Dispute Over Application of CBA's Bargaining Unit Work Definition to Nonunion Facility Was Arbitrable: Seventh Circuit | Practical Law

Dispute Over Application of CBA's Bargaining Unit Work Definition to Nonunion Facility Was Arbitrable: Seventh Circuit | Practical Law

In Certco, Inc. v. Int'l Brotherhood of Teamsters, Local 695, the US Court of Appeals for the Seventh Circuit affirmed a district court's ruling that a dispute over the application of a collective bargaining agreement's (CBA) definition of bargaining unit work to work at nonunion facilities was arbitrable.

Dispute Over Application of CBA's Bargaining Unit Work Definition to Nonunion Facility Was Arbitrable: Seventh Circuit

by Practical Law Labor & Employment
Published on 23 Jul 2013USA (National/Federal)
In Certco, Inc. v. Int'l Brotherhood of Teamsters, Local 695, the US Court of Appeals for the Seventh Circuit affirmed a district court's ruling that a dispute over the application of a collective bargaining agreement's (CBA) definition of bargaining unit work to work at nonunion facilities was arbitrable.
On July 17, 2013, the US Court of Appeals for the Seventh Circuit issued an opinion in Certco, Inc. v. Int'l Brotherhood of Teamsters, Local 695, affirming a district court's ruling that a dispute over interpreting a collective bargaining agreement's (CBA) definition of bargaining unit work to work at nonunion facilities was arbitrable.
Certco Inc. has long maintained a CBA with a local union of the Teamsters that represents warehouse workers at its first warehouse facility. The CBA:
  • Defines bargaining unit work as including all of Certco's warehouse labor without limiting it to a specific facility.
  • Forbids Certco from transferring bargaining unit work to nonunion workers.
In the past ten years, Certco opened three larger warehouse facilities and its employees there have not unionized. The union:
  • Filed two separate unfair labor practice (ULP) charges with the NLRB alleging that:
    • Certco unlawfully transferred bargaining unit work for particular products to one of its nonunion facilities without bargaining with the union and that all of Certco's nonunion employees at that facility should be accreted into the union's bargaining unit; and
    • Certco unlawfully shut down freezers at the unionized facility, transferred warehouse freezer work to a larger nonunion facility and that the warehouse freezer employees at that nonunion facility should accrete into the union's bargaining unit.
  • Filed a grievance under its CBA, alleging that Certco violated the CBA by assigning and transferring bargaining unit work to nonunion workers at different facilities.
The NLRB:
  • Held that:
    • Certco committed no ULP regarding the alleged transfer of warehouse work when it opened its second facility; and
    • it was not proper to accrete the new facility's nonunion employees into the union's bargaining unit at the first facility or apply the terms of the union's CBA to them.
    (See Certco Distribution Centers.)
  • Declined to issue a ULP complaint regarding the transfer and assignment of warehouse freezer work at the new facility because the evidence preliminarily showed that:
    • Certco built a new freezer facility because of space limitations at its first facility, rather than based on union animus or labor costs;
    • no unionized freezer employee applied for and was discriminatorily denied a warehouse freezer position at the new facility; and
    • accretion of the nonunion warehouse freezer workers into the union's bargaining unit was not appropriate.
The arbitrator deciding the grievance:
  • Interpreted the CBA's definition for bargaining unit work as broad enough to cover work on products traditionally handled by the bargaining unit at the unionized facility even though that work was now performed by nonunion workers at the new nonunion facilities.
  • Held that Certco:
    • breached the CBA by transferring work traditionally performed by bargaining unit employees on freezer products to nonunion workers at its new facility;
    • breached the CBA by transferring the work of handling certain products traditionally performed by bargaining unit employees to nonunion workers at another new facility; and
    • lawfully assigned nonunion workers at its relatively new nonunion facilities to perform new warehouse work on products not traditionally handled by the bargaining unit employees.
  • Ordered as a remedy for the CBA breaches that Certco restore to the bargaining unit all work traditionally performed by bargaining unit employees.
Certco petitioned a US district court to deny enforcement of the arbitrator's award asserting that the dispute was not arbitrable, especially in light of the NLRB's conclusions that:
  • Certco lawfully assigned and arguably transferred warehousing work to nonunion facilities under the NLRA.
  • The nonunion workers performing the new or transferred work should not be accreted into the union's bargaining unit and represented by the union.
The Seventh Circuit affirmed the district court's findings that:
  • The dispute about whether work at the nonunionized facilities belonged to the union was arbitrable under the terms of Certco's CBA with the union.
  • The NLRB's conclusions in its 2006 decision about assigning work at new facilities and bargaining unit accretion were matters of labor policy; they did not affect the arbitrability of the dispute under the CBA.
  • The arbitrator's award was compatible with the NLRB's conclusions about bargaining unit accretion or the lawfulness of assigning or transferring work under the NLRA.
The Seventh Circuit held that:
  • The NLRB's decision not to issue a complaint about the alleged freezer warehouse work transfers had no bearing on the arbitrator's interpretation of the dispute and was immaterial because it was not a legally binding decision of the NLRB.
  • The district court did not abuse its discretion by staying enforcement of the decision until the Seventh Circuit affirmed its analysis or by denying the union's request for sanctions against the employer for challenging the issues arbitrability. (Had the employer challenged the merits of the arbitrator's award, sanctions would likely have been appropriate because that would have been a presumptively frivolous claim.)
Labor arbitrators may liberally interpret open-ended descriptions of a union's jurisdiction over work and require employers to make vast changes in their operations, with little NLRB or federal court oversight. This decision serves as a reminder to employers with CBAs that they should periodically review their CBAs to verify that one or more of the following are true:
  • CBA definitions of bargaining unit work limit its scope, such as specifying that it applies to specific:
    • types of work;
    • types of products or services; or
    • work in a specific employer facility.
  • CBA grievance clauses define what matters are arbitrable to exclude grievances about topics that the employer does not want to arbitrate.
  • CBA arbitration clauses define the arbitrator's authority to exclude authority to modify the CBA or interpret the CBA to apply it to the employer's other facilities or to employees outside of the bargaining unit covered by the CBA.
Court documents: