Bakery, Confectionery, Tobacco Workers and Grain Millers, International Union AFL-CIO, CLC v. Kellogg Company

Filing 21

OPINION REGARDING UNIONS' MOTION TO COMPEL ARBITRATION; signed by Judge Gordon J. Quist (Judge Gordon J. Quist, jmt)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
__________________________

BAKERY, CONFECTIONERY,
TOBACCO WORKERS and GRAIN
MILLERS, INTERNATIONAL UNION
and LOCAL UNION NO. 3-G. BAKERY,
CONFECTIONERY, TOBACCO
WORKERS AND GRAIN MILLERS,
Plaintiffs,
v.

Case No. 1:16-CV-1180

KELLOGG COMPANY,

HON. GORDON J. QUIST

Defendant.
__________________________________/

OPINION REGARDING UNIONS’ MOTION
TO COMPEL ARBITRATION
Plaintiffs, Bakery, Confectionery, Tobacco Workers and Grain Millers, International Union
AFL-CIO, CLC (International Union) and Local Union No. 3-G, Bakery, Confectionery, Tobacco
Workers and Grain Millers (Local Union), filed an amended complaint against Defendant, Kellogg
Company, pursuant to § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, alleging that
Kellogg failed to pay a contract ratification bonus to casual employees (now referred to as
transitional employees).1 Count I of the amended complaint alleges that Kellogg failed to arbitrate
Grievance 40-15, concerning Kellogg’s refusal to pay the ratification bonus to casual employees,
and Count II alleges nonperformace by Kellogg and requests a jury trial in the event the Court
declines to compel arbitration.

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Only the Local Union filed the initial complaint. In response to Kellogg’s motion to dismiss for failure to join
the International Union as a necessary party under Federal Rule of Civil Procedure 19, the Local Union amended its
complaint to add the International Union as a party.

The Unions move to compel Kellogg to arbitrate. The Court heard oral argument on the
motion on September 11, 2017. For the following reasons, the Court will deny the Unions’ motion.
I. BACKGROUND
A.

The Parties’ Agreements
Kellogg is a manufacturer of breakfast foods, including ready-to-eat cereal.

The

International Union, through local affiliates, represents production and maintenance employees at
Kellogg’s four ready-to-eat cereal plants, two of which are located in Battle Creek, Michigan, and
Memphis, Tennessee. (ECF No. 12-3.) See Kellogg Co. v. NLRB, 840 F.3d 322, 325 (6th Cir.
2016). The Local Union is the bargaining unit for production and maintenance employees at the
Battle Creek Plant.
The parties’ collective bargaining relationship is governed by two separate agreements. The
first—the so-called Master Agreement—applies to employees at all four plants. The second
agreement—known as the Supplemental Agreement—is the product of bargaining at the local level
and is specific to Battle Creek employees. The Master Agreement covers “only those matters
specifically included” in that agreement, and provides that the Supplemental Agreement (and the
separate supplemental agreements entered into at Kellogg’s other facilities) shall govern “except as
specifically amended or modified by [the Master] Agreement.” (ECF No. 12-3 at PageID.1074.)
In addition to its regular employees, Kellogg has a “casual employee” program at its Battle
Creek Plant. Casual employees “provide regular employees with relief from extended work
schedules.” (ECF No. 12-2 at PageID.1054.) Such employees may generally not be used when
regular employees are on layoff or want to work overtime. (Id.) With the exception of one limited
reference in the Master Agreement, the terms of employment for casual employees are governed
exclusively by a Memorandum of Agreement appended to the Supplemental Agreement, captioned,

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“Guidelines for Utilization of Casual Employees.” (Id.) The Memorandum of Agreement states,
in part:
The terms and conditions of the Supplemental and Master Agreements will not apply
to Casual employees. Only the following fringe benefits will be granted to Casual
employees, and they will not accumulate seniority:
• Uniforms
• Lunch and Breaks
• Shift Differential
• Wage Appendix of the Master Agreement-COLA
(Id.)
B.

The Ratification Bonus
The Master Agreement in effect during the summer of 2015 was set to expire in October

2015. However, due to economic challenges in the breakfast cereal market, Kellogg entered into
early negotiations with the Unions regarding the successor Master Agreement, with the goal of
obtaining certain concessions in exchange for a five-year moratorium on Kellogg’s ability to close
the ready-to-eat cereal plants.

