Eagle Systems And Services, Inc. v. International Association of Machinists, District Lodge 725

Filing 25

ORDER signed by District Judge John A. Mendez on 12/15/16: The Court GRANTS WITH PREJUDICE 7 Motion to Dismiss and GRANTS Union's Counter Motion to Confirm the Arbitration Award. The Court also GRANTS Union's request for attorneys fees and orders Union to file documents required under Local Rule 293 within twenty days of the date of this Order to assist the Court in determining the reasonable amount of attorneys' fees to be awarded. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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EAGLE SYSTEMS AND SERVICES,
INC.,

No.

2:16-cv-02077-JAM-EFB

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Plaintiff,
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v.
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INTERNATIONAL ASSOCIATION OF
MACHINISTS, DISTRICT LODGE
725,

ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS AND COUNTER
MOTION TO CONFIRM ARBITRATION
AWARD

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Defendant.
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This case involves a dispute about an arbitration award. 1

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Plaintiff Eagle Systems and Services, Inc. (“Eagle”) filed its

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complaint to vacate an arbitration award under the Labor

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Management Relations Act (“LMRA”).

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International Association of Machinists, District Lodge 725

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(“Union”) moves this Court for an order dismissing Eagle’s

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complaint under Fed. R. Civ. P. 12(b)(6) and counter-moves for an

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order confirming the arbitration award.

ECF No. 1.

Defendant

ECF No. 7.

Eagle

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for November 15, 2016.
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opposes Union’s motion and counter motion.
I.

ECF No. 19.

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Eagle and Union entered into a collective bargaining

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agreement (“CBA”).

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CBA requires Eagle to provide full-time and part-time pilot and

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loadmaster instructors for the C-17 Training System Program at

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the Travis Air Force Base in Fairfield, California (“bargaining-

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unit employees”).

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bargaining-unit employees.

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CBA, attached to Complaint as Exhibit 1.

Exh. 1 at 6.

The

Union represents these

Id.

Except in emergencies, the CBA prohibits non-bargaining-unit

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employees (i.e., Eagle employees not covered by the agreement)

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from performing work typically performed by the bargaining unit.

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Id. at 17.

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a bargaining unit employee to be laid off, displaced or excluded

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from overtime.”

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Nor can a non-bargaining-unit employee’s work “cause

Id. at 18.

The CBA also includes a grievance procedure resulting in

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final and binding arbitration.

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arbitrator’s decision “shall be final and binding on all

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parties,” provided the arbitrator does not “add to, subtract

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from, modify or in any way change” CBA provisions.

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Id. at 10-12.

Under the CBA, the

Id. at 12.

After executing the CBA with Union, Eagle modified a

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subcontract it already had with L-3 Communications Link

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Simulation & Training Division (“L-3”).

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attached to Complaint as Exhibit 3.

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subcontract, Eagle provided five full-time equivalent pilot

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instructors at Travis Air Force Base.

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L-3 hired a Site Manager to perform bargaining-unit work, the

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Modified Subcontract reduced the staff by one full-time
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Modified Subcontract,

Under the original

Compl. at 3.

But, because

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equivalent instructor.

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part-time pilot instructors, which also precluded the remaining

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bargaining-unit employees from working overtime.

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Exh. 3 at 6-8.

So, Eagle terminated two

Compl. at 5.

Union filed a grievance, alleging that Eagle violated the

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CBA when an L-3 Site Manager began performing bargaining-unit

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work and when Eagle terminated two bargaining-unit employees.

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Grievance Statement, attached to Complaint as Exhibit 4.

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parties could not resolve their differences, so Union submitted

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the matter to arbitration.

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The

Compl. at 5.

Meanwhile, Union filed an Unlawful Labor Practice Charge

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against Eagle with the National Labor Relations Board (“NLRB”),

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alleging that Eagle violated several provisions under the

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National Labor Relations Act (“NLRA”) by transferring work out of

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the bargaining unit and terminating two bargaining-unit

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employees.

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the Regional Director declined to issue a complaint.

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Director’s Decision, attached to Complaint as Exhibit 6.

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Union appealed the Regional Director’s decision, but the General

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Counsel’s Office affirmed it.

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Decision, attached to Complaint as Exhibit 9.

ULP Charge, attached to Complaint as Exhibit 5.

