April 28, 1994 UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
No. 93-1762
TEJIDOS DE COAMO, INC., ETC.,
Plaintiff, Appellee,
v.
INTERNATIONAL LADIES' GARMENT WORKERS' UNION, ET AL.,
Defendants, Appellants.
ERRATA SHEET
The opinion of this Court issued on April 25, 1994, is amended as follows:
On page 6, footnote 3, line 4, replace "(7th Cir. 1984). See" with "(7th Cir. 1984); see."
On page 13, line 14, add a comma after the word "Board."
On page 13, line 14, add the word "the" after the word "and."
On page 14, line 17, replace "Further, having" with "Having."
UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
INTERNATIONAL LADIES' GARMENT WORKERS' UNION, ET AL.,
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen C. Cerezo, U.S. District Judge]
Before
Torruella, Circuit Judge,
Coffin, Senior Circuit Judge,
and Boudin, Circuit Judge.
Ira Jay Katz with whom Rosa Garcia Badillo, Nicolas Delgado,
Reinaldo Perez-Ramirez, and Jose E. Carreras-Rovira were on brief for
appellants. Vicente J. Antonetti, Howard Pravda, Goldman, Antonetti, Cordova
& Axtmayer, R. Carl Cannon, Frank B. Shuster and Constangy, Brooks &
Smith were on brief for appellee.
April 25, 1994
BOUDIN, Circuit Judge. On January 12, 1993, Teijidos de
Coamo, Inc. ("the Company") filed this suit in district court
against the International Ladies' Garment Workers' Union and
one of its locals (collectively, "the Unions"). The
complaint, premised on section 301 of the Taft-Hartley Act,
29 U.S.C. 185, sought a declaration that no contract
existed between the Company and the Unions; and the Company
also requested a stay of pending arbitration proceedings.
The district court granted a stay pendente lite, and the
Unions appealed. We vacate the stay and remand for further
proceedings.
I.
Well before the current law suit, the Company and the
Unions were parties to a collective bargaining agreement
covering the Company's knit, cut, and sew employees at
Barranquitas, Puerto Rico. That contract expired on February
29, 1992. Thereafter, on April 17, 1992, the parties entered
into a "summary of agreement" looking toward a new contract.
It is enough for present purposes to say that the Company
believes that no effective contract was adopted at that time
or thereafter; the Unions, by contrast, take the view that
(based on past practice and the summary of agreement) a new
contract did go into effect on or after April 17, 1992,
retroactive to February 1, 1992, and is currently in force.
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On November 5, 1992, the Unions requested arbitration,
before arbitrator David Helfeld, of a dispute concerning
access for union representatives to the Company's
Barranquitas mill. The Company agreed; its explanation for
agreeing is that the contract that expired on February 29,
1992, had provided for arbitration of disputes arising under
that agreement and that the access dispute dated back to the
period before the contract expired. The arbitrator scheduled
a hearing for December 7, 1992.
On or about November 30, 1992, the Unions learned that
some of the Company's employees desired to decertify the
Unions as the representative of the Barranquitas workers and
were preparing to petition the National Labor Relations Board
for a new election. In early December 1992 there was a
strike and certain employees were disciplined by the Company
for what it said was strike and picket-line misconduct. The
Unions then sought arbitration before arbitrator Helfeld of
these disciplinary disputes. The Company objected that there
was no contract and thus no basis for arbitration of new
disputes arising after February 29, 1992.
The arbitrator held a hearing on December 30, 1992, and
advised the parties that he would determine whether he had
authority to proceed. The Company then filed the present
lawsuit on January 12, 1993; the complaint sought, as already
noted, a judicial declaration that no contract existed after
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February 29, 1992, a determination that would strip the
arbitrator of power at least as to disputes arising after
that date. The Company also sought a judicial stay of the
arbitration while the contract issue was being determined by
the court.
On January 20, 1993, a magistrate judge denied a stay of
the arbitration proceedings. On January 27, 1993, the
arbitrator issued a decision finding that a contract
currently existed between the Company and the Unions. He
proposed to schedule additional hearings on the merits of the
disputes. The Company appealed the magistrate judge's
decision and also asked the district court to stay further
arbitration proceedings pending the court's decision as to
whether the arbitrator had authority to proceed.
