Granite Rock Company v. Local 287 ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GRANITE ROCK COMPANY, 
Plaintiff-Appellant,
v.
No. 07-15040
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, FREIGHT CONSTRUCTION,  D.C. No.
CV-04-02767-JW
GENERAL DRIVERS, WAREHOUSEMEN
& HELPERS, LOCAL 287 (AFL-
CIO); INTERNATIONAL
BROTHERHOOD OF TEAMSTERS,
Defendants-Appellees.

GRANITE ROCK COMPANY, 
Plaintiff-Appellee,
v.
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, FREIGHT CONSTRUCTION, No. 07-16142
GENERAL DRIVERS, WAREHOUSEMEN
& HELPERS, LOCAL 287 (AFL-  D.C. No.
CV-04-02767-JW
CIO),
Defendants-Appellants,
and
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS,
Defendant.

14703
14704 GRANITE ROCK CO. v. TEAMSTERS
GRANITE ROCK COMPANY, 
Plaintiff-Appellant,
v.
No. 07-16236
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, FREIGHT CONSTRUCTION,  D.C. No.
CV-04-02767-JW
GENERAL DRIVERS, WAREHOUSEMEN
& HELPERS, LOCAL 287 (AFL- OPINION
CIO); INTERNATIONAL
BROTHERHOOD OF TEAMSTERS,
Defendants-Appellees.

Appeal from the United States District Court
for the Northern District of California
James Ware, District Judge, Presiding
Argued and Submitted
September 8, 2008—San Francisco, California
Filed October 22, 2008
Before: Ronald M. Gould and Carlos T. Bea, Circuit Judges,
and James W. Sedwick,* District Judge.
Opinion by Judge Gould
*The Honorable John W. Sedwick, Chief United States District Judge
for the District of Alaska, sitting by designation.
GRANITE ROCK CO. v. TEAMSTERS 14707
COUNSEL
Garry G. Mathiason, Alan S. Levins, Adam J. Peters, and
Kimberly L. Owens, Littler Mendelson, San Francisco, Cali-
fornia, for plaintiff-appellant Granite Rock Company.
Stephen P. Berzon, Peter D. Nussbaum, and Peder J.V. Thor-
een, Altshuler Berzon LLP, San Francisco, California, for
appellee International Brotherhood of Teamsters.
Duane B. Beeson and Lisa W. Pau, Beeson Taylor & Bodine,
APC, San Francisco, California, for appellant/cross-appellee
Teamsters Local 287.
OPINION
GOULD, Circuit Judge:
Granite Rock Company (“Granite Rock”) sued Interna-
tional Brotherhood of Teamsters, Local 287 (“Local 287”)
and International Brotherhood of Teamsters (“IBT”) under
section 301(a) of the Labor Management Relations Act
(“LMRA”) with claims relating to a collective bargaining
agreement. Granite Rock seeks remedies against Local 287
for breach of the collective bargaining agreement, and against
IBT for tortious interference with the collective bargaining
14708 GRANITE ROCK CO. v. TEAMSTERS
agreement between Granite Rock and Local 287. The district
court dismissed the claim against IBT under Federal Rule of
Civil Procedure 12(b)(6) for failure to state a claim. Granite
Rock appeals that dismissal, and we affirm.
In the dispute between Granite Rock and Local 287, the
parties appeal and cross-appeal a total of five orders, but we
need reach only one: the district court’s denial of Local 287’s
motion to compel arbitration on the question of contract for-
mation. We reverse that ruling and remand with instructions
to compel arbitration on the entire dispute between Granite
Rock and Local 287.
I
For purposes of analyzing the district court’s dismissal of
Granite Rock’s claims against IBT, Granite Rock’s alleged
facts must be presumed true and viewed in the light most
favorable to Granite Rock. Pakootas v. Teck Cominco Metals,
Ltd., 452 F.3d 1066, 1069 (9th Cir. 2006). Granite Rock
alleges: Granite Rock is a California company engaged in
supplying ready mixed concrete for commercial use, and
Local 287 represents certain employees at Granite Rock’s San
Jose facility. Between March 1, 1999 and April 30, 2004,
Granite Rock and Local 287 were parties to a collective bar-
gaining agreement (“CBA”). Before expiration of that agree-
ment, the parties began negotiations. Throughout the
negotations, Rome Aloise (“Aloise”), the administrative assis-
tant to the General President of IBT, advised Local 287 that
certain provisions of the CBA were inadequate. Aloise also
represented the interests of IBT and other local unions affili-
ated with IBT in the negotiations. No resolution was reached
in April or May, and in early June, 2004, after the CBA
between Granite Rock and Local 287 expired, Local 287
members went on strike. Negotiations resumed shortly there-
after, and the parties reached a tentative four-year agreement
(“new CBA”) at 4:00 a.m. on July 2, 2004. This tentative
agreement contained a broad arbitration clause requiring the
GRANITE ROCK CO. v. TEAMSTERS 14709
parties to arbitrate “[a]ll disputes arising under this agree-
ment.”
