Petition — Jefferson Trucking Co. v. Chauffeurs, Teamsters, Warehousemen & Helpers, Local Union No. 135
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80-849 FILED
NOV 26 1980
MICHAEL RODAK, Jk, CLERK
SUPREME COURT OF THE UNITED STATES
October Term , 1980
No
Jefferson Trucking Company, Petitioner
against
Chauffeurs, Teamsters, Warehousemen, and Helpers
Local Union No. 135, Respondent
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Barry L. Moon, Attorney
Barry L. Moon, P.C.
Counsel for Petitioner
14292 N. Fenton Road
Fenton, Michigan 48430
(313) 629-8801
QUESTIONS PRESENTED
L.
WHICH LAW APPLIES IN ACTIONS UNDER 29 U.S.C.
§141 ET SEQ. THE LABOR MANAGEMENT RELA-
TIONS ACT OF 1947 (LMRA), THE INDIANA
ARBITRATION ACT, OR THE UNITED STATE
ARBITRATION OF 1925 (USAA),9 U.S.C. § LETSEQ. IF
EITHER.
I.
WHEN THE CHOICE IS MADE BY A FEDERAL
DISTRICT COURT TO ADOPT THE STATE STATUTE
OF LIMITATION IN AN ACTION TO ENFORCE AN
AWARD UNDER LMRA PROCEEDINGS CAN THE
CONSIDERATION OF THAT COURT IGNORE THE
SUBSIDIARY MATTERS OF STATE LAW ON COR-
RESPONDING COUNTER-CLAIMS AND TOLLING?
OR IF THE LOWER COURT WAS REQUIRED TO USE
THE STATUTE OF LIMITATION OF THE UNITED
STATES ARTIBRATION ACT IS SUCH A COURT
REQUIRED TO CONSIDER FEDERAL DECISIONAL
LAW ON COUNTER CLAIMS AND TOLLING?
we
Pep >
TABLE OF CONTENTS
Pages
Issues Presented for Review.........-.+eeeeeeeeees ii
Index of Authorities Cited............ce cece ee eees Ill
Statement of Jurisdiction and Proceedings ........ 1-4
Statement of Facts.........ccccccccccccccecsoees 5-7
Arguments
L THE LOWERCOURT ERRED BY
HOLDING THE NINETY (90) DAY
LIMITATION ON FILING A MOTION TO
VACATE CONTAINED IN THE INDIANA
ARBITRATION ACT PRECLUDED DE-
FENDANT FROM DEFENDING AGAINST
PLAINTIFF’S COMPLAINT TO ENFORCE
THE ARBITRATION AWARD........... 8
A. The Lower Court erred by applying the Indiana
Arbitration Act as opposed to the Federal Arbitration
ns ond ek beee nek endesenet wees eneweak ut 8
B. Under the Federal Arbitration Act defenses which
could have been used as grounds to vacate the Award
can be raised to preclude confirmation of the Award
after the time limitations in Section Twelve of the Act
have elapsed...........0eceeeeeeeeceeeeeeeeeeeee
C. The Lower Court erred by holding that the Statute
of Limitations ran against Defendant's defenses to
Plaintiff s Complaint to confirm the Award
D. TheLowerCourt erred by failing to construe the
Indiana CounterClaim saving Provision as permitting
recoupment by way of defense
E. The complete elimination of the right to defend
against the invalidity of an Arbitration Award is not
consistent with Federal Labor Policy
IL THE LOWER COURT ERRED BY DENYING
DEFENDANT'S MOTION FOR LWAVE TO MOVE
TO VACATE THE ARBITRATION AWARD
6. Conclusion and Relief
INDEX OF AUTHORITIES CITED
Case Lawic Page
Allison Inc. v Minikin Storage of Omaha, Inc. 452 F.
Supp 573, 575 (D. Neb. 1978)..........cceeeeeees 15
American Airlines Inc. v Louisville and Jefferson County
Air Board, 269 F2d 811 (6th Cir. 1959) ............ 5
Anderson v Biggs, 118 App. 266, 77 NE 2d 909....... 13
Brown v Bridgeport Rolling Mills, 245 F. Supp. 41, 43, (D.
uh cb ses esas wa we seahen 4 bee toe es 15
Bull v United States, 295 US 247, 262............... 13
Burton v Martin Oil Service, Inc., 295 F2d 679 (7th Cir.,
NE Sct aan ck baa ENE wees deere eee Cows 10-12
Catz American Co., Inc. v Pearl Grange Fruit Exchange, Inc.,
292 F. Supp. 549, 551 (S.D. NY, 1968) ........... 15
Chauffeurs, Teamsters, Warehousemen and Helpers Local
Union No. 135 v Jefferson Trucking Co., Inc., 473 F.
Supp. 1255, 1256, 1257, 1258, 1259, 1260 (S.D. Ind.
Fe iu coints hasta e Chi ceseeesaneeaye 3,12,13,18
Cannon v Consolidated Freightways Corp., 524 F2d 290,
ey, Ur Ry |. ipa an apnea eC Srna 19
Chauffeurs, Teamsters, Warehousemen and Helpers
Local 394 v Ruan Transport Corp., 473 F. Supp.
298,299,300,301,302,303 (N.D. Indiana
> NSPE DP aut Uy “Sa area eat ar ag RL BD 16,17,18
Coenen v R.W. Pressprich & Co., 453 F2d 1209
ES UE A 1A% ehh eek ds kane Kehoe a ken: 5,14
Fou v Barker, 14 Ind. 300 (1860 .. 0... scccwccvcscsces 14
Fukaya Trading Co., S.A.V. Eastern Marine Corp.,
322 F. Supp. 278, 280 (E.D. LA, 1971) ........... 15
General Electric Co. v Local 205,353 US547,548 (1957)... 6
Harvey Aluminum, Inc., v Steelworkers, 263 F. Supp. 488
ee es EN sad ook as Fuk eas ee eek ss va ead 20
Hoover Motor Express Co., Inc., v Teamsters, Chauffeurs,
Helpers and Taxi Cab Drivers, Local No. 327, 217
F2d 49 52-53 (6th Cir., 1954) ........ cece cece eeees 6
International Union of Operating Engineers, Local
No. 450 v Midvalley Inc., 374 F.Supp. 1104 (D.D.
. oh, Se rr et ry resets Pree eee 11
International Union of Operating Engeineers, Local
No. 139 v Carl A. Morse,Inc., 529 F2d 574, 581
‘yi Ts “eee 6,7
Lee v Olin Mathieson Chemical Corp., 271 F. Supp.
635 (D.C. Va 1967)... ccccccccccccvcdccecssccces 11
Litton R.C.S., Inv. v Pennsylvania Turnpike
Commission, 376 F. Supp. 579, 585-587 (E.D. Pa.,
1974); Affd 511 F2d 1394 (3rd Cir. 1975).......... 5
Luckenback v United States, 312 F2d 545 (2d Cir.
ee ee ees wae arebkee hs o's 10
Local 205 United Elec. Radio and Machine Workers
of America, (U.E.) v General Electric Company
233 F2d 85, 100 (Ist Cir., 1956); aff'd 353 US
BOT TAIT, oda bow kn WAW ees Y ae bPN es tee te detenores 5
Mason Dixon Lines, Inc. v Local 560, IBT,
SAD PEG OO), (OF CAF. 1GTI).. 0. cscs ccccccaceees 6
Nalley v McClements, 295 F. Supp. 1357, 1359
CER SEED su cc daRbae ned ededienerrcecescuse 12,13
Pietro Scalzitti Co., v International Union
of Operating Engineers, Local No. 150
BOL FRE O76 C7 ed CARs, LOGO) cece cnccccsscccces 6,16
Riko Enterprises, Inc. v Seattle Supersonics
Corp., 357 F. Supp. 521,523,526 (S.D. NY1973)...... 15
Tamari v Conrad, 552 F2d 778 (7th Cir., 1977)..... 11,16
Tenny Engineering, Inc. v United Electrical
Etc., Workers, 207 F2d 450 (3rd Cir.,
SORE Se ee rt errs ere re ee ee ee 6
Textile Workers Union v Lincoln Mills,
353, U.S. 448, 557-578 (1957) ...... cece ewww wees 6,7
The Hartbridge, 57 F2d 672, 673, 674 (2d Cir.), cert.
den’d, 228 U.S. 601 (1932)..........ceeeeees 14,15,17
United States v United States Casualty Co., 218
F. Supp. 653, 657 (D.Del, 1962)............66- 13,14
United States v Western-Pacific R. Co., 352 US 59,
70,71,72,77 at 169 (1956) ........ccccecceeees 8,9,12
Woodruff v Garner, 27 Ind. 4 (1866) .............0645- 13
Zell v Jacoby Bender, Inc., 542 F2d 34,
yi te Se ee eee 5,14
World Airways, Inc. v International Brotherhood of
Teamsters, 578 F2d 800 (9th Cir., 1978).......... 19
7
PETITION FOR A WRIT OF CERIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Petitioner prays that a Writ of Ceriorari be issued to review
the judgment herein of the United States Court of Appeals
for the Seventh Circuit entered in the above entitled case on
August 28, 1980.
Decisions Below
The official citation of the decisions below are 473 F. Supp.
1255 (S.D. Ind. 1979) 628 F.2d 1023 (7th Cir. 1980)
presented in the appendix.
