International Ass'n of MacHinists & Aerospace Workers, Local Lodge 1943 v. AK Steel Corp.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 10a0242p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

X
-
INTERNATIONAL ASSOCIATION OF
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MACHINISTS & AEROSPACE WORKERS,
AFL-CIO, LOCAL LODGE 1943, -
Plaintiff-Appellee, -
No. 09-3425

,
>
-
-
v.
-
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AK STEEL CORPORATION,
Defendant-Appellant. -
N
Appeal from the United States District Court
for the Southern District of Ohio at Cincinnati.
No. 08-00294—Herman J. Weber, District Judge.
Argued: January 12, 2010
Decided and Filed: August 12, 2010
Before: MARTIN and WHITE, Circuit Judges; ZOUHARY, District Judge.*

_________________

COUNSEL
ARGUED: George E. Yund, FROST BROWN TODD LLC, Cincinnati, Ohio, for
Appellant. Robert H. Mitchell, MANLEY BURKE, LPA, Cincinnati, Ohio, for
Appellee. ON BRIEF: George E. Yund, Catherine Ann Reed, FROST BROWN TODD
LLC, Cincinnati, Ohio, for Appellant. Robert H. Mitchell, Emily T. Supinger,
MANLEY BURKE, LPA, Cincinnati, Ohio, for Appellee.
MARTIN, J., delivered the opinion of the court, in which ZOUHARY, D. J.,
joined. WHITE, J. (pp. 10-13), delivered a separate dissenting opinion.

*
The Honorable Jack Zouhary, United States District Judge for the Northern District of Ohio,
sitting by designation.

1
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 2
Workers v. AK Steel Corp.

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OPINION
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BOYCE F. MARTIN, JR., Circuit Judge. The question in this case is who
decides who decides. The district court granted appellee International Association of
Machinists and Aerospace Workers, AFL-CIO, Local Lodge 1943’s motion for summary
judgment, in which the Union sought to compel the arbitration of the question of whether
ninety-three grievances against appellant AK Steel Corporation were substantively
arbitrable under their agreement. The Company argues that the district court erred
because the parties did not “clearly and unmistakably” state their intent to submit to an
arbitrator the question of the substantive arbitrability of the grievances.

The Company and the Union entered into a Return To Work Agreement
(“Transition Agreement”) that did not provide for arbitration of grievances except for
certain claims arising during the Transition Period, to be followed by a long-term 2007
Collective Bargaining Agreement (“2007 Agreement”) with a more expansive grievance
and arbitration procedure. The Transition Agreement governs grievances which arise
during the Transition Period and are based on violations of the Transition Agreement.
The Transition Agreement did not include a “clear and unmistakable” provision that the
substantive arbitrability of the Union’s grievances would be determined by an arbitrator.
Instead, the Transition Agreement explicitly exempted the Transition Agreement from
the 2007 Agreement grievance and arbitration procedures, which does clearly state than
an arbitrator would determine the question of substantive arbitrability of claims arising
under that 2007 Agreement. Thus, the issue of substantive arbitrability of grievances
arising under the Transition Agreement, as well as the antecedent question of whether
a grievance arises under the Transition Agreement, must be determined by a court.

We therefore REVERSE the district court’s order and REMAND the case to
determine whether each grievance is governed by the Transition Agreement or the 2007
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 3
Workers v. AK Steel Corp.

Agreement and to determine the substantive arbitrability of those grievances governed
by the Transition Agreement.

I.

The Company operates a steel-making facility in Middletown, Ohio, known as
the Middletown Works. The Union represents a bargaining unit consisting of production
and maintenance workers at the Middletown Works. This unit was previously
represented by the Armco Employees Independent Federation, Inc. The Company and
Armco were parties to a collective bargaining agreement, the 1999 Agreement, which
was effective from November 1, 1999 until February 28, 2006. The 1999 Agreement
provided that, to determine issues of procedural and substantive arbitrability,

If any question arises as to whether said dispute is or is not a proper
grievance within the meaning of these provisions, the question may be
reserved throughout the grievance procedure and determined, if
necessary by the arbitrator.

