Local 827 v. Verizon NJ Inc

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
8-17-2006
Local 827 v. Verizon NJ Inc
Precedential or Non-Precedential: Precedential
Docket No. 05-3613
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-3613
LOCAL 827, INTERNATIONAL BROTHERHOOD
OF ELECTRICAL WORKERS, AFL-CIO
v.
VERIZON NEW JERSEY, INC.;
VERIZON SERVICES CORPORATION,
Appellants
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Nos. 03-cv-03523, 03-cv-03613, 03-cv-06097)
District Judge: Honorable Katharine S. Hayden
Argued July 13, 2006
Before: SLOVITER, McKEE and RENDELL, Circuit Judges
(Filed August 17, 2006)
Thomas M. Beck (Argued)
Nicholas J. Sanservino, Jr.
Jones Day
Washington, DC 20001
Attorneys for Appellants
Mark E. Belland
Steven J. Bushinsky
Nancy S. Sokol (Argued)
O’Brien, Belland & Bushinsky
Northfield, NJ 08225
Attorneys for Appellee
OPINION OF THE COURT
SLOVITER, Circuit Judge.
In this appeal, we must decide between the conflicting
conclusions reached by two district judges in the same court
regarding the interpretation of the same collective bargaining
contract. One has held that the contract’s arbitration clause is
narrow, while the other has held that it is broad. Although only
one of the cases is on appeal before us, we write to resolve the
conflict because the interpretation of that clause is central to our
disposition.
In this case, appellants Verizon New Jersey, Inc. and
Verizon Services Corporation (collectively, “Verizon”) appeal
from the District Court’s order granting summary judgment to
Local 827, International Brotherhood of Electrical Workers,
AFL-CIO (“Local 827”). Local 827 brought suit against
Verizon, seeking to compel arbitration of three grievances
relating to overtime. Verizon contends that these grievances do
not fall within the scope of the arbitration clause of the parties’
Collective Bargaining Agreement (“CBA”). Both parties moved
for summary judgment and the District Court granted Local
827's motion, finding as a matter of law that grievances relating
to the assignment of overtime work are substantively arbitrable
under the CBA.
The District Court had jurisdiction pursuant to 29 U.S.C.
§ 185. We have jurisdiction pursuant to 28 U.S.C. § 1291.
2
I.
Local 827 represents Verizon’s non-supervisory
employees with respect to collective bargaining for rates of pay,
wages, hours of employment, and other conditions of
employment. The parties’ CBA contains a “Plant Contract”
covering the Plant and Engineering Departments and an
“Accounting Contract.” It is the Plant Contract that is at issue
here and which Local 827 contends covers arbitration of the
three overtime grievances.
Grievance One alleges that Verizon violated the CBA and
a related prior agreement by improperly assigning overtime work
involving Facilities Technicians in Local 827’s Northern
Suburban District. Specifically, the grievance alleged violations
of Article II (Recognition and Collective Bargaining) of the
CBA,1 the implied covenant of good faith and fair dealing, and
past practices under the CBA.
Grievance Two alleges that Verizon violated the
provisions of Article II of the CBA by improperly assigning
overtime work involving Repair Service Clerks in Local 827's
Southern Suburban District. This grievance relates to Verizon’s
alleged violations of additional provisions of the CBA as well as
an established past practice of utilizing an overtime list.
Grievance Three alleges that Verizon violated the
provisions of the CBA by improperly assigning construction
overtime work involving a Facilities Technician (a job
1
Article II of the CBA provides, inter alia: “The Company
recognizes and acknowledges the Union as the designated and
selected representative of the nonsupervisory employees of its Plant
Department and Engineering Department for the purpose of
collective bargaining and as their sole collective bargaining agency
in respect to rates of pay, wages, hours of employment, and other
conditions of employment, and for the purpose of entering into
understandings and agreements with reference thereto. . . .” App.
at 492.
3
classification under the agreement) in Local 827’s Southern
Jurisdictional Area. Specifically, the grievance alleged
violations of Articles II and XI (Grievance Procedure) of the
CBA, the implied covenant of good faith and fair dealing, and
past practices.