At the conclusion of the successful bargaining session,
George Netto (“Netto”), Business Representative for Local
287, told Granite Rock’s CEO Bruce Woolpert that Netto
would put the new CBA to a vote among the union members,
would recommend ratification, and would cease picketing. At
the same time, Netto raised the topic of a “back-to-work”
agreement to provide for the terms under which the parties
would return to work, including liability for actions taken dur-
ing the strike. However, the parties agreed to discuss prepar-
ing a back-to-work agreement at a later date.
Local 287 members allegedly ratified the new CBA, which
contained a “no-strike” clause, later on the morning of July 2,
2004. However, on July 5, 2004, Aloise and members of
Local 287 called workers to instruct them not to return to
work the next day. On July 6, 2004, Netto demanded a back-
to-work agreement that would explicitly shield Local 287, its
members, and IBT from any liability arising from the strike.
Granite Rock refused to sign such an agreement, and Local
287 continued its strike in violation of the no-strike clause.
Throughout the strike, Aloise played an active leadership role;
he sent letters to other local unions and employees encourag-
ing their support, held meetings to discuss strategy, and
sought to secure financial support for the strike. IBT gave
benefits to Local 287 members as long as they did not return
to work.
Granite Rock’s Third Amended Complaint alleged breach
of contract against Local 287, and tortious interference with
contract against IBT. Both actions were asserted under section
301(a) of the LMRA, 29 U.S.C. § 185(a). Defendant IBT
moved to dismiss the complaint pursuant to Rule 12(b)(6) of
the Federal Rules of Civil Procedure. The district court
granted that motion on the grounds that Granite Rock failed
14710 GRANITE ROCK CO. v. TEAMSTERS
to state a claim against IBT under section 301(a). Granite
Rock timely appealed.
There is only one fact that is critical to our determination
of whether the entire dispute between Granite Rock and Local
287 should have been submitted to arbitration, and that fact
is undisputed: While the parties disagree about the ratification
date, they agree that the tentative new CBA reached on July
2, 2004, contains an arbitration clause that requires arbitration
for “[a]ll disputes arising under this agreement.” Interpreting
this clause, the district court dismissed the issues of breach
and damages in favor of arbitration, but retained the question
of contract ratification for the district court’s determination.
Local 287 timely appealed the order retaining the formation
question.
Because we determine that the district court erred by deny-
ing Local 287’s motion to compel arbitration of the entire dis-
pute, and we remand for arbitration, we need not address the
appealed orders that arose from the district court’s rulings in
resolving on the merits the issue of contract formation by rati-
fication.
II
The district court’s dismissal of Granite Rock’s claims
against IBT presents questions of law which we review de
novo. Pruitt v. Cheney, 963 F.2d 1160, 1162-63 (9th Cir.
1992).
[1] Section 301(a) of LMRA, 29 U.S.C. § 185(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
chapter, or between any such labor organizations,
may be brought in any district court of the United
States having jurisdiction of the parties, without
GRANITE ROCK CO. v. TEAMSTERS 14711
respect to the amount in controversy or without
regard to the citizenship of the parties.
Jurisdiction over a claim under section 301(a) requires two
things: First, that the claim be “based on an alleged breach of
contract between an employer and a labor organization,” and
second, “that the resolution of the lawsuit be focused upon
and governed by the terms of the contract.” Painting & Deco-
rating Contractors Ass’n v. Painters & Decorators Joint
Comm., Inc., 707 F.2d 1067, 1071 (9th Cir. 1983).
