Johnson Controls Security Solutions, LLC v. Int'l Brotherhood of Electrical Workers, Local 103 ( 2022 )

United States Court of Appeals
For the First Circuit
No. 21-1460
JOHNSON CONTROLS SECURITY SOLUTIONS, LLC,
Plaintiff, Appellee,
v.
INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 103,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Lynch, Kayatta, and Barron,
Circuit Judges.
Christopher N. Souris, with whom Richard M. Olszewski and
Krakow, Souris & Landry, LLC were on brief, for appellant.
Brian D. Lee, with whom Ogletree, Deakins, Nash, Smoak &
Stewart, P.C. was on brief, for appellee.
January 28, 2022
LYNCH, Circuit Judge. In this dispute between the
International Brotherhood of Electrical Workers, Local 103 (the
"Union"), and Johnson Controls Security Solutions, LLC over
Johnson Controls' compliance with the terms of the parties'
collective bargaining agreement (the "CBA"), the district court
refused to order arbitration as called for by a clause in the
agreement. We reverse.
I.
Johnson Controls is a limited liability company with
offices in Massachusetts which sells, installs, and maintains
security alarms and provides related services to commercial
clients. Its Norwood, Massachusetts facility has entered into a
CBA with the Union, a labor organization that represents Johnson
Controls employees.1
We next describe the pertinent terms of the CBA, which
are found in three clauses. Article 5, Section 1 (the "Arbitration
Clause") states:
In the event that an agreement cannot be
reached between the Union and the Employer
with respect to a grievance involving and
1 Johnson Controls is the successor-in-interest to Tyco
Integrated Security, LLC, which was the signatory to the CBA that
was in effect during the events giving rise to this dispute. That
agreement was effective between October 21, 2017 and September 30,
2020. Johnson Controls and the Union have since executed a new
collective bargaining agreement, operative between October 15,
2020 and December 31, 2023, which is in all material respects the
same as the predecessor agreement. The parties do not dispute the
validity of the CBA.
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limited to the interpretation and application
of any specific provision of this Agreement,
it may be submitted, by the Union to
arbitration, pursuant to the Labor Arbitration
Rules of the American Arbitration Association.
Article 5, Section 2 (the "Exclusion Clause"), provides:
Changes in business practices, matters
involving capital expenditures, the opening
and/or closing of new units/facilities, the
choice of personnel (subject to the seniority
provisions, if applicable)[,] the choice of
materials, service products, processes and
equipment, or any dispute which either
directly or indirectly involves the
interpretation or application of the plans
covering pensions, disability benefits and
death benefits, shall not be arbitrable.
(emphasis added).
The third relevant clause is Article 9, which states:
"The Employer hereby agrees to provide the 401(k) Plan, disability
benefits and death benefits as in effect as of May 6, 2008." It
is this clause which the Union says Johnson Controls has violated
and which gives rise to the dispute the Union seeks to arbitrate.
Around April 2020, Johnson Controls "temporarily reduced
its matching contribution to the Company's 401(k) Plan" (the
"Plan"). The Union's grievance, which was filed on May 1, 2020,
concerns Johnson Controls' reduction in the employer match, "which
the Union view[ed] as a violation of Article 9 of [the CBA]."2
2 The reduction in the employer match was for one year.
Johnson Controls states that it has since restored its
contributions, but does not claim to have made up the difference
in the reduced benefits.
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Following Johnson Controls' denial of the grievance, the Union
filed a demand for arbitration on May 19, 2020 with the American
Arbitration Association (the "AAA") pursuant to the Arbitration
Clause.
The next day, the AAA opened the arbitration case and
Johnson Controls sent an email to the Union's counsel, objecting
that "per Article 5 Section 2 of the labor agreement th[e
grievance] is not arbitrable." On June 8, 2020, Johnson Controls
sent an email to the AAA, stating again that "[t]he subject matter
of the Union's arbitration request . . . is not arbitrable." The
Union disagreed, and an arbitrator was appointed on June 19, 2020.
On July 7, 2020, the arbitrator declined to stay the arbitration
absent a court order, and scheduled a hearing for February 9, 2021.
On January 14, 2021, Johnson Controls filed the instant
lawsuit in the U.S. District Court for the District of
Massachusetts pursuant to the Labor Management Relations Act, 29
U.S.C. § 185, seeking a declaratory judgment that the dispute is
not arbitrable under the CBA, see also 28 U.S.C. § 2201.3 On March
15, 2021, the Union moved to dismiss Johnson Controls' court
complaint. The parties agreed to treat the motion as one for
judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c).