During the grievance proceedings, Local 827 argued that
for over twenty-five years, an overtime list tracked the hours
worked by each employee. This list was to serve as the basis for
overtime assignments, and Verizon was obligated to offer
overtime first to those employees with the least amount of
overtime. Local 827 argued that by failing to assign overtime in
accordance with the overtime list, Verizon violated Article II,
the implied covenant of good faith and fair dealing, and past
practices under the CBA. Local 827 also alleged violations of
Articles IV (Working Conditions), and V (Wages) of the CBA.
All three grievances were processed through the grievance
procedures outlined in Article XI of the CBA, and Verizon
denied each grievance at each step of the grievance process.
Local 827 then sought to arbitrate the three grievances, but
Verizon refused to arbitrate, contending that the grievances fell
outside the scope of the Arbitration Clause of the CBA. Local
827 then brought suit to compel arbitration.
The District Court granted Local 827's motion for
summary judgment and held that the grievances were arbitrable.
II.
The Arbitration Clause of the CBA, Article XII, states:
Section 1. Only the matters specifically made subject to
arbitration in Article VII, Force Adjustments and
Termination Allowances, Section 4, paragraph 4;
Article VIII, Separations From the Service--Other Than
Layoffs, Section 2;
Article X, Interpretation and Performance, Section 2;
Article XI, Grievance Procedure, Section 4;
Article XV, Changes in the Verizon Pension Plan and the
Sickness and Accident Disability Benefit Plan, Section 3;
4
Article XVI, Seniority in Promotions, Section 4; and
Article XXII, Verizon Services Transfer Plan and
Intercompany Job Bank Program; shall be arbitrated.
···
Section 2. The Board of Arbitration in its decision shall
be bound by the provisions of this Agreement and shall
not have the power to add to, subtract from, or modify
any provision of this Agreement.
Section 3. The Procedure for Arbitration is set forth in
Exhibit III attached to and made part of this Agreement.
App. at 500 (emphasis added).
The District Court found that the grievances were
arbitrable on the ground that they fell within Article XI, Section
4. That section, which is headed Grievance Procedure, is one of
the subject matters listed in Article XII as subject to arbitration.
Article XI establishes a three-step grievance procedure. Section
4 sets forth the top-step of the grievance procedure. It states:
If any grievance involving a controversy over the true
intent and meaning or the application, in any particular
instance, of any provision of this Agreement, is not
satisfactorily adjusted under the provisions of Sections 1
and 2 above, the Union's written notice to the
Director-Labor Relations appealing the grievance
specified in Section 3 above shall identify, by Article and
Section, the particular provision(s) of the Agreement at
issue.
App. at 499.
Article XI, Section 3 sets forth the procedure when a
grievance is not resolved at the first or second step of the
grievance procedure. Article XI, Section 3, provides:
If the grievance is not satisfactorily adjusted under the
5
provisions of Sections 1 and 2 above, the Union may
appeal the grievance by written notice, which notice shall
set forth the Union's position with respect to such
grievance, to the Director-Labor Relations designated by
the Company within fourteen (14) days after discussions
have been concluded under Section 2 above. Conferences
shall be held promptly between the Union and the
Company representatives, or such other representatives as
either party may select, in a further effort to reach a
satisfactory adjustment of the grievance. Fourteen (14)
days shall be allowed for adjustment of the grievance at
this level. If a satisfactory adjustment is not reached, the
Company, within fourteen (14) days after discussion have
been concluded at this level, shall submit to the Union in
writing a final statement of its position. The case shall
then be considered closed unless the grievance is
arbitrable and arbitration proceedings are initiated under
the provisions of Article XII, Arbitration, within thirty
(30) days after the period allowed for adjustment at this
level.
App. at 499 (emphasis added).
Based on its reading of the CBA, and specifically of the
provisions quoted above, the District Court concluded that the
grievances were arbitrable and granted Local 827’s motion for
summary judgement. The District Court found that “[a]lthough
none of the matters listed in the arbitration provision references
overtime in general, or the assignment of overtime in particular,
the existence of Article XI, Grievance Procedure, Section 4 in
the Arbitration Article cannot be ignored.” App. at 24.
