Ibew v. Citizens Telecom ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
INTERNATIONAL BROTHERHOOD OF 
ELECTRICAL WORKERS, AFL-CIO
LOCAL 1245, No. 06-16189
Petitioner-Appellee,
v.  D.C. No.
CV-06-00677-WBS
CITIZENS TELECOMMUNICATIONS CO. OPINION
OF CALIFORNIA,
Respondent-Appellant.

Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, District Judge, Presiding
Argued and Submitted
June 12, 2008—San Francisco, California
Filed December 5, 2008
Before: Mary M. Schroeder, John M. Walker, Jr.,1 and N.
Randy Smith, Circuit Judges.
Opinion by Judge Walker
1
The Honorable John M. Walker, Jr., Senior Circuit Judge of the United
States Court of Appeals for the Second Circuit, sitting by designation.
16039
IBEW v. CITIZENS TELECOMMUNICATIONS CO. 16041
COUNSEL
Thomas M. Beck, at argument, and Peter E. Davids, on the
briefs, Jones Day, San Francisco, California, for appellant Cit-
izens Telecommunications Company of California.
Shawn C. Groff, at argument, and Lynn Rossman Faris, on
the briefs, Leonard Carder, LLP, Oakland, California, for
appellee International Brotherhood of Electrical Workers,
AFL-CIO Local 1245.
16042 IBEW v. CITIZENS TELECOMMUNICATIONS CO.
OPINION
WALKER, Circuit Judge:
Appellant Citizens Telecommunications Co. (Citizens) and
Appellee International Brotherhood of Electrical Workers,
AFL-CIO Local 1245 (IBEW) are parties to a Collective Bar-
gaining Agreement (CBA) in effect from October 2004
through September 2008. IBEW sought an order compelling
Citizens to arbitrate IBEW’s claim that Citizens had violated
the CBA by reducing employee retirement benefits. The dis-
trict court granted the motion to compel arbitration and Citi-
zens appealed, arguing that IBEW cannot arbitrate its
grievance without first obtaining consent from the retirees
currently eligible for benefits under the CBA. We affirm.
I. Background
Article 24.1 of the CBA provides that the “Citizens Utilities
Medical Plan,” which includes the “Retiree Medical” plan,
“shall be provided for all eligible employees in accordance
with the terms of said plans.” This article further provides that
Citizens may “make changes” to the plan, provided that, inter
alia, “[t]he changes do not reduce the overall level of bene-
fits.” Article 24.1 also contains the following arbitration pro-
vision:
In the event that any dispute arises as to whether the
proposed change does or does not reduce the overall
level of benefits the dispute will be referred to expe-
dited arbitration without exhaustion of the grievance
procedure.
In November 2005, Citizens informed IBEW, the exclusive
bargaining agent for a group of Citizens employees, that it
was making changes to its medical plan that would affect both
current employees and retirees. In particular, Citizens pur-
ported to cancel retiree medical benefits, beginning in January
IBEW v. CITIZENS TELECOMMUNICATIONS CO. 16043
2006, for any “medicare eligible” retiree. In response, IBEW
filed two grievances. The first, Grievance 5-07, sought relief
from Citizens’ decision to increase the medical plan premi-
ums paid by active employees. The second, Grievance 5-08,
alleged that Citizens “unilaterally made changes to the retiree
medical plan” and therefore violated the CBA because those
changes would “reduce the overall level of benefit to the
retiree plan.” In this grievance, IBEW requested that Citizens
“rescind any and all unilateral retiree medical benefit reduc-
tions and reimburse retirees appropriately and retroactively.”
This grievance also requested “expedited arbitration” pursuant
to Article 24.1 of the CBA.
Citizens, while agreeing to arbitrate Grievance 5-07,
refused to arbitrate Grievance 5-08. In a letter from Citizens’
Associate General Counsel to IBEW’s Senior Assistant Busi-
ness Manager, Citizens contended that IBEW was “attempting
to grieve issues related to current retirees” who were “for-
merly represented by the Union.” Because the union did not
currently represent those employees, and because, Citizens
asserted, “the Union is not raising an issue covered by the cur-
rent CBA between the parties,” Citizens claimed that Griev-
ance 5-08 was not arbitrable under the CBA.