Jurisdiction
The date of order from which relief is sought is August 28,
1980. No rehearings were sought. No extensions have been
prayed for at anytime.
The statutory provision believed to confer jurisdiction on this
Court is 28 U.S.C. 1254. The Courts below were presented
the case on the jurisdictional basis of 28 U.S.C. §1337, based
upon an action to enforce a labor contract under the Labor-
Management Relations Act, 29 U.S.C. §185
PETITION FOR WRIT OF CERTIORARI
Outline of the Case
On October 18, 1977, an employee, Paul Nettleton, was
involved ina severe accident while driving a truck of Appellant
Jefferson, involving extensive property damage. On October
19, 1977, Nettleton was given written notice that he was
discharged for the following reasons in writing with his
representative present. (Appellee is the party representative
for Paul Nettleton).
“On October 18, 1977, at approximately 8:30
p.m. Mr. Nettleton was involved in an accident
while driving units 992 and 568 loaded with
paper. The accident is a major chargeable
accident due to excessive speed conditions.
Driver is discharged.”
This Notice was given pursuant to Article XI of The Collective
Bargaining Agreement and Paragraph9 of the Uniform Rules
and Regulations which are attached as Appendage B of the
Agreement. Both the Agreement and the rules provide that
the discharge must be written notice and that a copy of the
Notice must be directed to the Local Union and Shop
Steward. No further requirements regarding Notice of
Discharge are contained in the Agreement.
Pursuant to Article X of the Collective Bargaining Agreement,
Mr. Nettleton filed a grievance and the matter went through
the first three steps of the grievance procedure without
settlement prior to presentation to the Joint Committee.
Throughall three steps Mr. Nettleton maintained the position
that the charge was of a major chargeable accident due to his
negligence on the day in question was not true.
On November 7, 1977, Jefferson was provided with a copy of
the agenda for the November 17, 1977 Joint Committee
meeting. This agenda contained the following description of
ols
the matter to be heard:
“I protest letter of discharge dated 10/19/77.
The charge is not true. I want to be reinstated
with full seniority and paid for all time lost plus
health, welfare and pension.”
On November 17, 1977, the Appellant appeared at the Joint
Committee meeting prepared to establish that Nettleton was
in fact guilty of a major chargeable accident by testimony and
documentary evidence. However, Appellant's repesentatives
were not even permitted to present evidence because they had
“failed to cite the specific contract Article or Rule violation as
well as the offense... .”. The Committee decided that as a
result of this failure the employer was required to reinstate
Plaintiff with full seniority and back pay. This decision was
made in spite of the fact that there is no provision in the
contract of Uniform Rules requiring the employer to cite the
specific contract Article or Rule violation as well as the offense
in order to discharge an employee.
Appellee initiated this action on April 6, 1978, by filing a
Complaint to Enforce a Joint Committee Award entered on
November 17, 1977. Federal jurisdiction for Appellee’s
Complaint was predicated on §301 of the Labor-
Management Relations Act, 29 U.S.C. §185. Appellant
responded to Appellee’s Complaint with an Answer which
included eight affirmative defenses to enforcement of the
Award.
On May 26, 1978, Appellee moved to strike Appellant's
Affirmative Defenses and moved for Summary Judgment on
the ground that Appellant’s failure to move to vacate, modify
or correct the Award within ninety days of its entry precluded
Appellant from defending against the Award under both
Federal and State Law.
Appellant responded with a Brief in Opposition to Appellee’s
Motions which rebutted Appellee’s position under Federal
and State law. In addition, Appellant filed a Motion seeking
_™
leave to to move to vacate the Joint Committee Award
pursuant to exisiting authority in favor of this proposition and
also filed a proposed Motion to Vacate. Several response
Briefs and reply Briefs followed prior to the Court's issuance
of a Memorandum Opinion and Order on July 27, 1979.
Chauffeurs, Teamsters, Warehousemen and Helpers Local
Union No. 135 vs. Jefferson Trucking Company, Inc., 473 F.
Supp. 1255 (S.D. Indiana, 1979).
The Court’s Opinion addressed one basic issue in deciding
whether the three Motions should be granted or denied:
““
.
. .whether Defendant, the unsuccessful
party at arbitration, who did not move to
vacate the disfavorable Award within ninety
days as required under Indiana Law or within
three months as required by Federa’ Statute,
may now raise contentions, which he could
have raised as grounds to vacate in such a
Motion, as Affirmative Defenses in the instant
suit to enforce the Award, which suit was filed
after the three-month and ninety- day periods
but within the time limits set for filing a suit to
enforce or confirm an award.” See Jefferson,
supra, 473 F. Supp. at 1256-1257.
In the lower court Appellant presented affirmative defenses
on eight grounds including (1) that the Joint Committee acted
in an arbitrary and discriminatory manner by precluding
Appellant from submitting any evidence on its behalf at the
hearing, (2) that ther Joint Committee exceeded its authority
by adding a term to the Agreement requiring citation to the
contract Article and Rule violation number and (3) that
enforcement of the Award would violate Federal Regulations
regarding Medical qualifications of truck drivers because the
driverin question had objective heart disease that could cause
blackouts while driving and thereby explain a pattern of
accidents that Nettleton was involved in that jeopardized not
only company property and freight, but the property and lives
3
of others, in violation of Federal safety standards binding on
the Driver and the Company.
L
‘WHICH LAW APPLIES IN ACTIONS UNDER 29 U.S.C.
§141 ET SEQ. THE LABOR MANAGEMENT RELA-
TIONS ACT OF 1947 (LMRA), THE INDIANA
ARTIBRATION ACT OR THE UNITED STATES
ARBITRATION OF 1925 (USAA),9 U.S.C. §1 ET SEQ., IF
EITHER.
The Lower Court’s holding that the ninety (90) day limitation
contained in the Indiana Arbitration Act, LC. 34-4-2-13,
precluded Defendant from defending against the Complaint
to enforce the Arbitration Award after the passage of ninety
(90) days gives rise toanumber ofissues. The initial issues are
whether the Court should have applied the law under the
Federal Arbitration Act rather than the Indiana Arbitration
Act, and if so, whether the law under the Federal Act bars
defenses after three months. Other issues concern whether
the Lower Court erred in finding that a statute of limitations
could run so as to bar a defense against Plaintiff's action
regardless of which statute of limitations is appropriate. It is
Defendant's position that when each of these issues is
examined that it must be concluded that the lower court erred
in holding the ninety (90) day limitation precluded Defendant
from defending against Plaintiffs action to enforce the Joint
Committee Award. Defendant will address each issue
separately below.
A.
THE LOWER COURTERRED BY APPLY-
ING THE INDIANA ARBITRATION ACT
AS OPPOSED TO THE FEDERAL ARBI-
TRATION ACT.
It is well settled that if the Federal Arbitration Act is
applicable then Federal Law, regarding all questions of
interpretation, construction, validity, revocability and
enforceability, controls to the exclusion of State Law. Coenen
v. R.W. Pressprich& Co., 453 F2d1209 (2d Cir. 1972); Zellvs.
Jacoby Bender Inc., 542 F2d 34 (7th Cir., 1976); Litton
R.C.S., Inc. v Pennsylvania Turnpike Commission, 376 F.
Supp. 579, 585587 (E.D. Pa, 1974); Affd511 F2d 1394 (3rd
Cir. 1975); American Airlines Inc. v Louisville and Jefferson
County Air Board, 269 F2d 811 (6th Cir. 1959).
In Zell v Jacoby Bender, Inc., Supra, 542 F2d at 37, it was held
that in order to determine whether the Federal Arbitration
Actis applicable, the Court must first look to sections one and
two of the Act, 9 U.S.C. § 1 and 2, to determine whether the
contract is one “evidencing a transaction involving
commerce.” Given this holding, the crux of the issue in the
instant case is whether the collective bargaining agreement is
excluded by the following language contained in Section | of
the Act:
“nothing herein contained shall apply to
contracts of employment of seamen, railroad
employees or any other class of workers
engaged in foreign or interstate commerce.” 9
U.S.C. §1
Appellant will not pretend to suggest that the meaning of this
exclusion is clear. There is a definite division among the
Circuits as to not only whether or not collective bargaining
agreements are excluded by this Section but also, in those
Circuits where it is held that collective bargaining agreements
are not excluded, there is a division as to what kinds of
collective bargaining agreements are excluded. For example,
the First Circuit in Local 205, United Electrical Radio and
Machine Workers of America (U.E.) vs. General Electric
Company, 233 F2d 85, 100 (1st Cir., 1956); affirmed 353 US
547 (1957)' held that “the exclusion in Section One does not
embrace collective bargaining agreements, as distinguished
from individual “Contracts of Employment’, and that the
Arbitration Act applies to collective bargaining agreements
within the limitations of other sections of the Act.” The Third
Circuit has held that it applies to all collective bargaining
agreements except agreements of transportation workers.
Tenny Engineering, Inc. vs. United Electrical, Etc., Workers,
207 F2d 450 (3rd Cir. 1952); but compare, Mason Dixon
Lines, Inc. vs. Local 560, IBT, 443 F2d 807, (3rd Cir. 1971)
indicating that after the Supreme Court’s decision in Textile
Workers Union vs. Lincoln Mills, 353 US 448 (1957) that this
distinction may no longer be valid. Indeed, the Sixth Circuit
has found Section One not to exclude collective bargaining
agreements in the transportation industry in a decision
involving an affiliate of the very union involved in this action.
