancellation of this agreement.
. . .
This agreement shall also govern any corporation, partnership, or sole proprietorship . . . which is a successor to, joint employer with, or alter ego of the undersigned Contractor.
Article XIX of the CBA contained a Subcontracting Clause, which provides:
1. The Employer will not subcontract any work within the jurisdiction of the Union which is to be performed at the job site except to a contractor who holds an agreement with the United Brotherhood of Carpenters and Joiners of America or one of its subordinate bodies having jurisdiction at the job site, or who agrees in writing, prior to or at the time of the execution of his subcontract, to be bound by the terms of this Agreement.
. . .
3. The Employer represents that its members, officers and supervisory personnel will not attempt to form or participate in the creation of or operation of new or double-breasted corporations for the purposes of avoiding the obligations of this Agreement.
Article XVIII of the CBA sets forth the grievance and arbitration procedure to be followed by the parties. It states:
All questions or grievances involving the interpretation and application of this Agreement . . . shall be handled under the following procedures:
STEP 1: Between the company representatives and the business representative at the job site as soon as practical but in no event later than three (3) working days after the occurrence of the dispute. Failure to raise any dispute within three (3) working days of its notification renders the dispute null and void.
. . .
3.The Arbitrator shall have no power to add to, subtract from, or modify this agreement.
. . .
5. Except by mutual agreement, all timeliness provisions must be complied with and failure to comply by either party will result in default by that party of its position.
On December 13, 2000, Union Council Representative William F. Coyne, Jr., filed an Unfair Labor Practice Charge ("ULP") asserting that Gallant Construction, Inc. ("Gallant") was an alter ego of, a joint employer with, or a single employer with Galco. Thereafter, on May 11, 2001, the Union entered into a global Settlement Agreement with Galco and Gallant. Galante executed the Settlement Agreement on behalf of "Galco Drywall, Inc./Gallant Construction, Inc." As part of the Settlement Agreement, the Union agreed to dismiss the December 13, 2000 ULP against Galco/Gallant. It was also agreed that Galco and Gallant would be bound by the identical SFA with the Union, subjecting them both to a CBA with a termination date of April 30, 2002.
On January 15, 2002, Galante sent a letter on Gallant Construction, Inc. stationery to the New Jersey State Council of Carpenters, stating:
This letter will serve as Gallant Construction, Inc.'s notification that it does not wish to renew the agreement with the New Jersey State Council of Carpenters, the United Brotherhood of Carpenters and Joiners of America, AFL-CIO.
Gallant Construction, Inc. will not renew the agreement, which is scheduled to terminate on 4/30/02.
If you have any questions concerning this matter, please feel free to contact me prior to the termination of the agreement (4/30/02).
The Union initially denied receiving Galante's termination letter, but that dispute is not at issue in the pending motions.
By grievance letter dated November 6, 2002, Union Council Representative Coyne complained that T.G. Gallant was operating "as an alter ego of, a joint employer with, or a single employer with Galco Drywall, Inc./Gallant Construction, Inc.," in connection with First Aid Squad Renovations on Ticetown Road in Old Bridge, New Jersey. Coyne attached to the letter a copy of the Galco SFA dated May 1, 2000, which had been superseded by the May 11, 2001 Settlement Agreement and SFA between the Union and Galco/Gallant. The Union filed a demand for arbitration with respect to the November 6, 2002 grievance, but later withdrew the demand based on the termination of the SFA and the CBA by Gallant.
By grievance letter dated January 27, 2003, the Union complained of similar activity relating to a Dunkin Donuts project site at 4500 Bordentown Avenue, Sayreville, New Jersey. That grievance accused Galco of using non-unionrepresented employees:
The [Union] has discovered that Galco Drywall, Inc., a signatory to the Short Form Agreement with the New Jersey Regional Council of Carpenters . . . is operating T.G. Gallant Construction, Inc., as a nonunion alter ego, joint employer or single employer for the purpose of evading its contractual responsibilities to the union.
. . .
The union seeks to be made whole for any losses of wages and fringe benefits suffered by the membership as a result of your client's activities on this project or on any other projects that we discover.
On February 25, 2003, the Union filed a demand for arbitration against Galco and T.G. Gallant, arising from the January 27, 2003 grievance. An arbitration hearing was held on June 12, 2003 and August 21, 2003. The parties stipulated the issues as follows:
1. Is Galco bound by the current collective bargaining agreement between the New Jersey Regional Council of Carpenters and the Building Contractors Association of New Jersey?
