CHARLES R. SIMPSON, III, Senior District Judge.
This matter is before the court on two motions for summary judgment. The Plaintiff, Teamsters Local Union No. 89 ("the Union"), filed a motion for summary judgment against the Defendant, The Kroger Co. ("Kroger"), in which the Union seeks to compel Kroger to arbitrate its former employee's grievance pursuant to Kroger's collective bargaining agreement ("CBA") with the Union (DN 60). Kroger's motion for summary judgment contends that the CBA is inapplicable to the grievance at issue, and as such Kroger is not obligated to arbitrate (DN 57).
The Union's complaint asserts that by refusing to arbitrate, Kroger: (1) violated and breached Kroger's CBA with the Union; (2) violated the Labor Management Relations Act of 1947, 29 U.S.C. § 185 because Kroger is allegedly a joint employer of the grievant; and (3) violated the Federal Arbitration Act, 9 U.S.C. § 4 (DN 1). The Union seeks an order that Kroger is obligated to arbitrate, either in bilateral or tripartite arbitration, and that attorneys' fees are warranted (DN 1).
For the reasons set forth herein, the court will grant Kroger's motion for summary judgment as a matter of law and deny the Union's motion for summary judgment.
The following facts are undisputed (DNs 57 and 60): Kroger owns a warehouse and distribution center, the Kroger
This case arose regarding a former Kroger employee, Frank Herdt, who worked as a driver at the KDC prior to the 2007 changeover (DNs 57 and 60). Transervice hired Herdt in 2007 and he became a bargaining unit employee under Transervice's CBA with the Union, which included an arbitration provision just as the KMA did with Kroger (DN 57).
In late 2009, Herdt was arrested for stealing from Kroger (DN 60). In response, Kroger's risk management department alerted Transervice, Herdt's employer, that Herdt was banned from Kroger property. He was no longer permitted to make deliveries to any Kroger facilities and denied further access to Kroger property, including the KDC (DNs 57 and 60).
In July 2010, the Union filed a grievance with Kroger on Herdt's behalf (DN 60). The grievance acknowledges that Herdt was not a Kroger employee, but rather a Transervice employee (DN 1). However, the Union identifies Kroger's KMA as the basis for the grievance and alleges that Kroger violated KMA Article 10, which provides that Kroger will not terminate an employee without just cause (DN 1).
Herdt's criminal charges were later dismissed. Pursuant to Transervice's CBA with the Union, Transervice reinstated Herdt and he was awarded backpay and benefits (DN 60).
When Kroger banned Herdt from its property both Transervice and the Union contacted Kroger on Herdt's behalf (1) Transervice requested via letter that Kroger rescind the ban and allow Herdt onto its property, which Kroger denied (DN 57); and (2) the Union filed a grievance with Kroger, which Kroger refused to arbitrate (DN 60).
In response to Transervice, Kroger denied the request to allow Herdt onto Kroger's property in August and in September of 2010 (DN 57). Kroger noted that Herdt was Transervice's employee and the "decision as to what employment action to take with respect to Herdt belongs solely to Transervice." Thus, Kroger denied responsibility for paying Herdt's backpay and benefits, explaining that "[t]o suggest Kroger was responsible for any costs associated with the fact that
In response to the Union's grievance, Kroger's Vice President of Labor Relations
Thus, Kroger contends (1) that it has not employed Herdt since 2007 and did not terminate him; (2) that Kroger is not party to a Union CBA that covers Herdt; (3) that Transervice both employs Herdt and has a Union CBA that covers his grievance; (4) that Herdt successfully exercised his right to grieve his dismissal with Transervice; (5) that Kroger is not obligated under any agreement to allow former employees perpetual access to Kroger-owned property, and (6) that Kroger's act of banning Herdt from its property was not termination (DN 60). Thus, Kroger refuses to participate in arbitration with the Union and asserts that the KMA is not applicable to Herdt's grievance.
In August 2011, one year after the Union grieved Herdt's termination with Kroger, the Union filed an unfair labor practices charge against Kroger with the National Labor Relations Board ("NLRB"). The Union alleged that in 2011 — four years after the changeover at the KDC — Kroger failed and refused to bargain in good faith with the Union regarding KDC employees (DN 57).
