Installit, Inc. v. Carpenters 46 Northern California Counties Conference Board
214 F. Supp. 3d 855
N.D. Cal.2016Background
- Installit, a Bay Area installer, was party to a collective bargaining agreement (the 2011 Agreement) with Carpenters Union; the 2011 Agreement contained a broad grievance and arbitration provision.
- On April 15, 2015 Carpenters gave Installit notice of termination; parties dispute whether Installit was also a signatory to a separate 2014 Agreement.
- Installit alleges the Union terminated it to pressure a third-party neutral (B-K Mill) to sign a CBA, causing Installit to lose contracts, cease operations, and incur withdrawal liability; Installit sued under Section 303 of the LMRA for damages.
- Carpenters moved to compel arbitration under the 2011 Agreement and to stay the federal suit; it also asserted defenses including arbitrability and statute of limitations.
- The court found the 2011 Agreement valid and concluded the arbitration clause covered the dispute because the factual allegations ‘‘touch matters’’ in the Agreement; it ordered arbitration and stayed the case pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA permits arbitration of Installit’s Section 303 claim | Section 303 creates a federal damages action to be heard in federal court; statutory torts are not subject to arbitration absent explicit language | Arbitration is enforceable for statutory claims if the agreement’s scope reaches the issues and Congress did not preclude arbitration | Held: FAA compels arbitration; statutory claims arbitrable when they "touch" the agreement |
| Whether the arbitration clause encompasses the Section 303 claim | The claim arises from unlawful conduct independent of the CBA and does not require interpretation/application of the Agreement | The factual basis (termination under the CBA) implicates application/interpretation of multiple Agreement provisions; clause is broadly worded | Held: Clause ("any dispute concerning any application or interpretations") is broad and encompasses the claim |
| Whether Congress intended to preclude arbitration of Section 303 claims | Section 303(b) permits suit in federal court, so Congress intended judicial resolution | No textual or legislative evidence shows Congress precluded arbitration of Section 303 claims | Held: No contrary congressional command; arbitration not precluded |
| Whether arbitrators lack expertise to decide Section 303 claims | Labor arbitrators lack expertise to adjudicate statutory tort claims; federal courts are better suited | Arbitrability does not depend on an arbitrator’s judicial expertise; arbitration can accommodate experts | Held: Expertise argument is irrelevant to arbitrability; arbitration appropriate |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (statutory claims may be arbitrable; arbitration does not forfeit substantive statutory rights)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (arbitration of statutory employment claims permissible)
- AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986) (presumption in favor of arbitrability for labor agreements; court decides arbitrability threshold)
- Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999) (arbitration clause covers disputes whose factual allegations "touch matters" covered by the contract)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983) (ambiguities as to scope of arbitrable issues resolved in favor of arbitration)