But

Regional
Then

Office of the General Counsel’s

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One day before the General Counsel’s Office issued its

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affirmance, the arbitrator held a hearing on Union’s grievance.

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Compl. at 7.

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that Eagle violated the CBA.

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Complaint as Exhibit 10.

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reinstate any terminated bargaining-unit employees, to pay

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overtime to those bargaining-unit employees who lost that

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opportunity, and to take all other steps necessary to return to

About one month later, the arbitrator concluded
Arbitrator’s Decision, attached to

He issued an award requiring Eagle to

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the pre-violation status quo.

Exh. 10 at 9-10.

Eagle then filed its complaint in this Court to vacate the

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arbitration award, alleging that the arbitrator exceeded his

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authority, that the award does not draw its essence from the CBA,

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that the award violates public policy, and that the award

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conflicts with a prior NLRB ruling.

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moves to dismiss Eagle’s complaint and counter-moves to confirm

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the arbitration award.

Compl. at 1.

Union now

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II.

OPINION

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A.

Procedural Issue

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In response to a complaint to vacate an arbitration award,

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a party may simultaneously move to dismiss under Rule 12(b)(6)

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and move to confirm the award.

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United Bhd. of Carpenters, Local 45, No. 15-cv-05265, 2016 WL

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1559712, at *1 (N.D. Cal. Apr. 18, 2016) (granting defendant’s

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Rule 12(b)(6) motion to dismiss and “Counter-Motion” to confirm

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arbitration award).

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12(b)(6) motion to dismiss a complaint to vacate an arbitration

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award, a court may, sua sponte, treat that motion as a motion to

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confirm the award.

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556 F. Supp. 2d 329, 332 (S.D.N.Y. 2008).

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motion to dismiss a complaint to vacate an arbitration award is

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essentially the same as a motion to confirm an award.

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Fed. Fin. Corp. v. Carrion-Concepcion, No. 14-1019, 2016 WL

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1328769, at *1 (D.P.R. Apr. 5, 2016) (“motion to dismiss ‘a

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complaint to vacate or modify an award is functionally

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equivalent to a motion to confirm an award’”) (internal

See K&M Installation, Inc. v.

Even when a party files only a Rule

See Sanluis Devs., LLC v. CCP Sanluis, LLC,

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That is because a

See First

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citations omitted); Gen. Elec. Co. v. Anson Stamping Co. Inc.,

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426 F. Supp. 2d 579, 595 (W.D. Ky. 2006) (finding that a motion

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to dismiss is the “practical equivalent” of a motion to confirm

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and treating it as such).

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interests or a case’s procedural posture warrants treating a

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motion to dismiss as a motion to confirm an arbitration award.

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See Roy v. Buffalo Philharmonic Orchestra Society, Inc., 161 F.

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Supp. 3d 187, 193 (W.D.N.Y. 2016).

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Indeed, sometimes judicial economy

The parties dispute whether it was procedurally proper for

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Union to join its motion to dismiss with its counter motion to

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confirm the arbitration award.

Eagle says it was procedurally

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improper for several reasons:

(1) Union violated Rule 12(g) by

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joining a Rule 12 motion and a non-Rule-12 counter motion;

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(2) Union’s counter motion violated E.D. Cal. L.R. 230(e) by

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bringing a motion against a complaint; (3) courts decide motions

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to vacate or confirm awards under the LMRA on summary judgment;

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and (4) it would be unduly prejudicial to decide Union’s counter

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motion now because Eagle has not had the opportunity to fully

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brief or provide evidence.

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See Opp’n at 4-5.

Conversely, Union maintains that it properly joined its

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motion and counter motion.

First, Union says, courts commonly

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adjudicate motions to dismiss joined with motions to confirm

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awards.

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whether Eagle intended its complaint to operate as a motion.

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Id.

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because (i) L-3 is neither a party to this litigation nor the

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CBA, and (ii) there are no factual issues, so the court may

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decide the legal question on the pleadings.

See Reply, ECF No. 20, at 1.

Second, it was unclear

And, third, ruling now would not prejudice Eagle or L-3

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Id. at 1-2.

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The Court finds that Union properly joined its motion to

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dismiss with its counter motion to confirm the arbitration

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award.

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to confirm an award.

