Road Sprinkler Fitters Local Union No. 669 v. G and L Associated, Inc
Filing
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ORDER denying 37 Motion for Sanctions; denying 29 Motion to Vacate ; denying with leave to renew 31 Motion for Sanctions. Signed by Chief District Judge Thomas A Varlan on 6/16/2014. (KMK, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
ROAD SPRINKLER FITTERS LOCAL
UNION NO. 669,
Plaintiff,
v.
G&L ASSOCIATED, INC., d/b/a
USA FIRE PROTECTION,
Defendant.
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No.: 3:10-CV-471-TAV-CCS
MEMORANDUM OPINION AND ORDER
This civil matter is before the Court on several motions: (1) the Motion to Vacate
Orders for Arbitration or Alternatively, Motion to Stay Orders for Arbitration [Doc. 29]
by defendant G&L Associated, Inc., doing business as USA Fire Protection; (2)
plaintiff’s Motion for Civil Contempt Sanctions [Doc. 31]; and (3) plaintiff’s Motion for
Sanctions under Rule 11 [Doc. 37]. In its motion to vacate, defendant requests the Court
to vacate the previously entered Agreed Order [Doc. 20] and subsequent Order [Doc. 28]
sending this matter to binding arbitration because of a change in the law upon which the
parties based their agreement, pursuant to Rule 60(b)(5) of the Federal Rules of Civil
Procedures. Alternatively, defendant requests that enforcement of the Orders be stayed
until the Supreme Court of the United States affirms or denies the United States Court of
Appeals for the District of Columbia’s opinion in National Labor Relations Board
(“NLRB”) v. Noel Canning, 705 F.3d 490 (D.C. Cir. 2013), cert. granted 81 U.S.L.W.
3629 (U.S. June 24, 2013) (No. 12-1281). Plaintiff submitted a response in opposition
[Doc. 33], to which defendant submitted a reply [Doc. 35].1 In its respective motions,
plaintiff seeks sanctions for defendant’s failure to arbitrate as previously ordered by the
Court under Rule 70 of the Federal Rules of Civil Procedure and for filing the motion to
vacate in violation of Rule 11 of the Federal Rules of Civil Procedure. Defendant filed a
response to each motion [Docs. 36, 38].
I.
Relevant Background2
This dispute arises from plaintiff’s attempts to enforce the terms of a Collective
Bargaining Agreement (“CBA”) between the parties, pursuant to Section 301 of the
Labor Management Relations Act, 29 U.S.C. § 185 [Doc. 1 ¶ 1]. Under the terms of the
CBA, all disputes and grievances are subject to final, binding arbitration [Doc. 1-1 at 3536]. In this case, plaintiff wishes to arbitrate a grievance over defendant’s termination of
Mr. Jerry Cooper which occurred in September 2009. Defendant, however, contends that
it is not subject to the terms of the CBA because it never recognized plaintiff as a
bargaining representative, thus the CBA itself is void and unenforceable [Doc. 10 ¶ 5].
Prior to and during the course of this lawsuit, the parties were also engaged in
litigation before the NLRB, where an Administrative Law Judge had previously
1
Defendant argues that plaintiff’s response was untimely filed and should not be
considered. Given the defendant’s ability to file a timely reply, and lack of prejudice, the Court
will consider plaintiff’s brief along with defendant’s brief in addressing defendant’s motion.
2
Although recited to the extent necessary for resolution of the pending motion, the Court
presumes familiarity with the underlying facts of this case.
2
determined that defendant had engaged in unfair labor practices by withdrawing its
recognition of plaintiff as the exclusive bargaining representative [Doc. 1-3 at 8]. The
parties then appealed the conclusions of the ALJ as to defendant’s general obligations
under the CBA to the NLRB. On September 28, 2012, the NLRB affirmed the findings
of the ALJ and issued a decision which, in relevant part, required defendant to do the
following:
(b)
Make employees whole for any loss of earnings and other benefits
suffered as a result of the Respondent’s unlawful withdrawal of recognition
from the union, plus interest, as set forth in the remedy section as amended.
