IN THE MATTER OF THE ARBITRATION BETWEEN INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 117 LOCAL 313,) OPINION AND AWARD UNION, FACILITY RELOCATION TO and CENTRALIA GRIEVANCE INC., FMCS NO. 190430-06670 EMPLOYER. BEFORE: REPRESENTING THE UNION: REPRESENTING THE EMPLOYER: HEARING HELD: JOSEPH W. DUFFY ARBITRATOR PO BOX 12217 SEATTLE, WA 98102 TRACEY A. THOMPSON MICHAEL DAY TEAMSTERS LOCAL UNION 117 DANIELLE FRANCO-MALONE BARNARD IGLITZIN LAVITT, LLP JONATHAN O. LEVINE ADAM P. TUZZO LITTLER 111 E. KILBOURN AVE., SUITE 1000 MILWAUKEE, WI 53202 AUGUST 6 7, 2019 SEATAC, WA OPINION Introduction International Brotherhood of Teamsters Local 117 and Local 3131 (?Union?) serve as exclusive bargaining representatives for workers employed by United Natural Foods, Inc. (?Employer? or The Union and the Employer (?Parties?) submitted this dispute to arbitration under the terms of their July 15, 2018 ?July 17, 2021 collective bargaining agreement (?Agreement?), copies of which they introduced into the record as a joint exhibit. (J3) In addition, the Parties entered into a pre-arbitration agreement which set certain terms and conditions for the conduct of this arbitration. (J 1; The Parties selected me to arbitrate this dispute from a panel of arbitrators provided by the Federal Mediation and Conciliation Service. This arbitration involves a grievance ?led by the Union related to the Employer?s UNFI Supply Chain, Paci?c Northwest restructuring plans and an alleged violation of Article 1 of the Agreement. (U9) The hearing took place at the Hilton Seattle Airport on August 6 7, 2019. As referenced in the Pre-Arbitration Agreement, the Employer has raised issues of arbitrability. The Parties agreed to proceed with a hearing on both arbitrability and the merits, with the understanding that I will consider the arbitrability issue ?rst when making my decision and then proceed to the merits only if I determine that I have jurisdiction. The Parties also agreed that I should retain jurisdiction following issuance of the award to aid in the implementation of the remedy, if a remedy is awarded. (TR12112-16) The hearing proceeded in an orderly manner. The attorneys did an excellent job of presenting the respective cases. Both Parties had a full opportunity to call witnesses, to submit documents into evidence and to make arguments. Witnesses were sworn under oath and subject to cross-examination by the opposing Party. A court reporter transcribed the hearing and made copies of the transcript available to the Parties and to me. The Parties submitted nine joint exhibits (J 1-J9), eighteen Employer exhibits and thirty-nine Union exhibits (Ul-Ul 1, into the record. A total of ?ve witnesses testi?ed at the hearing. They were: Local 117 Principal Of?cer/Secretary Treasurer John Scearcy, Local 313 Principal Of?cer/Secretary Treasurer Bob In this Opinion, most of the focus is on Local 1 17, but the decision applies to both Local 1 l7 and Local 313. Facility Relocation to Centralia Page 2 of 20 McDonald, retired Director of the Teamsters Warehouse Division and former President of Joint Council 28 as well as other Union of?ces John Williams, retired Local 117 Business Agent Tom Gallwas and Arbitrator and former Allied Employers Attorney Michael Merrill. At the conclusion of the testimony, the Parties elected to submit post hearing briefs to me and to each other on September 6, 2019. (TR29826-8) I received the briefs on September 6, 2019 and then closed the record. Issue for Decision At the hearing, the Parties did not agree on an issue statement, so they left it to me to frame the issue based on their proposals and the record. The Union proposed the following: 1. What contractual obligations does the Employer owe its current bargaining unit employees who are employed at the Tacoma facility and are covered by a collective bargaining agreement that contains movement-of-facility language? 2. Did the Employer breach the Parties? collective bargaining agreement when it unequivocally stated that it would not comply with Section 1.01.2 and when it did not allow Tacoma facility bargaining unit employees to transfer to the Centralia facility without loss of wages, bene?ts and seniority in accordance with Section 1.01.2? 3. If the Employer breached the Agreement, what is the appropriate remedy? The Employer proposed the following: 1. Is the grievance substantively arbitrable? 2. If so, did the Employer violate Section 1.01.2 of the Agreement? I have framed the issue as follows: 1. Is the grievance substantively arbitrable? 2. If so, did the Employer violate Section 1.01.2 of the Agreement? 