Monday, June 25, 2012

Action to compel arbitration not barred by statute of limitations, timeliness for arbitrator to decide

In United Steel, Paper, and Forestry, Manufacturing, Energy, Allied Industrial and Service Workers International Union v. Wise Alloys (U.S.D.C N.D.AL), the court rejected Wise’s claim that the union’s action to compel arbitration was brought too late. The Union had grieved Wise’s interpretation of the cost of living clause in its labor agreement, and the interrelationship of that clause with the employee’s health care costs. Wise rejected a union grievance on the issue, claiming that the grievance was untimely, and “therefore all claims and demands are waived in its entirety by the Union”. The company also refused to hear the grievance at subsequent steps of the grievance procedure. When the Unions sought to submit the grievance to arbitration the Company responded (on July 28, 2010) that it “will not agree to submit the above-referenced issue to arbitration because it conflicts with the terms of our Labor Agreement…” On October 19, 2010, the Union filed suit to compel arbitration.

Wise argued that the statute should begin to run from the time it first rejected the grievance. The court rejected this position, finding it did not constitute an “unequivocal refusal” to arbitrate; rather the denial could be read as a statement that the Company would argue before an arbitrator that the grievance was untimely. Finding that the first unequivocal refusal to arbitrate was the Company’s July 28 letter, the Court concluded that the actions fell within the six month limitations period.

The Court also rejected Wise’s claim that the question of timeliness should be decided by the court rather than an arbitrator. It contended that the Supreme Court’s decision in
GRANITE ROCK CO. v. TEAMSTERS required a conclusion that where a contract provided that untimely grievances were not arbitrable, arbitrability was to be decided by the court rather than an arbitrator. The Court determined that Granite Rock did not change the law that timeliness issues are for the arbitrator to decide, noting “a court must resolve contractual issues related to arbitration agreements, i.e., was a contract formed and does the contract provide for arbitration of a dispute? Where a contract was formed and covers a dispute, all further issues relating to that dispute are matters for an arbitrator to decide.”

Concluding there was no dispute about the formation of the contract or the substantive arbitrability of the dispute, the court ordered Wise to arbitrate the timeliness of the dispute.

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