The US Court of Appeals for the Tenth Circuit ruled in Communication Workers of America v. Avaya, Inc. that a district court improperly presumed that a union, which had a collective bargaining agreement (CBA) and a neutrality agreement with the employer, was entitled to arbitrate a dispute about the managerial status of employees it intented to organize. The Tenth Circuit held that the court should have applied a more searching judicial review to determine the dispute was not arbitrable.
On September 11, 2012, the US Court of Appeals for the Tenth Circuit ruled in Communication Workers of America v. Avaya, Inc. that a district court improperly compelled an employer to arbitrate a dispute about the managerial status of certain employees under the provisions of its collective bargaining agreement's arbitration clause and the application of a separately negotiated neutrality agreement to the union's attempt to organize those workers. The Tenth Circuit held that the court should have applied a more searching judicial review of whether the parties agreed to arbitrate this dispute and dismissed the union's motion to compel arbitration.Close speedread
In Communication Workers of America v. Avaya, Inc., the US Court of Appeals for the Tenth Circuit considered whether a district court properly compelled the employer, Avaya, Inc., to arbitrate the Communication Workers of America's (CWA) grievance about the managerial status of certain Avaya employees that CWA sought to organize. A key litigated issue in the case was whether the district court properly applied the presumption in favor of arbitration that exists in the labor relations context, or whether the court should have applied a presumption in favor of judicial resolution where there was a dispute about the arbitrability of the grievance.
The CWA has a collective bargaining agreement (CBA) with Avaya that sets the terms and conditions of employment for employees in the bargaining unit (www.practicallaw.com/1-504-3640) it represents. The bargaining unit consists of occupational employees whose titles were listed in the CBA, but does not include Avaya management or non-represented employees. The CBA does not list backbone engineers among represented members. The CBA includes a grievance procedure, culminating in arbitration, that serves as the exclusive process for resolving "employee disputes."
Avaya, the CWA and another union agreed to a National Memorandum of Understanding (NMU), which contains a neutrality agreement that provides an exclusive procedure by which a union can attempt to organize unrepresented and non-management employees. Violations of these so-called neutrality provisions were to be resolved informally by the parties themselves, and by a third party neutral agreed on by the parties if those efforts fail. The NMU was appended to the CBA.
In early 2010, the CWA began efforts to organize Avaya backbone engineers located in Denver, Colorado. Backbone engineers, who provide engineering support for software and hardware products, are classified as management in Avaya's corporate title guide and benefits program, and supervise the work of technician teams.
Avaya objected to the organizing campaign, arguing that the neutrality agreement does not apply to management employees such as backbone engineers, and that any attempt to organize them must instead conform with the procedures laid out by the NLRB. The CWA maintained that backbone engineers are non-represented occupational employees, and proposed that the parties use the dispute resolution mechanism in the NMU and submit their dispute to arbitration. Avaya refused, asserting that the dispute fell outside the scope of the NMU's neutrality agreement and its dispute-resolution process.
The CWA then filed a formal grievance under the CBA, charging Avaya with denying access to the backbone engineers and failing to follow the dispute resolution procedures in the neutrality agreement. When Avaya denied the grievance and refused to arbitrate it under the CBA's arbitration provision, the CWA filed a motion under the Labor Management Relations Act, to compel arbitration in a federal district court. The parties filed cross motions for summary judgment.
The district court granted the CWA's motion and denied Avaya's. In its opinion, the court:
Found that there is a presumption in favor of arbitration in the labor relations context.
Held that the NMU was a continuation of the CBA and that the arbitration provision in the CBA covered the dispute about whether the backbone engineers' status was subject to arbitration under the neutrality agreement.
Held that the union's motion to compel arbitration was timely, using the date of Avaya's refusal to arbitrate the grievance filed under the CBA's grievance provision rather than the earlier refusal to arbitrate the NMU dispute, and applying a six-month statute of limitations accepted by most circuit courts.
Declined to address Avaya's argument that the backbone engineers, as managers, were outside the scope of the arbitration agreements, holding that such a determination would constitute an improper resolution of the underlying merits of the case.
Avaya appealed the decision to the Tenth Circuit, arguing, among other things, that the parties' dispute is not subject to the CBA's arbitration clause because backbone engineers are management and outside the scope of the CBA, and that the CWA's motion was untimely.
On September 11, 2012, the Tenth Circuit issued an opinion in Communication Workers of America v. Avaya, Inc., reversing the district court's grant of summary judgment for the CWA and instructing the court to dismiss the case.
The Tenth Circuit concluded that the district court misapplied AT&T Technologies, Inc. v. Communication Workers of America by requiring Avaya to arbitrate issues it never agreed to submit to arbitration. In particular, the court held that:
The district court was required to interpret provisions of the CBA and NMU, and therefore consider the merits of Avaya's arguments against arbitration, because the merits were included in the issue of arbitrability.
Based on the language of the CBA, there was no clear and unmistakable language suggesting either that the parties meant for arbitrators to decide questions about whether to arbitrate, or that the CBA's dispute resolution procedures applied to arbitration disputes about the interpretation and application of the neutrality agreement.
The parties did not agree to submit the particular dispute over the backbone engineers to arbitration, due to its findings that:
the neutrality agreement, CBA and NMU all applied only to "non-management" or "occupational" workers; and
Avaya classifies backbone engineers as management, rather than occupational workers, and that this was further confirmed by actions taken from previous grievance disputes filed by the CWA.
Although Tenth Circuit acknowledged that courts evaluating whether parties consented to submit a dispute to arbitration generally must not rule on the merits of the underlying claim, it noted that, where these duties conflict, the court's obligation to determine arbitrabilitytrumps the obligation to avoid reaching the merits.
Because the Tenth Circuit found that the dispute was not arbitrable, it did not reach Avaya's other arguments.
The decision clarifies that courts will not be deferential to parties' demands for arbitration where the arbitrability of the underlying dispute is at issue. Rather, the Tenth Circuit's decision shows that a strong presumption in favor of judicial resolution of such issues will apply, and that courts may scrutinize relevant agreements to determine whether the particular dispute at issue was intended to be resolved through arbitration.
Employers that enter neutrality agreements or other agreements with unions that are ancillary to CBAs might benefit from clarifying whether:
The dispute resolution process for disputes about the interpretation and application of the ancillary agreements is separate from the CBA's dispute resolution process.
The ancillary agreements are integrated with the CBA, and if so, to what extent.