### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 07-30559

PAPER, ALLIED-INDUSTRIAL CHEMICAL AND ENERGY WORKERS INTERNATIONAL UNION, LOCAL 4-12, also known as Baton Rouge Oil and Chemical Workers Union, Plaintiff–Appellee–Cross-Appellant,
v. EXXON MOBIL CORPORATION, formerly known as Exxon Chemicals America, formerly known as Exxon Company USA, Defendant–Appellant–Cross-Appellee.

Appeals from the United States District Court for the Middle District of Louisiana

Before BARKSDALE, OWEN, and SOUTHWICK, Circuit Judges. PRISCILLA R. OWEN, Circuit Judge: Paper, Allied-Industria l , Chemical and Energy Workers International Union, Local 4-12 (the Union) brought this suit to compel Ex xon Mobil Corporation ( E x x o nMobil) to arbitrate two labor grievances pursuant to the parties’ collective bargaining agreement. The district court granted the Union’s motion for summary judgment with respect to one grievance but denied it with respect to t h e o ther and denied ExxonMobil’s motion for summary judgment. U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t 

### F I L E D Sep tem ber 1 6, 2 011 Lyle W . Cayce Clerk Case: 07-30559 Document: 00511604848 Page: 1 Date Filed: 09/16/2011No. 07-30559

The Union and ExxonMobil have both appealed. We reverse in part and affirm in part, holding that neither grievance is arbitrable. I The Union represents certain e m p l oyees at ExxonMobil’s Baton Rouge, Louisiana, refinery and chemical plant. The Union and ExxonMobil entere d int o two collective bargaining agreements (to which we will refer in the singular as the collective bargaining agreement or t h e a greement), the first effective from April 1996 to March 2002 and the second from April 2002 to March 2006. The two agreements are identical in all relevant respects and contain an arbitration clause that defines an “arbitrable grievance” as “a good faith claim by one party that the other party has violated a written provision of this agreement.” The parties’ dispute focuses on the following provisions of the agreement: 212. Recognition of Management Functions (a) The Union recognizes that the Employer has the right, on its own initiative, to perform any function of management at any time, s o l o n g as it does not violate any express provision of this Agreement. (b) The following acts are functions of management: (1) Tho s e a c t s w h i ch are not within the area of collective bargaining as required by the National Labor Relations Act; (2) T h o s e a c t s w h i c h a r e u s u a l l y e x e r c i s e d b y o t h e r employers; and (3) Those acts which management should exercise in order to properly manage the business.

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251. What Grievances Are Arbitrable An arbitrable grievance is a good faith claim by one party that the oth e r p a r t y has violated a written provision of this Agreement. If the claim is disputed, the issue is either (1) The interpretation of the provision, or (2) The facts, or both.
1131. General (a) The company may let independent contracts. But it will not let a maintenance contract or contracts that will cause an employee in either Mechanical Division who has five or more years of Plant Service to be laid off for lack of work during the term of this agreement. (b) A m a i nte n a n c e c o n t r a c t i s o n e w h i c h p r o vi d e s f o r t h e performance of maintenance work w i t hin the Refinery and Chemical Plant bounds which has customarily been performed by employees in the Mechanical Divisions. 1151. Exercising Rights
N e ither party shall exercise any right under this agreement in an arb i t r a ry manner, but each party shall exercise its rights in a reasonable manner and in good faith.
In 1997, ExxonMobil announced t hat it would begin contracting out the loading and unloading of tank trucks and railroad tank cars at its Baton Rouge chemical plant. This action displaced bargaining unit employees b u t r e sulted in no layoffs, since those e m p l o y ees were assigned to other work at the plant with the same classification, seniority, and pay rate. The Union filed a grievance (the contracting-out grievance) with Exx o n M o b i l asserting that a number of sections of the collective bargaining agreement, including Sections 1131 a nd

