Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

• Email This
• Print
• Comments
• Trackbacks
• Share Link

MERRYMAN EXCAVATION v. INTERNATIONAL UNION OF OPERATING ENGINEERS (March 21, 2011)

Merryman Excavation and Local 150 of the International Union of Operating Engineers entered into a Memorandum of Agreement in 2000. The agreement basically adopted the terms of Local 150's Collective Bargaining Agreement. In addition to setting wages and describing working conditions, the agreement provided that all disputes were to be resolved by an informal process. The final phase of this process was a hearing before the joint grievance committee. The committee is comprised of an equal number of employer and union members. A majority decision of the committee on a dispute is final and non-appealable. On two different occasions in 2006, a joint committee heard a total of 13 grievances initiated against Merryman. Some of the grievances were settled, some resulted in a committee deadlock, and some were resolved in the union's favor. In total, Merryman was ordered to pay almost $100,000. At the two hearings, Merryman objected to the committee's jurisdiction, objected to proceeding with only two voting members on each side, objected to proceeding before an attempt to settle, and objected to "unbiased" committee members on the union side. Merryman brought suit pursuant to § 301 of the Labor Management Relations Act. The complaint alleged violations of the agreement and sought to set aside the awards. Local 150 counterclaimed for enforcement of the awards. Judge Kendall (N.D. Ill.) granted summary judgment to Local 150. Merryman appeals.

In their opinion, Chief Judge Easterbrook and Judges Manion and Hamilton affirmed. The Court first identified some confusion in the briefing and even in its own jurisprudence. It pointed out that the joint committee proceeding is not an arbitration subject to the Federal Arbitration Act and its impartiality requirements. Rather, it is a creature of contract -- a failure to honor a valid award is simply a breach of contract. The Court categorized Merryman's arguments into three categories: procedural errors, orders to pay the union assistance fund instead of union members, and bias. The Court quickly disposed of the alleged procedural errors. First, most of the alleged "errors" were contract disputes and the joint committee had the absolute authority to resolve them without appeal. Second, with respect to the composition of the committee and whether a quorum was required, the Court concluded that Merryman received all the procedures to which it was entitled under the agreement. With respect to the awards to the assistance fund, the Court also concluded that the issue involved construction of the agreement and was within the joint committee's authority to resolve without appeal. Finally, with respect to bias, the Court conceded that bias is one of the few grounds to attack the decision of a supposedly unbiased arbitrator or panel. But the agreement here does not require a neutral committee members. Instead, it strives to achieve achieves fairness by requiring an equal number of voting members from each camp. There is no evidence that that requirement was not met in this case. Whether any particular voting individual lacked impartiality is irrelevant.