In the
United States Court of Appeals
For the Seventh Circuit
Nos. 09-2453 & 09-2517
P RATE INSTALLATIONS, INC.,
Plaintiff-Appellee/
Cross-Appellant,
v.
C HICAGO R EGIONAL C OUNCIL OF C ARPENTERS,
Defendant-Appellant/
Cross-Appellee.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 08 C 5377—Amy J. St. Eve, Judge.
A RGUED JANUARY 21, 2010—D ECIDED JUNE 4, 2010
Before E ASTERBROOK, Chief Judge, and C UDAHY and
M ANION, Circuit Judges.
C UDAHY, Circuit Judge. This is an appeal from an en-
forcement proceeding to confirm an arbitration award
in favor of Prate Installations, Inc. (Prate) because of a
2 Nos. 09-2453 & 09-2517
contract breach by the Chicago Regional Council of Car-
penters (Union). The district court confirmed the arbitra-
tor’s award in part and vacated it in part because it held
that the arbitrator interpreted a subsequent collective
bargaining agreement (CBA) that it had no authority to
construe. We affirm because the district court properly
modified the award.
I. Background
Prate is a construction firm in the Chicagoland area. It
performs residential and commercial roofing as well as
installing gutters, insulation and siding. Prate and the
Union have been at odds for years. In 2002, the Union
went on strike over a dispute regarding Prate’s payments
to a certain trust fund that is jointly managed by the
Union and the Residential Construction Employer’s
Council (RCEC). Prate is a member of the RCEC, which
is the bargaining representative of employers in the
residential construction industry. The parties also
became involved in litigation related to the trust fund
payments. They eventually settled the litigation and the
strike, and they released each other from any claims
based on actions taken prior to July 2002.
Unfortunately the acrimony between Prate and the
Union continued, this time because the Union allegedly
required Prate to pay hourly wages while allowing Prate’s
competitors to pay their union workers on a piecework
Nos. 09-2453 & 09-2517 3
basis.1 In September 2003, Prate filed a grievance alleging
that the Union violated the Most Favored Nations
(MFN) clause of the 2001 CBA, negotiated between RCEC
and the Union.2 The CBA’s MFN clause ensured employers
that they would not be subject to more unfavorable
wage rates than those agreed upon by the Union for other
employers.3 The 2001 CBA required that employers pay
their workers on an hourly basis and explicitly prohibited
the workers from performing work on a piecework basis.
CBA Article 20.9.
To resolve Prate’s grievance, the parties mutually
selected Arbitrator James P. Martin from a list provided
1
A worker paid on a piecework basis receives compensation
based on the production achieved, not on the time spent
working.
2
The Union does not negotiate individual contracts with
individual employers. Also, the “2001 CBA” is actually an
interim agreement that extended all material provisions of a
1998 CBA between the Union and the RCEC until 2005, when
the 2005 CBA came into effect. We adopt this shorthand used
by the district court.
3
The MFN clause provided:
In no event shall any EMPLOYER be required to pay higher
wage rates or be subject to more unfavorable wage rates,
contract terms or work rules, than those agreed to by the
UNION in any Collective Bargaining Agreement with any
other construction industry employer with [sic] Cook, Lake
and DuPage Counties, Illinois.
CBA Article 21.1(a).
4 Nos. 09-2453 & 09-2517
by the Federal Mediation and Conciliation Service and, as
is standard, the parties waived their right to each
appoint an additional arbitrator. The selected arbitrator
framed the dispute as addressing the question: “Was
the union in violation of the agreement and more particu-
larly the Most Favored Nations provision of the 2001
[CBA] by subjecting [Prate] to wage rates, contract terms
or work rules inconsistent with the manner in which the
agreement was enforced for all other specialty trade
employers? If so, what is the remedy?” He found that
the Union had violated the MFN provision by enforcing
the hourly wage-rate requirement for Prate, while
allowing piecework basis pay for other construction
employer signatories of the 2001 CBA. He awarded
$9,434,436 in damages for violations from the July 2002
claim release date until the time of the award, Septem-
ber 2008, and, going forward, allowed Prate to pay on a
piecework basis until the Union began complying with
the MFN clause. He also awarded Prate reasonable attor-
neys’ fees, not to exceed $2 million.