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at *1; Gen. Elec., 426 F. Supp. 2d at 595.

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v. Dist. Council of Painting and Allied Trades No. 36 to support

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its argument that courts decide motions to vacate or confirm

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arbitration awards under the LMRA on summary judgment, not the

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pleadings.

First, courts often treat motions to dismiss as motions
See First Fed. Fin. Corp., 2016 WL 1328769

768 F.2d 1115 (9th Cir. 1985).

Eagle cites Kemner

Eagle’s reading of

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Kemner is misplaced.

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arbitration award and to confirm two others under the LMRA and

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the Federal Arbitration Act.

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to dismiss for lack of subject matter jurisdiction and for

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failure to state a claim.

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district court granted the defendant’s motion; the Ninth Circuit

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reversed, confirming the first arbitration award and declining

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to reach the remaining substantive issues.

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easily distinguishable from the instant case and does not

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support Eagle’s argument.

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treat motions to dismiss as motions to confirm arbitration

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awards, Eagle’s Rule 12(g) argument fails.

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Kemner involved a complaint to vacate one

Id.

Id. at 1117.

The defendant moved

Without explanation, the

Id.

Kemner is

Also, given that courts frequently

Second, it is unclear whether Eagle intended its complaint

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to operate as a motion to vacate the award, which undercuts

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Eagle’s L.R. 230(e) argument.

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to its complaint 95 pages worth of exhibits (including the CBA,

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the Modified Subcontract, both NLRB rulings, and the

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Arbitrator’s Decision), suggesting that Eagle wanted the Court

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to treat its complaint as a motion.

On the one hand, Eagle attached

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See Exhs. 1, 3, 6, 9, 10.

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On the other hand, Eagle requests leave to amend if the Court

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dismisses the complaint.

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need not resolve whether Eagle has filed a motion to vacate the

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arbitration award because Eagle, in its opposition brief, “had

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the opportunity to defend against [the Union’s counter motion]

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and the enforcement of that [a]ward.”

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at *1.

Opp’n at 15.

Nevertheless, the Court

See K&M, 2016 WL 1559712

And Eagle did just that.

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Lastly, ruling on Union’s counter motion will not prejudice

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Eagle because the Court faces a legal question it can resolve on

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the pleadings.

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Court has the evidence it needs to decide the issues before it.

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See Exhs. 1, 3, 6, 9, 10.

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disregarding the arbitrator’s factual determinations, let alone

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supplementing them with its own.”

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v. Auto. Machinists Lodge No. 1173, Int’l Ass’n of Machinists &

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Aerospace Workers, 886 F.2d 1200, 1207 (9th Cir. 1989) (en

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banc).

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that issue because L-3 is neither a party to this litigation nor

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a signatory to the CBA.

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Given the detailed record Eagle provided, this

Indeed, “a court is barred from

Stead Motors of Walnut Creek

B.

As for prejudice against L-3, the Court need not address

Standard of Review
The Steelworkers Trilogy recognizes the unique interplay

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between arbitration and collective bargaining agreements.

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United Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564 (1960);

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United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363

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U.S. 574 (1960); United Steelworkers of Am. v. Enter. Wheel &

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Car Corp., 363 U.S. 593 (1960).

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explained, “the grievance machinery under a collective

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bargaining agreement is at the very heart of the system of

As the Supreme Court has

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See

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industrial self-government.”

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This explains why, in the labor context, arbitration more than

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merely resolves disputes:

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the grievance machinery is actually a vehicle by which meaning

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and content are given to the collective bargaining agreement.”

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Id.

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Warrior & Gulf, 363 U.S. at 581.

“The processing of disputes through

Eagle seeks to vacate the arbitration award under § 301 of

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the LMRA.

See Compl. at 1.

Section 301 empowers this Court to

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review an arbitration required under a collective bargaining

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agreement.

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(1960).

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collective bargaining agreement context, courts reviewing labor

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arbitration awards afford a “nearly unparalleled degree of

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deference” to the arbitrator’s decision.

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at 1205.

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interpretation of the collective bargaining agreement and to his

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factual findings, see id. at 1207, as well as the arbitrator’s

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interpretation of the issue’s scope.

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Cunningham, 866 F.2d 283, 285-86 (9th Cir. 1989).

