Petition — Teamsters Local No. 243, Affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers v. Sears, Roebuck & Co.

upreme Court, US.

FILE, |

82-1162 "a

AN Ii (S83

a

IN THE

Supreme Court of the United States

OcTOBER TERM, 1982

TEAMSTERS LOcAL No. 243,

affiliated with THE INTERNATIONAL BROTHERHOOD

Or TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN

AND HELPERS OF AMERICA,

Petitioner,

Vs.

SEARS, ROEBUCK AND COMPANY,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT

OF APPEALS

FOR THE SIXTH CIRCUIT

MATTHEW R. RossiNns

GOLDBERG, PREVIANT, UELMEN,

GRATZ, MILLER & BRUEGGEMAN, S.C.

788 North Jefferson Street

Milwaukee, Wisconsin 53202

(414) 271-4500

Attorneys for Petitioner

St. Louis Law Printing Co., Inc., 411 No. Tenth Street 63101 314-231-4477

QUESTION PRESENTED

Where an arbitrator interpreted the language of a labor agree-

ment as codifying a restriction on subcontracting recognized by

the arbitral common law, may a court vacate the arbitrator’s

award because the court interprets the ‘‘plain meaning’’ of the

language differently?

TABLE OF CONTENTS

Page

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SNE OF GND 6a. o's 6 kc ose 0 ces cecukbananeeen 3

Reasons for Granting the Writ ...............00000e- 5

1. The Court of Appeals has _ repeatedly

substituted its interpretation of labor

agreements for that of arbitrators, thereby

undermining arbitration as a method of

resolving labor disputes ..........seceseees 5

2. Acconflict exists among the courts of appeals

with respect to the scope of review of arbitra-

CCGG oo ios cc csvsudthayseuneaesuea 8

Co vvicscdudbsventueauseenbeeulsuseeeeeeen 10

Appendix A

Decision of the Court of Appeals and Order on

PP TEE EP try Tee ee er A-l

Appendix B

Decision and Award of the Arbitrator ........... A-7

Appendix C

Opinion and Order of the District Court ......... A-69

Appendix D

Order of the Supreme Court Granting Extension of

Time to File Writ of Certiorari ................. A-81

iv

TABLE OF AUTHORITIES

Cases:

Amoco Oil Co. v. Oil, Chemical and Atomic Workers,

548 F. 2d 1288, 1294 (7th Cir. 1977) cert. denied

CE RD ore Oe et ers ee

Andros Compania Maritima v. Marc Rich Co., 579 F.

ee le A ee

Boise Cascade v. United Steelworkers of America, 588

Pe bes mey (+ le & |) ere

Detroit Coil Co. v. Int’l Ass’n of Machinists, 594

Ae ff le | eer

General Drivers, Warelhiousemen and Helpers Local

89 v. Hays & Nicoulin, Inc., 594 F. 2d 1093 (6th

SE dastaveeessasacbdeGcesriavessiuaires

Grand Rapids Die Casting v. Local Union No. 159,

UAW, 684 F. 2d 413 (6th Cir. 1982) .............

Int’! Bhd. of Firemen and Oilers Local 935-B v. Nestle

Co., 630 F. 2d 474 (6th Cir. 1980) ...............

Johnson Bronze Co. v. UAW, 621 F. 2d 81 (3d Cir.

DG Seabcbhe Gees Enea aeeaeRaee Ree cskueus

Loveless v. Eastern Airlines, Inc., 681 F. 2d 1272,

SPREE NN Gals NUMER ob covecvedcedscrneces

N.F. & M Corp. v. United Steelworkers of America,

Pe ee fs Le BE eee

Nolde Brothers, Inc. v. Local No. 358, Bakery and

Confectionary Workers, 430 U.S. 243 (1977) .....

Page

Storer Broadcasting Co. v. Am. Fed. of Television

and Radio Artists, 600 F. 2d 45 (6th Cir. 1979) ....

