The parties to theseconsolidated appeals, an employer and a union,have a collective bargaining agreement thatprovides for arbitration of disputes arisingunder it. The employer changed certain of itsstaffing practices in an effort to avoid payingovertime wages. The change precipitated a slew ofgrievances by the union, of which seven resultedin arbitration proceedings (all before differentarbitrators) that are relevant to the appeal. Theissue in all the arbitrations was the same:whether the change in staffing practices violatedthe collective bargaining agreement. The employerwon all but the fourth of the arbitrations. Thefourth differs from the other six in notinvolving claims for compensation for individualworkers adversely affected by the challengedstaffing practice. The award in the fourth is ageneral declaration that the staffing practiceviolates the collective bargaining agreement. Theother six sought compensation for individualworkers. The union sought enforcement of theaward in its favor in a federal district courtunder the Taft-Hartley Act, which in section 301(29 U.S.C. sec. 185) makes collective bargainingagreements enforceable. The court enforced theaward, and the employer did not appeal. The company had won the first three arbitrationsafter the hearing before the fourth arbitratorbut before he rendered his award in favor of theunion. But neither party told the fourtharbitrator about the outcome of thosearbitrations. In the case under review–thesecond round in the district court, the firsthaving ended with the court’s confirmation of thefourth award, the one in favor of the union–thedistrict court confirmed the six arbitrationawards that the company had won, all of whichwere rendered before the district court confirmedthe fourth award. The union appeals. The upshot of the two district court decisions,one enforcing the award in favor of the union andthe other enforcing the awards in favor of thecompany, is not a happy one, since the decisionsare inconsistent, with six of them rejecting thepremise of the seventh (that is, of number 4).Yet it is not quite the recipe for anarchy thatit may appear to be. The first district courtdecision, in confirming the fourth arbitrator’saward, did not order the employer to rescind thechange in its staffing practices (courts arereluctant to issue labor injunctions, though theywill enforce an arbitrator’s injunction, e.g.,Local 1545 v. Inland Steel Coal Co., 876 F.2d1288, 1292-96 (7th Cir. 1989); United Electrical,Radio & Machine Workers v. Honeywell Inc., 522F.2d 1221, 1225-28 (7th Cir. 1975); Derwin v.General Dynamics Corp., 719 F.2d 484, 491 (1stCir. 1983), which however the fourth arbitrator’saward was not), while the second decision,confirming a bunch of awards in favor of theemployer, authorizes the employer to continue inits changed course with respect to the workersinvolved in those arbitrations but does notrescind the order of the fourth arbitrator, whichwould be flatly contrary to the district court’sfirst decision. (Hence the district court wascorrect to reject the union’s argument that bycontinuing to arbitrate the issue resolved in theunion’s favor by the fourth arbitrator, thecompany was in contempt of the district court’sorder confirming the fourth arbitrator’s award.)Any subsequent disputes are likely to be resolvedin the company’s favor as well, as we shall see;and the company points out that in any event,since judicial review of an arbitration award isso limited as to be little better than a rubberstamp, arbitral awards based on diametricallyopposed interpretations of the identical contractcan all withstand judicial review. E.g., AmericanNat’l Can Co. v. United Steelworkers of America,120 F.3d 886, 891-93 (8th Cir. 1997); ConnecticutLight & Power Co. v. Local 420, 718 F.2d 14, 20-21 (2d Cir. 1983); Westinghouse Elevators ofPuerto Rico, Inc. v. S.I.U. de Puerto Rico, 583F.2d 1184 (1st Cir. 1978). This is provided thatthe inconsistent interpretations do not result inthe kind of impasse that would be presented ifthe employer were simultaneously enjoined by acourt from continuing, and authorized by thecourt to continue, the identical practice. But,as we have seen, that is not a problem here. Yet when multiple suits as closely related asare these seven arbitrations are filed in court,they invariably are consolidated. However, theconsolidation of arbitrations, as distinct fromthe consolidation