Houston Refining, L.P. v. United Steel, Paper & Forestry, Rubber, Manufacturing ( 2014 )

Case: 13-20384 Document: 00512745053 Page: 1 Date Filed: 08/25/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-20384 FILED
August 25, 2014
Lyle W. Cayce
HOUSTON REFINING, L.P., Clerk
Plaintiff - Appellant
v.
UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS
INTERNATIONAL UNION; UNITED STEEL WORKERS LOCAL UNION
NO. 13-227,
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Texas
Before JOLLY, GARZA, and HIGGINSON, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
After filing for bankruptcy, Houston Refining, L.P. (“Houston Refining”),
suspended matching contributions to its employees’ 401(k) plans. The company
later agreed to enter into arbitration regarding the suspension with the United
Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial
and Service Workers International Union, acting on behalf of itself and its local
unions (collectively “Union”). After the arbitrator found that the suspension
violated the parties’ collective bargaining agreement, Houston Refining
brought an action in the district court to vacate the arbitral award, and the
Union counterclaimed to enforce the award. Both parties moved for summary
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judgment. The district court denied the company’s motion, granted the Union’s
motion in part, and remanded to the arbitrator for clarification of the remedy.
Houston Refining timely appealed. We reverse and remand.
I
Houston Refining operates a refinery on the east side of Houston. Many
of its employees are members of the Union. In 2006, the Union and Houston
Refining executed a collective bargaining agreement (“2006 CBA”). Ahead of
the 2006 CBA’s scheduled expiration on January 31, 2009, the parties began
negotiating a successor contract. When the negotiation stalled, they agreed to
a twenty-four-hour rolling extension of the 2006 CBA (“extension agreement”),
which could be cancelled with twenty-four hours’ notice.
Article 30 of the 2006 CBA establishes grievance and arbitration
procedures, while Article 40 references various employee benefits. Article 30
defines a “grievance” as “any difference regarding wages, hours or working
conditions between the parties . . . covered by this Agreement,” 2006 CBA, art.
30, ¶ 1, and sets forth a grievance procedure that culminates in arbitration, id.
art. 30, ¶ 7. Article 40 provides that employees are eligible to participate in
various benefit plans. Among these plans is the “401K and Savings Plan for
Represented Employees,” id. art. 40, pt. III, ¶ 1(e) (“401(k) Plan”),
administered by the Benefits Administrative Committee. Article 40 further
provides that “the Company will provide advance notice of proposed changes
to the benefit plans,” after which the Union will have “[a] reasonable time
period . . . to elect inclusion in or exclusion from the amended benefits plan.”
Id. art. 40, pt. III, ¶ 5.
2
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According to Houston Refining negotiators, the Union negotiator
informed them that the extension agreement would expire upon ratification of
a successor CBA. In February 2009, the parties’ negotiators reached a tentative
agreement on a new CBA (“2009 CBA”), which the Union’s local membership
ratified by majority vote days later. However, the Union subsequently refused
to sign the 2009 CBA after a disagreement arose over certain terms. The
parties now agree that the 2009 CBA never took effect. 1
In March 2009, having filed for Chapter 11 bankruptcy in the Southern
District of New York, Houston Refining informed the Union that it would
suspend its matching contributions to employees’ 401(k) plans. 2 Although the
Union representative did not mention an exclusion from the plan amendment,
he responded, “Well you know I’m going to have to sue you.” Houston Refining
proceeded to eliminate the matching contributions by means of an amendment
to the 401(k) Plan.
After the suspension came into effect, the Union filed a grievance with
Houston Refining, demanding that the company resume matching
contributions and compensate employees for any unpaid contributions. The
text of the grievance quoted from the 2009 CBA, rather than the 2006 CBA.
Houston Refining refused to process the grievance, claiming that the
1 In 2009, Houston Refining filed a complaint with the National Labor Relations Board
(“NLRB”), alleging that the Union unlawfully refused to execute an agreed-upon CBA. The
NLRB concluded that because there was no meeting of the minds on “all substantive issues
and material terms,” Intermountain Rural Elec. Ass’n, 309 NLRB 1189, 1192 (1992), the 2009
CBA never came into effect. The parties do not dispute this determination. Eventually, in
January 2010, the parties executed a new CBA, which is irrelevant to this appeal.
2 Houston Refining filed for bankruptcy along with other subsidiaries and affiliates of
Lyondell Chemical Company. Nothing in the record suggests that the bankruptcy court
ordered the match suspension.
3
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suspension was not a grievable issue. Months later, the Union commenced an
adversary proceeding in the bankruptcy court to compel Houston Refining to
arbitrate the grievance under the 2009 CBA. The complaint was amended to
allege that, in the alternative, the 2006 CBA mandated arbitration.
The parties then concluded the Settlement Agreement to submit the
grievance to arbitration, which the bankruptcy court approved. The Settlement
Agreement provided in relevant part:
1. The parties agree to proceed to arbitration with
the grievances [regarding 401(k) matching
contributions] expeditiously and in compliance
with the arbitration procedures . . . in the
applicable collective bargaining agreements.
[...]
4. At arbitration, the parties shall reserve all
rights to present any and all arguments and
advance any and all defenses to them including,
without limitation, arguments concerning
whether or not an applicable collective
bargaining agreement was in effect at the time
that a particular grievance arose.
Settlement Agreement, ¶¶ 1, 4. Pursuant to the terms of the Settlement
Agreement, the parties entered into arbitration.
Following a two-day hearing, Arbitrator Charles G. Griffin rendered an
award in favor of the Union. The arbitrator found that the 2006 CBA, by way
of the extension agreement, was in effect when the Union filed its grievance
and that the grievance was an arbitrable dispute over “wages” under that
CBA’s arbitration clause because the matching contributions “had monetary
value.” He also found immaterial the fact that the grievance quoted from the
2009 CBA. Lastly, he concluded that Houston Refining violated Article 40 of
4
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the 2006 CBA by unilaterally amending the 401(k) Plan, because the Union
had effectively elected exclusion from the amendment when it expressed
intention to sue over the suspension.
Houston Refining filed suit in the district court seeking to vacate the
arbitral award under section 301 of the Labor Management Relations Act, 29
U.S.C. § 185, and the Union counterclaimed to enforce the award. Both parties
moved for summary judgment. The district court found that because the
Settlement Agreement evinced the parties’ clear agreement to have the
arbitrator decide questions of arbitrability, its review of this issue would be
deferential. The district court then upheld the arbitrability determinations—
that the 2006 CBA existed when the grievance was filed, and that the
arbitrator acted within his authority under that CBA’s arbitration clause. On
the merits, the district court upheld the arbitrator’s finding that Houston
Refining violated Article 40 of the 2006 CBA, but concluded that the arbitral
award’s remedy was ambiguous in certain respects. The district court
accordingly denied the company’s motion and granted the Union’s motion in
part, 3 but remanded to the arbitrator for clarification of the award’s monetary
value, among other issues. Houston Refining timely appealed.
II
Questions of subject-matter jurisdiction are reviewed de novo. Wagner v.
United States, 545 F.3d 298, 300 (5th Cir. 2008). “Subject-matter jurisdiction
cannot be forfeited or waived and should be considered when fairly in doubt.”
3 The district court denied the Union’s request for attorney’s fees. This issue is not
before us on appeal.
5
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Ashcroft v. Iqbal, 556 U.S. 662, 671 (2009); see also Steel Co. v. Citizens for a
Better Env’t, 523 U.S. 83, 94–95 (1998).
This court reviews a district court’s grant of summary judgment de novo.
Resolution Performance Prods., LLC v. Paper Allied Indus. Chem. & Energy
Workers Int’l Union, Local 4-1201, 480 F.3d 760, 764 (5th Cir. 2007).
III
Houston Refining first contends that the existence of an applicable CBA
is necessary for subject-matter jurisdiction under section 301 of the Labor
Management Relations Act, 29 U.S.C. § 185. The company further claims that
courts can assume jurisdiction to address the merits when factual issues are
common to both, and that in this case, the CBA’s existence is precisely such a
common factual issue—without an existing CBA, the Union’s grievance would
not be arbitrable. 4 Thus, in Houston Refining’s view, we must remand to allow
the district court to determine whether a CBA existed, and if it decides in the
negative, it could vacate the arbitral award on the grounds that the parties
never agreed to arbitrate the dispute.
A
The first question is whether, under section 301(a), the existence of a
labor contract is a requirement for federal subject-matter jurisdiction, as
Houston Refining submits. Relatedly, we ask if anything less would be
sufficient to support such jurisdiction. Section 301(a) provides:
Suits for violation of contracts between an employer
and a labor organization representing employees in an
industry affecting commerce as defined in this
4 Technically, the “merits” of this dispute concern whether Houston Refining’s 401(k)
match suspension violated Article 40 of the 2006 CBA, not whether the Union’s grievance is
arbitrable. But below, in Part III.B only, the term “merits” refers to the arbitrability issue,
as distinguished from the jurisdictional question. See First Options of Chi., Inc. v. Kaplan,
514 U.S. 938, 942 (1995) (distinguishing between three issues of merits, arbitrability, and
who decides arbitrability).
6
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chapter, or between any such labor organizations, may
be brought in any district court of the United States
having jurisdiction of the parties, without respect to
the amount in controversy or without regard to the
citizenship of the parties.
29 U.S.C. § 185(a). If the existence of a contract were jurisdictional, then
because the district court’s subject-matter jurisdiction would be “fairly in
doubt,” this Court (or the district court on remand) would be obligated to
confirm this jurisdiction. Iqbal, 556 U.S. at 671. By contrast, if section 301(a)
were not jurisdictional, then here, the question of the CBA’s existence would
be subsumed within the broader issue of whether the parties agreed to
arbitrate the Union’s grievance. See infra Part IV.B (discussing arbitrability
questions).
We have in the past read section 301(a) as a jurisdictional requirement.
In Alexander v. International Union of Operating Engineers, AFL-CIO, 624
F.2d 1235 (5th Cir. 1980), an international union directed its local union’s
officer to sign a project agreement previously rejected by the local’s
membership. Two individual local union members sued the unions for money
damages under section 301, alleging a violation of the international union’s
constitution. Id. at 1236–37. The district court denied relief as to this claim on
jurisdictional grounds. Id. at 1237, 1239. 5
We first explained that “[t]he issue of whether individual union members
may use section 301 as a jurisdictional basis to sue their local or international
unions is a matter of first impression in this Circuit.” Id. at 1238. We then
prefaced our analysis by observing that “[a]s the language in section 301 makes
5 The district court granted relief only as against the local union under its duty of fair
representation, which issue is not relevant to this case. Alexander, 624 F.2d at 1237. As for
the section 301 claim, we presume that the district court dismissed for lack of jurisdiction,
given that we affirmed on this issue and concluded that the district court “properly denied
jurisdiction under [section 301].” Id. at 1239.
7
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clear, jurisdiction depends on whether there is a contract between an employer
and a labor organization or between two labor organizations.” Id. Following
many sister circuits, we held that in order for section 301(a) jurisdiction to
reach suits for violations of union constitutions, “the alleged violation must
create a threat to industrial peace or have a significant impact upon labor-
employer relations.” Id. We reasoned that, in contrast to cases from other
circuits where “a genuine impact on industrial peace had been adequately
alleged,” id., “[w]ith respect to [the parent union constitution] and that alleged
violation, plaintiffs have not shown there was any real threat to industrial
peace or any significant impact on the relationship with the employer,” id. at
1239. Accordingly, we concluded that the district court “properly denied
jurisdiction under [section 301].” Id. 6
Importantly, our statement in Alexander that “jurisdiction depends on
whether there is a contract” merely acknowledged the presence of the term
“contracts” in the statutory language. Id. at 1238. Nowhere did we require
factual proof of a labor contract’s existence, and our reasoning bears out our
central concern: The plaintiffs did not even allege a contractual violation
covered by section 301(a), as they failed to claim that the international union
6 We undertook a similar analysis in determining whether plaintiffs’ complaint was
sufficient to “confer jurisdiction” under section 102 of the Labor Management Reporting and
Disclosure Act, 29 U.S.C. § 412. Alexander, 624 F.2d at 1239–40. This section allows district
courts to hear actions for violations of, among other provisions, section 101(a) of the Act,
which provides that “[e]very member of a labor organization shall have equal rights and
privileges with such organization . . . .” 29 U.S.C. § 411(a)(1). Plaintiffs contended that the
unions denied their right to vote by mandating the ratification of the rejected project
agreement. Alexander, 624 F.2d at 1239. We explained that “[t]here is no allegation here that
the two complaining union members have been discriminated against, or that they have been
denied a privilege or right to vote that the union has granted to others.” Id. at 1240; see also
id. at 1241 (concluding that plaintiffs’ allegations of discrimination were sufficient) (Clark,
J., concurring in part and dissenting in part).
