Opinion
00-Civ.-3067 (WGB).
September 6, 2001
Paul M. Levinson, Esq., East Windsor, NJ, Attorneys for Plaintiffs.
Kevin C. Donovan, Esq., CARPENTER, BENNETT MORRISSEY, Newark, NJ, Attorneys for Defendant.
OPINION
This litigation is about whether two labor disputes should be arbitrated as the Union contends or resolved by a neutral third party as the employer contends. Plaintiffs System Council T-3 of the International Brotherhood of Electrical Workers, AFL-CIO ("System Council T-3"), and Local 2322, IBEW, AFL-CIO ("Local 2322"), and Local 827, IBEW, AFL-CIO ("Local 827") (collectively "the Unions" or "Plaintiffs") seek to compel Defendant Lucent Technologies Inc. ("Lucent") to arbitrate the two labor disputes.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331.
Lucent moves for summary judgment and Plaintiffs cross move for summary judgment pursuant to Fed.R.Civ.P. 56. For the following reasons, the Court grants Lucent's motion for summary judgment and denies Plaintiffs' cross motion for summary judgment.
I. BACKGROUND
In 1999, Local 2322 initiated a grievance against Lucent for permanently contracting out certain bargaining unit work to a vendor named Choice Logistics ("Local 2322 Choice Logistics Grievance"). (Id. at ¶ 10.) Lucent denied the Local 2322 Choice Logistics Grievance at every step of the grievance procedure. (Id. at ¶ 15.) On January 12, 2000, System Council T-3 demanded arbitration of this grievance. (Id. at ¶ 16.) On January 27, 2000, Lucent notified System Council T-3 of its position that the grievance was not arbitrable. (Id. at ¶ 17.)
Local 827 also initiated a grievance against Lucent in 1999, claiming that Lucent permanently outsourced "desktop support" work to IBM, thereby reneging on a 1996 commitment and verbal agreement to employ a certain number of Local 827 bargaining unit employees in New Jersey to perform that work ("Local 827 Desktop Support Grievance"). (Id. at ¶¶ 21-22.) Lucent denied the Local 827 Desktop Support Grievance at every step of the grievance procedure. (Id. at ¶ 26.) On January 14, 2000, System Council T-3 demanded arbitration of this grievance. (Id. at ¶ 27.) On January 27, 2000, Lucent notified System Council T-3 of its position that the grievance was not arbitrable. (Id. at ¶ 28.)
"Desk top support," which was performed by "customer engineers," involved installation and repair of in-house desktop PC computers, servers, routers, and other computer peripheral equipment. (Pls.' Counter Statement of Undisputed Material Facts, at 12.)
The Unions filed this action contending that both grievances are arbitrable under a broad arbitration clause set forth in Article G8 of a collective bargaining agreement that the parties entered into on May 30, 1998 ("1998 CBA"). Article G8 provides for the arbitration and mediation of any controversy that
arises between the Company and the Union regarding the true intent and meaning of any provision of [the CBA] or regarding a claim that either party hereto has not fulfilled its obligations and commitments [under the CBA.] . . .
(1998 CBA attached to Certification of Grady Ligon ("Ligon Cert.") as Ex. C. at 17.) The 1998 CBA does not expire until May 31, 2003. (See Compl., at ¶ 7.)
Lucent, however, maintains that the two labor disputes are subcontracting issues that must be resolved by a neutral third party in accordance with Article G23 of the 1998 CBA, which specifically governs "contract work."
Both parties now move for summary judgment. Oral argument was heard on September 6, 2001.
II. DISCUSSION A. The Court Determines Arbitrability
Because arbitration is a matter of contract, "`a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" ATT Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649 (1986) (citing United Steelworkers v. Warrior Gulf Nav. Co., 363 U.S. 574, 582 (1960)); see also John Hancock Mutual Life Ins. Co. v. Olick, 151 F.3d 132, 135-36 (1998) ("Arbitration is, above all, a matter of contract and courts must respect the parties' bargained-for method of dispute resolution.")
Therefore, in the absence of "clear and unmistakable" evidence that the parties agreed to submit the arbitrability question itself to arbitration, the Court determines whether a given dispute is arbitrable. First Option of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); ATT Technologies, Inc., 475 U.S. at 649; Painewebber, Inc. v. Hofmann, 984 F.2d 1372 (3d Cir. 1993).