The parties agree that Arbitrator Martin did not retain
jurisdiction to resolve any subsequent controversy with
respect to implementation of the award. In addition, they
both acknowledge that the 2005 CBA, which replaced
the 2001 CBA and came into effect October 1, 2005, estab-
lished a standing panel of five rotating arbitrators, and
Arbitrator Martin was not a member of that panel. The
2005 CBA contained the same MFN provision and the
same prohibition on piecework pay as the 2001 CBA.
The Union advised Prate that it did not intend to
comply with the arbitrator’s award. Prate filed the present
Nos. 09-2453 & 09-2517 5
lawsuit, under § 301 of the Labor Management Relations
Act, 29 U.S.C. § 185, to confirm the award, and the
Union counterclaimed to set it aside. The district court
reduced the award because it held that the arbitrator
lacked authority to award damages for the period after
the expiration of the 2001 CBA. Similarly, the district
court vacated the equitable order, which permitted Prate
to pay by piecework, because the equitable award
applied well after the expiration of the 2001 CBA and,
therefore, Arbitrator Martin had no authority to award
it. The district court, however, confirmed the award of
damages for violations during the term of the 2001 CBA
and the award of attorneys’ fees. The present cross-appeals
followed.
II. Standard of Review
Summary judgment is proper if the record demonstrates
that there is no genuine issue as to any material fact and
that, viewing the disputed evidence in the light most
favorable to the non-moving party, the moving party
is entitled to judgment as a matter of law. See Fed. R. Civ.
P. 56(c); Scott v. Harris, 550 U.S. 372, 378-80 (2007). “We
review de novo a district court’s decision on cross-motions
for summary judgment, meaning that we review the
arbitrator’s decision as if we were the court of first deci-
sion.” United Food & Commercial Workers, Local 1546 v. Ill.
Am. Water Co., 569 F.3d 750, 754 (7th Cir. 2009) (internal
citations omitted). Judicial review of arbitration awards
is extremely limited, and the merits of the arbitrator’s
decision will not be reviewed. See Major League Baseball
6 Nos. 09-2453 & 09-2517
Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001); Monee
Nursery & Landscaping Co. v. Int’l Union of Operating Eng’rs,
Local 150, 348 F.3d 671, 675 (7th Cir. 2003). “When an
arbitrator resolves disputes regarding the application of
a contract, and no dishonesty is alleged, the arbitrator’s
improvident, even silly, factfinding does not provide a
basis for a reviewing court to refuse to enforce the award.”
See Garvey, 532 U.S. at 509 (internal citations omitted).
Therefore, the arbitrator’s award must draw its essence
from the contract—an arbitrator is not free to say “[t]he
contract says X, but my view of sound policy leads me
to decree Y.” Chi. Typographical Union No. 16 v. Chi. Sun-
Times, Inc. 935 F.2d 1501, 1505 (7th Cir. 1991); see also
United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29,
36-39 (1987).
III. Discussion
1. The arbitrator permissibly interpreted the CBA
to find that the Union violated the MFN clause.
The arbitrator found that there were no other contracts
with more favorable wage rates between the Union and
Prate’s competitors. The Union contends that this
finding should have ended the arbitrator’s inquiry into
whether the Union had violated the MFN clause and
that, therefore, the arbitrator “manifestly disregarded the
law” by concluding that there was a violation. It is
well established that, when arbitrators draw their con-
clusions from the applicable collective bargaining agree-
ments, the awards are legitimate. See United Steelworkers
Nos. 09-2453 & 09-2517 7
of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597 (1960).
