United Steelworkers v. Warrior & Gulf Navigation Co.

1960-06-20

Headline: Disputes over an employer’s outsourcing of work are subject to arbitration; the Court orders the company to arbitrate a union grievance about contracting out that led to layoffs, making arbitration the first stop for such claims.

Holding:

Real World Impact:

Makes it easier for unions to force arbitration of outsourcing disputes that allege contract violations.
Directs courts to compel arbitration unless a contract clearly and specifically excludes a grievance.
Leaves the question whether outsourcing violated the contract for labor arbitrators to decide.

Topics: outsourcing and contracting out, labor arbitration, union grievances, collective bargaining

Summary

Background

A company that moves steel by barge ran a maintenance terminal in Chickasaw, Alabama, where maintenance workers were represented by a union. Between 1956 and 1958 the company laid off many maintenance employees after contracting some repair work to outside firms. The union filed a grievance saying the contracting out was unreasonable and effectively a partial lockout in violation of the agreement’s no-lockout and grievance procedures, but the company refused to arbitrate.

Reasoning

Lower courts held contracting out was a management-only decision and not for arbitration. The Supreme Court reversed. It explained that collective bargaining agreements create a system of industrial self-government and that grievance arbitration is a central part of that system. Unless the contract clearly and specifically excludes a particular dispute, courts should order arbitration and resolve doubts in favor of coverage. Whether contracting out violated the agreement is for the arbitrator to decide, not the courts.

Real world impact

The ruling requires courts to send disputes about outsourcing and similar management actions to arbitrators when the grievance alleges a contract violation, absent a clear exclusion. That makes arbitration the usual route for resolving shop disputes that could otherwise produce strikes. The decision emphasizes arbitration as a tool to preserve industrial peace and to let experienced arbitrators apply the contract and industry practices.

Dissents or concurrances

A strong dissent argued that arbitrators have only the power parties plainly grant and that long-standing trade practice and the contract language showed contracting out had been excluded from arbitration, so the judgment should have been affirmed.