On June 21, 1993, the district court issued a stay
pendente lite of arbitration as to grievances alleged to have
arisen after February 29, 1992. The Unions then filed the
present appeal to this court. So far as we have been
advised, the district court has not yet determined the merits
of the dispute and we are concerned only with the Unions'
claim that interim relief--reflected in the stay of
arbitration--was improperly granted.
II.
On this appeal, the first question presented is whether
we have jurisdiction to review the stay of arbitration
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granted by the district court as either a final order or an
appealable interlocutory injunction. The Company has raised
this issue by motion to dismiss the appeal. Clearly, the
district court's stay is not a final disposition of the case.
But we agree with the Unions that it is an appealable
interlocutory injunction.
The governing statute, 28 U.S.C. 1292(a)(1), provides
for immediate appeals of interlocutory orders of district
courts "granting . . . [or] refusing . . . injunctions." An
order staying an arbitration proceedings is in substance, and
often in form, a directive to the parties to cease the
arbitration. It is thus injunctive in character, A. & E.
Plastik Pak Co. v. Monsanto Co., 396 F.2d 710, 713 (9th Cir.
1968), and one might think that there could be little doubt
that such an order was immediately appealable.
The doubts, such as they are, stem from two facts.
First, several circuits, including this one, have held that
an order refusing to stay an arbitration proceeding is not
immediately appealable under 28 U.S.C. 1292(a)(1).1
Second, in a series of decisions beginning with one by Judge
Friendly in the Lummus case,2 the Second Circuit has gone
1E.g., New England Power Co. v. Asiatic Petroleum Corp.,
456 F.2d 183, 185 (1st Cir. 1972); Stateside Machinery Co. v.
Alperin, 526 F.2d 480, 482-84 (3d Cir. 1975).
2Lummus Co. v. Commonwealth Oil Ref. Co., 297 F.2d 80
(2d Cir. 1961), cert. denied, 368 U.S. 986 (1962). Later
Second Circuit cases are listed in 16 Wright, Miller, Cooper
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further and held that an order staying an arbitration
proceedings also is not immediately appealable under 28
U.S.C. 1292. The Company argues that the Second Circuit's
approach is supported by considerations of symmetry and
policy.
The Second Circuit appears to stand alone. At least six
other circuits treat an order staying arbitration as an
injunction that is immediately appealable.3 Our own
decision in Societe Generale v. Raytheon European Management
and Systems Co., 643 F.2d 863 (1st Cir. 1981), tenuously
distinguished by the Company, leans in the direction of the
majority rule. A 1988 amendment to the Federal Arbitration
Act, now 9 U.S.C. 16(a)(2)--although perhaps formally
inapplicable to this case--expresses a congressional policy
in favor of immediate appeal of "an interlocutory order
granting . . . an injunction against an arbitration that is
subject to this title."4
& Gressman, Federal Practice and Procedure 3923, at 60
(1977).
3The circuits are the Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, and the District of Columbia. E.g.,
Timberlake v. Oppenheimer & Co., Inc., 729 F.2d 515, 518-19
(7th Cir. 1984); see 16 Wright, supra, 3923 (1977 and 1994
Supp.).
4The arbitration title broadly covers arbitration clauses in maritime agreements or agreements evidencing transactions involving interstate commerce, 9 U.S.C. 2, but it excludes "contracts of employment" from its scope. Id.
1; see Paperworkers Co. v. Misco, 484 U.S. 29, 40 n.9 (1987).
-6-
Judge Friendly's views are never lightly to be
disregarded. However, his main concern in Lummus was with
"the baneful effect" of permitting appeals from "order[s]
refusing a stay of arbitration." 297 F.2d at 86. As he
explained, immediate appeals from such orders would
compromise the speedy, informal disposition at which
arbitration agreements aim. Id. Judge Friendly then
concluded that, as a matter of symmetry, "if an order
refusing a stay" is deemed not to be an injunction, then "an
order granting such a stay" also cannot be so classified.