On July 17, 2015, Kellogg presented the Unions a Best

Offer/Memorandum of Agreement (MOA), pursuant to which Kellogg agreed to pay each employee
a $15,000 bonus for ratification of the MOA by August 2, 2015. (ECF no. 12-5 at PageID.1171.)
The Unions accepted the offer and held a contract ratification vote on July 31, 2015. (ECF No. 7
at PageID.497.) The votes were counted on August 1, 2015, and the MOA was approved by the
employees. (Id.)
Following the ratification, Kellogg paid the ratification bonus to all regular employees but
did not pay the bonus to casual employees. The Local Union argued that Kellogg was obligated to
pay the ratification bonus to casual and seasonal employees. Kellogg disagreed, and the Local
Union filed a grievance. (Id.) The Local Union pursued the grievance through each step of the
grievance process without a resolution. On June 20, 2016, the Local Union requested arbitration.
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(Id. at PageID.497–98.) However, Kellogg refused to arbitrate, claiming that the grievance was not
arbitrable.
C.

The Memphis Plant Case
In 2013, Kellogg and the Memphis local union began negotiations for a successor to the

Memphis supplemental agreement, which was set to expire in October 2013. Memphis, like Battle
Creek, also had a casual employee program that was governed by the Memphis supplemental
agreement. Kellogg Co., 840 F.3d at 325. The provisions of the Memphis supplemental agreement
pertaining to casual employees were materially indistinguishable from the casual employee
provisions in the Battle Creek Supplemental Agreement. Id. As part of the negotiations, Kellogg
proposed modifications that would expand Kellogg’s use of casual employees by allowing Kellogg
to employ them on an indefinite basis and use them to perform production or other bargaining unit
work. The proposal also gave casual employees new rights not provided under the current
agreement, including seniority rights and access to the grievance procedure. Id. at 326. The parties
eventually reached an impasse, and Kellogg locked out the bargaining unit employees. After the
local union filed a complaint with the National Labor Relations Board, an ALJ concluded that the
parties had reached a bona-fide impasse and that Kellogg was entitled to impose a lockout. Id. The
NLRB reversed, concluding that Kellogg’s proposals altered the Master Agreement mid-term and
that Kellogg therefore had no basis to threaten a lockout to compel acceptance of its proposal. Id.
at 327.
Kellogg petitioned for review. The Sixth Circuit granted the petition and vacated the portion
of the NLRB’s decision regarding Kellogg’s right to impose a lockout. Id. at 332–33. The
International Union and the Memphis local intervened in the Sixth Circuit case and, in their brief
to that court, stated—as they also had done before the NLRB—that Kellogg’s “proposal . . . red4

lined the Supplemental Agreement to insert ‘Regular and Casual employees’ into virtually every
provision that previously had pertained only to regular employees[,] . . . conferr[ing] on the new
class of ‘casual’ employees rights such as . . . access to the grievance procedure.” (ECF No. 12-9
at PageID.1236–37.) Consistent with this representation, the Sixth Circuit noted that Kellogg’s
proposal would grant casual employees “new rights, such as . . . access to a grievance procedure.”
Id. at 326.
II. DISCUSSION
The Unions argue that they are entitled to an order compelling Kellogg to arbitrate based on
the following definitions of “grievance” set forth in the Master Agreement and Supplemental
Agreement: “any dispute involving the application or interpretation of any provision of this
Agreement” (ECF No. 12-3 at PageID.1096) (Master Agreement); and “any complaint, dispute, or
difference of opinion concerning any matter” (ECF No. 12-2 at PageID.1018) (Supplemental
Agreement).
The federal policy favoring arbitration of labor disputes is well established. That is,
arbitration is an important means of “promot[ing] industrial stabilization . . . [and] achieving
industrial peace.” United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 578, 80
S. Ct. 1347, 1350 (1960); see also United Steelworkers of Am. v. Cooper Tire & Rubber Co., 474
F.3d 271, 277 (6th Cir. 2007) (“In deciding the arbitrability of a dispute, we begin with the
presumption that national labor policy favors arbitration.”). The following principles guide a court’s
decision on a motion to compel arbitration:
1) a party cannot be forced to arbitrate any dispute that it has not obligated itself by
contract to submit to arbitration; 2) unless the parties clearly and unmistakably
provide otherwise, whether a collective bargaining agreement creates a duty for the
parties to arbitrate a particular grievance is a question for judicial determination; 3)
in making this determination, a court is not to consider the merits of the underlying
claim; and 4) where the agreement contains an arbitration clause, the court should
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apply a presumption of arbitrability, resolve any doubts in favor of arbitration, and
should not deny an order to arbitrate unless it may be said with positive assurance
that the arbitration clause is not susceptible of an interpretation that covers the
asserted dispute.
Id. at 277–78 (citing AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648–50, 106
S. Ct. 1415, 1418–19 (1986)). When a collective bargaining agreement contains a broad arbitration
clause, “arbitration will be denied only if an express provision excludes a particular grievance from
that forum.” Int’l Union v. Cummins, Inc., 434 F.3d 478, 486 (6th Cir. 2006) (citing United
Steelworkers of Am. v. Mead Corp., 21 F.3d 128, 131 (6th Cir. 1994)). In such circumstance, the
resisting party “must present ‘the most forceful evidence of a purpose to exclude the claim from
arbitration’ to prevail.” Teamsters Local Union No. 89 v. Kroger Co., 617 F.3d 899, 906 (6th Cir.
2010) (quoting United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 585, 80 S.
Ct. 1347, 1354 (1960)).
A.

