Opinion
Case No. 3:04CV7025.
July 20, 2004
ORDER
This is a suit by a labor union to enforce an arbitration award entered against an employer of the union's members. For the reasons that follow, the union's motion for summary judgment shall be granted as to both its demand for enforcement of the award and the employer's counterclaim.
The underlying arbitration and award in favor of the union arose from grievances filed on February 10, 2003, and March 3, 2003, by the union. Each grievance alleged that the employer had failed to make fringe benefit contributions as required by the collective bargaining agreement. The grievances stated, respectively, that the issue was "[n]on payment of fringe benefits (2/10/03 grievance) and "[s]ubcontracting, fringe benefits, hourly-rate" (3/3/03 grievance) (Doc. 16, Exh. 2). Both grievances referenced general sections, rather than specific paragraphs of the collective bargaining agreement. The February 10th grievance stated that $28,880 was owed. The March 3d grievance did not mention the amount of unpaid benefits.
The arbitrators agreed with the union: their award stated that the employer was "found guilty on all charges."
The award, as is customary, was expressed in informal terms. (Doc. 1, Exh. B). It noted that notice had been received, and referenced W-2 forms that were presented to the arbitrators. The award also pointed out that the union contended that another company, MCW was a sham, and used to defraud the union. The award also indicated that documentation provided by the employer was not complete, and would have to be supplemented.
So that the arbitrators could assess the damages (i.e., amount of the unpaid benefits), the award directed the employer to submit all documents and records for itself and MCW and to allow an audit.
Following filing of the auditor's report, the arbitrators entered an award in favor of the union and against the employer in the amount of $71,912.95 in damages, plus $700.96 for the cost of the audit. The amount of the award was based on the auditor's report.
The employer claims that, even if the award is otherwise proper (which it disiputes), about $40,000 of the amount awarded neither was sought in the grievance or arbitration proceeding nor was otherwise properly awarded. The employer points out that the award notes that the union representative stated that "as of now, the fringes are paid to date."
Shortly prior to the arbitration hearing, the union had withdrawn its members from their work for the defendant. According to the union, it was entitled to take that action pursuant to an express provision of the collective bargaining agreement; that provision, the union claims expressly permitted such withdrawal where fringe benefits had not been paid. In its counterclaim, the employer asserts that this work stoppage violated the collective bargaining agreement.
The work stoppage occurred between the date of the union's first and second grievances and prior to the hearing on the grievances and the arbitrators' ensuing award and order. The union did not, however, raise the issue of the lawfulness, or lack thereof, of the work stoppage before the arbitrators.
With regard to the enforceability of the award, the union argues: 1) in light of the narrow standard of this court's review arbitration awards, it is entitled to enforcement of the award; 2) the employer, having failed to file suit to vacate the award, is limited in the defenses it can assert; 3) the employer's counterclaim must be dismissed due to the employer's failure to have presented the counterclaim to the arbitrators; and, 4) the counterclaim is without merit.
In its opposition to the union's motion for summary judgment, the employer argues: 1) any award and order by the arbitrators is not enforceable because neither is signed by a majority of the four-person arbitration panel; 2) the grievances were untimely under the collective bargaining agreement; 3) there was no factual basis for imposition of approximately $40,000 of the award, such amount exceeds the amount stated in the February 10th grievance, and that amount was not agreed to by a majority of the arbitration panel; 4) inclusion in the award of $4,248.82 in liquidated damages did not draw its essence from the collective bargaining agreement; 5) if this court accepts the union's claim that some or all of the foregoing defenses are barred due to the union's failure to file an action to vacate the award, ambiguities in the award require that it be remanded to the panel for clarification; and 6) the counterclaim is, in any event, meritorious.
Discussion A. The Employer Waived its Asserted Defenses
The statute of limitations for suits to enforce or vacate an arbitration award is three months. United Steelworkers of America, Local 4839 v. New Idea Farm Equipment Corp., 917 F.2d 964, 967 (6th Cir. 1990) ("The appropriate statute of limitations in an Ohio case seeking to vacate, modify or correct an arbitration award is Ohio Revised Code (O.R.C.) § 2711.13, which provides a three-month period for such an action.").The employer did not file an action enforce the award within the three month deadline. Thus, under New Idea, the employer cannot assert the defenses that it has advanced in this suit. See, e.g., Occidental Chem. Corp. v. Int'l Chem. Workers Union, 853 F.2d 1310, 1315 (6th Cir. 1988) ("even though an action to confirm [an arbitration award] carries a longer limitations period, a party may not file defenses against confirmation after the time for an action to vacate has expired") (citations omitted); Ohio Council 8 v. Trumbull Memorial Hospital, 124 F. Supp.2d 484, 484 n. 1 (N.D. Ohio 2000) (since defendant did not raise in a timely motion to vacate its argument that the arbitration award "should not be confirmed because it does not draw its essence from the collective bargaining agreement," it "cannot rely on this argument as a defense to confirmation of the award") (citations omitted).