2. If so, did Galco violate the Collective Bargaining Agreement by operating T.G. Gallant Construction, Inc. as a non-Union alter ego, joint employer or single employer for the purpose of evading its contractual obligations concerning bargaining unit work performed at the project known as Dunkin Donuts at 4500 Bordentown Avenue, Sayreville, New Jersey?
3. If so, what shall be the remedy?
At the hearing, Galco argued, among other things, that the Union's grievance was untimely and that Galco was no longer subject to the Agreement with the Union. The Union countered that it complied with the timeliness requirements and that, in any event, Galco waived a timeliness objection by asserting the defense for the first time at the arbitration hearing.
By Opinion and Award dated November 24, 2003, Arbitrator Gerald Restaino determined that the Union's grievance was timely, that Galco remained bound to a contract with the Union, and that Galco violated that agreement when it employed non-union-represented employees on the Dunkin Donuts job. The Arbitrator ordered Galco to pay $4000.00 to the Union. To date, Galco has refused to comply with the Award in any fashion.
STANDARD OF REVIEW
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56; Serbin v. Bora Corp., 96 F.3d 66, 69 n. 2 (3d Cir. 1996). In evaluating a summary judgment motion, a court must "draw all reasonable inferences in favor of the non-moving party." Armour v. County of Beaver, PA, 271 F.3d 417 (3d Cir. 2001) (quoting Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150 (2000)). A motion for summary judgment requires the non-moving party to set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The moving party carries the initial burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Huang v. BP Amoco Corp., 271 F.3d 560, 564 (3rd Cir. 2001).
Once the moving party has made a properly supported motion for summary judgment, the burden shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 242. The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991) (noting that a motion for summary judgment is not defeated by mere allegations, general denials, or other "vague statements"). Rather, only disputes regarding facts that might affect the outcome of the lawsuit under the governing law will preclude the entry of summary judgment. Anderson, 477 U.S. at 247-48. If the evidence is "such that a reasonable fact-finder could return a verdict for the nonmoving party," summary judgment should not be granted.Id. at 248; Lawrence v. Nat'l Westminster Bank of New Jersey, 98 F.3d 61, 65 (3d Cir. 1996).
DISCUSSION
A. Applicable LawDistrict courts are strictly limited in their power to review a labor arbitrator's award. Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001); United Parcel Service, Inc. v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America, Local Union No. 430, 55 F.3d 138, 141 (3d Cir. 1995). A court must enforce any arbitration award that "draws its essence from the collective bargaining agreement." United Steelworkers of America v. Enterprise Wheel Car Corp., 363 U.S. 593, 597 (1960). "An arbitration award draws its essence from the bargaining agreement if `the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and any other indicia of the parties intention.'" Tanoma Mining Co., Inc. v. Local Union No. 1269, UMWA, 896 F.2d 745, 748 (3d Cir. 1990). "Once a court is satisfied that an arbitrator's award draws its essence from a collective bargaining agreement, it is without jurisdiction to consider the award further." Brentwood Medical Assocs. v. United Mine Workers of America, 396 F.3d 237, 241 (3d Cir. 2005).
The validity of an arbitration award is subject to attack only under limited circumstances. The Federal Arbitration Act states that where the parties have agreed that judgment shall be entered pursuant to the decision of the arbitrator, the court must grant the order unless 1) "the award was procured by corruption, fraud, or undue means"; 2) there is "evident partiality or corruption" by the arbitrator; 3) the arbitrator was "guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy" or "any other misbehavior by which the rights of any party have been prejudiced"; or 4) the arbitrator exceeded his powers or failed to reach a "mutual, final, and definite award." 9 U.S.C. § 10.
Here, there are no allegations of corruption or fraud on the part of the Arbitrator. At issue is whether the Arbitrator exceeded his powers. A court may vacate an arbitration award where, as is argued here, the arbitrator ignores the plain language of the contract or where the arbitrator's decision is unsupported by principles of contract construction. United Paperworkers Int'l, AFl-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987). Only where there is a "manifest disregard of the agreement, totally unsupported by principles of contract construction and the law of the shop, may a reviewing court disturb the award." Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123, 1128 (3d Cir. 1969). "`[A]s long as [an honest] arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, the fact that `a court is convinced that he committed serious error does not suffice to overturn his decision.'"Eastern Associated Coal Corp. v. United Mine Workers, 531 U.S. 57, 62 (2000).