Judicial Estoppel
Kellogg argues that, based on the International Union’s position and the Sixth Circuit’s

decision in the Memphis plant case, the Court need not decide whether the arbitration provisions in
the Master and Supplemental Agreements apply to grievances concerning casual employees because
the Unions are judicially-estopped from arguing that the arbitration/grievance provisions apply to
casual employees.
Courts employ the doctrine of judicial estoppel to prevent “the perversion of judicial
machinery.” Reynolds v. Comm’r, 861 F.2d 469, 472 (6th Cir. 1988) (internal quotation marks
omitted). The doctrine “forbids a party from taking a position inconsistent with one successfully
and unequivocally asserted by the same party in a prior proceeding.” Great Earth Cos. v. Simons,
288 F.3d 878, 892 (6th Cir. 2002) (internal quotation marks omitted); see also Browning v. Levy,
283 F.3d 761, 775 (6th Cir. 2002) (judicial estoppel bars a party from asserting a position contrary
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to one that it took in a prior proceeding if “the prior court adopted the contrary position ‘either as
a preliminary matter or as part of a final disposition’” (quoting Teledyne Indus., Inc. v. NLRB, 911
F.2d 1214, 1218 (6th Cir. 1990)). The Supreme Court has observed that the “circumstances under
which judicial estoppel may appropriately be invoked are probably not reducible to any general
formulation of principle,” New Hampshire v. Maine, 532 U.S. 742, 750, 121 S. Ct. 1808, 1815
(2001), though it has identified three factors that may help to inform the analysis:
First, a party’s later position must be clearly inconsistent with its earlier position.
Second, courts regularly inquire whether the party has succeeded in persuading a
court to accept that party’s earlier position, so that judicial acceptance of an
inconsistent position in a later proceeding would create the perception that either the
first or the second court was misled[.] Absent success in a prior proceeding, a
party’s later inconsistent position risk of inconsistent court determinations, and thus
poses little threat to judicial integrity. A third consideration is whether the party
seeking to assert an inconsistent position would derive an unfair advantage or impose
an unfair detriment on the opposing party if not estopped.
Id. at 750–51, 121 S. Ct. at 1815 (internal quotation marks and citations omitted). Judicial estoppel
“should be applied with caution to ‘avoid impinging on the truth-seeking function of the court,
because the doctrine precludes a contradictory position without examining the truth of either
statement.’” Eubanks v. CBSK Fin. Grp., Inc., 385 F.3d 894, 897 (6th Cir. 2004) (quoting Teledyne
Indus., 911 F.2d at 1218).
At first blush, the circumstances would appear to warrant application of judicial estoppel.
That is, contrary to the Unions’ characterization of the International Union’s prior representations
to the Sixth Circuit, the International Union’s position in the instant case is clearly inconsistent with
the position it took in the Memphis plant case. It told the Sixth Circuit that casual workers had no
right to access the grievance/arbitration process. Here, it claims otherwise. In addition, in its
opinion, the Sixth Circuit stated—consistent with the International Union’s representations—that
Kellogg’s proposal would give casual employees a new right of access to the grievance procedure
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that they did not previously enjoy. Kellogg Co., 840 F.3d at 326. On the other hand, while casual
employees’ new right of access to the grievance procedure was part and parcel of the International
Union’s argument that Kellogg’s proposal effectively modified terms for regular employees set forth
in the Master Agreement, there was never any issue in the case about whether casual employees had
an existing right of access to the grievance procedure, and the Sixth Circuit did not decide that issue.
In fact, in light of Kellogg’s success before the Sixth Circuit, it is difficult to see how the
International Union—which defended the NLRB’s decision—could be considered successful in
persuading the Sixth Circuit to accept its position. Finally, and perhaps most importantly, Kellogg
has not shown, nor even argued, that, estoppel is necessary to prevent the International Union from
receiving an unfair benefit or Kellogg from being unfairly harmed by the International Union’s
conduct in the Memphis plant case.
Accordingly, the Court declines to apply judicial estoppel.
B.