8
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constitution was a contract whose violation “create[d] a threat to industrial
peace or ha[d] a significant impact upon labor-employer relations.” Id. 7
Alexander, then, establishes that an allegation of a contractual violation
is necessary for section 301(a) jurisdiction. But we had no occasion to decide
whether such an allegation was sufficient for such jurisdiction. As particularly
relevant to this case, Alexander did not consider whether, if an allegation of a
contract’s existence is later challenged and disproven as a factual matter,
section 301(a) jurisdiction could still reach such a case. See Jolly Op. at 3.
The Supreme Court subsequently answered this question: An allegation
of a labor contract violation is sufficient to support subject-matter jurisdiction
under section 301(a). See Textron Lycoming Reciprocating Engine Div., AVCO
Corp. v. United Auto., Aerospace & Agric. Implement Workers of Am., Int’l
Union, 523 U.S. 653, 657–58 (1998). In Textron, a union sought a declaratory
judgment that its CBA with Textron was voidable. Id. at 654–55. The union
“alleg[ed]” that Textron had fraudulently induced the CBA’s execution, but
“[did] not allege that either it or Textron ever violated the [CBA].” Id. at 655.
The district court dismissed “for lack of subject-matter jurisdiction” under
section 301(a), and the court of appeals reversed. Id. at 656.
7 See also Wooddell v. Int’l Bhd. Of Elec. Workers, Local 71, 502 U.S. 93, 98–99 (1991)
(“No employer-union contract is involved here; if the District Court had § 301 subject-matter
jurisdiction over petitioner’s suit against his union, it is because his suit alleges a violation
of a contract between two unions, and because § 301 is not limited to suits brought by a party
to that contract . . . .” (emphasis added) (internal citations omitted)); id. at 98 n.3 (explaining
that district courts have jurisdiction over suits by a union member against his union for a
violation of the union constitution “only if it is charged that the breach alleged violates a
contract between two labor organizations” (emphasis added)).
Houston Refining misunderstands Carpenters Local Union No. 1846 v. Pratt-
Farnsworth, Inc., 690 F.2d 489 (5th Cir. 1982). There, a union sued two trade associations
that lacked any contractual relationship with the union, but that allegedly conspired to effect
their member companies’ breaches of their labor contracts with the union. We held that
because the plaintiff could not even allege that the defendants were parties to a labor
contract, jurisdiction under section 301 was lacking. Id. at 500–502.
9
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In reversing the court of appeals, the Supreme Court first explained that
section 301(a) “confers federal subject-matter jurisdiction only over ‘[s]uits for
violation of contracts,’” id. at 656, and that as a textual matter, such suits do
not include “suits that claim a contract is invalid,” id. at 657. The Court then
explained:
This does not mean that a federal court can never
adjudicate the validity of a contract under § 301(a).
That provision simply erects a gateway through which
parties may pass into federal court; once they have
entered, it does not restrict the legal landscape they
may traverse. Thus if, in the course of deciding
whether a plaintiff is entitled to relief for the
defendant’s alleged violation of a contract, the
defendant interposes the affirmative defense that the
contract was invalid, the court may, consistent with
§ 301(a), adjudicate that defense.
Id. at 657–58. In closing, the Court reasoned that “[s]ection 301(a) jurisdiction
does not lie over such a case” because the union “neither alleges that Textron
has violated the contract, nor seeks declaratory relief from its own alleged
violation.” Id. at 658; see also id. at 661–62 (restating same conclusion).
Textron thus teaches that an “alleged violation” satisfies section 301(a)’s
jurisdictional requirement. Id. at 658 (emphasis added). The Court’s
hypothetical “adjudica[tion]” of the “affirmative defense” of a labor contract’s
invalidity would require a disposition on the merits of that defense, not on
jurisdictional grounds, since the parties would have already passed through
the jurisdictional “gateway . . . into federal court.” Id. at 658 (emphasis added). 8
This principle complements our analysis in Alexander, and reading the two
8 Textron’s teaching that a court can adjudicate an affirmative defense “that the
contract was invalid,” Textron, 523 U.S. at 658 (emphasis added), contemplates no distinction
between a non-existent contract and a void contract (that was previously existing, i.e.,
voidable). Contra Jolly Op. at 3.
10
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cases together yields the conclusion that an allegation of a labor contract
violation is both necessary and sufficient to support subject-matter jurisdiction
under section 301(a). 9 If the court later finds the allegedly violated contract to
be non-existent or invalid, it must dismiss for failure to state a claim, not for
lack of jurisdiction. 10
To be sure, neither Alexander nor Textron implicated arbitration, as this
case does. But no authority supports the proposition that arbitration alters
those cases’ teachings on the jurisdictional requirement of section 301(a)—that
a party alleging a labor contract violation passes through the statute’s
jurisdictional “gateway.” Id. Indeed, the Supreme Court has previously treated
an agreement to arbitrate as any other labor contract whose alleged violation
is actionable under section 301(a). See Atkinson v. Sinclair Refining Co., 370
U.S. 238, 241 (1962) (“The Congress has by [section] 301 of the Labor
Management Relations Act, assigned the courts the duty of determining
whether the reluctant party has breached his promise to arbitrate.” (citation
omitted)).
Houston Refining urges us to reject the Third and Sixth Circuits’
approach of treating the factual existence of a labor contract as an element of
a plaintiff’s claim and instead follow the Eighth Circuit, which recognizes the
jurisdictional nature of section 301(a). Compare Winnett v. Caterpillar, Inc.,
553 F.3d 1000, 1007 (6th Cir. 2009); Pittsburgh Mack Sales & Serv., Inc. v. Int’l
Union of Operating Eng’rs, Local Union No. 66, 580 F.3d 185, 189–90 (3d Cir.
9 While an allegation is sufficient for subject-matter jurisdiction under section 301(a),
other statutory provisions impose additional jurisdictional requirements, which are not at
issue on this appeal. See 29 U.S.C. 185(c) (personal jurisdiction limitations).
10 To be clear, my approach would not preclude a challenge to the factual existence of
a labor contract; a court need not assume “permanently” that a labor contract exists once
such existence is alleged. Jolly Op. at 3. However, under Textron, any challenge to such
existence would be decided on the merits.
11
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2009), with ABF Freight Sys., Inc. v. Int’l Bhd. of Teamsters, 645 F.3d 954, 961–
64 (8th Cir. 2011). The Third and Sixth Circuits relied on Arbaugh v. Y & H
Corp., 546 U.S. 500 (2006), in which the Supreme Court explained that “when
Congress does not rank a statutory limitation on coverage as jurisdictional,
courts should treat the restriction as non-jurisdictional in character.” Id. at
516. In ABF Freight, the Eighth Circuit explained that the Third and Sixth
Circuits, in interpreting Arbaugh, did not have the benefit of the Supreme
Court’s subsequent discussion in Henderson ex rel. Henderson v. Shinseki, 131
S. Ct. 1197 (2011). The Henderson Court, after reviewing Arbaugh’s “bright
line” rule, explained that “[w]hen a long line of [the] Court’s decisions left
undisturbed by Congress has treated a similar requirement as jurisdictional,
[the Court] will presume that Congress intended to follow that course.” Id. at
1203 (internal citation and quotation marks omitted). Applying Henderson, the
Eighth Circuit reviewed several earlier Supreme Court cases on section 301(a)
including Textron, all of which treated allegations of a labor contract violation
as a jurisdictional requirement. See ABF Freight System, 645 F.3d at 961–64
(reviewing cases). Accordingly, the court concluded that section 301(a) is
“jurisdictional.” Id. at 963.
But neither the Third, Sixth, nor Eighth Circuits contemplated whether
an alleged labor contract violation can support federal subject-matter
jurisdiction under section 301(a). The Third and Sixth Circuits are correct
insofar as they hold that factual proof of a labor contract is not necessary for
such jurisdiction, and that if a court finds that such a contract is invalid, it
should dismiss for failure to state a claim. See Textron, 523 U.S. at 658. But
those decisions did not recognize that under Textron, section 301(a) jurisdiction
12
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requires an alleged labor contract violation. 11 The Eighth Circuit, for its part,
correctly holds that section 301(a) is “jurisdictional,” but ABF Freight does not
clearly explain what suffices for obtaining such jurisdiction. 12 Accordingly, the
jurisdictional question in this case is best resolved by Alexander and Textron,
rather than any decision of our sister circuits.
Lastly, section 301(a) jurisdiction cannot be so permissive as to reach
any action filed “because a contract has been violated,” Higginson Op. at 5
(quoting Textron, 523 U.S. at 657), or any “suit . . . to vacate an arbitral decision
finding that the plaintiff violated a CBA,” id. at 4. These propositions would
side-step Textron’s copious references to the union’s failure in that case to
“allege” any violation of the CBA. See Textron, 523 U.S. at 655, 658, 661–62. 13
Nor could section 301(a) jurisdiction reach any “controversies involving
11 While the Sixth Circuit in Winnett characterized its own prior holdings as “drive-by
jurisdictional rulings,” Winnett, 553 F.3d at 1005, it did not dismiss the Supreme Court’s
prior jurisdictional rulings as equally inconsequential. At least Textron’s treatment of section
301(a) as jurisdictional goes well beyond the “unrefined dispositions” with which the Arbaugh
Court expressed concern. Arbaugh, 546 U.S. at 511; see also Steel Co., 523 U.S. at 91
(describing “drive-by jurisdictional rulings” as cases in which jurisdictional issues were
“assumed by the parties, and . . . assumed without discussion by the Court”).
12 See ABF Freight System, 645 F.3d at 963 (reviewing Supreme Court case law
holding that allegations are sufficient for section 301 jurisdiction, mentioning plaintiff’s
“colorable claims” of labor contract violation, but also confirming formation of contract as
factual matter).
13 A jurisdictional test requiring only that a suit originate “because a contract has been
violated” is incompatible with the well-pleaded complaint rule, which Judge Higginson would
apply to section 301 actions. Higginson Op. at 3 n.2. Under the well-pleaded complaint rule,
courts must look only to the complaint to confirm their jurisdiction. But if a complaint seeking
vacatur happens not to mention that the arbitral award arose from an alleged labor contract
violation, then a court could examine the award to confirm its jurisdiction.
Furthermore, Textron does not hold that a declaratory-judgment plaintiff who has
“not alleged the violation of a contract . . . therefore [has] not ‘present[ed] a case or controversy
. . . .’” Higginson Op. at 5; see also id. at 3 n.2. The “case or controversy” holding of Textron
was premised solely on the unique factual circumstances of the two parties to that action—
there happened to be “no evidence” that Textron and the union “had any concrete dispute
over the contract’s voidability at the time when the suit was filed.” Textron, 523 U.S. at 660,
661. The Court even emphasized that it was “assuming (without deciding)” that a
“declaratory-judgment complaint raising a nonfederal defense to an anticipated federal
claim” would confer federal-question jurisdiction under 28 U.S.C. § 1331. Id. at 659, 660.
