Fifth Circuit Rules on Arbitrability of Labor Union Grievances Under the CBA

In Paper, Allied-Industrial Chem. & Energy Workers Int’l Union, Local 4-12 v. Exxon Mobil Corp., 657 F.3d 272 (5th Cir. La. 2011), plaintiff (the “Union”) filed suit to compel defendant corporation (“Exxon”) to arbitrate two labor grievances, pursuant to a provision in the collective bargaining agreement (“CBA”). The CBA defined “arbitrable grievance” as “good faith claim by one party that the other party has violated a written provision of this agreement.” The district court granted the Union’s motion for summary judgment, but only as to one of the grievances, and both sides appealed.

The issue before the Court of Appeals for the Fifth Circuit is whether the Union’s grievances are arbitrable. Because the element of “good faith” was included in the arbitration clause, the court concluded that only “good faith” claims by one party that the other party had violated a written provision of the CBA were arbitrable. The Fifth Circuit held that the Union’s grievances, based upon employer’s contracting out of process work as it was expressly allowed to do under an unambiguous provision of the CBA, or based on employer’s performance of expressly authorized management function, were not asserted in “good faith” as required for it to be arbitrable. For the same reasons that section of the CBA could not serve as a basis for requiring arbitration of the post-reduction claim.

Accordingly, the court reversed the district court’s grant of the Union’s motion for summary judgment with regard to the contracting-out grievance, affirmed the district court’s denial of the Union’s motion for summary judgment with regard to the post-reduction grievance, and reversed the district court’s denial of Exxon’s motion for summary judgment.