No. 04-4206

418 F.3d 762
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 15, 2005
Docket762
StatusPublished

This text of 418 F.3d 762 (No. 04-4206) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
No. 04-4206, 418 F.3d 762 (7th Cir. 2005).

Opinion

418 F.3d 762

DEXTER AXLE COMPANY, Plaintiff-Appellant,
v.
INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS, DISTRICT 90, LODGE 1315, Defendant-Appellee.

No. 04-4206.

United States Court of Appeals, Seventh Circuit.

Argued June 3, 2005.

Decided August 15, 2005.

John T. Neighbours (argued), Baker & Daniels, Indianapolis, IN, for Plaintiff-Appellant.

John C. Hamilton (argued), The Hamilton Law Firm, South Bend, IN, for Defendant-Appellee.

Before CUDAHY, POSNER, and WILLIAMS, Circuit Judges.

CUDAHY, Circuit Judge.

This action to vacate an arbitration award was brought by the Dexter Axle Company (Dexter), against the International Association of Machinists and Aerospace Workers, District 90, Lodge 1315 (Union) under the Labor and Management Relations Act of 1947, 29 U.S.C. § 185. A collective bargaining agreement (CBA) between Dexter and the Union provided that Dexter's employees would receive incentive pay for completing assembly tasks more quickly than at a benchmark production rate called a "standard". The CBA also allowed Dexter to periodically recalculate incentive standards in the event there was a significant change in method, tooling or other conditions and set forth procedures for challenging these recalculations. Dexter having recalculated inventive standards in 2000 and having implemented new standards in 2001, certain union members contested the standard for the 12-inch axle station. After exhausting internal procedures, the dispute was submitted to arbitration, with the arbitrator finding the contested standard improper and awarding lost wages to affected employees. Dexter then challenged the award in district court and, the parties having filed cross-motions for summary judgment, the district court granted summary judgment for the Union. On appeal, Dexter now asserts that the arbitrator exceeded his authority in awarding lost wages and that compliance with the award would result in Dexter's violation of the CBA. We affirm.

I.

Dexter is a manufacturer of trailer axles, and the Union is the authorized bargaining representative for all production and maintenance workers at Dexter's Elkhart, Indiana manufacturing facility (Elkhart). Dexter and the Union were parties to a CBA, whose term ran from July 23, 1999 to July 22, 2002. The CBA consists of sixteen articles, with Article XV providing for a basic hourly rate and outlining an incentive pay system for Elkhart employees. The terms of the incentive pay system are set forth in the sixteen sections of the Incentive Pay System Supplement (Supplement), which, inter alia, establish procedures for setting and challenging incentive standards. The Supplement is a separate document from the sixteen articles of the CBA, but is made part of the CBA by the express language of Article XV.

In Article VII, "Grievance Procedures," and Article VIII, "Arbitration," the CBA also establishes procedures for resolving disputes about its provisions. The Supplement outlines in Sections 10, 11 and 12 additional procedures for employees to contest incentive standards. Sections 11 and 12 of the Supplement specifically refer to Articles VII and VIII of the CBA, respectively, with Section 12, stating in its entirety:

Section 12. If no agreement is reached at Step Three, the disputed standard may be submitted to arbitration under the provisions of Article VIII, except that the Arbitrator selected shall be a competent engineer in the field of work measurement or one who is experienced in arbitrating incentive grievances. The Arbitrator shall have no power to set a standard and/or rate, or to establish methods or procedures. His authority shall be limited to reviewing whether the standard is proper and consistent with those established in the plant and has been properly applied.

In November of 1999, Dexter assigned an industrial engineer (Engineer) to study and establish new incentive standards for Elkhart's axle assembly processes. The Supplement provides details about how the Engineer is expected to set standards on which to calculate incentive pay. The Engineer concluded his study in January of 2000, and Dexter implemented the Engineer's newly established standards in September of 2001. In November of 2001, several Elkhart employees filed complaints with Dexter protesting the newly calculated rates in accordance with the procedures outlined in the Supplement. The Union and Dexter could not resolve the matter; so it was submitted to arbitration. The arbitrator issued an Interim Award in June of 2003, and, before he issued his Final Award in September, permitted the Engineer to respond to the Interim Award. After reviewing the Engineer's response, the arbitrator concluded in his Final Award that the line balancing method used by the Engineer on the 12-inch axle line resulted in an improper standard. The arbitrator expressly defined the limits of his authority in making this Final Award as stemming from Article VIII of the CBA and section 12 of the Supplement. The arbitrator then awarded affected employees lost wages resulting from the implementation of the new, improper standard.

Thereafter, pursuant to the Labor and Management Relations Act of 1947, 29 U.S.C. § 185, Dexter filed a complaint in December of 2003 against the Union and moved to vacate the arbitrator's award. After the parties filed cross-motions for summary judgment, the district court granted the Union's motion in November of 2004. In its Memorandum and Order, the district court acknowledged that Dexter had made a "clever technical" argument to undermine the award, but stated that this was not enough under a collective bargaining agreement to disturb an arbitrator's award, citing United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). Dexter then initiated this appeal in December of 2004.

II.

A district court's grant of summary judgment is reviewed de novo, applying the same standards as did the district court to evaluate the arbitrator's decision. N. Ind. Pub. Serv. Co. v. United Steelworkers of Am., Local Union 12775, 243 F.3d 345, 346 (7th Cir.2001). Judicial review of arbitration awards under collective bargaining agreements is extremely limited. Id.

Dexter presents two arguments to support its contention that the arbitrator's award should be vacated. Dexter first alleges that the arbitrator exceeded his authority by awarding lost wages. Second, Dexter argues that compliance with the arbitrator's award would force Dexter to violate the CBA. We address each of these arguments in turn.

A. Whether the Arbitrator Exceeded His Authority Under the CBA By Awarding Lost Wages

Dexter asserts that the arbitrator had no authority to award lost wages since this remedy is not available in the arbitration of an incentive rate dispute.

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