See Hoover Motor Express Co.,Inc. vs. Teamsters,
Chauffeurs, Helpers and Taxi Cab Drivers, Local No. 327,217
F2d 49, 5253 (6th Cir., 1954).
The decisions in the 7 th Circuit regarding this issue are also in
conflict. For example, recently in International Union of
Operating Engineers, Local No. 139 vs. Carl A. Morse, Inc.,
529 F2d 574, 581 (7th Cir. 1976), this Court upheld the
application of the Federai Arbitration Act to a collective
bargaining agreement in an industry it described as “mobile
and tre sitory”’. Yet, in Pietro Scalzitti Co., vs. International
Union of Operating Engineers, Local No. 150, 351 F2d 576
(7th Cir., 1965) this Circuit indicated that it was adopting the
Third Circuit view that the exclusion in Section One covered
1. The Supreme Court did not reach this issue in its
affirmance. Instead it affirmed solely on the ground that
Federal substantive law under §301(a) furnished the right to
enforce an agreement to arbitrate. General Electric Co. v
Local 205, 353 US 547, 548 (1957).
collective bargaining agreements in the transportation
industry. However, it should be noted that the Court in
Scalzitti, Supra, was actually broadening the scope of the
coverage of the Federal Arbitration Act to collective
bargaining agreements “in accord with the modern
trend,” “the intent of Congress” and the policy in favor of
arbitration advanced in Lincoln Mills, Supra, 351 F2dat577-
578.
Given the law above and the modern trend to apply the
Federal Arbitration Act to all collective bargaining
agreements, including those in“ mobile” industries Operating
Engineers vs. Carl A. Morse, Inc., Supra, 529 F2d at 581,
Defendant suggests that the First and Sixth Circuits’
construction of the exclusionary provision in 9 USC §1 as
applying only to individual contracts of employment as
opposed to collective bargaining agreements is the
interpretation most consistent with present authority in this
Circuit and in others’. Therefore, this Court should find the
Lower Court’s application of the Indiana Arbitration Act as
opposed to the Federal Arbitration Act erroneous.
2. Even Plaintiff appears to agree with the applicability of the
Federal Act since it argued that the time limitations in9 USC
§12 barred Defendant’s defense after three months. (16a
1).
a
QUESTION PRESENTED
Il
WHEN THE CHOICE IS MADE BY AFEDERAL COURT
TO ADOPT THE STATE STATUTE OF LIMITATION IN
AN ACTION TO ENFORCE AN AWARD UNDER LMRA
PROCEEDINGS, CAN THE CONSIDERATION OF
THAT COURT IGNORE THE SUBSIDIARY MATTERS
OF STATE LAW ON CORRESPONDING COUNTER-
CLAIMS AND TOLLING? OR IF THE LOWER COURT
WAS REQUIRED TO USE THE STATUTE OF
LIMITATION OF THE UNITED STATES ARBITRA-
TION ACT IS SUCH A COURT REQUIRED TO
CONSIDER FEDERAL DECISIONAL LAW ON COUN-
TER CLAIMS AND TOLLING?
THE LOWER COURTERRED BY HOLDING THAT THE
STATUTE OF LIMITATIONS RAN AGAINST DEFEN-
DANT’S DEFENSES TO PLAINTIFF’S COMPLAINT TO
CONFIRM THE AWARD.
Regardless of whether the limitations contained in the
Indiana Actor the Federal Act are applicable, itis Defendant's
contention that the Lower Court's ruling that these time
limitations bar the assertion of a defense to a Complaint to
enforce an Award is clearly erroneous. Appellant makes this
contention regardless of the applicability of Indiana’s
counter-claim tolling provision.
The Lower Court’s holding that the ninety day statute of
limitations bars not only affirmative actions against the
Arbitration Award but also defenses to confirmation of the
Arbitration Award is irreconcilable with the well settled
principle under Federal Law that limitations do not normally
run against a defense.
In United States vs. WesternPacific R. Co.,352 US 59, (1956)
the United States Supreme Court addressed an issue quite
analgous to the present case. In Western- Pacific, Supra, the
Court was faced with a procedural anomally quite similar to
the instant case, in that, in a dispute regarding tariffs, the
United States could be sued for overcharges for six years while
it had only two years to sue for undercharges. Western- Pacific
R. Co., Supra352 US at70-71. The lower Court hadruled that
the United States failure to bring suit for undercharges
against the company within tw years after the charges were
made precluded the Government from defending against the
company’s claim that it had been overcharged since that suit
was brought after the two-year limitation on the
Government’s right to sue for an undercharge but within the
six year limitation on the company’s right to sue. In reversing
the lower Court’s holding, the Court noted that the concept of
a limitation on actions barring the right to defend against suit
was totally alien to the very purpose of a statute of limitations:
“the basic policy behind statutes of
limitations has no relevance to the situation
here. The purpose of such statutes is to keep
stale litigation out of the courts. They are
aimed at lawsuits, not at the consideration of
particular issues in lawsuits. Here the action
was already in court and held to have been
brought in time. To use the statute of
limitations to cut off the consideration of a
particular defense in the case is quite foreign
to the policy of preventing the commencement
of stale litigation. We think it would be
incongruous to hold that once a lawsuit is
properly before the court, decision must be
made without consideration of all the issues in
the case and without the benefit of all the
applicable law. If this litigation is not stale,
then no issue in it can be deemed stale.” 352
U.S. at 72, 77 S. Ct. at 169.
-9-
The very same principle was recognized as applicable under
Indiana Law in Burton v Martin Oil Service, Inc., 295 F2d679
(7th Cir., 1961). In Burton, the Plaintiff acquired title to land
through a tax sale and sued Defendant for possession.
Pursuant to Indiana law, Defendant was required to contest
the validity of the tax sale by bringing an action within one year
but failed to do so. The time limitation on Plaintiff s right to
sue was greater than one year. However, Defendant defended
on the ground that the tax sale was invalid. Plaintiff moved for
Summary Judgment, arguing that the statute of limitations
barring Defendant's right to initiate an action to contest the
validity of the sale also barred the Defendant's right to defend
on the ground that the sale was invalid. The Trial Court
overruled Plaintiff's Motion and she appealed contending
that the statute of limitations “would be rendered negatory’ if
it did not bar an affirmative defense which could have been
used as a ground to invalidate the award. Burton, supra, 295
F2d at 680-681. However, this Copurt rejected Plaintiff's
argument and affirmed the District Court holding that it was
clear under Indiana decisional law that“ actions are barred but
defenses are not.” Burton, supra, 295 F2d at 681.
A similar result was reached in Luckenbach v United States,
312 F2d 545 (2d Cir. 1963). The Plaintiff in Luckenbach
sought a declaration of nonliability against the Government.
The Government argued that the Plaintiffs right for
declaratory relief was barred by the Statute of limitations.
(The Government's right to sue had not been barred).
However, the Court rejected this argument finding that the
Plaintiffs suit was in the nature of a defense, since he only
sought non-liability and pointed out that under Federal luw
such defenses are not time barred. Luckenbach, supra, 312
F2d at 549-550.
The proposition to be extracted from the cases above is that if
claims accruing to opposing parties arise out of the same
transaction and separate limitations of different time periods
govern the claims of each party then the party with the shorter
-10-
(oe erwtce
limitation period will be permitted to defend against an action
initiated by the party with the longer limitation period even
though the shorter limitation period may bar the right of the
defending party to initiate their own action. The rationale for
this proposition is that, once an action arising out of the
transactionis initiated, the policy behind barring an issue that
could have been raised in the time barred action is no longer
present. That is, the limitation period is no longer useful to
prevent stale litigation of this issue since it has been raised by
the initiation of the action by the party with the longer
limitation period.
The very circumstances covered by this principle are present
in the instand action. Here, the losing party in an arbitration
award has only three months, 9 USC § 12, or ninety (90) days,
LC. 34-4-2-13, to initiate litigation to vacate the Award.
However, the winning party has at least one year to initiate
litigation to enforce the Award. 9 U.S.C. §9, LC. 34-4-2-12. If
the losing party does not bring a Motion to Vacate the Award
within three months the winning party still has the right to seek
enforcement for nine(9) more months.If enforcement is
sought within the nine month period then the purpose of the
three month limitation of preventing stale litigation has been
defeated since the same issues reappear once enforcement is
sought. That is, the validity of the Award comes into issue
regardless of whether the losing party moves to vacate
because this jurisdiction and others have held that an
Arbitration Award is not self executing and the Courts have no
power to enforce aninvalid Award. See T'amariv Conrad, 552
F2d 778, 781 (7th Cir., 1977) where it was held that an
Arbitrator’s Award is “not self executing” when holding an
unsuccessful party at arbitration has an option to
affirmatively defend against an Award as opposed to initiating
an action to vacate. Accord: International Union of Operating
Engineers, Local No. 450 v Midvalley Inc., 374 F. Supp. 1104
(D.C. Tex, 1972) and Lee v Olin Mathieson Chemical Corp.,
271 F. Supp. 635 (D.C. Va 1967) where both Courts held the
ott.