(c)
Make all contributions, including additional amounts due, that it was
required to make contractual fringe benefit funds during the term of the
collective-bargaining agreement, but which it has not made since
September 8, 2009, and reimburse its unit employees, with interest as
provided in the remedy section as amended, for any expenses resulting
from its failure to make the required payments.
[Doc. 29-1, 358 N.L.R.B. 162 (2012)].
Subsequent to the NLRB’s decision, counsel for both parties exchanged
communications regarding arbitration in light of the decision obligating defendant to
adhere to the terms of the CBA [Docs. 29-2, 29-3]. Specifically, plaintiff’s counsel stated
in an October 4, 2012 letter that adherence to the CBA, per the NLRB’s decision, “would
include arbitrating the pending grievance which is subject to our federal court suit to
compel arbitration” [Doc. 29-2 at 1]. In reply, on October 16, 2012, defendant’s counsel
stated that “[b]ased upon the NLRB’s decision, 358 NLRB No. 162 (2012),” defendant
was willing to proceed to arbitration on Mr. Cooper’s grievance [Doc. 29-3 at 1]. On
November 20, 2012, the parties submitted a joint motion to dismiss and submit the matter
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to binding arbitration [Doc. 19].
The Court, the Honorable Thomas W. Phillips,
presiding, granted the motion on November 23, 2012, under the conditions agreed upon
by the parties [Doc. 20].3
In February 2013, plaintiff filed a motion to compel defendant to comply with the
agreed order [Doc. 21], citing to the fact that defendant had not yet agreed to proceed
with the arbitration. Defendant argued in response that plaintiff had not given defendant
a settlement offer, which defendant sought in order to avoid the expense of arbitration,
and also argued that the agreed order did not set forth a specific deadline for when the
matter had to be submitted to arbitration. Plaintiff’s motion was granted by the Court on
June 25, 2013 [Doc. 28]. In granting the motion, Judge Phillips specifically ordered that
the case be submitted to arbitration within thirty days [Id.]. Defendant filed its motion to
vacate the previous orders [Doc. 29] on July 26, 2013. During the thirty-day period
between the Court’s order and defendant’s motion, plaintiff and defendant exchanged
communications regarding the selection of an arbitrator as well as the dates for arbitration
[Docs. 32-2, 32-3].
On January 25, 2013, in an unrelated case, the D.C. Circuit issued its opinion in
Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013), holding that because three of the
members of the NLRB who had issued the decision under review in that case were never
validly appointed under the Recess Appointments Clause of the Constitution, that
particular panel of the NLRB lacked quorum, and therefore, authority to act, so that its
3
The Court notes that this matter was reassigned on May 5, 2014 [Doc. 40].
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decision was void. Id. at 514. Relevant for the purposes of this case, two of the three
members whose appointments were the subject of the dispute in Noel Canning were part
of the panel which handed down the September 28, 2012 decision ordering defendant to
comply with the terms of the CBA. On June 24, 2013, the Supreme Court granted
certiorari in N.L.R.B. v. Noel Canning, 133 S.Ct. 2861, 81 USLW 3629, to review the
D.C. Circuit’s decision. Earlier, in March 2013, plaintiff’s own appeal to the D.C.
Circuit from the NLRB’s September 2012 decision had been held in abeyance in light of
the Noel Canning decision [Doc. 29-6].
II.
Motion to Vacate Orders for Arbitration [Doc. 29]
In support of its motion to vacate, or, alternatively, stay the orders of arbitration,
defendant argues that there has been a significant change in the law since it agreed to
enter into the consent order sending the case to arbitration, warranting relief from the
agreed order under Rule 60(b)(5) of the Federal Rules of Civil Procedure. Because the
D.C. Circuit’s decision in Noel Canning voided an NLRB decision due to lack of
quorum, defendant argues, the same reasoning would apply to plaintiff’s pending appeal
before the D.C. Circuit regarding the NLRB’s September 2012 decision. Thus, if the
Supreme Court affirms the D.C. Circuit, and finds that the NLRB’s decision was void,
the September 2012 decision obligating defendant to comply with the terms of the CBA,
which defendant argues was the basis for its decision to agree to arbitration, would
similarly be void. Plaintiff argues in response that the NLRB litigation is not related to
the grievance at issue in this case, given that defendant has not raised Mr. Cooper’s
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termination as an issue before the NLRB and given that the dispute involved in the
NLRB litigation, that is, defendant’s recognition of plaintiff as bargaining representative,
arose after Mr. Cooper’s termination. In addition, plaintiff argues that Rule 60 is
inapplicable in this case because the agreed order was not prospective in nature and
because there has been no significant change in the law.