of court suits, is a creatureof contract, Connecticut Gen’l Life Ins. Co. v.Sun Life Assurance Co., No. 99-4085, 2000 WL490692, *2 (7th Cir. April 27, 2000), and thecollective bargaining agreement in this casepermits consolidation of grievances (the filingof a grievance being the first stage in thedispute resolution process that includes, as itsfinal stage before judicial review, theproceeding before the arbitrator) only if bothunion and employer agree to consolidate them, andthey did not do so here. Nevertheless, when,before the fourth arbitrator ruled, the firstthree arbitrations came out in favor of theemployer, one might have expected the employer toso advise the fourth arbitrator, and this itfailed to do. It argues that it could not do sobecause the collective bargaining agreementforbids reopening the record after the hearingbefore the arbitrator. The argument is unsound.The decisions of the other three arbitrators werenot evidence–the sort of thing a prohibitionagainst reopening the record would cover. Theywere the arbitral equivalents of judicialdecisions, of which, of course, a court can takejudicial notice; and in just the same way anarbitrator can take “arbitral notice” of aprevious decision by another arbitrator dealingwith the same or a related issue–especiallysince, as we are about to see, the collectivebargaining agreement requires arbitrators to giveprior arbitral decisions preclusive effect, whichthey cannot do if no one informs them of thosedecisions. That effect, like most features of arbitration,is indeed a matter of contract rather than amatter of law. E.g., Pierce v. CommonwealthEdison Co., 112 F.3d 893, 895-96 (7th Cir. 1997);Brotherhood of Maintenance of Way Employees v.Burlington Northern R.R., 24 F.3d 937, 940 (7thCir. 1994); American Nat’l Can Co. v. UnitedSteelworkers of America, supra, 120 F.3d at 891-92; Hotel Ass’n of Washington, D.C., Inc. v.Hotel & Restaurant Employees Union, 963 F.2d 388(D.C. Cir. 1992); District 37 v. LockheedEngineering & Mgmt. Services Co., 897 F.2d 768,773 (5th Cir. 1990); G. Richard Shell, “ResJudicata and Collateral Estoppel Effects ofCommercial Arbitration,” 35 UCLA L. Rev. 623,660-63 (1988). If the parties to the collectivebargaining agreement want the first arbitrator’sinterpretation of a provision of the agreement orresolution of a dispute arising under theagreement to have preclusive effect, they can soprovide; and whether they do so or not, thequestion of the preclusive force of the firstarbitration is, like any other defense, itself anissue for a subsequent arbitrator to decide.E.g., Independent Lift Truck Builders Union v.NACCO Materials Handling Group, Inc., 202 F.3d965, 968 (7th Cir. 2000); Brotherhood ofMaintenance of Way Employees v. BurlingtonNorthern R.R., supra, 24 F.3d at 940; ChironCorp. v. Ortho Diagnostic Systems, Inc., 207 F.3d1126, 1132-33 (9th Cir. 2000); John HancockMutual Life Ins. Co. v. Olick, 151 F.3d 132, 139-40 (3d Cir. 1998); National Union Fire Ins. Co.v. Belco Petroleum Corp., 88 F.3d 129, 135-36 (2dCir. 1996). Most arbitrators, applying thearbitral equivalent of common law, would indeedgive preclusive effect to the first arbitration,even in the absence of contractual guidance,provided that the usual conditions of resjudicata were fulfilled. See Fairweather’sPractice & Procedure in Labor Arbitration 525-33(4th ed., Ray J. Schoonhoven ed. 1999); TimothyJ. Heinsz, “Grieve It Again: Of Stare Decisis,Res Judicata and Collateral Estoppel in LaborArbitration,” 38 B.C. L. Rev. 275, 286-93 (1997);Shell, supra, 35 UCLA L. Rev. at 663-64. Anyway,here the contract did make clear that resjudicata is a defense in a subsequentarbitration. See Heinsz, supra, 38 B.C. L. Rev.at 286-87, describing the contract. So by failingto argue preclusion to the fourth arbitrator, theemployer forfeited a good defense that would haveheaded off the confusion that ensued. It might seem that once the fourth arbitrator’sdecision came down, res judicata clicked in andentitled the union to block any subsequentinconsistent arbitration awards unless and untilthat decision was vacated by a reviewing court.Not so. It was up to the subsequent arbitrators,5 through 7, to decide what significance toattach to the employer’s having booted its resjudicata defense before the fourth arbitrator;and they decided to give it no weight. Theyforgave the employer’s waiver, and like otherprocedural questions in