Article VII, Section B(1).1 The Agreement further provided that

Either party to the Agreement shall have the right to refer to an impartial
arbitrator any grievance (including the determination of the question
under Section B, Paragraph 1, as to whether a particular dispute is or is
not a proper grievance) . . . .

Article VII, Section F(1).2 The Company and Armco negotiated for a successor
agreement, but were unable to do so prior to the expiration of the 1999 Agreement in
2006.

1
Substantive arbitrability is whether an issue is within the scope of an agreement’s arbitration
clause and must be submitted to arbitration. See John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 552
(1964). Procedural arbitrability is whether the submission of the grievance that is subject to arbitration
followed the proper procedures, including timeliness, to qualify for arbitration. See id. at 556. While
procedural arbitrability is generally determined by the arbitrator unless the parties provide otherwise,
substantive arbitrability is generally determined by the court unless the parties provide otherwise. See id.
at 558.
2
The parties do not dispute that, under this contract provision in the 1999 Agreement, substantive
arbitrability can be reserved by either party and taken to the arbitrator for resolution.
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 4
Workers v. AK Steel Corp.

Upon the expiration of the 1999 Agreement, the Company commenced a lockout
that lasted approximately one year, during which Armco affiliated with the International
Association of Machinists and Aerospace Workers, AFL-CIO, which became the new
representative for the bargaining unit. The Company continued negotiations with the
Union during the lockout and the parties reached a tentative decision upon a new
Agreement on February 28, 2007. The Agreement was ratified and became effective on
March 15, 2007. The 2007 Agreement contained language relating to grievance
procedures and substantive arbitrability of issues that was virtually identical to that
included in Article VII, Sections B(1) and F(1) as reproduced above.

As part of the new 2007 Agreement, however, the parties also negotiated and
entered into the Transition Agreement, which was intended to provide for the orderly
transfer of work upon the return of employees to work and ramp-up of production after
the lockout. The parties tentatively agreed to the Transition Agreement on February
28th and it was ratified on March 15th, along with the 2007 Agreement. The Transition
Agreement established a six-month Transition Period, from March 15th through
September 15th, during which the Transition Agreement would govern. Under Section
K(3) of the Transition Agreement, “the terms and conditions of this Agreement take
precedence over the 2007 Labor Agreement during the Transition Period. For example,
the forty (40) hour work opportunity of the Employment Security Plan is not applicable
during the Transition Period[.]” Section L of the Transition Agreement provided that:

All matters covered by this Agreement [the Transition Agreement] or
other matters that occur during the Transition Period shall not be subject
to challenge under the grievance and arbitration procedure, or otherwise,
except for the following specifically identified issues . . . .

These narrow types of issues included: (1) whether an employee “discharged from
employment for failure of Alcohol and Substance Abuse Testing” or for Work Stoppage
Misconduct had tested positive or committed an act of work stoppage; (2) “whether the
disciplinary suspension or disciplinary discharge of an employee following return to
work was with just cause and due consideration”; (3) “whether the employee was paid
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 5
Workers v. AK Steel Corp.

the correct standard hourly wage”; and (4) “whether the employee was properly
determined ineligible for healthcare coverage”. The Transition Agreement did not
contain its own grievance and arbitration procedure.

The Union filed ninety-three separate grievances3 against the Company that the
Company argues pertain to events arising during the Transition Period or under the
Transition Agreement and are, thus, governed by the Transition Agreement and is
arbitration provisions. The Company denied each grievance and refused to submit the
disputes to arbitration, arguing that none of the disputes was substantively arbitrable
because it either arose under the terms of the Transition Agreement or occurred during
the Transition Period. For each grievance, the Company issued a “Step II” grievance
answer asserting that the grievance was “not arbitrable” and that it would not process the
grievance further unless its position should “be determined erroneous by a final, non-
appealable order of a court of competent jurisdiction.”