Rule 60, in relevant part, states that a court may relieve a party of a final judgment
or order when “the judgment has been satisfied, release, or discharged; it is based on an
earlier judgment that has been reversed or vacated; or applying it prospectively is no
longer equitable . . . .” Fed. R. Civ. P. 60(b)(5). Defendant’s contended basis for relief in
this action is the final clause of the rule, i.e., that applying the Court’s previous orders
would no longer be equitable. The “‘[r]ule provides a means by which a party can ask a
court to modify or vacate a judgment or order if a significant change either in factual
conditions or in law renders continued enforcement detrimental.’” Northridge Church v.
Charter Twp. of Plymouth, 647 F.3d 606, 613 (6th Cir. 2011) (alteration in original)
(quoting Horne v. Flores, 557 U.S. 433, 447 (2009)). The party seeking relief bears the
burden of establishing that changed circumstances warrant relief. Horne, 557 U.S. at
447.
Plaintiff first argues that Rule 60(b)(5) is inapplicable because the consent order
entered in this case is not “prospective.” Specifically, plaintiff contends that the consent
order does not require ongoing supervision, in that the order merely instructs the parties
to submit the case to arbitration. In support of this position, plaintiff cites to Kalamazoo
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River Study Group v. Rockwell International Corp., 355 F.3d 574 (2004) for the
following:
There mere possibility that a judgment has some future effect does not
mean that it is ‘prospective’ because virtually every court order causes at
least some reverberations into the future, and has . . . some prospective
effect. The essential inquiry into the prospective nature of a judgment
revolves around whether it is executory or involves the supervision of
changing conduct or conditions.
Id. at 587 (internal quotation marks and citations omitted).
As noted by the Sixth Circuit in Northridge Church, however, the Kalamazoo
court went on to state that “‘[m]ost cases consider Rule 60(b)(5)’s ‘prospective
application’ clause in the context of consent decrees, which are prospective by nature.’”
647 F.3d at 613 (quoting 355 F.3d at 588). The Sixth Circuit also noted that “consent
decrees and consent judgments are the prototypical subjects of Rule 60(b)(5) motions,”
id., recognizing that a consent decree “‘is an agreement that the parties desire and expect
will be reflected in, and be enforced as, a judicial decree that is subject to the rules
generally applicable to other judgments and decrees.’” Id. (quoting Rufo v. Inmates of
Suffolk Cnty. Jail, 502 U.S. 367, 378 (1992)).
In this case, the consent order between the parties requires the parties to act in the
future, that is, to proceed to arbitration. Although the parties were only obligated to
submit to a single arbitration, until such time as the parties comply with the order, the
order has been and is subject to continued enforcement and supervision by the Court so
that it may be applied “prospectively” within the meaning of Rule 60(b)(5). This is
evidenced by the fact that, when defendant failed to submit the case to arbitration,
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plaintiff filed a motion with the Court to compel to force defendant to comply with the
terms of the consent order. Plaintiff argues that this case is inapposite to the cases of
institutional reform relied upon by defendant, where Rule 60(b)(5) motions are common,
but, as the Sixth Circuit noted, the Supreme Court in Rufo made clear that the rule
“should not be limited to institutional-reform litigation.” Kalamazoo, 355 F.3d at 588.4
Thus, the Court finds that defendant’s motion is properly asserted under Rule 60(b)(5)
and will proceed to discuss the merits of defendant’s request.