13
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collective-bargaining agreements.” Higginson Op. at 4 (quoting Lingle v. Norge
Division of Magic Chef, Inc., 486 U.S. 399, 403 (1988)). In Lingle, the Supreme
Court did mention that certain “controversies involving” CBAs fall within
section 301 jurisdiction, summarizing its earlier holding in Textile Workers
Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448 (1957). But Lincoln Mills
confirmed section 301 jurisdiction not for any disputes merely implicating
CBAs, but rather cases involving alleged labor contract violations, in which
parties had sought “enforcement” of those contracts—namely, the “performance
of promises to arbitrate grievances under [CBAs].” Lincoln Mills, 353 U.S. at
451 (emphasis added), accord Lingle, 486 U.S. at 403; see also Sinclair Refining
Co., 370 U.S. at 241. 14 Furthermore, to allow any suit merely “involving” a
CBA—even lacking an alleged violation—would run afoul of Textron. After all,
the Textron Court held that section 301 jurisdiction did not reach a suit
“involving” a CBA’s voidability because the complaint did not allege a CBA
violation. 15
Under Textron and Alexander, the alleged violation of a labor contract is
both necessary and sufficient to invoke federal subject-matter jurisdiction
under section 301(a) of the Labor Management Relations Act, 29 U.S.C. §
185(a). See Textron, 523 U.S. at 657–58; Alexander, 624 F.2d at 1238.
B
Because a party need only allege the violation of a labor contract to
invoke federal subject-matter jurisdiction under section 301, this requirement
was easily satisfied here.
14 Indeed, the fact that the Textron Court did not bother to discuss either Lingle or
Lincoln Mills is telling: The principle common to all three decisions is that a party must
allege a labor contract violation in order to invoke section 301(a) jurisdiction.
15 See Textron, 523 U.S. at 658 (holding that “[s]ection 301(a) jurisdiction does not lie”
where plaintiff union sought declaratory judgment that a CBA was voidable).
14
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This suit involves at least two alleged violations of a labor contract. First,
Houston Refining’s complaint claimed that the Union alleged the company had
violated a CBA. 16 Second, in requesting vacatur of the arbitral award, Houston
Refining alleged that the award violated the terms of the 2006 CBA—assuming
arguendo its existence. 17 Accordingly, the district court properly exercised
subject-matter jurisdiction over this suit for “violation of contracts between an
employer and a labor organization.” 29 U.S.C. § 185(a). 18
Additionally, because section 301’s jurisdictional requirement does not
require factual proof of a valid labor contract, Houston Refining’s collateral
attack on arbitrability is meritless. Houston Refining relies on Montez v.
Department of the Navy, 392 F.3d 147 (5th Cir. 2004), for the proposition that
“where issues of fact are central both to subject matter jurisdiction and the
claim on the merits, . . . the trial court must assume jurisdiction and proceed
to the merits.” Id. at 150. By Houston Refining’s logic, because the “merits” of
16 See Compl., Appl. to Vacate Arbitration Award & Mem. of Law in Supp. at 8
(claiming that the Union representative, “submitted Grievance No. 0-12-09 . . . , purportedly
under the 2009-12 tentative agreement . . . demanding that the Company reinstitute the
matching contribution under the 401(k) Plan”); id. at 18 (claiming that arbitrator
“determined, correctly, that the Grievance alleged violations of provisions of the 2009-12
tentative agreement”). A plaintiff’s claim that it (and not the defendant) allegedly violated a
labor contract is sufficient to support section 301 jurisdiction. See Textron, 523 U.S. at 657(“‘Suits for violation of contracts’ under § 301(a) are not suits that claim a contract is invalid,
but suits that claim a contract has been violated.” (emphasis added)); id. at 658 (“[A]
declaratory judgment plaintiff accused of violating a collective-bargaining agreement may ask
a court to declare the agreement invalid.” (emphasis added)).
17 See Compl., Appl. to Vacate Arbitration Award & Mem. of Law in Supp. at 18
(“Where arbitrators act ‘contrary to express contractual provisions,’ they have exceeded their
powers.”); id. at 22 (alleging that “because the dispute over the matching contributions is not
subject to the arbitration agreement under the 2006-09 CBA, Arbitrator Griffin exceeded his
powers and the Award should be vacated”); id. at 26 (alleging that “if the 401(k) Plan’s terms
are in fact wholly incorporated into the 2006-09 CBA . . . then Arbitrator Griffin’s Decision
renders Section 11 of the 401(k) Plan meaningless”).
18 Houston Refining urges us to remand to enable the district court “to evaluate
independently . . . the existence of a CBA.” If the district court’s subject-matter jurisdiction
indeed hinged on a fact-intensive determination, remand would be appropriate. But as
explained above, no such factual inquiry is necessary under section 301.
15
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No. 13-20384
this appeal concern whether the grievance was arbitrable, and because the
parties agree that a valid CBA was necessary for such arbitrability, the
question of the CBA’s existence is common to both jurisdiction and the merits.
See infra Part IV.B. Thus, the company does not ask the district court to
dismiss for lack of jurisdiction—for dismissal would allow the arbitral award
to stand. 19 Rather, invoking Montez, Houston Refining apparently views this
“jurisdictional” claim as an alternative path for the district court to vacate the
award on arbitrability grounds, a path that would conveniently elide the
question of whether the parties agreed to give arbitrability to the arbitrator.
See infra Part IV.A.
But Montez’s interpretation of the Federal Tort Claims Act is
inapplicable because as explained above, under Textron, the jurisdictional
issue under section 301(a) does not hinge on “issues of fact,” but rather on
allegations of a contract violation. Montez, 392 F.3d at 150. That is, under
section 301(a), the jurisdiction and arbitrability inquiries are not factually
“intertwined.” Id. Accordingly, Montez cannot permit the district court to
assume jurisdiction in order to resolve the arbitrability question de novo. 20
Because Houston Refining’s complaint alleges both that the Union
claimed the company violated a CBA, and that the arbitral award violates the
19 Indeed, Houston Refining claims in its “Statement of Jurisdiction” that “[t]he lower
court had jurisdiction under the LMRA,” quoting and citing 29 U.S.C. § 185.
20 Although we need not pass on this question today, we express doubt about whether
a court can ever “assume jurisdiction and proceed to the merits,” Montez, 392 F.3d at 150, in
light of the Supreme Court’s rejection of such “hypothetical jurisdiction,” Steel Co., 523 U.S.
at 94–95. Read narrowly, our holding in Montez is limited to actions under the Federal Tort
Claims Act, Montez, 392 F.3d at 150, but the opinion also refers to the permissibility of
hypothetical jurisdiction as the “general rule,” id. In this observation, Montez relied on
Williamson v. Tucker, 645 F.2d 404, 415 (5th Cir. 1981). We reserve for a future case a fuller
consideration of the correctness of Montez.
16
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2006 CBA, the district court had subject-matter jurisdiction under section
301(a) of the Labor Management Relations Act, 29 U.S.C. § 185(a). 21
IV
Houston Refining next contends that the district court erred in deferring
to the arbitrator’s determination of the grievance’s arbitrability. According to
the company, because the parties never agreed in clear and unmistakable
terms to give the issue of arbitrability to the arbitrator, the district court was
obligated to decide the issue independently. Houston Refining further urges us
to resolve certain dispositive arbitrability questions on appeal and render
judgment in its favor.
“[J]udicial review of an arbitration award arising from the terms of a
CBA is narrowly limited” as to the merits of the award. Albemarle Corp. v.
United Steel Workers, 703 F.3d 821, 824 (5th Cir. 2013) (citation and internal
quotation marks omitted). 22 By contrast, the law presumes that courts have
21 A recent panel of this Court held that it was without “statutory ground for appellate
jurisdiction under the [Federal Arbitration Act (‘FAA’)]” because the district court “neither
confirmed nor vacated the arbitration award,” but only denied a motion to dismiss and
remanded the award to the arbitration panel for clarification of damages. Murchison Capital
Partners, L.P. v. Nuance Commc’ns, Inc., No. 13-10852, 2014 WL 3703868, at *5 (5th Cir.
July 25, 2014). We assume (without deciding) that Murchison, decided under the FAA’s
provisions governing appellate jurisdiction, 9 U.S.C. § 16(a)(1), governs this appeal in an
action under section 301 of the LMRA. Even so, Murchison is distinguishable. There, the
panel explained that the district court “neither vacated nor confirmed the arbitration award
but instead remanded the award back to the arbitration panel for further consideration of”
damages, and “did not dismiss” the case, but in fact denied a motion to dismiss. Murchison,
2014 WL 3703868, at *2, 4. Here, although the district court remanded the award to the
arbitrator for clarification of the remedy, it also granted in substantial part the Union’s
motion for summary judgment (denying the motion only as to attorney’s fees) and concluded
that “Houston Refining failed to establish . . . that the arbitrator’s award should be vacated.”
Thus, its “order confirming an arbitration award” is appealable. Id. at *2.
22 This judicial deference extends to both the merits of an arbitral award and to an
arbitrator’s resolution of “procedural preconditions” to arbitration. See BG Group PLC v.
Republic of Arg., 134 S. Ct. 1198, 1207 (2014). In its reply brief, Houston Refining suggests
that BG Group might help clarify whether the grievance’s quotation from the 2009 CBA
implicates arbitrability or merely procedural preconditions. We generally do not consider a
claim raised for the first time in a reply brief. Cox v. DeSoto Cnty., Miss., 564 F.3d 745, 749
17
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plenary power to decide the gateway question of a dispute’s “arbitrability”—
i.e., “whether [the parties] agreed to arbitrate the merits.” First Options of Chi.,
Inc. v. Kaplan, 514 U.S. 938, 942 (1995).
When a party calls upon a court to decide a dispute’s arbitrability, the
court must determine whether the dispute falls within the ambit of the parties’
agreement to arbitrate. “[A]rbitration is simply a matter of contract between
the parties; it is a way to resolve those disputes—but only those disputes—that
the parties have agreed to submit to arbitration.” First Options, 514 U.S. at
943. If the parties did not so agree, then the “party who has not agreed to
arbitrate will normally have a right to a court’s decision about the merits of its
dispute.” Id. at 942.
Yet like any other disputed issue, even the gateway question of
arbitrability can be given to an arbitrator, if the parties so choose. But the
party contending that an arbitrator has authority to decide arbitrability “bears
the burden of demonstrating clearly and unmistakably that the parties agreed
to have the arbitrator decide that threshold question . . . .” ConocoPhillips, Inc.
v. Local 13-0555 United Steelworkers Int’l Union, 741 F.3d 627, 630 (5th Cir.
2014) (citation and internal alteration omitted). “[M]erely arguing the
arbitrability issue to an arbitrator does not indicate a clear willingness to
arbitrate that issue, i.e., a willingness to be effectively bound by the arbitrator’s
decision on that point.” First Options, 514 U.S. at 946. Nor do “ambiguity and
silence” suffice. ConocoPhillips, 741 F.3d at 632. If the party cannot carry its
burden, then the “court should decide [the arbitrability] question just as it
(5th Cir. 2009). Additionally, we observe that Houston Refining’s interests would not be
served by a determination that the quotation issue implicates mere “procedural
preconditions” under BG Group, since the arbitrator would then be afforded substantial
deference on this matter.
18
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No. 13-20384
would decide any other question that the parties did not submit to arbitration,
namely, independently.” Id. at 630 (quoting First Options, 514 U.S. at 943). 23
A
We first consider whether, on the undisputed facts at summary
judgment, the Union carried its burden of proving that the parties “clearly and
unmistakably” agreed to have the arbitrator decide arbitrability.
