Michigan Family Resources, Inc. v. Service Employees International Union Local 517m

475 F.3d 746, 181 L.R.R.M. (BNA) 2257, 2007 U.S. App. LEXIS 1734, 2007 WL 188099
CourtCourt of Appeals for the Sixth Circuit
DecidedJanuary 26, 2007
Docket04-2564
StatusPublished
Cited by124 cases

This text of 475 F.3d 746 (Michigan Family Resources, Inc. v. Service Employees International Union Local 517m) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michigan Family Resources, Inc. v. Service Employees International Union Local 517m, 475 F.3d 746, 181 L.R.R.M. (BNA) 2257, 2007 U.S. App. LEXIS 1734, 2007 WL 188099 (6th Cir. 2007).

Opinions

MARTIN, J. (pp. 757-60), delivered a separate opinion concurring in part and dissenting in part, in which CLAY and GILMAN, JJ., joined with GIBBONS, J. (pp. 760-61), also delivering a separate opinion concurring in part and dissenting in part, in which BATCHELDER, J., joined.

OPINION

SUTTON, Circuit Judge.

Local 517M of the Service Employees International Union challenges the decision of the district court vacating an arbitration award in its favor. Because the ai'bitrator was “acting within the scope of his authority” in resolving this dispute, because the company has not charged the arbitrator with fraud or dishonesty in making the award, because the arbitrator was “arguably construing ... the contract” when he awarded union employees a 4% cost-of-living increase for 2003 and because the company has shown no more than that the arbitrator made an error, perhaps even a “serious error,” in interpreting the contract, we reverse and direct the district court to enter an order enforcing the award. See United Paperworkers Int’l Union, AFL-CIO v. Misco, 484 U.S. 29, 38-39, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987).

I.

Michigan Family Resources (MFR) runs the federal Headstart Program that serves Kent County, which lies in western Michigan. Local 517M of the Service Employees International Union represents some of MFR’s employees. On behalf of its members, the union negotiated a collective bargaining agreement with MFR that entitled its members to annual wage increases. The agreement contains four pertinent provisions.

Article 35(1) of the agreement provides:

[749]*749Bargaining unit members will receive the same cost of living increases paid to other MFR employees pursuant to the directive of MFR’s funding source. The parties understand that the timing and amount of any such increase is entirely dictated by the funding source.

JA 43. The “funding source” mentioned in this provision, the parties agree, refers to the federal government.

Article 85(2) provides:

During the fall semester of each program year, bargaining unit members will be reviewed and will be considered for a merit increase.... MFR will guarantee at least that for each bargaining unit employee the sum of any COLA [i.e., cost-of-living increase] paid during the year and the merit increase will be as follows: 2002-4%; 2003-2.5%; 2004-3.5%. For example, if the [cost-of-living] increase for 2004 is 2.5%, effective on September 1, 2004 bargaining unit members will receive at least an additional 1.0%.

JA 43-44.

Article 5 provides an “exclusive method of resolving” disputes arising under the agreement and requires the parties to arbitrate any grievances that they cannot resolve on their own. The arbitrator, it says, “shall have full authority to render a decision which shall be final and binding upon both parties and the employees, except that the arbitrator shall not have authority to change, alter, amend, or deviate from the terms of this collective bargaining agreement in any respect.” Article 5(c). The provision also says that “[i]f the Union requests arbitration, the parties shall choose an arbitrator by selecting from the following list through the alternating strike method: Mario Chiesa[,] Mark Glazer[,] William Daniel[,] George Roumell and Lamont Stallworth.” Id.

Article 34 provides that the agreement “expresses the understanding of the parties and it will not be changed, modified, or varied, except by written instrument signed by duly authorized agents of the party thereto,” and that “[t]here are no past practices which are binding upon the parties.” JA 43.

In May 2003, MFR notified the union employees that they would receive a 2.5% cóst-of-living increase for 2003 — 1.5% from the “funding source” (ie., the federal government), 1% from MFR — while non-union employees would receive a 4% cost-of-living increase for the year. Although the 2003 pay increase for union employees satisfied the collective bargaining agreement’s minimum requirement for that year (2.5%), the union claimed that the agreement required parity between union and non-union employees in the payment of cost-of-living increases. The union, as a result, filed a grievance against MFR. In accordance with the agreement, the parties engaged one of the designated arbitrators to resolve the dispute.

On December 10, 2003, the arbitrator issued a ten-page opinion resolving the dispute in favor of the union. The question, as he saw it, wás “whether Article 35 requires MFR to provide parity in [cost-of-living] payments for its [union] employees when non-Union employees receive higher ... payments.” Arb. Op. at 2. On this point, the arbitrator reasoned, Article 35 was not entirely clear. While it required union members to “receive the same payments from the federal funding source as other employees,” it did not directly address “the cost of living increases from other sources, such as from the Employer.” Id. at 7. The arbitrator then noted that before and after the adoption of the collective bargaining agreement, MFR granted the same cost-of-living increase to all employees, regardless of union affilia[750]*750tion. Id. at 8. MFR never held merit reviews, he added, and in a 2002 memo (dealing with pay increases for the first year of the collective bargaining agreement) it characterized the entire wage increase to union employees as a cost-of-living increase. “I am persuaded,” the arbitrator then concluded, “that [Article 35] becomes ambiguous because of the Employer’s prior decision to characterize both its individual payment and its payment from the federal funding source as [cost of living].” Id. In the end he resolved this ambiguity based on the employer’s prior practice of granting identical cost-of-living increases to all .employees and awarded union members an equivalent 4% cost-of-living increase.

On January 9, 2004, invoking § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, MFR filed a complaint in federal court seeking to vacate the award. On November 10, 2004, 380 F.Supp.2d 886, the district court granted MFR’s motion for summary judgment, holding that “the Arbitrator’s award does not draw its essence from the [collective bargaining agreement] because the Arbitrator considered evidence to aid in construing the [collective bargaining agreement] when, in fact, no construction was necessary.” 380 F.Supp.2d at 890. “[T]he Arbitrator,” the court concluded, “went beyond the express terms of the [collective bargaining agreement] by imposing additional requirements upon the parties and considering past practices, which are specifically disclaimed by the [collective bargaining agreement’s] waiver provision.” Id.

A panel of this court affirmed, Mich. Family Res., Inc. v. Serv. Employees Int'l Union Local 517M, 438 F.3d 653 (6th Cir.2006), and applied this court’s four-part test for assessing arbitration awards in doing so, see Cement Divs., Natl. Gypsum Co. v. United Steelworkers of America, AFL-CIO-CLC, Local 135, 793 F.2d 759

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475 F.3d 746, 181 L.R.R.M. (BNA) 2257, 2007 U.S. App. LEXIS 1734, 2007 WL 188099, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michigan-family-resources-inc-v-service-employees-international-union-ca6-2007.