The NLRB's Office of Appeals explained that it denied the Union's appeal (1) because the evidence "fails to establish that Kroger is a joint employer of the employees of Zenith and Transervice;" (2) because the Union's evidence of joint employer status "is consistent with Kroger being the customer of Zenith and Transervice;" and (3) because Kroger "no longer directly employs Local 89 members." (DN 57). The NLRB reasoned that a "business entity that is the customer of an employer and owns the property utilized by the employer to operate its business has some impact on the day-to-day activities of the employees of the employer, but this impact does not establish a joint employer status." (citing AM Prop. Holding Corp., 350 NLRB 998 (2007) enforced, 647 F.3d 435 (2d Cir. 2011)); Teamsters Local Union No. 89 v. Kroger Co., 617 F.3d 899, 910 (6th Cir. 2010).
Both Kroger and the Union request summary judgment under Fed.R.Civ.P.
However, the evidence must be construed in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)). The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. Plaintiffs must offer evidence demonstrating a genuine issue of material fact. Celotex, 477 U.S. at 322, 106 S.Ct. 2548.
A party is not obligated to arbitrate a labor dispute unless it has contractually agreed to do so. Litton Financial Printing v. N.L.R.B., 501 U.S. 190, 200, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991); United Steelworkers v. Warrior Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). "[W]hether or not [a] company is bound to arbitrate, as well as what issues it must arbitrate, is a matter to be determined by the Court on the basis of the contract between the parties." John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 547, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964); see also Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 105-06 (Ky. 2003).
When the issue is whether a collective bargaining agreement creates a duty for the parties to arbitrate, any dispute between the parties subject to a collective bargaining agreement is presumed arbitrable. Warrior Gulf, 363 U.S. 574, 80 S.Ct. 1347; AT & T Tech., Inc. v. Commc'n Workers of Am., 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). The arbitrability of the grievance is an issue for judicial determination and the presumption of arbitrability may be overcome only if "it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Id. at 582-83. The court does not weigh the merits of a grievance or determine the rights of the parties under a collective bargaining agreement. AT & T, 475 U.S. 643, 106 S.Ct. 1415. Our "role is limited to deciding if `the party seeking arbitration is making a claim which on its face is governed by the contract.'" Gen. Drivers, Salesmen & Warehousemen's Local Union No. 984 v. Malone & Hyde, Inc., 23 F.3d 1039, 1043 (6th Cir.1994) (quoting United Steelworkers of Am. v. American Mfg. Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960)).
Regarding arbitrability, "the court generally faces two separate scenarios. In
Here, the contractual matter at issue concerns Kroger's refusal to arbitrate Herdt's termination grievance under the KMA.
Like the case at issue here, Teamsters I involved the application of the KMA to an employee grievance that occurred after the 2007 changeover. In Teamsters I, the Union filed grievances against Kroger seeking to compel arbitration. The Union alleged that Kroger violated the KMA by subcontracting transportation operations to non-Union third party drivers at the KDC when bargaining unit drivers were available. Id. Kroger counter-argued that the KMA was no longer applicable to the alleged violations because the subcontracting work took place after the changeover and that post-changeover grievances were not subject to the arbitration provisions of either the KMA or Kroger's local agreement. Id. Kroger also argued that it no longer had a collective bargaining relationship or grievance procedure with the Union regarding its former employees at the KDC. Id.
The Federal District Court for the Western District of Kentucky granted summary judgment in favor of the Union, which the Sixth Circuit affirmed — holding that Kroger had an obligation to arbitrate former KDC employees' grievances with regard to subcontracting. Id. The Sixth Circuit reasoned that the KMA specifically addressed the possibility of Kroger subcontracting its KDC operations, and neither the KMA, the local agreement, or the LOU limited the applicability of the arbitration provision regarding subcontracting. Id. at 906-10. Based on specific language in the job-security provision, the court held that the KMA "provide[s] protections to
The issues in Teamsters I were whether a valid agreement to arbitrate existed between the parties, and whether the subcontracting dispute fell within the scope of the agreement. Id. at 904. The Sixth Circuit held that Kroger was obligated to arbitrate grievances related specifically to subcontracting commitments, based on the factual situation before it, because the arbitration provision in the KMA was broad, there is a presumption in favor of arbitrability, and none of the parties' agreements demonstrated an intent to exclude subcontracting grievances from arbitration under the KMA. Id. at 907-08. However, the Sixth Circuit did not define the scope of arbitable rights that all former Kroger employees may or may not have under the KMA, nor did it hold that Kroger was obligated to arbitrate all former KDC employees' grievances under the KMA. See Id.