arbitration not regulatedby law their determination as to whether toforgive the waiver cannot be second-guessed by acourt. Connecticut Gen’l Life Ins. Co. v. SunLife Assurance Co., supra, at *2; Baravati v.Josephthal, Lyon & Ross, Inc., 28 F.3d 704, 709(7th Cir. 1994); UHC Management Co. v. ComputerSciences Corp., 148 F.3d 992, 997 (8th Cir.1998). They did it, oddly, out of a commitment tores judicata so profound as not to brook aforfeiture: they held that they were bound by thedecisions made by the first three arbitrators. It doesn’t follow that it was right for thedistrict court in the second go round to enforcethe other arbitration awards (that is, 1 through3 and 5 through 7). We must consider the possibleres judicata effect of the first district courtdecision, a distinct issue from the res judicataeffect of the arbitral awards. The union arguesthat the district court’s judgment in the firstround, when the issue before the court waswhether to enforce the fourth arbitrator’s award,which was in favor of the union, was resjudicata. The other six awards, the ones in favorof the employer, all were rendered before thedistrict court confirmed the fourth award. Theemployer’s claim for judicial confirmation ofthose awards was, the union argues, a compulsorycounterclaim to the union’s claim for enforcementof the fourth arbitrator’s award, because bothclaims arose out of the same transaction oroccurrence, Fed. R. Civ. P. 13(a), and failure toplead a compulsory counterclaim bars as a matterof res judicata its being presented in asubsequent suit. Baker v. Gold Seal Liquors,Inc., 417 U.S. 467, 469 n. 1 (1974); PublicisCommunication v. True North Communications Inc.,132 F.3d 363, 365 (7th Cir. 1997); Olympia HotelsCorp. v. Johnson Wax Development Corp., 908 F.2d1363, 1367 (7th Cir. 1990); Driver Music Co. v.Commercial Union Ins. Cos., 94 F.3d 1428, 1435(10th Cir. 1996); 6 Charles Alan Wright, ArthurR. Miller & Mary Kay Kane, Federal Practice &Procedure sec. 1417, p. 129 (2d ed. 1990). But while the seven arbitrations all arose outof the same transaction or occurrence, namely thestaffing dispute, the two district courtproceedings did not. They arose out of thearbitrations, which we deem to have been separatetransactions or occurrences. We make thisclassification not under the compulsion of thewords of Rule 13(a), but because of the need torespect the right of the arbitrators to resolvedisputes within the scope of the authoritygranted them by the collective bargainingagreement. The arbitrators who administer thisagreement have, we noted, a fierce commitment tores judicata. Paradoxically, it would benullified were we to display an equal zeal forthe principle of res judicata embedded in Rule13(a)–if, that is to say, we agreed with theunion that the district court was precluded fromconfirming the arbitral awards that were based onthe arbitrators’ commitment to arbitral resjudicata. And, precisely because of theircommitment, we needn’t worry overmuch that thedistrict court will be asked to confirminconsistent awards from now until every singleworker at Consolidation Coal Company’s plant hasgone through arbitration. Given the rule of resjudicata applied by the arbitrators under thiscollective bargaining agreement, it is reasonablycertain that all subsequent arbitrations will bedecided in favor of the company and will beconfirmed by the district court if the unionrefuses to bow to them. The essential point,however, is that the res judicata effect of ajudicial decision merely confirming an arbitralaward is extremely limited. All it amounts to isa determination that there is no basis forupending that award; the effect on subsequentawards must be left to the arbitrators who makethem. The union has no colorable defense to theconfirmation of the awards in favor of thecompany other than res judicata, and so thedistrict court’s judgment is Affirmed.
Consolidation Coal Co. v. United Mine Workers of America, District 12, Local Union 1545 United States Court of Appeals For the Seventh Circuit Nos. 99-1640 and 99-1641 Consolidation Coal Company, Plaintiff-Appellee, Defendant-Appellee, v. United Mine Workers of America, District 12, Local Union 1545, Defendant-Appellant, Plaintiff-Appellant. Appeals From: United States District Court for the Southern District of Illinois Argued: January 13, 2000 Decided: May 17, 2000 Before: Posner, Chief Judge, and Bauer and Rovner,Circuit Judges.