Smith Steelworkers v. A.O. Smith Corp. 626 F. 2d

PAPUA: SU is we ksccecesaceuaneses

Timken Co. v. Local Union No. 1123, United Steel-

workers of America, 482 F. 2d 1012 (6th Cir. 1973)

John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543

Dae a ee eRe CR URKA AS ERE RRA OAR SRL OASS

F.W. Woolworth Co. v. Miscellaneous Warehouse-

men’s Union Local No. 781, 629 F. 2d 1204, 1215

ME TS alka ic es cease ade sce waded ene

United Steelworkers of America v. American Mfg. Co.,

EE 6 td awekdcabadeent saceunne

United Steelworkers of America v. Warrior & Gulf

Navigation Co., 363 U.S. 574 (1960) ............

United Steelworkers of America v. Enterprise Wheel

te eR | ere

Statutes:

Labor Management Relations Act of 1947, §203(d), 29

EEE, ShpecchWie Gib heveNne eh etanears

Labor Management Relations Act of 1947, §301(a), 29

ES Scar aisbenleeeneedseenderesase

Other sources:

Christensen, Judicial Review: As Arbitrators See It,

Proceedings of the Twenty-Fifth Annual Meeting,

National Academy of Arbitrators, 96, 106, 110-111

SN cas Saree nkwe bes bh LATS CEaSRAe SERS R ess

2,4

vi

Morris, Twenty Years of the Trilogy: A Celebration,

Proceedings of the Twenty-Third Annual Meeting,

National Academy of Arbitrators, 356, 370 (1981) .

Roumell, Reversing the Arbitrator, 61 Mich. B. J.

Pe PIS k oTi ccd cause sdutdasevaueeeren

St. Antoine, Judicial Review of Labor Arbitration

Awards: A Second Look at Enterprise Wheel and

Its Progeny, 75 Mich. L. Rev. 1137 (1977)

No.

IN THE

Supreme Court of the United States

OctToBerR TERM, 1982

TEAMSTERS Loca No. 243,

affiliated with THE INTERNATIONAL BROTHERHOOD

Or TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN

ANnpD HE-pers OF AMERICA,

Petitioner,

vs.

SEARS, ROEBUCK AND CoMPANY,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT

OF APPEALS

FOR THE SIXTH CIRCUIT

Petitioner Teamsters Local No. 243 prays that a writ of cer-

tiorari issue to review the judgment of the United States Court

of Appeals for the Sixth Circuit in the above case.

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Sixth Circuit is reported at 683 F. 2d 1095 (infra pp. A-1-5). The

Order and Opinion of the United States District Court for the

Eastern District of Michigan (infra, pp. A-69-78) is not

reported. Nor is the arbitrator’s decision and award (infra, pp.

A-7-69).

—,

JURISDICTION

The judgment of the Court of Appeals (infra, pp. A-1-5) was

entered on July 16, 1982. On September 13, 1982 the Court of

Appeals denied the petition for rehearing of Teamsters Local

No. 243 (infra, pp. A-5-6). On December 9, 1982 Justice Sandra

Day O’Connor, upon application of Local No. 243, ordered

that the time for filing a petition for writ of certiorari be extend-

ed to and including January 11, 1983 (infra, p. A-81). The

jurisdiction of the Court rests upon 28 U.S.C. §1254(a).

STATUTES INVOLVED

This case involves §203(d) of the Labor Management Rela-

tions Act, 1947, 29 U.S.C. §173(d), which provides:

‘*Final adjustment by a method agreed upon by the parties

is declared to be the desirable method for settlement of

grievance disputes arising over the application or inter-

pretation of an existing collective-bargaining agreement.

The Service is directed to make its conciliation and media-

tion services available in the settlement of such grievance

disputes only as a last resort and in exceptional cases.”’

The case also involves §301(a) of the Labor Management

Relations Act, 1947, 29 U.S.C. *185(a), which provides:

‘Suits for violation of contracts between an employer and

a labor organization representing employees in an industry

affecting commerce as defined in this chapter, 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.”’

on Sus

STATEMENT OF THE CASE

Teamsters Local No. 243 (hereinafter referred to as the

*“‘Union’’) is the collective bargaining representative for

warehouse and service employees at five Detroit area facilities

of Sears, Roebuck and Company (hereinafter referred to as

‘*Sears’’). This case arose when Sears subcontracted the work of

ninety bargaining unit employees.