Court has no power to enforce an invalid Award thereby
implying the validity of the Award is always in issue. Under
these circumstances, it makes little sence to hold that the
losing party may not assert a defense against enforcement of
the Award because once the action is brought the issues may
be litigated. United States v Western-Pacific R. Co., supra,
352 US at 72.
In the instant case, the Court construed Appellant's defenses
as a claim for affirmative relief and found that under such
ciremstances Appellant could not defend. Jefferson, supra,
473 F. Supp. at 1258. The Court relied on Nalley v
McClements, 295 F Supp. 1357 (D. Del. 1969) for this
construction of Appellant’s defenses. The Court's reliance on
Nalley v McClements, supra, is misplaced with respect to the
issue of Appellant's right to defend. In Nalley, the Defendant
sought leave to amend to file a Counterclaim after the statute
hadrun. NalleyvMcClements, supra, at1359. The Courtheld
that the Counterclaim was a request for affirmative relief and
not a defense. Hence, while the Nalley case may have
relevance to Appellant’s attempt to move for leave to file a
Motion to Vacate it is not applicable to the issue of whether
Appellant could defend against enforcement. The cases
applicable to Appellant’s right to defend are United States v
WesternPacificR. Co., supra, and Burton v Martin Oil Service
Inc., supra, which speak to defenses and not Counterclaims.
Given the law above and the circumstances of the instant case,
it is clear that the Lower Court erred in precluding the
Appellant defending against enforcement of the Award.
THE LOWER COURT ERRED BY FAIL-
ING TO CONSTRUE THE INDIANA
COUNTERCLAIM SAVING PROVISION
AS PERMITTING RECOUPMENT BY
WAY OF DEFENSE.
The Lower Court found that the Indiana Counterclaim
Savings Provision would not permit Appellant to defendant
against enforcement of the Award on the grounds that it was
-12-
procedural as opposed to substantive and a request for
affirmative relief as opposed torecoupment. Jefferson, supra,
473 at 1258. While the Court’s opinion finds some support in
Nallye v McClements, supra, Appellant contends that this
portion of the Court’s holding is not dispositive in light of
arguments A through C. Moreover, the Nalley case is
distinguishable from the issue here since Appellant only seeks
to use this provision in support of its right to defend and not in
support of an affirmative claim.
Defendant ‘suggests that the better view as to whether the
Indiana Counterclaim tolling provision should give rise to the
right to recoup against an action to enforce the Award is found
in United States v. United States Casualty Company, 218 F.
Supp. 653 (D. Dev., 1962). ~The Court in United States
Casualty Co. held that the Delaware Rules of Civil Procedure
regarding compulsory Counterclaims were based upon the
defense of recoupment under Delaware Common Law and
that both aspects of this Delaware Law gave rise to
substantive Delaware Law permitting recoupment by
Counterclaim in an action underF ederal Law after the Statute
of limitations hadrun. United States Casualty Co., supra, 218
F. Supp. at 657. The Court relied on the decision of Bull v
United States, 295 US 247, 262, for the proposition that the
Statute of limitations never bars recoupment.
The Court defined recoupment as “a defensive measure”. . .
growing out of the same transaction or occurrence which was
the basis of the opponent’s claim and utilized for reduction or
extinguishment of the opponent's claim.” United States
Casualty Co., supra, 218 F. Supp. at657. This is exactly what
Appellant seeks to do with its defense to enforcement.
Appellant seeks nothing in excess of Plaintiff s claim that can
be construed as a request for Affirmative Relief.
Indiana Trial Rule 13 J was initially based upon the Common
Law Doctrine of Recoupment, Woodrull v Garner, 27 Ind. 4
(1866), later codified in Indiana Statute Anderson v Biggs,
118 App. 266 77 NE 2d 909 and finally incorporated into the
-13-
!
Trial Rules, Indiana Trial Rule 13 J. Hence, while the
provision may now be placed within the Trial Rules, it has a
definitive basis in the substantive law of Indiana. See, Fox v
Barker, 14 Ind. 309 (1860). Given this history, under the
rationale of United States v United States Casualty Co.,
supra, Defendant's defenses should be construed to be in the
nature of recoupment and not barred by any statute of
limitation.
UNDER THE FEDERAL ARBITRATION
ACT DEFENSES WHICH COULD HAVE
BEEN USED AS GROUNDS TO VACATE
THE AWARD CAN BE RAISED TO
PRECLUDE CONFIRMATION OF THE
AWARD AFTER THE TIME LIMITA-
TIONS IN SECTION TWELVE OF THE
ACT HAVE ELAPSED.
If the applicability of the Federal Arbitration Act is
established, it is settled that Federal Law is to be applied to
the exclusion of State Law. Zellv Jacoby Bender, Inc., Supra.
The question in this context is whether the three month
limitation on motions to vacate an award precludes the
assertion of a defense to enforcement of an award after the
expiration of three months under Section Twelve (12) of the
Federal Arbitration Act. Every Federal authority Appellant
has found on this issue holds that defenses are not barred by
the passage of three months under 9 U.S.C. §12.
The earliest authority to speak to this issue was The
Hartbridge, 57 F2d 672 (2d cir. 1932); cert. denied, 288 US
601 (1932). In The Hartbridge, supra, the Plaintiff moved to
confirm the Award within three months of its entry. The party
seeking to vacate the Award had lost their exhibits in support
of their grounds for vacating the Award and had notified the
District Court of its intent to move to vacate as soon as the
exhibits were found. The District Court confirmed the
-14-
Award before the expiration of three months holding that the
opposing party could still move to vacate after confirmation.
The opposing party appealed before the three months
elapsed and the Circuit Court held that the District Court had
abused its discretion in confirming the Award. However, by
the time the appeal was decided, well over three months had
passed since the Award was entered. The Court noted that
even though three months had passed the opposing party
could still defend against confirmation, referring to authority
for this proposition. The Hartbridge, Supra, 57 F2d at 673.
However, the Court did not “commit” itself to this authority
since, under the circumstances, the period of appeal tolled the
running of the three month period, thereby leaving the
opposing party enough time to file a motion to vacate. The
Hartbridge, Supra, 57 F2d 673-674.
Federal cases addressing this issue after The Hartbridge,
Supra, relied on the reference in The Hartbridge to authority
for the proposition that “even though the statutory period for
moving to vacate an award has expired, a party may use the
statutory grounds for vacation in defense of a motion to
confirm ” under the Federal Arbitration Act. See Brown v
Bridgeport Rolling Mills, 245 F. Supp 41, 43, (D. Conn,
1965); Catz American Co., Inc. v Pearl Grange Fruit
Exchange, Inc., 292 F. Supp. 549, 551 (S.D. NY, 1968);
Fukaya Trading Co., S.A.V. Eastern Marine Corp., 322 F.
Supp. 278, 280 (E.D. LA, 1971); Riko Enterprises, Inc. v
Seattle Supersonics Corp., 357 F. Supp. 521, 523 (S. D. NY,
1973); Paul Allison Inc. v Minikin Storage of Omaha, Inc. 452
F. Supp 573, 575 (D. Neb. 1978). Every one of these cases
cited to The Hartbridge when holding Section 12 does not
preclude defenses to confirmation after the expiration of
three months. The Court in the instant action held that these
cases did not support Appellant’s right to defend because
these cases took the language from The Hartbridge “out of
context”. Jefferson Supra, 473 F. Supp. at 1259. Appellant
suggests that rather than quoting “out of context”, the Courts
tt.
in the decisions above merely “committed” themselves to the
authority referred to in The Hartbridge. The fact that the
court in The Hartbridge was not required to commit itself to
the authority relief on in the cases above does not make the
authority in the latter cases any less binding.
Although Appellant can find no cases decided in this Circuit
addressing this issue directly, there is one case in this Circuit
which implies that an unsuccessful party to an Arbitration
Award has the option of affimatively defending against an
Award or moving to vacate the Award on the same grounds.
In Tamari v Conrad, 552 F2d 778 (7th Cir., 1977), the
Plaintiff, who was unhappy with the selection process of the
arbitrators, sued for declaratory relief. In finding the
arbitrators themselves were immune from suit, the Court
noted the Plaintiff had two other optional remedies:
“Thus, Tamari (Plaintiff) is not forclosed from
challenging Defendant's authority by our
decision. It has the choice of either waiting for
Bache to attempt to enforce the arbitrators
Award andthenasserting its claim asa defense
or bringing an action against Bache seeking to
have the Award set aside because the panel
was improperly selected.” Tamari v Conrad,
supra, 552 F2d at 781.