ConocoPhillips, 741 F.3d at 630. Absent such proof, the district court had to
decide arbitrability independently. 24 The Union submits that the parties
expressed agreement to arbitrate arbitrability both by their conduct in
arbitration proceedings and by the Settlement Agreement, and we consider
each in turn below. 25
As for their conduct at arbitration, the parties agree that Houston
Refining argued at length about arbitrability before the arbitrator. But “merely
arguing the arbitrability issue to an arbitrator does not indicate a clear
willingness to arbitrate that issue.” First Options, 514 U.S. at 946. The Union
does not dispute this well-established rule or advance any other reason why
23 While cases such as First Options arose under the Federal Arbitration Act, courts
“may rely on” this jurisprudence in reviewing arbitrations under section 301 of the Labor
Management Relations Act. Int’l Chem. Workers Union v. Columbian Chems. Co., 331 F.3d
491, 494 (5th Cir. 2003). Although Houston Refining is correct that judicial review in these
two contexts is “not interchangeable,” Brabham v. A.G. Edwards & Sons Inc., 376 F.3d 377,
384 (5th Cir. 2004), the limited differences are irrelevant to this dispute.
24 The district court mistakenly articulated the burden of proof applicable to a party
who seeks vacatur of an arbitral award on the merits: “As the party seeking to vacate the
arbitral award, Houston Refining bears the burden of proof.” Here, Houston Refining does
not challenge the arbitrator’s merits determination that the match suspension violated
Article 40; rather, at issue is the procedural question of who decides arbitrability. See First
Options, 514 U.S. at 942 (distinguishing between three issues of merits, arbitrability, and
who decides arbitrability). Thus, as the party claiming that the arbitrator has the power to
decide arbitrability, the Union—not Houston Refining—bears the initial burden of proving
that the parties agreed in sufficiently clear terms to delegate this issue to the arbitrator and
thereby take the question away from the courts. ConocoPhillips, 741 F.3d at 630.
25 The parties do not dispute that the 2006 CBA, standing alone, did not manifest an
agreement to arbitrate arbitrability.
19
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the arbitration proceedings demonstrated any agreement to arbitrate
arbitrability.
The Settlement Agreement is also unavailing because its terms are too
ambiguous to evince a “clear and unmistakable” agreement to arbitrate
arbitrability. This ambiguity is borne out by the parties’ plausible but
conflicting interpretations. Houston Refining contends that it did not agree to
give the arbitrator the final word on arbitrability, citing this clause:
At arbitration, the parties shall reserve all rights to
present any and all arguments and advance any and
all defenses to them including, without limitation,
arguments concerning whether or not an applicable
collective bargaining agreement was in effect at the
time that a particular grievance arose.
Settlement Agreement, ¶ 4. The company explains that, in particular, the
words “shall reserve” demonstrate that the parties contemplated potential
judicial review, especially on the matter of arbitrability, which encompasses
the factual inquiry into “whether or not an applicable collective bargaining
agreement was in effect at the time that a particular grievance arose.” Id. In
Houston Refining’s view, the Union effectively construes “reserve” to mean
“exhaust.” The Union does not refute this reading, but points to another clause
in the Agreement stating that the parties “agree[d] to proceed to arbitration
with the grievances [regarding 401(k) contributions] expeditiously and in
compliance with the arbitration procedures . . . in the applicable collective
bargaining agreements.” Id. ¶ 1. While these provisions seem to be in tension,
the Union proffers nothing more. 26
26The prepositional phrase “[a]t arbitration” does nothing to resolve the underlying
ambiguity. In light of the “context of the agreement,” Higginson Op. at 6, one could reasonably
read the Settlement Agreement to mean “that the parties reserve the right to make [any and
all] arguments at arbitration,” id. at 7. This interpretation, however, relies on repositioning
the phrase “at arbitration,” such that it modifies “to present any and all arguments . . . .”
20
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The Union additionally contends that allowing Houston Refining to
return to the courts would result in a “waste of judicial resources . . . [that] the
policy of deference to arbitral awards intends to avoid.” 27 Houston Refining, for
its part, acknowledges that under its reading, the Settlement Agreement
“inverts the usual timing”: The parties forgo an initial court decision about
arbitrability but, following arbitration, are able to litigate about arbitrability
and other issues in court. Yet the Supreme Court in First Options rejected the
same concerns about “delay and waste” and concluded that “factual
circumstances vary too greatly to permit a confident conclusion about whether
allowing the arbitrator to make an initial (but independently reviewable)
arbitrability determination would, in general, slow down the dispute resolution
process.” First Options, 514 U.S. at 946–47. Thus, the First Options default
rule that courts decide arbitrability absent clear agreement avoids case-by-
case weighing of costs and benefits, and strikes a desirable balance between
reaping the efficiencies of arbitration and ensuring access to judicial review on
the “rather arcane” question of who decides arbitrability, which parties
“reasonably would have thought a judge, not an arbitrator, would decide.” See
id. at 945 (citation omitted).
In light of the parties’ “ambiguity and silence,” ConocoPhillips, 741 F.3d
at 632, the Union has not carried its burden of establishing that the parties
“clearly and unmistakably” agreed to arbitrate arbitrability, id. at 630. 28
Settlement Agreement, ¶ 4. But in the actual text of the Settlement Agreement, “[a]t
arbitration” modifies only the main verb phrase “shall reserve,” which again could be read to
mean “shall reserve for judicial review.” Again, left with two interpretations of the phrase
“shall reserve,” we cannot conclude that the parties “clearly and unmistakably” agreed to
arbitrate arbitrability. ConocoPhillips, 741 F.3d at 630.
27 See also Higginson Op. at 7 (“There would have been no need to stipulate to th[e]
fact [that the parties could advance ‘all arguments and defenses’ at arbitration] in advance if
the parties did not intend the arbitrator to decide those questions.”).
28 To be sure, an arbitration agreement need not recite verbatim that the “parties
agree to arbitrate arbitrability” in order to manifest “clear and unmistakable” agreement.
21
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Accordingly, we hold that the district court erred as a matter of law in failing
to decide arbitrability “just as it would decide any other question that the
parties did not submit to arbitration, namely, independently.” Id.
B
We decline today to decide whether the Union’s grievance was arbitrable.
This appeal presents three distinct arbitrability inquiries, and the district
court is better positioned to assess the parties’ arguments in the first instance
and develop the record as necessary.
The first arbitrability inquiry is whether the 2006 CBA existed when the
Union filed its grievance. The parties seem to agree that if no CBA was in effect
at all, then arbitration would be unavailable. This arbitrability question also
appears to be the most fact-intensive one, and neither party asks us to decide
it on the limited record before us.
The second and third arbitrability inquiries concern whether, even if the
2006 CBA existed, the arbitrator exceeded his authority under that CBA.
Houston Refining urges us to hold that the arbitrator did exceed his authority
and vacate the award—on either of two independent grounds. First, the
company contends that the Union’s grievance quoted the text of the 2009 CBA,
See, e.g., Petrofac, Inc. v. DYNMcDermott Petroleum Operations, 687 F.3d 671, 675 (5th Cir.
2012) (concluding that parties agreed to arbitrate arbitrability by incorporating into their
arbitration agreement the rules of the American Arbitration Association, which state that
“[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any
objections with respect to the existence, scope or validity of the arbitration agreement,” and
reviewing similar cases from sister circuits); Allen v. Regions Bank, 389 F. App’x 441, 446
(5th Cir. 2010) (unpublished) (determining that parties clearly agreed to arbitrate
arbitrability where agreement stated that “[a]ny dispute regarding whether a particular
controversy is subject to arbitration . . . shall be decided by the arbitrator(s)”). Furthermore,
because the delegation clause granting broad jurisdiction to the arbitrator in Rent-A-Center,
W., Inc. v. Jackson, 561 U.S. 63 (2010), did not include any proviso that the parties “shall
reserve” rights to make arguments, that case is inapposite. See id. at 66 (explaining that
delegation clause provided that “Arbitrator . . . shall have exclusive authority to resolve any
dispute relating to the interpretation, applicability, enforceability or formation of this
Agreement” (emphasis added)); Higginson Op. at 7–8.
22
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such that the grievance is invalid under the 2006 CBA’s arbitration clause. See
2006 CBA, art. 30, ¶¶ 1, 7(b). Additionally, Houston Refining submits that its
unilateral suspension of the 401(k) Plan, allegedly in violation of Article 40 of
the 2006 CBA, 29 does not concern “wages” within the meaning of the CBA’s
arbitration clause. See id. art. 30, ¶ 1.
We reserve these and all other arbitrability questions for the district
court, which must on remand decide the grievance’s arbitrability
“independently,” without deference to the arbitral decision. ConocoPhillips,
741 F.3d at 630.
C
Judge Higginson, in dissent, would vacate the arbitral award on the
grounds that the arbitrator exceeded his authority because the term “wages”
in the CBA’s arbitration clause cannot encompass this dispute over the 401(k)
match suspension. Although we do not decide any question of arbitrability,
given the important doctrinal questions raised by the dissent, we here explain
why we would disagree, at least on this record.
Article 40 of the 2006 CBA imposes procedural requirements on changes to the
29
401(k) Plan:
During the term of this Agreement, the Company will provide
advance notice of proposed changes to the benefit plans covered
by the Agreement. . . . A reasonable time period will be provided
for the Union to elect inclusion in or exclusion from the amended
benefits plan. If the Union elects exclusion, represented
employees shall continue participation in the existing,
unchanged benefits plan for the term of the Collective
Bargaining Agreement.
2006 CBA, art. 40, pt. III, ¶ 5.
23
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No. 13-20384
1
The dissent errs in construing Houston Refining’s claim about the scope
of the CBA’s arbitration clause as a claim that the arbitrator exceeded his
powers, rather than a challenge to the dispute’s arbitrability.
Under its assumptions, 30 the dissent reasons that we would have
authority to construe the scope of the 2006 CBA’s arbitration clause because
we may always decide whether the arbitrator “exceed[ed] his contractual
mandate,” Beaird Indus., Inc. v. Local 2297, Int’l Union, 404 F.3d 942, 946 (5th
Cir. 2005), and because, here, Houston Refining contends that the arbitrator
“exceeded his powers by treating a 401(k) dispute as grievable.”
But Houston Refining has not established an excess-of-powers challenge
under Beaird. In Beaird, we considered a party’s challenge to an arbitrator’s
mandate to decide the merits, where arbitrability was “undisputed.” Beaird,
404 F.3d at 943. Unlike Beaird, Houston Refining does not contend that the
arbitrator exceeded his mandate to decide the merits. In fact, Houston Refining
correctly observes that “the merits are not here” at all on this appeal; it does
not challenge the arbitrator’s finding that the unilateral 401(k) match
suspension violated Article 40 of the CBA. Nor does Houston Refining
demonstrate that the arbitrator exceeded his mandate to decide arbitrability—
by ignoring “unambiguous,” “express contractual provisions” prohibiting
arbitration of the Union’s grievance. Beaird, 404 F.3d at 946.
Rather, Houston Refining’s contention—that the parties’ agreement to
arbitrate does not cover the Union’s grievance—concerns a quintessential
question of the dispute’s arbitrability. Supra Part IV.B. 31 To be sure, Houston
30 See Higginson Op. at 9–10 (applying to arbitrability question here the same
deferential review generally applicable to any issue submitted by the parties to the
arbitrator).
31 Here, I examine the substance of Houston Refining’s claim and conclude that it is
actually an arbitrability challenge. By contrast, for jurisdictional purposes, I construe the
24
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Refining deploys the phrase “exceeded his powers” and cites Beaird. But this
is nothing more than an attempt to transform an arbitrability claim into an
excess-of-powers claim, thus preserving an alternate grounds for vacatur.
Indeed, we have routinely construed claims that an arbitral body “exceeded its
powers by issuing an award on a claim not covered by the parties’ arbitration
agreement” as raising a “question of arbitrability.” Petrofac, Inc. v.
DynMcDermott Petroleum Operations Co., 687 F.3d 671, 674 (5th Cir. 2012)
(emphasis added); see also Downer v. Siegel, 489 F.3d 623, 626–27 (5th Cir.
2007) (same). Tellingly, both parties’ leading cases on whether certain disputes
implicating benefits are covered by arbitration clauses all invoke the
presumption of arbitrability; therefore, this case, like those, presents a
question of arbitrability. See infra Part IV.C.2 (reviewing cases).