B. Analysis
Galco maintains that the Arbitration Award should be vacated because it fails to draw its essence from the SFA and CBA. Specifically, Galco contends that the Arbitrator exceeded his authority by effectively reading out of the Agreement the time limitations for filing a grievance and by binding Galco to the Agreement even though Galco had properly terminated the Agreement.
The threshold question here is whether Galco was bound to the Agreement. The Court will thus first review the Arbitrator's decision as to Galante's January 15, 2002 termination letter. It will then turn to the timeliness issue.
Termination
Galco argues that the January 15, 2002 termination letter (which only references Gallant Construction), should apply to Galco because the SFA that Gallant Construction signed indicates that it also governs "any corporation . . . which is a successor to, joint employer with or alter ego to the undersigned Contractor." The Arbitrator rejected that argument, stating:
The Employer's semantic arguments are interesting, but not controlling. The letter dated January 15, 200[2], references Gallant Construction and no other entity. Therefore, to advance such an argument and to expect the Arbitrator to accept it expands the boundaries of believability to beyond any recognizable limit.
The fact that there are two separate SFAs for two separate companies controlled by Mr. Galante, clearly means that when he sent the January 15, 200[2] letter, it was only to remove Gallant Construction from the SFA dated May 11, 2001, and not for the May 1, 2000 SFA for Galco. Otherwise, why would there be two separate SFAs?
Arbitrator Restaino clearly considered the issue of termination in relation to the existing agreements between the parties and based his judgment thereon. This Court will not disturb the Award based on the Arbitrator's handling of the termination issue.
Timeliness of the Grievance
Galco also argues that the grievance was submitted more than three days after notification of the dispute and thus, according to the notice provisions in the CBA, this dispute should be null and void. The argument goes that the Union was aware of Galco's alleged activities nearly three months prior to the filing of its January 27, 2003 grievance, given that, in the November 6, 2002 grievance, the Union complained of the operation of T.G. Gallant as an alter ego of, a joint employer, or single employer with Galco at the First Aid Squad site. Moreover, T.G. Gallant posted a sign at the Dunkin Donuts site as early as May 2002 and Union Business Administrator Steven Kosmowski regularly drove past the visible Dunkin Donuts site throughout 2002.
The Union first argues that timeliness is a procedural issue to be handled exclusively by the Arbitrator and not the Court. Next, the Union argues that the grievance was timely because it was not until January 2003 that it discovered that Galco was using non-union-represented individuals employed by T.G. Gallant Construction Co., Inc. to perform work within the jurisdiction of the Carpenters at the Dunkin Donuts jobsite. The Union urges that the events underlying the November 2002 grievance were separate and distinct in that they involved a different project site.
The timeliness issue in this case is governed by contract. The CBA provides that disputes shall be handled "as soon as practical but in no event later than three (3) working days after the occurrence of the dispute. Failure to raise any dispute within three (3) working days of its notification renders the dispute null and void." Another provision states that the Arbitrator is without power to "add to, subtract from, or modify this agreement."
The Arbitrator in this matter was bound to apply the timing provision of the Agreement. This means that the Arbitrator lacked power to reach the merits of the dispute if he determined that the grievance filed more than three days after "notification" of the dispute, i.e., more than three days after the Union became aware of the facts generating the dispute. But the Arbitrator did not so determine. Rather, the Arbitrator concluded that the "grievance was timely filed" and not procedurally defective. Award at 23, 29.
The Arbitrator set forth the Union's argument on the timeliness issue and later adopted it. The Union's argument is summarized as follows:
Union representative, Steven Kosmowski, testified that he did not observe carpentry work being performed at the Dunkin Donuts construction site in Sayreville, New Jersey until January 25 or 26, 2003. . . . It is undisputed that he notified Mr. Coyne about the Dunkin Donuts job site and Mr. Coyne promptly filed the grievance letter dated January 27, 2003.
Award at 16. The Arbitrator concluded that "[t]he circumstances in the instant matter show that the grievance was filed on January 27, 2003, after Mr. Kosmowski notified Mr. Coyne of carpentry work being performed by T.G. Gallant at the Dunkin Donuts site on Bordentown Avenue in Sayreville, New Jersey."Id. at 22. The Arbitrator further concluded that Kosmowski "immediately" notified Coyne about the non-Union work being performed by T.G. Gallant. Id. at 28.