The most recent case addressing this issue, and perhaps the
most well reasoned, was decided ten days before this case in
the Northern District of Indiana.’ In Chauffeurs, Teamsters,
Warehousemen and Helpers Local 394 v Ruan Transport
Corp., 473 F. Supp. 298 (N.D. Indiana, 1979), the Court
addressed the identical issue presented in this action. The
Court noted at the outset that the Federal Arbitration Act was
the applicable statute in question. Ruan, Supra, 473 F Supp at
299. The Court then addressed the issue of whether the three
month limitation in Section 12 precluded defenses to
confirmation after the expiration of three months. Ruan,
-16-
Supra, 473 F. Supp at300. The Court acknowledged that The
Hartbridge avoided an express ruling on this issue and that
the cases referring to The Hartbridge had adopted the
authority referred to but avoided in The Hartbridge. Ruan,
Supra, 473 F. Supp. at 300-301. However, the Court did not
stop its inquiry at this point and overule forty-seven years of
precedent on the grounds it was taken out of context. Instead,
the Court examined the legislative history of the Act. Ruan,
Supra, 473 F. Supp at301-303. Anexamination of the original
act passed in 1925 resulted in a finding that the original
language, although ambiguous, could be construed so as to
explicitly allow defenses to confirmation without regard to the
time limitations in Section 12. Ruan, Supra, 473 F Supp at
302. Further examination uncovered the fact that the source
of the Federal Act was the New York Arbitration Act which
had been interpreted as allowing defenses to a motion to
confirm which could have been raised on a motion to vacate,
even though the three month limitation on a motion to vacate
had expired. Ruan, Supra, 473 F. Supp at 302. The Court
concluded that since Congress had not disapproved of this
construction at the time of the Acts passage then it was their
intent to adopt the New York Law as it had been interpreted
by the New York Court and therefore Congress intended to
allow defenses to confirmation to be raised three months after
the limitations set forth in Section Twelve. Ruan, Supra, 473
F. Supp. at 302-303. After determining the Congressional
intent, the Court held that the Defendant would be permitted
to defend against confirmation on the same grounds that
could have been used to vacate the Award and denied the
3. Defendant's counsel was not aware of this decision until
well after this case was decided. Consequently Defendant
was unable to present it to the District Court for consi-
deration. However, Plaintiff's counsel should have been
aware of this decision since they were counsel for the
unsuccessful party in Ruan. However, they did not present it
for consideration to the District Court.
ah
Plaintiff s motion to strike Defendants affirmative defenses.
Ruan, Supra, 473 F. Supp. at 303.
Appellant submits that the result reached in Ruan is the most
logical construction of the Federal Arbitration Act in light of
the legislative history of the Act and the forty-seven years of
Federal precedent supporting this construction. Therefore, it
is Appellant's contention that the lower Court erred in holding
that Appellant was precluded from defending against
confirmation of the Joint Committee Award.
THE COMPLETE ELIMINATION OF THE
RIGHT TO DEFEND AGAINST THE
INVALIDITY OF AN ARBITRATION
AWARD IS NOT CONSISTENT WITH
FEDERAL LABOR POLICY.
The final portion of the Lower Court’s opinion is devoted to
the proposition that eliminating the right to defend against the
invalidity of an Arbitration Award if the unsuccessful party
has failed to move to vacate the Award within ninety days is
consistent with Federal Labor Policy. Jefferson, supra, 473 F.
Supp. at 1259. The apparent policy that this disposition
favors is ‘speedy resolution of disputes”. Jefferson, supra,
473 at 1259. It should be noted, however, that after
“condemning” Appellant for failing to move to vacate the
Award within ninety (90) days and “asking to be given its day
in Court when Plaintiff brings suit in frustration’, the Court
found that the Appellant’s challenge to the arbitration
decision was justifiable and there was a sincere question as to
the validity of the Arbitration Award. Jefferson, supra, 473 F.
Supp. at 1259-1260. It should also be pointed out that one of
Appellant's defenses to enforcement of the Award was that
the Joint Committee acted in an arbitrary and discriminatory
manner by absolutely precluding Defendant from presenting
evidence at the arbitration hearing in support of the charges
against the employee. Hence, the result of the District Court's
decision is that not only was Appellant “condemned” for
-18-
asking for its “day in Court” but Appellant was also precluded
from defending against the deprivation of its “day in
Arbitration”, even though this Court recognized this to be a
justifiable defense to the validity of the Award.’
Another Federal policy, predominant in all aspects of
Federal Law, is defeated as a result of the District Court's
decision: the policy that the Federal Courts will not condone
the deprivation of a fair hearing. This policy has been
adhered to in Labor Arbitration Proceedings, Harvey Alumi-
num, Inc., v Steelworkers, 263 F. Supp. 488 (C.D. Cal, 1967)
as well as purely commercial arbitration proceedings, Riko
Enterprises, Inc., v Seattle Supersonics Corp., 357 F. Supp.
521 (S.D. NY, 1973). Indeed, this Circuit has stated that an
Award issued by a biased arbitrator “will not be enforced” in
a decision stating that the option to defend against such an
Award is an alternative to bringing a Motion to vacate.
Tamari v Conrad, supra, 552 F2d at 781.
Defendant submits this Court should find that the Federal
policy in favor of “just resolution” of labor and other disputes
“- takes precedence over “speedy resolution” of labor disputes,
especially where the implementation of the “speedy reso-
lution” policy results in the elimination of all defenses to an
unjest Award in the face of forty-seven years of Federal
precedent to the contrary. Where the validity of an Award is
in question as a result of the deprivation of a fair hearing “no
Court, State, or Federal, should affix its imprimatur to any
such “Award”. Riko Enterprises, Inc. v Seattle Supersonics
Corp., supra, 357 F. Supp. at 526.
4. Two other justifiable defenses raised in Defendant's
Brief in Opposition to Plaintiff's Motion to Strike were: 1)
the employee’s lack of medical qualifications to drive, see
World Airways, Inc. v International Brotherhood of
Teamsters, 578 F2d 800 (9th Cir, 1978) and 2) The
Committee’s addition of terms to the contract, see, Cannon v
Consolidated Freightways Corp., 524 F2d 290, 295 (7th Cir.,
1975).
-19-
For the reasons set forth above, this Court should find that
the District Court's ruling is inconsistent with Federal policy
in favor of just resolution of arbitrable disputes.
For the reasons aforesaid, it is respectfully prayed that a Writ
of Certiorari be granted to review the judgment of the United
States Court of Appeals for the Seventh Circuit.
Attorney for Petitioner
Barry L. Moon, P.C.
14292 North Fenton Road
Fenton, Michigan 48430
(313) 629-8801
-20-
— APPENDIX —
Page
JUDGMENT a.
ORDER b. - i.
APPEAL FROM THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN j.- q.
DISTRICT OF INDIANA, INDIAWWAPOLIS DIV.
PETITION FOR A WRIT OF CERIORARI r.
9 U.S.C. §1 & INDIANA TRIAL RULE 13 s.
29 U.S.C. §185 & INDIANA ARBITRATION t.
ACT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
' INDIANAPOLIS DIVISION
CHAUFEURS, TEAMSTERS, WAREHOUSEMEN )
AND HELPERS LOCAL UNION NO. 135
)
Vv.
| )
JEFFERSON TRUCKING COMPANY, INC.
JUDGMENT
Pursuant to the Court’s order of this date granting plaintiffs
motion to strike affirmative defenses, grant-ing plaintiff's motion
for summary judgment, and denying defendant’s motion for leave
to file motion to vacate the grievance award, which order shall
serve as findings of fact and conclusions of law,
ITIS ORDERED, ADJUDGED and DECREED that plaintiff is
entitled to judgment as a matter of law, it being established that
there is no genuine issue of material fact, each party to pay its own
costs and counsel fees.
Dated this 27th day of July, 1979.
/s/William E. Stickler
United States District Judge
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
CHAUFFEURS, TEAMSTERS, WAREHOUSEMEN)
AND HELPERS LOCAL UNION NO. 135
- \IP78-216-C
JEFFERSON TRUCKING COMPANY, INC.
ORDER
This matter is before the Court on motions by plaintiff to strike
affirmative defenses and for summary judg-ment and motion by
defendant for leave to file motion to vacate an arbitra-tion award.
Plaintiffs complaint requests enforcement of an arbitration
award rendered in favor of a union member who is an employee of
defendant, which award has not bee complied with by defendant.
Jurisdiction over the claim is predicated upon 29 U.S.C. § 185.
As established by the complaint and other materials before the
Court, the complaint is based upon the following facts. Plaintiff
Teamsters Local 135 and defendant Jefferson Trucking Com-
pany were parties to a collective bargaining agreement which was
in effect at the times material to the action. On October 19, 1977,
Paul Nettleton, an employee of defendant represented by plain-
tiff, was discharged by defendant after
being involved in an accident the previous day while driving
equipment on the job. The written notice of discharge stated that
“the accident is a major chargeable accident due to ecessive speed
for conditions.” Thereafter, a grievance was filed by Nettleton
and processed according to the agreement. Eventually, the
Grievance Committee, whose awards are to be final and binding
under the terms of the contract (Art.X § 4(d)),ordered Nettleton’s
reinstatement with back pay stating:
)
“Tt is the majority decision of this Committee
based on the facts and evidence presented such as
the company failed to site (sic) the specific Con-
b.
tract Article or rule violation as well as
offense, the employee is to be reinstated with full
seniority and paid fcr all time lost.”
The reinstatement was ordered on November 17, 1977. Though
plaintiff repeatedly demanded that defendant abide by the award,
defendant has refused, bringing about the institution of this
lawsuit for enforcement of the award. In addition, plaintiff alleges
that defendant’s conduct has been such that defendant should be
required to pay plaintiffs reasonable attorney fees and costs for
prosecuting the action.
Defendant has answered raising several affirmative defenses.
These include contentions that the Grievance Committee award
went outside the scope of the collective bargaining agreement,
that the award was not final and therefore not reviewable, that
plaintiff is guilty of unclean hands, that plaintiff is unentitled to
relief because of the “arbitrary and discriminatory nature of the
decision (of the Grievance Committee) in light of past practicies of
the Joint Committee .. .,”that the sought-after relief is not
available at law and is barred by laches, and that defendant has
been denied medical information needed to determine it-Mr.