A party need not be a signatory to a CBA to come within
the purview of section 301(a). In Painters & Decorators, the
“Joint Committee”—created by the bargaining agreement to
administer the terms of the agreement—was not a signatory
of the agreement. We held that the Committee was still an
appropriate defendant under section 301(a) because the CBA
created the Committee and governed its rights and duties. Id.
at 1069.
However, the second part of the Painters and Decorators
test requires that resolution of any section 301(a) claim be
governed by the terms of the relevant agreement. In Carpen-
ters S. Cal. Admin. Corp. v. Majestic Housing, 743 F.2d 1341
(9th Cir. 1984), the defendant’s property was subject to a
mechanic’s lien because a party to the collective bargaining
agreement had not made required trust contributions. 743 F.2d
at 1343. The district court found jurisdiction under section
301(a) because the lien foreclosure would require interpreta-
tion of the collective bargaining agreement. Id. at 1345. We
reversed, holding that “mere reference to the collective bar-
gaining agreement does not make this a case ‘arising under’
federal law within the meaning of 28 U.S.C. § 1441.” Id.
Although Majestic Housing dealt with rights under a
mechanic’s lien, its reasoning also applies to tort claims. The
underlying agreement in Majestic Housing was relevant to the
mechanic’s lien because the lien could only be foreclosed if
14712 GRANITE ROCK CO. v. TEAMSTERS
the contract was violated, just as a tortious interference with
contract claim depends on a breach. The court in Majestic
Housing held that such a connection is inadequate to satisfy
the requirements of section 301(a). 743 F.2d at 1345.
[2] Applying the rule developed in Majestic Housing, we
conclude that the district court was correct to dismiss Granite
Rock’s claim against IBT because a claim for tortious inter-
ference cannot be said to “arise under” the new CBA between
Granite Rock and Local 287. Majestic Housing, 743 F.2d at
1345. That agreement did not mention IBT, and did not gov-
ern any rights or duties of IBT. Indeed, Granite Rock con-
cedes that the alleged tortious interference could only be a
violation of a general tort duty, not a violation of any specific
contractual duty. Notwithstanding, Granite Rock contends
that the alleged tortious interference claim still meets the
requirement that “the resolution of the lawsuit be focused
upon and governed by the terms of the contract.” Painters &
Decorators, 707 F.2d at 1071. Granite Rock’s theory is that
because breach of the underlying contract is a necessary ele-
ment of the tortious interference claim, the resolution of the
tort claim is “focused upon” and “governed by” the contract.
[3] We reject Granite Rock’s argument, because its position
clashes with the plain language of section 301(a) and the
Majestic Housing requirement that the underlying agreement
must have created the rights or liabilities which the parties
seek to vindicate by their suit. Majestic Housing, 743 F.2d at
1345. We made this distinction clear in Majestic Housing: In
Painters and Decorators, “the rights and liabilities of both
parties were determined by the bargaining agreement,” but in
Majestic Housing, “although the amount of the mechanic’s
lien must be determined by the terms of the collective bar-
gaining agreement, Majestic has no rights or liabilities under
the agreement.” Id. Similarly, IBT has no rights or duties
under the agreement, and thus Granite Rock’s tortious inter-
ference claim against IBT does not meet the requirements of
section 301(a).
GRANITE ROCK CO. v. TEAMSTERS 14713
Granite Rock makes an additional argument in its unsuc-
cessful attempt to bridge this gap: that the “close relationship”
between IBT and Local 287, at least when presented with
IBT’s aim to “benefit” from the breach by gaining a release
of liability through the proposed back-to-work agreement, jus-
tifies allowing a tort claim against IBT. Although Granite
Rock’s argument has some emotive force, Granite Rock pro-
vides no persuasive case support for its position, and does not
explain adequately how the concepts of “close relationship”
and “benefit” bring IBT within the scope of the contractual
rights and obligations created by the new CBA.1
The majority of our sister circuits to have considered the
question have declined to find a section 301(a) cause of action
against parties not governed by the relevant agreement. See
Int’l Union, United Mine Workers of America v. Covenant
Coal Corp., 977 F.2d 895, 897 (4th Cir. 1992) (“The majority
of courts to address the issue have refused to construe section
301 in such a way as to allow [tortious interference claims
against non-signatories.]”); Carpenters Local Union No. 1846
v. Pratt-Farnsworth, Inc., 690 F.2d 489, 501 (5th Cir. 1982)
(“[C]ourts have almost unanimously held that a section 301
suit may be brought for violation of a labor contract only
against those who are parties to the contract at issue.”).
