Granite Rock Co. v. International Brotherhood of Teamsters
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Full Opinion
delivered the opinion of the Court.
This case involves an employer’s claims against a local union and the union’s international parent for economic dam
I
Petitioner Granite Rock Company is a concrete and building materials company that has operated in California since 1900. Granite Rock employs approximately 800 employees under different labor contracts with several unions, including respondent International Brotherhood of Teamsters, Local 287' (Local). Granite Rock and Local were parties to a 1999 CBA that expired in April 2004. The parties’ attempt to negotiate a new CBA hit. an impasse and, on June 9, 2004, Local members initiated a strike in support of their contract demands.
The strike continued until July 2, 2004, when the parties reached agreement on the terms of a new CBA. The CBA
Respondent IBT, which had advised Local throughout the CBA negotiations and whose leadership and .members supported the June strike, opposed Local’s decision to return to work without a back-to-work agreement shielding both Local and IBT members from liability for strike-related damages. In an effort to secure such an agreement, IBT instructed Local’s members not to honor their agreement to return to work on July 5, and instructed Local’s leaders to continue the work stoppage until Granite Rock agreed to hold Local and IBT members free from liability for the June strike. Netto demanded such an agreement on July 6, but Granite Rock refused the request and informed Local that the company would view any continued strike activity as a violation of the new CBA’s no-strike clause. IBT and Local responded by announcing a companywide strike that involved numerous facilities and hundreds of workers, including members of IBT locals besides Local 287.
According to Granite Rock, IBT not only instigated this strike; it supported and directed it. IBT provided pay and benefits to union members who refused to return to work, directed Local’s negotiations with Granite Rock, supported Local financially during the strike period with a $1.2 million
On July 9, 2004, Granite Rock sued IBT and Local in the District Court, seeking an injunction against the ongoing strike and strike-related damages. Granite Rock’s complaint, originally and as amended, invoked federal jurisdiction under LMRA § 301(a), alleged that the July 6 strike violated Local’s obligations under the CBA’s no-strike provision, and asked the District Court to enjoin the strike because the hold-harmless dispute giving rise to the strike was an arbitrable grievance. See Boys Markets, Inc. v. Retail Clerks, 398 U. S. 235, 237-238, 253-254 (1970) (holding that federal courts may enjoin a strike where a CBA contemplates arbitration of the dispute that occasions the strike). The unions conceded that LMRA § 301(a) gave the District Court jurisdiction over the suit but opposed Granite Rock’s complaint, asserting that the CBA was not validly ratified on July 2 (or at any other time relevant to the July 2004 strike) and, thus, its no-strike clause did not provide a basis for Granite Rock’s claims challenging the strike.
The District Court initially denied Granite Rock’s request to enforce the CBA’s no-strike provision because Granite Rock was unable to produce evidence that the CBA was ratified on July 2. App. 203-213. Shortly after the District Court ruled, however, a Local member testified that Netto had put the new CBA to a ratification vote on July 2, and that the voting Local members unanimously approved the agreement. Based on this statement and supporting testimony from 12 other employees, Granite Rock moved for a new trial on its injunction and damages claims.
On August 22, while that motion was pending, Local conducted a second successful “ratification” vote on the CBA, and on September 13, the day the District Court was scheduled to hear Granite Rock’s motion, the unions called off
IBT and Local both moved to dismiss. Among other things, IBT argued that Granite Rock could not plead a federal tort claim under § 301(a) because that provision supports a federal cause of action only for breach of contract. The District Court agreed and dismissed Granite Rock’s tortious interference claims. The District Court did not, however, grant Local’s separate motion to send the parties’ dispute over the CBA’s ratification date to arbitration.
The Court of Appeals for the Ninth Circuit affirmed in part and reversed in part. See 546 F. 3d 1169 (2008). The Court of Appeals affirmed the District Court’s dismissal of Granite Rock’s tortious interference claims against IBT. See id., at 1170-1175. But it disagreed with the District
II
It is well settled in both commercial and labor cases that whether parties have agreed to “submi[t] a particular dispute to arbitration” is typically an “ ‘issue for judicial determination.’” Howsam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 83 (2002) (quoting AT&T Technologies, Inc. v. Communications Workers, 475 U. S. 643, 649 (1986)); see John Wiley & Sons, Inc. v. Livingston, 376 U. S. 543, 546-547 (1964). It is similarly well settled that where the dispute at issue concerns contract formation, the dispute is generally for courts to decide. See, e. g., First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 944 (1995) (“When deciding whether the parties agreed to arbitrate a certain matter ... courts generally . . . should apply ordinary . . . principles that govern the formation of contracts”); AT&T Technologies, supra, at 648-649 (explaining the settled rule in labor cases that “ ‘arbitration is a matter of contract’” and “arbitrators derive their authority to resolve disputes only because the parties have agreed in advance to submit such grievances to arbitration”); Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440, 444, n. 1 (2006) (distinguishing treatment of the generally nonarbitral question whether an arbitration agreement was “ever concluded” from the question whether a-
These principles would neatly dispose of this case if the formation dispute here were typical. But it is not. It is based on when (not whether) the CBA that contains the parties’ arbitration clause was ratified and thereby formed.