Nettleton is fit to drive in accordance with ICC regulations.
In moving to strike defendant’s affirmative defenses and for
summary judgment, plaintiff advances several contentions.
However, the crucial question before the Court is whether
defendant, the unsuccessful party at arbitration, who did not
move to vacate the disfavorableaward within ninety days as
required under Indiana law or within three months as required by
federal statute, may now raise contentions, which he could have
raise‘(as grounds to vacate in such motion, as affirmative defenses
in the instant suit to enforce the award, which suit was filed after
the three month and ninety- day periods but within the time limits
set for filing a suit to enforce or confirm an award.
Plaintiff argues basically that the raising of these defenses, no
matter how meritorious, is barred by the short statute of federal
labor policy encourages the use of n award. Plaintiff contends that
Cc
federal labor policy encourages the use of the arbitration and
award procedure to provide speedy final resolutions to labor
problems and that a short statute of limitations for moving to
vacate awards serves this federal policy. Plaintiff further con-
tends that the speed and finality policies would be
frustrated considerably if the loser in arbitration could refuse to
comply with the award, sit back idly until the statute of limitations
ran on bringing a motion to vacate, and then raise all his defenses
anyway if a suit to enforce the award were filed by the other party.
In opposition, defendant advances the argument that since
plaintiff contends that the statute of limitations contained in the
Indiana Arbitration Act is applicable rather than that contained in
the Federal Arbitration Act, an Indiana provision “tolling” the
statute of limitations must also be applied. Defenc ant draws the
tolling provision it contends should apply from In¢iana Trial Rule
13(J)(1), which defendant maintains allows a defendant to avail
himself of a setoff or counterclaim by way of defense even thougha
claim would otherwise be barred.
Where a federal statute suchas 29 U.S.C. §185 contains no statute
of limitations, the federal court shall, as a matter of federal law,
select the state statute of limitations most appropriate to the type
of action. UAW v. Hoosier Cardinal Corp., 386 U.S. 696, 704-5
(1966); Canada v. United Parcel Service, Inc., 446 F. Supp. 1048
(N.D. Ill 1978). Since the present complaint seeks enforcement of
an arbitration award, the most appropriate Indiana statute would
seem to be contained in sections of the Indiana Code concerning
arbitration. LC. 34-4-2-13 states:
“(a) Upon application of a party, the court shall
vacate an award where: (1) the award was
procured by fraud..., (2) there was evident partiali-
ty by anarbitrator...or corruption..., (3) the arbitra-
tors (exceeded) their powers and the award cannot
be corrected without affecting the merits of the
decision upon the controversy submitted... (b) An
application under this section shall be made within
ninety (90) days after the mailing of a copy of the
award to the applicant, except that, if predicated
upon corruption or fraud or other undue means, it
d.
shall be made within ninety (90) days after such
grounds are known or should have been known. .
(d) If the application to vacate is denied, and no
motion to modify or correct the award is pending
(which motion must also be made within ninety
days of the mailing of the award) the court shall
confirm the award.”
LC. 34-4-2-12 states:
“Upon application of a party, but not before ninety
(90) days after the mailing of a copy of the award to
the parties, the court shall confirm an award,
unless within the time limit hereinafter imposed (in
34-4-2-13 quoted above) grounds are urged for
vacating or modifying or correcting the award, in
which case the court shall proceed as provided in
sections 13 and 14 (34-4-2-13, 34-4-2-14) of this
act. Upon confirmation, the court shall enter a
judgment consistent with the award and cause
such entry to be docketed as if rendered in an
action in said court.”
Though the language of the Indiana statute seems to quite clearly
state the grounds such as those defendant urges as defenses must
be raised within ninety days in a motion to vacate and the court
“shall confirm” if they are not, defendant argues that cases under
9 U.S.C. § 9 et seq., and cases from other jurisdictions under
arbitration statutes similar to the one in Indiana do not support
that interpretation of the Indiana statute. In addition, defendant
argues that even if the above interpretation of the statute is
correct, since under Hoosier Cardinal the federal court must appy
the most appropriate state statute of limitations due to the
absence of a stated statute of limitations in the federal statute, the
court must also apply state provisions which would toll the
Indiana statutes of limitation, citing Johnson v. REA, 421 U.S.
454 (1975). In this case defendant urges the court to apply as a
tolling provision Indiana Trial Rule 13 (J)(1) which reads:
“The statute of limitations, a non claim statute, or
other discharge at law shall not bar a claim as-
bn.
serted as a counterclaim to the extent that:
(1)it diminishes or defeats the opposing party's
claim if it arises out of the transaction or occur-
rence that is the subject matter of the opposing
party’s claim, or it could have been asserted as a
counterclaim to the opposing party’s claim before
it (the counterclaim) was barred.”
Indiana Trial Rule 13(J)(1)will not save defendant from the
operation of the limitations periods in LC. 34-4-2-13(b) and (d)
and LC, 34-4-2-12 for several reasons. First, it cannot be saie that
this rule is a tolling provision in the usual sense of the word, that is,
Trial Rule 13(J)(1) does not interrupt the running of the limita-
tions period. It was this latter type of tolling provision
which was referred to in Johnson v. REA when the court stated
that “any period of limitation. . . is understood fully only in the
context of the various circumstances that suspend it from running
against a particular cause of action.... In borrowing a state period
of limitations for application to a federal cause of action, a federal
court is relying on the state’s wisdom in setting a limit, and
exceptions thereto....” Id, 421 U.S. at 4534.
Rather than being a tolling provision which Johnson indicates
should be adopted under certain circumstances with the state
statute of limitations, Indiana Trial Rule 13(J)(1) is really an
Indiana procedural rule, which is obvious from the fact it is
contained in the Indiana Trial Rules. It is elementary that federal
procedure controls in federal courts.
Some federal cases indicate that a counterclaim arising out of the
transaction or occurrence on which the action is founded may be
asserted despite the bar of a statute of limitations if it is asserted
for purposes of recoupment. However, such a counterclaim is not
permitted if it is a claim for affirmative relief. See, e.g, Nalley v.
McClements, 295 F. Supp. 1357 (D. Del 1969). In the instant
case, although defendant does not style his answer as a counter-
claim, he is attempting to raise as defenses
items which really constitute a request for affirmative relief,
namely, vacation of an arbitration award. Therefore, even though
Indiana Trial Rule 13(J)(1) seems to have a counterpart in federal
decisional law, this does not aid defendant.
Even if defendant were correct in stating that Johnson mandates
the use of the Indiana Trial Rule as a tolling provision, Johnson
further states that “considerations of state law may be displaced
where their applicability would be inconsistent with the federal
policy underlying the case of action under consideration. Id., 421
U.S. at 465.
There is considerable indication that federal policy favors the use
of bargained-for arbitration to settle labor disputes and favors
court intervention only under very limited situations. Under the
teachings of the famous Steelworkers Trilogy, a federal court, at
the pre-arbitration stage, may not do more than pass on the issue
of arbitrability, Steelworkers v. Amer. Mfg. Co., 363 U.S. 564
(1959), resolving all doubts in favor of arbitrabiity, Steelworkers v.
Warrior and Gulf Co., 363 U.S. 574 (1959). Post arbitration
review is limited to a determination of whether the arbitrator's
award is susceptible of the interpretation that it had its basis in the
contract. Steelworkers v. Enterprise Wheel and Car Corp., 363
U.S. 593 (1959).
Thus, it is an understatement to say that arbitration is a favored
method of resolving labor disputes. Another indication of the
federal proarbitration policy is the application by the courts of the
short periods allowed in the federal and state arbitration acts for
moving the courts to vacate an award. The reason for these short
periods for motions to vacate is to accord the arbitration award
finality so that the parties who contracted for the use of arbitration
get the benefit of what they bargained for --speedy resolution of
disputes so that their business may go forward. See, e.g., Hill v.
Aro Corp., 275 F. Supp. 482, 487 (N.D. Ohio 1967); Emporium
AreaJ.S.A. v. Anundson Constr, & Bldg. Supply Corp., 402 Pa. 82,
166 A.2d 269 (1961).
This policy would seem to condemn what defendant has done
here, namely, ignore an award disfavorable to him, fail to abide by
B-
it and fail to move to vacate it and then ask to be given his day in
court when plaintiff brings suit in frustreation to have the
arbitration award enforced. If defendant’s defenses were of vital
importance to him, he had an opportunity to raise them. Since he
failed to do so earlier, the language of the Indiana statute clearly
requires the court to grant confirmance of the award. Though
many cases were cited by both sides involving the timeliness of
motions to vacate, the logic of which would apply in this case,
fewer cases are on all fours factually with this case. Two cases
which do squarely address the point raised here concluded that a
defendant may not assert, after the statute of limitations had run
on a motion to vacate, grounds which could have been raised in
such a motion as defenses to a suit for enforcement. Component
Systems, Inc. v. Murray Enterprises, 217 N.W. 2d,514,516(S. Ct.
Minn. 1974); Textile Workers Union v. Uncas Printing and Finish.
Co., 125 A.2d 236, 239-40 (Super. Ct. Conn. 1956).