Id.
Courts since Lummas have been willing to entertain just
such a distinction between orders granting stays of
arbitration and orders denying them. Perhaps the best way to
explain this outcome is to say that both orders constitute
injunctions but that the policy favoring arbitration
precludes an immediate appeal where the district court has
refused a stay. New England Power Co., supra, 456 F.2d at
186. After all, treating procedure as a special concern of
the courts, judges have not hesitated to embroider the
Judicial Code with other judge-made rules on appealability.
E.g., Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541
(1949).
Accordingly we believe that an order declining to stay
an arbitration is an injunction but for policy reasons is not
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immediately reviewable by appeal, although of course
fundamental objections to the arbitration are preserved for
later judicial review if an award is made. By contrast, an
order staying arbitration is an injunction that is
immediately appealable under 28 U.S.C. 1292(a)(1), even
where section 16 of the Federal Arbitration Act does not
apply to the particular order. We thus have jurisdiction to
review the district court's stay order in this case, and turn
now to the question whether the district court had authority
to grant such a stay.
III.
The Unions claim that the stay granted by the district
court was an injunction issued in violation of the stringent
requirements of section 7 of the Norris-LaGuardia Act, 29
U.S.C. 107. In the alternative, the Union says that the
stay was unjustified even under the less stringent equitable
standards that govern ordinary injunctions. For reasons
already indicated we agree that the stay comprised an
injunction. The next, and more difficult, question is
whether section 7 supplies the yardstick.
Section 7 is one of a set of interlocking provisions of
the Norris-LaGuardia Act designed to curb the use of federal
court injunctions in cases "involving or growing out of a
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labor dispute."5 Under section 7, no injunction may be
issued in such a case except after an evidentiary hearing,
specified findings by the court, and certain other steps
including a bond. The required findings include findings
that absent an injunction "substantial and irreparable injury
to complainant's property will follow" and that public
officers "are unable or unwilling to furnish adequate
protection." Id.
The threshold question, where section 7 is invoked, is
whether the case derives from a "labor dispute," a critical
phrase that provides the outer boundary for much of the
Norris-LaGuardia Act. On the face of the matter, a dispute
between an employer and its unions involving arbitration,
plant access, discipline of employees, and the existence vel
non of a collective bargaining agreement does comprise a
labor dispute, taking that phrase literally. The pertinent
definitions in the statute are broad, see section 13, 29
5Section 1 of the statute says that federal courts have no jurisdiction to issue temporary restraining orders or injunctions in such cases except in "strict conformity" with the statute; section 4 prohibits any temporary restraining order or injunction against certain acts (e.g., refusing to
work) regardless of circumstances; and section 7 imposes severe conditions on the grant of injunctive relief where it is not barred outright by section 4. 29 U.S.C. 101, 104, 107.
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U.S.C. 113, and have been broadly construed by the courts
including the Supreme Court.6
While the Supreme Court has been unwilling to narrow the
definition of "labor dispute," it has carved out a quite
important set of exceptions to the Norris-LaGuardia Act in
relation to arbitration. Following the Taft-Hartley Act's
creation of contract suits under section 301, the Supreme
Court upheld an injunction requiring an employer to arbitrate
a dispute, as the employer and union had agreed. Textile
Workers Union v. Lincoln Mills, 353 U.S. 448 (1957). What is
pertinent here is not the decision's famous holding that
federal law governs such labor contracts; it is the further
conclusion that section 7 did not apply to the injunction:
The congressional policy in favor of the enforcement of agreements to arbitrate grievance disputes being clear, there is no reason to submit them to the requirements of 7 of the Norris- LaGuardia Act.
Id. at 458-59 (footnote omitted).
Thereafter, in Boys Markets, Inc. v. Retail Clerks
Union, 398 U.S. 235 (1970), the Court took the even more
extreme step of approving a federal court injunction to
enjoin a strike that the union was conducting despite a
contract promising to arbitrate and to refrain from strikes.