The dissent wants to have it both ways: Even if we were to find that the
parties agreed clearly and unmistakably to arbitrate arbitrability, we would
retain the power to vacate the award for lack of arbitrability. But our law
forbids such a procedure.
2
Because we would hold that the parties here did not clearly and
unmistakably agree to arbitrate arbitrability, see supra Part IV.A, the courts
must decide arbitrability questions independently.
But this independent inquiry is circumscribed by a presumption favoring
arbitrability: “[W]here the contract contains an arbitration clause, there is a
presumption of arbitrability.” AT & T Techs., Inc. v. Commc’ns Workers of Am.,
475 U.S. 643, 650 (1986). That presumption applies “unless it may be said with
face of Houston Refining’s complaint and conclude that the company does allege that the
arbitral award violates the parties’ contract by exceeding the arbitrator’s mandate. See supra
note 17. Of course, a complaint facially alleging only that a dispute was not arbitrable would
also sufficiently allege a violation of a labor contract—the arbitration of a non-arbitrable
dispute violates the scope of powers delegated to the arbitrator.
25
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positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute. Doubts should be resolved in
favor of coverage.” Id. However, “the policy that favors resolving doubts in
favor of arbitration cannot serve to stretch a contractual clause beyond the
scope intended by the parties or authorize an arbiter to disregard or modify the
plain and unambiguous provisions of the agreement.” Smith v. Transp.
Workers Union of Am., AFL-CIO Air Transport Local 556, 374 F.3d 372, 375
(5th Cir. 2004) (citation and internal quotation marks omitted). 32
Even undertaking an independent review of arbitrability under the 2006
CBA, assuming the CBA existed, we would not conclude on this record that
because this dispute does not concern “wages,” vacatur is proper.
The dissent’s analysis of the 2006 CBA says nothing about whether “it
may be said with positive assurance that the arbitration clause is not
32 Where parties agree to give an issue to the arbitrator, courts apply a deferential
standard of review; absent such agreement, courts independently decide the issue. See
Schneider v. Kingdom of Thailand, 688 F.3d 68, 72 (2d Cir. 2012). Courts must guard against
“conflat[ing] the concepts” of deferential and independent review. Id. Although independent
review “also is deferential” insofar as courts apply the presumption of arbitrability, Higginson
Op. at 10 n.4, the dissent renders meaningless the inquiry into whether parties agreed to
arbitrate arbitrability—because either way, a court could ultimately interpret the arbitration
clause’s scope de novo.
Tellingly, this Court has never found clear and unmistakable agreement to arbitrate
arbitrability before proceeding to conduct an independent analysis of the arbitration
agreement to determine arbitrability. In separating these approaches, we are in the good
company of the First, Second, Fourth, Seventh, and Ninth Circuits. Goldman, Sachs & Co. v.
City of Reno, 747 F.3d 733, 742 (9th Cir. 2014) (undertaking independent review only after
determining that parties did not clearly and mistakably agree to arbitrate arbitrability);
Peabody Holding Co., LLC v. United Mine Workers of Am., Int’l Union, 665 F.3d 96, 104 (4th
Cir. 2012) (same); Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 376 (1st Cir.
2011) (same); R.J. Corman Derailment Servs., LLC v. Int’l Union of Operating Eng’rs, Local
Union 150, AFL-CIO, 422 F.3d 522, 527 (7th Cir. 2005) (explaining lack of clear and
unmistakable agreement to arbitrate arbitrability required court “to decide whether the
dispute was arbitrable”); see also Schneider, 688 F.3d at 74 (concluding that because parties
agreed to arbitrate arbitrability, appellant “is not entitled to an independent judicial
redetermination of that same question”). But see Martinez v. Carnival Corp., 744 F.3d 1240,
1246–47 (11th Cir. 2014) (undertaking independent review of scope of arbitration clause even
after concluding that parties agreed clearly and unmistakably to arbitrate arbitrability).
26
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susceptible of an interpretation that covers the asserted dispute.” AT & T, 475
U.S. at 650 (emphasis added). That is, we have no license to interpret the CBA
de novo; rather, we must ask whether any interpretation could bring this
dispute within the ambit of the arbitration clause, bearing in mind that
“[d]oubts should be resolved in favor of coverage.” Id. Here, Arbitrator Griffin
concluded that the dispute was arbitrable, explaining that because matching
contributions “had monetary value,” they could be considered a form of wages,
and that the match suspension violated an express provision of the CBA—
Article 40, which governed procedures for amending the 401(k) Plan.
The case law makes the CBA particularly “susceptible of” the arbitrator’s
interpretation. Id. 33 First, this case can be distinguished from our decision in
Local Union No. 4-449, Oil, Chem. & Atomic Workers Union v. Amoco Chem.
Corp., 589 F.2d 162 (5th Cir. 1979). At issue in Amoco were “two grievances
filed by [union] members . . . contesting the denial of sick pay benefits for
certain work absences.” Id. at 163. We concluded that a process for obtaining
sickness and disability benefits, “expressly constructed” by the CBA and
benefits plan, “sufficiently exclude[d] arbitration for grievances concerning
sickness and disability benefits.” Id. at 164. We relied on the fact that under
the CBA, Amoco’s Board of Directors had “the right to interpret and apply the
[Benefits] Plan,” and that their decision “would be final.” Id. Thus, the two
grievances fell squarely within the jurisdiction of the Board of Directors.
In contrast to Amoco, this case does not involve individual Union
members’ challenges to the denial of their benefits under the 401(k) Plan—the
33To be clear, under the presumption of arbitrability, we need not reject the dissent’s
analysis as legally erroneous or establish a definitively “correct” interpretation of the 2006
CBA—especially since we decline to decide any arbitration question on this appeal. Rather,
we explain below that on the record before us, the case law amply supports at least “an
interpretation” of the 2006 CBA’s arbitration clause that favors arbitrability. AT & T, 475
U.S. at 650 (emphasis added).
27
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purview of Houston Refining’s Benefits Administrative Committee. Rather,
the Union alleges that the procedure by which Houston Refining amended the
401(k) Plan violated its obligations under the 2006 CBA. The record before us
indicates that the Committee is charged only with the “administration” of the
401(k) Plan—including the power to “construe and interpret all Plan terms”
and to “determine all controversies relating to Plan administration.” Had
Union members sought to enforce their rights under the 401(k) Plan, then the
Committee could certainly “interpret and apply” that Plan. Amoco, 589 F.2d at
164. But Houston Refining has not proffered any evidence showing that the
Committee, in the course of administering the 401(k) Plan, can determine
whether that Plan was lawfully amended under the 2006 CBA. In fact,
Houston Refining has suggested precisely the opposite: Because the 401(k)
Plan expressly permits the company to make unilateral amendments “at any
time and from time to time,” the Committee, in carrying out its duty of applying
the Plan’s terms, would likely never be able to recognize a breach of Article 40
of the 2006 CBA. 34
Our sister circuits’ decisions also support “an interpretation” of the 2006
CBA favoring arbitrability. To be sure, the Third and Seventh Circuits found
that arbitration of a benefits-related grievance was unavailable where
arbitration clauses covered only disputes over “wages, hours, or working
conditions,” like the clause here. Higginson Op. at 12. But those decisions
turned not on the scope of “wages,” 35 but on the fact that the CBA was not the
34 Houston Refining claims that it has made multiple unilateral changes in the past,
and that it and the Union have “never bargained about any such changes.” But Houston
Refining and the Union indisputably bargained over the terms of the 2006 CBA, and if that
CBA was valid, then the Union would seem to have an actionable right under that CBA,
notwithstanding any past failures to enforce that right.
35 In fact, those courts concluded that even an arbitration clause covering “wages,
hours, or working conditions” is “broad” under AT & T, warranting an even stronger
presumption of arbitration. See United Steelworks of Am., AFL-CIO-CLC v. Rohm & Haas
28
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source of the allegedly violated right. 36 Elsewhere, under arbitration clauses
facially broader than the one at issue here, the Fourth and Seventh Circuits
concluded that disputes were arbitrable. 37 But other courts, notwithstanding
similarly broad clauses, concluded that disputes were not arbitrable—again,
because the right at issue was protected by a separate benefits grievance
procedure. 38
In sum, Amoco and our sister circuits’ decisions could be read to stand
for this proposition: A dispute is arbitrable if the dispute concerns a direct
violation of a right under the CBA, rather than a challenge to a determination
of an employee’s eligibility for benefits under the benefits plan. This principle
recognizes the importance of the source of the disputed right, and, furthermore,
prevents clashes between arbitration and disputes governed by the Employee
Retirement Income Security Act (“ERISA”), about which Houston Refining
professes to be concerned. Compare Amoco, 589 F.2d at 164 (holding dispute
over two employees’ entitlement to sick pay benefits not arbitrable and
explaining that Board of Directors has “right to interpret and apply the
[Sickness and Disability Benefits] Plan”), with Printing Specialties & Paper
Products Union Local 680, Graphic Commc’n Int’l Union, AFL-CIO v. Nabisco
Brands, Inc., 833 F.2d 102, 105 (7th Cir. 1987) (concluding that employee-
Co., 522 F.3d 324, 331–32 (3d Cir. 2008); Printing Specialties & Paper Products Union Local
680, Graphic Commc’n Int’l Union, AFL-CIO v. Nabisco Brands, Inc., 833 F.2d 102, 104 (7th
Cir. 1987). Our analysis does not depend on this stronger presumption of arbitrability.
36 See infra note 39 and accompanying text.
37 See Higginson Op. at 12 n.5 (citing Karl Schmidt Unisia, Inc. v. Int’l Union, United
Automobile, Aerospace, & Agric. Implement Workers of Am., UAW Local 2357, 628 F.3d 909,
914–16 (7th Cir. 2010); E.I. DuPont De Nemours & Co. v. Ampthill Rayon Workers, Inc., 290
F. App’x 607, 610–12 (4th Cir. 2008) (unpublished)).
38 See Teamsters Local Union No. 783 v. Anheuser-Busch, Inc., 626 F.3d 256, 258 (6th
Cir. 2010) (CBA covering all grievances “arising under or relating to the interpretation of”
the CBA); Bridgestone/Firestone, Inc. v. Local Union No. 998, 4 F.3d 918, 923 (10th Cir. 1993)
(CBA covering disputes over “the interpretation or application of [the CBA] or any local plant
Supplementary Agreement”).
29
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specific benefits dispute was not arbitrable under clause covering “wages,
hours or working conditions,” but explaining that CBA violation would be
arbitrable if Nabisco had violated an “obligation under the [CBA]” that
“abrogated the full force and effect of the [Benefits] Plan”). 39
Accordingly, if the 2006 CBA in fact existed, the case law applied to this
record—under the presumption of arbitrability—demonstrates that the CBA’s
arbitration clause is at least “susceptible of” an interpretation that would not
bar arbitration of this dispute. AT & T, 475 U.S. at 650. 40
39 Besides our Circuit and the Seventh Circuit, the Sixth, Third, Fourth, and Tenth
Circuits have also considered the source of the allegedly violated right. Compare Anheuser-
Busch, 626 F.3d at 260–63 (holding dispute over individual employee’s pension benefits
eligibility not arbitrable, despite “broad” arbitration clause under AT & T, id. at 261, because
“the Pension Plan clearly provides a specific mechanism for resolving all grievances related
to pension rights,” whereby “an individual can make a claim for pension benefits to the plan
director,” id. at 262); Rohm & Haas, 522 F.3d at 332–34 (“The employees’ right to receive
disability benefits . . . derives from the [Health and Welfare] Plan,” id. at 334, where CBA
“d[id] not . . . have an article devoted to disability benefits nor [did] it provide any sort of
discussion as to the employees’ rights to or calculations regarding such benefits,” id. at 332);
Bridgestone/Firestone, 4 F.3d at 923 (finding dispute not arbitrable because of “separate
structure of the two instruments, [and] the absence of any reference to the Suggestion System
in the bargaining agreement”), with E.I. DuPont de Nemours & Co. v. Ampthill Rayon
Workers, Inc., 516 F. Supp. 2d 588, 593–94 (E.D. Va. 2007) (rejecting employer’s claims of
potential arbitration-ERISA conflict), aff’d 290 F. App’x 607, 612 (4th Cir. 2008)
(unpublished) (holding dispute arbitrable despite potential impact on benefits to employees,
given alleged violation of CBA’s procedural rules governing benefit plan amendments);
United Steelworkers of Am. v. Mead Corp., Fine Paper Div., 21 F.3d 128, 132 (6th Cir. 1994)
(holding dispute arbitrable given that union’s claim was “governed on its face by the [CBA]”).