3. If so, what is the appropriate remedy? Background In June 2017, SuperValu, a wholesale grocery distribution company acquired Uni?ed Grocers, another wholesale grocery distribution company. In October 2018, United Natural Foods, Inc. a national wholesale grocery distribution company, acquired SuperValu Facility Relocation to Centralia Page 3 of 20 through a stock purchase, as a result of which, UNFI acquired all assets and liabilities of SuperValu. After the acquisition, Paci?c Northwest supply chain included distribution centers in Portland, Oregon, and Tacoma, Auburn and Ridgefield, WA. (C6) UNFI recognized the Unions and agreed to comply with the terms of the collective bargaining agreements for the remainder of their terms. (U3) Locals 117 and 313 have had a collective bargaining relationship with SuperValu for more than forty years, either directly with SuperValu or through a multi-employer agreement. SuperValu previously has been through a number of mergers and acquisitions over the years. On February 5, 2019, UNFI announced a plan to consolidate the distribution centers by moving the Tacoma and Portland facilities to a newly constructed facility in Centralia, Washington, which is about 55 miles from Tacoma and about 90 miles from Portland. (U7) The new distribution center will eventually employ approximately 500 hourly warehouse workers by early 2020. Teamster Locals 162, 206, and 305 represent approximately 253 warehouse workers at the Portland facility. (C2) Local 117 represents approximately 263 hourly warehouse workers at the Tacoma facility. This dispute involves Local 117 and Local 313 on behalf of the Tacoma facility employees. In discussions between the Union and the Employer that occurred following the announcement of the move to Centralia, Local 117 argued that under Section 1.01.2 of the Agreement, entitled ?Movement of Existing Facility?, the terms of the Agreement shall apply with respect to the new facility and the employees working at Tacoma shall be entitled to the opportunity to work at the new facility under the same terms and conditions and without any loss of seniority or other contractual rights or bene?ts. The Employer responded that Article 1 of the Agreement, including Section 1.01.2, does not apply to the move to Centralia. (US-U11) The Union ?led a grievance, which went to a Board of Adjustment. When the Parties could not resolve the dispute in the grievance procedure, this arbitration followed. In discussions between the Parties that preceded the arbitration, the Parties entered into an Arbitration Agreement that establishes certain terms and conditions for this arbitration. (J 1) Facility Relocation to Centralia Page 4 of 20 The Arbitration Agreement On June 4, 2019, the Parties entered into the following agreement: This Agreement is made by and between the Parties. For purposes of this Agreement, the Parties are: United Natural Foods, Inc. on behalf of and for the bene?t of its subsidiaries and af?liates (collectively and Teamsters Local 117 and 313 (the ?Union?). On May 25, 2019, pursuant to their collective bargaining agreements a Board of Adjustment hearing was held. The Board heard grievances seeking a declaration that Article 1, Section 1.01.2 of the Local 117 CBA (and Section 1.1.2 of the Local 313 CBA) applies to the Company?s consolidation of Paci?c Northwest supply chain operations in Centralia, WA. The Company denied the grievances on the merits and on various other grounds including without limitation, that the grievances are not arbitrable. The Board, composed of two representatives chosen by the Company and two representatives chosen by the Union, failed to agree on a disposition of the grievance. Pursuant to the CBAs, the Unions have requested to submit the grievances to arbitration. In exchange for the Company?s agreement to this request, the Unions have agreed to complete their responses to the Company?s pending information requests in a timely manner and further agreed that the Company may proceed to arbitration without prejudice to and without waiving any rights, arguments, and defenses it has or may have regarding the merits and/or arbitrability of the grievances. The Parties agree to strike arbitrators by a date no later than June 4, 2019. (J1) Stipulation At the hearing, the Parties entered into the following stipulation: The Parties stipulate that Ryan Blackhurst is a regional vice-president of operations for UNFI. His duties include responsibility for the success of distribution operations in the Pacific region, which includes 17 distribution centers in Washington, Oregon and California. Mr. Blackhurst reports to Mario Adami, senior vice-president of operations for UNFI. Mr. Blackhurst was informed of and assigned operational responsibility for implementing decision to consolidate Portland and Tacoma into Centralia on or about the last week of January 2019, which is the Facility Relocation to Centralia Page 5 of 20 ?rst time he became aware of the decision. Mr. Blackhurst was not involved in the decision making process. The consolidation of Portland and Tacoma into Centralia?into the Centralia distribution center is currently being conducted as a complete consolidation