The Union then filed this action in district court pursuant to section 301 of the
Labor Management Relations Act, 29 U.S.C. § 185, seeking an order to compel the
Company to arbitrate the substantive arbitrability of the ninety-three grievances, as well
as an award of attorney fees for the Company’s alleged bad faith refusal to submit these
grievances to arbitration. The Union argued that the Transition Agreement was a part
of the 2007 Agreement, which included a clear and unmistakable provision that an
arbitrator, and not a court, will determine both substantive and procedural questions of
arbitrability.4

The Company responded by arguing that the Transition Agreement explicitly
takes precedence over the 2007 Agreement during the Transition Period and “clearly and
unmistakably” states that matters covered by the Transition Agreement or other matters
occurring during the Transition Period shall not be subject to challenge under the 2007

3
While the Union originally filed ninety-four grievances, the Union withdrew one of the
grievances based on individual seniority after this litigation was initiated.
4
It is undisputed that the parties clearly and unmistakably consented to having an arbitrator
determine the question of substantive arbitrability of claims arising under the 2007 Agreement.
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 6
Workers v. AK Steel Corp.

Agreement grievance and arbitration procedure. The Company argued that, because
each of the ninety-three grievances arose during the Transition Period or under the
Transition Agreement, the issue of their substantive arbitrability must be determined by
a court rather than by an arbitrator because the Transition Agreement is silent on that
issue.

The district court granted summary judgment to the Union, ordering the parties
to submit the question of the substantive arbitrability of the grievances to an arbitrator.
The district court denied the Union’s request for attorney fees, finding that the Company
had not acted in bad faith. The Company timely appealed.

II.

“We review de novo a district court’s decisions regarding . . . the arbitrability of
a particular dispute.” Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 311 (6th
Cir. 2000) (citing Bobbie Brooks, Inc. v. Int’l Ladies’ Garment Workers Union, 835 F.2d
1164, 1170 (6th Cir. 1987) (stating that district court’s finding that a contract exists is
subject to de novo review)); M&C Corp. v. Erwin Behr GmbH & Co., 143 F.3d 1033,
1037 (6th Cir. 1998) (“A determination of the arbitrability of a dispute is subject to de
novo review.”)). We also review de novo a district court’s decision to grant a motion
for summary judgment. McMullen v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir. 2004)
(citing Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997)).

III.

“[A]rbitration is simply a matter of contract between the parties; it is a way to
resolve those disputes—but only those disputes—that the parties have agreed to submit
to arbitration.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995) (citations
omitted). “The guiding principles for determining whether a grievance is arbitrable are
well established: (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
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 7
Workers v. AK Steel Corp.

duty for the parties to arbitrate a particular grievance is an issue 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 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.’” United Steelworkers of Amer. v. Mead Corp., 21 F.3d 128, 131 (6th
Cir. 1994) (citing AT&T Techs., Inc. v. Communications Workers, 475 U.S. 643, 648-51
(1986) (quoting United Steelworkers of Amer. v. Warrior & Gulf Navigation, 363 U.S.
574, 582-83 (1960))). “Moreover, in cases involving broad arbitration clauses the Court
has found the presumption of arbitrability ‘particularly applicable,’ and only an express
provision excluding a particular grievance from arbitration or ‘the most forceful
evidence of a purpose to exclude the claim from arbitration can prevail.’” Mead Corp.,
21 F.3d at 131 (citing AT&T Techs., 475 U.S. at 650 (quoting Warrior & Gulf
Navigation, 363 U.S. at 584-85)).

Our role is thus limited to determining whether the substantive arbitrability of the
ninety-three grievances should be determined by a court or by an arbitrator rather than
whether the grievances themselves are arbitrable. AT&T Techs., 475 U.S. at 651. As
previously noted, Section L of the Transition Agreement provides that:

All matters covered by this Agreement [the Transition Agreement] or
other matters that occur during the Transition Period shall not be subject
to challenge under the grievance and arbitration procedure, or otherwise,
except for the following specifically identified issues . . . .

Here, the Company argues that the district court erred in finding that the
Transition Agreement included a clear and unmistakable expression of intent to arbitrate
the substantive arbitrability of the Union’s grievances. The district court’s reasoning,
agreeing with that of the Union, was as follows: (1) the Transition Agreement was part
of the 2007 Agreement; (2) the Transition Agreement did not include its own procedures
for grievance and arbitration, and, indeed, referred to them as governing in some of the
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 8
Workers v. AK Steel Corp.

cases in which arbitration would be permitted; thus, (3) the Transition Agreement
incorporated those procedures. It found that the 2007 Agreement vested an arbitrator
with the authority to determine issues of substantive arbitrability. Therefore, the district
court determined that, because the Union and the Company had agreed to have an
arbitrator determine the substantive arbitrability of grievances with regard to issues
arising under the 2007 Agreement, they had necessarily agreed to those procedures,
despite the mandate that claims arising under the Transition Agreement were not subject
to the procedures of the 2007 Agreement. By doing so, the district court erred.