40 Since we do not decide this arbitrability question today, a more considered district
court opinion and developed record could inform a future court’s analysis. For instance, the
record is spare on the CBA’s negotiating history and the Benefits Administrative Committee’s
authority to apply Article 40 of the 2006 CBA. Regardless of what additional facts and legal
arguments are marshalled, Houston Refining cannot carry its burden of overcoming the
presumption of arbitrability, Standard Concrete Prods. Inc. v. Gen. Truck Drivers, Office,
Food & Warehouse Union, Local 952, 353 F.3d 668, 674 (9th Cir. 2003), merely by advancing
a reasonable reading of the 2006 CBA. Rather, it must invalidate the Union’s interpretation
of the CBA’s arbitration clause, such that the CBA is “not susceptible of an interpretation
that covers the asserted dispute.” AT & T, 475 U.S. at 650 (emphasis added).
30
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V
For the foregoing reasons, we REVERSE the judgment of the district
court and REMAND for further proceedings. 41
41Judge Jolly and Judge Higginson both conclude that jurisdiction is proper,
notwithstanding their differing rationales. See supra Part III; Jolly Op. at 1; Higginson Op.
Part A. Judge Jolly concurs in the reasoning and holdings in Parts IV and V, while Judge
Higginson dissents from both Parts IV and V. See Higginson Op. Parts B, C.
31
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E. GRADY JOLLY, Circuit Judge, concurring:
I wholly agree with the conclusions reached by Judge Garza: We have
jurisdiction over this case, and the district court erred in failing to decide the
arbitrability question. I write separately, however, because Judge Garza’s
jurisdictional analysis is, in my opinion, quite troublesome.
I agree with Judge Garza that we are bound by Alexander v. Int’l Union
of Operating Eng’rs, AFL-CIO to view the existence of a contract under section
301 as a jurisdictional requirement. 624 F.2d 1235 (5th Cir. 1980). Judge
Garza, however, reads Alexander to require only that jurisdiction be alleged;
that is, he would hold that “[a]n allegation of a labor contract violation is
sufficient” to grant jurisdiction that effectively exists thereafter and cannot be
challenged. Judge Garza Op. at p. 9. Of course, jurisdiction can be challenged
at any time. I recognize that the jurisdictional analysis under section 301 has
been complicated by several subsequent Supreme Court cases, but if, as both
Judge Garza and I agree, Alexander is still controlling law in the Fifth Circuit,
the holding that a mere allegation of jurisdiction cannot be disturbed by a
meritorious challenge is bewildering.
Alexander holds that “jurisdiction [under section 301] depends on
whether there is a contract . . . .” Alexander, 624 F.2d at 1238. I do not see
how this statement can be read as indicating anything other than that the
existence of a contract is a necessary jurisdictional fact. As with any other
jurisdictional fact, this rule requires that if one of the parties challenges the
existence of the contract, the district court must determine whether
jurisdiction is satisfied under the Rule 12(b)(1) standard. Judge Garza
attempts to escape this conclusion by noting that Alexander did not “require
factual proof of a labor contract’s existence.” Judge Garza Op. at p. 8. This
observation, although true at the initial pleading stage, is irrelevant to our
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analysis because the existence of a contract was not disputed in Alexander.
Thus, nothing more can be taken from this observation than the
uncontroversial proposition that alleged jurisdictional facts may be accepted
as true if unchallenged. It does not speak to the situation before this panel;
the Union alleged a violation of the CBA, and Houston Refining is contesting
the existence of that CBA. Thus, that Alexander did not itself require factual
proof of the existence of a contract provides no guidance here, whereas its
statement that “jurisdiction depends on whether there is a contract” speaks
directly to this point. Alexander, 624 F.2d at 1238.
Judge Garza also relies on Textron Lycoming Reciprocating Engine Div.,
AVCO Corp. v. United Auto., Aerospace & Agric. Implement Workers of Am.,
Int’l Union for his conclusion that allegations of jurisdiction are sufficient to
provide jurisdiction under section 301. 523 U.S. 653 (1998). But Textron also
holds that a contract is a jurisdictional requirement under section 301. Id. at
656. Judge Garza, however, rather relies on Textron’s statement that section
301 “erects a gateway through which parties may pass into federal court.” Id.
at 658. Textron goes on to say that “if, in the course of deciding whether a
plaintiff is entitled to relief for the defendant’s alleged violation of a contract,
the defendant interposes the affirmative defense that the contract was invalid,
the court may” adjudicate that defense. Id. From his chosen statements,
Judge Garza concludes that “Textron thus teaches that an ‘alleged violation’
satisfies section 301(a)’s jurisdictional requirement.” Judge Garza Op. at p. 10
(emphasis in original). But Textron only says that an allegation of jurisdiction
promises a temporary entry but not a permanent residence in federal court.
No statement in Textron prevents the court from hearing and ruling on a
jurisdictional challenge brought under Rule 12(b)(1), alleging and
demonstrating that there is no subject matter jurisdiction because there is no
section 301 contract in existence for the court to address.
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I would read Alexander and Textron together in the following way: First,
there can be no dispute that a party must sufficiently allege jurisdiction in
order to get in the door of the federal court. As Textron puts it, in order to enter
the “gateway through which parties may pass into federal court,” the plaintiff
must, at a bare minimum, allege a covered contract and the violation thereof.
Textron, 523 U.S. at 658. If the defendant disputes the existence of a contract,
Alexander requires that the court, pursuant to its “jurisdiction to determine its
own jurisdiction,” determine whether a contract exists so as to secure subject
matter jurisdiction. In re McBryde, 120 F.3d 519, 522 (5th Cir. 1997) (“[I]t is
axiomatic that this court always has jurisdiction to determine its own
jurisdiction.”). When the complaint alleges a violation of the contract, but the
district court determines that at the time of the alleged violation, there was no
contract, the court must dismiss the complaint for lack of subject matter
jurisdiction.
If after the plaintiff alleges a contract violation, the defendant argues
either (1) that no violation occurred, or (2) that the underlying contract is
voidable (as opposed to void) for some reason, these determinations are
properly left for the merits stage. Textron, 523 U.S. at 658.
Despite its statements to the contrary, Judge Garza’s opinion treats the
existence of a contract under section 301 as only an element of the claim rather
than as a jurisdictional requirement. Although it does not say so expressly,
the opinion surely suggests a holding that the jurisdictional facts at issue in a
section 301 case are subject to the simple Rule 12(b)(6) dismissal standard,
under which courts assume that all properly pleaded factual allegations are
true. I am aware of no factual jurisdictional requirement that can be
permanently settled by a bare allegation when jurisdiction is challenged.
Instead, when subject matter jurisdiction is meritoriously challenged, the more
stringent Rule 12(b)(1) standard is applied, and the court decides disputed
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jurisdictional facts; it does not blithely assume allegations of jurisdiction as
true. See Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981) (“The unique
power of district courts to make factual findings which are decisive of
jurisdiction is, therefore, not disputed.”).
As Judge Garza’s opinion points out, many circuits have abandoned
earlier views that the existence of a contract under section 301 is a
jurisdictional requirement. I agree, however, with Judge Garza that we cannot
abandon Alexander’s holding. 1 But we disagree when Judge Garza proceeds to
“interpret” Alexander’s jurisdictional holding as meaningless by rendering
section 301 only a pleading requirement. I would give more respect to
Alexander and hold that when, as here, the defendant moves to dismiss the
section 301 complaint for lack of subject matter jurisdiction by challenging
even the existence of the alleged contract, the district court is duty bound to
determine whether that contract exists in order to assure itself of its own
jurisdiction. See Union Planters Bank Nat’l Ass’n v. Salih, 369 F.3d 457, 460
(5th Cir. 2004) (reaffirming that “federal courts are duty-bound to examine the
basis of subject matter jurisdiction . . .”).
Nonetheless, in the end I find myself in the pleasant company of Judge
Garza. We agree in the result. Houston Refining has challenged the existence
of the CBA. The Union has also alleged that Houston Refining violated the
Settlement Agreement between it and the Union, and Houston Refining raises
no challenge to the existence of the Settlement Agreement. Accordingly,
because the Union has alleged the violation of that contract violation, and
Houston Refining has not challenged the existence of that contract, I would
hold that the jurisdictional requirement of section 301 is satisfied. I also agree
with Judge Garza’s analysis regarding arbitrability, and therefore concur in
1 I thus disagree with the jurisdictional analysis in Judge Higginson’s dissent.
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Section IV of Judge Garza’s opinion. For these reasons, I respectfully concur
in the court’s judgment.
36
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HIGGINSON, Circuit Judge, concurring in the judgment in part and
dissenting in part:
A.
I concur in the conclusion that the district court had subject-matter
jurisdiction under § 301(a) of the LMRA, 29 U.S.C. § 185, which empowers
federal courts to decide “[s]uits for violation of contracts between an employer
and a labor organization representing employees in an industry affecting
commerce . . . .”
Preliminarily, I agree with the Third and Sixth Circuits—following the
reasoning of Arbaugh v. Y&H Corp., 546 U.S. 500, 501 (2006)—that under §
301 the existence of a contract is a necessary element of a plaintiff’s merits
claim, not a threshold requirement which must be proven for subject-matter
jurisdiction to exist, allowing parties in controversy access to federal court. See
Pittsburgh Mack Sales & Serv., Inc. v. Int'l Union of Operating Eng'rs, Local
Union No. 66, 580 F.3d 185, 190 (3d Cir. 2009); Winnett v. Caterpillar, Inc., 553
F.3d 1000, 1007 (6th Cir. 2009).
In Arbaugh, 546 U.S. at 503-04, the Supreme Court held that the
numerical qualification in Title VII’s definition of employer relates to the
substantive adequacy of a claim and not to subject-matter jurisdiction. The
Court explained: “If the Legislature clearly states that a threshold limitation
on a statute's scope shall count as jurisdictional, then courts and litigants will
be duly instructed and will not be left to wrestle with the issue. But when
Congress does not rank a statutory limitation on coverage as jurisdictional,
courts should treat the restriction as nonjurisdictional in character.” Id. at
515–16 (internal citations omitted). The Court reasoned that the numerosity
requirement appears in the “definitions” section of the statute and that the
section “does not speak in jurisdictional terms or refer in any way to the
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jurisdiction of the courts.” Id. at 515. The Court also took measure of the
pragmatic consequences of designating an element as jurisdictional so that its
existence confers or deprives federal courts of the power even to deal with the
subject in dispute. See id. at 514–15.
As the Third and Sixth Circuits persuasively have elaborated, several
considerations compel the same conclusion as to the existence of a contract
under § 301. See Pittsburgh Mack Sales, 580 F.3d at 189–90; Winnett, 553 F.3d
at 1004–1007. 1 First, the text of § 301(a) does not explicitly state that it is a
limitation on subject-matter jurisdiction. See 129 U.S.C. § 185(a). Indeed, the
language at issue appears in the subsection entitled “Venue, amount, and
citizenship.” Id. The only jurisdictional reference in this subsection describes a
limit on personal jurisdiction and does not appear to modify the elements of
the claim. See id. Second, there is a separate subsection explicitly entitled
“Jurisdiction,” which sets forth exact limitations on personal jurisdiction. See
id. at (c). Finally, all of the elements of the claim appear in subsection (a), yet
the statute does not elaborate that some of the elements of the claim have
subject-matter jurisdictional consequences whereas others do not. See Winnett,
1 The Eighth Circuit has maintained course after Arbaugh, continuing to conclude
that the existence of a contract is threshold requirement for subject-matter jurisdiction under
§ 301. See ABF Freight System, Inc. v. Int’l Bhd. of Teamsters, 645 F.3d 954, 961–63 (8th Cir.