On January 4, 1979 Sears informed the Union that it had sub-

contracted out the work of the maintenance agreement sales

department effective February 1, 1979. This resulted in ninety

bargaining unit employees 'osing their jobs, about twelve per-

cent of the bargaining unit. Thus, Sears’ action substantially

eroded the bargaining unit (infra, p. A-8). The subcontract also

had the effect of undermining the wages and benefits provided

for in the labor agreement. The maintenance agreement sales

employees received $6.91 per hour in wages and a fringe benefit

package equivalent to fifteen percent of their wages, or an

overall economic package of $7.94 per hour. The subcontrac-

tor’s employees were all part-time, were paid $4.00 per hour,

and received no fringe benefits (p. A-60). Labor costs, accor-

ding to Sears, are ninety percent of the total cost of the

maintenance agreement sales operation (p. A-58).

The Union filed a grievance protesting the subcontract as a

violation of the labor agreement, and the parties submitted the

grievance to arbitration. The arbitrator held that Sears had

violated the labor agreement and ordered Sears to terminate the

subcontract and make the affected employees whole for lost

earnings from the date of his award until their reinstatement

(pp. A-67-68). The labor agreement provided that the ar-

bitrator’s decision would be final and binding.

In reaching his decision the arbitrator examined the labor

agreement’s language against the background of the numerous

arbitrators’ awards in subcontracting cases. The arbitrator

a

found, and the court of appeals did not dispute, that even where

a labor agreement is silent concerning subcontracting, ar-

bitrators hold that implicit in the labor agreement is a

reasonableness limitation on subcontracting. The arbitrator

then concluded that the language in the Union-Sears agreement

should be interpreted as codifying the arbitral common law

standard (p. A-45).

Although not required to do so, the arbitrator cited several

factors which supported this interpretation. First, the language

did not provide an explicit right to lay off employees by subcon-

tracting (pp. A-44-45). Second, an interpretation which gave

Sears carte blanche to subcontract whenever it was more

economical led to a nonsensical result: for minimal cost savings

Sears could eliminate the entire bargaining unit (pp. A-42-43).

Third, a reasonableness requirement is a standard canon of con-

tract interpretation (pp. A-45-46). Fourth, other arbitrators had

interpreted similar language and reached the same conclusion

(p. A-43).

Sears commenced an action in the district court to vacate the

arbitrator's award. The Union counterclaimed for enforcement

of the award, Both Sears’ action and the Union’s counterclaim

had as their jurisdictional basis §301(a) of the Labor Manage-

ment Relations Act of 1947, 29 U.S.C, §185 (a). The district

court vacated the arbitrator's award and the court of appeals af-

firmed the district court's judgment,

The court of appeals recognized that where a labor agreement

is silent as to subcontracting, it is ‘‘accepted practice for ar-

bitrators to infer a reasonableness limitation on

subcontracting.’’ The court of appeals also recognized that

other arbitrators had interpreted similar language as codifying

the reasonableness limitation. However, the court of appeals

held that the award here should be vacated because: (1) the

‘weight of authority’’ of arbitrators was contrary, and (2) the

case came within its ‘unambiguous language’’ exception to the

deference normally accorded arbitrators’ awards (pp. A-3-4).

pre

REASONS FOR GRANTING THE WRIT

1. The Court Of Appeals Has Repeatedly Substituted Its In-

terpretation Of Labor Agreements For That Of Arbitrators,

Thereby Undermining Arbitration As A Method Of Resolving

Labor Disputes,

Since the Stee/workers Trilogy’ it has become axiomatic that

arbitration is the preferred method of labor dispute settlement.

See, ¢.g., Nolde Brothers, Inc. v. Local No, 358, Bakery and

Confectionary Workers, 430 U.S. 543 (1964); John Wiley &

Sons, Inc, v. Livingston, 376 U.S. 543 (1964). An integral part

of this federal policy is the strong presumption in favor of the

enforcement of arbitration awards and the refusal of courts to

substitute their interpretation of labor agreements for that of ar-

bitrators. If courts regularly vacate arbitrators’ awards, arbitra-

tion will lose the attribute of finality and therefore its value as a

method of dispute resolution. In United Steelworkers of

Aierica v. Enterprise Wheel & Car Corp., supra at 596, the

Court stated:

‘*The refusal of courts to review the merits of an arbitra-

tion award is the proper approach to arbitration under col-

lective bargaining agreements. The federal policy of settl-

ing labor disputes by arbitration would be undermined if

courts had the final say on the merits of the awards.”’

