Summary of a Recent
Judicial Development in
Labor

Timeliness of Suit to Compel Arbitration Upheld
Against Party That Failed to Refuse Arbitration
in an Express and Unequivocal Manner

M. Sean Brister
National AgLaw Center Research Associate

Summary of Decision

In General Truck Drivers, Warehousemen, and Helpers Union Local No. 624 v. Clover Stornetta Farms, Inc., No. C-08-2463 SC, 2009 WL 415620 (N.D. Cal. Feb. 19, 2009), the United States District Court for the District of Northern California granted a motion for summary judgment in favor of General Truck Drivers, Warehousemen and Helpers Union Local No. 624 and the International Brotherhood of Teamsters (Union) to compel arbitration in a labor dispute between the local union and Clover Stornetta Farms, Inc. (Clover), and denied Clover's motion for summary judgment, stating that Clover failed to refuse to arbitrate in an express and unequivocal manner, thus failing to initiate the running of the statute of limitations period.

Background

The Union and Clover entered a collective bargaining agreement covering a four-year period. Id. at *1. The agreement required Clover to provide benefits to the union employees including health coverage, but it allowed Clover to change plans to minimize cost or pass increased cost along to employees if the cost exceeded a cap defined in the agreement. Id. After entering into the bargaining agreement and in order to secure the Union's cooperation in obtaining a new cost effective health plan, Clover agreed to pay 50 percent of the cost in excess of the cap for one year. Id. A Letter of Understanding (LOU) was signed by the parties. Id. After the LOU was executed, Clover searched for a new health policy, but the existing policy underwent changes, and Clover decided to maintain the existing policy. Id. Thereafter, Clover billed the entire amount of premiums above the cap to the employees without covering 50 percent of the cost in excess as agreed in the LOU. Id. A labor dispute arose surrounding this issue. See id.

The collective bargaining agreement provided a complex dispute resolution mechanism. Id. On December 27, 2006, the Union sent a formal written grievance to Clover requesting that several steps in the dispute resolution mechanism be circumvented and that the parties proceed directly to binding arbitration. Id. at *2. Clover responded requesting an earlier step in the resolution procedure but agreeing to meet again to attempt informal resolution. Id. The parties met informally two additional times, but failed to resolve the underlying dispute or resolve the dispute as to proceeding directly to arbitration. Id. Subsequently, Clover sent an email suggesting mediation and issued minutes from the first informal meeting indicating that no agreement had been reached, and the parties suggested some type of mediation which, if unsuccessful, could issue an opinion regarding the outcome of potential arbitration. Id. Nearly one year after its first grievance letter, the Union suggested that mediation be foregone and that the parties attend a board of adjustment as Clover had requested in its initial response. Id. Clover refused, stating that it considered the matter closed because the sixty day period to initiate the procedure had lapsed. Id. The Union filed suit to compel arbitration of the labor dispute on May 14, 2008. Id. Both parties filed motions for summary judgment. Id. at *1.

Arguments

Briefing the motions narrowed the issue of the case to whether the Union's suit to compel arbitration was barred by the applicable statute of limitations. Id. at *3. The court explained that the statute of limitations ends six months from the date on which one party makes clear through "'an unequivocal, express rejection'" that it will not participate in arbitration. Id. (quoting Local Joint Exec. Bd. of Las Vegas v. Exber, Inc., 994 F.2d 674, 676 (9th Cir. 1993)).

Clover argued that it had clearly and consistently refused to participate in arbitration, causing the statute of limitation to begin more than six months prior to the Union's suit. Id. In addition, Clover argued that the Union failed to "exercise reasonable diligence" because regardless of any explicit refusal to arbitrate, Clover's actions should have indicated to the Union that it would not submit to arbitration, thus putting the Union on constructive notice and beginning the statute of limitations period. See id.

The Union argued that its suit was timely under the facts of the case. See id. The Union argued that its motion for summary judgment should be granted under the facts of the case, and that it should be awarded attorneys' fees and costs. Id. at *4.

Analysis and Holdings

The court reviewed the facts of the case and stated that the evidence did not support Clover's argument because an unequivocal, express refusal to arbitrate did not occur until November 2007. Id. at *3. It similarly rejected Clover's other argument, finding that the "reasonable diligence" standard advocated by Clover was unsupported by the law in the Ninth Circuit. Id. The court did not award attorneys' fees or costs to the Union because it found that the evidence was insufficient to show bad faith or oppressive or unlawful conduct on the part of Clover to warrant such an award. Id. at *4. The court granted the Union's motion for summary judgment in the suit to compel arbitration and denied Clover's motion for summary judgment. Id.

The case was decided on February 19, 2009.