3 The arbitrator stayed the arbitration hearing after
being notified of the federal lawsuit.
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The district court stated at the end of the May 12, 2021
motion hearing that the Union's dispute was not arbitrable. The
court did not enter a written opinion. The court did not address
the exact terms of the CBA. On May 17, 2021, the district court
entered a declaratory judgment in favor of Johnson Controls. The
Union appeals from that judgment.
II.
Our review of a district court's allowance of a motion
for judgment on the pleadings under Fed. R. Civ. P. 12(c) is de
novo. Curran v. Cousins, 509 F.3d 36, 43 (1st Cir. 2007).
Under AT & T Technologies, Inc. v. Communications
Workers of America, 475 U.S. 643 (1986), four principles govern
the determination of whether a certain labor dispute concerning
the collective bargaining agreement is subject to arbitration:
(1) that arbitration is a matter of contract and the parties must
have agreed in a contract to arbitrate the dispute, id. at 648;
(2) that the question of whether a collective bargaining agreement
requires the parties to arbitrate a particular grievance is one of
law for the court, not the arbitrator, to determine, id. at 649;
(3) that, in making this determination, "a court is not to rule on
the potential merits of the underlying claims," id. at 649; and,
most relevant here, (4) that "where the contract contains an
arbitration clause, there is a presumption of arbitrability," id.
at 650.
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The presumption, in turn, requires a court to permit a
grievance to proceed to arbitration "unless it may be said with
positive assurance that the arbitration clause is not susceptible
of an interpretation that covers the asserted dispute." Id. at
650 (quoting United Steelworkers of Am. v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582–83 (1960)). Where, as here,
there exists a relatively broad arbitration clause, the
presumption can be rebutted only by a specific and "express
provision excluding a particular grievance from arbitration" or
"the most forceful evidence of a purpose to exclude the claim."
Id. at 650 (quoting Warrior & Gulf, 363 U.S. at 585). "[A]ny
doubts concerning the scope of arbitrable issues should be resolved
in favor of arbitration." Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985) (quoting Moses
H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25
(1983)); see also Gateway Coal Co. v. United Mine Workers of Am.,
414 U.S. 368, 377 (1974) (noting "[t]he federal policy favoring
arbitration of labor disputes"); cf. Mastrobuono v. Shearson
Lehman Hutton, Inc., 514 U.S. 52, 62 (1995) ("[D]ue regard must be
given to the federal policy favoring arbitration, and ambiguities
as to the scope of the arbitration clause itself resolved in favor
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of arbitration." (quoting Volt Info. Sci., Inc. v. Bd. of Tr. of
Leland Stanford Junior Univ., 489 U.S. 468, 476 (1989))).4
On de novo review, we cannot say "with positive
assurance" that the Union's grievance is not arbitrable. The
grievance concerns whether the CBA was violated by Johnson
Controls' unilateral reduction of its matching contribution to the
company's 401(k) plan. The parties agree that it plainly
constitutes "a grievance involving and limited to the
interpretation and application of any specific provision of [the
CBA]," namely, Article 9.
This takes us to the relevant language of the Exclusion
Clause, which expressly excludes from arbitration only disputes
that "directly or indirectly" involve the "interpretation or
application" of "plans covering pensions, disability benefits and
death benefits." These types of plans, which include the 401(k)
plan, are governed by the Employee Retirement Income Security Act
of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), and its statutorily
mandated claims procedures. See 29 U.S.C. §§ 1002–03, 1133; 29
C.F.R. § 2560.503-1 (ERISA claims procedures). There is no
colorable claim that the Union's grievance "directly" involves the
4 See also Granite Rock Co. v. Int'l Bhd. of Teamsters,
561 U.S. 287, 298 n.6 (2010) (discussing precedents applying the
Federal Arbitration Act in a labor case "because they employ the
same rules of arbitrability").
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"interpretation" or "application" of the Plan.5 The question
becomes whether the grievance clearly "indirectly" does. Johnson
Controls argues for a broad reading of the term "indirectly." It
says the term would be rendered meaningless and duplicative of
"directly" if the Exclusion Clause did not apply to this grievance.
Resolving all doubts in favor of arbitration, we disagree.
