7th Circuit: Employer suing union after strikes not required to arbitrate

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An employer suing an employee union after the employees twice went on strike won’t be required to take its claims to arbitration.

The 7th Circuit Court of Appeals, analyzing the collective bargaining agreement between the parties, affirmed on Tuesday that to trigger arbitration, the grievance must’ve been filed by the union members and not the employer — and that the clause in question is not open to interpretation.

United Natural Foods Inc. and Local 414 were parties to a CBA effective June 2017 through September 2019.

Article 5 of the agreement prohibited both strikes and lockouts during the life of the agreement. Article 35 contained an “evergreen clause” providing for automatic renewal of the contract absent written notice of termination or desired modification at least 60 days prior to the expiration date.

Negotiations over a successor agreement commenced in August 2019 and were ongoing when the expiration date of the existing agreement came and went on Sept. 14, 2019. Bargaining over a new agreement came to a standstill on Sept. 20, 2019, without agreement on a new contract and without additional bargaining dates being scheduled.

On Dec. 12, 2019, Local 414 and its members went on strike and established a picket line at the Fort Wayne distribution center. Five days later, union members began additional picketing at United Natural’s Hopkins, Minnesota, and Green Bay, Wisconsin, distribution centers.

According to the complaint, the purpose of the pickets was to cause workers at those facilities to go on strike, as well, and, indeed, those workers honored the picket lines and walked off the job.

On Dec. 18, 2019, Local 414 ended the strike at the Fort Wayne distribution center and ceased picketing at the other two distribution sites.

However, on July 23, 2020, Local 414 and its members engaged in another strike at the Fort Wayne distribution center and picketed that facility. No picketing was initiated at United Natural’s other facilities.

United Natural filed suit in January 2021 against Local 414 pursuant to Section 301 of the Labor Management Relations Act of 1947, alleging that by engaging in the December 2019 and July 2020 strikes, the union had violated the no-strike provisions of the CBA — which, according to United Natural, remained in effect on and after the Sept. 14, 2019, expiration date.

The company also pursued a state-law claim that the union had tortiously interfered with the company’s contractual rights by inducing union members at other facilities to walk off the job and breach the no-strike provisions of their own collective bargaining agreements with United Natural.

Local 414 responded to the suit by moving to compel arbitration of the Section 301 claim, arguing that the parties’ dispute was arbitrable under Article 14 of the CBA, which laid out “Grievance and Arbitration Procedure.”

The Indiana Northern District Court denied Local 414’s motion to compel arbitration, concluding that the company’s claim for the alleged breach of the no-strike provision of the CBA was not governed by the arbitral remedies set forth in Article 14, Step 4 of the CBA.

The court began by noting that § 14:01 required the “aggrieved employee” to initiate the grievance and arbitration procedures set forth in Article 14. “Without action by the ‘aggrieved employee’ … , the procedures in Article 14 are never implicated.”

The 7th Circuit affirmed, allowing the suit to move forward.

“The provision for arbitration is not a stand-alone arbitration clause allowing either party to arbitrate anything and everything that might arise under the collective bargaining agreement,” Judge Ilana Rovner wrote. “Rather, it constitutes the final step in a four-step procedure designed to resolve a particular set of grievances.”

The 7th Circuit specifically looked at Faultless Div. v. Local Lodge No. 2040 of Dist. 153, Int’l Machinists & Aerospace Workers, 513 F.2d 987 (7th Cir. 1975), in its analysis.

Faultless focused on the employee-oriented nature of an agreement’s grievance and arbitration procedure to conclude that the agreement did not permit the employer to initiate its own grievances and take them to arbitration,” Rovner wrote. “The agreement in this case is materially no different. Indeed, the language of section 14:01, emphasizing that it is the ‘aggrieved employee’ who initiates the process, is even stronger than the comparable language at issue in Faultless.

“… In short, there is no ambiguity in the CBA which might trigger the presumption in favor of arbitration,” the appellate court concluded. “The grievance and arbitration procedure that the parties have agreed to is focused exclusively on employee-initiated grievances and does not envision or apply to employer-initiated grievances. We can say with confidence that the arbitration clause is not reasonably susceptible to an interpretation that includes an employer-initiated dispute regarding the meaning and application of the terms of the agreement. Thus, United Natural is not obligated to submit its dispute over the two strikes to arbitration.”

The case is United Natural Foods Inc., et. al., v. Teamsters Local 414, 22-1469.

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