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Service Employees International Union v. Office Center Services Inc.

decided: January 12, 1982.

SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL NO. 36, AFL-CIO
v.
OFFICE CENTER SERVICES, INC., APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Before Adams, Rosenn and Sloviter, Circuit Judges.

Author: Rosenn

Opinion OF THE COURT

The appellant, Office Center Services, Inc. (OCS), appeals from a summary judgment of the United States District Court for the Eastern District of Pennsylvania confirming an arbitration award obtained by default. The primary question presented is whether affirmative defenses which are in the nature of grounds for vacating the award may be raised in a proceeding to confirm the award under section 301 of the Labor-Management Relations Act of 1947 (LMRA), 29 U.S.C. § 185 (1976), notwithstanding the failure to move to vacate the unfavorable award within the limitations period prescribed for actions to vacate. This question in turn requires us to decide whether the applicable statute of limitations should be determined under state law or by the formulation of a uniform federal limitations period. The Supreme Court has not directly addressed this issue and this court has not previously spoken to it. The district court rejected the employer's challenges as untimely and confirmed the award. We affirm.

I.

OCS is a janitorial and landscaping company which performs services at the Valley Forge Executive Mall in Tredyffrin Township, Pennsylvania. It does not own, operate, or manage any buildings. OCS's employees were members of Service Employees International Union, Local No. 36, AFL-CIO (Local 36). A multi-employer association, Building Operators Labor Relations, Inc. (BOLR), negotiated a collective bargaining agreement with Local 36 on or about November 1, 1978. Although it is not clear whether OCS was a member of BOLR on November 1, 1978, OCS acknowledges that it was bound by that collective bargaining agreement.*fn1 In June 1979 the janitorial and landscaping services at six office buildings in the mall were awarded to another company, Supervised Services, Inc. In July OCS notified its employees and their union of this change and that it therefore was terminating the services of the employees. Thereupon, Local 36 filed a grievance against OCS alleging that the separations were impermissible under the collective bargaining agreement. The BOLR scheduled a grievance hearing for August 15, 1979.*fn2 OCS requested a continuance and did not attend the hearing.*fn3 On September 24, 1979, OCS received a letter dated September 18 from BOLR advising that the grievance committee had found in favor of Local 36.*fn4 By letter of September 27, 1979, OCS objected to the hearing because it was held in OCS's absence and requested a legible copy of the award. OCS received no response. The matter lay dormant until Local 36 brought the instant action to confirm the award on August 12, 1980.

Local 36 and OCS cross-moved for summary judgment. OCS raised a number of objections to the conduct of the grievance hearing and to the award.*fn5 As to the fifth and last objection, the district court held that Local 36's failure to attach a copy of the award to the complaint was "excusable neglect in the assembly of pleadings" and that the action was timely since the union filed the complaint within one year of the award. OCS does not appeal that decision. As to the other objections, the district court agreed with Local 36 that they were affirmative defenses that could have served as grounds in an action to vacate the award and were waived because they were not timely raised within three months of the issuance of the arbitration award.

OCS on appeal complains that the district court has fashioned a new rule of law in disallowing the raising of affirmative defenses in a confirmation proceeding. Even if the "new rule" stands, OCS asserts, its retroactive application violates due process.

II.

A.

In UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S. Ct. 1107, 16 L. Ed. 2d 192 (1966), the Supreme Court held that because there is no statute of limitations in section 301 of the LMRA, "the timeliness of a § 301 suit ... is to be determined, as a matter of federal law, by reference to the appropriate state statute of limitations," id. at 704-05, 86 S. Ct. at 1112-13 (footnote omitted), instead of a judicially fashioned uniform rule. In its footnote to the quoted sentence, the Court left open the question of whether another approach might be taken in section 301 suits other than those that resemble damage actions for breaches of contract. This footnote has led federal courts to differ on the approach to be taken to the statute of limitations question in section 301 suits to enforce or vacate arbitration awards. Although a majority of courts have applied the statute of limitations found in state arbitration statutes, see, e.g., Sine v. Local 992, International Brotherhood of Teamsters, 644 F.2d 997 (4th Cir. 1981), cert. denied, 454 U.S. 965, 70 L. Ed. 2d 381, 102 S. Ct. 507 (1981); Chauffeurs, Teamsters, Warehousemen & Helpers, Local 135 v. Jefferson Trucking Co., 628 F.2d 1023 (7th Cir. 1980), cert. denied, 449 U.S. 1125, 101 S. Ct. 942, 67 L. Ed. 2d 111 (1981), at least two courts have held that the limitations period of the Federal Arbitration Act should be used instead of the period of any state arbitration statute in actions to vacate an arbitration award under section 301. Lumber Production & Industrial Workers, Local 3038 v. Champion International Corp., 486 F. Supp. 812 (D.Mont.1980); Communications Workers v. Pacific Telephone and Telegraph Co., 462 F. Supp. 736, 739 (C.D.Cal.1978).*fn6

Support for application of state statutes of limitations as opposed to a uniform federal rule in actions under section 301 to confirm arbitration awards is found in United Parcel Service, Inc. v. Mitchell, recently decided by the Supreme Court of the United States, 451 U.S. 56, 101 S. Ct. 1559, 67 L. Ed. 2d 732 (1981). Mitchell involved an action to vacate an arbitration award under section 301 of the LMRA.*fn7 Though the Supreme Court did not address the appropriateness of using a federal instead of a state statute of limitations, it upheld the district court's application of a state statute of limitations and thus tacitly reaffirms Hoosier Cardinal.*fn8

We believe that in the instant case the district court correctly concluded that the statute of limitations of the Pennsylvania Arbitration Act should be applied. Our conclusion is supported not only by Mitchell's approval of the use of the applicable state statute of limitations, but because Hoosier Cardinal's reasoning supports that result here. In Hoosier Cardinal, the Supreme Court acknowledged that "a uniform limitations provision for § 301 suits might well constitute a desirable statutory addition," 383 U.S. at 702-03, 86 S. Ct. at 1111-12, but concluded that rather than engage in "so bald a form of judicial innovation," id. at 701, 86 S. Ct. at 1110, the Court should follow its practice of applying the relevant state statute of limitations to a federal cause of action where Congress has not specifically provided otherwise. The Court discounted the effect of the resulting lack of uniformity among the states:

The need for uniformity ... is greatest when its absence would threaten the smooth functioning of those consensual processes that federal labor law is chiefly designed to promote-the formation of the collective agreement and the private settlement of disputes under it. For the most part, statutes of limitations come into play only when these processes have already broken down. Lack of uniformity in this area is ...


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