The Transition Agreement and the 2007 Agreement must be read together. The
Company conceded as much at oral argument by stating that the Transition Agreement
is “incorporated” within the 2007 Agreement. The agreements were ratified together and
both took effect on March 15, 2007. The Transition Agreement also cites and
incorporates terms of the 2007 Agreement in a number of sections. For example, in
Section G, the re-issuance of safety shoes “will be addressed in accordance with Article
XXIV of the 2007 Labor Agreement.” Additionally, under Section K(3) of the
Transition Agreement, “the terms and conditions of this Agreement take precedence over
the 2007 Labor Agreement during the Transition Period.” Thus, where the terms of the
Transition Agreement are more restrictive, those terms trump the 2007 Agreement.

The Transition Agreement does not provide, in “clear and unmistakable”
language, for an arbitrator to decide substantive arbitrability. First Options, 514 U.S.
at 943. Instead, the Transition Agreement specifically states that issues arising under the
Transition Agreement or during “the Transition Period shall not be subject to challenge
under the grievance and arbitration procedure, or otherwise, except for the following
specifically identified issues . . . .” Transition Agreement Section L (emphasis added).5

5
While the Union argues that the Company pre-supposes that the grievances are not substantively
arbitrable, this is a misreading of the Company’s position. The Company argues that the grievances arise
under the Transition Agreement or during the Transition Period and are thus bound by the arbitration rules
found in the Transition Agreement rather than by the 2007 Agreement. While the Company believes that
the grievances are not substantively arbitrable because it believes that the grievances do not fit within one
of the exceptions to the Transition Agreement’s provision prohibiting arbitration, this does not mean that
the Company’s argument is based on the grievances’ substantive arbitrability. Rather, the grievances arise
under the Transition Agreement and are thus governed by its procedures.
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 9
Workers v. AK Steel Corp.

The Transition Agreement explicitly excludes nearly all claims from the grievance and
arbitration procedures outlined in the 2007 Agreement. This demonstrates the parties’
intent not to be bound by these procedures (including the procedure for deciding
substantive arbitrability) for claims arising under the Transition Agreement or during the
Transition Period.

Thus, the district court erred in finding that the Transition Agreement required
that the question of substantive arbitrability be submitted to an arbitrator. Additionally,
as the contract is unclear on the matter, it is similarly for a court to determine whether
the grievances at issue are subject to the Transition Agreement or the 2007 Agreement.

IV.

For the foregoing reasons, we REVERSE the district court’s order and
REMAND the case to determine first whether the grievances are governed by the
Transition Agreement or the 2007 Agreement and then to determine the substantive
arbitrability of those grievances governed by the Transition Agreement. The court must
first determine if a grievance is governed by the Transition Agreement or by the 2007
Agreement. If a grievance is found to be governed by the 2007 Agreement, that
grievance must be sent to an arbitrator. If a grievance is found to be governed by the
Transition Agreement, the court will go on to decide the grievance.
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 10
Workers v. AK Steel Corp.

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DISSENT
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HELENE N. WHITE, Circuit Judge, dissenting. I respectfully dissent. I view
this case somewhat differently than does the majority, and I would affirm the district
court.

I do not see this case as presenting the straight-forward question “who decides
who decides” in the context of an agreement that is silent on the issue. Rather, as noted
by the district court, there are two agreements the enforcement of which are implicated
by this decision.

I agree with the majority, as well as the district court, that the two agreements
must be read together. The district court observed that the Transition Agreement
provides that certain matters are subject to challenge under the grievance and arbitration
procedure and certain matters are not, but the Transition Agreement sets forth no
arbitration and grievance procedure. The court concluded that “the grievance and
arbitration procedure to which the RTW [Transition Agreement] refers is that contained
in the parties’ CBA [the 2007 Agreement].” This is clearly correct.

