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TANOMA MINING CO. v. LOCAL UNION NO. 1269

July 12, 1989

TANOMA MINING COMPANY, INC., Plaintiff,
v.
LOCAL UNION NO. 1269, UNITED MINE WORKERS OF AMERICA, and DISTRICT 2, UNITED MINE WORKERS OF AMERICA, Defendants



The opinion of the court was delivered by: SIMMONS

 PAUL A. SIMMONS, UNITED STATES DISTRICT JUDGE.

 Plaintiff, Tanoma Mining Company, Inc. ("Tanoma Mining"), initiated this action under Section 301 of the Labor Management Relations Act of 1947, as amended, 29 U.S.C. Section 185. Tanoma Mining seeks to have this court vacate the Arbitrator's May 14, 1987, labor arbitration award.

 Defendants, Local Union No. 1269, United Mine Workers of America ("Local 1269"), and District 2, United Mine Workers of America ("District"), filed a counterclaim to enforce the award.

 All parties have now filed motions for summary judgment.

 On or about August 20, 1979, Tanoma Coal Company, N.V. ("Tanoma Coal") obtained property and mining rights to an area that is now known as the Tanoma Mine in Indiana County, Pennsylvania. See Complaint and Answer, paragraph 7. At the time of the acquisition, Tanoma Coal was a wholly owned subsidiary of Pohang Iron and Steel, Ltd. ("Pohang"), a Korean based steel corporation. See complaint and Answer, paragraph 7.

 At or about this same time, Tanoma Coal and Barnes & Tucker Company ("B & T") entered into a management agreement whereby B & T agreed to construct, develop, and operate the Tanoma Mine. See Complaint and Answer, paragraph 7. The management agreement specifically provided that all personnel required for the development and operation of the Tanoma Mine would be employees of B & T. See Complaint and Answer, paragraph 7.

 B & T, Local 1269, and District 2, eventually reached an agreement whereby B & T would give laid-off members of Local 1269 preferential hiring rights at the Tanoma Mine in exchange for their release of certain recall rights at other B & T operations. See Complaint and Answer, paragraph 10.

 B & T's hourly employees at the Tanoma Mine became members of a newly formed local union of the UMWA, which is known as Local 2494, and were employed pursuant to terms and conditions of the collective bargaining agreements B & T executed with the UMWA on behalf of the employees at all of B & T's various owned or managed operations. See Complaint and Answer, paragraph 8.

 B & T continued to operate the Tanoma Mine under the terms of the aforementioned agreements until January 1, 1987, when Tanoma Coal terminated B & T's management agreement. See Complaint and Answer, paragraph 11. In December, 1986, Tanoma Coal's successor, Tanoma Coal Company, Inc., formed a subsidiary, Tanoma Mining, which it subsequently hired to manage the Tanoma Mine. See Transcript p. 166.

 In December, 1987, Tanoma Mining notified the UMWA that it would sign the National Bituminous Coal Wage Agreement of 1984, conditioned on an understanding that it was not bound by the special, preferential hiring agreement B & T had negotiated with Local 1269 and District 2. See Arbitrator's Opinion and Award, a copy of which is attached to the complaint as Exhibit "D", pps. 13-14.

 The UMWA, however, objected to Tanoma Mining's position on this issue and, on January 21, 1987, employees of Local 1269 filed a grievance under the terms of the 1984 Agreement. The grievance stated as follows:

 
We claim management is in violation of Article I, Article I(a), Article XVII, Article XXV and Article XXVI of the NBCWA of 1984.
 
We claim Tanoma Mining Company is refusing to recognize Article XVII recall rights from the employer's panel as per the individual panel forms which they accepted at the time of the layoff and heretofore recognized.
 
We are asking [that] Tanoma Mining continue to adhere to Article XVII and recognize the Barnes & Tucker panel which was strengthened with a district agreement (an agreement to alleviate any questions of panel rights). Said agreement has been put into practice.
 
Position of the Mine Committee:

 See Complaint and Answer, paragraph 15.

 The parties were not able to resolve this grievance. Subsequently, by agreement, the matter was referred to arbitration pursuant to the terms of the 1984 Agreement and a hearing was held before the Arbitrator. See Complaint and Answer, paragraphs 16, 17.

 In an Opinion and Award dated May 14, 1987, a copy of which is attached to the Complaint as Exhibit "D", the Arbitrator sustained the grievance. The Arbitrator reasoned that Tanoma Mining was bound by B & T's preferential hiring agreement with Local 1269 and District 2 since (1) B & T made the preferential hiring agreement as an authorized agent of Pohang, (2) Tanoma Mining was Pohang's new authorized agent, and (3) as the new authorized agent, Tanoma Mining was bound by B & T's agreements with Local 1269 and District 2.

 On the other hand, Tanoma maintained that the Arbitrator's Award did not draw its essence from the collective bargaining agreement and should be vacated because (1) it was premised on an undisputed mistake of fact which has no support whatsoever in the record, (2) it was based upon a manifest disregard of agency law, and (3) it was based on the conduct of a third party who was not involved in the arbitration hearing, and accordingly, Tanoma Mining contends that summary judgment should be granted in its favor on the claim to vacate the Arbitrator's award and against defendants on their counterclaim to enforce the award.

 In United Paperworkers International Union v. Misco, Inc., 484 U.S. 29, 98 L. Ed. 2d 286, 108 S. Ct. 364 (1987), the Supreme Court of the United States offered the following standard of review for arbitration awards:

 
The courts are not authorized to reconsider the merits of an award even though the parties may allege that the award rests on errors of fact or on misinterpretation of the contract. "The refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards." [Citation omitted.] As long as the arbitrator's award "draws its essence from ...

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