These unusual facts require us to reemphasize the proper framework for deciding when disputes are arbitrable under our precedents. Under that framework, a court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute. See First Options, supra, at 943; AT&T Technologies, supra, at 648-649. To satisfy itself that such agreement exists, the court must resolve any issue that calls into question the formation or applicability of the specific arbitration clause that a party seeks to have the court enforce. See, e.g., Rent-A-Center, West, Inc. v. Jackson, ante, at 68-70. Where there is no provision validly committing them to an arbitrator, see ante, at 71, these issues typically concern the scope of the arbitration clause and its enforceability. In addition, these issues always include whether the clause was agreed to, and may include when that agreement was formed.
A
The parties agree that it was proper for the District Court to decide whether their ratification dispute was arbitrable.
Local contends that our precedents, particularly those applying the “‘federal policy favoring arbitration of labor disputes,”’ permit no other result. Brief for Respondent Local, p. 15 (quoting Gateway Coal Co. v. Mine Workers, 414 U. S. 368, 377 (1974)); see Brief for Respondent Local, at 10-13, 16-25. Local, like the Court of Appeals, overreads our precedents. The language and holdings on which Local and the Court of Appeals rely cannot be divorced from the first principle that underscores all of our arbitration decisions: Arbitration is strictly “a matter of consent,” Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 479 (1989), and thus “is a way to resolve those disputes — but only those disputes— that the parties have agreed to submit to arbitration,” First Options, 514 U. S., at 943 (emphasis added).
Local nonetheless interprets some of our opinions to depart from this framework and to require arbitration of certain disputes, particularly- labor disputes, based on policy grounds even where evidence of the parties’ agreement to arbitrate the dispute in question is lacking. See Brief for Respondent Local, at 16 (citing cases emphasizing the policy favoring arbitration generally and the “impressive policy considerations favoring arbitration” in LMRA cases (internal quotation marks omitted)). That is not a fair reading of the opinions, all of which compelled arbitration of a dispute only after the Court was persuaded that the parties’ arbitration agreement was validly formed and that it covered the dispute in question and was legally enforceable. See, e. g., First Options, supra, at 944-945. That Buckeye and some of our cases applying a presumption of arbitrability to certain disputes do not discuss each of these requirements merely reflects the fact that in those cases some of the requirements were so obviously satisfied that no discussion was needed.
In Buckeye, the formation of the parties’ arbitration agreement was not at issue because the parties agreed that they had “concluded” an agreement to arbitrate and memorialized it as an arbitration clause in their loan contract. 546 U. S., at 444, n. 1. The arbitration clause’s scope was also not at issue, because the provision expressly applied to “‘[ajny claim, dispute, or controversy ... arising from or relating to . . . the validity, enforceability, or scope of this Arbitration Provision or the entire Agreement.’ ” Id., at 442. The parties resisting arbitration (customers who agreed to the broad arbitration clause as a condition of using Buckeye’s loan service) claimed only that a usurious interest provision in the loan agreement invalidated the entire contract, including the arbitration clause, and thus precluded the Court from relying on the clause as evidence of the parties’ consent to arbitrate
Our cases invoking the federal “policy favoring arbitration” of commercial and labor disputes apply the same framework. They recognize that, except where “the parties clearly and unmistakably provide otherwise,” AT&T Technologies, 475 U. S., at 649, it is “the court’s duty to interpret the agreement and to determine whether the parties intended to arbitrate grievances concerning” a particular matter, id., at 651. They then discharge this duty by: (1) applying the presumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand; and (2) adhering to the presumption and ordering arbitration only where the presumption is not rebutted. See id., at 651-652; Prima Paint Corp., supra, at 396-398; Gateway Coal, supra, at 374-377; Drake Bakeries Inc. v. Bakery Workers, 370 U. S. 254, 256-257 (1962); Atkinson v. Sinclair Refining Co., 370 U. S. 238, 241-242 (1962); Steelworkers v. Warrior & Gulf Nav. Co., 363 U. S. 574, 576 (1960).
B
We begin by addressing the grounds on which the Court of Appeals reversed the District Court’s decision to decide the parties’ ratification-date dispute, which the parties characterize as a formation dispute because a union vote ratifying the CBA’s terms was necessary to form the contract. See App. 351.
This formation-date question requires judicial resolution here because it relates to Local’s arbitration demand in such a way that the District Court was required to decide the CBA’s ratification date in order to determine whether the parties consented to arbitrate the matters covered by the demand.
The Court of Appeals overlooked the fact that this theory of the ratification dispute’s arbitrability fails if the CBA was not formed at the time the unions engaged in the acts that gave rise to Granite Rock’s strike claims. The unions began their strike on July 6, 2004, and Granite Rock filed its suit on July 9. If, as Local asserts, the CBA containing the parties’ arbitration clause was not ratified, and thus not formed, until August 22, there was no CBA for the July no-strike dispute to “arise under,” and thus no valid basis for the Court of Appeals’ conclusion that Granite Rock’s July 9 claims arose under the CBA and were thus arbitrable along with, by extension, Local’s formation-date defense to those claims.