Although Article XI, Section 4 merely sets forth the
procedures that must be taken to appeal certain grievances to the
top step of the grievance process, the District Court stated that
“the inclusion of entire Section 4 of Article XI in Article XII,
Section 1 perforce includes the substance of the grievances
referenced in Section 4, described as a ‘controversy over the true
intent and meaning or application’ of the Agreement.” App. at
26. In so holding, the District Court rejected Verizon’s
6
argument that Article XI, Section 4, only dealt with the
appropriate scope of a grievance submitted to arbitration. The
District Court held that Verizon’s interpretation of the clause
amounted to a “tortured reading” of it. App. at 26. The Court
also rejected Verizon’s contention that Article XI, Section 3’s
distinction between arbitrable and non-arbitrable grievances
indicates that the CBA “contemplates that a grievance is
arbitrable only if it relates to one of the express items listed in
Article XII, Section 1.” App. at 27.
The District Court’s holding is in conflict with the
holding of another district court judge in New Jersey interpreting
the same CBA provisions. In Local 827, Int’l Bhd. of Elec.
Workers v. Verizon N.J., Inc., Civ. No. 03-3612 (D.N.J. filed
June 25, 2005), Judge Greenaway held that the Article XII of the
CBA contains a narrow arbitration clause and that disputes over
enhanced employee benefits, which are not listed in Article XII,
are not subject to arbitration.
In that case, Local 827 brought suit on behalf of one of its
members, Dellisanti, who was told he would likely be laid off
and was given the option of resigning and claiming certain
enhanced employee benefits. He opted to do so, but then
attempted to rescind his resignation. Verizon refused to accept
the rescission. Local 827 sought to arbitrate but Verizon refused
and Local 827 brought a motion to compel arbitration. Local
827 argued, inter alia, that the arbitration clause was broad
because it included Article XI, Section 4, and thus encompassed
Dellisanti’s grievance. Judge Greenaway rejected this argument.
He stated, “The language of Section 4 outlines the procedural
requirements for a top-step grievance to be arbitrated, rather than
making all the disputes subject to arbitration. . . . [T]he language
of Article XII is unambiguous in its explicit mandate that only
those matters enumerated are ‘specifically subject to
arbitration.’” App. at 57 (quoting Article XII, Section 1).2
III.
2
No appeal was taken from Judge Greenaway’s decision.
7
On review of a grant of summary judgment, this court is
required to apply the same test that the district court should have
used. Taking the non-movant's factual allegations as true, we
must determine whether the moving party is entitled to judgment
as a matter of law. E.M. Diagnostic Sys., Inc. v. Local 169, Int’l
Bhd. of Teamsters, 812 F.2d 91, 94 (3d Cir. 1987) (citation
omitted).
The relevant labor law is well-settled. Although
“arbitration is clearly the preferred method for resolving disputes
between the union and the employer,” Butler Armco
Independent Union v. Armco, Inc., 701 F.2d 253, 255 (3d
Cir.1983), it “is a matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not
agreed so to submit.” United Steelworkers v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582 (1960). “Unless the parties
clearly and unmistakably provide otherwise, the question of
whether the parties agreed to arbitrate is to be decided by the
court, not the arbitrator.” AT&T Technologies, Inc. v.
Commc’ns Workers, 475 U.S. 643, 649 (1986) (citations
omitted).
The District Court in this case stated that there was some
ambiguity in the CBA’s arbitration clause, as evidenced by the
fact that several arbitrators had held that the clause was broad,
while others had found it narrow. The Court reasoned that
therefore the strong presumption of arbitrability must tip the
balance. The Court interpreted Article XI, Sections 3 and 4, and
Article XII “as defining grieved matters that the Union can bring
into arbitration to be those grievances that involve a controversy
over the true intent and meaning or the application . . . of any
provision of the CBA, which have been processed through the
steps set forth in Article XI, Section 3.” App. at 28-29.
