Local 36 Sheet Metal Workers’ International Association, AFL-CIO v. Michael Whitney, doing business as Whitney Industrial

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 11-1781
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Local 36 Sheet Metal Workers’
International Association,
AFL-CIO,
Appellee,
v.
Michael Whitney, doing business
as Whitney Industrial,
Appellant.
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Appeal from the United States
District Court for the
Western District of Missouri.
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Submitted: November 16, 2011
Filed: March 6, 2012
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Before SMITH, COLLOTON, and GRUENDER, Circuit Judges.
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GRUENDER, Circuit Judge.
Local 36 Sheet Metal Workers’ International Association, AFL-CIO (“Local
36”) obtained an arbitration award against Michael Whitney (“Whitney”) d/b/a
Whitney Industrial, a non-signatory to any collective bargaining agreement, under an
alter-ego theory. Whitney appeals the district court’s order enforcing the arbitration
award, and we vacate and remand for further proceedings.

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Whitney Mechanical Contractors, Inc. (“Whitney Mechanical”) was a family-
owned general contracting business based in Nixa, Missouri. Whitney’s parents were
the majority owners, while Whitney and his wife owned three percent of the
corporation. Whitney Mechanical was a signatory to a standard form collective
bargaining agreement (“the CBA”) between the Southwest Missouri Area Contractors
Association and Local 36.
After the death of Whitney’s father in 2006, Whitney’s mother decided to close
Whitney Mechanical. Following her decision, Whitney Mechanical finished its
existing projects but did not bid on any new projects. Whitney and his wife
surrendered their three percent ownership back to the corporation in 2007. As the
business wound down, it failed to pay into certain union benefit funds as required by
the CBA, causing Local 36 to pull workers from Whitney Mechanical’s projects.
Meanwhile, in May 2008, Whitney registered to do business under the fictitious
business name “Whitney Industrial.” Under that name, Whitney conducted a new
general contracting business using non-union labor.
The CBA included an arbitration clause requiring Local 36 and Whitney
Mechanical to submit unresolved grievances to the Local Joint Adjustment Board
(“JAB”) for binding resolution. On July 14, 2008, Local 36 filed a grievance against
Whitney Mechanical and Whitney Industrial, claiming that Whitney Industrial was
acting as an alter ego of Whitney Mechanical and that both had violated various
provisions of the CBA. Local 36 sent all correspondence regarding the grievance to
Whitney Mechanical’s Nixa address, rather than the Springfield, Missouri address
identified by the Whitney Industrial fictitious name registration. Nevertheless,1
On July 24, 2008, Whitney formally registered Whitney Industrial Contractors,1
LLC as a limited liability company, but Local 36 did not amend the grievance or
direct any correspondence to the address of Whitney Industrial Contractors, LLC.
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Whitney acknowledges he also maintained an office at the Nixa address and received
all correspondence regarding the grievance and arbitration.
Local 36 informed Whitney in an August 14, 2008 letter that Local 36 would
demand a hearing before the JAB. A JAB representative subsequently informed
Whitney by letter about a pending JAB hearing. Whitney never responded. The
hearing occurred on February 18, 2009, with no appearance by Whitney Mechanical
or Whitney Industrial. The JAB unanimously found that Whitney Industrial was an
alter ego of Whitney Mechanical, that both entities were bound by the CBA, and that
both entities had violated the CBA. It entered an award against Whitney Industrial
and Whitney Mechanical ordering them to (i) comply with the CBA, (ii) pay union
wages and benefits for all employees for the period beginning June 24, 2008, and (iii)
submit to an audit to determine the amounts owed in item (ii). Whitney
acknowledges receiving a copy of the award and taking no action in response.
Local 36 sued in federal district court to enforce the arbitration award against
Whitney d/b/a Whitney Industrial, Whitney Mechanical, and Whitney Industrial
Contractors, LLC. Whitney asserted that the award was unenforceable as to any
business done under the fictitious name Whitney Industrial because he was not a party
to the CBA, leaving the arbitrators with no jurisdiction over him. However, the
district court found that Whitney’s failure to challenge arbitral jurisdiction in a timely
fashion, either at the JAB or in a court action, resulted in a waiver of all such
jurisdictional challenges. Accordingly, the district court granted summary judgment
enforcing the award against Whitney d/b/a Whitney Industrial. We review a2
summary judgment order based on an arbitration-jurisdictional determination de novo.
