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Lehigh Portland Cement Co. v. Cement

argued: January 8, 1988.


On Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. No. 84-5536.

Seitz, Hutchinson and Garth, Circuit Judges.

Author: Garth


GARTH, Circuit Judge:

Lehigh Portland Cement Company ("Lehigh") appeals from the district court's order entered July 14, 1987 which granted the motion of the Cement, Lime, Gypsum, and Allied Workers Division of the International Brotherhood of BOilermakers, Blacksmiths, Iron Ship Builders, Forgers and Helpers, ("the Union"), dismissing Lehigh's complaint. Because we agree with Lehigh that the district court erred in concluding that Lehigh's claim against the Union was arbitrable, we will vacate the judgment of the district court and remand for further proceedings.


This dispute centers on a Collective Bargaining Agreement entered into by Lehigh and the Union, dated May 1, 1981, which expired April 30, 1984. The Agreement provided, among other things, that the parties could not terminate it (and thus engage in a strike or a lockout) without providing notice to the other party. Lehigh charges that the Union did not provide the required notices under the Agreement and thus violated the agreement by striking. Lehigh brought the instant action in the United States District Court, for the Eastern District of Pennsylvania, seeking damages for the Union's breach of contract. The Union, contending that the dispute was arbitrable, moved to dismiss Lehigh's complaint.

Initially, the district court granted the Union's motion to dismiss, holding that the Collective Bargaining Agreement required that Lehigh submit the dispute to an arbitrator. Upon Lehigh's motion for reconsideration, the district court vacated the original judgment of dismissal and held an evidentiary hearing to receive evidence concerning the parties' bargaining history and their negotiations. After this hearing, the district court again ruled in the Union's favor and again dismissed Lehigh's complaint on the grounds that an arbitrator, and not the district court, was required to resolve Lehigh's claim. Lehigh appeals from the district court's order of July 14, 1987. Our review is plenary. We reverse.


In a labor dispute, "arbitration is a matter of contract, and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960). Thus, the issue of arbitrability is "a matter to be determined by the courts on the basis of the contract entered into by the parties." Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 8 L. Ed. 2d 462, 82 S. Ct. 1318 (1962). In interpreting a labor contract, the Supreme Court has instructed the federal courts to resolve ambiguities in favor of arbitration. The Court has established a "strong presumption" in favor of arbitrability. Nolde Brothers, Inc. v. Local 357, Bakery and Confectionery Workers, 430 U.S. 243, 254, 51 L. Ed. 2d 300, 97 S. Ct. 1067 (1977).

However, despite this strong presumption, the touchstone of this type of analysis is still the language of the contract itself. "Absent a contractual obligation to the contrary, a reluctant party [to arbitrate] is free to pursue any available legal remedy to redress its grievances." Boeing Co. v. Auto Workers, 370 F.2d 969, 970 (3d Cir. 1967). A recurring issue in this type of case is whether the company is required to bring its claims to an arbitrator when the collective bargaining agreement establishes procedures which limit the initiation of arbitration solely to the union.

In those cases where some ambiguous language appears in the contract and the contract can be read to provide for the employer initiating arbitration, this court has held that the strong presumption in favor of arbitration required that the employer must arbitrate his grievance. For example, in Eberle Tanning Co. v. Section 63L, FLM Joint Board, Allegheny Divisions, United Food and Commercial Workers International Union, 682 F.2d 430 (3d Cir. 1982), we held that the district court properly dismissed Eberle's breach of contract action because the dispute, under the parties' agreement, was to be decided by an arbitrator. While the first steps of the grievance procedures set forth in the agreement between Eberle and the union were designed to be employee initiated, later steps of the process called for both Eberle and the union to meet monthly to resolve grievances. Significantly, it provided, in addition, that "should the grievance remain unsettled, either party may refer it to a three (3) man Board of Arbitration." Id. at 432 (emphasis added).*fn1 We held that this quoted language created "an ambiguity concerning the Company's duty to arbitrate its grievances, an ambiguity which we must resolve consistent with federal labor policy." Id. at 434. See also Wilkes-Barre Publishing Co. v. Newspaper Guild, 647 F.2d 372 (3d Cir. 1981), cert. denied, 454 U.S. 1143, 71 L. Ed. 2d 295, 102 S. Ct. 1003 (1982).

