Decorative Panels International, Inc. v. International Ass'n of Machinists & Aerospace Workers Local Lodge W-260

996 F. Supp. 2d 559, 2014 WL 495407, 198 L.R.R.M. (BNA) 2486, 2014 U.S. Dist. LEXIS 15199
CourtDistrict Court, E.D. Michigan
DecidedFebruary 6, 2014
DocketCase No. 13-cv-10798
StatusPublished
Cited by4 cases

This text of 996 F. Supp. 2d 559 (Decorative Panels International, Inc. v. International Ass'n of Machinists & Aerospace Workers Local Lodge W-260) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Decorative Panels International, Inc. v. International Ass'n of Machinists & Aerospace Workers Local Lodge W-260, 996 F. Supp. 2d 559, 2014 WL 495407, 198 L.R.R.M. (BNA) 2486, 2014 U.S. Dist. LEXIS 15199 (E.D. Mich. 2014).

Opinion

ORDER DENYING PLAINTIFF’S MOTION TO VACATE, GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, AND DENYING PLAINTIFF’S MOTION TO STRIKE

THOMAS L. LUDINGTON, District Judge.

Plaintiff Decorative Panels International brought this action to vacate an arbitration award in favor of the International Association of Machinists and Aerospace Workers and Its Lodge W-260 (“the Union”). The arbitration award required that five Union employees be restored to their original jobs and continue receiving their original wages. The award also required DPI to apply for the transfer of an effluent treatment permit. DPI asserts that the award should be vacated because the arbitrator (1) acted outside the scope of his authority since he lacked jurisdiction to order the arbitral award, (2) failed to arguably construe the collective bargaining agreement by finding that DPI did not have the right to subcontract, and (3) granted an award that contravened public policy by ordering a third party to rehire Union workers. Mot. to Vacate, ECF No. 19. DPI also filed a motion to strike, arguing that the award should be vacated because it was procured by fraud or undue means when the Union intentionally misrepresented the state of discovery. See Mot. to Strike, ECF No. 29. The Union counterclaimed, seeking to enforce the arbitration award. Mot. Summ. J., ECF No. 21. For the reasons set forth below, the arbitrator’s award will be affirmed.

I

DPI is a general production business in Alpena, Michigan, that manufactures solid designer wall panels. DPI also maintains a wastewater treatment area, referred to as the E-Lab, which processes and treats the wastewater from DPI’s production facility. Mot. to Vacate Ex. A at 4. The E-Lab is — or was — typically staffed by about five employees covering three shifts on a daily basis. Id.

In 2008, DPI began investigating the use of new technology that had been developed by American Process, Inc. (“API”). It was hoped that API’s developing technology would permit it to not only treat DPI’s wastewater, but would also change the wastewater into useful products such as deicer and ethanol.

DPI and the Union are parties to a collective bargaining agreement (the “CBA”). As part of its general representation duties, the Union represents DPI employees working at the E-Lab. Id. In February 2011, DPI informed the Union that it intended to sell some real estate to API, and that API intended to build a Biorefinery on the property deploying the new technology. Id. at 5.

In 2012, DPI informed the Union that it had entered into a vendor/customer agreement with API in which API would process wastewater in the E-Lab using its new technology and proprietary equipment. Id. In return, DPI would pay API a monthly fee to process the water.1 Id. DPI informed the Union that after the Union employees trained API employees to run the E-Lab, the Union employees [563]*563would be found alternate jobs within DPI, but at reduced pay rates. Id. at 6. Information provided during the October 16, 2012 evidentiary hearing indicates that the contract between DPI and API was not a traditional subcontract. API’s interest in entering into the subcontract was not simply to perform work that DPI employees had been performing, but rather to reduce the cost of treating the effluent and to produce new products from DPI’s effluent. The process for treating the effluent was necessarily experimental and neither DPI nor API knew whether it would work. See Mot. to Vacate Ex. D at 24 (DPI President stated that he had “been on the skeptical side from the beginning, which is why we structured the deal the way we did because it’s new technology, it’s unproven.”).

A

On April 23, 2012, the Union filed a grievance claiming that DPI violated the CBA by transferring Union work in the E-Lab to API. DPI and the Union submitted the grievance to arbitration, and the arbitrator conducted an evidentiary hearing on October 16, 2012.

DPI made several concessions at the evidentiary hearing that seemingly rendered the hearing unnecessary. First, DPI conceded that the E-Lab had not yet been altered to accommodate the Biorefi-nery, although DPI still contemplated that it would be. Second, DPI conceded that the original Union employees could and should continue their work in the E-Lab and be paid under the CBA. Mot. to Vacate Ex. A at 23.

On December 5, 2012, the arbitrator sustained the Union’s grievance and found that DPI subcontracted its E-Lab work to API in violation of the CBA:

As a result, DPI’s E-Lab operation will have to continue to treat the wastewater whether or not there is a Biorefinery. To date, wastewater continues to be treated through the E-Lab. The difference is that the E-Lab is being operated by API employees rather than bargaining unit employees of DPI.

Mot. to Vacate Ex. A at 22. In reaching his decision, the arbitrator first concluded that DPI’s subcontract with API violated the CBA. To justify its position that it had the right to subcontract work to API, DPI had relied on paragraph 11, which provided that DPI “agrees to notify the Union in advance of contracts for construction or major repair work that in its opinion cannot be performed by the Bargaining Unit due to lack of skills, necessary equipment or completion times.” DPI had relied on paragraph 11 as justifying its right to subcontract the work in the E-Lab to API. The arbitrator concluded that the subcontract with API is not “construction or major repair work,” and therefore paragraph 11 did not even apply to the situation at hand. But, even if it did, the arbitrator stated that “[tjhere is no question that [the Union workers] have the skills to perform the work.” Ex. A at 21.

The arbitrator further found, based on the evidence furnished to him, that no new technologies were involved at the E-Lab: ‘Tour arbitrator is not convinced that new technologies are directly involved, in terms of the E-Lab, because presently, the E-Lab is still performing wastewater treatment on the same basis it was performed prior to the work being transferred, or subcontracted, to API employees.” Id. at 23. DPI had acknowledged that the Bior-efinery was not yet in operation in 2012, even though the Union workers had been removed from their jobs seven months pri- or. The arbitrator noted that the original equipment and facilities in the E-Lab were still available and were being operated by API employees. The arbitrator summarized his findings by stating that “[u]ntil the Biorefinery is in operation, there appears to be no good reason, or [564]*564logical reason, why bargaining unit employees cannot continue to perform that work. Certainly, nothing of a substantial nature has been emphasized by DPI in this case.” Ex. A. at 24.

The arbitrator ordered DPI to reimburse the five employees who had previously worked in the E-Lab the difference between their rates of pay prior to being transferred out of the E-Lab and their rates of pay after being transferred out. Id. at 26. The arbitrator also ordered the parties to discuss a resolution that would either allow the Union employees to return to the E-Lab in their former capacities or reach another amicable agreement. Id. The arbitrator retained jurisdiction in the December 5, 2012 Award relating to the operation of the E-Lab. Id.

B

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996 F. Supp. 2d 559, 2014 WL 495407, 198 L.R.R.M. (BNA) 2486, 2014 U.S. Dist. LEXIS 15199, Counsel Stack Legal Research, https://law.counselstack.com/opinion/decorative-panels-international-inc-v-international-assn-of-machinists-mied-2014.