Int’l Bhd. of Elec. Workers v. Smart Cabling Solutions, Inc., 476 F.3d 527, 529 (8th
Whitney Mechanical did not appear, and the district court entered a default2
judgment against it. In addition, the district court declined to enforce the award
against Whitney Industrial Contractors, LLC, finding that the award could not be
construed as applying to that entity. Neither of these holdings were appealed.
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Cir. 2007). “Summary judgment is proper when no genuine issues of material fact
exist and the moving party is entitled to judgment as a matter of law.” Id. (quoting
Nat’l Am. Ins. Co. v. W & G, Inc., 439 F.3d 943, 945 (8th Cir. 2006)).
On appeal, Whitney again presents his argument that the JAB had no authority
over Whitney Industrial. There are two types of challenges to arbitral jurisdiction:
procedural and substantive. See Int’l Bhd. of Elec. Workers, Local Union No. 545 v.
Hope Elec. Corp., 380 F.3d 1084, 1098 (8th Cir. 2004). “Jurisdictional challenges
of a procedural nature relate to whether the party who seeks arbitration, and the
arbitrators themselves, abided by the procedural safeguards set forth in the collective
bargaining agreement and in the rules of the arbitral body.” Id. Such challenges “are
generally appropriate for submission to the arbitrators themselves,” id., but this is not
the type of challenge at issue here.
In contrast, jurisdictional challenges of a substantive nature “are generally for
the courts to resolve.” Id. The question of whether Whitney’s new company, a non-
signatory to the CBA, is nevertheless subject to the CBA as the alter ego of a
signatory company fits squarely within the realm of substantive jurisdictional
challenges. See id. (noting that substantive jurisdictional challenges relate to, inter
alia, “whether the parties are subject to a valid contract that calls for arbitration”).
As the Supreme Court has made clear, “[u]nless the parties clearly and unmistakably
provide otherwise, the question of whether the parties agreed to arbitrate is to be
decided by the court, not the arbitrator.” AT&T Techs., Inc. v. Commc’ns Workers
of Am., 475 U.S. 643, 649 (1986) (emphasis added). Whitney contends that the
district court denied him this opportunity.
In response, Local 36 argues, and the district court agreed, that our precedent
does not allow a party who disputes an arbitrator’s substantive jurisdiction to sit back
and wait for a court action to enforce the award, but instead requires that party to act
affirmatively in one of the following four ways: (i) object to the arbitrator’s authority
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but proceed to the merits before the arbitrator, while expressly reserving the
jurisdictional question for the courts; (ii) seek preemptive declaratory or injunctive
relief in court before the arbitration commences; (iii) notify the arbitrator of the
refusal to arbitrate, thereby forcing the other party to file a motion in court to compel
arbitration; or (iv) timely file a motion to vacate the arbitrator’s award following
arbitration. See Local Union No. 36, Sheet Metal Workers’ Int’l Ass’n, AFL-CIO v.
Atlas Air Conditioning Co., 926 F.2d 770, 771-72 (8th Cir. 1991). It is undisputed
that Whitney did not take any of these four actions.3
Although we indeed have held that signatories to an arbitration agreement are
required to follow one of these four affirmative methods to preserve their substantive
jurisdictional challenges, we have never had occasion to determine if this precedent
should apply to non-signatories such as Whitney. The Second Circuit faced4
Regarding option (iv), a timely motion to vacate the arbitration award,3
timeliness is evaluated with respect to the statute of limitations from the state law
most analogous to the dispute. See Sheet Metal Workers Int’l Ass’n, Local Union
No. 36 v. Systemaire, Inc., 241 F.3d 972, 975 (8th Cir. 2001). In Missouri, that law
is the Missouri Uniform Arbitration Act, which mandates that a motion to vacate an
arbitration award be filed within ninety days after delivery of a copy of the award to
the moving party. Mo. Rev. Stat. § 435.405(2), cited by Systemaire, 241 F.3d 972,
975. There is no dispute that Whitney did not act within this ninety-day window.
Local 36 contends, and the district court agreed, that we did apply this4
precedent to a non-signatory in Atlas Air Conditioning. See 926 F.2d at 771 (“Atlas
and Local 36, then, are not signatories to the same collective bargaining agreement.”).