We give great deference to the arbitrator when
reviewing interpretations of a CBA and all doubts should
be resolved “in favor of enforcing the award.” Clear
Channel Outdoor, Inc. v. Int’l Unions of Painters & Allied
Trades, Local 770, 558 F.3d 670, 675 (7th Cir. 2009). In fact,
“[e]ven if we are convinced that the arbitrator’s error
in interpreting the parties’ agreement was plain, we
lack the authority to intervene.” Id. at 677.
In the present case, the arbitrator interpreted the MFN
clause of the 2001 CBA as forbidding the Union from
selectively enforcing the no piecework provision. The
Union’s contention that the arbitrator’s interpretation of
the MFN clause was incorrect is simply asking for
judicial review of the merits of the arbitrator’s decision.
This we will not do, so long as the arbitrator was inter-
preting the proper contract. See Enter. Wheel, 363 U.S.
at 596-97. The district court correctly held that the ar-
bitrator permissibly determined that the Union violated
the MFN clause of the 2001 CBA.
2. The district court did not err in striking the portion
of the arbitrator’s award that extends past the
expiration of the 2001 CBA.
Prate contends that the arbitrator’s award was simply
aimed at making Prate whole and that the district court
erred when it reduced the award. Arbitrator Martin found
that the violation of the 2001 CBA was a continuing one,
and awarded damages up to the date of the issuance of
8 Nos. 09-2453 & 09-2517
the award and prospective equitable relief until the Union
uniformly enforced the MFN clause.
Arbitrators must have flexibility to determine remedies,
and the “authority to interpret and find a breach of the
agreement implies the authority to prescribe a remedy
to cure the breach.” Dexter Axle Co. v. Int’l Assoc. of Mach. &
Aerospace Workers, 418 F.3d 762, 768-69 (7th Cir. 2005)
(citing, inter alia, Enter. Wheel, 363 U.S. at 597). Remedies
that extend beyond the termination of the CBA at issue
are not necessarily impermissible. In Enterprise Wheel,
the Supreme Court held that an arbitrator may have
properly interpreted and remedied a violation of a CBA,
even though the award of back pay and the reinstate-
ment of the employees extended beyond the expiration
of that agreement. See Enter. Wheel, 363 U.S. at 597; see
also Van Waters & Rogers, Inc. v. Int’l Bhd. of Teamsters,
56 F.3d 1132, 1135-37 (9th Cir. 1995) (construing a
CBA, which required that a new owner maintain the em-
ployees’ seniority rights and remedy “all damages sus-
tained” as a result of a contract breach, to allow damages
post-expiration). Likewise, a court has upheld an award
that was based on violations that were probably outside
the scope of the applicable CBA because of the strong
deference accorded arbitrators’ decisions. See Nat’l Postal
Mail Handlers Union v. Am. Postal Workers Union, 589 F.3d
437, 442-44 (D.C. Cir. 2009) (holding that it was likely
an error for the arbitrator to find the grievances
arbitrable, but that he did not exceed his authority by
interpreting the contract and in the process relying on a
background principle of law).
Nos. 09-2453 & 09-2517 9
However, in this instance the principle that an arbitra-
tion may provide a remedy that extends beyond the
term of the CBA under consideration must yield to the
circumstance that controls here. As the district court
correctly determined, the appropriateness of post-expira-
tion awards turns on the authority of the arbitrator. RCEC
and the Union materially altered the arbitration pro-
cedures for the 2005 CBA to require that a standing
panel of arbitrators, not including Arbitrator Martin,
resolve disputes. Therefore, Arbitrator Martin had no
authority to interpret subsequent CBAs. In Polk Brothers,
Inc. v. Chicago Truck Drivers, we rejected the union’s
argument that when a CBA limited an arbitrator’s juris-
diction, it did not also limit the arbitrator’s authority to
remedy a violation that was within its jurisdiction. 973
F.2d 593, 597 (7th Cir. 1992) (upholding the district
court’s decision to vacate the part of the arbitrator’s
award that reinstated employees past the expiration of
the applicable agreement). Enterprise Wheel is distinguish-
able from the present case because there was no subse-
quent CBA that cut off the arbitrator’s jurisdiction. See
363 U.S. at 595, 597-98. Likewise, in Van Waters, the
Ninth Circuit was able to point to a particular contract
provision that authorized the arbitrator to award relief
beyond the agreement’s expiration. See 56 F.3d at 1136.