6Burlington Northern R.R. v. Brotherhood of Maintenance
of Way Employees, 481 U.S. 429, 441-42 (1987); International
Ass'n of Machinists v. Eastern Air Lines, 826 F.2d 1141, 1145
(1st Cir. 1987).
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Section 7 aside, this injunction required the Court to
override section 4's flat prohibition on federal injunctions
against strikes. 29 U.S.C. 104. Nevertheless, Justice
Brennan declared that "the unavailability of equitable relief
in the arbitration context" would frustrate Congress' policy
"favoring the voluntary establishment of a mechanism for the
peaceful resolution of labor disputes . . . ." 398 U.S. at
253.
The twin themes in these cases are the desirability of
enforcing labor contracts and the desirability of
arbitration. At least where these objectives coincide, as in
Lincoln Mills and Boys Markets, we are told that the Norris-
LaGuardia Act's "seemingly absolute terms" can be made to
yield to "the subsequently enacted provisions of 301(a) . .
. and the purposes of arbitration." Boys Markets, supra, 398
U.S. at 249-50. We do not think that in this case injunctive
relief can be justified on either ground--to enforce a
contract or support arbitration--let alone both.
It requires no argument to show that the stay of
arbitration granted in this case is not a step fostering
arbitration. Nor can the stay fairly be described as one to
enforce a collective bargaining agreement. The Company's
position, after all, is that there is no such agreement at
all. The Company is seeking not to enforce a contract but to
obtain a judicial determination that none exists. This is a
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permissible aim but it is rather far from the circumstances
of Lincoln Mills and Boys Market.
The Company's argument for bypassing section 7 is not
without some force. It points out that whatever the strength
of the policy favoring arbitration of labor disputes, the
obligation to arbitrate remains a creature of contract.
United Steelworkers of America v. Warrior & Gulf Nav. Co.,
363 U.S. 574, 582 (1960). Thus, there is no obligation to
arbitrate if the parties did not agree to do so. Id. A
fortiori there is no obligation to arbitrate if the parties
did not agree to anything, as the Company claims here.
Indeed, in AT&T Technologies, Inc. v. Communications Workers,
475 U.S. 643 (1986), the Supreme Court held that a court
cannot order arbitration without a judicial finding that
there is an agreement providing for it.
But AT&T Technologies, although heavily stressed by the
Company, does not directly govern our case. Here the
arbitration clause invoked by the Unions does not require a
court order: an arbitrator being already designated under
the alleged contract--that is, the prior contract that the
Unions claim to have been extended--the Unions could begin
the process without cooperation from the Company or aid from
the courts. It is the Company that has taken the offensive
and sought to preempt the arbitration. Nothing in AT&T
Technologies addresses the question whether section 7 applies
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to injunctive relief when an employer seeks to preempt
arbitration.
Taking a very broad view, one could argue that the
Lincoln Mills policy of issuing injunctions to enforce labor
contracts should entail an equal willingness to help parties
avoid spurious claims that a contract exists. It might also
be argued that, despite the Norris-LaGuardia Act's sweeping
language, the primary concerns that it had with labor
injunctions involved conduct such as lawful strikes, peaceful
picketing and union organizing which are very remote from the
conduct--a disputed arbitration proceeding--sought to be
stayed in this case. These are not frivolous arguments.
On the other hand, the judicial virtues include
respecting statutory language, and section 7 seems on its
face to apply to our case. The Lincoln Mills and Boys
Markets cases are distinguishable because they involved
affirmative enforcement of collective bargaining contracts in
support of arbitration. Also, what law can be found in the
circuits may lean slightly in favor of the view that section
7 does apply here: the Ninth Circuit has so held, as did the
Third (though by a two-to-one vote); and the Second Circuit
cases that look in the opposite direction do not directly
discuss our issue.7
7Compare Camping Constr. Co. v. District Council of Iron
Workers, 915 F.2d 1333 (9th Cir. 1990) (no stay), and Lukens
Steel Co. v. United Steelworkers of America, 989 F.2d 668 (3d
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On balance, we are disposed to hold that section 7 does
govern a suit to enjoin a labor arbitration--unless and until
the Supreme Court says otherwise. Carving out new exceptions
to the Norris-LaGuardia Act, or markedly extending old ones,
is primarily a matter for the Supreme Court. We think such a
step is entirely possible; but we do not think it so certain
that we should anticipate it. Modern labor law, after all,
is largely a construct of Congress, the Labor Board, and the
Supreme Court. The edifice does not need another architect.