The Arbitrator rejected Galco's argument that the Union was aware of the dispute since November 2002, based on its grievance concerning a different project site. Id. at 23 ("I do not believe that the Ticetown Road project and the Dunkin Donuts project are joined at the hip. To the contrary, they are mutually exclusive."). And, while the Arbitrator indicated that he felt the Union erred in not stopping at the jobsite sooner to make sure that Union contractors were working on the job (and, in fact, held the delay against the Union on the separate issue of damages), there is no indication that the Arbitrator ignored or modified the timing provisions by allowing an untimely grievance to go forward on the merits.
Citing the Union's delay (i.e., Mr. Kosmowski waiting until January 25/26, 2003 to make an official Union visit to the Dunkin Donuts site), the Arbitrator reduced the Union's recovery from $32,795.12 to $4000.00. Award at 29.
The Arbitrator's decision on the timeliness issue finds support in the facts of record and is not inconsistent with the provisions of the Agreement. Thus, the Court will not vacate the Award for failure to draw its essence from the Agreement.
C. Prejudgment/Postjudgment Interest and Counsel Fees
Postjudgment interest on civil judgments is authorized by 28 U.S.C. § 1961, and a district court has discretion to allow prejudgment interest in claims arising under federal labor law. "The general rule is that prejudgment interest is awardable when the damages from breach of contract are ascertainable with mathematical precision." Glass, Molders, Pottery, Plastics, and Allied Workers International Union v. Owens-Illinois, 758 F. Supp. 962, 975 (D.N.J.), aff'd, 941 F.2d 1202 (3d Cir. 1991). Where payment "constitutes a liquidated amount, prejudgment interest is appropriate." Id.
The Court finds prejudgment interest to be appropriate here, where the payment of $4000.00 in damages constitutes a liquidated amount and such an award is necessary to fully compensate the Union. See Sun Ship, Inc. v. Matson Navigation Company, 785 F.2d 59, 63 (3d Cir. 1978) (noting that confirmed arbitration award bears interest from date of award and not date of judgment confirming it).
As for counsel fees, the "American Rule" provides that each party typically must bear the burden of its own legal expenses.Mobil Oil Corp. v. Independent Oil Workers Union, 679 F.2d 299, 305 (3d Cir. 1982). A narrow exception to that rule is when the losing party is found to have litigated in bad faith, vexatiously, or for oppressive reasons. Id. The following factors inform the determination of whether a party has acted in bad faith: (1) whether a party acted promptly to effect a vacation of an arbitration award, thus demonstrating a good faith belief in the arguments it advanced; (2) whether the party has a history of refusing to comply with arbitration awards; and (3) whether the party has presented a substantial legal issue. Id. Counsel fees are recoverable in an action to enforce an arbitration award if a challenger refuses to abide by an arbitration decision without justification or did not have a reasonable chance to prevail. Teamsters Local Union No. 674 v. J.H. Merritt Co., 770 F.2d 40, 43 n. 2 (3d Cir. 1985).
The Union contends that Galco engaged in "a campaign of delay" by refusing to participate in the grievance procedure, filing a state court action to enjoin the arbitration, and refusing to abide by the Award without justification. Galco maintains that it timely filed a complaint to vacate the Award and that it has presented a substantial legal issue in seeking to vacate an award that does not draw its essence from the parties' SFA and CBA. Galco further argues that there is no evidence in the record of it having a history of refusing to comply with arbitration awards, adding that its failure to participate in the grievance procedure is consistent with its position that the collective bargaining agreement had been terminated.
The Court declines to award counsel fees to the Union. Galco presented a substantial legal issue in arguing that the Arbitrator exceeded his authority and there is insufficient evidence of bad faith on the part of Galco to justify an award of counsel fees.
CONCLUSION
For the foregoing reasons, the Motion of the Union for summary judgment confirming the Arbitration Award and ordering pre- and post-judgment interest is granted, the Motion for counsel fees is denied, and the Motion of Galco for summary judgment vacating the Arbitration Award is denied.
Accordingly, IT IS on this 13th day of April 2005,
ORDERED that the Motion of New Jersey Regional Council of Carpenters for summary judgment confirming the November 24, 2003 Arbitration Opinion and Award, and awarding pre- and post-judgment interest is granted, and it is further
ORDERED that the Motion of New Jersey Regional Council of Carpenters for an award of attorneys' fees is denied; and it is further
ORDERED that the Motion of Galco Drywall, Inc. for summary judgment on its counterclaim to vacate the November 24, 2003 Arbitration Opinion and Award is denied.