2011) (agreeing with defendants’ argument “that the existence (or violation) of a collective-
bargaining agreement is a jurisdictional requirement under section 301(a)”). For the reasons
articulated above by the Third and Sixth Circuits, and above all the Supreme Court’s
unanimous and clarifying decision in Arbaugh, I disagree. Furthermore, I would add that our
court thirty-four years ago in Alexander v. Int’l Union of Operating Eng’rs, 624 F.2d 1235,
1238 (5th Cir. 1980), did not elaborate reasoning determinative of the issue before us when
we made the following statement: “As the language in section 301 makes clear, jurisdiction
depends on whether there is a contract between an employer and a labor organization or
between two labor organizations.” That observation was not essential to our court’s holding
in Alexander, nor is it instructively precise in light of Arbaugh. The issue in Alexander was
whether the union’s international constitution constituted a contract within the meaning of
§ 301, id., whereas here there is no question that a CBA is a contract within the meaning of
§ 301.
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553 F.3d at 1006. If the existence of a contract is a threshold jurisdictional
requirement, then so too would be the existence of a violation, such that the
district court would have to decide whether the contract actually had been
violated before reaching the merits of the case. I am similarly “reluctant to
conclude that Congress intended to create a cause of action that has no non-
jurisdictional elements.” Winnett, 553 F.3d at 1006.
Finally, the practical oddities of designating the existence of a contract
a threshold jurisdictional requirement are apparent here, as they were also in
Arbaugh, 546 U.S. at 514–15. It was Houston Refining that brought suit to
vacate the arbitral award. As the plaintiff, Houston Refining invoked subject-
matter jurisdiction under § 301 and 28 U.S.C. § 1331. Houston Refining now
argues that the existence of a contract is a jurisdictional requirement (to obtain
de novo review of arbitrability by the district court) yet simultaneously asserts
that there was no CBA in effect at the time the Union filed its grievance.
However, if the district court were to find that no CBA existed (as Houston
Refining urges), then under this rationale it would have to dismiss the suit for
lack of subject-matter jurisdiction and would be precluded from reviewing the
arbitral award altogether. 2
2 Allegations in a counterclaim do not suffice to establish federal-court jurisdiction
where the basis for federal jurisdiction does not appear on the face of the plaintiff’s complaint.
See Caterpillar Inc. v. Williams, 482 U.S. 386, 392–98 (1987) (explaining that the well-
pleaded complaint rule applies to suits under § 301 and that “the presence of a federal
question, even a § 301 question, in a defensive argument does not overcome the paramount
policies embodied in the well-pleaded complaint rule . . .”); Textron Lycoming Reciprocating
Engine Div., Avco Corp. v. United Auto., Aerospace, Agric., 523 U.S. 653, 659 (1998)
(reiterating that the well-pleaded complaint rule bars invoking § 1331 jurisdiction by
anticipating a federal defense in a suit asserting a nonfederal claim) (citing Rivet v. Regions
Bank of La., 522 U.S. 470, 475 (1998)). Hence, the LMRA cases discuss only the adequacy of
a plaintiff’s complaint. See Textron, 523 U.S. at 661 (“Because the [plaintiff’s] complaint
alleges no violation of the collective-bargaining agreement . . .”); Alexander, 624 F.2d at 1238(“Plaintiff employees sough to invoke the district court’s jurisdiction . . . Plaintiffs contended
that violation by the respective unions . . .”). None indicates that the allegations in a
counterclaim can establish jurisdiction under § 301. Cf. Textron, 523 U.S. at 658–60 (rejecting
39
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The Third and Sixth Circuit decisions adhere to the Supreme Court’s
instruction in Textron Lycoming Reciprocating Engine Div., Avco Corp. v.
United Auto., Aerospace, Agric. Implement Workers of Am., Int’l Union, 523
U.S. 653, 658 (1998), that § 301 “erects a gateway through which parties may
pass into federal court,” even as they do not require anticipatory proof of the
elements of a § 301 claim in order to enter into federal court. Pittsburgh Mack
Sales, 580 F.3d at 189–90; Winnett, 553 F.3d at 1006. Those Circuits only did
not delve further into explication of what is both necessary and sufficient to
support threshold subject-matter jurisdiction under § 301. Sufficient for this
case, established case law settles that a suit by a plaintiff to vacate an arbitral
decision finding that the plaintiff violated a CBA is cognizable under § 301,
without requiring the plaintiff separately to allege in district court that either
it or the defendant violated the relevant CBA. See Brown v. Witco Corp., 340
F.3d 209, 218 (5th Cir. 2003) (“When an arbitration decision arises from the
terms of the collective bargaining agreement, judicial review of the arbitration
award is authorized not by the FAA but by the terms of Section 301 of the
Labor Management Relations Act.”) (citing United Paperworkers Int’l Union v.
Misco, 484 U.S. 29, 41 n.9, (1987); Int’l Chem. Workers Union, Local 683C v.
Columbian Chems. Co., 331 F.3d 491, 493–94 (5th Cir. 2003)); see also, e.g.,
E.I. DuPont de Nemours and Co. v. Local 900 of the Int’l Chem. Workers Union,
968 F.2d 456, 458 (5th Cir. 1992) (suit by employer to vacate arbitral award
under § 301); N. New England Tel. Operations Co. LLC v. Local 2327, Int’l Bhd.
of Elec. Workers, 735 F.3d 15, 20 (1st Cir. 2013) (same); Akers Nat’l Roll Co. v.
United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Indus. and Serv.
Union’s argument that its declaratory-judgment action should proceed because it was a
defense to what it anticipated would be employer’s claim that Union violated the CBA).
Houston Refining properly invoked subject-matter jurisdiction under both § 301 and 28
U.S.C. § 1331; § 301 provides the federal question, and the well-pleaded complaint rule
applies. See Caterpillar, 482 U.S. at 398.
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Workers Int’l Union, 712 F.3d 155 (3d Cir. 2013) (same); accord Lingle v. Norge
Div. of Magic Chef, Inc., 486 U.S. 399, 403 (1988) (citing Textile Workers v.
Lincoln Mills, 353 U.S. 448 (1957) (explaining that § 301 “provides federal-
court jurisdiction over controversies involving collective-bargaining
agreements”)); Caterpillar, 482 U.S. at 394 (“Section 301 governs claims
founded directly on rights created by collective-bargaining agreements, and
also claims substantially dependent on analysis of a collective-bargaining
agreement.”) (internal quotation marks and citation omitted).
That approach is compatible with Textron, which involved the different
posture of a declaratory-judgment plaintiff that had not alleged the violation
of a contract and therefore had not “present[ed] a case or controversy giving
[it] access to federal courts.” Textron, 523 U.S. at 660. The instruction of
Textron is that a suit properly through the gateway into federal court under §
301 is “one filed because a contract has been violated.” Id. at 657 (emphasis in
original). Houston Refining’s suit in federal court indisputably was filed
because the arbitrator concluded that Houston Refining had violated its CBA
with the Union. Were Textron to establish the further special pleading rule
that in every case a plaintiff must expressly allege that either it or the
defendant violated a contract, I do not perceive that that formalistic rule would
be met in this very case. No matter how its language is framed, Houston
Refining’s complaint does not allege that either it or the Union violated the
CBA. Instead, Houston Refining’s complaint states only that the Union filed a
grievance alleging that Houston Refining violated the CBA and that the
arbitrator exceeded his authority in agreeing with the Union. Whereas, as
noted earlier, allegations in a counterclaim cannot establish federal-court
jurisdiction, Houston Refining’s failure to expressly allege that either it or the
Union violated the CBA is not determinative. That is because, again, a suit to
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vacate an arbitral award is cognizable under § 301. See, e.g., E.I. DuPont, 968
F.2d at 458.
Consider the instant facts. The parties made all of their arguments,
about both the arbitrability of the grievance and the alleged violation of the
CBA, to the arbitrator. The arbitrator decided that a CBA was in effect,
analyzed the terms of the CBA, concluded that Houston Refining indeed
violated those terms, and fashioned an award accordingly. Houston Refining
then filed a complaint to vacate the arbitral decision that involved and arose
from the terms of the disputed CBA, alleging that the arbitrator exceeded his
authority in concluding that Houston Refining’s suspension of 401(k)
contributions violated the CBA. This is a suit to vacate an arbitral award, filed
because a contract (as declared by the arbitral award) was violated, which I
would hold is sufficient to pass through the gateway of § 301 into federal court.
See, e.g., E.I. DuPont, 968 F.2d at 458.
Because I agree that the district court had subject-matter jurisdiction to
entertain this suit, the position all parties took heretofore, I concur in the
outcome of Part III.A.
B.
I dissent, however, from the majority’s conclusion that the parties did
not clearly and unmistakably agree to submit the question of arbitrability to
the arbitrator. The parties dispute whether the Settlement Agreement, into
which they entered pursuant to litigation in bankruptcy court, evinces a clear
and unmistakable agreement to arbitrate arbitrability. See First Options of
Chi., Inc. v. Kaplan, 514 U.S. 938, 942 (1995); ConocoPhillips v. Local 13-0555
United Steelworkers Int’l Union, 741 F.3d 627, 630 (5th Cir. 2014). The context
of the agreement is significant. The Union filed in bankruptcy court a motion
to compel Houston Refining to arbitrate its grievance, which alleged that
Houston Refining violated the terms of the parties’ CBA when it unilaterally
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suspended its 401(k) contributions. In response, Houston Refining raised all
arguments against arbitrability, including that there was no CBA in effect at
the time of the suspension, that the grievance was filed under a CBA that did
not exist, and that, even if a CBA was in effect, it did not cover the grievance.
The parties then entered into the Settlement Agreement, which provides:
1. The parties agree to proceed to arbitration with the grievances that
are the subject of the Actions expeditiously and in compliance with the
arbitration procedures, including the time frames, in the applicable
collective bargaining agreements. . . .
4. At arbitration, the parties shall reserve all rights to present any and
all arguments and advance any and all defenses to them including,
without limitation, arguments concerning whether or not an applicable
collective bargaining agreement was in effect at the time that a
particular grievance arose.
The Settlement Agreement is a concise, explicit agreement to arbitrate
and defines the claims that will be subject to arbitration to include the subject
of the bankruptcy proceedings and all relevant arguments and defenses,
including but not limited to the existence of a CBA. The majority perceives
ambiguity in the word “reserve,” but the Agreement states that the parties
reserve the right to make those arguments at arbitration. The majority notes
further that Houston Refining raises other arbitrability arguments besides the
lack of a CBA. But Houston Refining raised all of its arbitrability arguments
in the bankruptcy proceedings, and the Agreement states that the parties
reserve the right to argue at arbitration all arguments and defenses to that
action, including but not limited to the existence of a CBA. There would have
been no need to stipulate to that fact in advance if the parties did not intend
the arbitrator to decide those questions.
In Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68–70 (2010), the
Supreme Court considered a delegation clause in an arbitration agreement,
which submitted to arbitration certain threshold questions of arbitrability. The
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Court held that where such a clause delegates to the arbitrator a dispute
relating to the arbitration agreement’s enforceability, validity, or scope, that is
clear and unmistakable evidence that the parties agreed to arbitrate
arbitrability. See id.; see also Petrofac, Inc. v. DYNMcDermott Petroleum
Operations Co., 687 F.3d 671, 675 (5th Cir. 2012) (concluding that parties
agreed to arbitrate arbitrability where agreement expressly incorporated the
AAA Rules, which state that “[t]he arbitrator shall have the power to rule on
his or her own jurisdiction, including any objections with respect to the
existence, scope or validity of the arbitration agreement”) (internal quotation
marks omitted); Allen v. Regions Bank, 389 F. App’x 441, 446 (5th Cir. 2010)
(concluding that parties agreed to arbitrate arbitrability where agreement
stated that “[a]ny dispute regarding whether a particular controversy is
subject to arbitration . . . shall be decided by the arbitrator(s)”). Agreeing with
the district court, I would hold that the same is true with the Settlement
Agreement here.
