OWEN, Circuit Judge:
Paper, Allied-Industrial, Chemical and Energy Workers International Union, Local 4-12 (the Union) brought this suit to compel Exxon Mobil Corporation (ExxonMobil) to arbitrate two labor grievances pursuant to the parties' collective bargaining agreement. The district court granted the Union's motion for summary judgment with respect to one grievance but denied it with respect to the other and denied ExxonMobil's motion for summary judgment. The Union and ExxonMobil have both appealed. We reverse in part and affirm in part, holding that neither grievance is arbitrable.
The Union represents certain employees at ExxonMobil's Baton Rouge, Louisiana, refinery and chemical plant. The Union and ExxonMobil entered into two collective bargaining agreements (to which we will refer in the singular as the collective bargaining agreement or the agreement), the first effective from April 1996 to March 2002 and the second from April 2002 to March 2006. The two agreements are identical in all relevant respects and contain an arbitration clause that defines an "arbitrable grievance" as "a good faith claim by one party that the other party has violated a written provision of this agreement."
The parties' dispute focuses on the following provisions of the agreement:
In 1997, ExxonMobil announced that it would begin contracting out the loading and unloading of tank trucks and railroad tank cars at its Baton Rouge chemical plant. This action displaced bargaining unit employees but resulted in no layoffs, since those employees were assigned to other work at the plant with the same classification, seniority, and pay rate. The Union filed a grievance (the contracting-out grievance) with ExxonMobil asserting that a number of sections of the collective bargaining agreement, including Sections 1131 and 1151, had been violated. After following the formal grievance process, ExxonMobil denied the claim.
Five years later, in 2002, ExxonMobil eliminated two and one-half bargaining unit posts at the Baton Rouge facility. The Union filed a grievance (the post-reduction grievance) asserting that this action violated Section 1151 of the collective bargaining agreement. The grievance process was initiated, and ExxonMobil ultimately denied the claim.
The Union filed a formal demand for arbitration of both grievances. ExxonMobil declined to proceed to arbitration, asserting that the grievances were not arbitrable under the collective bargaining agreement. The Union then filed suit in district court seeking to compel arbitration. Both parties moved for summary judgment, and the district court granted the Union's motion in part and denied the motion in part, holding that the contracting-out grievance was arbitrable but the post-reduction grievance was not. The district court denied ExxonMobil's motion for summary judgment as "moot" and dismissed the Union's action. Both parties then appealed to this court.
This court reviews an order compelling arbitration de novo.
In determining whether the grievances at issue are arbitrable, we must examine the scope of the parties' agreement, as reflected in the arbitration clause. If the collective bargaining agreement provided that "[a]n arbitrable grievance is a claim by one party that the other party has violated a written provision of this Agreement," our task would be an easy one. The Union's claim that Exxon-Mobil violated section 1131 of the agreement when it engaged independent contractors would be arbitrable. But that is not what the agreement provides. The element of "good faith" is included in the arbitration clause. The words "good faith" are not surplusage and reflect that not every claim that the collective bargaining agreement has been violated is arbitrable. Only "good faith claim[s] by one party that the other party has violated a written provision
The context of the term "good faith" in the collective bargaining agreement indicates that it is not an entirely subjective standard. There must be a good faith claim that "a written provision" of the agreement has been violated. The plausibility of a claim that a written provision has not been honored is indicative of whether that claim can be in good faith.
Our court had occasion to construe an identical "good faith" arbitration provision in a case in which the meaning of the terms "other conditions of employment" and "working conditions" in a collective bargaining agreement were at issue.
This does not mean that contentions regarding an unambiguous provision are not in good faith if a court ultimately determines, as a matter of law, that the interpretation advanced is incorrect. "Good faith" does not necessarily equate to "meritorious," since a party can bring a losing argument in good faith. Nevertheless, the merits of the claim can be probative as to the good faith of the party bringing the claim when the claim is not colorable or is frivolous.
We recognize that in determining whether the Union's claim regarding contracting out is a "good faith" one and therefore arbitrable entails an assessment of the merits of the contract construction dispute. We are mindful of the Supreme Court's statement in AT&T Technologies, Inc. v. Communications Workers of America that "in deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims."