In April 2006, IBEW sued Citizens in the Eastern District
of California seeking to compel arbitration. In opposition, Cit-
izens did not contend that the grievance was beyond the scope
of the arbitration provision. Instead, Citizens argued that
IBEW “lacks standing to represent the interests of for-
mer employees who are no longer members of the union.”
Int’l Bhd. of Elec. Workers v. Citizens Telecomms. Co. of Cal.
(IBEW I), No. CIV S-06-0677, slip op. at 4 (E.D. Cal. May
17, 2006). The district court observed that “the bulk of author-
ity addressing the issue” has endorsed a rule requiring retiree
consent in order for the union to represent the interests of
retirees. Id. at 8. The district court ultimately rejected this rule
as “inconsistent with the Ninth Circuit’s understanding of the
role and purpose of unions,” and out of step with “accepted
16044 IBEW v. CITIZENS TELECOMMUNICATIONS CO.
principles of contract law.” Id. at 9. The district court granted
IBEW’s motion to compel arbitration of Grievance 5-08 over
the cancellation of certain medical benefits, and Citizens filed
this appeal.
II. Discussion
The district court properly found subject matter jurisdiction
under 29 U.S.C. § 185(a), and we have appellate jurisdiction
under 28 U.S.C. § 1291. “The district court’s decision to grant
or deny a motion to compel arbitration is reviewed de novo.”
Bushley v. Credit Suisse First Boston, 360 F.3d 1149, 1152
(9th Cir. 2004).
A. The CBA Requires Arbitration
Citizens does not dispute that Grievance 5-08 raises an
issue that is subject to the expedited arbitration procedures of
the CBA. As a general rule, a party’s duty to arbitrate depends
on contract law:
[A]rbitration is a matter of contract and a party can-
not be required to submit to arbitration any dispute
which he has not agreed so to submit. Yet, to be con-
sistent with congressional policy in favor of settle-
ment of disputes by the parties through the
machinery of arbitration, the judicial inquiry under
§ 301 must be strictly confined to the question
whether the reluctant party did agree to arbitrate the
grievance . . . . 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. Doubts should be resolved in favor
of coverage.
United Steelworkers v. Warrior & Gulf Navigation Co., 363
U.S. 574, 582-83 (1960) (emphasis added). In Grievance 5-
IBEW v. CITIZENS TELECOMMUNICATIONS CO. 16045
08, IBEW contends that Citizens’ new policy reduces the
overall level of benefits in contravention of Article 24.1 of the
CBA. Citizens contends that it does not. This is the issue
IBEW seeks to submit to arbitration, and the plain language
of the CBA imposes on Citizens a duty to arbitrate. Citizens
did not contest the existence of this duty before the district
court, IBEW I, slip op. at 3-4 (“respondent does not contend
that the aforementioned modifications . . . do not . . . trigger
the [Article 24.1] duty to arbitrate”), and it does not do so
here. Instead, Citizens contends that the district court erred in
not “requiring a union to obtain the consent of affected retir-
ees before arbitrating claims concerning their benefits,” and
Citizens urges this court to join the Fifth,2 Sixth, and Seventh
Circuits in requiring the union to do so. Appellant’s Br. at 2.
In advancing this position, Citizens relies primarily on Ros-
setto v. Pabst Brewing Co., 128 F.3d 538 (7th Cir. 1997), and
Cleveland Electric Illuminating Co. v. Utility Works Union
Local 270, 440 F.3d 809 (6th Cir. 2006). While these cases
do not bind the Ninth Circuit, they are plainly relevant to our
consideration and thus merit further examination.
B. Rossetto and Cleveland Electric
In Rossetto, a collective bargaining agreement between
Pabst (the employer) and District 10 (the union) provided cer-
tain benefits to retirees. In June 1995, when the CBA expired,
Pabst proposed eliminating the retiree benefits from a succes-
sor agreement to that CBA, and District 10 rejected the pro-
posal. In August 1996—a year later—Pabst informed retirees
(but not District 10) that it would be terminating the same
2
Citizens cites International Ass’n of Machinists & Aerospace Workers
Local Lodge 2121 v. Goodrich Corp., 410 F.3d 204, 213 (5th Cir. 2005),
in support of its contention that the Fifth Circuit has endorsed the rule that
Citizens now urges us to adopt. In Goodrich, however, the Fifth Circuit
found it unnecessary to determine whether a union’s failure to obtain
retiree consent deprived it of standing to represent retirees in a federal suit
to compel arbitration, because the union in that case had obtained consent.
