Construction company need not pay $1.4M arbitration award for hiring wrong union's members
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Friday, July 1, 2016

Construction company need not pay $1.4M arbitration award for hiring wrong union's members

By Brandi O. Brown, J.D. A construction company, which previously had found itself without remedy for a $1.4 million grievance committee award in favor of one union for having erroneously given work to members of a second union as part of a highway construction project, prevailed on appeal to the Seventh Circuit. The award had been made under a subordinate collective bargaining agreement, after a prior arbitrator had already resolved the jurisdictional issue under the project labor agreement, and the appeals court concluded that the award was void. The district court judgment was reversed (William Charles Construction Co., LLC, v. Teamsters Local Union 627, June 29, 2016, Manion, D.). After grievance had to reassign work. In early 2013, the unions and contractors involved in a highway widening project were required to sign a Project Labor Agreement (PLA). Although the signatories were required to abide by collective bargaining agreements that were already in force between the contractors and unions, that compliance was required only so long as the CBA did not conflict with the PLA. The latter controlled in the event of a conflict. Labor disputes, with the exception of jurisdictional disputes, were governed by the applicable CBA. Jurisdictional disputes were covered by a provision within the PLA and resolution of those disputes, according to that provision, would be final. A jurisdictional dispute arose when the plaintiff construction company assigned operation of certain trucks to the International Union of Operating Engineers, rather than the Teamsters. Work commenced, but the Teamsters eventually brought a jurisdictional grievance under the PLA against the other union. That grievance was resolved in their favor several months into the project by a neutral arbitrator who ruled that the trucks should have been assigned to the Teamsters. The work was reassigned the very next day. The arbitrator did not award back pay or benefits. Second grievance, this one against employer. Five days later, the Teamsters filed a new grievance, this time against the construction company and this time under a CBA between the Associated General Contractors of Illinois and the Illinois Conference of Teamsters (the ACA). It complained of the same conduct and alleged that the construction company violated that ACA by assigning the trucks the way it had. However, the construction company was not a signatory to that agreement, although it was required to abide by it under the PLA unless there was a conflict. The construction company objected, arguing that the grievance was just a rehashing of the jurisdictional dispute. It also argued that it could not be held responsible for the Teamsters' back pay or benefits. Nevertheless, the grievance committee apparently found that the company had violated the agreement and found it liable for make whole relief. Although the Teamsters informed the construction company of this in an email, the company alleged that it did not receive a final decision at that time. In July, the company received a call from the Teamsters' attorney demanding $1.4 million in back pay and benefits. The construction company filed a declaratory action and attached to the union's counterclaim was an exhibit with a memorandum containing the final grievance decision. The Teamsters filed a motion for summary judgment, which was granted, and the construction company appealed. Not untimely. Out of the gate the appeals court laid to rest one of the bases for the district court decision—that the construction company's claim was barred by the 90-day statute of limitations for challenging arbitration awards. Although the district court found that the company had sufficient notice of the decisions from the email and a later letter from a labor director for the Associated General Contractors of Illinois, the appeals court did not agree. First, the correspondence only dealt with one of two matters before the grievance committee (the second one was a seniority dispute) and so was incomplete. Second, the email had stated that review and approval were required for the decision, making it "clear" that the decision had not been finalized. Rather, the first indication that the construction company had that the grievances were final came much later, when the Teamsters' attorney called, and the limitations-triggering event did not occur until the actual final decision was filed as an exhibit in the case. Award was void. More importantly, the appeals court ruled that the award itself was void because the construction company had not agreed to arbitration by the grievance committee. The grievance was jurisdictional and the PLA provided the exclusive remedy for those disputes. Although the Teamsters argued that the truck grievance was not a jurisdictional dispute, the ACA provision it cited explicitly referred to jurisdiction and, thus, was jurisdictional in nature. Not only that, the court explained, but the grievance was the same as the previous grievance that had been resolved by an arbitrator. The court also noted that the Teamsters had sought recovery from the construction company, which had already paid once for the work, rather than from the other union that had received the benefit from that assignment. Even if the issue of damages could be separated out from the injury, the court explained, the construction company had not agreed to have severable issues decided by the grievance committee. Finally, the appeals court rejected an argument that the construction company had waived its challenge to the award by participating in the hearing before the grievance committee. The appeals court concluded that the construction company had preserved its argument and had not waived its challenge. The judgment of the district court was reversed, the Teamsters' counterclaim was dismissed, and the case was remanded.

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