Here, the Union contends that Kroger is obligated to arbitrate Herdt's termination grievance under the KMA because the Sixth Circuit's holding in Teamsters I applies to and controls in this case (DN 60). The Union argues that pursuant to Teamsters I, Kroger must arbitrate all former KDC employees' grievances under the KMA, whether or not the grievance is related to subcontracting, because the KMA's arbitration provision is broad, and because a broad provision mandates a presumption of arbitrability and provides protections for former employees under the KMA (DN 60).
Kroger, both in response and in its motion for summary judgment, contends that Teamsters I is inapplicable here. Kroger argues generally that Teamsters I was decided on a different set of facts and is thus distinguishable from this case because Teamsters I involved subcontracting-related grievances, and this case involves the exclusion of a former Kroger employee from Kroger-owned property.
Upon review we conclude that, while Teamsters I is valid law, it is inapplicable under the circumstances of this case. Unlike the court in Teamsters I, we must consider whether Kroger is obligated to arbitrate a former KDC employee's termination grievance under the KMA when the employee's current employer is also a party to a CBA containing an arbitration provision for wrongful termination.
In this case, Herdt was not without any avenue to remedy his grievance. Herdt was not an employee of Kroger at anytime applicable to this dispute. He was Transervice's employee and Transervice terminated him — Kroger merely banned him from Kroger-owned property.
The cases are facially similar because both address former employees' grievances which seemingly could be grieved under the KMA. However, one chief difference is that in Teamsters I, the grievants' only recourse was to grieve under the KMA, whereas here Herdt is protected by his current employer's CBA (DN 57). Herdt
Teamsters I is also distinguishable because the issue for decision in Teamsters I was whether or not the grievants' subcontracting dispute was arbitrable under the KMA — not whether the KMA as a whole applies to former KDC employees, as is claimed here. Id. at 904. The two cases are completely different considering the fact that Teamsters I addressed Kroger's subcontracting in violation of the KMA whereas here we address Kroger's banning Herdt from its property, which is not a violation of the KMA.
Teamsters I identified a narrow protection only for former Kroger employees with subcontracting-related grievances. Id. at 908. In determining whether a grievance is subject to compulsory arbitration: "a party cannot be forced to arbitrate any dispute that it has not obligated itself by contract to submit to arbitration, unless the parties clearly and unmistakably provide otherwise." Id. at 904; Warrior Gulf, 363 U.S. at 585, 80 S.Ct. 1347; AT & T, 475 U.S. at 650, 106 S.Ct. 1415. The Union makes no showing that in any CBA Kroger ever committed to allow former employees unconstrained access its property. Obligating Kroger to arbitrate Herdt's grievance now, over three years after leavings its employ and his old bargaining unit, would be improper.
Teamsters I did not hold that all former Kroger employees could avail themselves of unlimited grievance rights under the KMA. See Int'l Ass'n of Machinists & Aerospace Workers v. ISP Chems., Inc., 261 Fed.Appx. 841, 846 (6th Cir.2008). Teamsters I held only that the KMA could be the basis for grieving a subcontracting issue, not all issues by all former bargaining unit members.
The case at bar addresses a termination grievance. The LOU specifically provided that Kroger would address only a limited number of named grievances under the KMA: "Kroger agrees to pay the Holiday Pay Class Action Grievance, Robert Minks Grievance, and the Class Action Transportation Dispute Grievance." (DN 58). Unlike the effect of the LOU in Teamsters I, which supported the presumption of arbitrability because it addressed subcontracting, here the LOU does not address subsequent termination-related grievances. Id. at 908-09. In this case the LOU (1) shows that Kroger agreed to arbitrate only a select few pending grievances under the KMA, and (2) demonstrates Kroger's intent to exclude subsequent grievances from arbitration under the KMA because Kroger specifically rejected the Union's 2007 proposal that Kroger agree to arbitrate former employee grievances under the KMA. Teamsters I found that Kroger's rejection of the Union's proposals was sufficient evidence of Kroger's purpose to exclude future subcontracting grievances. Id. However, we reason that Kroger's agreement in the LOU to arbitrate only a select few pending grievances, combined with that fact that Kroger specifically refused to cover former employees' under the KMA is evidence that Kroger intended to avoid the situation at issue here.