Although there are some variations in phrasing, the circuits
are almost unanimous in rejecting LMRA jurisdiction over a
1
It is undisputed that the separate back-to-work agreement was never
signed, and IBT is not transformed into a third party beneficiary or obligor
by supporting an abandoned addendum to the relevant collective bargain-
ing agreement.
Moreover, although there may be limited section 301 remedies available
when parties are so intertwined that one is the “alter ego” of the other, and
a plaintiff might be able to recover by “piercing the veil,” see Local 159
v. Nor-Cal Plumbing, Inc., 185 F.3d 978, 984-85 (9th Cir. 1999) (finding
jurisdiction under section 301 because the veil-piercing theory “merely
concern[ed] the remedy attached to a breach of contract claim governed
by LMRA,” and was not a separate tort cause of action), Granite Rock did
not pursue such a theory in the district court.
14714 GRANITE ROCK CO. v. TEAMSTERS
claim such as Granite Rock’s claim against IBT. See Green-
blatt v. Delta Plumbing & Heating Corp., 68 F.3d 561, 572
(2d Cir. 1995) (holding that “at a minimum the defendant
must have breached some duty created by a labor contract to
be liable for a violation” under section 301(a)); Covenant
Coal, 977 F.2d at 897 (declining to find jurisdiction under
section 301(a) for a tortious interference with contract claim);
Pratt-Farnsworth, 690 F.2d at 501-02 (holding, in response to
plaintiffs’ arguments that defendants had “conspired” with the
alleged breaching party, that “the absence of a contractual
relationship between [the parties] requires dismissal of the
section 301 claim”); Serv., Hosp., Nursing Homes & Public
Employees Union, Local No. 47 v. Commercial Prop. Servs.,
Inc., 755 F.2d 499, 506 (6th Cir. 1985) (holding “that a dis-
trict court does not have subject matter jurisdiction over a
non-signatory to a collective bargaining agreement, where no
rights or duties of the non-signatory party are stated in the
terms and conditions of the contract”); Loss v. Blankenship,
673 F.2d 942, 948 (7th Cir. 1982) (holding “that a complaint
for interference with a collective bargaining agreement,
against a non-party to that agreement, is not actionable under
§ 301(a) of the LMRA”); United Food & Com. Workers
Union, Local No. 1564 v. Quality Plus Stores, Inc., 961 F.2d
904, 906 (10th Cir. 1992) (concluding “that section 301 does
not establish subject-matter jurisdiction for a federal common
law claim of tortious interference against an entity that is not
a signatory to the contract”).
The only circuit to have adopted Granite Rock’s position is
the Third. Wilkes-Barre Publishing Co. v. Newspaper Guild
Local 120, 647 F.2d 372 (3d Cir. 1981). In Wilkes-Barre, the
court held that tortious interference claims do arise under the
underlying contract because “an essential element of the cause
of action . . . is a violation of the collective bargaining agree-
ment.” Id. at 380-81. We rejected similar reasoning in Majes-
tic Housing, where we held that “mere reference to the
GRANITE ROCK CO. v. TEAMSTERS 14715
collective bargaining agreement” is inadequate to confer juris-
diction under section 301(a). 743 F.2d at 1345.2
Granite Rock attempts to distinguish cases from other cir-
cuits by arguing that they did not deal with parties who are
“closely related” or who “benefitted from” the breach. As dis-
cussed above, these distinctions are unsupported by precedent
and the fact remains that only the Third Circuit has recog-
nized a tortious interference claim under section 301(a).
Granite Rock’s assertion that we should create federal com-
mon law to reach IBT misinterprets our instructions from
Congress and the Supreme Court. The Supreme Court has
said that section 301 can be read as a “congressional mandate
to the federal courts to fashion a body of common law to be
used to address disputes arising out of labor contracts.” Allis-
Chalmers v. Lueck, 471 U.S. 202, 209 (1985). However,
based on the language of section 301(a) and Allis-Chalmers,
we understand this as a mandate to create a federal common
law of labor contract interpretation, not an independent body
of tort law. Accord, Brazinski v. Amoco Petroleum Additives
Co., 6 F.3d 1176, 1180 (7th Cir. 1993) (“The common law to
be made is a common law of contracts, not a source of inde-
pendent rights, let alone tort rights; for section 301 is as we
have said a grant of jurisdiction only to enforce contracts.”).