of operations. In Centralia there is a single classi?cation of warehouse worker called, quote, general warehouse, and employees are being trained on multiple functions, including forklift, selection, loading, and receiving. Employees hired in Centralia will have the same managers, regardless of whether they previously worked in Portland or Tacoma. Employees hired in Centralia will have the same supervisors, regardless of whether they previously worked in Portland or Tacoma. Employees hired in Centralia will be performing the same warehouse work, regardless of whether they previously worked in Portland or Tacoma. The Centralia warehouse operations will not be divided in any fashion based on whether a customer or employee came from Tacoma, Portland, or was new to the Centralia operation. The Centralia distribution center will include a produce operation that did not exist in Tacoma. This is the complete stipulation of the Parties. The Agreement ARTICLE 1 RECOGNITION AND BARGAINING UNIT 1.01 Union Recognition: SuperValu, Inc. and Teamsters Local Union No. 117, af?liated with the International Brotherhood of Teamsters, as the sole and exclusive collective bargaining agency for all employees of the Employer in the classi?cations of work covered by this Agreement within the jurisdiction of the Union. In the event the Employer establishes a wholesale grocery operation within the jurisdiction of the Union where presently only a cash and carry operation is covered, the Employer agrees to recognize the Union and the parties shall negotiate a separate Labor Agreement. 1.01.1 Authorization Card Recognition: The Employer signatory to this Agreement, hereby agrees that in the event a new wholesale grocery operation is established within the territorial jurisdiction of any local union signatory to this Agreement, and if any of the local unions present signed authorization cards from a majority of the employees in an appropriate bargaining unit, the affected employer will thereupon recognize the petitioning local union as the collective bargaining representative of such employees and will meet with the local union to engage in collective bargaining regarding terms and conditions of employment for a separate labor agreement. Any dispute concerning the interpretation or enforcement of this provision will be resolved exclusively by referring it to the arbitration procedure of this Agreement. Facility Relocation to Centralia Page 6 of 20 1.01.2 Movement of Existing Facility: In the event that the Employer moves an existing facility to any location within the jurisdiction of Joint Council of Teamsters No. 28, as currently de?ned excluding current facilities under the jurisdiction of and the service area of Teamsters Local Union No. 690, the terms of this contract shall continue to apply with respect to the new facility. In addition, all employees working under the terms of this Agreement at the old facility shall be afforded the opportunity to work at the new facility under the same terms and conditions and without any loss of seniority or other contractual rights or bene?ts. The designated Union will be required to show a majority representation in accordance with controlling law. In addition, the parties agree to enter into effects bargaining in accordance with controlling law regarding the impact on employees of the movement of an existing facility. 1.02 Employer Recognition: Teamsters Local Union No. 117, af?liated with the International Brotherhood of Teamsters, for and on behalf of its members, hereby recognize, during the term of this Agreement, SuperValu, Inc. (J 3, p. 1) ARTICLE 16 - TRANSFER OF RIGHTS In the event that an Employer absorbs, purchases, or merges with another Company signatory to this Agreement within the jurisdictional area of the Union, all wages and vacation privileges shall continue and all other bene?ts under this Agreement will prevail. Further, if the Employer absorbs, purchases, or merges with a company in the Wholesale Grocery Industry within the jurisdictional area of the Union, it shall be considered a new operation and the provisions of Section 1.01 shall apply. (J3, p.17) ARTICLE 23 SETTLEMENT OF DISPUTES 23.01 Exclusive Procedure: The right to process and settle grievances is wholly, to the exclusion of any other means available, dependent upon the provisions of this Article. The Union and the Employer agree to act and fairly in all grievances. 