E I Dupont De Nemour v. Martinsville Nylon ( 1996 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
E. I. DUPONT DE NEMOURS AND
COMPANY, INCORPORATED,
Plaintiff-Appellee,
v. No. 94-2222
MARTINSVILLE NYLON EMPLOYEES'
COUNCIL CORPORATION,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Virginia, at Danville.
Jackson L. Kiser, Chief District Judge.
(CA-94-8)
Argued: January 29, 1996
Decided: February 28, 1996
Before MURNAGHAN, ERVIN, and WILKINS, Circuit Judges.
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Affirmed by unpublished opinion. Judge Wilkins wrote the opinion,
in which Judge Murnaghan and Judge Ervin joined.
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COUNSEL
ARGUED: Jonathan Gans Axelrod, BEINS, AXELROD,
OSBORNE, MOONEY & GREEN, P.C., Washington, D.C., for
Appellant. Donald Lester Creach, HUNTON & WILLIAMS, Rich-
mond, Virginia, for Appellee. ON BRIEF: Hill B. Wellford, Jr.,
HUNTON & WILLIAMS, Richmond, Virginia, for Appellee.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
WILKINS, Circuit Judge:
Martinsville Nylon Employees' Council Corporation (the Union)
appeals a decision by the district court granting a motion by E. I.
DuPont de Nemours and Company, Incorporated (DuPont) to vacate
an arbitration award entered in favor of the Union. Because we agree
with the district court that the question of whether the dispute
between DuPont and the Union was arbitrable was one for the court
and further agree that the dispute was not subject to arbitration, we
affirm.
I.
In 1989, DuPont proposed a Reward and Recognition Program
(R & R Program) at its Martinsville plant. Because the collective bar-
gaining agreement1 between the parties did not provide for the R & R
Program, and because the parties were unable to reach an agreement
to modify this contract to include the program, DuPont implemented
it unilaterally.
The Union subsequently filed a grievance asserting that DuPont
was not applying the R & R Program equitably. When grievance pro-
ceedings failed to resolve the dispute, the Union sought arbitration
under the collective bargaining agreement, which provided for arbi-
tration of "[a]ny question as to the interpretation of this Agreement
or as to any alleged violation of any provision of this Agreement."
DuPont submitted to arbitration, while contesting that the arbitration
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1 The parties agree that this collective bargaining agreement governed
the parties' conduct at the time, and therefore controls the resolution of
the present controversy, by virtue of their agreement to extend it on a
day-to-day basis following its expiration and during their ongoing nego-
tiations to secure a new collective bargaining agreement.
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clause required it to arbitrate a dispute concerning the R & R Pro-
gram.
Although the arbitrator agreed with DuPont that the R & R Pro-
gram had never been incorporated into the collective bargaining
agreement, he concluded that the dispute concerning DuPont's man-
agement of the R & R Program nevertheless was arbitrable. The arbi-
trator reasoned that an implied covenant of good faith and fair dealing
in the collective bargaining agreement imposed a duty upon DuPont
to deal in good faith with respect to programs it implemented unilater-
ally. Consequently, the arbitrator ruled that the allegation that DuPont
had breached its duty of good faith by administering the program in
a discriminatory manner was arbitrable. Proceeding to address the
merits of the grievance, the arbitrator ruled against DuPont.
Thereafter, DuPont brought this action pursuant to§ 301 of the
Labor Management Relations Act, 29 U.S.C.A. § 185 (West 1978), to
vacate the arbitration award entered in favor of the Union, and the
Union filed a counterclaim for enforcement. The district court ruled
that the arbitrator had exceeded his authority by entering the award
and granted DuPont's motion to vacate it. From this final decision,
the Union appeals.
II.
The first question we must address is the standard to apply in
reviewing the decision of the arbitrator concerning the arbitrability of
the dispute. The Union contends that the decision of whether the dis-
pute was arbitrable was one for the arbitrator and, accordingly, that
a court should defer to that decision except in a narrow set of circum-
stances not present here. DuPont, however, argues that the decision
is one for the court and, therefore, that no deference should be given
to the arbitrator's decision.
"``[A]rbitration is a matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not agreed
so to submit.'" AT&T Technologies, Inc. v. Communications Workers,
475 U.S. 643, 648 (1986) (quoting United Steelworkers v. Warrior &
Gulf Navigation Co., 363 U.S. 574, 582 (1960)). This principle
applies to the merits of a dispute as well as to the question of who
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should decide whether a dispute is subject to arbitration. First Options
of Chicago, Inc. v. Kaplan, 115 S. Ct. 1920, 1923-24 (1995). Accord-
ingly, if the parties have agreed that the arbitrator should resolve
questions concerning whether a dispute is arbitrable, courts should
grant considerable deference to the arbitrator's decision; but if the
parties have not agreed to allow the arbitrator to decide this question,
it is one for the court. Id.; see AT&T Technologies, 475 U.S. at 648-
49.
