McKinstry Company v. Sheet Metal Workers' International Association, Local Union 16, Defendant

859 F.2d 1382, 129 L.R.R.M. (BNA) 2781, 1988 U.S. App. LEXIS 14261, 1988 WL 108465
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 20, 1988
Docket87-3865, 87-4025
StatusPublished
Cited by27 cases

This text of 859 F.2d 1382 (McKinstry Company v. Sheet Metal Workers' International Association, Local Union 16, Defendant) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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McKinstry Company v. Sheet Metal Workers' International Association, Local Union 16, Defendant, 859 F.2d 1382, 129 L.R.R.M. (BNA) 2781, 1988 U.S. App. LEXIS 14261, 1988 WL 108465 (9th Cir. 1988).

Opinion

FLETCHER, Circuit Judge:

McKinstry Co. appeals the district court’s grant of summary judgment in favor of the defendant union in McKinstry’s action to vacate an arbitration award. We affirm.

FACTS

Collective bargaining agreements in the sheet metal and air conditioning industry are negotiated in two phases. First, national level negotiations take place between the Sheet Metal Workers’ International Association, AFL-CIO (SMWIA) and the Sheet Metal and Air Conditioning Contractors National Association, Inc. (SMACNA), a national association of employers in the industry. SMWIA and SMACNA negotiate a standard form of union agreement, which leaves blank the names of the parties. Next, the standard form is distributed to various local unions and employers for further negotiations. The standard form is a starting point for local negotiations, and may be adopted as is, with blanks filled in, or with modifications as agreed by the local parties. It is the local unions and employers who sign as parties to the agreement.

McKinstry is a Seattle-based mechanical contractor operating throughout the Pacific Northwest. Several Western Washington employers, including McKinstry, assigned their bargaining rights to the local chapter of SMACNA (SMACNA of Western Washington). SMACNA of Western Washington reached an agreement with Sheet Metal Workers' Local Union No. 99 (“Local 99”), covering several counties in Western Washington, which McKinstry signed on June 1, 1983. This collective bargaining agreement (the Agreement) was based on the standard form and specifically incorporated Articles I, II, IV, V, VIII and X without modification.

In 1985, McKinstry bid on a prime mechanical contract for the State Office Building in Portland, Oregon. McKinstry’s bid was based in part on a subcontractor bid it had received from Columbia Mechanical *1384 Co., which was the lowest bid for the sheet metal portion of the work. According to McKinstry, if it had not incorporated Columbia’s sheet metal subcontract bid, McKinstry would have lost the bid for the prime mechanical contract to the next lowest prime contract bidder (which happens to have been Columbia).

McKinstry’s only collective bargaining agreement covering sheet metal workers is with Local 99. Sheet Metal Workers International Association Local Union No. 16 (“Local 16”) represents sheet metal workers in the Portland area. Although McKin-stry has never had a labor agreement or any relationship with it, Local 16 challenged McKinstry’s use of Columbia Mechanical as a violation of Article II, Sections 1 and 2 of the McKinstry/Loeal 99 Agreement. These sections prohibit the employer under the agreement from subcontracting with a firm that is not signatory to the Agreement. Local 16 requested a meeting under the grievance procedure provisions of the McKinstry/Local 99 Agreement, but McKinstry responded that it had no obligation to Local 16.

McKinstry next received notice from Local 16 that a Local Joint Adjustment Board in Portland was being convened, under Step Two of the grievance procedure. McKinstry sent a letter to the Joint Board and Local 16 stating its position that its Agreement with Local 99 was effective only in designated counties in the state of Washington and contesting the Local Joint Adjustment Board’s jurisdiction over it. 1

The Local Joint Adjustment Board found McKinstry to be in violation of its contract with Local 99 and awarded Local 16 approximately $19,000 in damages. McKin-stry appealed to the National Joint Adjustment Board, which affirmed the Local Joint Adjustment Board’s determinations but reduced the damages awarded to Local 16 from approximately $19,000 to approximately $1,900, holding the balance of the fine in abeyance to become due if McKin-stry should again violate the Agreement.

McKinstry filed this action in district court, pursuant to § 301 of the National Labor Relations Act, 29 U.S.C. § 185, to vacate the arbitration award. Both parties moved for summary judgment. The district court ruled in favor of Local 16. McKinstry timely appealed.

DISCUSSION

I. Standard of Review and Legal Standard

“[Arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960). Where the contract contains an arbitration clause, there is a presumption of arbitrability. In other words, a grievance will be presumed arbitrable “unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.” Warrior & Gulf, 363 U.S. at 582-83, 80 S.Ct. at 1353.

However, where one of the parties seeking arbitration is not a signatory to the underlying agreement, a further step is added to the inquiry. Before the presumption of arbitrability can apply, the nonsignatory party must show that the signatories intended it to derive benefits from the agreement. 2 Where such intent can be *1385 shown, and where the arbitration clause is susceptible to the interpretation that the nonsignatory has the right to enforce these benefits, 3 then arbitration is proper.

The question of arbitrability— whether the parties are to be compelled to arbitrate — is ultimately decided by the court, not the arbitrator, on the basis of the contract entered into by the parties. 4 AT & T Technologies v. Communications Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986). The district court should independently review the agreement. It should not give deference to the arbitrator’s decision in this regard, but should exercise plenary review to determine whether the matter is arbitrable. AT & T Technologies, 475 U.S. at 649, 106 S.Ct. at 1418. Because this case presents issues of law and contract interpretation, our standard of review is also de novo. The language of the district court suggests that it may have improperly deferred to the arbitrator’s decision as to arbitrability:

I cannot find that the Local Board and the National Board failed to draw their decisions favoring Local 16 from the essence of the agreement. I must therefore respect their determination that the [McKinstry/Local 99] Agreement was intended to have extraterritorial effect under the present circumstances.

Nevertheless, regardless of how the district court reached its result, its conclusion that arbitration was proper is correct.

II. Interpretation of the Agreement

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859 F.2d 1382, 129 L.R.R.M. (BNA) 2781, 1988 U.S. App. LEXIS 14261, 1988 WL 108465, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckinstry-company-v-sheet-metal-workers-international-association-local-ca9-1988.