We do not want to overstate our holding. The Union
argues that Totes Isotoner Corporation v. International Chemi-
cal Workers Union Council is analogous to this case
because the Sixth Circuit held that the arbitrator there
impermissibly looked at a subsequent CBA when asked
to determine the parties’ compliance with an award
10 Nos. 09-2453 & 09-2517
issued under the previous agreement. 532 F.3d 405, 417-18
(6th Cir. 2008). We first note that the Sixth Circuit did not
address the question whether a remedy could extend
beyond the expiration of the CBA at issue. See id. at 414.
In addition, the issue in Totes was different than
the issues in our case. The Sixth Circuit held that the
arbitrator impermissibly interpreted a subsequent CBA
in the process of confirming whether the parties were
complying with his original award reached under a
prior CBA. Id. at 416. Here, we need not address
the question whether a subsequent CBA may ever be
used to inform the interpretation of the CBA at issue (or
an award issued under that CBA), because our holdings
here rest on the fact that the subsequent CBA in the
present case explicitly eliminated Arbitrator Martin’s
power to interpret it and that he indeed interpreted the
2005 CBA in fashioning his award.
Prate also contends that the Union’s violations con-
tinued into the period governed by the 2005 CBA and that
the arbitrator properly determined a remedy based on
those continuing violations. Arbitrator Martin explained,
in his recitation of Prate’s position: “When the 2005
negotiations concluded with an agreement effective on
September 2005, the instant grievance had been filed and
procedurally and substantively controlled the claim of
Prate going forward. The violation charged was a con-
tinuing one, with the remedy requested also continuing.”
The arbitrator’s apparent invocation of the “continuing
violation” theory does not save the award. While we
have determined that an arbitrator did not exceed his
authority by characterizing a grievance as a series of
Nos. 09-2453 & 09-2517 11
ongoing, related violations rather than a single incident,
see Monee, 348 F.3d at 676-77, we have not approved of
the use of a “continuing violation” theory to allow the
arbitrator to expand the scope of his jurisdiction to con-
tracts under which he has no authority. Cf. 348 F.3d at 676-
77 (finding no reason to disturb the arbitrator’s remedy
for a continuing violation during the term of the CBA).
While the D.C. Circuit, in National Postal Mail Handlers,
may have upheld the arbitrator’s use of the “continuing
violation” theory to remedy grievances that should not
have fallen within the scope of the relevant CBA, the
arbitrator in that case was in fact interpreting the
relevant CBA. Arbitrator Martin, in awarding damages
for periods after the expiration of the 2001 CBA was not,
and he had no authority to do so. Cf. Nat’l Postal Mail
Handlers, 589 F.3d at 442-44. The district court permissibly
reduced the damages award that extended past the ex-
piration of the 2001 CBA. See Trs. of Chi. Painters & Decora-
tors Pension v. Royal Int’l Drywall & Decorating, Inc., 493
F.3d 782, 789-90 (7th Cir. 2007).