Local seeks to address this flaw in the Court of Appeals’ decision by arguing that in December 2004 the parties exe
Although the foregoing is sufficient to reverse the Court of Appeals’ judgment, there is an additional reason to do so: The dispute here, whether labeled a formation dispute or not, falls outside the scope of the parties’ arbitration clause on grounds the presumption favoring arbitration cannot cure. Section 20 of the CBA provides in relevant part that “[a]ll disputes arising under this agreement shall be resolved in accordance with the [Grievance] procedure,” which includes arbitration. App. 434 (emphasis added); see also id., at 434-437. The parties’ ratification-date dispute cannot properly be characterized as falling within the (relatively narrow, cf., e. g., Drake Bakeries Inc., 370 U. S., at 256-257) scope of this provision for at least two reasons. First, we do not think the question whether the CBA was validly ratified on July 2, 2004 — a question that concerns the CBA’s very existence— can fairly be said to “arise under” the CBA. Second, even if the “arising under” language could in isolation be construed to cover this dispute, § 20’s remaining provisions all but foreclose such a reading by describing that section’s arbitration requirement as applicable to labor disagreements that are addressed in the CBA and are subject to its requirement of mandatory mediation. See App. 434-437 (requiring arbitration of disputes “arising under” the CBA, but only after the union and employer have exhausted mandatory mediation, and limiting any arbitration decision under this provision to those “within the scope and terms of this agreement and . . . specifically limited to the matter submitted”).
The Court of Appeals’ contrary conclusion does not find support in the text of § 20. The Court of Appeals’ only effort to grapple with that text misses the point because it focuses on whether Granite Rock’s claim to enforce the
D
Local’s remaining argument in support of the Court of Appeals’ judgment is similarly unavailing. Local reiterates the Court of Appeals’ conclusion that Granite Rock “implicitly” consented to arbitration when it sued to enforce the CBA’s no-strike and arbitrable grievance provisions. See Brief for Respondent Local, at 17-18. We do not agree that by seeking an injunction against the strike so the parties could arbitrate the labor grievance that gave rise to it, Granite Rock also consented to arbitrate the ratification- (formation-) date dispute we address above. See 564 F. 3d, at 1178. It is of course true that when Granite Rock sought that injunction it viewed the CBA (and all of its provisions) as enforceable. But Granite Rock’s decision to sue for compliance with the CBA’s grievance procedures on strike-related matters does not establish an agreement, “implicit” or otherwise, to arbitrate an issue (the CBA’s formation date) that Granite Rock did not raise, and that Granite Rock has always (and rightly, see Part II-C, supra) characterized as beyond the scope of
Ill
We turn now to the claims available on remand. The parties agree that Granite Rock can bring a breach-of-contract claim under LMRA § 301(a) against Local as a CBA signatory, and against IBT as Local’s agent or alter ego. See Brief for Respondent IBT 10-13; Reply Brief for Petitioner 12-13, and n. II.
Granite Rock asks us to reject this position as inconsistent with federal labor law’s goal of promoting industrial peace and economic stability through judicial enforcement of CBAs, as well as with our precedents holding that a federal common law of labor contracts is necessary to further this goal. See id., at 31; see also, e. g., Textile Workers v. Lincoln Mills of Ala., 353 U. S. 448, 451 (1957). Explaining that IBT’s conduct in this case undermines the very core of the bargaining relationship federal labor laws exist to protect, Granite Rock argues that a federal common-law tort remedy for IBT’s conduct is necessary because other potential avenues for deterring and redressing such conduct are either unavailable or insufficient. See Brief for Petitioner 32-33; Reply Brief for Petitioner 19-20. On the unavailable side of the ledger Granite Rock lists state-law tort claims, some of which this Court has held § 301(a) pre-empts, as well as administrative (unfair labor practices) claims, which Granite Rock says the National Labor Relations Board (NLRB) cannot entertain against international unions that (like IBT) are not part of the certified local bargaining unit they allegedly control. On the insufficient side of the ledger Granite Rock lists federal common-law breach-of-contract claims, which Granite Rock says are difficult to prove against non-CBA signatories like IBT because international unions structure their relationships with local unions in a way that makes agency or alter ego difficult to establish. Based on these assessments, Granite Rock suggests that this case presents us with the
We do not believe the choice is as stark as Granite Rock implies. It is of course true that we have construed “[election 301 [to] authoriz[e] federal courts to fashion a body of federal law for the enforcement of collective bargaining agreements.” Lewis v. Benedict Goal Corp., 361 U. S. 459, 470 (1960) (citing Lincoln Mills, supra). But we have also emphasized that in developing this common law we “did not envision any freewheeling inquiry into what the federal courts might find to be the most desirable rule.” Howard Johnson Co. v. Hotel Employees, 417 U. S. 249, 255 (1974). The balance federal statutes strike between employer and union relations in the collective-bargaining arena is carefully calibrated, see, e. g., NLRB v. Drivers, 362 U. S. 274, 289-290 (1960), and as the parties’ briefs illustrate, creating a federal common-law tort cause of action would require a host of policy choices that could easily upset this balance, see Brief for Respondent IBT 42-44; R