Finally, Granite Rock’s invocation of legislative intent does
not persuade us. Congress intended to improve the enforce-
ment of bargaining agreements via the LMRA. S. Rep. No.
80-105 (1947). But “[n]othing in the legislative history of
2
The Eleventh Circuit initially seemed to adopt the Third Circuit’s
approach in Local 472, United Ass’n of Journeymen & Apprentices v.
Georgia Power Co., 684 F.2d 721, 725 (11th Cir. 1982). However, the
Eleventh Circuit then implicitly overruled that precedent when it held, in
Xaros v. U.S. Fid. and Guar. Co., 820 F.2d 1176, 1181 (11th Cir. 1987),
that section 301(a) jurisdiction did not lie when the defendant was not a
signatory to the underlying contract, because the cause of action did not
“arise under the agreement but [was] merely related to it.” Id.
14716 GRANITE ROCK CO. v. TEAMSTERS
§ 301 bears on the question of holding a nonsignatory to a
collective bargaining agreement.” Carpenters Local Union
No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 503 n.6
(5th Cir. 1982). Granite Rock asks us to extrapolate from
Congress’s general purpose a tort claim against IBT, despite
the language of the statute, in the interests of “fundamental
fairness.” We decline to do so. The plain language of the stat-
ute appears to require at least that rights or obligations created
by a labor agreement be in contest to support a section 301(a)
challenge. Moreover, the persuasive array of authority in our
sister circuits counsels against adopting Granite Rock’s posi-
tion, and leads us instead to take the beaten path established
by this extra-circuit precedent.
Any “gap” that might exist in Congress’s labor law design
is for Congress and not for us to fill. When Congress regulates
an area comprehensively, as it has done in the federal labor
laws, rights and remedies can be defined and circumscribed.
Congress has not left parties such as Granite Rock altogether
without recourse. It has provided for remedies in labor dis-
putes through both section 301—against parties to the bar-
gaining agreement—and through the National Labor
Relations Act, 29 U.S.C. §§ 151-169. Indeed, Granite Rock
vigorously pursued actions against Local 287 in the federal
courts as well as in the National Labor Relations Board. If
Congress did not provide a remedy for Granite Rock directly
against IBT on its asserted tortious interference claim, then
that is an issue to be addressed by Congress, not by an
extraordinary and outlier interpretation of the governing stat-
ute.
[4] We affirm the dismissal of Granite Rock’s claims
against IBT.3
3
Language in section 301(a) of the LMRA strongly suggests that its
requirements are necessary to confer subject-matter jurisdiction on the
federal courts: The action “may be brought in any district court of the
United States having jurisdiction of the parties, without respect to the
GRANITE ROCK CO. v. TEAMSTERS 14717
III
We review de novo the effect of the arbitration clause in
the alleged new CBA between Granite Rock and Local 287.
See Nagrampa v. Mailcoups, Inc., 469 F.3d 1257, 1267 (9th
Cir. 2006) (en banc).
[5] The United States Supreme Court has drawn a distinc-
tion between challenges to an arbitration clause and chal-
lenges to an entire contract. The Court has stated this general
rule: “[U]nless the challenge is to the arbitration clause itself,
the issue of the contract’s validity is considered by the arbitra-
tor in the first instance.” Buckeye Check Cashing, Inc. v. Car-
degna, 546 U.S. 440, 445-46 (2006); see Prima Paint Corp.
v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967).
The Ninth Circuit recognized this dichotomy recently in
Nagrampa, where we held that federal courts must refer to
arbitration those claims seeking to “invalidate or otherwise
directly affect the entire contract,” 469 F.3d at 1271, but may
hear “challenges specifically to [an] arbitration agreement.”
Id. at 1269.
[6] Consistent with this framework, a party generally may
not sue in federal court under a contract that, by its terms,
amount in controversy or without regard to the citizenship of the parties.”
