Enter to open, tab to navigate, enter to select
FAA Gives Circuit Courts Jurisdiction over Interlocutory Appeals of Denied LMRA Petitions to Compel Arbitration: Tenth Circuit
Practical Law Legal Update 9-592-1526 (Approx. 6 pages)
FAA Gives Circuit Courts Jurisdiction over Interlocutory Appeals of Denied LMRA Petitions to Compel Arbitration: Tenth Circuit
by Practical Law Labor & Employment
| Published on 16 Dec 2014 • USA (National/Federal) |
In IBEW, Local 111 v. Public Service Company of Colorado, as a matter of first impression, the US Court of Appeals for the Tenth Circuit held that the Federal Arbitration Act (FAA) gave it jurisdiction over an interlocutory appeal of a district court's denial of a petition to stay a proceeding and compel arbitration that the electrical workers filed under the Labor Management Relations Act (LMRA) on a breach of collective bargaining agreement (CBA) claim. The Tenth Circuit affirmed the district court's judgment denying the appellants' motion after similarly finding that the CBA's arbitration provisions could not be interpreted as to cover disputes about retired workers' healthcare benefits.
On December 9, 2014, in IBEW, Local 111 v. Public Service Company of Colorado, as a matter of first impression, the US Court of Appeals for the Tenth Circuit held that the Federal Arbitration Act (FAA) gave it jurisdiction over an interlocutory appeal of a district court's denial of a petition to stay a proceeding and compel arbitration that the electrical workers filed under the Labor Management Relations Act (LMRA) in a breach of collective bargaining agreement (CBA) action. The Tenth Circuit affirmed the district court's judgment denying the appellants' motion to stay the proceeding and compel arbitration because the CBA’s arbitration provision could not be interpreted as covering disputes about retired workers' healthcare benefits. (13-1207, (10th Cir. Dec. 9, 2014).)
Background
The Public Service Company of Colorado entered into a CBA with the International Brotherhood of Electrical Workers Local #111, a union that represents some of the company's employees. About two years later, the company unilaterally increased its retired workers' copayments for prescription drugs. The union demanded arbitration under the CBA's grievance and arbitration procedures, alleging that this action violated the CBA.
The company declined to arbitrate about this action, arguing that the CBA's arbitration provision did not apply to disputes about retired workers' healthcare benefits, including copayment increases.
The union filed a breach of CBA action and moved to stay that action and compel arbitration under Section 301 of the LMRA (29 U.S.C. § 185).
The district court denied the motion, holding that the terms of the CBA's arbitration provision reflected that the parties did not agree to arbitrate disputes about retired workers' healthcare benefits.
The union filed an interlocutory appeal with the Tenth Circuit challenging the district court's conclusion that the dispute was not arbitrable.
Outcome
The Tenth Circuit held that the FAA gave it jurisdiction over an interlocutory appeal of a district court's denial of a petition to stay a proceeding and compel arbitration filed under the LMRA and affirmed the district court's judgment denying the appellants' motion to stay the proceeding and compel arbitration because the CBA’s arbitration provision could not be interpreted as covering the dispute in the case.