The Supreme Court has previously set forth the
applicability of the presumption of arbitrability. “[W]here 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
8
positive assurance that the arbitration clause is not susceptible of
an interpretation that covers the asserted dispute.” Id. at 650
(citations, punctuation and quotation marks omitted). This court,
however, has held that the presumption of arbitrability does not
apply in all circumstances. Where the arbitration provision is
narrowly crafted, “we cannot presume, as we might if it were
drafted broadly, that the parties here agreed to submit all
disputes to arbitration. . . .” Trap Rock Indus. v. Local 825, Int’l
Union of Operating Eng’rs, 982 F.2d 884, 888 n.5 (3d Cir.
1992).
We distinguished the narrow arbitration clause at issue in
Trap Rock, in which we refused to apply the presumption of
arbitrability, from the broad arbitration clauses at issue in E.M.
Diagnostic and Lukens Steel Co. v. United Steelworkers, 989
F.2d 668 (3d Cir. 1992), in which we applied the presumption.
In E.M. Diagnostic, the arbitration clause applied to “any dispute
arising out of a claimed violation of this [Collective Bargaining]
Agreement. . . .” 812 F.2d at 92 (emphasis omitted). We noted
that the E.M. Diagnostic arbitration provision did not by its
explicit terms expressly limit the range of arbitrable disputes.
Rather, it provided for arbitration of all disputes arising from
alleged violations of the CBA. Similarly, the arbitration clause
in Lukens included a clause providing for arbitration “[s]hould
any differences arise between the Company and the Union as to
the meaning and application of, or compliance with, the
provisions of this Agreement. . . .” 989 F.2d at 673. The
agreement between Lukens Steel and the Union also “expressly
exclude[d] certain disputes from arbitration,” id. at 673 n.4,
showing that “‘the parties knew how to remove issues from
arbitration when they wanted to.’” Id. (quoting Eicleag Corp. v.
Int’l Ass’n of Bridge, Structural & Ornamental Iron Workers,
944 F.2d 1047, 1058 (3d Cir. 1991)); see Trap Rock, 982 F.2d at
888 n.5.
The arbitration clause in Trap Rock was much narrower
and restricted
the arbitrator’s jurisdictional reach:
[T]he Arbitrator's powers are limited as follows:
9
He shall have no power to add to, or subtract from, or
modify any of the terms of any Agreement . . . .
He shall have no power to substitute his discretion for the
Employer's discretion in cases where the Employer is
given the discretion by this Agreement or by any
supplementary Agreement, except that where he finds a
disciplinary layoff or discharge is in violation of this
Agreement, then he may make appropriate modifications
of the penalty.
Id. at 885. The CBA in that case also reserved to the Employer
“the right, which right shall not be subject to Arbitration, to
determine the qualifications of any Employee covered hereunder
and if, in the Employer's opinion, the Employee does not meet
the qualifications or fails to perform his duties properly, then the
Employer can Discharge or demote the Employee, whichever the
Employer desires. The Employer will notify the Emplolyee [sic]
and Union of such action.” Id. (alteration in original). The issue
that the union sought to arbitrate involved the discharge of an
employee for failure to perform his duties.
This court found that the grievance was not arbitrable
because it was not listed in the CBA’s narrow arbitration clause.
We noted that the clause “expressly limit[ed] the range of
arbitrable disputes to a single category or function, such as
limiting the arbitrator's power to modifying a penalty where only
disciplinary layoffs or discharges which violate the terms of the
CBA are involved.” Id. at 888 n.5. We concluded that,
“[b]ecause the arbitration provision . . . [was] narrowly crafted to
apply only to certain disciplinary discharges and layoffs, we
[could] not presume, as we might if it were drafted broadly, that
the parties here agreed to submit all disputes to arbitration . . .
Thus, the presumption of arbitrability . . . [is] inapposite.” Id.
The case before us largely turns on the question of
whether the arbitration clause is broad. If the arbitration clause
is clearly broad or ambiguous, we will apply the presumption of
arbitrability. If the clause is not ambiguous and clearly delimits
the issues subject to arbitration, the presumption of arbitrability
does not apply.
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IV.