The court then reasoned that because the grievance and arbitration procedure of
the 2007 Agreement is the controlling procedure for grievance and arbitration—even
under the Transition Agreement because no other procedure was invoked or
contemplated by the Transition Agreement, although the Transition Agreement declared
some matters subject to challenge under the grievance and arbitration procedure—the
court should look to the procedure set forth in the 2007 Agreement to determine who
should decide whether the 93 grievances are arbitrable under the 2007 Agreement or not
arbitrable under the Transition Agreement. It is undisputed that the 2007 Agreement
unambiguously commits such questions to the arbitrator, and thus the district court
determined that the arbitrator should decide whether the grievances are arbitrable. I find
no error in this analysis.
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 11
Workers v. AK Steel Corp.

The language of the Transition Agreement supports the district court’s
conclusion. The Agreement states that certain matters “shall not be subject to challenge
under the grievance and arbitration procedure, or otherwise.” It does not state that the
matters shall not be subject to the grievance and arbitration procedure. In stating that
the matters are not subject to challenge under the procedure, the Agreement focuses on
the substantive arbitrability of the matter, rather than the procedure for determining the
substantive arbitrability. Stated differently, a matter that is not subject to challenge
under the procedure is a matter that cannot be challenged through the grievance and
arbitration procedure, but, as with all matters as to which arbitration is demanded, the
arbitrator is confided with the duty to declare that the grievance and arbitration
procedure cannot be invoked to challenge the matter. In contrast, a matter that is not
subject to the grievance and arbitration procedure is one that is simply not subject to the
procedure at all.

Further, as ineluctably true as the majority’s assertion that the Transition
Agreement explicitly exempted from challenge under the grievance and arbitration
procedure all matters covered by the Transition Agreement or arising during the
Transition Period except certain specified issues, is the assertion that grievances not
covered by the Transition Agreement and not arising during the six-month period are
covered by the 2007 Agreement, which explicitly commits the question of arbitrability
to an arbitrator. If the grievances fall into the latter category, allowing a court to decide
the question of arbitrability would violate the parties’ agreement.

AK Steel asserts that the grievances arise under the Transition Agreement, and
the majority opinion in effect assumes that this is an accurate characterization. The
Union, however, argues that the grievances arise under the 2007 Agreement. Thus, in
the instant case, there is a conflict between the second principle identified by the
majority—“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 an issue for judicial determination”—and the fourth principle identified by
the majority—“where the agreement contains an arbitration clause, the court should
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 12
Workers v. AK Steel Corp.

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.’” United Steelworkers of Amer. v. Mead Corp., 21 F.3d 128, 131 (6th Cir.
1994).

Focusing exclusively on the second principle would lead to the conclusion that
because the Transition Agreement does not “unmistakably provide” that the question of
arbitrability is for the arbitrator, the question is one for the courts; however, focusing
exclusively on the fourth principle would lead to the conclusion that because the 2007
Agreement clearly provides that the arbitrator should decide whether a grievance is
arbitrable, the question is one for the arbitrator.

The Union’s district court complaint asserts that it presented AK Steel with 93
grievances alleging that AK Steel violated specific terms of the 2007 Agreement, and
that each grievance “raised a claim which upon its face and as presented fell within the
scope of the grievance and arbitration provisions of the CBA.” The 2007 Agreement
provides that the arbitrability of such claims will be determined by an arbitrator. If,
indeed, the grievances arise under the 2007 Agreement rather than the Transition
Agreement, the majority decision will have the effect of giving the Transition Agreement
precedence over the 2007 Agreement not just during the Transition Period, but also for
the succeeding period, in direct violation of both the Transition Agreement and the 2007
Agreement.

In short, under the majority decision, AK Steel could assert that any grievance
concerns a matter that is covered by the Transition Agreement or that occurred during
the Transition Period, and thereby deprive the Union of the contractual right to have an
arbitrator decide whether the grievance is arbitrable; or, under the district court decision,
the Union can assert that a grievance arises under the 2007 Agreement, and force
arbitration of the arbitrability question, even though the claim may not be arbitrable.
No. 09-3425 Int’l Assoc. of Machinists & Aerospace Page 13
Workers v. AK Steel Corp.

The district court determined that the second alternative is most consistent with the
governing law and the parties’ written agreements. I agree and would affirm.