In Teamsters I, the Sixth Circuit was concerned with whether or not the Union could arbitrate its bargained-for right to prevent subcontracting under the KMA, despite the fact that Kroger no longer employed any bargaining unit members (DN 57). In other words, in Teamsters I the Union bargained for KDC employees' rights to grieve subcontracting. Here, the Union's bargained-for rights are not at stake — there is no showing of a similar covenant that committed Kroger to allow former employees to access to Kroger's property, or to remain Kroger employees, or to be covered by the KMA when they were no longer employed by Kroger.
Thus, we will not require Kroger to arbitrate Herdt's grievance under the KMA because Teamsters I is inapplicable to the circumstances in this case.
When two companies are joint employers, a non-signatory to a CBA may be bound by the terms of the signatory company's agreement. Metro. Detroit Bricklayers Dist. Counsel v. J.E. Hoetger & Co., 672 F.2d 580, 581-82 (6th Cir.1982). Whether a company possesses sufficient control over the work of another company's employees to qualify as a joint employer is "essentially a factual issue." Int'l Longshoremen's Ass'n v. Norfolk S. Corp., 927 F.2d 900, 902 (6th Cir.1991) (citing Boire v. Greyhound Corp., 376 U.S. 473, 84 S.Ct. 894, 11 L.Ed.2d 849 (1964)). The Sixth Circuit analyzes four factors in determining whether two companies are joint employers: (1) the interrelation of operations between the companies; (2) common management; (3) centralized control of labor relations; and (4) common ownership. Norfolk, 927 F.2d at 902; Hoetger, 672 F.2d at 584. Whether a joint employment relationship exists is largely an issue of control:
3750 Orange Place L.P. v. N.L.R.B., 333 F.3d 646, 660 (6th Cir.2003) (quoting Carrier Corp. v. N.L.R.B., 768 F.2d 778, 781 (6th Cir.1985)). In assessing whether such control exists, the Sixth Circuit has also considered other factors that evidence control, including the ability: (1) to hire, fire, and discipline; (2) to affect compensation and benefits; and (3) to direct and supervise performance. Sanford v. Main Street Baptist Church Manor, Inc., 449 Fed. Appx. 488, 492 (6th Cir.2011).
In Norfolk, the Sixth Circuit held that no joint employment relationship existed where a company owned the facility in which another company operated, payed the facility's operating costs, conducted time studies, recommended staff reductions, paid management fees, and had input on the other company's schedules, holiday pay, and overtime pay. 927 F.2d at 902. The court held that the facts did not indicate that the companies' operations were "substantially interrelated beyond the extent necessary to the performance of their basic contractual duties." Id. The court further held that the management agreement between the companies did not evidence common management or ownership because it "was the product of arm's-length
Here, applying the Sixth Circuit's four-factor test, the undisputed facts indicate that Kroger and Transervice have neither common management nor common ownership. See Norfolk, 927 F.2d at 902. Transervice alone supervises its KDC employees, cuts their paychecks, implements employee policies and procedures, determines its own staffing needs, and makes employee hiring, firing, and disciplinary decisions. The Union's contention that Kroger recommended to Transervice how many drivers to employ does not evidence joint employment "beyond the extent necessary to performance of their basic contract," such a recommendation is "consistent with the conduct to be expected of a party interested in holding down costs." Id.
The Union contends that the two remaining factors evidencing joint employment — the interrelation of operations between the companies and centralized control of labor relations — are satisfied because Transervice is "simply part of Kroger's KDC management" and because Kroger retains control of Transervice employees (DN 60).