Article XII, Section 1, the arbitration clause in the CBA,
provides that “[o]nly the matters specifically made subject to
arbitration [in specific provisions]. . . shall be arbitrated.” App.
at 500. The clause then lists five specific issues that can be
arbitrated. Because the arbitration clause clearly limits matters
subject to arbitration, the clause at issue here is clearly unlike
those in E.M. Diagnostics and Lukens. It does not refer
expansively to “any” disputes, but rather to disputes about issues
that are specifically enumerated. It clearly forecloses the
possibility that other issues could be arbitrated by providing that
the list is exclusive. Cf. Cummings v. Fedex Ground Package
System, Inc., 404 F.3d 1258, 1262 (10th Cir. 2005) (“Here, as
the district court ruled, we are presented with a narrowly drawn
arbitration clause. It is not the type of broad provision that refers
all disputes arising out of a contract to arbitration. Rather, the
parties clearly manifested an intent to narrowly limit arbitration
to specific disputes regarding the termination of the Operating
Agreement.”) (citation, internal quotations marks, and alterations
omitted). Thus, we conclude that the arbitration clause is
narrow and that the District Court erred by applying the
presumption of arbitrability.3
We are not convinced by Local 827's argument that the
arbitration clause is broad. Local 827's reading of Article XI,
Section 4, ignores the very language of that Article. Article XI,
Section 4, provides that if the parties have a dispute over the true
intent, meaning, or application of the CBA which is not
satisfactorily adjusted through the lower levels of the grievance
procedure (specified in Sections 1 and 2 of Article XI), then the
Union’s written notice of appeal to the Director-Labor Relations
(specified in Section 3) shall identify, by Article and Section, the
3
In reviewing the parties’ history, it appears that Local 827
sought to have a broad arbitration provision included in the CBA
but was unsuccessful. We are not inclined to impose on parties
provisions that they themselves did not negotiate.
11
particular provisions of the CBA at issue. Section 3 specifies
the procedures for appealing a grievance to the Director-Labor
Relations. After this final level of appeal, the “case shall then be
considered closed unless the grievance is arbitrable. . . .” App.
at 499.
Clearly, the inclusion of Article XI, Section 4, within
Article XII’s arbitration clause provides only for arbitration
regarding the scope of the grievance. As noted supra, Section 4
of Article XI provides that the union must provide written notice
to the Director-Labor Relations that identifies, by Article and
Section, the particular provision(s) of the Agreement at issue. If
the parties cannot agree as to which provisions of the agreement
are at issue (e.g. Local 827 believes a dispute falls under a
provision that is ultimately subject to arbitration while Verizon
believes the dispute involves a non-arbitrable provision), the
parties may arbitrate the question of which provisions of the
CBA are at issue.
Any other reading would be contrary to the words of the
CBA. Section 3 of Article XI provides that the Union may
appeal to the Director-Labor Relations after which the case is
considered closed unless it involves one of the provisions of the
CBA listed in Article XII. Sections 3 and 4 of Article XI
provide threshold requirements that the Union must fulfill before
it can seek arbitration, but fulfilling these requirements is not
sufficient. The matter the Union seeks to arbitrate must fall
within the Articles listed in Article XII as subject to arbitration.
Given the clarity of the language in this CBA, we find
that the bargaining history cited by Local 827 is inapposite. If a
contract “‘is explicit and unambiguous regarding whether the
Grievance is arbitrable; there is no need to look to extrinsic
evidence,’” Lukens, 989 F.2d at 673 (quoting Local 13, Int'l
Fed'n of Professional & Technical Eng'rs v. Gen. Elec. Co., 531
F.2d 1178, 1183 n. 13 (3d Cir.1976)) (punctuation omitted). In
addition, we need not look to the language in the parties’ other
agreements, as urged by Verizon. Insofar as the existence of
contrary interpretations of the arbitration clause suggests that
there may be a modicum of ambiguity in the language of the
12
arbitration clause, we note that “‘a compelling case for
nonarbitrability should not be trumped by a flicker of
interpretive doubt.’” PaineWebber Inc. v. Hofmann, 984 F.2d
1372, 1377 (3d Cir. 1993) (quoting PaineWebber Inc. v.
Hartmann, 921 F.2d 507, 513 (3d Cir. 1990)).
V.
For the reasons set forth above, we will reverse the
District Court’s grant of summary judgment and direct that
summary judgment be granted to Verizon.
13