Despite the foregoing, the employer's objections to enforcement of the award shall be reviewed on their merits. None suffice to overcome the union's motion for summary judgment.
B. The Union's Defenses Are Not Meritorious 1. The Grievances Were Not Untimely
According to the employer, the collective bargaining agreement requires that grievances be filed within seven days of the events giving rise to the grievance. (Doc. 17, at 7 (citing the Collective Bargaining Agreement, Art. XII, ¶ 10)).Citing Dobbs, Inc. v. Local 614, Int'l Brotherhood of Teamsters, 205 F.3d 85 (6th Cir. 1987), the employer claims that the arbitration panel departed from the essence of the agreeement because the union's grievances were time-barred because they related to fringe benefits that had remained unpaid for more than seven days.
This defense fails. First, it was not asserted before the arbitrators. A court reviewing an arbitration award cannot consider issues not presented to the arbitrators. See, e.g., National Wrecking Co. v. Int'l Brotherhood of Teamsters, Local 731, 990 F.2d 957, 960-961 (7th Cir. 1993). This doctrine is based on the common-sense proposition that parties "cannot stand by during arbitration, withholding certain arguments, then, upon losing the arbitration, raise such arguments in federal court." Id. To allow such sandbagging would, moreover, "`undermine the purpose of arbitration'" which is to provide a fast and inexpensive method for the resolution of labor disputes.'"). Id. (citations omitted).
Second, even though this defense has been doubly defaulted (by the employer's failure to file an action to vacate the award and its failure to have asserted it during the arbitration proceedings), it is, in any event, without merit. Failure to pay a fringe benefit is a continuing violation of the collective bargaining agreement. The obligation to pay such benefits does not begin and end within the seven day period within which a grievance is to be filed. The breach of such obligation continues until the back benefits have been paid. Once the benefits are paid, any grievance about their nonpayment would have to be filed within the seven day period. Until then, that period does not start to run, and a grievance is timely, even thought the benefits have been due and owing for more than seven days. See Monee Nursery Landscaping Co. v. Int'l Union of Operating Engineers, Local 150, AFL-CIO, 348 F.3d 671, 676 n. 2 (7th Cir. 2003) ("While the continuing violation doctrine most often arises when a plaintiff seeks to connect an earlier violation to a present one in order to overcome a statute of limitations hurdle, in this case, the concept of continuing violation is more akin to the common understanding of the words used. The continuing violation in the present case is, simply put, a violation of the CBA . . . that was ongoing.") (citation omitted).
2. The Panel's Decision Was Unanimous
The collective bargaining agreement provides that "[a]ll majority decisions of the [arbitrators] are final and binding." Neither the award nor order is signed by the panel members. Thus, the employer argues, there was no majority decision by the panel.
When the award is read in its entirety, it is clear that it reflects the concurrence of the panel members. The award states "the panel found that Precision Flooring was guilty on all charges." (Doc. 1, Ex. B). Absent evidence to the contrary — which the employer has not produced — it can properly be presumed that the reference to "the panel" referred to a unanimous determination of all the panel's members.
The same is true with regard to the order, which states, inter alia, that "the contractor members of the panel all agreed to the following. . . ." (Doc. 1, Ex. C). There is no reason to believe — and the employer, once again, has offered no such reason — that the union representatives disagreed with the award. Given the employer's contention that the award exceeded the claim by $40,000, it is hardly likely that the panel's union members would have disagreed with the order.
In a word, there can be no reasonable question that the award and order reflect the concurrence of all members of the panel.
3. The Award is Not Excessive
The employer claims there is no factual basis for about $40,000 of the award. It bases this contention on the fact that the initial grievance referenced about $28.000 in unpaid benefits, and the award indicated that the union understood that all benefits had been paid to date.
That argument ignores two facts: first, the arbitrators found that the employer's documentation was insufficient, and, second, the auditor's report and findings, on which the order was based, were, in turn, based on the supplemental documentation provided after the hearing and award.
Where an employer fails to provide complete documentation, it cannot later contend, as the employer does here, that the limit of its obligation is fixed by what was understood before the entire records were produced. The employer, not the union, keeps the records of hours worked. The employer is obligated to account fully for those hours, and until it does so, no final assessment of its fringe benefit obligations is possible.
Based on the evidence before it — the auditor's report, which, in turn, was based on the supplemented documentary record — the arbitrators could find that the amount owed by the employer was the amount recited in that report. There is nothing arbitrary or capricious about that finding, and, give the limited scope of this court's review, it will be upheld.
4. The Arbitrators Properly Awarded Liquidated Damages
The final order included an award of liquidated damages. This award was based on the auditor's finding that such damages were due and owing.The issue of such damages was before the panel. The employer does not appear to have challenged a prospective award of such damages, or made its present argument that such damages could not be awarded because it had not received notice of the regulations relating to liquidated damage charges. Thus, the "lack of notice" argument has been waived.
