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Recently, the 10th Circuit (whose rulings apply to all Oklahoma employers) considered whether a district court properly compelled an employer to arbitrate a union’s grievance about the managerial status of employees whom the union wanted to organize. The main issue in the case was whether (1) the grievance had to be arbitrated?which is typical when a collective bargaining agreement (CBA) is in place?or (2) it was the court’s place to decide the issue (in this case, the managerial status of the employees) when there is a dispute about whether the grievance is subject to arbitration.

Facts

The union and the employer had a CBA that set the terms and conditions of employment for all employees in the bargaining unit that the union represented. The bargaining unit consisted of employees whose job titles were identified in the bargaining agreement, but it didn’t include management employees or unrepresented employees (e.g., engineers). The agreement also included a grievance procedure requiring arbitration to resolve “employee disputes.”

In 2010, the union began organizing engineers in Colorado. The employer, which classified the engineers as “management,” objected to the organizing campaign, arguing that (1) the CBA didn’t apply to management employees and (2) any attempt to organize them had to be done under other federal labor laws. The union maintained that the engineers were unrepresented employees, not managers, and demanded that the dispute over their status be resolved through the arbitration process. The employer refused, arguing that the dispute was outside the CBA and its dispute resolution process.

The union filed a grievance, claiming the employer was (1) denying it access to the engineers and (2) failing to follow the dispute resolution procedures in the parties’ bargaining agreement. When the employer denied the grievance and refused to arbitrate, the union filed a lawsuit in federal district court to compel arbitration.

The law

The district court found in favor of the union, holding (1) there was a presumption in favor of arbitration in the labor relations context and (2) the arbitration provision in the CBA covered the dispute about the engineers’ status. It refused to address the employer’s argument that the engineers, as managers, were outside the scope of the arbitration agreement, holding that such a determination would be an improper resolution of the underlying merits of the case.

The employer appealed the decision to the 10th Circuit, arguing that the dispute wasn’t subject to the CBA’s arbitration clause because the engineers were management employees outside the scope of the bargaining agreement.

The result

The 10th Circuit reversed the ruling, concluding that the district court improperly required the employer to arbitrate issues it never agreed to submit to arbitration. The appellate court held in part that:

1. Based on the language of the bargaining agreement, there was no clear language suggesting that the parties meant for arbitrators to decide questions about whether to arbitrate or that the bargaining agreement’s dispute resolution procedures applied to arbitration disputes about the interpretation and application of the agreement.
2. The parties didn’t agree to submit the particular dispute about the management status of engineers to arbitration because the CBA applied only to “nonmanagement” or “occupational” workers and the employer classified engineers as management.

The 10th Circuit noted that when courts determine if the parties to a CBA consent to submit a dispute to arbitration, they generally must not rule on the merits of the underlying claim. Nevertheless, when judicial rules conflict, the court’s obligation to determine whether a dispute is subject to arbitration overrides its obligation to avoid reaching the merits of the dispute. Communication Workers of America v. Avaya, Inc.

Impact of the decision

The 10th Circuit’s decision clarifies that courts simply will not defer to a party’s demand for arbitration when the arbitrability of the dispute is at issue. The court’s decision reflects a presumption in favor of judicial resolution of arbitrability disputes. Employers that are required to enter into bargaining agreements should make clear that the process for resolving disputes about the interpretation and application of the agreement is separate from the CBA’s dispute resolution process.