Titan Tire Corp. v. United Steel

831 F.Supp.2d 1047

TITAN TIRE CORP.

v.UNITED STEEL.

No. 10 C 50296.

United States District Court, N.D. Illinois.

Dec. 22, 2011.

Matthew Fitzgerald Logan, Hinshaw & Culbertson, Rockford, IL, for Titan Tire Corp.

John G. Adam, Legghio & Israel, P.C., Royal Oak, MI, Stephen Anthony Yokich, Cornfield & Feldman, Chicago, IL, for United Steel.

FREDERICK J. KAPALA, District Judge.

Plaintiff, Titan Tire Corporation of Freeport, filed an action against defendant labor unions United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and its Local 745, to vacate an arbitration award rendered pursuant to a collective bargaining agreement between plaintiff and defendants. Now before the court are defendants' motion for summary judgment asking the court to uphold the arbitration award, and plaintiff's motion for summary judgment asking the court to vacate the award. For the following reasons, plaintiff's motion is denied, and defendants' motion is granted.

I. BACKGROUND

The following facts are taken from the Local Rule 56.1 statements of the parties. To the extent the facts are in dispute, the court will note such dispute and will consider the facts in the light most favorable to the nonmoving party with respect to each motion for summary judgment.

Plaintiff operates a manufacturing facility in Freeport, Illinois, that produces agricultural and other off-road tires. Plaintiff and defendants were parties to a collective bargaining agreement (the “CBA”) from January 2006 to November 19, 2010, as extended to December 2010. The CBA provides that plaintiff will pay the salaries of defendants' President and Benefits Representative (together, the “union representatives”), which are elected, full-time positions. Since purchasing the Freeport plant in 2006, plaintiff has made efforts to discontinue direct payment of the salaries to the union representatives. In October 2008, plaintiff ceased paying wages directly to the union representatives, stating that it believed such payment would be in violation of § 302 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 186(a). After plaintiff discontinued direct payroll payments to the union representatives, it issued checks to defendants for an amount equivalent to the pay formerly received by the union representatives. Defendants submitted a grievance to an arbitrator challenging this practice, who sustained the grievance, finding that the direct payment of wages by plaintiff to the union representatives was not illegal.

The CBA provides that plaintiff will pay an employee who is a designated union representative at his current hourly rate for time lost from his regular shift as a result of attending scheduled grievance meetings with plaintiff, up to a certain weekly maximum number of hours. The parties also entered into an agreement entitled “Understandings Outside of the Agreement” that provided, in part, that the union representatives would be paid by the company for certain activities not charged against the Union Business account described in the CBA. Finally, the parties entered into a Benefits Agreement that provides for compensation for the Benefits Representative, stating that the Benefits Representative will be paid his current hourly rate for forty-eight hours per week plus 2% of previous year's earnings as vacation pay, and will be considered on a leave of absence during the time he serves as Benefits Representative.

The arbitrator found that the union representatives spend most of their time handling affairs of defendants that are connected with affairs of the company. The President is head of the grievance and negotiating committee. The President also deals with a variety of bargaining unit problems such as seniority, job bidding, and overtime distribution. The Benefits Representative's job is to meet with employees to help them secure their benefits. The Benefits Representative works with management to control costs and simplify the administration of benefits, and in performing these duties, he takes assignments from management. He is involved in health, accident and sickness, dental, supplemental employment benefits, life insurance, pensions, and workers' compensation issues. Both the President and the Benefits Representative maintain an office in both plaintiff's plant and the Union Hall in Freeport. The President handles problems during regular office hours at the plant, but is also available at the Union office, his home, or by cell phone. The Benefits Representative is similarly available to meet with plaintiff's employees either at plaintiff's plant or the Union office. The union representatives do not need to seek approval from plaintiff for vacation time, but must inform plaintiff of planned vacations so that someone is designated to fill in for their position in their absence.

