Titan Tire Corp. of Freeport, Inc. v. United Steel, Paper, & Forestry, Rubber, Mfg., Energy, Allied Indus., & Serv. Workers Int'l Union

Titan Tire Corp. of Freeport, Inc. v. United Steel, Paper, & Forestry, Rubber, Mfg., Energy, Allied Indus., & Serv. Workers Int'l Union

Opinion

 [*710]  Manion, Circuit Judge. Titan Tire Corporation of Freeport, Inc. ("Titan"), purchased a tire manufacturing facility in Freeport, Illinois, in late December 2005. In January 2006, Titan entered into a series of labor agreements with Local 745, the union which represented the Titan workers. After taking over the Freeport facility, Titan paid the full union salaries of Local 745's President and Benefit Representative even though they were on leave of absence from Titan and primarily working away from the Titan facility. But in October 2008, Titan informed the union that for two reasons it concluded such payments violated Section 302(a) of the Labor Management Relations Act ("LMRA"), which  [**2] prohibits an employer from paying money to union representatives.² First, Titan concluded the payments  [*711]  were illegal because Local 745 also represented a bargaining unit at the Freeport School District but the President's full-time salary was being paid solely by Titan. And second, it believed the payments illegal because the union representatives were not working full-time from the Titan facility and were not subject to Titan's control.

The union filed a grievance against Titan, arguing that Titan violated the various labor agreements when it stopped paying the President's and Benefit Representative's full-time salaries. It argued that such payments were exempt from the general prohibition of Section 302(a) by Section 302(c), because the President and Benefit Representative were current or former employees of Titan and the payments were "by reason of" their service as employees of Titan.³ An  [**3] arbitrator found that Titan made these payments "by reason of their former employment" at Titan, and thus that the payments were lawful under Section 302(c). The arbitrator ordered Titan to resume paying the President's and Benefit Representative's full-time salaries. Titan filed suit in federal district court to vacate the arbitrator's award and the union counterclaimed for enforcement of the award. The district court granted the union's motion, denied Titan's motion, and enforced the arbitrator's decision. Titan appeals.

This appeal presents an issue of first impression in this circuit, namely whether a company may legally pay the full-time salaries of the President and Benefit Representative of the union representing the company's employees. The Third Circuit, in a divided en banc decision, in Caterpillar, Inc. v. Int'l Union, United Auto. Aerospace & Agric. Implements Workers of Am., 107 F.3d 1052 (3d Cir. 1997),  [**4] held that paying the full-time salaries of the union's grievance chairmen did not violate Section 302 of the LMRA because such payments were "by reason of" the union representatives' former employment at Caterpillar. Conversely, the dissents in Caterpillar concluded that the plain language of Section 302 barred the company from paying the full-time salaries of the union grievance chairmen, reasoning that such payments were not "because of" the grievance chairmen's prior service to Caterpillar, but rather because of their current work for the union. Id. at 1059 (Mansmann, J., dissenting); id. at 1069 (Alito, J., dissenting).⁴

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