As the Union has argued, we cannot say "with positive
assurance" that the Arbitration Clause does not apply to its
grievance on account of the "indirect" language in the Exclusion
Clause. This language, viewed in context, does not "specifically
exclude" all disputes broadly having to do with the Plan.6 See
Warrior & Gulf, 363 U.S. at 581. Rather, the language can
plausibly be read more narrowly, to exclude disputes other than
the grievance at issue here. It is plausible to read the Exclusion
Clause as not applicable to this dispute concerning compliance
with the CBA's requirements as to the 401(k) plan.
The Union's reading would give meaning to the qualifying
terms "interpretation or application" which limit the scope of the
Exclusion Clause. See New England Carpenters Cent. Collection
5 The Exclusion Clause also does not expressly exclude
grievances concerning the interpretation of Article 9.
6 Counsel for Johnson Controls does not explain why the
parties, if they intended to exclude from arbitration essentially
all disputes broadly "having to do with pension plans," did not
say as much in the Exclusion Clause.
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Agency v. Labonte Drywall Co., 795 F.3d 271, 282 (1st Cir. 2015)
("[E]very word and phrase of an instrument is if possible to be
given meaning, and none is to be rejected as surplusage if any
other course is rationally possible." (citation omitted)). Its
reading is buttressed by the fact that ERISA-governed disputes are
subject to separate, statutorily mandated dispute resolution
procedures.7 See 29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1; see
also Senior v. NSTAR Elec. & Gas Corp., 449 F.3d 206, 220–21 (1st
Cir. 2006) (interpreting a CBA against the backdrop of its "broader
context"). A dispute over the administration of the Plan's
benefits necessarily would involve the "interpretation or
application" of the Plan's governing documents. See Diaz v.
Seafarers Int'l Union, 13 F.3d 454, 456–59 (1st Cir. 1994)
(reviewing trustees' "interpretation" and "application" of ERISA-
governed pension plan in dispute over the administration of
benefits).
Johnson Controls' position turns on its surplusage
argument, which we do not accept. The Union's reading of the
7 Notably, counsel for Johnson Controls conceded at oral
argument that there is no way to know what the drafters meant in
the Exclusion Clause and whether they intended to exclude only
ERISA-governed disputes. Because there is doubt as to what the
drafters meant, at least insofar as the word "indirectly" is
ambiguous, that doubt must be resolved in favor of arbitration.
See Gambino v. Alfonso, 566 F. App'x 9, 12 (1st Cir. 2014)
(unpublished) ("[I]f there is any doubt, an arbitration clause [in
a CBA] should be interpreted to embrace a particular dispute.").
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Exclusion Clause does not leave the term "indirectly" without
meaning or render it surplus, as the company argues. The Union's
reading gives the term "indirectly" a purpose. Such a purpose is
illustrated by this example: An employee and employer resolve a
dispute over the employee's termination with a Severance
Agreement. That Agreement, among other things, terminates the
employee's participation in the pension plan and grants the
employee an annuity "of value equal to payments that would have
been received under the pension plan." The employee then sues for
breach of the Severance Agreement, claiming the annuity is too low
because the pension plan calls for higher payments than the
employer claims in setting the annuity. So while the claimed
breach of the Severance Agreement turns on determining whether the
annuity is enough, it indirectly would involve the interpretation
of the pension plan. Here, in contrast, a decisionmaker need not
resolve any dispute, directly or indirectly, concerning what the
Plan means or how it applies. The only issue raised by the Union's
grievance is whether Johnson Controls' unilateral reduction in its
matching contribution to the 401(k) plan violates the language of
the CBA.
We turn to the final stage of the AT & T Technologies
analysis. As that case teaches, "only the most forceful evidence
of a purpose to exclude the claim from arbitration can prevail."
475 U.S. at 650 (quoting Warrior & Gulf, 363 U.S. at 584–85).
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Johnson Controls has presented no evidence at all to rebut the
presumption of arbitrability. Nothing in the record "show[s] the
parties intended to exclude this type of dispute" over the meaning
of a provision in the CBA "from the scope of the arbitration
clause." Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d
1, 9 (1st Cir. 2014) (emphasis in original) (citing AT & T Techs.,
475 U.S. at 650); see also Int'l Union, United Auto., Aerospace &
Agric. Implement Workers of Am. v. Trane U.S. Inc., 946 F.3d 1031,
1035 (8th Cir. 2020); Bressette v. Int'l Talc Co., Inc., 527 F.2d
211, 216 (2d Cir. 1975).
III.
Reversed.
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