In deciding whether the parties have agreed to submit the question
of arbitrability to arbitration, a court applies ordinary principles of
contract interpretation. See First Options, 115 S. Ct. at 1924. And,
when the parties have remained silent concerning who should decide
whether an issue must be submitted to arbitration, or when the appli-
cation of principles of contract interpretation leads to ambiguity con-
cerning whether that issue is one for the arbitrator, a court must
assume that the issue is one for the court. Id. In other words, "[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 Technologies, 475 U.S. at 649; accord First
Options, 115 S. Ct. at 1924.
The arbitration clause in the collective bargaining agreement
between DuPont and the Union contains no provision clearly and
unmistakably agreeing to submit the question of arbitrability to
arbitration.2 Hence, we decide whether DuPont was required to sub-
mit the dispute concerning the R & R Program to arbitration without
deferring to the decision of the arbitrator.
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2 The Union also claims that because DuPont voluntarily submitted the
question of arbitrability to the arbitrator in this instance, instead of
requiring the Union to obtain a court order compelling arbitration, it has
waived any opposition to the arbitrator deciding whether the dispute was
arbitrable. This argument, however, lacks merit. If a party submits to
arbitration while asserting that the arbitrator lacks the authority to pro-
ceed, as DuPont did here, that party has not waived its argument that
arbitration was improper. See First Options, 115 S. Ct. at 1925.
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III.
Having concluded that the question is one for the court, we turn to
consider it.3 As with the previous question, the ``resolution of this
issue requires the application of general rules of contract interpreta-
tion. See First Options, 115 S. Ct. at 1924. But, unlike the prior ques-
tion, any doubt concerning the scope of the questions to be arbitrated
should be resolved in favor of arbitration. See id.Again, the arbitration clause in the contract between the parties
requires the arbitration of "[a]ny question as to the interpretation of
this Agreement or as to any alleged violation of any provision of this
Agreement." From this plain language, it is obvious that because no
provision of the agreement governed the R & R Program, the arbitra-
tion clause did not require arbitration of disputes concerning it. The
Union maintains, however, that all collective bargaining agreements
contain an implied obligation of good faith and fair dealing and that
since its claim is that DuPont violated this provision of the collective
bargaining agreement, it is asserting a violation of the agreement that
is within the scope of the arbitration clause.
We agree with the district court and reject this argument. Assuming
that it were appropriate to interpret the collective bargaining agree-
ment as containing an implied covenant of good faith and fair dealing
--a question that we need not decide today--our decision would
remain unchanged. Such an implied covenant would only control the
conduct of a party in areas governed by the collective bargaining
agreement; it would not impose a duty to act in good faith in matters
not subject to the agreement. Cf. Cumberland Typographical Union
No. 244 v. Times & Alleganian Co., 943 F.2d 401, 406-07 (4th Cir.
1991) (holding similar arbitration clause required submission to arbi-
tration of claim that employer violated implied duty of good faith
with respect to a term of the collective bargaining agreement);
Restatement (Second) of Contracts § 205 (1981) ("Every contract
imposes upon each party a duty of good faith and fair dealing in its
performance . . . ."). Therefore, an alleged violation of an implied
covenant of good faith and fair dealing would not render arbitrable
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3 We review de novo the decision of the district court. See First
Options, 115 S. Ct. at 1926.
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matters that were not otherwise subject to arbitration under the agree-
ment.
A contrary conclusion would render nugatory language in the arbi-
tration clause purporting to limit the matters that must be submitted
to arbitration. Rather than agreeing to submit all disputes between the
parties to arbitration, DuPont and the Union agreed to submit only
those controversies alleging a violation of the collective bargaining
agreement or requiring an interpretation of that agreement. Constru-
ing the agreement in the manner propounded by the Union would
effectively negate this limitation, and we will not countenance such
an unintended result.
In sum, we conclude that the plain language of the collective bar-
gaining agreement requires the parties to submit to arbitration only
allegations of violations of the provisions of the agreement or ques-
tions requiring its interpretation. An allegation that DuPont violated
an implied covenant of good faith and fair dealing with respect to a
matter not governed by the collective bargaining agreement is not
encompassed within the unambiguous arbitration clause. Therefore,
DuPont was not required to submit the dispute concerning the R & R
Program to arbitration.
AFFIRMED
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