In any event, regardless of the employer's claimed lack of notice, it had every right to inspect the relevant documents and, regardless of any such inspection, was bound by the terms and conditions of those documents, including the provision relating to liquidated damages. Its complaint of lack of actual notice is unavailing.
The auditor's report states the amount of liquidated damages. The panel, accordingly, had an adequate evidentiary basis on which to make such award, which was not arbitrary or capricious
5. The Award Is Clear and Needs No Clarification
Anticipating that its other arguments may be rejected, the employer claims that the award and order are ambiguous and should be remanded for clarification. I disagree: there is nothing in the award that requires clarification. All that is required is compliance.
6. The Work Stoppage Did Not Violate the Collective Bargaining Agreement and the Union is Entitled to Summary Judgment on the Employer's Counterclaim
In its counterclaim the employer claims that the union breached the collective bargaining agreement when its members engaged in a work stoppage in response to the employer's failure to meet its fringe benefit obligations.
The employer disregards the applicable contractual language, which gave the union the right to withdraw its members if the employer was delinquent with respect to fringe benefit contributions: "In the event of a violation of this Section [defining the fringe benefit obligation] by an Employer, the Union shall be authorized to withdraw its men from said Employer until such time as said Employer complies with the requirements of this Section." (Doc. 1, Ex. A, Art. IV, § 22(F)).
This provision makes clear that, where an employer has not paid its fringe benefits, work can stop.
The employer claims that its obligation to pay fringe benefits was in dispute, and not determined until the arbitrator's award and order. This is nonsense: as the award and order make clear, the employer was in default, as alleged in the grievance filed before the work stoppage. The language of the collective bargaining agreement is clear, and the rights it extends to the union when fringe benefits have not been paid cannot reasonably be disputed. Among those rights, which can be exercised at the union's discretion, is a work stoppage.
In any event, the employer's remedy was to file a grievance challenging the lawfulness of the work stoppage. Not having done so, it cannot maintain its counterclaim.
C. The Union is Entitled to its Attorneys' Fees and Pre-Judgment Interest
The union's motion for summary judgment seeks an award of its attorneys' fees and prejudgment interest. According to the union — and I agree — the employer's failure to comply with the award was not justified: it simply makes arguments that it waived either before the panel or this court. Those arguments are, in any event, without merit, even if they had been preserved properly for this court's review. See Baldwin Piano and Organ Co. v. International Chemical Workers Union, 564 F. Supp. 1262, 1272 (N.D. Mississippi 1983) ("A challenge is unjustified if there is no bona fide question as to whether the subject matter of the dispute was arbitrable or whether the award of the arbitrator drew its essence from the collective bargaining agreement.").To deter similar action on the part of other employers, the union should, and shall be awarded its attorneys' fees and costs. See, e.g., Bell Production Engineers Association v. Bell Helicopter Textron, Division of Textron, Inc., 688 F.2d 997, 999 (5th Cir. 1982) (even absent a statutory basis in § 301 for an award of fees, fees can be awarded where an arbitration award is challenged without justification); Synergy Gas Co. v. Sasso, 853 F.2d 59, 65 (2d Cir. 1988) (same).
I likewise agree that the union is entitled to prejudgment interest from the date of the panel's order, August 18, 2003, until the date of this court's judgment entry. Bricklayers' Pension Trust Fund v. Tairiol, 671 F.2d 988, 990 (6th Cir. 1982) (federal courts have discretion to award prejudgment interest in order to make a party whole when the adverse party fails to comply with an arbitration award); see also IBEW Local No. 573 v. Steen Electric, Inc., 232 F. Supp.2d 797, 805-06 (N.D. Ohio 2002) (prejudgment interest of ten percent per annum assessed for one-year period between award and court's judgment); United Steelworkers v. Roemer Industries, 68 F. Supp.2d 843, 849 (N.D. Ohio 1999) (prejudgment interest assessed for nineteen months between arbitrator's award and court's decision enforcing the award).
In the absence of federal statute establishing the appropriate rate of interest, the rate shall be ten percent, as provided under Ohio law. See id; O.R.C. § 1343.03(A).
The union shall submit a proposed judgment entry on or before July 30, 2004. If, after prior review of the proposed entry, the employer disputes the amount of attorneys' fees and costs, it shall file its opposition on or before August 10, 2004, and the union shall reply on or before August 16, 2004. Absent objection to the proposed order, it shall be entered, and interest computed as of, August 10, 2004. The employer's lack of objection to the proposed entry shall be without prejudice to its right otherwise to object to this order and any judgment that may be entered thereon.
Conclusion
For the foregoing reasons, it is
ORDERED THAT:
1. The plaintiff's motion for summary judgment be, and the same hereby is granted;
2. The defendant's counterclaim be, and the same hereby is dismissed; and
3. The plaintiff shall, on or before August 15, 2004, submit a proposed judgment entry as provided herein.
So ordered.