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Orlando v. Interstate Container Corporation

November 1, 1996







(D.C. Civ. No. 95-cv-01075)

Before: COWEN, LEWIS, and WEIS, Circuit Judges

WEIS, Circuit Judge.

Argued September 11, 1996

Filed November 6, 1996


In this labor relations case, the district court concluded that, in the absence of appropriate language in a collective bargaining agreement, an arbitration award in a grievance proceeding was not final. We agree and will affirm.

Plaintiff, a long-time employee of Interstate Container Corporation, underwent heart bypass surgery in 1992 and collected benefits for several months, as provided by a collective bargaining agreement. In January 1993, his application for a disability pension was approved by the Paper Industry Union-Management Fund. He also applied for and received disability insurance benefits from the Social Security Administration.

As a result of these developments, Interstate treated plaintiff as a retired employee and terminated his medical insurance as of January 19, 1993. When his physical condition improved, plaintiff applied for reinstatement of employment with Interstate. When the Company denied his request, his union filed grievances on his behalf. They were processed through the steps set out in the collective bargaining agreement and culminated in an arbitrator's decision favorable to Interstate.

Plaintiff subsequently brought a breach of contract suit in state court and Interstate removed the action to federal court. The district judge granted partial summary judgment to Interstate, but held that on two breach of contract counts, the case would have to proceed because the grievance arbitration was not final and binding. The district court then certified the issue as a controlling question of law under 28 U.S.C. Section(s) 1292(b) and we granted leave to appeal.

Article VII of the collective bargaining agreement directs that "grievances shall be processed in the following manner" and lays out a four-step procedure beginning with the participation of a supervisor and working up through the plant manager and general manager. Step 4 provides that if the dispute has not been settled at that point, the union can give the company "notice of its intention to submit the grievance to arbitration" and request the American Arbitration Association to supply a list of arbitrators. The arbitrators' authority is limited to "interpreting and/or applying the language of the existing Labor Agreement"; they cannot "amend, modify, or alter in any manner whatsoever, any provision of the Agreement." The words "final" or "binding" do not appear in Article VII.

The preface to the entire collective bargaining agreement includes the following statement: "The terms herein stated are the exclusive terms for collective bargaining between the respective parties. It is mutually agreed by the parties that all claims under prior contracts shall be considered null and void with the effective date of this Agreement." The district court first noted the absence of such terms as "binding" or "final" in Article VII and then looked to the collective bargaining agreement in its entirety to determine whether the parties intended to preclude a suit under section 301 of the Labor Management Relations Act, 29 U.S.C. Section(s) 185(a). Although the company relied on the preface to the collective bargaining agreement for its assertion that arbitration was exclusive and binding, the court disagreed, finding that the paragraph "does not compel the conclusion that the arbitration provision . . . is final and binding." Finally, the district judge pointed out that although "the grievance procedures are mandatory [that] does not necessarily mean they are final and binding." Although the district court did not articulate the controlling question of law that it certified under 28 U.S.C. Section(s) 1292(b), from the briefs and arguments presented to us, we construe the question to be whether an arbitration award precludes review on the merits under section 301 when the collective bargaining agreement does not provide that arbitration is the final, binding, or exclusive means of resolving the dispute. *fn1 The answer to that question requires consideration of several cross-currents in labor law.


National labor policy favors access to a judicial forum to resolve labor disputes. Section 301 provides that "suits for violations of contracts between an employer and a labor organization . . . may be brought in any ...

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