United Steelworkers of America v. Warrior & Gulf Navigation Co.

United States District Court for the Southern District of Alabama · Labor Law

Labor LawArbitrationCollective Bargaining AgreementsManagement RightsSection 301labor arbitrationmanagement functionscontracting out

Facts

The union and employer were parties to a collective bargaining agreement effective from September 25, 1956 to September 25, 1959. The agreement provided a grievance procedure culminating in arbitration, but it also stated that matters strictly a function of management were not subject to arbitration and reserved management of the company and direction of the workforce exclusively to the company. In August 1958, employees filed a grievance protesting the company's practice of contracting out work that could previously have been performed by company employees. The court found that the company had contracted out such work since the beginning of its business, that the union knew of that practice, had unsuccessfully tried to negotiate limits on it, and that no contract provision limited the company's right to contract out work.

Issue

Can the employer be compelled to arbitrate a grievance protesting its decision to contract out maintenance work under this collective bargaining agreement? More specifically, does the agreement's broad grievance language cover that dispute despite the exclusion of matters strictly a function of management from arbitration?

Rule

An employer may not be compelled to arbitrate a grievance over contracting out work where the collective bargaining agreement contains no provision limiting that practice, is not susceptible of interpretation as prohibiting it, and expressly excludes matters that are strictly a function of management from arbitration. The right to contract out work is an inherent, traditional management right unless the employer has agreed otherwise or the contract expressly limits that right.

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Granite River Fabrication, a steel-processing company in Pittsburgh, has a collective bargaining agreement with Local 88. The agreement contains a grievance procedure ending in arbitration, excludes from arbitration matters "strictly a function of management," and separately states that bargaining-unit machine repair work may not be subcontracted while qualified unit employees are on layoff. After the company sends repair work to an outside contractor while three qualified mechanics are laid off, the union files a grievance.

Under the district court's approach, is the employer most likely compellable to arbitrate?

Explanation. The opinion treated contracting out as a traditional management right only in the absence of employer agreement or an express contractual limitation. Here, unlike the contract in the opinion, the agreement expressly limits subcontracting during layoffs. Because the grievance is supported by a contract provision, the court's reason for refusing arbitration would not apply. (Derived from United Steelworkers of America v. Warrior & Gulf Navigation Co. (n.d.).)