Houston Refining argues that the Settlement Agreement lays out
“matters of what will occur, not whether it will bind each side.” In the above
cases, however, the agreements did not state that the parties would be bound
by the arbitrators’ decisions, only that the arbitrators would decide the
questions. Those cases do not require “magic words” to establish that the
parties agreed to arbitrate arbitrability. The facts of this case indicate that
these two sophisticated parties agreed, after making their arguments relating
to arbitrability in bankruptcy court, to submit that dispute to arbitration.
Therefore, I would hold that the parties clearly and unmistakably agreed to
arbitrate arbitrability and thus that the district court properly applied
deferential review to the arbitrator’s decision on arbitrability. See First
Options, 514 U.S. at 943; Beaird Indus., Inc. v. Local 2297, Int’l Union, 404
F.3d 942, 944 (5th Cir. 2005).
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C.
I would hold further, however, that even under that deferential standard
of review, the arbitrator exceeded his authority in concluding that the Union’s
grievance was arbitrable. The grievance alleged that Houston Refining
violated the CBA when it unilaterally suspended its matching contributions to
the 401(k) Plan. Houston Refining argues that the CBA provides for arbitration
of grievances regarding only “wages, hours, or working conditions” and that
the company’s 401(k) contributions do not constitute “wages” within the
meaning of the CBA.
Where “an arbitration decision arises from the terms of a CBA, judicial
review is narrowly limited. Courts should afford great deference to arbitral
awards.” Beaird, 404 F.3d at 944. “As long as the arbitrator’s decision draws
its essence from the collective bargaining agreement and the arbitrator is not
fashioning his own brand of industrial justice, the award cannot be set aside.”
Resolution Performance, Resolution Performance Prods., LLC v. Paper Allied
Indus. Chem. and Energy Workers Int’l Union, Local 4-1201, 480 F.3d 760,
764–65 (5th Cir. 2007) (internal quotation marks and citation omitted).
However, “[i]t is well-established that courts may set aside awards when the
arbitrator exceeds his contractual mandate by acting contrary to express
contractual provisions.” Beaird, 404 F.3d at 946. Thus, “[a]lthough we accord
an arbitrator’s decision considerable deference regarding the merits of the
controversy, the CBA circumscribes his jurisdiction.” Bruce Hardwood Floors,
Div. of Triangle Pac. Corp. v. UBC, So. Council of Indus. Workers, Local Union
No. 2713, 103 F.3d 449, 452 (5th Cir. 1997). This is the appropriate deferential
standard of review afforded to a question of arbitrability that the parties
agreed to submit to the arbitrator. See First Options, 514 U.S. at 943 (“Did the
parties agree to submit the arbitrability question itself to arbitration? If so,
then the court’s standard for reviewing the arbitrator’s decision about that
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matter should not differ from the standard courts apply when they review any
other matter that parties have agreed to arbitrate.”). 3
Under our circuit’s and other circuits’ case law, I would hold that the
term “wages” in this CBA is not broad enough to encompass Houston Refining’s
suspension of 401(k) contributions. 4 Article 30 of the CBA provides that “[a]
grievance is defined to be any difference regarding wages, hours, or working
conditions between the parties or between the Company and an employee
covered by this Agreement” (emphasis added). Article 14, entitled “Wage Rates
and Pay,” nowhere references the 401(k) Plan. Appendix C, entitled “Wage
Rates,” similarly refers only to base rates of pay. Articles 14 and 30, which
describe wages and the grievance procedure, are separate from and precede
3 The question of whether the parties agreed to arbitrate arbitrability determines what
level of deference the court affords to the arbitrator’s decision. See First Options, 514 U.S. at
943. Accordingly, the majority’s challenge that my approach conducts a de novo or
independent review of the CBA is incorrect; rather, because I conclude that the parties clearly
agreed to submit the entirety of this dispute, including the question of whether this dispute
falls within the terms of the CBA, to the arbitrator, the well-established deferential standard
of review applies to the arbitrator’s determination of that question. See Beaird, 404 F.3d at
944. The Second Circuit’s decision in Schneider v. Kingdom of Thailand, 688 F.3d 68, 72 (2d
Cir. 2012), is consistent with this approach, as there the district court erred because it
deferred to the arbitrator’s arbitrability determination “without first finding clear and
unmistakable evidence of the parties’ intent to submit that question arbitration.” The Second
Circuit nonetheless reiterated the rule that “a party resisting confirmation of an arbitration
award is entitled to an independent review of a question of arbitrability unless there is clear
and unmistakable evidence that the parties agreed to arbitrate that question.” Id. at 71
(emphasis added).
4 That the relevant cases review the scope of the CBAs at issue de novo is not
determinative here because that standard also is deferential: “Where the contract contains
an arbitration clause, there is a presumption of arbitrability in the sense that an order to
arbitrate the particular grievance should not be denied unless it may be said with positive
assurance that the arbitration clause is not susceptible of an interpretation that covers the
asserted dispute.” AT&T Techs., Inc. v. Commcn’s Workers of Am., 475 U.S. 643, 650 (1986).
The cases nonetheless conclude, however, that there is “no ambiguity as to the intent” of the
CBAs to exclude the grievances from arbitration. See, e.g., Local Union No. 4-449, Oil, Chem.
and Atomic Workers Union v. Amoco Chem. Corp., 589 F.2d 162, 163 (5th Cir. 1979) (per
curiam). That conclusion supports equally a finding that here the arbitrator acted contrary
to express contractual provisions in finding this dispute to be arbitrable. See Beaird, 404 F.3d
at 946. Finally, because this issue turns on “a matter of law which requires the interpretation
of” the CBA, see Amoco, 589 F.2d. at 163, further factual development is unnecessary.
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Article 40, which contains the provision that is the subject of the instant
grievance:
During the term of this Agreement, the Company will provide advance
notice of proposed changes to the benefit plans covered by the
Agreement. . . . A reasonable time period will be provided for the Union
to elect inclusion in or exclusion from the amended benefits plan. If the
Union elects exclusion, represented employees shall continue
participation in the existing, unchanged benefits plan for the term of the
Collective Bargaining Agreement.
Significantly, whereas Article 40 goes on to explicitly apply the grievance
procedure to the Sickness and Accident Disability Plan, it does not do so for
the other listed benefits plans, including the 401(k) Plan. Accordingly, the
401(k) provision at issue contains no mention of grievance or arbitration.
Houston Refining has a separate 401(k) Plan with its own provisions for
review of benefits. The 401(k) Plan distinguishes company contributions from
compensation, including “wages.” It expressly provides that
the Benefits Administrative Committee has exclusive responsibility for
the general Plan administration, according to the Plan terms and
provisions, and shall have all discretion and powers necessary to
accomplish its purposes, including, without limit, the right, power,
authority and duty . . . to construe and interpret all Plan terms,
provisions, conditions and limits and the Benefits Administrative
Committee’s construction and interpretation shall be final and
conclusive on all persons or entities . . . to determine all controversies
relating to Plan administration . . . to make a determination on any
person’s right to a benefit and to afford any person dissatisfied with that
determination the right to a full and fair review.
It further provides that it “may be amended at any time,” that the Plan Sponsor
“reserves the right to terminate it at any time,” and that it does not impose an
obligation to pay benefits other than any potential ERISA liability.
In Local Union No. 4-449, Oil, Chem. and Atomic Workers Union v.
Amoco Chem. Corp., 589 F.2d 162, 163 (5th Cir. 1979) (per curiam), the union
sought to compel arbitration under a CBA of the company’s denial of sick-pay
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benefits. The CBA provided: “Benefits with respect to sickness and disability
shall be payable in accordance with the Company's Sickness and Disability
Benefits Plan as presently in effect except that an employee will be paid
holiday pay in place of sick leave pay for a holiday falling on a normally
scheduled day of work, but which normally would not have been worked by the
employee.” Id. The Benefits Plan stated: “The decision of the Board of Directors
of the Company on any matter concerning the administration of this plan as a
whole or as applied to any specific case Shall be final and the Board reserves
the right to interpret, apply, amend or revoke this Plan at any time.” Id. We
concluded that the CBA and the benefits plan together clearly excluded
arbitration for grievances concerning sick-pay benefits. Id. at 164. I would
apply the same logic and analysis here.
Other circuits have come to the same conclusion on similar facts. See
United Steelworkers of Am. v. Rohm and Haas Co., 522 F.3d 324, 326-27 (3d
Cir. 2008) (concluding that dispute over ERISA benefits was not arbitrable
where CBA grievance clause covered only “wages, hours, and working
conditions” and CBA referenced the disability-benefits plan and vice versa but
no other overlap existed); Bridgestone/Firestone, Inc. v. Local Union No. 998,
United Rubber, Cork, Linoleum, and Plastic Workers of Am., 4 F.3d 918, 922-
23 (10th Cir. 1993) (concluding that dispute over employee-suggestion system
was not arbitrable where CBA grievance clause covered only interpretation or
application of CBA, suggestion system had its own agreement and review
process, and CBA did not reference suggestion system); Printing Specialties
and Paper Prods. Union Local 680, Graphic Commc’n Int’l Union v. Nabisco
Brands, Inc., 833 F.2d 102, 103–05 (7th Cir. 1987) (concluding that dispute
over pension benefits was not arbitrable where grievance clause covered only
“wages, hours, and working conditions,” pension plan stated that pension
committee would be responsible for its administration, CBA contained only one
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reference to plan, and bargaining history suggested purpose to exclude pension
claims from arbitration). 5 In all of these cases, the disputes concerned alleged
violations of rights to benefits created in the CBAs, yet the courts still
concluded that the disputes were not arbitrable, hence the cases are not
distinguishable on the ground that the disputes concerned only employee
eligibility under the separate benefits plans. See, e.g., Printing Specialties, 833
F.2d at 103; Amoco, 589 F.2d at 163.
Here, the CBA grievance clause covers only wages, hours, or working
conditions. Nowhere does the CBA’s discussion of “wages” mention 401(k)
benefits. The CBA references Houston Refining’s duty to notice proposed
changes to the 401(k) Plan, but whereas it explicitly applies the grievance
procedure to another listed benefits plan, it does not do so for the 401(k) Plan.
The 401(k) Plan provides for independent administration of benefits and
resolution of disputes by a separate committee. Houston Refining made
unilateral changes to the 401(K) Plan several times prior to this suspension.
Thus, “there appears to be no ambiguity as to the intent of the [CBA] to exclude
grievances dealing with [401(k)] benefits from arbitration,” Amoco, 589 F.2d at163–64, and I would hold that the arbitrator “exceed[ed] his contractual
mandate by acting contrary to express contractual provisions.” Beaird, 404
F.3d at 946.
5 The cases in which courts have concluded that similar disputes are arbitrable are
consistent as well because they involved contrastingly broad arbitration clauses. See Karl
Schmidt Unisia, Inc. v. UAW Local 2357, 628 F.3d 909, 914–16 (7th Cir. 2010) (concluding
that dispute over employee-incentive program was arbitrable where CBA grievance clause
covered “any violation of this agreement”); E.I. DuPont De Nemours & Co. v. Ampthill Rayon
Workers, Inc., 290 F. App’x 607, 610–12 (4th Cir. 2008) (unpublished) (concluding that
dispute over ERISA benefits plan was arbitrable where CBA grievance clause covered “any
question as to the interpretation of the [CBA] or as to any alleged violation of the [CBA]”).
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For the foregoing reasons, I would reverse and remand with instructions
to vacate the arbitral award. I respectfully concur in the judgment in part and
dissent in part.
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