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In re Application of Glover Bottled Gas Corp.

decided: June 22, 1983.


Glover Bottled Gas Corp. appeals decision of United States District Court for the Eastern District of New York, denying its application for stay of arbitration and granting Union's cross-application to compel arbitration. Glover claims dispute is not arbitrable.

Feinberg, Chief Judge, Friendly and Winter, Circuit Judges.

Author: Feinberg

FEINBERG, Chief Judge:

Glover Bottled Gas Corp. (the Company) appeals from an order of the United States District Court for the Eastern District of New York, Jack B. Weinstein, Ch. J., denying appellant's application to stay arbitration and granting the application of Local Union No. 282, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (the Union), to compel arbitration. Glover claims that the dispute between the parties is not arbitrable. We conclude that it is, for reasons given below, and we affirm the judgment of the district court.


From the scanty record before us, the following appear to be the pertinent facts: In May 1980, the Company and the Union entered into a collective bargaining agreement covering the drivers at the Company's terminal in Patchogue, Long Island. By its terms, the contract was to continue until July 31, 1982; there was no automatic renewal clause. On July 19, 1982, the police investigated a theft of $1,947.81 in checks, and $439.25 in cash that had occurred on the Company's premises on July 17. The police determined that the theft was an "inside job" and identified five employees as suspects. The five were asked to take lie detector (polygraph) tests; two agreed to do so and three refused. One of the three was the shop steward and another was the assistant shop steward under the labor agreement. The shop steward spoke to representatives of the Union and was advised not to take the tests because it was the Union's policy to bargain about such a request by an employer. The three employees then told Company representatives that they would follow the Union's advice.

On July 27, 1982, representatives of the Company and the Union had their first meeting to negotiate a new labor contract; the current one was due to expire in four days. At that bargaining session, one of the union representatives told the Company that the Union wanted "to bargain about Unit employees being requested to take polygraph tests," but no agreement was reached. The next bargaining meeting was scheduled for August 10, 1982.

On July 28, the Company's general counsel, who had also been at the bargaining session the day before, wrote to the three employees that the Company regarded their refusal to cooperate in the investigation of the theft by the police as "an extreme dereliction of duty, and an attempt to shield the guilty party," and that failure to reconsider their refusal to take a polygraph test by August 4, 1982 would result in their discharge. A copy of one such letter, which was sent by certified mail, is reproduced in the margin.*fn1 On August 4, 1982, the three employees were discharged.

There then followed in fairly short order the Union's notice under New York law of intention to arbitrate, the Company's petition in the New York State Courts for a stay of arbitration, the Union's answer and counter-application to compel arbitration, and removal of the proceedings to the federal court. After the matter was argued before Judge Weinstein, he denied the Company's petition and granted the Union's. This appeal followed.


As we have frequently noted, see, e.g., Conticommodity Services Inc. v. Philipp & Lion, 613 F.2d 1222, 1224 (2d Cir. 1980), a district court's scope of inquiry in considering a petition to compel arbitration under section 4 of the Federal Arbitration Act, 9 U.S.C. ยง 4, is circumscribed. The relevant statutory language provides:

A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement. . . . The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. . . . If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.

This somewhat awkwardly phrased statute appears to pose for a court only the questions of whether there is an "issue" over "the making of [an] agreement for arbitration or the failure to comply therewith." The latter question can usually be answered in the negative with a minimum of effort, since the parties are usually in court because one of them refuses to arbitrate a dispute. But the question whether there is an issue as to the making of an agreement to arbitrate is deceptively simple since it encompasses not only whether there was an agreement to arbitrate, but also whether the dispute falls within the scope of the arbitration clause and whether the agreement to arbitrate has been terminated. Cf. McAllister Brothers, Inc. v. A & S Transportation Co., 621 F.2d 519 (2d Cir. 1980).

Section 12 of the collective bargaining agreement between the parties in this case covered strikes, lockouts, arbitration and grievances. The section provided, in relevant part, that "[no] employee shall be disciplined or discharged without just cause" and that "all disputes between the parties . . . which relate to the interpretation or application of [the] Agreement shall, if not resolved amicably . . ., be referred to arbitration." Thus, there is no doubt that at least until July 31, 1982, there was an agreement to arbitrate disputes between the parties. However, the Company argues that it was not obligated to arbitrate the discharges here because they occurred after the termination of the collective bargaining ...

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