23.05 Limited Powers: A Board or Arbitrator shall have no power to add to or subtract from or to disregard, modify or otherwise alter any terms of this or any other agreement(s) between the Union and Employer or to negotiate new agreements. Board and/or Arbitrators powers are limited to interpretations of and a decision concerning appropriate application of the terms of this Agreement or other existing pertinent agreement(s), if any. 23.13 Arbitrator?s Decision: The arbitrator shall render his/her ?nal typewritten decision which shall be dated and which shall include orderly and concise Facility Relocation to Centralia Page 7 of 20 Findings of Fact within thirty (30) days of the close of the hearing or if either or both parties submit post hearing brief(s), within thirty (30) days after receiving the post hearing brief(s), provided further that such brief(s) are to be submitted within thirty (30) days of the close of the hearing or sooner if mutually agreed. Failure to do so shall mean forfeiture of the arbitration fee. Copies of the ?nal decision shall, in duplicate, be furnished to the Union and the Employer. (J3, 13-19) The Grievance The grievance that the Union ?led, dated March 26, 2019, describes the dispute as follows: On March 18, 2019 the Union and the Employer met to discuss the UNF I Supply Chain, Paci?c Northwest restructuring plans. Speci?cally, the Employer has initiated its plan to move multiple existing operations and facilities, including SuperValu Tacoma, into a newly constructed facility in Centralia, WA. At this meeting the Employer con?rmed that the work historically performed by members of the Teamsters Local Union No. 117 at the Tacoma facility(s) and the Tacoma facility(s) itself will be moved and added that the of?cial position of the Employer was that Article 1 of the parties? Collective Bargaining Agreement covering the employees and work at the SuperValu Tacoma facility(s) was not applicable and would not be honored. The Union protests the Employer?s decision to violate the parties? Collective Bargaining Agreement including, but not limited to, Article 1 of that (U9 and see U11) Discussion The Employer contends that this dispute is not arbitrable. Ordinarily, when a party raises an arbitrability issue, I address the arbitrability issue separately and then, if appropriate, proceed to the merits. 1:9) In this case, the arbitrability issue and the merits are so intertwined that I have to discuss the issues together in order to provide a clear explanation for my ?nal ruling. The Parties provided excellent briefs that laid out their positions clearly and in depth. In the most basic terms, this dispute is either about contractual rights, as the Union contends, or is a dispute about union representation, as the Employer contends. The Employer further contends that as a union representation issue, this matter falls within the exclusive jurisdiction of the NLRB, which means the dispute is not arbitrable. Facility Relocation to Centralia Page 8 of 20 Positions of the Parties2 The following brie?y summarizes the positions of the Parties. The Union?s Position The Union contends that arbitrators have the power to enforce vested contractual rights that arose while the contract was in effect even after the expiration of the contract or the cessation of work performed at the facility where the collective bargaining agreement applied. In the present case, the existing facility will close and the new facility will be operational during the term of the Agreement (July 15, 2018 ?July 17, 2021). The Union contends that the Tacoma employees were promised certain bene?ts in the Agreement. Speci?cally, they were promised a job at the new facility under the same terms and conditions of employment that they had in Tacoma. The Union argues that the facts of this case present a dispute that is primarily contractual and not primarily representational. The Union contends that in this proceeding it only intends to enforce the rights granted to the employees under Section 1.01.2 to work at the new facility under the same terms and conditions as they had in Tacoma. The Union contends that it has never demanded recognition as the exclusive representative of employees in Centralia. Therefore, in this arbitration, under the Union?s view of the facts, I am not being asked to decide a representational issue. The Union argues that the present case differs from the Safeway case relied on by the Employer, because in that case the union asserted representational rights at the newly merged facility. The Union asserts that here it attempts only to enforce the rights that the Tacoma employees had already secured in the Agreement, not to obtain recognition. The Union contends that the Employer?s contention that the employees at the Tacoma facility must constitute a majority in Centralia before the ?rst two sentences of Section 1.01.2 apply does not make sense. The employees from the Tacoma facility must ?rst be working in Centralia before they could demonstrate majority status. Therefore, in the Agreement, the Parties placed the majority status provision in the third sentence after the ?rst two sentences that give the employees the opportunity to work at the new facility 2 The arguments made by the Parties have been considered in reaching the decision in this case even if not discussed herein. Facility Relocation to Centralia Page 9 of 20