Our reading of AT&T is consistent with the Supreme Court's subsequent decision in Litton, in which the Court cited AT&T in response to a dissenting opinion's argument that the Court was impermissibly deciding "an issue of contract interpretation to be submitted to an arbitrator in the first instance."
We followed Litton in Local Union No. 898 of the International Brotherhood of Electrical Workers v. XL Electric, Inc., holding that "the question of arbitrability is a question for the court . . . even if answering the arbitrability question requires a construction of the contract."
The Union argues that Litton no longer applies and that two subsequent Supreme Court decisions, Howsam v. Dean Witter Reynolds, Inc.
In Bazzle, a plurality of the Court concluded that the question of whether a contract prohibited class arbitration was a procedural question for an arbitrator to decide.
The Union bases its contracting-out grievance on two provisions of the collective bargaining agreement—Section 1131 and Section 1151. ExxonMobil argues that Section 1131 cannot support a claim that the contracting out violated the CBA because the express language of that section authorizes ExxonMobil to do what it did. ExxonMobil also contends that this court's opinion in Baton Rouge Oil & Chemical Workers Union v. ExxonMobil Corp. (BROCWU)
Section 1131 specifically states that "[t]he company may let independent contracts," with the exception of "maintenance contract[s]"—that is, contracts for maintenance work that would otherwise be performed by employees in the Mechanical Divisions—that would "cause an employee
The Union insists that reading Section 1151 in conjunction with Section 1131 creates a basis for a good faith claim that the contracting out violated the collective bargaining agreement. Section 1151 provides that both parties to that agreement must not exercise their rights in an "arbitrary manner," but must exercise them "in a reasonable manner and in good faith." The Union contends that ExxonMobil's refusals 1) to provide evidence to the Union that the contracting out was necessary for cost savings or 2) to consider offers about how the Union employees could perform more economically to save the company money were arbitrary and in bad faith.
ExxonMobil argues that Section 1151 cannot serve as a basis for arbitration, citing this court's opinion in BROCWU,
We held that Section 1151 and Section 251 did not make the otherwise non-arbitrable grievance arbitrable. We "decline[d] to rely on this catchall phrase [Section 1151] to create a right of arbitration that clearly does not exist under the terms of the CBA, and which would explicitly conflict with the CBA's express provision allowing ExxonMobil to discharge
We agree with ExxonMobil that BROCWU forecloses reliance on Section 1151 as an independent basis for arbitrability of the contracting-out grievance. To read Section 1151 in a way that would transform an otherwise non-arbitrable grievance into an arbitrable one would render Section 251's good faith requirement meaningless, since the Union could always assert that ExxonMobil was exercising its rights arbitrarily or not in good faith under Section 1151. Such a reading would also explicitly conflict with the collective bargaining agreement's express provision allowing ExxonMobil to contract out process work that does not result in layoffs. Accordingly, the rationale behind the BROCWU decision applies equally here and the Union may not rely on Section 1151 as a basis for arbitrability.
The Union also bases its post-reduction grievance on Section 1151. The Union asserts that the post-reduction grievance is arbitrable because it is a good faith claim that ExxonMobil has violated Sections 212 and 1151 by unilaterally reducing two and one-half bargaining unit posts. Section 212 permits ExxonMobil to "perform any function of management at any time, so long as it does not violate any express provision of this Agreement." Though the Union does not dispute that the post reduction was a function of management, it argues that this right was exercised arbitrarily and in bad faith in violation of Section 1151. The Union expends great effort discussing the facts underpinning its claims. But the Union cites to no "express provision" of the collective bargaining agreement within the meaning of Section 212 that ExxonMobil has violated. For the same reasons that we hold that the contracting-out grievance is not arbitrable under Section 1151, we hold that Section 1151 cannot serve as a basis for requiring arbitration of the post-reduction claim.
For the foregoing reasons, we REVERSE the district court's grant of the Union's motion for summary judgment with regard to the contracting-out grievance, AFFIRM the district court's denial of the Union's motion for summary judgment with regard to the post-reduction grievance, and REVERSE the district court's denial of ExxonMobil's motion for summary judgment.