In particular, the Tenth Circuit:
- Noted that:
- appellate courts generally may review only final decisions of a district court (Miller v. Basic Research, LLC, 750 F.3d 1173, 1175 (10th Cir. 2014) and 28 U.S.C. § 1291);
- the FAA provides that contractual agreements to arbitrate are generally valid, irrevocable, and enforceable but that the FAA does not apply “to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” (9 U.S.C. §§ 1, 2);
- the FAA allows an interlocutory appeal from an order denying a motion to stay under 9 U.S.C. § 3 and from an order denying a motion to compel arbitration under 9 U.S.C. § 4 (9 U.S.C. §§ 16(a)(1)(A) and (B));
- it has jurisdiction over an interlocutory appeal under FAA Section 16(a) where a district court denies a motion in which a party unmistakably seeks only an order staying the action and compelling arbitration. A party may trigger appellate jurisdiction by either expressly captioning the motion in the district court as one under FAA §§ 3 or 4 or moving essentially for the issues presented to be decided exclusively by an arbitrator and not by any court (Conrad v. Phone Directories Co., 585 F.3d 1376, 1380, 1385-86 (10th Cir. 2009));
- Section 301 of the LMRA confers jurisdiction on courts to enforce CBAs and authorizes federal courts to fashion a body of federal common law for enforcing CBAs (29 U.S.C. § 185(a); Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 450–51, 456 (1957);
- historically the Tenth Circuit has held that CBAs are contracts of employment and are excluded from the FAA's jurisdiction (United Food & Commercial Workers, Local Union No. 7R v. Safeway Stores, Inc., 889 F.2d 940, 944 (10th Cir. 1989) and see Mercury Oil Ref. Co. v. Oil Workers Int’l Union, 187 F.2d 980, 983 (10th Cir. 1951), abrogated on other grounds by Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 450–51 & n.1 (1957));
- the Tenth Circuit and the Supreme Court, in cases not concerning arbitration agreements in CBAs, have interpreted the FAA as excluding only employment contracts for transportation workers engaged in foreign or interstate commerce (Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) and McWilliams v. Logicon, Inc., 143 F.3d 573, 576 (10th Cir. 1998);
- the US Court of Appeals for the Seventh Circuit has held that the FAA excludes only CBAs that cover transportation workers engaged in foreign or interstate commerce (Int’l Bhd. of Teamsters Local Union No. 50 v. Kienstra Precast, LLC, 702 F.3d 954, 955–56 (7th Cir. 2012)); and
- the Seventh Circuit has also held that Section 301 of the LMRA and the FAA are not mutually exclusive and that there is no conflict between Section 301's substantive law and the FAA's procedures or remedies that would foreclose a court from applying the FAA's interlocutory appeal process to LMRA actions seeking to compel arbitration under CBA arbitration provisions (Smart v. IBEW, Local 702, 315 F.3d 721, 724–25 (7th Cir. 2002).
- Found that:
- it was undisputed that the CBA in this case contained a written arbitration agreement that did not cover transportation workers within Circuit City’s meaning;
- the union filed a motion under the LMRA rather than the FAA but unmistakably sought only an order staying the case and compelling arbitration; and
- the Seventh Circuit's analysis of the interplay between the FAA and Section 301 of the LMRA was compelling.
- Held, as a matter of first impression, that it has jurisdiction under Section 16(a) of the FAA over interlocutory appeals from district court orders denying motions to stay actions and compel arbitration under the LMRA if:
- the CBA sought to be enforced contains a written arbitration provision covered by 9 U.S.C. § 2;
- that CBA does not cover transportation workers engaged in foreign or interstate commerce;
- a party to the CBA filed a motion obviously seeking only an order staying the case and compelling arbitration; and
- the district court denied the motion.
- Held that the CBA's arbitration provision which provided for arbitration of disputes over “hours, wages, or conditions of employment” tracked language from Supreme Court precedent deeming those words as referring to terms for employees and not retirees (see Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 173 (1971)).
- Affirmed the district court's judgment that the arbitration clause did not render the plaintiffs' dispute arbitrable and remanded the case for further proceedings.
Practical Implications
In light of IBEW, Local 111, parties in the Tenth Circuit may be subject to the FAA's procedures permitting interlocutory appeals in a context, here litigation under the LMRA, where those procedures never previously applied. Only two circuits have interpreted the interactions of the FAA and LMRA as the Tenth Circuit did here. Time will tell whether other circuits adopt similar analyses, but it will likely require other circuits to revisit their LMRA preemption analyses and traditional views that CBA arbitration provisions are beyond the scope of the FAA.
In this case, the newly found procedural right to an interlocutory appeal under the FAA opened a door to nowhere. The Tenth Circuit leapt through a number of hoops only to confirm it had jurisdiction to affirm that the district court properly declined to compel arbitration of a non-arbitrable dispute.