Here, the parties do not argue that they agreed to submit the arbitrability question itself to arbitration. Therefore, the Court must determine whether the dispute is arbitrable.
B. Nature of Dispute
Before determining arbitrability, however, the Court must first resolve the parties' dispute over what the nature of the dispute is. Plaintiffs' phrasing of their grievances does not determine arbitrability. See Morristown Daily Record, Inc. v. Graphic Communications Union, Local 8N, 832 F.2d 31, 34 (3d Cir. 1987). Instead, "the test for arbitrability properly focuses on the substance of the grievance. . . . `[The court] must first isolate the nature of the dispute.'" Id. (citation omitted).
Lucent characterizes the Local 2322 Choice Logistics Grievance and the Local 827 Desktop Support Grievance as subcontracting disputes that are governed by Article G23 of the 1998 CBA, entitled "Contract Work."
See discussion infra for text of Article G23.
In contrast, the Unions argue that the "permanent removal" of work does not violate Article G23, but rather, violates Articles G1 (recognition), G2 (collective bargaining), G7 (the unfair treatment clause), and the implied covenant of good faith and fair dealing. The Unions therefore conclude that their allegations constitute controversies over "the true intent and meaning" of the terms of the 1998 CBA or are claims that Lucent "has not fulfilled its obligations and commitments" under the CBA, (see 1998 CBA, Article G8), such that arbitration under Article G8 is appropriate.
Paragraph 2 of Article G1 provides in pertinent part: "[t]he Company recognizes the Union as the exclusive representative of those Company employees [covered by the 1998 CBA]." (Ligon Cert., Ex. C. at 1.)
Article G2, the collective bargaining clause, basically provides that all collective bargaining shall be carried on between the delegated representatives of the Union and of the Company, negotiations for modifications of the CBA shall be held only by mutual consent of both parties, modifications must be signed by the appropriate parties, the Company has the exclusive right to manage its business, and finally, that the CBA applies to all bargaining unit employees unless otherwise provided. (Id. at 2.)
Article G7 of the CBA, entitled "Grievance Procedure," provides that "the grievance and arbitration procedures, where applicable, provide the mutually agreed upon and exclusive forum for resolution and settlement of employee disputes covered thereby during the term of this Agreement." (Ligon Cert., Ex. C at 13.) A grievance is defined in Article G7 as "a complaint involving the interpretation or application of any of the provisions of [the CBA] or a complaint that an employee or group of employees for whom the Union is the bargaining agent has, in any manner, been unfairly treated." (Id. at 14.)
As evidence that Article G23 is not even implicated, the Unions point out that they did not mention Article G23 during the grievance procedure and do not seek damages under Article G23. They argue that they have the right to allege what actions are in violation of the CBA and which provisions of the agreement they believe have been violated.
The damages available under Article G23 consist of lost wages to only two categories of employees, i.e., employees who were laid off due to subcontracting and employees who had previously been laid off and had recall rights.
While the Unions certainly have the right to determine what actions of Lucent it believes are in violation of the CBA, it is clear that the conduct it has identified as violative of certain provisions of the 1998 CBA, i.e. Lucent's contracting out of bargaining unit work is subcontracting. Although neither party has identified any CBA definition of "subcontract," that term is defined in the dictionary as "engag[ing] a third party to perform under a subcontract all or part of (work included in an original contract)." Webster's Ninth New Collegiate Dictionary (1990).
The Unions, however, make the untenable claim that Lucent's outsourcing of work is not "subcontracting" under Article G23 because that provision does not involve the temporary removal of work, but rather, involves the "permanent removal" of bargaining unit work. The fact that work was subcontracted out, the Unions contend, is "merely incidental to the thrust and legal position of the grievance." (See Pls.' Br. in Supp. of Mot. for Summ. Judgement, at 8.) The Unions fail to support this assertion with any evidence. They do not identify where in the labor agreement subcontracting is defined to only include the temporary, but not permanent removal of bargaining unit work. Webster's Dictionary definition of "subcontract" also does not include a distinction between temporary and permanent removal of work. See supra.
