By Wayne D. Garris Jr., J.D.
The court determined that a 24-year-old Ninth Circuit decision was effectively overruled by the Supreme Court.
Reversing a district court’s order to compel arbitration of SEIU’s grievance, the Ninth Circuit held that the CBA between the parties lacked clear and unmistakable evidence that parties intended to have an arbitrator, rather than the court, decide whether the union’s grievance is arbitrable. In reaching its conclusion, the court adhered to the Supreme Court’s decisions in First Options of Chicago, Inc. v. Kaplan (1995) and Granite Rock Co. v. Int’l Bhd. Of Teamsters (2010), and overruled its own decision in United Bhd. Of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace, Inc. (1996), in which the Ninth Circuit held that labor cases warrant different treatment than commercial disputes and that an arbitrator should decide arbitrability as long as the agreement includes a broad arbitration clause (SEIU Local 121RN v. Los Robles Regional Medical Center, September 18, 2020, VanDyke, L.).
Los Robles Regional Medical Center and the union representing the medical center’s nurses were parties to a CBA that defined a grievance as “a dispute or disagreement involving the interpretation, application, or compliance with specific provisions” of the CBA. The union filed a grievance asserting that the medical center placed certain types of patients with nurses who did not have the appropriate training to care for those patients and that the medical center was violating state-law-mandated nurse-to-patient rations. The medical center and the union were unable to resolve the grievance, so the union notified the medical center on that it was pursuing arbitration.
District court proceedings. The medical center believed that the grievance was a staffing issue covered in the CBA and thus was not arbitrable. The parties could not resolve the issue, so the union filed suit in district court and moved to compel arbitration. The district court, pursuant to the Ninth Circuit’s decision in United Bhd. Of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace, Inc., held that the CBA’s arbitration provision was “broad enough to authorize the arbitrator—rather than the court—to determine whether the grievance was arbitrable” and granted the union’s motion. The medical center then appealed.
First Options, Desert Palace, and Granite Rock. At issue on appeal was whether an arbitrator or the court could decide whether the parties agreed to arbitrate the nurse staffing issue, when the CBA includes a broad arbitration clause but is silent on the arbitrability of the issue. The resolution of the question required the appeals court to examine three longstanding cases governing arbitration.
Agreement silent. In First Options of Chicago, Inc. v. Kaplan, the Supreme Court held that a court, not an arbitrator, must determine whether the arbitrability of an issue is itself arbitrable when the relevant agreement is silent on that question. The Court in First Options explained that courts “should not assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.”
Labor disputes are different. One year later, the Ninth Circuit issued its decision in United Bhd. of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace. In Desert Palace, the court held that policy considerations required the court to treat a collective bargaining dispute differently than a commercial arbitration dispute, which was before the Supreme Court in First Options. The appeals court held that in labor disputes, an arbitrator should decide arbitrability as long as the agreement includes a broad arbitration clause; the arbitration clause at issue in Desert Palace was broad and did not explicitly exclude arbitrability or jurisdictional issues. Thus, the Ninth Circuit had held that the parties agreed to have an arbitrator decide arbitrability.
But not that different. In 2010, the Supreme Court rejected the view that labor arbitration disputes should be treated differently than commercial arbitration disputes in Granite Rock Co. v. Int’l Bhd. of Teamsters. The Granite Rock Court also rejected the idea that policy considerations required labor disputes to be arbitrated even when there was no evidence that the parties agreed to arbitrate the dispute at issue. The High Court concluded that its decision in Desert Palace was “clearly irreconcilable” with Granite Rock.
Union’s response. The union argued that Desert Palace is inconsistent with Granite Rock because Granite Rock concerned when the CBA was ratified, not which forum had authority to decide issues of arbitrability. The appeals court disagreed, noting that even though the issues in the two cases were different, the Granite Rock decision ‘undercut the theory or reasoning” underlying Desert Palace—that labor disputes should be examined differently than commercial disputes. Thus, the “clear and unmistakable evidence” standard of First Options controlled.
What does the CBA say? The Ninth Circuit then turned to the CBA at issue to determine whether there was clear and unmistakable evidence of the parties’ intent to have an arbitrator—rather than the court—decide whether the grievance is arbitrable. The court focused on Article 38 of the CBA, which states that an arbitrator is tasked with resolving any “dispute or disagreement involving the interpretation, application, or compliance with specific provisions of [the CBA].” The CBA is silent as to the arbitrator’s authority to determine its own jurisdiction, however, and the union failed to provide any additional evidence of an agreement to have an arbitrator decide that issue.
Following First Options, the court explained that it could not assume that the union and employer agreed to arbitrate arbitrability “in the face of silence or ambiguity” in the CBA. Thus, the district court was responsible for determining whether the union’s grievance is arbitrable, and the court reversed and remanded the district court’s order granting the union’s motion to compel arbitration.
Dissent. In a dissenting opinion, Judge Lee stated that he agreed with much of the majority’s analysis, but disagreed that Granite Rock effectively overruled Granite Rock He asserted that the holding in Desert Palace—that silence in a CBA is clear and unmistakable evidence of agreement—is flawed, but the case should still stand because Desert Palace addressed who decides arbitrability, while Granite Rock examined whether a specific issue is arbitrable.
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