IV.
To say that section 7 applies is not the end of the
matter. The central findings and procedures required for an
injunction under section 7 differ from those required for an
ordinary injunction,8 but only by degree and in detail. The
most important findings required by and peculiar to section 7
are that "unlawful acts" be threatened, that "substantial and
irreparable injury to complainant's property" will follow
absent an injunction, and that "public officers" "are unable
Cir. 1993) (same by a divided court), with Diamond Glass
Corp. v. Glass Warehouse Workers and Paint Handlers Local
Union 206, 682 F.2d 301 (2d Cir. 1982) (arbitration enjoined
without discussing section 7).
8The almost universal considerations in granting a preliminary injunction are a (1) a likelihood of success on the merits, (2) irreparable injury to the moving party, (3) outweighing harm to the opponent, and (4) compatibility of the injunction with the public interest.
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or unwilling to furnish adequate protection" to the
property.9
Based on these requirements, especially the reference
to public officers, a decent argument could be made that
section 7 precludes any injunctive relief in a labor dispute
except where essential to prevent damage to physical property
caused by violent acts. That reading, however, goes slightly
beyond the precise words of the statute. Further, there
would be some tension between such a view of section 7 and
the Supreme Court's willingness to uphold injunctions in aid
of contractually promised arbitration (Lincoln Mills) and
even against peaceful strikes (Boys Markets).
Having given the term "labor disputes" a broad reading,
we see good reason to preserve at least the potential for
injunctive relief where unlawful (but non-violent) acts
threaten to cause "substantial and irreparable injury" to
some property-like interest (other than physical security).
There is even legislative history in the Norris-LaGuardia Act
to the effect that Congress did not mean to preclude
injunctive relief against "unlawful acts or acts of fraud or
9Section 7 also requires findings that the balance of harms as to each element of the injunction be in favor of the complainant and that complainant lack an adequate remedy at law; but these are requirements that normally apply to any injunction.
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violence."10 If the balance of harms and irreparable
injury requirements are taken seriously, little danger exists
of promiscuous injunctions under section 7.
This danger is further reduced by two other
considerations. First, no matter what threats or harms are
presented, section 4--except as limited by the Supreme court-
-creates an unqualified "no injunction" zone for the core
conduct of striking, organizing in unions, and picketing.
Second, where the conduct falls outside that zone, the
substantive findings required by section 7 are backed by
procedural requirements that go beyond those of ordinary
injunctions (e.g., an evidentiary hearing and a bond for
costs and attorney's fees).
In this case, we do not think that either the findings
or the procedural requirements of section 7 were satisfied.
The district court may have assimilated a stay of arbitration
to a stay of a phase of its own proceedings, for which no
findings of any kind would be required. But despite some
similarities, the stay of arbitration is a coercive order
directed not at the court's own proceedings but at the out-
of-court activities of parties before the court. That, in
fact, is why the stay is an injunction appealable under 28
U.S.C. 1292(a).
10S. Rep. No. 163, 72d Cong., 1st Sess. 11 (1932) (emphasis added); see Grace Co. v. Williams, 96 F.2d 478, 481
(8th Cir. 1938), recounting the legislative history.
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Here, starting with procedure, the district court
apparently omitted the requirement that no injunction be
granted except "after hearing the testimony of witnesses in
open court (with the opportunity for cross-examination),"
section 7; nor were there separate formal findings of fact
covering the issues for which section 7 requires such
findings;11 nor does it appear that bond was filed to cover
damages including attorney's fees, as section 7 also
requires. There may be cases where one or another of these
procedural requirements is waived or its omission is
manifestly harmless; but the lack of substantive findings
cannot be so easily ignored.
