Equitable Resources, Inc. v. United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union

621 F.3d 538, 189 L.R.R.M. (BNA) 2225, 2010 U.S. App. LEXIS 19306, 2010 WL 3582920
Court of Appeals for the Sixth Circuit·Decided September 16, 2010·No. 08-6444·Published·Cited by 20 cases

Opinions

MOORE, J., delivered the opinion of the court, in which SUTTON, J., joined. KENNEDY, J. (p. 554), delivered a separate concurring opinion.

OPINION

KAREN NELSON MOORE, Circuit Judge.

In this case under § 301 of the Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185, Equitable Resources, Inc. (“Equitable”) challenges the district court’s order enforcing an arbitration award entered in favor of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AEL-CIO/CLC and its Local 8-512 (collectively, the “Union”). In early 2008, Equitable announced its plan to “integrate” the operations and employees of one of its wholly owned subsidiaries, Kentucky West Virginia Gas Company, L.L.C. (“Kentucky West”) into two other wholly owned 'subsidiaries operating in Kentucky. Following announcement of the integration, in June 2008 the Union filed suit in the United States District Court for the Eastern District of Kentucky to compel Equitable and Kentucky West to arbitrate successor-ship issues under the Union’s then-current collective bargaining agreement with Kentucky West (the “CBA”). The CBA included a successorship clause stating that Kentucky West agreed to make any “sale, lease, transfer, or assignment” of “the operations covered by this Agreement” conditional upon the successor entity assuming the CBA. The district court dismissed the Union’s action after Equitable and the Union agreed to arbitrate the successor-ship issues under the CBA. Equitable moved forward with its corporate restructuring plan, and, effective July 1, 2008, Kentucky West ceased to exist.

Equitable, purporting to represent Kentucky West’s interests, appeared at the arbitration. On July 21, 2008, the arbitrator entered an award in favor of the Union that required Equitable to abide by the CBA until it expired in October 2008 (the “Award”). The arbitrator concluded as a matter of contract interpretation that the restructuring triggered the CBA’s successorship clause and reasoned that Equitable could be liable under the clause for multiple reasons, including Equitable’s status as the entity that assumed Kentucky West’s legal obligations after it ceased to exist July 1st, as Kentucky West’s alter ego, and as the entity that received Kentucky West’s operations after July 1st. Equitable then filed the instant complaint under § 301 of the LMRA to vacate or modify the Award, alleging multiple defects in the Award. The Union counterclaimed for enforcement of the Award and filed a cross-motion for summary judgment. The district court granted summary judgment in favor of the Union, enforcing the Award.

On appeal, Equitable argues that the district court erred in enforcing the Award because the arbitrator exceeded his authority in ordering Equitable, a non-party to the CBA, to honor the CBA as the remedy for Kentucky West’s breach of the successorship clause, which resulted in [542] multiple alleged defects in the Award. Guided by the highly deferential standard of review for arbitration awards that interpret a collective bargaining agreement outlined in Michigan Family Resources, Inc. v. Service Employees International Union, 475 F.3d 746 (6th Cir.) (en banc), cert. denied, 551 U.S. 1132, 127 S.Ct. 2996, 168 L.Ed.2d 704 (2007), we affirm the district court’s order enforcing the Award.

I. FACTS AND PROCEDURE

The Union entered into the CBA with Kentucky West — defined as “a Delaware limited liability company and subsidiary of Equitable Resources, Inc.” — effective October 16, 2003 through October 15, 2008. Doc. 8 (Answer), Ex. 1 (CBA at 1, 44). The CBA includes successorship language in Section 1 of Article II “RECOGNITION”:

The Company agrees that if during the life of this Agreement, it discontinues operations, sells, leases, transfers or assigns the operations covered by this Agreement, it shall inform the purchaser, lessee, transferee or assignees of the exact terms of this Agreement and shall make the sale, lease, transfer, or assignment conditional upon the purchaser, lessee, transferee, or assignee, assuming all the obligations of the Agreement until its expiration date and treating affected employees of the Bargaining Unit in accordance with the terms of this Agreement. The Company agrees to provide the Union with written notice when the transaction is complete and the Agreement is assumed.

Id. at 2. Article X “GRIEVANCE AND ARBITRATION” dictates the manner for resolving “any difference ... between the parties or between any one or more of the employees and the Company relating to the meaning, application, or violation of any provisions of this agreement.” Id. at 39. Article X further dictates the “Jurisdiction of [the] Arbitrator,” stating, “The arbitrator shall have jurisdiction and authority only to interpret, apply, or determine compliance with the provisions of this agreement, and will not have authority to add to or detract or alter any provisions of this agreement. The arbitrator’s decision will be final and binding on both parties.”Id. at 40.

In early 2008, Equitable announced that it was undertaking a “corporate restructuring” for efficiency purposes that would eliminate Kentucky West and move its operations and employees to two wholly owned non-union subsidiaries of Equitable, Equitable Midstream and Equitable Productions (both of which had undergone operations changes prior to January 1, 2008). Under this plan, Kentucky West would cease to exist effective July 1, 2008. The Union filed a grievance with Kentucky West on March 7, 2008, and then an amended grievance on May 16. On May 23, 2008, Equitable responded to the Union, stating that the grievance was nonarbitrable. The Union then filed suit in the district court under § 301 of the LMRA, requesting a preliminary injunction to stay the restructuring and compel arbitration with Kentucky West so that the Union would be able to arbitrate with Kentucky West or Equitable without either party being able to argue that arbitration was no longer available under the CBA. After telephonic conference calls with the district court, the parties agreed to settle by submitting the case to arbitration, and the Union withdrew its suit.

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Equitable Resources, Inc. v. United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, 621 F.3d 538, 189 L.R.R.M. (BNA) 2225, 2010 U.S. App. LEXIS 19306, 2010 WL 3582920 (6th Cir. 2010).

621 F.3d 538 (Equitable Resources, Inc. v. United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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