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See generally Enter. Wheel & Car Corp., 363 U.S. 593

But, because arbitration plays a critical role in the

Stead Motors, 886 F.2d

This deference applies to the arbitrator’s

See Pack Concrete, Inc. v.

Because “the parties have[e] authorized the arbitrator to

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give meaning to” the CBA’s text, the Supreme Court has held that

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a court cannot vacate an arbitration award simply because the

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arbitrator misread the collective bargaining agreement.

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Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29,

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38 (1987).

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collective bargaining agreement because he essentially functions

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as the parties’ surrogate:

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See Stead Motors, 886 F.2d at 1205 (internal citation omitted)

United

Indeed, an arbitrator cannot misinterpret a

“[H]is award is their contract.”

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(original emphasis).
The Ninth Circuit has “taken this instruction to heart,”

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reiterating that “even if we were convinced that the arbitrator

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misread the contract or erred in interpreting it, such a

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conviction would not be a permissible ground for vacating the

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award.”

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Inc., 823 F.3d 524, 530 (9th Cir. 2016) (internal citation and

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quotation marks omitted).

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arbitrator is even arguably construing or applying the contract

Sw. Reg’l Council of Carpenters v. Drywall Dynamics,

Simply put, “as long as the

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and acting within the scope of his authority,” a court must

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uphold the arbitration award.

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(emphasis added).

See Misco, 484 U.S. at 38

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Likewise, courts give great deference to an arbitrator’s

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factual determinations because “[t]he parties did not bargain

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for the facts to be found by a court, but by an arbitrator

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chosen by them.”

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silly, factfinding ... is hardly a sufficient basis for

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disregarding what the agent appointed by the parties determined

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to be the historical facts.”

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Misco, 484 U.S. at 45.

“[I]mprovident, even

Id. at 39.

Finally, “an arbitrator’s interpretation of the scope of

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the issue submitted to him is entitled to the same deference

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accorded his interpretation of the collective bargaining

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agreement.”

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interpreting the submitted issue often requires interpreting the

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collective bargaining agreement, “a job clearly for the

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arbitrator.”

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Pack Concrete, 866 F.2d at 285.

Indeed,

Id. at 285-86 (internal citation omitted).

Despite these well-established principles, under § 301 of
the LMRA, a court may vacate an arbitration award if (1) the
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award does not draw its essence from the CBA; (2) the arbitrator

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exceeds the issue’s scope; (3) the award violates public policy;

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or (4) the award is procured by fraud.

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State Warriors, 266 F.3d 979, 986 (9th Cir. 2001).

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C.

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See Sprewell v. Golden

Analysis
1.

The Award Draws Its Essence From The CBA

Under controlling Supreme Court precedent, a court may

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declare an arbitrator’s decision unenforceable only when the

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arbitrator strays from interpreting and applying the collective

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bargaining agreement and effectively “dispense[s] his own brand

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of industrial justice.”

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Garvey, 532 U.S. 504, 509 (2001) (internal citation and

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quotation marks omitted).

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from many sources, yet his award is legitimate only so long as

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it draws its essence from the collective bargaining agreement.

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When the arbitrator’s words manifest an infidelity to this

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obligation, courts have no choice” but to declare the award

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unenforceable.

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The critical inquiry is simple:

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construe the contract”?

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“If so, the court’s inquiry ends,” id., provided the

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arbitrator’s award does not ignore the contract’s “plain

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language.”

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Major League Baseball Players Ass’n v.

An arbitrator may “look for guidance

See Enter. Wheel & Car Corp., 363 U.S. at 597.
“Did the arbitrator look at and

See Drywall Dynamics, 823 F.3d at 532.

Stead Motors, 886 F.2d at 1205 n.6.

The parties dispute whether the arbitration award draws its

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essence from the CBA.

Eagle says it does not for two reasons.

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First, the arbitrator’s decision that the Modified Subcontract

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violated the CBA is not a plausible interpretation of the CBA

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because the CBA’s plain language shows that it applied only to
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Eagle.

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bind L-3 by requiring Eagle to reinstate terminated employees,

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which necessarily requires L-3 to remove its Site Manager.

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at 10.

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Opp’n at 9.

Second, the arbitrator modified the CBA to

Id.