Turning to substance, we do not think that it is
apparent how the lack of an injunction threatened the Company
with substantial and irreparable injury. In this court, the
only claim made by the Company under this head is that the
arbitration proceedings would be used by the Unions "as
campaign propaganda in a decertification election." This
assertion is not explained in the brief, and it is scarcely
11Section 7 requires five findings. The first four are that unlawful acts are threatened, that substantial and irreparable injury will follow, that the balance of harm on each element of relief favors the complainant, and that complainant has no adequate remedy at law. The fifth finding, that public officers are unable or unwilling to furnish protection, is (as we read the statute) irrelevant where the harm is not of a kind that the police ordinarily prevent.
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self-evident that the arbitration proceedings would or would
even be likely to alter the election results.
If the concern is with relief that the arbitrator might
order, the short answer is that the award is not self-
executing. A valid objection to jurisdiction would be
presented to and decided by the court before the award was
implemented. As for any propaganda benefit accruing to the
Unions from the existence of the arbitration or even the
arbitrator's findings, the Company is no less free to
publicize its own claim that the arbitration is a nullity,
pointing to its declaratory judgment suit as evidence that
the challenge is a serious one.
In its district court papers the Company argued that it
needed a stay to forestall a hopeless predicament: either
participate in the arbitration "and risk waiving its right to
judicial determination of the issue of substantive
arbitrability" or decline to participate and be bound by the
award if the arbitrator is later held to have jurisdiction.
Not surprisingly, no authority was cited for the suggestion
that the Company would waive an explicitly asserted
jurisdictional objection by defending on the merits. The
suggestion is mistaken. E.g., IAM Lodge 1777 v. Garsteel,
Inc., 900 F.2d 1005, 1008-10 (9th Cir.), cert. denied, 111 S.
Ct. 143 (1990).
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It is true that participating would cause one form of
loss, namely, the time and expense of litigation before the
arbitrator. But courts have ordinarily not deemed litigation
expense to be substantial and irreparable injury warranting
an injunction, Renegotiation Board v. Bannercraft Clothing
Co., 415 U.S. 1, 24 (1974), USM Corp. v. GKN Fasteners, Ltd.,
574 F.2d 17, 20 (1st Cir. 1978), and perhaps in deference to
such decisions the Company does not argue to the contrary in
this court. If the Bannercraft generalization may have some
exceptions, nothing here makes this case appear exceptional.
In sum, so far as appears from this record, there is no
substantial and irreparable injury--or at least injury of a
kind that courts recognize in injunction cases. Under
ordinary standards for injunctive relief, irreparable injury
is nominally required but courts are often generous where the
complainant's claim on the merits is very strong or
unanswerable. Under section 7, however, there is no such
generosity. Absent a supported finding of "substantial and
irreparable injury," the stay of arbitration cannot stand.
This case is not over. The Company's complaint sought a
declaration that there was no collective bargaining agreement
in force after February 29, 1992, and so no obligation to
arbitrate disputes arising after that date. Although section
301 actions are ordinarily brought to enforce contracts, the
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Declaratory Judgment Act, 28 U.S.C. 2201-02, permits the
declaration of rights about which a real controversy exists,
and the Unions have not disputed the district court's
authority to grant declaratory relief. Nor does section 7
pose any barrier to such a declaration; it is directed only
against injunctions. See, e.g., Wilkes-Barre Publishing Co.
v. Newspaper Guild of Wilkes-Barr, Local 120, 647 F.2d 372,
379 (3d Cir. 1981), cert. denied, 454 U.S. 1143 (1982).
If this seems an eccentric limitation on a useful remedy
now customarily available to litigants, the short answer is
that the Norris-LaGuardia Act reflects a unique historical
experience. See Frankfurter & Greene, The Labor Injunction
(1930). Perceived judicial abuses gave rise to severe
restrictions on federal court authority; and the
restrictions, being statutory, persist even though the
climate that led to abuses has altered. Courts have assumed
a lot of authority in recent years, but the authority to
repeal statutes still belongs to Congress.
The stay of arbitration granted by the district court is
vacated and the case is remanded for further proceedings on
the request for declaratory relief.
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