29 U.S.C. § 185(a); see also Steel Co. v. Citizens for a Better Env’t, 523
U.S. 83, 89 (1998) (reasoning that similar language in the Clean Water
Act made the Act’s requirements jurisdictional). This reading is consistent
with our precedent. See Majestic Housing, 743 F.2d at 1345 (holding that
“mere reference” to a collective bargaining agreement does not confer fed-
eral question jurisdiction under section 301(a)). Thus, a failure to state a
claim under section 301(a) of the LMRA is a defect in subject-matter
jurisdiction, and Granite Rock’s claim against IBT here should have been
dismissed under Federal Rule of Civil Procedure 12(b)(1), not 12(b)(6) as
the district court held. This difference in theory, however, leads to the
same result of dismissal. We may affirm the district court’s dismissal of
the claim on any grounds supported by the record, even if the district court
did not rely on those grounds. See United States v. State of Wash., 969
F.2d 752, 755 (9th Cir. 1992).
14718 GRANITE ROCK CO. v. TEAMSTERS
requires arbitration. Teledyne, Inc. v. Kone Corp., 892 F.2d
1404 (9th Cir. 1989). In such cases, the matter must be sent
to arbitration “unless there is a challenge to the arbitration
provision which is separate and distinct from any challenge to
the underlying contract.” Id. at 1410 (citing Prima Paint, 388
U.S. at 402-04). In Teledyne, the plaintiff sued for breach of
contract, and defendant argued that the draft agreement was
never finalized. Id. We upheld the dismissal of the claim, in
favor of arbitration, to avoid the absurd result where a plain-
tiff simultaneously argues that the whole contract is valid, but
that the court should ignore the arbitration provision which
strips its power.
Two years later, we held that a party who disputes the for-
mation of a contract may not be forced to arbitrate the issue
of contract formation; otherwise “[p]arty A could forge party
B’s name to a contract and compel party B to arbitrate the
question of the genuineness of its signature.” Three Valleys
Municipal Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136,
1140 (9th Cir. 1991). In Three Valleys, plaintiffs sued E.F.
Hutton for substantial losses in their investment accounts. Id.
at 1137. Defendant asserted an arbitration clause in a client
agreement, while plaintiffs contended that the entire client
agreement was not binding because the signor lacked author-
ity to bind plaintiffs. Id. at 1138. The district court directed
arbitration of the contract formation issue, and we reversed on
the grounds that forcing the formation issue into arbitration
would have held the plaintiffs to an arbitration clause upon
which they might not have agreed. Id. at 1138-42.
The parties’ briefing and the district court’s careful analysis
in the case at bar illuminate the conceptual tension that exists
between Teledyne and Three Valleys. It might be argued that
these two cases look in opposite directions: Teledyne com-
pelled arbitration on the question of contract formation, Three
Valleys reserved the formation question for the court. How-
ever, the court in Three Valleys distinguished its facts from
those in Teledyne in an instructive way:
GRANITE ROCK CO. v. TEAMSTERS 14719
Teledyne is a rare case. In Teledyne, the plaintiff (1)
asserted the validity of the underlying contract con-
taining the arbitration clause by bringing a breach of
contract action and (2) did not make an independent
challenge to the arbitration clause. The plaintiff thus
had no ground on which to repudiate the arbitration
agreement. As we explained in Teledyne, to allow
the plaintiff to circumvent arbitration in these cir-
cumstances by bringing its claims in federal court
would lead to an absurd result . . . .
Three Valleys, 925 F.2d at 1142. This reading of Teledyne
precisely fits the facts of the case presented by the appeal
before us. Whether the facts of this case and of Teledyne are
“rare” or not, we conclude that the general rule stated by the
Supreme Court, reiterated recently in our en banc decision in
Nagrampa, and previously implemented sensibly in Teledyne,
should be followed.
[7] Here, Granite Rock brings a section 301(a) breach of
contract action based on its alleged new CBA with Local 287,
which includes an arbitration clause covering “[a]ll disputes
arising under this agreement.” This clause is broad enough to
cover the dispute over contract formation, and Granite Rock
does not make an independent challenge to the arbitration
clause.4 Granite Rock “thus ha[s] no ground on which to repu-
4
While Granite Rock does not argue the arbitration clause is invalid in
any way, it does argue briefly that the clause does not cover a dispute over
formation. However, Granite Rock offers no support for a narrow reading
of the arbitration clause here. Arbitration clauses are to be construed very
broadly: “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 dis-
pute. Doubts should be resolved in favor of coverage.” AT&T Techs., Inc.
v. Comm. Workers, 475 U.S. 643, 650 (1986) (quoting Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (1960)). Because
Granite Rock is suing “under” the alleged new CBA, the arbitration clause
is certainly “susceptible of an interpretation” that covers the dispute.