II. DISCUSSION

A court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Hemsworth v. Quotesmith.Com, Inc., 476 F.3d 487, 489–90 (2007). In evaluating such a motion, the court's role is not to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial. Hemsworth, 476 F.3d at 490. The court must draw all reasonable inferences in the light most favorable to the party opposing the motion. Id.

In their motion for summary judgment, defendants ask the court to enforce the arbitration award finding that plaintiff breached the CBA, whereas in its motion, plaintiff asks the court to overturn the award on the basis that it violates § 302 of the LMRA.

“[I]n labor arbitration, matters of contract interpretation are typically for the arbitrator, not for a reviewing court.” El Dorado Technical Servs., Inc. v. Union Gen. De Trabajadores, 961 F.2d 317, 319 (1st Cir.1992). Courts have limited authority to review an arbitrator's award entered pursuant to a collective bargaining agreement. United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 36, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987). The courts are not authorized to reconsider the merits of an award even though the parties may allege that the award rests on errors of fact or on misinterpretation of the contract. Id. As long as the arbitrator's award “draws its essence from the collective bargaining agreement, and is not merely his own brand of industrial justice,” the award is legitimate. Id. at 36, 108 S.Ct. 364 (quotation marks omitted). “The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards.” Steelworkers v. Enter. Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960).

However, a court may refuse to enforce an arbitrator's award under a collective bargaining agreement because it is contrary to public policy, as a specific application of the general doctrine that a court may refuse to enforce contracts that violate law or public policy. Misco, 484 U.S. at 42, 108 S.Ct. 364. Such refusal, however, “is limited to situations where the contract as interpreted would violate some explicit public policy that is well defined and dominant, and is to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests.” Id. at 43, 108 S.Ct. 364 (quotation marks omitted). Compliance with a federal statute furthers a public policy. Id.;W.R. Grace & Co. v. Rubber Workers, 461 U.S. 757, 770–72, 103 S.Ct. 2177, 76 L.Ed.2d 298 (1983).

The Seventh Circuit has held that where the question before the court is whether an arbitration award violates public policy, the court engages in a de novo review as to that issue. Chrysler Motors Corp. v. Int'l Union, Allied Industrial Workers, etc., 959 F.2d 685, 687 (7th Cir.1992); see also Chi. Bears Football Club, Inc. v. Haynes, No. 11 C 2668, 816 F.Supp.2d 534, 537, 2011 WL 4062511, at *2 (N.D.Ill. Sept. 13, 2011). However, while the court may consider de novo plaintiff's argument that public policy prohibits enforcement of the arbitration award, the court is bound to accept the arbitrator's interpretation of the CBA, as well as his legal and factual conclusions. ANR Advance Transp. Co. v. Int'l Broth. of Teamsters, Local 710, 153 F.3d 774, 778 (7th Cir.1998); see also Chi. Bears Football Club, Inc., 816 F.Supp.2d at 537, 2011 WL 4062511, at *2.

Here, defendants argue that the payment of wages directly to the union representatives required by the CBA would not be in violation of § 302 of the LMRA. “Section 302 generally forbids employer payments to representatives of employees (unions).” Perry v. Sheet Metal Workers' Local No. 73 Pension Fund, 585 F.3d 358, 364 n. 3 (7th Cir.2009). The statute provides certain exceptions, however, including one for money paid “by an employer ... to any officer or employee of a labor organization, who is also an employee or former employee of such employer, as compensation for, or by reason of, his service as an employee of such employer.” 29 U.S.C. § 186(c)(1). Defendants contend that the payments ordered by the arbitration award fit within this exception because the payments are “by reason of” the President's or the Benefits Representative's service as an employee or former employee of plaintiff.

The LMRA amended the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 151–169, which defines the term “employee” as follows:

The term “employee” shall include any employee, and shall not be limited to the employees of a particular employer, unless [this Act] explicitly states otherwise, and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice, and who has not obtained any other regular and substantially equivalent employment, but shall...