With respect to the equitable portion of the award—that
Prate be allowed to pay on a piecework basis until the
Union enforces the MFN provision—the district court
vacated this portion of the award because it was
“imposed well after September 30, 2005, the expiration
of the 2001 CBA. Thus, the Arbitrator had no authority
to award it, or any relief, after that date.” The parties did
not separate the two parts of the award to address
in the first instance the post-2001 CBA damages and
secondly the equitable award. In some ways, for us, the
equitable award is a more puzzling issue because it is not
12 Nos. 09-2453 & 09-2517
time-specific; that is, its timing depends upon when the
arbitrator happened to issue the equitable award. Had
the arbitration proceeded more quickly (Prate filed
its grievance in September 2003, the parties selected
Arbitrator Martin in early 2004 and he issued an award
in September 2008), Arbitrator Martin might have
awarded this equitable relief prior to the 2001 CBA’s
expiration. However, here, the equitable order will be
applied to periods which began after new CBAs that
divested Arbitrator Martin of any jurisdiction to address
grievances under them came into force. Therefore, on
balance, we agree with the district court that it
seems more appropriate to apply the same analysis to the
equitable portion of the award as to the post-2001 CBA
damages, and we now vacate the equitable portion of the
award. Of course, the result here could have been different
if, when the employers negotiated the new dispute resolu-
tion procedures, they insisted on addressing issues that
might arise from this type of cross-CBA dispute.
Prate argues that a decision to limit Arbitrator
Martin’s remedial authority to the expiration of the 2001
CBA runs counter to the national policy in favor of arbitra-
tion and that, if our holding is taken to its logical ex-
treme, parties in the middle of arbitration when the CBA
at issue expires could take a mulligan and try their luck
with another arbitrator. On the contrary, our holding
does nothing to disturb parties’ ability to resolve a griev-
ance under an expired CBA. They simply must bring a
grievance before an arbitrator who has jurisdiction over
the CBA in force when the dispute arose.
Nos. 09-2453 & 09-2517 13
3. The issue whether the arbitrator inappropriately
adjusted wage rates is moot because the award
of equitable relief is vacated.
The Union contends that when the arbitrator awarded
Prate the ability to pay under a piecework formula, he was
disregarding the contractual limits on his power by
changing the wage scale. However, this argument is
moot because we have affirmed the district court’s deci-
sion to vacate the equitable portion of the award.
In its opening brief, the Union also argues that the
arbitrator’s damages award impermissibly altered the
wage scale by allowing the employer to pay on a piece-
work basis. Prate responds that the arbitrator was simply
exercising his authority to order a remedy and the
Union already waived the hourly pay requirement for
Prate’s competitors so it was coming to the table with
unclean hands. We have noted the arbitrator’s broad
remedial authority and the general presumption in favor
of upholding arbitrators’ awards. See Dexter Axle, 418
F.3d at 768; Clear Channel, 558 F.3d at 675. Applying
these principles, we think it a stretch to argue that the
arbitrator adjusted wage rates in violation of the terms
of the CBA by ordering a retrospective damages remedy.
Cf. Anderman/Smith Operating Co. v. Tenn. Gas Pipeline Co.,
918 F.2d 1215, 1219-20 (5th Cir. 1990) (holding that an
arbitrator did not exceed his authority in setting natural
gas prices, even though the contract gave Tennessee
the right to adjust the price whenever it wished).
14 Nos. 09-2453 & 09-2517
4. The district court correctly dismissed the Union’s
argument that the arbitrator improperly relied on
facts covered by the 2002 release.
The Union argues that any actions that occurred prior to
the 2002 release should not have been considered by the
arbitrator when determining the present dispute. The
arbitrator agreed with the Union and specifically stated
that he was only using the pre-2002 facts as background.
The Union’s reinstatement of this argument on appeal
is meritless because it is based on an incorrect reading
of the arbitrator’s decision. The district court correctly
dismissed the argument.
5. The arbitrator permissibly awarded attorneys’ fees.
The Union contends that the arbitrator awarded attor-
neys’ fees without authority because the CBA does not
specifically discuss attorneys’ fees. As the district court
held, an arbitrator has ample discretion to formulate
remedies including an indeterminate attorney fee award
of this kind, and we see no reason to set aside the arbitra-
tor’s fee award. See, e.g., Dexter Axle, 418 F.3d at 768;
Clear Channel, 558 F.3d at 675.
For the foregoing reasons, the district court’s order is
A FFIRMED.
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