Lucent does not contest the Union's assertion that the grievances at issue involved the "permanent removal" of bargaining unit work.
Moreover, although the Unions may allege violations of good faith and fair dealing as well as other terms of the CBA except Article G23, they cannot avoid the fact that Article G23 expressly governs subcontracting. See Dep. of Dennis Slaman attached as Ex. D to Supplemental Cert. of Kevin C. Donovan, 46:15-19 (testifying that Article G23 covers "contract work" which "means work that is normally performed by bargaining unit people is given to a subcontractor.")
Nevertheless, the Unions, relying on E.M. Diagnostic, 812 F.2d at 96 and other non Third Circuit cases, argue that "[s]ubcontracting or permanent removal of bargaining unit work may impliedly violate a recognition clause or other implied obligations of a CBA even where the employer has the right to subcontract." (Pls.' Br. in Opp. To Def.'s Mot., at 6.) To begin with, the Unions' assertion that Lucent's "subcontracting" may violate implied provisions of the CBA is an admission that the nature of the underlying disputes is in fact subcontracting. Further, the Unions fail to explain how any implied limits of the CBA would change the nature of the dispute to something other than subcontracting.
Additionally, E.M. Diagnostic only helps the Unions establish that Lucent's right to subcontract is not absolute. In E.M. Diagnostic, the company insisted that it had an unfettered right to subcontract pursuant to Article V of the labor agreement, which stated in pertinent part:
The management of the operation and the direction of the working force including the right . . . to sub-contract, . . . and to relieve workers from duty because of lack of work or for other legitimate reasons in accordance with this Agreement are vested in the Company. The Union or its representatives shall not interfere with the exercise of such authority, or responsibility, subject only to the restrictions contained in this Agreement.
Article XIX of the agreement provided for the grievance and arbitration of "[a]ny dispute arising out of a claimed violation" of the agreement. The company insisted that because of its explicit right to subcontract, the union's claim did not "arise out of" any claimed violation. The Third Circuit, however, noted that in part because there are implicit limits on the right to subcontract, the subcontracting dispute at issue was in fact within the "zone of interests" protectible by the applicable collective bargaining agreement. In other words, the court determined that subcontracting was protectible and therefore arbitrable under the broad arbitration clause because the right to subcontract is not without bounds.
Such an implicit limit on the right to subcontract is relevant to the merits of the underlying dispute — whether Lucent permissibly subcontracted under Article G23 and any implied limits. Even in E.M. Diagnostic, the Third Circuit expressly recognized that the employer's right to subcontract the work in dispute was not relevant to its analysis of the arbitrability of the dispute. Id. at 95. This Court, therefore, cannot consider the merits of the two underlying labor disputes. See E.M. Diagnostic, 812 F.2d at 95 (noting that even if frivolous, court is not to rule on potential merits of underlying claim by union that employer violated collective bargaining agreement). A court must be careful not to weigh or rule on the potential merits of the underlying claims, consider "whether there is equity in a particular claim, or determin[e] whether there is particular language in the written instrument which will support the claim." ATT Technologies, Inc., 475 U.S. at 649-50.
Moreover, the Third Circuit's recognition that the right to subcontract has implied limits in no way compels the conclusion that the express applicability of Article G23 to "contract work" should not be given effect. Stated differently, even assuming that Lucent's right to subcontract was limited by an implied provision in the CBA, it does not alter the fact that Article G23 also expressly governs subcontracting disputes. The Unions unsuccessfully rely on Washington Mailers Union No. 26 v. Washington Post Co., 233 F.3d 587 (D.D.C. 2000) to argue that "Lucent's right to subcontract under Article G23 is limited and modified by Articles G1, G2, G7, and the implied covenant of good faith and fair dealings, which are arbitrable." (Pls.' Br. in Opp. To Def.'s Mot., at 6.) In Washington Mailers, § 13(a) of the agreement provided that the publisher "shall determine the number of regular situations to meet minimum production requirements . . . In the event of a dispute arising under this paragraph, the Union may grieve such dispute, but the dispute shall not be subject to arbitration."
