STERLING FLUID SYSTEMS (USA), INC. v. Chauffeurs, Teamsters, & Helpers Local Union 7

322 F. Supp. 2d 837, 175 L.R.R.M. (BNA) 2078, 2004 U.S. Dist. LEXIS 1814, 2004 WL 1396262
CourtDistrict Court, W.D. Michigan
DecidedFebruary 3, 2004
Docket1:03-cv-00135
StatusPublished
Cited by1 cases

This text of 322 F. Supp. 2d 837 (STERLING FLUID SYSTEMS (USA), INC. v. Chauffeurs, Teamsters, & Helpers Local Union 7) is published on Counsel Stack Legal Research, covering District Court, W.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
STERLING FLUID SYSTEMS (USA), INC. v. Chauffeurs, Teamsters, & Helpers Local Union 7, 322 F. Supp. 2d 837, 175 L.R.R.M. (BNA) 2078, 2004 U.S. Dist. LEXIS 1814, 2004 WL 1396262 (W.D. Mich. 2004).

Opinion

OPINION

QUIST, District Judge.

This matter involves an arbitration regarding the alleged breach of a collective bargaining' agreement between Plaintiff, Sterling Fluid Systems (USA), Inc. (“Sterling”), and Defendant, the. Chauffeurs, Teamsters & Helpers Local Union #7, Affiliated with the International Brotherhood of Teamsters (the “Union”). The parties submitted their dispute to arbitration, which resulted in an award granting the Union full relief. Now before the Court are Sterling’s Motion to Vacate the Arbitration Award and the Union’s Motion for Summary Judgment to Enforce the Arbitration Award. For the reasons stated below, the Court will vacate the arbitration award.

I. Facts and Procedural Background

The Court is bound by the arbitrator’s findings of fact and therefore adopts the statement of facts made by arbitrator Gordon Byrholdt, attached as Exhibit 1 to the Union’s brief in support of its Motion for Summary Judgment. See Int’l Ass’n of Machinists & Aerospace Workers v. Tenn. Valley Auth., 155 F.3d 767, 771 (6th Cir.1998) (“A court cannot make findings of fact independent of the arbitrator.”). The arbitrator must make the factual findings, “and a court may not reject those findings simply because it disagrees with them.” United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 370-71, 98 L.Ed.2d 286 (1987).

*840 Sterling manufactures various types of pump products at several facilities. Three of these facilities remain in operation: La Boer in Alabama, Peerless in Indiana, and SIHI in Ontario, Canada. Sterling also owned and operated the small foundry facility at issue in this action, Process Metals Company (“PMC”), located in White Pigeon, Michigan. On August 27, 2000, Sterling entered into a collective bargaining agreement (the “CBA”) with the Union, which represented 12-13 PMC production and maintenance employees. The CBA ran from August 27, 2000, through June 15, 2003.

A Management Rights Clause in Article II of the CBA states as follows:

Subject to the provisions of this Agreement, the parties recognize that the management of the plant and the direction of the working forces remain vested in the Company. The management of the plant includes all the customary and usual rights, powers, functions, and the authority of management; such as, but not limited to, the right to plan, direct, and control plant operation; to hire, promote, transfer or demote; to suspend or discharge for cause; to maintain discipline and efficiency of employees; to issue and enforce reasonable rules and regulations; to introduce new and improved methods and facilities, or to change existing methods or facilities; to determine the products to be made or services to be performed, and those purchased from or made by other sources, or to be performed by outside contractors; and to perform all other actions which management believes necessary to maintain the Company in a sound competitive condition for the benefit of its employees and for the stockholders who have invested in the Company. Any controversy with respect to the above shall be subject to the grievance procedure.

(CBA Art. II, Compl. Ex. 1.)

A Subcontracting Clause in Article II of the CBA states:

Sub-contracting: It is expressly understood that the Company may subcontract work which occurs because of emergencies, lack of required manufacturing equipment or techniques, unusual and urgent customer delivery requirements, lack of maintenance job skills, or for additional capacity. In doing so, the Employer agrees that it will not use any sub-contracting device primarily for the purpose of evading this Agreement.

(CBA Art. II.)

Finally, Article V of the CBA contains a clause setting forth the time limitations for filing grievances arising under the CBA:

Section lp. Time Limitation on Filing: To be considered, a grievance must be reduced to writing in Step 1 within five (5) working days after the occurrence of the event giving rise to it, or knowledge thereof to the grievant. Failure to file grievance in the foregoing time period will constitute a waiver of said grievance, except as provided elsewhere in this Agreement. A grievance relating to discharge will be processed beginning at Step 2.

(CBA Art. V.)

According to Sterling witnesses, demand for Sterling products was slow in the 2000-2001 period and Sterling looked to possible economies in its operations. Among those operations analyzed was the PMC facility at White Pigeon. According to Sterling, the facility was too small to stand alone, and the company decided to close the plant. On January 18, 2002, the PMC plant manager notified all plant employees of Sterling’s intention to close the facility. In a certified letter to the Union dated the *841 same day, which the Union received on January 23, 2002, Sterling notified the Union of its decision to begin a gradual downsizing of PMC in March 2002 and to close the facility on April 30, 2002. Sterling did not tell the employees that the plant’s work was being transferred to other Sterling or non-Sterling plants.

On February 7, 2002, the molds and-dies necessary to carry out the manufacturing process at PMC were loaded onto trucks for shipment to Sterling’s facility in Ontario, Canada, and to a non-Sterling operation in California. Also on February 7, 2002, the Union filed a grievance under the CBA challenging Sterling’s decision to close the plant. The Union asserted that Sterling was in violation of a provision in the CBA restricting Sterling’s ability to subcontract work out of PMC. The grievance stated: “The Company is in violation of Article II — Subcontracting by subcontracting our work out.” Despite filing a grievance, the Union never sought an injunction to prevent Sterling from closing its plant or disposing of its property.

On August 15, 2002, the arbitrator held a hearing on the Union’s grievance. On November 27, 2002, he issued a decision finding that Sterling had violated the CBA’s Subcontracting Clause by unilaterally subcontracting the bargaining unit’s work without consulting the Union. First, the arbitrator made clear his finding that this is not a “plant closure case,” but rather a “subcontracting case.” (11/27/02 Arb. Award at 5.) In the arbitrator’s view, Sterling took grievable action not when it announced its decision to close PMC, but instead when it “made arrangements to contract out the bargaining unit work to its subsidiary in Ontario, Canada, and to another company in California, whose relationship to Sterling is unclear.” (Id. at 6.) The arbitrator concluded that the CBA permits subcontracting only in the six circumstances enumerated in the Subcontracting Clause. (Id. at 12-13.) Because Sterling’s activities failed to satisfy any of these circumstances, “there is no contractual justification for the subcontracting of the work at White Pigeon Foundry to another company.”

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322 F. Supp. 2d 837, 175 L.R.R.M. (BNA) 2078, 2004 U.S. Dist. LEXIS 1814, 2004 WL 1396262, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sterling-fluid-systems-usa-inc-v-chauffeurs-teamsters-helpers-miwd-2004.