The Court clearly saw that if federal courts reviewed the

merits of arbitrators’ awards, it ‘‘would make meaningless the

provisions that the arbitrator’s decision is final, for in reality it

would almost never be final.’’ /d. at 599,

' United Steelworkers of Ainerica vy. American Mfg. Co., 363 U.S.

564 (1960); United Steelworkers of America v. Warrior & Gulf

Navigation Co., 363 U.IS. 574 (1960); United Steelworkers of

America v. Enterprise Wheel & Car Corp., 463 U.S. 593 (1960),

a

The present case, however, is but one of a recent series of

cases in which the court of appeals has substituted its interpreta-

tion for that of an arbitrator and vacated the arbitrator’s award,

See, ¢.g., Grand Rapids Die Casting v. Local Union No, 159,

UAW, 684 F, 2d 413 (6th Cir. 1982); /nt’l Bhd. of Firemen and

Oilers Local 935-B v. Nestle Co., 630 F. 2d 474 (6th Cir. 1980);

Storer Broadcasting Co, v. Am. Fed. of Television and Radio

Artists, 600 F, 2d 45 (6th Cir, 1979); Detroit Coil Co. v. Int'l

Ass'n of Machinists, 594 F, 2d 575 (6th Cir. 1979); General

Drivers, Warehousemen and Helpers Local 89 v. Hays &

Nicoulin, Inc., 594 F, 2d 1093 (6th Cir, 1979); Timken Co. v.

Local Union No, 1123, United Steelworkers of America, 482 F.

2d 1012 (6th Cir. 1973), Today arbitration awards are no longer

final within the Sixth Circuit. When an arbitrator issues an

award, it is only the beginning of a long and unpredictable pro-

cess.

In its numerous decisions not to defer to arbitrators’ inter-

pretations of labor agreements, the court of appeals has relied

upon its ‘unambiguous language’’ rule: whenever a court con-

cludes that the ‘‘unambiguous language’ of an agreement has a

different meaning than an arbitrator gives it, a court need not

defer to the arbitrator's interpretation of the agreement. This

unambiguous language rule is no more than the ‘‘plain mean-

ing’’ or Cutler-Hammer doctrine which the Court rejected in

the Steelworkers Trilogy. United Steelworkers of America v.

American Mfg. Co., supra at 567, The Court further stated:

**Whether the moving party is right or wrong is a question

of contract interpretation for the arbitrator. In these cir-

cumstances the moving party should not be deprived of the

arbitrator's judgment, when it was his judgment and all

that it connotes that was bargained for.’’ /d. at 568.

An “‘unambiguous language’’ or ‘‘plain meaning’’ exception

to the rule against judicial entanglement in the merits of arbitra-

a

tion awards inevitably emasculates the rule. Whenever a court is

unhappy with the arbitrator's interpretation of a labor agree-

ment, it is simplicity itself for the court to conclude that the ar-

bitrator ignored the ‘‘plain meaning”’ of the contract language.’

This is precisely what has happened within the Sixth Circuit.

One scholar examined the Sixth Circuit Court of Appeals’

deviation from the Steelworkers Trilogy and concluded:

**These new rules, as might have been expected, are leading

to the overturning of arbitrators’ awards, especially on the

basis of ‘plain’ meaning in the contract — at least what a

court, district or circuit, in disagreement with the ar-

bitrator, deems to be plain meaning.’’ Morris, Twenty

Years of the Trilogy: A Celebration, Proceedings of the

Thirty-Third Annual Meeting, National Academy of Ar-

bitrators, 356, 370 (1981).’

In the Steelworkers Trilogy the Court intended that the

federal courts should no longer become entangled in the merits

of arbitration awards. The Court recognized that if the judiciary

was free to substitute its interpretations of labor agreements for

‘those of arbitrators, then arbitration would not long remain a

viable method of dispute resolution. The court of appeals has

departed from this central teaching of the Trilogy. This devia-

tion threatens to fatally undermine arbitration as the method

for resolving the thousands of disputes which occur each week

in the American workplace.

*3t. Antoine, Judicial Review of Labor Arbitration Awards: A Sec-

ond Look at Enterprise Wheel and its Progeny, 75 Mich. L. Rev. 1137

(1977).