In contrast, the arbitration clause provided for arbitration if the parties could not resolve a grievance alleging a "violation of a specific provision" of the collective bargaining agreement. The "specific provision" that the unions argued had been violated was the separate guarantee of "regular" employment in § 6(f)(1). That provision stated in pertinent part that "[a]ll situation holders actively working . . . and whose names appear on the Job Security Rosters . . . will be guaranteed regular, full-time positions as Mailers or Helpers for the term of this Agreement."
The court of appeals concluded that § 13(a) and § 6(f)(1) "undoubtedly — at least on their face — created some tension."Id. at 591. Because both sides' reading of the agreement was "at least equally plausible," the court held that the grievance was arbitrable. Unlike Washington Mailers, here, there is no question that Article G23 and Articles G1, G2, G7, and the implied covenant of good faith and fair dealings do not create any tension, even on their face.
Finally, as argued by Lucent, adopting the Unions' position that its grievances are not subcontracting disputes, but rather, are allegations of violations of implied covenants and other more general provisions of the CBA, would render meaningless the agreement by the parties as set forth in Article G23.
Therefore, regardless of which implied or express provision of the 1998 CBA the Unions seek relief under, and despite the Unions' attempt to narrow the definition of "subcontracting" to include only temporary work, Lucent is correct that the true nature of the dispute is the outsourcing of work, which is expressly governed by Article G23.
C. Arbitrability of Dispute
Ordinarily, there is a strong federal policy favoring arbitration agreements. John Hancock, 151 F.3d at 137. Therefore, "where the contract contains an arbitration clause, there is a presumption of arbitrability" unless there is "express exclusion or other forceful evidence" that the disputed grievance is not subject to arbitration. ATT Technologies, 475 U.S. at 650, 652. "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
Because the 1998 CBA contains Article G8, a broad arbitration clause, there is a "presumption of arbitrability." Although the Unions rely on E.M. Diagnostic Systems, Inc. v. Local 169, Int'l Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, 812 F.2d 91 (3d Cir. 1987) to argue that subcontracting falls within the "zone" or broad scope of the arbitration clause, Lucent does not dispute that subcontracting is within the scope of Article G8.
Rather, Lucent argues that Article G23 expressly excludes the disputed grievance from arbitration, and instead, requires that the dispute be resolved by a neutral third party. Paragraph 4 of Article G23 of the CBA provides in pertinent part:
The provisions of this article will be subject to the grievance procedure contained in Article G7, but shall not be subject to the arbitration provisions contained in Article G8.
The parties mutually desire to provide a vehicle, other than litigation, by which certain subcontracting disputes can be amicably and expeditiously resolved in the future.
Because of the competitive nature of our markets, fluctuating work loads, and the need to provide prompt response to customer demands, the Company cannot agree that it will not contract work which might otherwise be performed by its employees. It has agreed, however, to provide for a neutral third party review of its compliance with the applicable language of the collective bargaining agreement concerning contracting, as well as the commitments set forth in the Williams/Barry letter, which the parties have agreed to renew for the term of this new Agreement.
In furtherance thereof, the parties have agreed as follows:
In lieu of all other procedures set forth in Article G8 (Arbitration), the following procedure shall apply to grievances alleging that the Company has contracted work which would otherwise have been performed by bargaining unit employees . . . in which (1) layoffs of such employees are pending, (2) in which employees are on layoff with recall rights and are available to do the work which has been contracted.
. . .
These procedures shall be the sole and exclusive means by which contracting grievances unresolved after the exhaustion of the procedures set forth in Article G7 may be addressed.
(Id. at 56-58 (emphasis added)).
The Williams/Barry letter referenced in Article G23 states:
As to such work normally performed by our employees, we have always preferred not to contract such work out if it would otherwise be performed by bargaining unit employees in job titles in a geographical commuting area: (1) where layoffs of such employees are pending; or (2) where a layoff has already occurred and such laid off bargaining unit members retain recall rights and are available to perform such work.
In the future, the Company will not contract out such work, under the conditions outlined above, except when it has no other reasonable alternative. Under such circumstances, the Company will discuss its decision with the Union.
(Ligon Cert., Ex. C at 340 (emphasis added)).