Id. at 212.
16046 IBEW v. CITIZENS TELECOMMUNICATIONS CO.
retiree benefits as of September 1, 1996. On August 12, after
learning of Pabst’s actions, District 10 filed a grievance alleg-
ing that the unilateral termination of retiree benefits breached
the CBA. In September 1996, a group of retired Pabst
employees also sued Pabst in federal court seeking reinstate-
ment of the benefits on the grounds that Pabst’s termination
action violated the CBA and the Employee Retirement
Income Security Act (ERISA). In November 1996, Pabst rein-
stated the retiree benefits and agreed to extend the expired
CBA through January 31, 1997. A day before the CBA was
again set to expire, District 10 notified Pabst of its desire to
arbitrate its August grievance, pursuant to a provision of the
CBA providing for arbitration of certain grievances. The com-
bined effect of the notice and the expiring CBA was that the
arbitration would pertain only to employees who had already
retired, and not to current employees. Pabst refused to arbi-
trate, and the federal plaintiffs amended their complaint to
request an order compelling arbitration of the grievance. The
district court granted the motion to compel, and Pabst
appealed. See Rossetto, 128 F.3d at 538-39.
At oral argument, the Seventh Circuit panel sua sponte
raised “a critical threshold question—whether District 10 has
standing to pursue the retirees’ grievance to arbitration.” Id.
at 539. The court observed that, in general, “a union has
standing under Article III of the Constitution to arbitrate the
meaning of a collective bargaining agreement that grants
rights to third parties (in this case, retirees) simply by virtue
of the fact that the union is a party to the contract,” and that
when the union and employer arbitrate, the union serves as
the “grievants’ representative.” Id. (emphasis added). But
because District 10 was not the “exclusive bargaining repre-
sentative” of the retiree plaintiffs, “any claims for benefits
here belong to the retirees individually, and the retirees may
deal directly with Pabst in pursuing such claims.” Id. at 540.
The Seventh Circuit further opined that any arbitration involv-
ing retirement benefits would bind the retirees: “If District 10
loses in arbitration, the retirees lose, period.” Id. As a result,
IBEW v. CITIZENS TELECOMMUNICATIONS CO. 16047
“any right District 10 has to pursue arbitration of the retirees’
grievance must come from the retirees.” Id. Because District
10 did not have the consent of the retirees, the court con-
cluded that “District 10 lacks standing to bring the retirees’
grievance to arbitration,” and it dismissed the appeal for lack
of jurisdiction. Id. at 541.
While the benefit changes in Rossetto only affected
employees that had retired, in Cleveland Electric, the
employer (Cleveland Electric) made a number of changes to
the health care benefits of both active and retired members of
the union. Cleveland Elec., 440 F.3d at 811. An arbitrator
decided that “since the Union and Cleveland Electric agreed
to include retirees’ benefits in the CBA, the Union had stand-
ing to seek arbitration on behalf of the retirees for benefits
that were included in the CBA.” Id. Cleveland Electric
brought suit to have the decision vacated, and the district
court held, in relevant part, “that the retirees, unlike the active
employees, had individual contractual rights and that they
could not be forced to arbitrate their grievance,” and therefore
“the retirees must consent to the Union’s representation.” Id.
at 811-12. The Sixth Circuit affirmed, holding that “[i]n order
to arbitrate a retiree’s benefits, the Union must obtain the con-
sent of the retiree. It will be the arbitrator’s responsibility to
establish the nature and extent of the consent requirement.”
Id. at 818. Relying on Rossetto, the court noted “at least two
dangers in failing to require” consent: the danger that the
retirees could lose their right to pursue claims directly if the
union loses in arbitration, and the danger that “Cleveland
Electric could be faced with numerous retirees’ claims and
lawsuits if a determination is made that the Union was not
authorized to act on the retirees’ behalf.” Id. at 817.
C. The Proposed Consent Rule
Citizens contends that these cases establish a rule that bars
unions from arbitrating disputes “relating to retiree benefits”
without the consent of affected retirees. Appellant’s Br. at 8.
16048 IBEW v. CITIZENS TELECOMMUNICATIONS CO.
While we believe that this is a plausible reading of Rossetto
and Cleveland Electric, we decline to adopt such a broad rule.
