839 F.3d 1198
10th Cir.2016Background
- Phillips 66 (successor to ConocoPhillips at the Ponca City refinery) assumed a collective bargaining agreement (CBA) with the Union after a corporate spin-off.
- Article 15 of the CBA requires eligible bargaining-unit employees to participate in Company medical/dental plans and obligates the Company to pay 80% of premiums and 80% of any premium increases during the CBA term.
- A Letter of Understanding regarding successorship (incorporated for the CBA term) addresses successor employers’ obligation to recognize the Union and provide "reasonably comparable" benefits, with limited procedures about bargaining and a potential strike right in narrow circumstances.
- In 2012 Phillips 66 announced modifications to employee and retiree medical plans effective Jan 1, 2013. The Union filed two grievances alleging Article 15 violations (including breach of the 80/20 premium obligation) and sought arbitration under Article 30’s four-step grievance-to-arbitration procedure.
- The Company refused arbitration, arguing (1) Article 15 permits unilateral plan modifications and thus disputes over plan amendments are not arbitrable, (2) the Plan’s internal claims procedure precludes CBA arbitration, (3) the Letter’s separate scheme governs successor-benefits disputes, and (4) past practice waived arbitration.
- The district court compelled arbitration; the Tenth Circuit affirmed, holding the grievances concern interpretation/performance of the CBA and the Company failed to produce forceful evidence excluding arbitration.
Issues
| Issue | Plaintiff's Argument (Union) | Defendant's Argument (Phillips 66) | Held |
|---|---|---|---|
| Are the grievances arbitrable under Article 30? | Grievances allege violations of Article 15 (80/20 obligation) and thus are disputes "relating to interpretation or performance" of the CBA and subject to arbitration. | The Company contends Article 15 allows plan modifications and therefore disputes over plan changes are not subject to arbitration. | Held: Arbitrable — the grievances concern interpretation/performance of the CBA and fall within the broad arbitration clause. |
| Does the Plan’s internal dispute-resolution scheme preclude arbitration? | Plan rules do not govern disputes about whether the Company breached the CBA; grievances target CBA obligations, not Plan benefit determinations. | The Plan vests administrators with exclusive, final authority to interpret the Plan and resolve claims, so Plan disputes must use Plan procedures. | Held: No. The Plan was unilaterally adopted by the Company and its internal rules do not constitute forceful evidence excluding CBA arbitration of Article 15 disputes. |
| Does the Letter of Understanding (successorship) remove benefits disputes from arbitration? | The Letter was incorporated into the CBA and does not provide a complete exclusion; it lacks procedures for a successor’s refusal to negotiate, so CBA grievance process applies. | The Letter creates a separate dispute-resolution regime for successor-benefits issues and therefore excludes arbitration under Article 30. | Held: No. Interpreting the Letter itself raises CBA issues reserved for arbitration; the Letter does not clearly exclude these grievances from arbitration. |
| Has the Union waived arbitration by past practice or by agreeing to plan modifications? | Union insists it preserved rights under Article 15; grievances also challenge the right to unilaterally modify plans and the 80/20 obligation. | Company points to prior plan changes and the Article 15 language as evidence the Union conceded unilateral amendments, thus waiving arbitration. | Held: No. The Company failed to produce "forceful evidence" that the parties intended to exclude these disputes from arbitration; past practice and Article 15 interpretation are for arbitration. |
Key Cases Cited
- United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593 (establishes arbitration framework for CBA disputes)
- United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574 (presumption of arbitrability; only strong evidence excludes disputes)
- United Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564 (courts should not rule on merits when deciding arbitrability)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (clarifies when courts decide arbitrability vs. arbitrators)
- AT&T Techs., Inc. v. Commc’n Workers of Am., 475 U.S. 643 (federal policy favoring arbitration in labor context)
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (arbitration is a matter of consent)
- Commc’n Workers of Am. v. Avaya, Inc., 693 F.3d 1295 (standards for district court review of arbitration/order compelling arbitration)
- Int’l Bhd. of Elec. Workers, Local #111 v. Pub. Serv. Co. of Colo., 773 F.3d 1100 (Tenth Circuit on presumption of arbitrability)