In Lippert Tile Company, Inc. v. Int'l Union of Bricklayers, the Court of Appeals for the Seventh Circuit issued an opinion affirming enforcement of an arbitration award requiring that a company using non-union tile installers provide those workers with union benefits under the collective bargaining agreement (CBA) that a union has with an affiliated company based on a finding that the companies constitute a single employer. The court found the two businesses (and a third company providing management services to both companies) were a single employer and that the employer waived the better of its two arguments that the dispute was not arbitrable by raising only the weaker arbitrability argument during the arbitration.

In 2004, the Lippert brothers operated two tile installation businesses. The first, Lippert Tile Company, employed unionized bricklayers and craftsmen while the second, DeanAlan, subcontracted with strictly non-union workers and competed only in the non-union tile installation market in the same locale. Another company, Lippert Group (collectively, employer), was created as a corporate entity to provide management services to the parallel union and non-union tile installation companies. (These types of operations are called double-breasted entities.)

In 2010, a union representative of the Bricklayers union, the union that represented Lippert Tile's employees, filed a grievance to alleging that the employer was violating the CBA that the union had with Lippert Tile by assigning tile laying work to DeanAlan subcontractors without paying the subcontractors' workers the wages and benefits required by the CBA. The union representative asserted that the employer was a single employer. The dispute proceeded to a six-member management and union joint-arbitration committee (JAC), on which the union representative sat. The employer raised, among other arguments, that the grievance was not arbitrable because DeanAlan and Lippert Group were not parties to the CBA or subject to its arbitration provision.

In March 2011, the JAC upheld the grievance against the employer. The JAC:

The employer filed a petition with a federal district court to vacate the JAC award, raising the same arguments it did before the JAC, and also asserted that the dispute was not arbitrable because DeanAlan subcontracted workers were not found by the NLRB to be part of an appropriate bargaining unit with Lippert Tile's unionized employees.

The district court granted the union's motion for summary judgment and ordered that the award be enforced. The court found that:

The employer appealed.

On August 1, 2013, the Court of Appeals for the Seventh Circuit affirmed the district court's decision. The Seventh Circuit held that:

Seventh Circuit precedent holds that parties can waive arbitrability arguments when opposing enforcement of arbitration awards by not raising the arbitrability issue in federal court before the arbitration commences or in the arbitration proceedings. However, this case appears to be the first decision where a federal circuit of appeals found that an employer must raise all variations of arbitrability arguments before or during the arbitration to preserve each variation of the argument for later labor arbitration award challenges in federal court.

Employers may be wise to move in federal court to stay arbitrations pending the court's determination on whether the grieved issue is arbitrable, especially where the grievance will be decided by a panel like the JAC, which presumably was comprised of union leaders and principals of the employer's industry competitors.