The rule that Citizens would have us apply here ignores the
fact that reductions in retiree benefits may also affect current
employees who are undisputedly still represented by the union
under an extant CBA, and it is based on unsound assumptions
about the preclusive effect of arbitration involving retiree ben-
efits.
1. Citizens’s Action Affects Current Employees
[1] First, the consent rule that Citizens divines from Ros-
setto and Cleveland Electric fails to account for the fact that
an impermissible reduction in retirement benefits under the
CBA affects current employees as well as retirees. This was
not a problem in Rossetto because the dispute implicated only
the benefits of employees who had retired.
[2] As the Supreme Court has pointed out, “the future
retirement benefits of active workers are part and parcel of
their overall compensation.” Allied Chem. & Alkali Workers
Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S.
157, 180 (1971). Thus, when IBEW seeks an arbitration order
to determine whether Citizens has impermissibly reduced
retirement benefits, it does so, at least in part, on behalf of
current employees. After all, in order for a current employee
to make a prudent decision about when to retire, accurate
information about his entitlement to retirement benefits is cru-
cial.
[3] Citizens, citing Allied Chemical, contends that this dis-
pute does not involve the benefits of current employees
because any effect on a current employee’s benefits is only
“speculative.” Appellant’s Reply Br. at 2. We disagree. This
argument distorts Allied Chemical beyond recognition—in
that case, as noted above, the Supreme Court observed that
future retiree benefits were “part and parcel” of an active
employee’s compensation. The only thing that was specula-
IBEW v. CITIZENS TELECOMMUNICATIONS CO. 16049
tive in Allied Chemical was the advantage gained by active
workers by including retirees in their bargaining unit when
negotiating a CBA. 404 U.S. at 180. Allied Chemical does not
suggest that the actual retirement benefits contractually prom-
ised to an active employee are speculative and therefore an
inappropriate subject of arbitration. The CBA here imposes a
duty to arbitrate a disputed reduction in benefits, and nothing
in Allied Chemical suggests that IBEW cannot enforce this
duty because current workers are not yet eligible to receive
the contested benefits.
2. Preclusive Effect of Arbitration on Retirees
In addition, we think the consent rule suggested by appel-
lant relies on unsound assumptions about the preclusive effect
of arbitration involving retiree benefits. The decision in Ros-
setto simply assumed that any arbitration of retiree benefits
between a union and an employer would bind current retirees.
See 128 F.3d at 540 (“If District 10 loses in arbitration, the
retirees lose, period.”). Thus, the Rossetto court required the
retirees’ consent because that court felt it unjust to bind them
without it.
[4] Even if we assume that it is proper to base the outcome
of an initial proceeding (the motion to compel arbitration) on
the preclusive effect of a second proceeding (the arbitration)
upon a hypothetical third proceeding (the suit by the individ-
ual retiree), the underlying assumption of preclusion does not
withstand scrutiny. First, we will not assume that either the
arbitration in Rossetto or the arbitration contemplated here
would preclude subsequent suits by individual retirees. The
one circuit court that we know to have reached the issue in
similar circumstances decided that a union’s pursuit of arbi-
tration, ostensibly undertaken on behalf of retirees, did not
preclude a later individual claim arising from the same set of
facts. See Meza v. Gen. Battery Corp., 908 F.2d 1262, 1273
(5th Cir. 1990). While we cannot definitively say that there
are no circumstances in which a union’s arbitration would
16050 IBEW v. CITIZENS TELECOMMUNICATIONS CO.
have some preclusive effect on a subsequent suit by a former
member no longer represented by the union, the result in
Meza certainly suggests that such preclusion would occur
very rarely, if at all; it seems extremely unlikely that a court
would apply claim preclusion against an individual retiree
based on an arbitration to which that retiree was not a party,
nor represented by a party. Thus, we disagree with the Ros-
setto court’s conclusion that allowing arbitration concerning
retiree benefits without consent of the retirees would “hijack
the retirees’ right to pursue their statutory claims by forcing
arbitration.” 128 F.3d at 541.
The Cleveland Electric court discussed a second harm that
it felt justified imposing a consent rule: the harm to the
employer of having to relitigate a favorable arbitral outcome
in suits by individual retirees. (Presumably, an unfavorable
arbitral outcome would preclude further resistance by the
employer in individual action under principles of issue preclu-
sion.) This relitigation possibility led the Cleveland Electric
court to require the union to obtain retiree consent, and
thereby bind the retirees to the result of the arbitration. The
court reasoned that retirees would otherwise get a second bite
at the apple in an individual proceeding even if the employer
prevailed against the union in arbitration. See 440 F.3d at 817.