Under the four-factor analysis, Kroger's mere involvement in Transervice's day-to-day operations is not enough to show "interrelation of operations" without additional evidence that Kroger had control over the terms and conditions of employment, such as hiring, firing, discipline, or negotiating authority. John Breuner Co., 248 NLRB 983, 989 (1980) (noting that cases finding joint employment of delivery drivers are supported by findings that the distributor or its supervisors directly supervised and controlled the trucking contractor's employees — which requires more than showing the interrelation of operations was "only to the degree necessary to coordinate [subcontractors] functions."); See Local 773 Int'l Brotherhood of Teamsters
Also, the facts do not show that Kroger exercised a sufficient "degree of control over labor relations" with Transervice to establish a joint employee relationship. See Hoetger, 672 F.2d at 584-85. The Union contends that Kroger injected itself into Transervice's labor negotiations in 2007 because Kroger refused to allow Transervice to agree that KDC employees could participate in the pension fund post-changeover, and because Kroger hired strike replacements during the KDC employees' 2007 strike in order for Transervice to maintain operations at the KDC (DN 60). Kroger's short-term involvement does not indicate that Kroger "integrally insert[ed] itself into the material terms of the employment obligations." Hoetger, 672 F.2d at 585; See Cotter, 691 F.Supp. at 882-83 (holding that a company's involvement in a subcontractor's CBA with the Union did not make the company a "participant" in collective bargaining negotiations sufficient to evidence a joint employer relationship when the company requested that the subcontractor "check with" the company during negotiations and complained to the subcontractor about high labor costs).
Further, regarding to control over labor relations, in Hoetger the Sixth Circuit held that the only element which would support finding joint employment is control over labor relations when two companies have a contractual relationship and there is no showing of integrated operations, common management or control. Id. In this situation, the degree of control of labor relations will not support joint employment without showing that a company was (1) exercising day-to-day control over the other company's employees; (2) making "any actual hiring or firing decisions;" and (3) supervising the other company's employees. Id.
The Union does not show that Kroger controlled Transervice's day-to-day operations, nor does it show that Kroger made hiring and firing decisions. Transervice terminated Herdt and the court is not persuaded by the Union's contention that Kroger's act of banning Herdt from its facility was constructive termination. The Union cites no authority for its contention that Kroger's refusal to lift the ban against Herdt takes "control over labor relations" away from Transervice or demonstrates that Kroger fired or disciplined Transervice's employees beyond the extent of their contractual relationship. See Hoetger, 672 F.2d at 584. Transervice is required to being Herdt back with backpay and benefits, not Kroger.
We find the Second Circuit's explanation of the four-factor analysis instructive: in Clinton's Ditch Co-op. Co., Inc. v. N.L.R.B., 778 F.2d 132, 138 (2d Cir.1985), the Second Circuit found the fact that a company complains to a contractor about problems that the company's customers had with the contractor's drivers, and that the company "expected appropriate action to be taken" against the contractor's drivers did not demonstrate joint employment. The court explained that, "any business has a legitimate interest in determining if its subcontractor's employees have offended its customers or have otherwise provided unsatisfactory service ... An employer need not mutely suffer incompetence or misbehavior by its subcontractor's employees in order to avoid status as a joint employer." Id.
The Contract Carrier Services Agreement between the companies specifically provides that Kroger is not a joint employer with Transervice (DN 60):
While contract language is not controlling, it is "persuasive evidence of the parties' intentions and of their understanding of their contractual arrangement." Norfolk, 927 F.2d at 902. The contract confirms Kroger's contention that it is a customer of Transervice and retains no control over Transervice's employee terms and conditions of employment (DN 57). Transervice does not show that the companies were "substantially interrelated beyond the extent necessary to the performance of their basic contractual duties." See Norfolk, 927 F.2d at 902.
Kroger's presence at the KDC is limited: Kroger did not employ on-site supervisors at the KDC; approximately four Kroger employees are at the KDC to inspect inbound produce; Kroger's Supply Chain Manager ("SCM") visits the KDC approximately twice a month to meet Transervice's upper management; and the SCM participates in conference calls with Transervice's managers multiple times each week to discuss service issues, complaints, and planning (DN 57). Thus, Kroger's presence at the KDC conforms with the Carrier Agreement and Transervice does not show that Kroger controlled the day-to-day operations at the KDC such that the companies were substantially interrelated beyond the performance of their basic contractual duties. See Norfolk, 927 F.2d at 902.
Summary judgment for Kroger is appropriate. A separate order will be entered in accordance with this opinion.