Defendant cites several cases to support the position that hemay
now raise as defenses contentions concerning the arbitrator's
authority which could have been raised on a motion to vacate.
Most of the cases defendant cites which appear to support his
position rely on language from the case of The Hartbridge, 57 F.2d
672 (2d Cir.), cert. denied, 288 U.S. 601 (1932). The language
quoted from this case by defendant and by the courts in cases
which rely on Hartbridge is taken out of context and cannot be
used to support defendant’s position. A careful reading of the
facts in Hartbridge shows that a motion to confirm the arbitration
award was made within one month of the award. In that context,
the court indicated that a motion to vacate could still be timely
filed within the three-month period, even though filed after the
motion to confirm. The case which defendant seems to rely most
heavily on, Riko Enterprises v. Seattle Supersonics Corp., 357 F.
Supp. 521 (S.D.N.Y. 1973), did indeed allow the consideration of
a motion to vacate after the three-month period had run when the
opponent filed a suit to confirm the award, but the Riko court
relied on the language taken out of context from Hartbridge.
Thus, it seems consistent with federal labor policy concerning
arbitration awards and with cases applying the short statutes of
limitations contained in most arbitration statutes to find that
defendant is time-barred from raising his defenses at this point. In
addition, for the same policy reasons, the Indiana Arbitration Act
clearly indicates the court must confirm the award. Thus
defendant's defenses will be stricken and plaintiff's motion for
summary judgment granted since no issues remain. It is also clear
that defendant's motion for leave to file a motion to vacate must be
denied due to the late date of its filing.
One final matter remains to be considered concerning the ren-
dering of summary judgment. Plaintiff requests an award of
costs and attorney fees. When a challenge to an arbitration
decision is “without justification”, costs and attorney fees are
awardable but if there is a sincere question as to the validity of the
arbitration award, an award of such items is inappropriate. Intern.
Ass’n of Machinists v. Texas Steel Co., 538 F.2d 1116 (5th Cir.
1976). Since defendant did here have case law to support his
position, the Court finds that the challenge was sincere and
therefore, no award of costs and fees will be made.
irBy reason of the foregoing, the Court concludes: (1) that
plaintiffs motion to strike defendant's affirmative de-
fenses is GRANTED:
(2) that plaintiff's motion for summary judgment in favor
of plaintiff based on the absence of factual questions is
GRANTED:
(3) that defendant's motion for leave to file motion to
vacate the Joint Committee Award is DENIED.
IT IS SO ORDERED.
Dated this 27th day of July, 1979.
s/s William E. Stickler
United States District Judge
In The
United States Court of Appeals
For the Seventh Circuit
No. 79-2017
CHAUFFEURS, TEAMSTERS, WAREHOUSEMEN
AND HELPERS, LOCAL UNION NO. 135,
- Plaintiff-Appellee
Vv
JEFFERSON TRUCKING COMPANY, INC.,
Defendant- Appellant.
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. IP 78-216-CWilliam E. Steckler, Judge.
submitted*FEBRUARY 26, 1980DECIDED AUGUST 28,
1980
Before CUMMINGS, PELL and BAUER, Circuit Judges.
BAUER, Circuit Judge. Defendantappellant Jefferson
Trucking Company appeals from the order of the district
court
granting summary judgment in favor of plaintiffappellee,
Teamsters Union Local 135, on the plaintiffs complaint to
enforce an arbitration award conferred under the collective
bargaining agreement between the parties. We affirm.
* This appeal has been submitted for decision solely on the
basdis of the record and the briefs filed on behalf of the
parties. See circuit Rule 14.
L
The facts material to the disposition of this appeal are not in
dispute. On October 18, 1977, the defendant was notified
that one of its drivers, Paul Nettleton, had been involved ina
serious traffic accident with a company vehicle during the
course of his employment. The following day the defendant
gave Nettleton and the Plaintiff written notice, pursuant to
Article XI of the collective bargaining agreement, that
Nettleton was discharged on the ground that he was respon-
sible for the accident due to
“excessive speed for conditions.” Nettleton subsequently
filed a grievance under the provisions of Article X of the
collective bargaining agreement. The grievance was not
resolved by resort to the preliminary procedures set forth in
the agreement, and the matter was ultimately submitted to
the Joint Grievance Committee for resolution. On November
17, 1977, the Joint Committee ordered Nettleton reinstated
to employment with full seniority and payment of lost wages.
Notwithstanding repeated demands by the plaintiff, defen-
dant refused to abide by the award and on April 6, 1978, the
plaintiff filed a complaint in the district court to enforce the
arbitration award. Subject matter jurisdiction was predi-
cated on Section 301 of the Labor Management Relations
Act, 29 U.S.C. § 185.
Defendant responded to the complaint with an answer
denying the plaintiff's allegations and further alleging eight
affirmative defenses to enforcement of the award. On May
26, 1978, plaintiff filed a motion to strike defendant's
affirmative defenses and for summary judgment on the
ground that defendant's failure to move to vacate, modify, or
correct the award within ninety days of its entry as required
under both federal and state law, precluded the defendant
from attacking the validity of the award. Defendant filed a
brief in opposition to these motions and, in addition, filed a
motion seeking leave to move to vacate the award of the Joint
Grievance Committee. aad
The dist. .2t court held that the defendant was barred under
the applicable statute of limitations from challenging the
propriety of the arbitration award and accordingly denied the
defendant's motion for leave to move to vacate the award and
granted the plaintiff's motion to strike the defendant's
affirmative defenses and for summary judgment. Chauffeurs,
Teamsters, Warehousemen and Helpers, Local Union No.
135 v. Jefferson Trucking Company, Inc. 473 F. Supp. 1255
(S.D. Ind. 1979). Defendant has appealed from that adverse
judgment to this Court.
II
The sole issue on appeal is whether the defendant, as the
unsuccessful party at arbitration and who did not move to
vacate the disfavorable award within the time period pre-
scribed for such motions, may subsequently raise contentions,
which it could have raised es grounds to vacate in such a
motion, as affirmative defenses in a suit to enforce the award,
which suit was filed after the prescribed period for a motion
to vacate but within the time limits set for filing a suit to
enforce the award. We hold that the defendant’s failure to
move to vacate the arbitration award within the prescribed
time period for such a motion precludes it from seeking
affirmative relief in a subsequent action to enforce the award.
As a preliminary matter, we address the defendant's
contention that the United States Arbitration Act of 1925
(USAA), 9 U.S.C. § 1 et seq. rather than the Labor-
Management Relations Act of 1947 (LMRA), 29 U.S.A. § 141
et seq., governs this action. In support of this contention,
plaintiff argues that in actions to confirm arbitration awards
under the relevant provision sof the USAA, federal courts
have permitted a delinquent motion to vacate the award. See,
e.g., Riko Enterprises, Inc. v. Seattle Supersonics Corpo., 357
F. Supp. 521 (S.D.N.Y. 1973); Paul Allison, Inc. v. Minikin
Storage of Omaha, 452 F. Supp. 573 (D. Neb. 1978). We find
plaintiffs reliance on the USAA in the context of this case to
be misplaced.
L
This action was brougfht under Section 301 of the LMRA,
which provides that suits for a violation of the collective
bargaining agreement between an employer and union may be
instituted in any United States District Court having
jurisdiction of the parties. 29 U.S.C. § 185(a). Since the
decision of the Supreme Court in Textile Workers Union of
America v. Lincoln Mills of Alabama, 353 U.S. 448 (1957), itis
settled that in the field of labor arbitration the governing lawis
a body of federal law to be fashioned by the federal courts
under Section301(a) of the LMRA. Id. at 456-457. Indeed, in
Lincoln Mills and its progeny the expansive role of the LMRA
and the substantive law to be fashioned under it became
manifest. United Steelworkers of America v. Enterprise
Wheel & Car Corp., 363 U.S. 593 (1960), is the most directly
pertinent, for in that case it was held that the federal courts
have the pwer under Section 301(a) of the LMRA to compel
specific performance of labor arbitration awards without
reviewing the merits of such awards. These cases
demonstrate that Section 301 confers the jurisdictional basis
and corresponding source of law governing this action.
We do not, of course, suggest that the LMRA is the exclusive
choice of lawin this field. But assuming arguendo that subject
matter jurisdiction was properly predicated on the USAA, we
find the provisions of that statute raise insurmountable
obstacles to its applicability in this case. In the first instance,
the defendant is facted with the statutory exclusion of Section
lof the USAA, which provides that the Act is not applicable to
“contracts of employemtn of...(any) class of workers engaged
in foreign or interstate commerce.” 9 U.S.A. § 1. As
defendant readily concedes, there is a division among the
circuit courts of appeals which have considered this question,
not only whether collective bargaining agreements in general
are excluded, but whether collective bargaining agreements
for specific industries are excluded.
We find it unnecessary to decide these questions for, even
assuming that the collective bargaining agreement in this case
m.
is not excluded from the coverage of the Act under Section |,
Section 9 of the Act would appear to bar defendant's claim
that the USAA governs. Section 9 provides, in relevant part:
If the parties in their agreement have agreed
that a judgment of the court shall be entered
upon the award made pursuant to the
arbitration, and shall specify the court, then at
any time within one year after the award is
made any party to the arbitration may apply to
the court so specified for an order confirming
the award, and thereupon the court must grant
such an order unless the award is vacated,
modified, or corrected as prescribed in
sections 10 and 11 of this title.