[5] This harm is also insufficient to justify the creation of
a “consent rule” that prevents the union from arbitrating an
otherwise arbitrable grievance. The fact that Citizens may be
exposed to allegedly duplicative proceedings is a result of its
own bargaining. We will not write into the CBA a consent
requirement provision for which Citizens failed to bargain.
D. IBEW’s Standing in Federal Court
[6] Citizens also contends that IBEW lacks standing to
compel arbitration of retirees’ claims because it has not dem-
onstrated “injury in fact” and because it cannot assert the
IBEW v. CITIZENS TELECOMMUNICATIONS CO. 16051
rights of third parties in federal court.3 [BB 18] But the right
to arbitration that IBEW asserts in federal court is plainly “an
invasion of a legally protected interest” that affects IBEW “in
a personal and individual way.” Lujan v. Defenders of Wild-
life, 504 U.S. 555, 560 & n.1 (1992). Even if this right
belongs to the CBA’s third-party beneficiaries (the current
employees and retirees), rather than the contracting party (the
union), denial of this right affects the union in a personal and
individual way: IBEW is forced to incur the expense of either
suing in federal court to compel arbitration or litigating the
alleged violation of the CBA itself in federal court.
3
We note at the outset that this standing argument is distinct from appel-
lant’s argument that the union cannot arbitrate certain claims (those
involving retiree benefits) without retiree consent. Although the Rossetto
opinion suggests that the latter issue also involves principles of standing,
see 128 F.3d at 541 (concluding that the union “lacks standing to bring the
retirees’ grievance to arbitration”), we do not share this view. The
Supreme Court’s constitutional and prudential standing doctrines, as enun-
ciated in cases like Warth v. Seldin, 422 U.S. 490 (1975), are used to
determine who may sue in federal court. Because standing is based on
constitutional limitations on the “judicial Power” of the federal courts, see
generally U.S. Const. art. 3, it does not bear on the issue of whether a cer-
tain claim can be brought before an arbitrator. Thus, we believe it is mis-
leading to say, for example, that “[a]s a general principle, a union has
standing under Article III of the Constitution to arbitrate the meaning of
a collective bargaining agreement.” Rossetto, 128 F.3d at 539. Article III
creates and limits the power of the federal courts, and is therefore not
implicated in a dispute before a non-Article III tribunal, such as an arbitra-
tor. In addition, we know of no other doctrine of constitutional or pruden-
tial standing under which the consent of a third party can cure a plaintiff’s
lack of standing.
The consent rule announced in Rossetto or Cleveland Electric more
closely resembles an implied-in-law contract term: because a court
believes it is unfair to compel arbitration without obtaining retiree consent,
it conditions the union’s right to arbitration on its obtaining the consent of
affected retirees. See, e.g., Bhd. of Locomotive Eng’rs v. Burlington N.
R.R.., 838 F.2d 1102, 1113 (9th Cir. 1988) (“[A] collective bargaining
agreement may include terms which, although omitted from the text of the
agreement, are nonetheless part of the agreement because they are
implied-in-law.”). As discussed above, we see no reason to imply such a
term in this case.
16052 IBEW v. CITIZENS TELECOMMUNICATIONS CO.
[7] The alleged uncertainty as to whether the right to arbi-
tration technically belongs to IBEW itself, rather than its indi-
vidual members, does not deprive IBEW of standing. A union
has standing to sue on behalf of its members if the prerequi-
sites of associational standing are met, see United Food &
Commercial Workers Union Local 751 v. Brown Group, Inc.,
517 U.S. 544, 553 (1996), and Citizens does not argue that
these requirements are not satisfied as to IBEW’s current
members.
[8] Instead, Citizens contends that IBEW cannot avail itself
of associational standing because the retirees are not union
members. But where, as here, the union has associational
standing to bring a suit to compel arbitration on behalf of its
current members, we know of no rule depriving it of that
standing solely because it may lack standing to bring suit on
behalf of non-members.
Accordingly, we conclude that the district court properly
granted IBEW’s petition to compel arbitration, and its judg-
ment is
AFFIRMED.