3 Case: 07-30559 Document: 00511604848 Page: 3 Date Filed: 09/16/2011No. 07-30559

1151, had been violated. After following the fo r mal grievance process, ExxonMobil denied the claim. Five years later, in 20 0 2 , E x x onMobil eliminated two and one-half bargaining unit posts at the Baton Rouge facility. The Union filed a grievance (the post-reduction grievance) asserting that t h i s a c tion violated Section 1151 of the collective bargaining agreement. The grievance process was initiated, and ExxonMobil ultimately denied the claim. T h e Union filed a formal demand for arbitration of both grievances. ExxonMobil declined to proceed to arbitration, asserting that t h e grievances

were not arbitrable under the collective bargaining agreement. The Union then filed suit in district court seeking to compel arbitration. Both parties moved for

summ a r y j u d g m ent, and the district court granted the Union’s motion in part and denied the motion in part , h o lding that the contracting-out grievance was arbitrable but the post-reduction grievance was n o t

. The district court denied ExxonMobil’s motion for summary judgment as “moot” and dismissed the Union’s action. Both parties then appealed to this court. II This court reviews an order compelling arbitration de novo. Likewise, we 1 review de novo the denial of a motion to compel arbitration. 2 III In determining whether the grievances at issue are arbitrable, we must examine the scope of the parties’ agreement, as reflected in the arbi t r a tion clause. If the collective bargaining agreeme n t p r ovided that “[a]n arbitrable

Pap er, Al li ed- Indus. , Chem

. & Energy Workers Int’l Uni on Lo c a l N o . 4 -200 1 v. 1 ExxonM obi l Ref ini ng & Supp ly Co., 449 F.3d616 , 619 (5t h Cir

. 2006)

. Ge n. War ehous em en & He lp ers Uni on Loca l 767 v. Al ber tson’ s Di stri b., Inc. , 331 F.3d 2 485, 487 (200 3) (c itin g Pennzoil Explora tion & Prod. Co. v. Ram co Energy Ltd. , 139 F.3d 1061, 1065 (5t h Cir .199 8))

. 4 Case: 07-30559 Document: 00511604848 Page: 4 Date Filed: 09/16/2011No. 07-30559

grievance is a claim by one party that the other party has violated a written provision of this Agreement,” our task would be an easy one. The Union’s claim that Exxo n - M o b i l violated section 1131 of the agreement when it engaged independent cont r a ctors would be arbitrable. But that is not what the agreement provides. The element of “good faith” is included in the arbitration clause. The words “good faith” are not surplusage and refle c t that not every claim that the collective bargaining agreement has been violated is arbitrable. Only “good faith claim[s] by one party that the other party has violated a written provision of [the CBA]” i s arbitrable. As the Supreme Court has repeatedly reminded courts and litigan t s , “ [ a] s with any agreement to arbitrate, we are obliged to enforce the parties’

. . . agreement ‘according to its terms.’” “[P]arties 3
may agree to limit the i s s u es they choose to arbitrate,” and the parties have 4 done so here. The context of the term “good faith” in the collective bargaining agreement indica t e s t h a t i t is not an entirely subjective standard. There must be a good faith claim that “a written provision” of the agreement has been violated. The plausibility of a claim that a written provision has not been honored is indicative of whether that claim can be in good faith. Our court had occasion to construe an identical “good faith” arb i t r a t i on provision in a case in which the meaning of t he terms “other conditions of employment” a n d “working conditions” in a collective bargaining agreement

were at issue. Our court concluded that because these terms were “sufficiently 5 broad to be susceptible of varying interpretations,” there was a good faith claim

Stolt- Ni elsen S.A

. v. Ani ma lFe eds Int’l Corp

. , 130 S. Ct. 1758, 1772 n.8 (201 0) (quo ting 3 Ma strob uono v. She arson Lehm an Hu tton, Inc. , 514 U. S. 52, 58 (199 5))

. Id

. at 1774. 4
Hu mbl e Oi l & Ref

. Co. v. In d e

p . Indus. Workers Uni on , 337 F.2d 321, 324 (5t h Cir. 5 1964)