Union disagrees, contending that Eagle’s “plausibility”

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argument invokes the wrong standard.

Mot. at 7.

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arbitrator, Union says, needed only to arguably look at and

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construe the CBA, and he did that.

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the arbitrator also reviewed the Modified Subcontract to show

Id. at 6-7.

The

Union adds that

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that Eagle agreed to reduce staffing, which falls within the

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submitted issue’s scope.

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Court that it must afford great deference to the arbitrator’s

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interpretation of the submitted issue’s scope.

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Mot. at 9.

Finally, Union reminds the

Reply at 3-4.

The Court concludes that the arbitration award draws its

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essence from the CBA.

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“The question is not ... whether the arbitrator’s interpretation

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of the agreement was ‘plausible,’ ... but instead whether he

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made any interpretation or application of the agreement at all.”

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Drywall Dynamics, 823 F.3d at 531-32.

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clearly looked at and applied the CBA.

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First, Eagle proposes the wrong standard:

Here, the arbitrator
See Exh. 10 at 6, 9.

Moreover, Eagle misconstrues the arbitrator’s decision.

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Eagle says that the arbitrator “found that by virtue of L-3

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reducing the scope of the number of instructors Plaintiff

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provided at Travis Air Force Base and employing L-3’s own site

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instructor to perform instructional duties, Plaintiff violated

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the CBA.”

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modified the CBA to bind L-3 because requiring Eagle to

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reinstate terminated workers “necessarily requires” L-3 to

Compl. at 8.

Eagle also contends that the arbitrator

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remove its Site Manager.

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that the arbitrator targeted L-3, the arbitrator puts the onus

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on Eagle.

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persuaded that [Eagle] can vacate its accountability”; Eagle

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“voluntarily negotiated a [CBA] with the Union”; Eagle

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“negotiated with L3 to transfer work out of the bargaining

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unit”; Eagle “violated the...CBA”).

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simply an indirect consequence of the award, and Eagle’s own

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language suggests the same.

Opp’n at 10.

Although Eagle suggests

See Exh. 10 at 9 (“[T]he arbitrator has not been

Any effect L-3 felt is

See Opp’n at 10 (requiring Eagle to

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reinstate terminated workers “necessarily requires L-3 to

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remove” its Site Manager) (emphasis added).

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Second, the award did not ignore the CBA’s plain language.

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The CBA prohibits transferring bargaining-unit work from

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bargaining-unit employees to non-bargaining-unit employees.

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Exh. 1 at 17.

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Eagle to pay overtime to the bargaining-unit employees who lost

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that opportunity after the transfer, to reinstate terminated

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workers, to make terminated workers whole, and to take other

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steps necessary to return to the pre-violation status quo.

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Exh. 10 at 9-10.

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See

The award enforces this prohibition by requiring

See

Finally, that the arbitrator looked to the Modified

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Subcontract to show that Eagle voluntarily transferred

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bargaining-unit work is insufficient grounds to vacate the award

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because, ultimately, the award draws its essence from the CBA.

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The parties asked the arbitrator to decide whether Eagle

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violated the CBA when an L-3 Site Manager began performing

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bargaining-unit work.

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concluded that his assessment required analyzing primarily the

See Exh. 10 at 3.

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The arbitrator

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CBA, but also the Modified Subcontract—to show that Eagle

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voluntarily transferred bargaining-unit work.

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permissible.

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(concluding that arbitrator may “look for guidance from many

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sources,” provided the award draws its essence from the

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collective bargaining agreement).

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words do not “manifest an infidelity” to his obligation to draw

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the award’s essence from the CBA, see id., this Court affords

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great deference to his interpretation of the issue’s scope.

10
11

This is

See Enter. Wheel & Car Corp., 363 U.S. at 597

Because the arbitrator’s

See

Pack Concrete, 866 F.2d at 285.
In short, the arbitrator addressed the submitted issue by

12

looking at and construing the CBA—that is all the law requires.

13

See Drywall Dynamics, 823 F.3d at 531-32 (concluding that if the

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arbitrator interpreted or applied the CBA, then “the court’s

15

inquiry ends”).

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on this ground.

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2.

The Court will not vacate the arbitration award

The Award Does Not Violate Public Policy

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There exists a very limited public policy exception to the

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general rule requiring courts to enforce arbitrators’ decisions

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that interpret and apply collective bargaining agreements.