Turning to the issue of whether there have been “significant changes” in the legal
circumstances surrounding this case, the Court notes that “‘modification of a consent
decree is an extraordinary remedy that should not be undertaken lightly.’” Northridge
Church, 647 F.3d at 614. As noted in Northridge Church, vacating or modifying a
consent decree may be required or warranted in several situations: (1) where “one or
more of the obligations placed upon the parties has become impermissible under federal
law”; (2) “when the statutory or decisional law has changed to make legal what the
decree is designed to prevent”; and (3) “while a clarification of the law will not, in and of
itself, provide a basis for modifying a decree, it could constitute a change in
circumstances that would support modification if the parties based their agreement on a
misunderstanding of the governing law.” Id.
4
In addition, the Court notes that the other case relied upon by plaintiff for the idea that
the consent order is not prospective, McCormick International, LLC v. AGCO Corp., Case No.
1:04-CV-833, 2007 U.S. Dist. LEXIS 27054 (W.D. Mich. Apr. 12, 2007), is inapposite to this
case because the Rule 60 motion there addressed the arbitrator’s award, not the consent order
requiring the parties to submit the case to arbitration.
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In this case, the Court finds that defendant has not met its burden of showing a
significant change in the law, particularly in light of the circumstances leading up to
defendant’s motion. Initially, the Court notes that, although the D.C. Circuit’s Noel
Canning decision could be extended to apply to the validity of the NLRB’s September
28, 2012 decision, the issuance of which in part led the parties to agree to the consent
order,5 the D.C. Circuit has delayed doing so, as evidenced by the order of abeyance
[Doc. 29-6]. The September 28, 2012 decision, then, is still valid as applied to the
parties. The mere fact that the Supreme Court may affirm or reverse the Noel Canning
decision, which would then require the D.C. Circuit to address the pending appeal of the
September 28, 2012 decision, the Court finds, is too speculative to constitute the type of
change warranting relief under Rule 60(b)(5) or a stay as requested by defendant. There
is, at most, only a potential for change in the law rather than an actual change warranting
relief at this time. In addition, the Court notes that the issues at stake in Noel Canning
which could be applied to the parties’ NLRB litigation are procedural, rather than
affecting the substantive law that formed the basis of the NLRB’s original decision, so
that defendant has also failed to show whether any future change would be “significant.”
Cf. Sweeton v. Brown, 27 F.3d 1162, 1166 (6th Cir. 1994) (finding significant change
where Supreme Court case held that there was no federal due process right for state to
5
Plaintiff argues that defendant’s attempts to connect the NLRB litigation with this
lawsuit is baseless because defendant did not refuse to recognize plaintiff as the bargaining
representative until after the grievance in this case arose. Defendant however, presented
evidence of communications between the parties demonstrating that the September 28, 2012
decision prompted the parties to agree to submit the case to arbitration [See Docs. 29-2, 29-3].
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follow parole regulations, so that consent decree governing parole procedures was based
on erroneous view of law). There has been no evidence presented that upon any potential
rehearing, the NLRB would change the legal positions of the parties which would affect
the perceived obligations of the parties in this case. Thus, the Court finds defendant has
not met its burden under Rule 60(b)(5).
The Court also notes that in viewing the circumstances of this case, considerations
of equity also support a finding that defendant has not shown that vacating or staying the
previously entered orders is appropriate.
The parties filed their motion for agreed
dismissal in November 2012, which the Court granted by way of the Agreed Order
[Docs. 19, 20]. Plaintiff filed its motion to compel on February 7, 2013 [Doc. 21], after
the D.C. Circuit decided Noel Canning. In its response to plaintiff’s motion, defendant
did not reference the Noel Canning decision nor is there any evidence that this decision
served as a basis for the parties’ continued delay in submitting the case to arbitration.
After Judge Phillips granted plaintiff’s motion on June 25, 2013, the day after the
Supreme Court granted certiorari in Noel Canning, defendant waited another thirty days
before filing the motion to vacate. Had defendant complied with the Agreed Order prior
to plaintiff’s motion to compel or proceeded to arbitration prior to or soon after Judge
Phillips’s June 25, 2013 order, defendant would not have been in a position to file the
present motion.
In other words, defendant’s delay in complying with the Court’s
previous orders created the circumstances by which it could file its motion to vacate those
orders. The Court finds that such conduct does not promote judicial efficiency and that
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granting the relief in this case could encourage parties to engage in similar conduct in the
future.