Contractual Analysis
Although the Court will not estop the Unions in this case, the Court nonetheless concludes

that the International Union and Kellogg had it right in the Memphis plant case. Applying ordinary
principles of contract interpretation, the Court must determine what the parties intended. M & G
Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 (2015). The parties’ intent is expressed in clear
and unambiguous terms: “The terms and conditions of the Supplemental and Master Agreements
will not apply to Casual employees.” (ECF No. 12-2 at PageID.1054.) Although the provision goes
on to describe the limited fringe benefits that casual employees receive, it does not qualify the
unambiguous language in the prior sentence stating that the “terms and conditions”—including the
grievance/arbitration provisions—of the Master and Supplemental Agreements do not apply to
casual employees. This unqualified exclusion constitutes “the most forceful evidence of a purpose
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to exclude . . . claim[s] [regarding casual workers] from arbitration.” Warrior & Gulf Nav. Co., 363
U.S. at 585, 80 S. Ct. at 1354.
The Unions argue that, when considered in context, it is reasonable to interpret the phrase,
“The terms and conditions of the Supplemental and Master Agreements will not apply to Casual
employees,” as referring only to fringe benefits provided by the Supplemental and Master
Agreements, rather than as a wholesale limitation on all terms and conditions, including the
grievance and arbitration provisions. The Unions argue that because the next sentence goes on to
describe the fringe benefits set forth in the Supplemental and Master Agreements to which casual
employees are entitled, the Court should construe the exclusion as applying only to fringe benefits.
At oral argument, the Unions’ counsel argued that further support for this interpretation is found in
paragraph 8 of the Memorandum of Agreement, which states: “The Company may discontinue
employment without such action being subject to the grievance procedure.” (ECF No. 12-2 at
PageID.1055.) The Unions contend that, if casual employees have no right of access to the
grievance procedure, as Kellogg contends, paragraph 8 would have been unnecessary.
The Court rejects the Unions’ interpretation because it is contrary not only to the plain
language in the Memorandum of Agreement, but also plain and unambiguous language in both the
Supplemental and Master Agreements. To explain: Section 1.01(d) of the Master Agreement
provides that “[t]he term ‘employees’ whenever used in this Agreement and for the purposes hereof
shall include all those employees included in each bargaining unit as defined in each Supplemental
Agreement.” (ECF No. 1-1 at PageID.14.) Section 201(a) of the Supplemental Agreement similarly
provides that “the terms of this Supplemental Agreement . . . cover [] only employees within the
bargaining unit.” (ECF No. 1-2 at PageID.127.) Section 201(b), in turn, defines the bargaining unit
as “all regular hourly employees in the Battle Creek plant of the Company.” Consistent with these
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provisions, the Memorandum of Agreement distinguishes between regular employees (bargaining
unit members) and casual employees (non-bargaining unit employees) and confirms that “[t]he
terms and conditions of the Supplemental and Master Agreements will not apply to Casual
employees.” These provisions make clear both that provisions in the Supplemental and Master
Agreements apply only to regular employees and not casual employees and that the fringe benefits
set forth in the Memorandum of Agreement for casual employees are not fringe benefits extended
from the Supplemental and Master Agreements, but instead are separately and independently
conferred by the Memorandum of Agreement. In light of the intent clearly expressed in the
Supplemental and Master Agreements and the Memorandum of Agreement, paragraph 8 of the
Memorandum of Agreement simply reinforces the parties’s understanding that no provision of the
Supplemental or Master Agreement applies to casual employees.
III. CONCLUSION
For the foregoing reasons, the Court will deny the Unions’ motion to compel.
A separate order will enter.

Dated: September 13, 2017

/s/ Gordon J. Quist
GORDON J. QUIST
UNITED STATES DISTRICT JUDGE

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