21

W.R. Grace & Co. v. Local Union 759, Int’l Union of United

22

Rubber, Cork, Linoleum & Plastic Workers of Am., 461 U.S. 757,

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766 (1983).

24

application of the more general doctrine, rooted in common law,

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that a court may refuse to enforce contracts that violate law or

26

public policy.”

27
28

See

This narrow exception involves “a specific

Misco, 484 U.S. at 42.

When evaluating whether to vacate an award on public policy
grounds, the court engages in a two-step inquiry.
13

First, the

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court must determine that an “explicit,” “well defined and

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dominant” public policy exists.

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The policy must arise from “the laws and legal precedents,” and

4

cannot “be the product of the parties’ or the courts’ general

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considerations of supposed public interests.”

6

F.2d at 1210 (internal citation and quotation marks omitted).

7

The Ninth Circuit has held that “[t]he public policy set forth

8

in the NLRA represents well defined and dominant public policy.”

9

Van Waters & Rogers, Inc. v. Int’l Bhd. of Teamsters,

W.R. Grace, 461 U.S. at 766.

Stead Motors, 886

10

Chauffeurs, Warehousemen & Helpers of Am., Local Union 70, 913

11

F.2d 736, 742 (9th Cir. 1990) (internal quotation omitted).

12

second step requires the court to find that the identified

13

policy specifically militates against relief provided by the

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arbitration award.

15

The

See Stead Motors, 886 F.2d at 1213-14.

As evidenced by this limited inquiry, courts should

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cautiously vacate an arbitration award on public policy grounds

17

“because the finality of arbitral awards must be preserved if

18

arbitration is to remain a desirable alternative to courtroom

19

litigation.”

20

Union, Local 1877, AFL CIO, 530 F.3d 817, 823 (9th Cir. 2008)

21

(internal citation and quotation marks omitted).

22

See Aramark Facility Servs. v. Serv. Emps. Int’l

The parties dispute whether the arbitration award violates

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public policy under the NLRA.

Eagle says it does for three

24

reasons.

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requiring that all pilot and loadmaster instructors comprise the

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bargaining unit infringes on L-3 employees’ § 7 rights to make

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their own choices about representation.

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the arbitrator infringed on the NLRB’s primary jurisdiction by

First, the award violates § 8(a)(1)-(2) because

14

Compl. at 9.

Second,

1

modifying the bargaining unit’s scope when it included L-3

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employees in its analysis.

3

maintains that the award violated the NLRA’s anti-featherbedding

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provisions under § 8(b)(6) by requiring Eagle to pay people for

5

services they cannot perform.

Id. at 9-10.

And, third, Eagle

Id. at 10.

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Union argues that the award does not violate NLRA policy

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because Eagle has not alleged that the award conflicts with an

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explicit, well-defined, and dominant public policy, i.e. Eagle

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has not alleged facts establishing that the award imposed

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binding obligations on L-3, extended rights or obligations of

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union members to L-3 employees, or required Eagle to pay workers

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who have not provided a “bona fide offer of competent

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performance.”

14

Reply at 4.

The Court agrees with Union, but for a slightly different

15

reason.

Because the NLRA qualifies as “explicit, well defined

16

and dominant public policy,” see Van Waters, 913 F.2d at 742,

17

the issue turns on whether the NLRA militates against the relief

18

provided by the arbitrator’s award.

19

at 1213-14.

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employees, so it does not violate § 7 or § 8(a)(1)-(2).

21

does the award require Eagle to pay the Site Manager for work it

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can no longer perform, so the award does not violate § 8(b)(6).

23

Cases like the one here reaffirm the principle that courts

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should cautiously vacate an arbitration award on public policy

25

grounds—otherwise arbitration will not “remain a desirable

26

alternative to courtroom litigation.”

27

Servs., 530 F.3d at 823.

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arbitration award on public policy grounds.

It does not.

See Stead Motors, 886 F.2d

The award imposes no burden on L-3’s
Nor

See Aramark Facility

The Court declines to vacate the

15

1

3.

2

The Arbitrator Did Not Exceed His Authority

An arbitrator does not exceed his authority if, in

3

addressing an issue submitted before him, he looks at and

4

construes the collective bargaining agreement.