Accordingly, defendant’s motion to vacate or stay the Court’s previous orders
[Doc. 29] will be denied and the parties will be ordered to proceed to binding arbitration
within 30 days of the entry of this Order.6
III.
Plaintiff’s Motion for Sanctions under Rule 11 [Doc. 37]
In support of its motion for sanctions under Rule 11 of the Federal Rules of Civil
Procedure, plaintiff contends that defendant’s motion to vacate [Doc. 29] was based upon
a misrepresentation of fact and law and was no more than attempt to evade arbitration.
Defendant responds that its motion had a basis in fact and in law in light of the D.C.
Circuit’s ruling in Noel Canning and subsequent grant of certiorari.
Rule 11 prohibits attorneys from filing pleadings and motions “unless ‘to the best
of the [attorney]’s knowledge, information, and belief, formed after an inquiry reasonable
under the circumstances . . . the claims, defenses, and other legal contentions therein are
warranted by existing law or by a nonfrivolous argument for the extension, modification,
or reversal of existing law or the establishment of new law.’” Salkil v. Mt. Sterling Twp.
Police Dep’t, 458 F.3d 520, 528 (6th Cir. 2006) (quoting Fed. R. Civ. P. 11(b)). In all
Rule 11 motions, the test for whether sanctions are warranted is whether the conduct for
6
In light of the Court’s disposition of defendant’s motion, plaintiff’s motion for sanctions
under Rule 70 [Doc. 31] will be denied with leave to renew should defendant fail to submit this
case to arbitration.
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which sanctions are sought “was ‘reasonable under the circumstances.’” Id. (quoting
Ridder v. City of Springfield, 109 F.3d 288, 293 (6th Cir. 1997)).
In this case, the Court concludes that plaintiff has not shown that defendant’s
actions were frivolous, done for improper purpose, or otherwise unreasonable so as to
warrant relief under Rule 11. While plaintiff contends that defendant's reliance upon the
NLRB litigation as a means to delay arbitration is baseless, the Court notes that defendant
submitted evidence showing that, at the time the NLRB’s September 28, 2012 decision
was issued, plaintiff used it as a means to prompt defendant into agreeing to submit the
case to arbitration [Doc. 29-2], and defendant responded that its willingness to do so was
in fact based on that decision [Doc. 29-3]. In addition, in its answer to plaintiff’s
complaint in this action, defendant denied that it was ever bound by the CBA [Doc. 10 ¶
5], illustrating defendant’s reasonable belief that the issues in the NLRB litigation were
related to defendant’s obligation to submit Mr. Cooper’s grievance to arbitration. When
defendant learned that the September 28, 2012 decision may be invalidated, defendant
filed its motion to vacate the arbitration orders. As previously discussed, defendant’s
ability to file the motion was, in part, a result of defendant’s failure to arbitrate the case
earlier, but the Court concludes that defendant’s filing of the motion itself was not
undertaken in bad faith or for frivolous reasons. While the Court finds defendant’s
arguments under Rule 60(b)(5) to be insufficient to warrant the relief requested, the Court
does not find that they are frivolous, dilatory, or unreasonable as to warrant relief under
Rule 11.
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Accordingly, the Court concludes that plaintiff has not shown that Rule 11
sanctions are warranted at this time, and plaintiff’s motion [Doc. 37] will be denied.
IV.
Conclusion
For the reasons previously discussed, defendant’s motion to vacate or stay the
Court’s orders for arbitration [Doc. 29] is hereby DENIED. It is hereby ORDERED that
the parties proceed to binding arbitration within thirty (30) days of the entry of this
Memorandum Opinion and Order. Failure to comply with this Memorandum Opinion
and Order will result in defendant being required to show cause why it should not be held
in civil contempt of Court. It is further ORDERED that plaintiff’s motion for sanctions
under Rule 70 [Doc. 31] is DENIED with leave to renew should defendant fail to
proceed to arbitration. Finally, plaintiff’s motion for sanctions under Rule 11 [Doc. 37]
is hereby DENIED.
IT IS SO ORDERED.
s/ Thomas A. Varlan
CHIEF UNITED STATES DISTRICT JUDGE
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