Pacific Coast District v. Liberty Maritime Corp.

          MEMORANDUM OPINION

          AMY BERMAN JACKSON UNITED STATES DISTRICT JUDGE

         This case involves a dispute between a labor union and a shipping company over whether a particular ship, the Liberty Peace, is covered by the parties' existing collective bargaining agreement. The question before the Court is whether the threshold issue of whether the ship is covered by the contract needs to be determined under the arbitration provision in the contract, or whether the coverage dispute must be decided first by the courts.

         On October 19, 2017, plaintiff District No. 1, Pacific Coast District, Marine Engineers' Beneficial Association AFL-CIO (“MEBA” or the “union”) brought this action against defendant Liberty Maritime Corporation (“Liberty”) pursuant to Section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185. Compl. [Dkt. # 1] ¶ 1. The union alleges that Liberty refused to arbitrate the coverage dispute in accordance with the collective bargaining agreement, and it seeks an order compelling arbitration. Id. ¶¶ 25-30. After Liberty answered the complaint, see Ans. [Dkt. # 6], plaintiff moved for judgment on the pleadings. Pl.'s Mot. for J. on the Pleadings [Dkt. # 10] (“Pl.'s Mot.”); Pl.'s Mem. in Supp. of Pl.'s Mot. [Dkt. # 10-1] (“Pl.'s Mem.”).

         Because the collective bargaining agreement contains a broad arbitration provision that was intended to resolve exactly the sort of contract interpretation dispute present here, the Court will grant plaintiff's motion and refer the matter to arbitration.

         BACKGROUND

         Plaintiff MEBA is a labor union that represents employees in the U.S. maritime industry who are located at ports throughout the United States and on oceangoing vessels. Compl. ¶ 2; Ans. ¶ 2. Liberty is a shipping company that operates various seagoing vessels, and many of its employees are represented by MEBA. Compl. ¶ 3; Ans. ¶ 3.

         Over the past thirty years, the parties have been engaged in a collective bargaining relationship with respect to employees working on certain vessels managed by Liberty. Compl. ¶ 6; Ans. ¶ 6. In 1988, MEBA and Liberty became signatories to two collective bargaining agreements, the 1986-1990 Tanker Vessels Master Agreement, and the 1986-1990 Dry Cargo Vessels Master Agreement. Compl. ¶ 8; Ans. ¶ 8; Ex. A to Compl. [Dkt. # 1-1] (“Tanker Master Agreement”); Ex. B to Compl. [Dkt. # 1-2] (“Dry Cargo Master Agreement”). These agreements cover “all licensed marine engineers employed” on either “U.S. flag ocean-going tanker vessels, ” or “US flag ocean-going, dry cargo and passenger vessels” owned or operated by Liberty. Tanker Master Agreement § 36(a); Dry Cargo Master Agreement § 41.

         On January 23, 2012, the parties signed a Memorandum of Understanding (“2012 MOU”). Compl. ¶ 11; Ans. ¶ 11; Ex. C to Compl. [Dkt. # 1-3] (“MOU”).^[1] That agreement governs three vessels, the Prestige New York, “operating under a Maritime Security Program (MSP) Agreement with the United States Government, ” and two other vessels, the Liberty Pride and Liberty Promise, “both eligible for MSP Agreements but currently operating without the benefit of any.” MOU at 1. The MSP is a federal program that provides payment to certain vessel operators in order to assure the government that it will have access to vessels and crew in times of war or national emergency. Compl. ¶ 13; Ans. ¶ 13.

         The 2012 MOU acknowledges and incorporates the parties' previous agreements, see MOU at 1 (“Whereas, the Company and MEBA are party to a Memorandum of Understanding dated September 23, 2005, as amended; various Side Letters, dated June 8, 2005, October 28, 2005, and July 14, 2010, respectively; and Letters of Understanding, dated July 7, 2009, and February 21, 2010, respectively; and arbitration awards, if any.”), and it states that “[e]xcept as expressly modified by this MOU, all other terms and conditions of employment of the [collective bargaining agreements], side letters, and letters of understanding are unchanged and shall remain in full force and effect.” Id. § 3(a). Accordingly, the grievance and arbitration procedures contained in the Tanker and Dry Cargo Master Agreements remain binding. See Compl. ¶ 9; Ans. ¶ 9. Both agreements require that “[a]ll disputes relating to the interpretation or performance of th[e] Agreement shall be determined” by an arbitration board consisting of two MEBA representatives and two Liberty representatives. Tanker Master Agreement § 2(a)-(b); Dry Cargo Master Agreement § 2(a)-(b). If the arbitration board cannot resolve the grievance by mutual agreement or majority vote, an agreed-upon arbitrator is authorized to render a final, binding decision. Tanker Master Agreement § 2(b); Dry Cargo Master Agreement § 2(b).

         On July 24, 2017, Liberty notified MEBA by letter that it was going to charter a foreign car/truck carrier vessel and operate it under a U.S. flag. Compl. ¶ 12; Ans. ¶ 12; Ex. D to Compl. [Dkt. # 1-4] (“Ex. D”) at 1. It claimed that this vessel would not fall under the parties' collective bargaining agreement, as modified by their MOUs, because the ship was not going to be enrolled in the MSP program “for the foreseeable future.” Compl. ¶ 13; Ans. ¶ 13; Ex. D at 1. Liberty offered to amend the terms of the 2012 MOU to cover the new vessel so long as certain non-negotiable conditions were met. Compl. ¶ 14; Ans. ¶ 14; Ex. D at 3. It also stated that if the union agreed to the amendment but wished “to reserve its right to assert that the terms of the 2012 MOU apply to the vessel to be reflagged, ” Liberty would “agree to arbitrate” that issue subject to certain conditions as well. Comp. ¶ 14; Ans. ¶ 14; Ex. D at 3.

         The union disagreed with Liberty's position and insisted that the new vessel was covered by the parties' agreements. Compl. ¶ 15; Ans. ¶ 15; Ex. E to Compl. [Dkt. # 1-5]. One week later, the parties met to discuss the matter, but they failed to reach a resolution. See Compl. ¶¶ 17-18; Ans. ¶¶ 17-18.

         Liberty, as the agent of a third party, now manages a vessel named the M/V Liberty Peace (“Liberty Peace”). See Compl. ¶ 18; Ans. ¶ 18. The third party entered into labor agreements with American Maritime Officers and Seafarer's International Union rather than with MEBA. Compl. ¶¶ 17-18; Ans. ¶¶ 17-18.

         On August 31, 2017, MEBA submitted a grievance to Liberty claiming that Liberty violated the collective bargaining agreement. Compl. ¶ 19; Ans. ¶ 19; Ex. G to Compl. [Dkt. # 1-7] (“Ex. G”). The letter also included a demand for arbitration to resolve the contractual dispute. Compl. ¶ 19; Ans. ¶ 19; Ex. G. While the parties have been engaged in the exchange of information and documents, Liberty has not processed the grievance and the parties have not engaged in arbitration. Compl. ¶¶ 20-23; Ans. ¶¶ 20-23; see Ex. H to Compl. [Dkt. # 1-8].

         On October 19, 2017, MEBA filed suit in this Court to compel arbitration, Compl., and it has moved for judgment on the pleadings. See Pl.'s Mot. The union argues that it is entitled to an order compelling arbitration as a matter of law based on the terms of the collective bargaining agreement between the parties. Pl.'s Mot. at 1; Pl.'s Mem. at 1, 9-10. Defendant opposed the motion, arguing that no obligation to arbitrate has arisen because “no collective bargaining agreement or other contract between the ...