However, when a contract contains no language which explicitly contemplates or permits the employer to initiate arbitration procedures, and the grievance structure is designed solely to afford the union the right to arbitrate, we have held that an employer, despite the presence of arbitration procedures in the collective bargaining agreement, is not bound to assert its claims before an arbitrator. Rather, we have permitted the employer to bring its claim against the union in the district court. Affiliated Food Distributors, Inc. v. Local 229, International Brotherhood of Teamsters, 483 F.2d 418 (3d Cir. 1973); Boeing, 370 F.2d at 971. Accord Eberle Tanning, 682 F.2d at 435 n.5 (distinguishing the procedures in Eberle's agreement from employee-oriented grievance procedures such as those found in Affiliated).

Other Courts of Appeals faced with grievance procedures, which they construed as being wholly employee-oriented, have followed the principles announced in Boeing and Affiliated, and in each instance, have allowed employers to maintain actions against unions in federal district court rather than remitting their disputes to arbitration. Rochdale Village, Inc. v. Public Service Employees Union, 605 F.2d 1290, 1295-96 (2d Cir. 1979); Faultless Division v. Local Lodge No. 2040 of District 153, International Association of Machinists and Aerospace Workers, 513 F.2d 987, 990 (7th Cir. 1975); Friedrich v. Local No. 780, International Union of Electrical, Radio and Machine Workers, 515 F.2d 225, 228 (5th Cir. 1975); Firestone Tire & Rubber Co. v. Rubber Workers Union, 476 F.2d 603, 675-76 (5th Cir. 1973); G. T. Schjeldahl Co. v. Machinest Local 1680, 393 F.2d 502 (1st Cir. 1968). As we demonstrate in the text following, even though each agreement must be analyzed independently, the grievance procedure and the other collective bargaining provisions found in the cases cited above are virtually indistinguishable from the provisions in the Agreement at issue here.



In Boeing, as in the instant case, the employer brought an action for damages in district court alleging that the defendant violated the no-strike clause of the parties' collective bargaining agreement. The union claimed that the controversy should be decided by an arbitrator rather than by a district court judge.

In affirming the district court's order, which denied the union's motion for stay pending arbitration, we recognized that the only issue for decision was whether arbitration should be ordered. After reviewing the various provisions of the Boeing agreement, (provisions which in substance are virtually identical to the provisions of the instant Lehigh agreement), we concluded that the grievance procedure was wholly employee-oriented. We held that the grievance procedure in Boeing was designed to resolve only the employees' grievances and as such, was available only to the employees as their exclusive remedy for the disposition of any claim of any kind that they had against their employer. Boeing, 370 F.2d 969 at 971.

Similarly, in Affiliated Food, the district court ordered a stay of the breach of contract suit brought by Affiliated against Local 229. On appeal to this court, we held that the collective bargaining agreement between Affiliated and Local 229 did not provide for the arbitration of employer complaints. Id. at 420. We noted that each of the procedural steps for bringing a case to arbitration placed the initiative on the union. The first step of the Affiliated grievance procedure provided that any grievance "may be taken up by the Union Steward(s) . . . ." Id. at 421. At the second step, "the Business Representative of the Union shall take the subject matter up with the Employer." Id. If a mutually satisfactory result could not then be reached, the grievance was then referred to arbitration. Id. at 419. The Affiliated Food court in vacating the stay imposed by the district court and remanding for trial, explained:

When a contract . . . is susceptible of a construction that dictates arbitration, the congressional policy favoring that form of dispute resolution may require the denial of judicial relief despite the possibility of fairly reading the contract to evidence a contrary intent. But, there is no occasion to resort to this congressional policy in a case where the contract, fairly read as a whole, is not susceptible of a construction that the parties bound themselves to arbitrate the dispute before the court. We conclude that this is such a case.

Id. at 420.

As the Affiliated court observed, "[a]t the heart of this matter, therefore, is the intention of the parties when they negotiated and signed their collective bargaining agreement." Id. at 419. Just as the Boeing and Affiliated courts looked to the parties' choice of words, terms, and procedures to evaluate their respective agreements regarding arbitration, so too, do we.


Article IX of the Agreement between Lehigh and the Union sets forth the grievance ...

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