5

Dynamics, 823 F.3d at 529-30.

6

exceeds his authority if he “dispense[s] his own brand of

7

industrial justice.”

8
9

See Drywall

Stated differently, an arbitrator

Garvey, 532 U.S. at 509.

Eagle first argues that the arbitrator’s conclusion
amounts to modifying the bargaining unit to include L-3

10

employees.

11

impermissibly interpreted the Modified Subcontract, a document

12

not at issue.

13

conclusion that only Eagle could provide instructors essentially

14

decided L-3’s rights and obligations.

15

Opp’n at 7.

Eagle also argues that the arbitrator

Id. at 7-8.

And, third, the arbitrator’s

Id. at 8-9.

Conversely, Union argues that the arbitrator did not exceed

16

his authority.

17

CBA when it modified the subcontract falls within the issue’s

18

scope.

19

great deference to the arbitrator’s interpretation of scope.

20

Reply at 3-4.

21

The arbitrator’s ruling that Eagle violated the

Mot. at 8.

And, Union contends, the court must afford

The Court finds that the arbitrator did not exceed his

22

authority.

Again, Eagle misconstrues the arbitrator’s decision

23

by suggesting that the arbitrator targeted L-3.

24

(arbitrator’s conclusion “essentially decided L-3’s rights and

25

obligations”) (emphasis added).

26

imposes nothing on L-3, and suggesting that the award has

27

indirect effects on L-3 does not make this conclusion any less

28

true.

See Opp. 7-9

As noted above, the award

The arbitrator answered the issue submitted before him by
16

1

looking at and construing the CBA, and he issued his award

2

accordingly.

3

affords great deference to the arbitrator’s interpretation of

4

the issue’s scope.

5

Eagle has not shown that the arbitrator dispensed “his own brand

6

of industrial justice.”

7

arbitration award is not vacated on this ground.

8

4.

See generally Exh. 10.

Furthermore, the Court

See Pack Concrete, 866 F.2d at 285.

See Garvey, 532 U.S. at 509.

In sum,

The

The Arbitrator’s Decision May Differ From The
NLRB’s Ruling

9
10

In cases involving conflicting decisions between the NLRB

11

and an arbitrator, the Ninth Circuit provides guidance as to

12

which decision a district court gives precedence.

13

focuses on the NLRB’s conduct.

14

issue a complaint, then an arbitrator may take the case and

15

decide it differently than the NLRB.

16

Teamsters Local Union 595, 667 F.2d 1275, 1279-80 (9th Cir.

17

1982); see also Warehousemen’s Union Local No. 206 v. Cont’l Can

18

Co., Inc., 821 F.2d 1348, 1351 (9th Cir. 1987).

19

NLRB accepted the case on the merits and issued a decision and

20

order, and a subsequent arbitration “involving the same parties”

21

produces a conflicting award, the district court “need not

22

defer” to the arbitrator’s decision.

23

No. 1478 v. Stevens, 743 F.2d 1271, 1275 (9th Cir. 1984); see

24

also Cont’l Can, 821 F.2d at 1351.

25

The inquiry

If the NLRB simply declined to

See Edna H. Pagel, Inc. v.

But, if the

See Carpenters Local Union

The parties dispute whether the Pagel rule or the Stevens

26

rule applies.

Eagle argues that the Stevens rule should be

27

applied, see Opp’n at 14, whereas Union contends Pagal is the

28

controlling authority.

See Mot. at 12-13.
17

1

The Court agrees with Union.

The Pagal rule applies

2

because the NLRB’s Regional Director declined to issue a

3

complaint.

4

complaint, an arbitrator may take the case and decide it

5

differently.

6

the Stevens rule does not apply here because the NLRB did not

7

accept Union’s case on the merits and did not issue a decision

8

and order.

9

to vacate the arbitration award on this ground.

See Exh. 6 at 1.

When the NLRB refuses to issue a

See Pagel, 667 F.2d at 1279-80.

See Stevens, 743 F.2d at 1275.

In other words,

The Court declines

10

D.

Attorneys’ Fees

11

Under the American rule, absent statutory or contractual

12

authorization, a prevailing litigant usually cannot collect

13

attorneys’ fees.

14

Soc’y, 421 U.S. 240, 247 (1975).