The Unions concede that pursuant to Article G23, Lucent has the right to subcontract unless the subcontracting causes layoffs of bargaining unit members in the relevant work area, or affect those already laid off with recall rights. (See Pls.' Br. in Opp. To Def.'s Mot., at 2.) The Unions argue, and the Court agrees, that Article G23 precludes arbitration and instead, provides for neutral third-party resolution of only those "certain subcontracting disputes" specifically, those grievances "alleging that the Company has contracted work which would otherwise have been performed by bargaining unit employees . . . in which (1) layoffs of such employees are pending, (2) in which employees are on layoff with recall rights and are available to do the work which has been contracted." Indeed, Lucent does not challenge that under such circumstances, Article G23 mandates neutral third-party resolution of the dispute.
Because the Unions do not allege that either circumstance precluded contracting out of the bargaining unit work that was grieved, the Unions are correct that the two labor disputes are not subject to resolution by a neutral third-party. Moreover, contrary to Lucent's position, with the exception of the expressly identified disputes over pending layoffs and employees with recall rights, nothing in Article G23 suggests that all subcontracting issues must be resolved by a neutral third-party.
Article G23 does, however, expressly exclude from arbitration disputes over contracting work. As stated earlier, Article G23 clearly provides that "[t]he provisions of this article will be subject to the grievance procedure contained in Article G7, but shall not be subject to the arbitration provisions contained in Article G8." Likewise, there can be no dispute regarding the provision in Article G23 that the procedures set forth therein are "the sole and exclusive means by which contracting grievances unresolved after the exhaustion of the procedures set forth in Article G7 may be addressed." Moreover, nothing in Article G23 supports the Unions' view that that article only applies to the temporary contracting out of work and not the "permanent" removal of work.
Not only does the express language of the labor agreement compel the conclusion that issues regarding subcontracting are not subject to arbitration, Lucent contends that the bargaining history of Article G23 also supports that same conclusion. The Unions, however, maintain that because the "exclusion provisions" are not ambiguous, there is no need to resort to bargaining history to determine what the parties intended. See Int'l Union, United Auto., Ero. And Agri. Indep. Workers of America, UAW Local No. 1697 v. Skinner Engine Corp., 188 F.3d 130, 145-146 (3d Cir. 1999) ("Extrinsic evidence . . . may not be used to create an ambiguity where none exists . . . There are, therefore, limits on the use of extrinsic evidence in interpreting collective bargaining agreements.") Indeed, because the express language of Article G23 is clear, see discussionsupra, the Court need not examine the parties' bargaining history. In any event, bargaining history is not controlling. See E.M. Diagnostic, 812 F.2d at 97, n. 3 (citing Independent Petroleum Workers of America v. American Oil Co., 324 F.2d 903, 907 (7th Cir. 1963), aff'd without opinion, 379 U.S. 130 (1964)).
In summary, although the broad arbitration clause of Article G23 gives rise to a "presumption of arbitrability," there is "express exclusion or other forceful evidence" that the disputed grievance — subcontracting — is not subject to arbitration. See ATT Technologies, 475 U.S. at 650, 652. Therefore, the two labor grievances are not arbitrable under Article G8 of the 1998 CBA. Moreover, because the grievances do not involve allegations that layoffs of bargaining unit employees were pending or that employees with recall rights were available to do the contracted out work, the grievances are also not subject to the neutral third party grievance procedure set forth in Article G23 and in Williams/Barry letter.
III. CONCLUSION
For the reasons noted above, Defendant's motion for summary judgment is granted. Plaintiffs' cross motion for summary judgment is denied.
An appropriate Order accompanies this Opinion.
ORDER
This matter having come before the Court on the motion of Defendant for summary judgment pursuant to Fed.R.Civ.P. 56; and on the cross motion of Plaintiffs for summary judgment pursuant to Fed.R.Civ.P. 56; andThe Court having considered the submissions of the parties; and
The Court having heard oral argument on September 6, 2001; and
For the reasons set forth in the Court's Opinion filed this day; and
For good cause shown;
IT IS on this 6th day of September, 2001, hereby ORDERED that Defendant's motion for summary judgment is granted; and
IT IS FURTHER ORDERED that Plaintiffs' cross motion for summary judgment is denied; and
IT IS FURTHER ORDERED that Plaintiff's Complaint is dismissed; and
IT IS FURTHER ORDERED that the Clerk of the Court shall close this case.