This is a misreading of Atlas Air Conditioning. In that case, the employer, Atlas, was
a signatory to a standard collective bargaining agreement with a different local of the
same union. Id. That agreement required Atlas, when working outside its home
territory, to honor “the Local Agreement covering the territory in which such work
is performed or supervised.” Id. at 772. The agreement expressly contemplated that
Atlas would be subject to arbitration with the local in the territory it was visiting
because it included “special protection afforded Atlas . . . intended to remedy any bias
a local board [in the non-home territory] may have had against Atlas.” Id. at 771.
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substantially the same question in Local Union No. 38, Sheet Metal Workers’
International Ass’n, AFL-CIO v. Custom Air Systems, Inc., 357 F.3d 266 (2d Cir.
2004). Similar to our precedent, the Second Circuit had held that a party that chose
not to participate in an arbitration proceeding and wished to challenge the arbitrator’s
substantive jurisdiction after the arbitration was completed could do so only by filing
a motion to vacate the award within ninety days, the statute of limitations set by the
most analogous state statute. Id. at 267. However, the Custom Air court noted that
whether this precedent applied to a non-signatory to the arbitration agreement,
purportedly an alter ego of a signatory, was a “novel issue.” Id. The court ultimately
held that the logic underlying its precedent would be inapplicable in the absence of
a district court’s threshold determination on the alter-ego question:
A district court’s independent determination of alter ego signifies that,
for all relevant purposes, the non-signatory is legally equivalent to the
signatory and is itself a party to the CBA. Only where this threshold
determination has been made would a non-signatory be bound by an
arbitral award and time-barred after expiration of the ninety day period
from challenging the confirmation of the award.
Id. at 268 (citations omitted). Following the Supreme Court’s admonition that
“arbitrability vis a vis a non-signatory is for the district court to decide,” id. (citing
AT&T Techs., 475 U.S. at 649), the Second Circuit remanded to the district court for
a determination of whether the non-signatory was the alter ego of a signatory and,
thus, bound by the arbitration agreement.
We agree with the Second Circuit’s analysis and hold that a non-signatory to
an arbitration agreement need not participate in the arbitration while expressly
Because the employer in Atlas Air Conditioning was a signatory to an agreement that
contemplated the arbitration process that occurred, we disagree with Local 36’s
contention that Atlas Air Conditioning involved a non-signatory to an arbitration
agreement.
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reserving jurisdictional questions, file a preemptive declaratory judgment action,
notify the arbitrator of its refusal to participate, or timely initiate a court action to
vacate the arbitrator’s award in order to have “the question of whether the parties
agreed to arbitrate . . . be decided by the court, not the arbitrator.” AT&T Techs., 475
U.S. at 649; accord Carpenters 46 N. Cal. Counties Conference Bd. v. Zcon Builders,
96 F.3d 410, 416 (9th Cir. 1996) (holding that a non-signatory, purported alter ego
company’s challenge to substantive arbitral jurisdiction was not time-barred by its
failure to file a motion to vacate the award and could be raised as a defense to
subsequent enforcement proceedings). Of course, a non-signatory that demonstrates
an intent to present substantive jurisdictional questions to the arbitrator, through
participation in the proceeding or otherwise, might effect a waiver of the right to have
a court determine the issue, just as a signatory might. See, e.g., Franklin Elec. Co. v.
Int’l Union, United Auto. Aerospace & Agric. Implement Workers of Am. (UAW), 886
F.2d 188, 192 (8th Cir. 1989) (“Franklin Electric proceeded to argue the issue to the
arbitrator without expressly reserving the issue for initial judicial resolution. By their
conduct the parties granted the arbitrator the jurisdiction to decide their arbitrability
question and in effect empowered him to decide those issues.” (internal quotation
omitted)). In this case, however, Whitney’s decision not to acknowledge any
communications or actions of the JAB—a tribunal that obtained its power only
through an agreement that Whitney never signed—cannot reasonably be characterized
as showing his intent to submit to its authority to any degree, much less “clearly and
unmistakably.” AT&T Techs., 475 U.S. at 649.
For the foregoing reasons, we agree with Whitney that the JAB had no
authority to determine whether his new company was the alter ego of Whitney
Mechanical and, thus, bound by the CBA. Therefore, we vacate the district court’s
adverse grant of summary judgment as to Whitney d/b/a Whitney Industrial. We
remand to the district court to determine, independently of the JAB’s findings and as
a threshold to considering enforcement of the arbitration award against Whitney d/b/a
Whitney Industrial, whether Whitney d/b/a Whitney Industrial is an alter ego of
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Whitney Mechanical and, thus, bound by the CBA, and to conduct other proceedings
not inconsistent with this opinion.
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