24 F.4th 87
1st Cir.2022Background
- Johnson Controls (successor to Tyco) and IBEW Local 103 were parties to a CBA covering Johnson Controls' Norwood, MA facility.
- Article 5, §1 established arbitration for grievances "involving and limited to the interpretation and application of any specific provision" of the CBA; Article 5, §2 (Exclusion Clause) excluded disputes that "directly or indirectly" involve interpretation/application of plans covering pensions, disability, and death benefits.
- Article 9 guaranteed provision of the employer 401(k), disability, and death benefits as of May 6, 2008; the Union filed a grievance after Johnson Controls temporarily reduced its 401(k) employer match in April 2020.
- The Union demanded arbitration under the AAA; Johnson Controls asserted the Exclusion Clause made the grievance non-arbitrable and sued in federal court seeking a declaratory judgment under § 185 and the Declaratory Judgment Act.
- The district court ruled the dispute non-arbitrable and entered judgment for Johnson Controls; the Union appealed to the First Circuit.
Issues
| Issue | Plaintiff's Argument (Johnson Controls) | Defendant's Argument (Union) | Held |
|---|---|---|---|
| Whether the Union's Article 9 grievance is subject to arbitration given the Exclusion Clause excluding disputes that "directly or indirectly" involve interpretation/application of ERISA-governed plans | The Exclusion Clause bars arbitration because the grievance "indirectly" involves interpretation/application of the 401(k) plan; therefore non-arbitrable | The grievance is a CBA interpretation (Article 9) and does not require interpreting the Plan; ambiguous "indirectly" must be resolved for arbitration | Reversed: grievance arbitrable; Exclusion Clause ambiguous as to "indirectly," presumption of arbitrability controls; no strong evidence to exclude claim |
| Applicable legal standard and burden to avoid arbitration | The clause should be read broadly to exclude disputes touching the plan | AT&T Technologies presumption of arbitrability applies; ambiguities resolved in favor of arbitration; opponent must show clear intent to exclude | Court applied de novo review and AT&T Technologies; only most forceful evidence can rebut presumption and Johnson Controls offered none |
Key Cases Cited
- AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986) (establishes presumption of arbitrability and principles for determining arbitrability in labor disputes)
- United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960) (arbitration clauses construed broadly; disputes presumptively arbitrable absent clear exclusion)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (ambiguities regarding arbitration scope resolved in favor of arbitration)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (federal policy favoring arbitration; doubts resolved for arbitration)
- Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1 (1st Cir. 2014) (party claiming exclusion must show clear intent to keep the dispute out of arbitration)
- New England Carpenters Cent. Collection Agency v. Labonte Drywall Co., 795 F.3d 271 (1st Cir. 2015) (contract terms should be given meaning; avoid surplusage)
- Diaz v. Seafarers Int'l Union, 13 F.3d 454 (1st Cir. 1994) (distinguishes disputes over plan administration that implicate ERISA interpretation from other labor disputes)