*For other scholarly criticism of the court of appeals’ refusal to en-

force arbitration awards, see Roumell, Reversing the Arbitrator, 61

Mich. B. J, 519, 543 (1982); Christensen, Judicial Review: As Ar-

bitrators See It, Proceedings of the Twenty-Fifth Annual Meeting,

National Academy of Arbitrators, 96, 106, 110-111 (1973),

2. A Conflict Exists Among The Courts Of Appeals With

Respect To The Scope Of Review Of Arbitration Awards,

In United Steelworkers of America v. Enterprise Wheel & Car

Corp., supra, the Court emphasized that the question of inter-

pretation of the labor agreement is for the arbitrator, The ar-

bitrator’s award need only ‘‘draw its essence’’ from the labor

agreement, /d. at 597,

However, a conflict has developed among the courts of ap-

pea’s with respect to when an award ‘‘draws its essence’’ from

the labor agreement. As noted above, the Sixth Circuit Court of

Appeals has held that an award does not draw its essence from

the agreement where a court interprets ‘‘unambiguous

language’ differently than the arbitrator, No other court of ap-

peals has embraced this standard,

Most of the courts of appeals have held that an arbitration

award should be enforced if it is derived in some rational man-

ner from the labor agreement,‘ In particular, other courts of ap-

peals have held that an arbitrator's award should be enforced

even though the arbitrator's interpretation varies from the

literal meaning of the agreement's language. In F.W,

Woolworth Co, v. Miscellaneous Warehousemen's Union Local

No, 781, 629 F, 2d 1204, 1215 (7th Cir, 1980), the court ordered

enforcement of an arbitration award where the arbitrator, after

examining the body of industrial law, rejected the literal mean-

ing of the agreement's language. Similarly, in Loveless v.

Eastern Air Lines, Inc,, 681 F, 2d 1272, 1278-1280 (Lith Cir,

‘See, ¢.g., Smith Steelworkers v, A.O, Smith Corp., 626 F, 2d 596,

599 (7th Cir, 1980); Boise Cascade v, United Steelworkers of America,

588 F, 2d 127, 129 (Sth Cir, 1979); Andros Compania Maritima v,

Marc Rich Co,; 579 F, 2d 691, 704 (2d Cir, 1978); Amoco Oil Co, v,

Oil, Chemical and Atomic Workers, 548 F, 2d 1288, 1294 (7th Cir,

1977) cert, denied 431 U.S, 905 (1977); N.F. & M Corp, v, United

Steelworkers of America, 524 F, 2d 756, 759 (3d Cir, 1975),

So

1982), the court ordered enforcement of an arbitrator's award

even though his interpretation of the agreement was contrary to

superficially clear and unambiguous contract language. In

Johnson Bronze Co, v, UAW, 621 F, 2d 81, 83 (3d Cir, 1980),

the arbitrator imposed a reasonableness requirement upon a

company's decision to recall from layoff, The court held that

since this requirement was not totally unsupported by principles

of contract construction, the arbitrator's award should be en-

forced, Each of these three appellate decisions conflict with the

‘unambiguous language’ rule applied by the Sixth Circuit to

overturn the arbitration award here and in a series of other

cases,

Unlike the other courts of appeals the Sixth Circuit has failed

to heed the Court's admonition that the federal courts should

not substitute their judgment for the arbitrator's on the merits

of an award, This has led one scholar to describe the Sixth Cir-

cuit as ‘‘revisionist’’ and a ‘‘maverick’’ among the courts of ap-

peals.’ Its broad involvement in the merits of arbitration awards

and its refusal to defer to arbitrators’ interpretations of labor

agreements cannot be reconciled with the decisions of other

courts of appeals, Because a conflict exists among the courts of

appeals with respect to the standard for review of labor arbitra-

tion awards, the Court should grant this petition,

‘Morris, supra at 356, 368-370,

an (an

CONCLUSION

For the foregoing reasons, the petition for a writ of certiorari

should be granted.

Respectfully submitted,

MATTHEW R, ROBBINS

Goldberg, Previant, Uelmen,

Gratz, Miller & Brueggeman, S.C,

733 N, Jefferson Street

P.O. Box 92099

Milwaukee, Wisconsin 53202

(414) 271-4500

ATTORNEYS FOR PETITIONER