Employer Cannot Overcome Arbitration Presumption Arising From CBA's Broad Arbitration Clause
KARL SCHMIDT UNISIA, INC. v. INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (December 17, 2010)
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Karl Schmidt Unisia and the Union representing its workers negotiated a Collective Bargaining Agreement (CBA). It contains several provisions relevant to this case: a "Thirty and Out" provision providing enhanced retirement benefits to employees who reach a certain age and seniority, a provision stating that the retirement plan would remain in effect during the term of the CBA, and a four-step dispute resolution process ending in arbitration. In early 2007, the Company announced its intention to lay off employees at its Fort Wayne facility. The Union initiated the dispute resolution process because of its belief that the Company intended to deny "Thirty and Out" provisions to eligible employees. The Company and the Union exhausted the first three stages of the dispute resolution process. The Union proceeded to arbitration and added a grievance on behalf of two affected employees. The Company filed suit seeking a declaratory judgment that the grievances were not arbitrable. The Union counterclaimed to compel arbitration. Judge Van Bokkelen (N.D. Ind.) granted summary judgment to the Union and ordered arbitration. The Company appeals.
In their opinion, Seventh Circuit Judges Posner, Kanne, and Sykes affirmed. The Court first noted the care it would take in not addressing the merits and set forth some general principles regarding arbitration -- there is a federal policy favoring arbitration, a party cannot be compelled to arbitrate unless it has contractually agreed to do so, and a presumption of arbitrability arises from a broad arbitration clause. Here, the Court had little difficulty in finding the presumption. The CBA states that the dispute resolution process is the "sole and exclusive remedy" for a grievance and that the Union may grieve any alleged violation of the CBA. In order to overcome this presumption, the Court stated, the Company must come forward with either an express exclusion or the "most forceful evidence" of an intent to exclude the issue from arbitration. The Court first rejected the Company's express exclusion argument, concluding that it distorted the Union's claim. The Company offered several "most forceful evidence" arguments -- that the answer to the underlying dispute lies in the Pension Plan and not the CBA, that the provisions in dispute were never negotiated, and that the issue is governed by the Pension Plan's dispute resolution process. The Court concluded that none of these arguments were supported by the record or the case law.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select