14720 GRANITE ROCK CO. v. TEAMSTERS
diate the arbitration agreement.” Three Valleys, 925 F.2d at
1142. Therefore, we must not allow Granite Rock to “circum-
vent arbitration in these circumstances by bringing its claim
in federal court.” Id.
Granite Rock contends that because Local 287 has con-
tested the issue of contract formation, Local 287 has repudi-
ated and waived the arbitration clause and should be estopped
from asserting it, even as to questions of breach and damages.
We summarily rejected that rationale in Teledyne, where the
defendant denied the existence of the contract but asserted the
arbitration clause. We stated: “Teledyne argues that Kone has
no right to enforce the arbitration provision because it has
denied that a valid contract exists. If accepted, this argument
would produce an absurd result . . . .” 892 F.2d at 1410. Local
287 timely raised the arbitration issue, and thus it is entirely
acceptable for Local 287 to argue in the alternative that the
agreement was never ratified, but even if it was, this case
belongs in arbitration. (This outcome does not fun afoul of
Three Valleys. The court there ultimately held that “ ‘a party
cannot be required to submit [to arbitration] any dispute
which he has not agreed so to submit.’ ” Three Valleys, 925
F.2d at 1142 (quoting AT & T Technologies, Inc. v. Communi-
cations Workers, 475 U.S. 643, 648 (1986)). In Three Valleys
the party contesting contract formation also resisted arbitra-
tion, so it was a permissible outcome to reserve the question
of contract formation for the court.
[8] Here, both parties consented to arbitration; Granite
Rock implicitly by suing under the contract containing the
arbitration clause, and Local 287 explicitly by asserting the
arbitration clause. Either might have had the right to a court
determination of the formation issue had that right not been
waived by asserting the validity of the contract. The holding
of Teledyne is clear: Parties have no right to access the federal
courts when they sue under agreements which, by their terms,
remove the federal courts’ power to hear the case—unless
GRANITE ROCK CO. v. TEAMSTERS 14721
they challenge the arbitration clause independently. See Tele-
dyne, 892 F.2d at 1410.
Congress and the Supreme Court have declared a “national
policy favoring arbitration.” Buckeye Check Cashing, 546
U.S. at 443 (citing the Federal Arbitration Act, 9 U.S.C. §§ 1-
16). As courts have noted however, this policy is best served
by limiting arbitrators’ jurisdiction to those cases where the
parties have actually agreed to arbitrate; “[t]he willingness of
parties to enter into agreements that provide for arbitration of
specified disputes would be ‘drastically reduced’ . . . if a labor
arbitrator had the ‘power to determine his own jurisdiction
. . . .’ ” AT & T, 475 U.S. at 651 (quoting Cox, Reflections
Upon Labor Arbitration, 72 Harv. L. Rev. 1482, 1509
(1959)). When the parties have both consented to arbitration
there are no concerns about arbitrators imposing themselves
upon parties. If a party sues under a contract containing a
broad arbitration clause, logic dictates that the most reliable
way of honoring the parties’ expectations is to enforce that
arbitration clause from the outset unless the other party shows
it never agreed to arbitrate.
When an alleged contract includes a broad arbitration
clause, it is sensible to conclude that an arbitrator will hear
challenges to contract formation or to the contract as a whole
—provided that both parties have consented, in some fashion,
to arbitration. Teledyne shows that one can consent to arbitra-
tion by suing under a contract that includes an applicable arbi-
tration clause.
[9] The challenge here regards contract formation, Granite
Rock does not challenge the arbitration clause independently,
and both parties have consented to arbitration. As such, Gran-
ite Rock’s claims against Local 287 should have been dis-
missed in favor of arbitration.
We AFFIRM the district court’s judgment dismissing
Granite Rock’s claims against IBT, and we REVERSE and
14722 GRANITE ROCK CO. v. TEAMSTERS
REMAND the district court’s order denying Local 287’s
motion to arbitrate, with instructions that Granite Rock and
Local 287 should be compelled to arbitrate their dispute in its
entirety. Costs of IBT and of Local 287 shall be borne by
Granite Rock.