15

attorneys’ fees “when the losing party has acted in bad faith,

16

vexatiously, wantonly, or for oppressive reasons.”

17

U.S. at 258-59 (internal citations and quotation marks omitted).

18

See Alyeska Pipeline Serv. Co. v. Wilderness
But a court may assess

Alyeska, 421

A court may find bad faith in several instances.

Bad faith

19

may arise “in conduct that led to the lawsuit” or conduct

20

occurring during that suit.

21

(1973).

22

granting [the other party’s] clear legal rights necessitated

23

resort to legal action with all the expense and delay entailed

24

in litigation.”

25

v. W. Indus. Maint., Inc., 707 F.2d 425, 428 (9th Cir. 1983)

26

(internal citation omitted).

27
28

See Hall v. Cole, 412 U.S. 1, 15

Bad faith also occurs when a party’s “obstinancy in

See Int’l Union of Petroleum & Indus. Workers

Awarding attorneys’ fees in this second context “satisfies
a dual purpose—deterrence and compensation.”
18

Id.

The prospect

1

of attorneys’ fees “tends to deter frivolous dilatory tactics.”

2

Id.

3

having to vindicate clearly established rights in court.”

4

And the award compensates a party “for the added expense of
Id.

In the labor arbitration context, deterrence and

5

compensation considerations are especially apt.

See Warrior &

6

Gulf, 363 U.S. 577-78.

7

seriously, encouraging district courts to award the party

8

seeking enforcement attorneys’ fees and reasonable costs because

9

“[e]ngaging in frivolous dilatory tactics not only denies the

The Ninth Circuit takes this rule

10

individual prompt redress, it threatens the goal of industrial

11

peace.”

12

awarding attorneys’ fees lies within the district court’s

13

discretion.

14

W. Indus. Maint., 707 F.2d at 428.

Nevertheless,

Id.

Each party argues that it is entitled to attorneys’ fees.

15

Union argues that it deserves attorneys’ fees because (1) Eagle

16

acted in bad faith given that the parties agreed to a grievance

17

arbitration procedure, yet Eagle still challenged the award,

18

causing unnecessary expense and delay; and (2) Eagle’s complaint

19

relies on “insubstantial arguments that fly in the face of well-

20

settled law concerning an arbitrator’s authority.”

21

15.

22

deserve attorneys’ fees because Union’s request is premature,

23

the American rule applies, and Union offered no evidence showing

24

that Eagle filed its complaint with ill-motive.

25

Second, Eagle claims that it deserves attorneys’ fees because

26

Union forced Eagle to oppose a “frivolous and procedurally

27

improper counter motion,” a motion brought in bad faith.

28

14-15.

Conversely, Eagle raises two points.

Mot. at 13-

First, Union does not

Opp’n at 15.

Id. at

In response, Union emphasizes that it has not “acted in
19

1
2

a way to impose costs unnecessarily.”

Reply at 6.

The Court grants Union’s request for attorneys’ fees, and

3

denies Eagle’s request.

Eagle not only agreed “to secure a

4

prompt and fair disposition of grievances” and to “final and

5

binding” arbitration, see Exh. 1 at 6, 12, but also filed an

6

action with meritless claims.

7

Union properly filed its counter motion, the Court will not

8

grant Eagle attorneys’ fees on that basis either.

9

Eagle’s behavior is the sort of bad faith the Ninth Circuit held

Furthermore, having ruled that

In short,

10

justifies attorneys’ fees, especially in the labor arbitration

11

context, where such “frivolous dilatory tactics not only

12

denies...prompt redress,” but also “threatens...industrial

13

peace.”

W. Indus. Maint., 707 F.2d at 428.

14
15
16

III.

ORDER

For the reasons set forth above, the Court GRANTS WITH

17

PREJUDICE Union’s Motion to Dismiss and GRANTS Union’s Counter

18

Motion to Confirm the Arbitration Award.

19

Union’s request for attorneys’ fees and orders Union to file

20

documents required under Local Rule 293 within twenty days of the

21

date of this Order to assist the Court in determining the

22

reasonable amount of attorneys’ fees to be awarded.

23
24

IT IS SO ORDERED.
Dated:

December 15, 2016

25
26
27
28
20

The Court also GRANTS