9 U.S.C. § 9. Since no provision of the collective bargaining
agreement in the instant case permits deference to federal
court as contemplated by Section 9, it would appear that
defendant’s reliance thereonis unavailing. Moreover, Section
12 of the Act provides that notice of a motion to vacate an
award under Section 10, or to modify or correct the award
under Section 11, must be served “within three months after
the awardis filed or delivered.” 9 U.S.C. § 12. Thus, Section9
instructs that the court “must grant” an application for
confirmation unless the award is challenged within a three
month period following its issuance. In this case, the
defendant attacked the validity of the award nearly six months
after itsissuance. Accordingly, the plain meaning of Section9
of the statute would seem to bar the defendant from raising a
delinquent motion to vacate the award.
Nor do we find the cases cited by the defendant permitting a
delinquent motion under Section 9 of the USAA to be
persuasive. E.g., RikoEnterprises, supra. These casesrely on
misreading of The Hartbridge, 57 F 2d 672 (2d Cir.), cert.
denied, 288 U.S. 601 (1932). We agree with the analysis of the
district court in the instant case that:
A careful reading of the facts in Hartbridge
shows that a motion to confirm the arbitration
n
award was made within one month of the
award. Inthat context, the courtindicated that
a motion to vacate could still be timely filed
within the three-month period, even though
filed after the motion to confirm.
Il
We therefore conclude that subject matter jurisdiction in this
case was proper under Section 301 of the LMRA. The LMRA,
however, does not provide for a time limitation on actions to
vacate an arbitration award in a suit to enforce the award
under Section 301. Accordingly, the timeliness of a Section
301 suit is to be determined, as a matter of federal law, “by
reference to the appropriate state statute of limitations.”
UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 704-705
(1966). Inthis case, the district court correctly deferred tothe
Uniform Arbitration Act, adopted in Indiana, as the
appropriate state statutes of limitations. Section34-4-2-12 of
the Indiana Code provides:
Confirmation of an award. - Upon application
of a party, but not before ninety (90) days after
the mailing of a copy of the award to the
parties, the court shall confirm an award,
unless within the time limits hereinafter
imposed grounds are urged for vacating or
modifying or correcting the award, in which
case the court shall proceed as provided in
sections 13 and 14 (34-4-2-13, 34-4-2-14) of
this act. Upon confirmation, the court shall
enter a judgment consistent with the award
and cause such entry to be docketed as if
rendered in an action in said court.
IND. CODE § 34-4-2-12 (emphasis supplied). Section 34-4-
2-13 prescribes aninety day time limit forthe filing of amotion
to vacate, and the same time limit is imposed by Section 34-4-
oO.
2-14 on the motion to modify or correct an arbitration award.
Since the defendant failed to file such a motion within the time
period prescribed by the statutes, we hold the defendant is
therefore barred from prosecuting its claim to invalidate the
award. Other federal courts which have considered this
question, in suits brought either under the LMRA or USAA,
have so held. Seee.g., Communications Workers of Americav.
Pacific Tel & Tel Co., 462 F. Supp. 736 (C.D. Cal. 1978);
Pizzuto v. Hall’s Motor Transit Co., 409 F. Supp. 427 (E.D.
Va. 1976); International Union, United Auto, Aerospace &
Agr. Implement Workers of America (UAW) v. LaCrosse
Cooler Co., 406 F. Supp. 1213 (W.D. Wis. 1976); DeLorto v.
United Parcel Service, Inc. 401 F. Supp. 408 (D. Mass. 1975).
The conclusion that the defendant is barred by the statute of
limitations from now seeking to invalidate the award finds
additional support in the federal policy favoring voluntary
arbitration as the most expedient method of resolving labor
disputes. See e.g., United Steel workers v. Enterprise Wheel
& Car Corp., 363 U.S. 593 (1960); Boys Markets, Inc. v. Retail
Clerks Union, Local 770, 398 U.S. 235 (1970). Thus, the
purpose of the short periods prescribed in the federal and
state arbitration statutes for moving courts to vacate an award
is to accord the arbitration award finality in a timely fashion:
As the district court observed, this policy would seem to
condemn the conduct of the defendant who ignored an award
disfavorable to it, failed to move to vacate the award, and then
sought to be given its day in court when the plaintiff brought
suit in frustration to have the arbitration award enforced. If
the defendant's defenses were of such vital importance to it,
the defendant nevertheless had an opportunity to raise them
in the manner contemplated by statute.
IV
Finally, defendant argues that the inovation of the statute of
limitations operates to preclude it from defending against the
action to enforce the award, in derogation of the common law
rule that statutes of limitation do not run against pure
p.
defenses. However, this argument ignores the fact that an
action to enforce an arbitration award is a creature of statute
and was unknown at common law. See, e.g., Lincoln Mills,
supra, 353 U.S. at 466 (Frankfurter, J., dissenting). It is
settled that where by statute aright of actionis given which did
not exist by the common law, and the statute giving the right
fixes the time period within which the right may be enforced,
the time so fixed becomes a limitation on such right. See
generally 53 C.J.S. § 102. ae
Moreover, the common lawrule applies to pure defenses, such
as recoupment, and not to setoffs, counterclaims or
crossclaims, all of which are regarded as affirmative actions.
In this case, the statute compelled the defendant to obtain the
affirmative relief of vacation of the award in order to avoid
confirmation. The defendant apparently recognized this
obliga-tion when it belatedly sought to move to vacate the
award. Indeed, the affirmative defenses alleged in the
defendant's answer tothe complaint are essentially reiterated
in its motion to invalidate the award. Alhough the answer is
not framed as a counterclaim, the “defenses” raised therein
constitute a request for affirmative relief, namely, vacation of
the arbitration award. A counterclaim for affirmative relief
may not be asserted if barred by the statute of limitations.
See, e.g., Nalley v. McClements, 295 F. Supp. 1357 (D. Del.
1969).
V.
We have examined the defendant’ s other arguments and find
them to be qually without merit. For the foregoing reasons the
judgment appealed from is affirmed and the Clerk of this
Court is directed to enter judgment accordingly.
AFFIRMED.
A true Copy:
Teste:
Clerk of the United States Court
of Appeals for the Seventh Circuit
q.
PETITION FOR A WRIT OF CERIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Petitioner prays that a Writ of Ceriorari be issued to review
the judgment herein of the United States Court of Appeals
for the Seventh Circuit entered in the above entitled case on
August 28, 1980.
Decisions Below
The official citation of the decisions below are 473 F. Supp.
1255 (S.D. Ind. 1979) 628 F.2d 1023 (7th Cir. 1980)
presented in the appendix.
Jurisdiction
The date of order from which relief is sought is August 28,
1980. No rehearings were sought. No extensions have been
prayed for at anytime.
The statutory provision believed to confer jurisdiction on this
Court is 28 U.S.C. 1254. The Courts below were presented
the case on the jurisdictional basis of 28 U.S.C. §1337, based
upon an action to enforce a labor contract under the Labor-
Management Relations Act, 29 U.S.C. §185
9 U.S.C. §1
§1. “Maritime transactions’and “commerce” defined;
exceptions to operation of title
“Maritime transactions”, as herein defined, means charter
parties, bills of lading of water carriers, agreements relating to
wharfage, supplies furnished vessels or repairs to vessels,
collisions, or any other matters in foreign commerce which, if
the subject of controversy, would be embraced within
admiralty jurisdiction; ‘commerce’, as herein defined, means
commerce among the several States or with foreign nations, or
in any Territory of the United States or in the District of
Columbia, or between any such Territory and another, or
between any such Territory and any State or foreign nation, or
between the District of Columbia and any State or Territory or
foreign nation, but nothing herein contained shall apply to
contracts of employment of seamen, railroad employees, or
any other class of workers engaged in foreign or interstate
commerce. (July 30, 1947, ch 392, §1, 61 Stat. 670.)
Indiana Trial Rule 13
Counterclaim and Cross-Claim
(A) Compulsory counterclaims. A pleading shall state as a
counterclaim any claim which at the time of serving the
pleading the pleader has against any opposing party, if it
arises out of the transaction or occurence that is the subject-
matter of the opposing party’s claim and does not require for
its adjudication the presence of third-parties of whom the
court cannot acquire jurisdiction. But the pleader need not
state the claim if:
(1) atthe time the action was commenced the claim was the
subject of another pending action; or
29 U.S.C. §185
Suits by and against labor organizations
(a) Venue, amount, and citizenship. Suits for violation of
contracts between an employer and a labor organization
representing employees in an industry affecting commerce as
defined in this Act, or between any such labor organizations,
may be brought in any district court of the United States
having jurisdiction of the parties, without respect to the
amount in controversy or without regard to the citizenship of
the parties.
Indiana Arbitration Act
34-4-1-1 [3-201]. Who may arbitrate — Method of
submission — All persons, except infants and insane persons,
may, by an instrument in writing, submit to the arbitration or
umpirage of any person or persons, to be by them mutually
chosen, any controversy existing between them which might
be the subject of a suit at law, except as otherwise provided in
the next section, and may agree that such submission be made
by arule of any court of record designated in such instrument.
[2 R.S. 1852, ch. 3, §1, p. 227; Acts 1939, ch. 22, §1, p. 42.]
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.