. 5 Case: 07-30559 Document: 00511604848 Page: 5 Date Filed: 09/16/2011No. 07-30559

by the Union that the employer had violated a written provision of the collective bargaining agreement. The corollary o f t hat holding is that if a contractual 6 provision is not susceptible of varying interpretations under the circumstances of the dispute, the claim that there has been a violation may not be in good faith. This does not mean that contentions regarding an unambiguous provision

are not in good faith if a court ultimately determines, as a matter of law, that the interpretation advanced is incorrect. “ G o o d faith” does not necessarily equate to “meritorious, ” s i n c e a party can bring a losing argument in good faith. Nevertheless, the merits of the claim can be probative as to the good faith of the party bringing the claim when the claim is not colorable or is frivolous. W e r e cognize that in determining whether the Union’s claim regard i n g contracting out is a “g ood faith” one and therefore arbitrable entails an assessment of the merits of the contract construction dispute. We are mindful

o f t he Supreme Court’s statement in AT&T Technologies, Inc. v . Communications Workers ofAmerica that “in deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims.” However , t h e c ontext of that 7 statement reflects that the Court had in mind an agreement in which the parties

Id

. 6
475 U. S. 643, 649 (198 6); see also id

. at 649- 50 (quo ting Steel wo rke rs v. Am

. Mf g. Co. , 7 363 U. S. 564 , 568 (196 0)) :

[I]n dec idi ng wh ethe r the par tie s have agree d to sub mi t a par tic u l ar grievanc e to arbit rat ion, a cour t is not to rule on the pot enti al me r i t s o f the unde rlying clai ms . Whet her “arguable” or not, inde ed even if it app ears to the cour t to be fr ivolous , the union’ s clai m that the em plo yer has violat ed the coll ect ive-b argaini ng agree me nt is to be dec ide d, not by the cour t ask ed to ord er arbit rat ion, but as the par tie s have agree d, by the arbit rat or. “The cour ts , th e r e f ore , have no bus ines s we ighing the me rit s of the grievanc e, cons ide ring wh ethe r ther e is equi ty in a part icula r claim , or de ter mi ning whe therthereis par tic ular langua g e i n t he wr itt en ins tru me nt wh ich wi ll sup por t the clai m. The agree me nt is to sub mi t all grievanc es to arbit rat ion, not me rely thos e wh ich the cour t wi ll dee m me rit orio us. ” 6 Case: 07-30559 Document: 00511604848 Page: 6 Date Filed: 09/16/2011No. 07-30559

agreed “‘to submit all grievances to arbitration, not merely those which the court will deem meritorious.’” The Union and ExxonMobil have not agreed to submit 8 all grievances to arbitration. We must therefore discern whether the particular grievances at issue are within the scope of the arbitration agreement, even if we must delve into the merits of the underlying dispute to some degree. Our reading of AT&T is consistent with the Supreme Court’s subsequent decision in Litton , in whic h t h e C ourt cited AT&T in response to a dissenting opinion’s argument that the Court was impermissibly decid i n g “an issue of contract interpretation to be submitted to an arbitrator in the first instance.” 9 The Supreme Court o b s e rv e d t hat “[w]hether or not a company is bound to arbitrate, as well as what issues it must arbitrate, is a matter to be determined by the court, and a party cannot be forced to ‘arbitrate the arbitrability question.’” The Supreme Court e x p r e s s l y held in Litton that “we must

1 0 determine whether the parties agreed to arbitrate this dispute, and we cannot avoid that d u t y b e cause it requires us to interpret a provision of a bargaining

a gr e e m e nt.” In Litton , the collective bargaining agreement in question had

1 1 expired before the grievances were filed and both the merits of the case and the arbitrability questio n h inged on whether the rights asserted in the grievances “accrued or vested under the Agreement” or “carried over after expiration of the Agreement.” 1 2

Id

. 8
Litton Fin. Pri nting Di v. , A Di v. of Litton Bus. Sys. , Inc. v. NLRB , 501 U. S. 190, 208- 9 09 ( 1991)

.

Id

. (quo ting AT

&T , 475 U. S. at651 ). 1 0
Id

. at 209. 1 1
Id. at209

. 1 2 7 Case: 07-30559 Document: 00511604848 Page: 7 Date Filed: 09/16/2011No. 07-30559

We followed Litton in Loc a l Union No. 898 of the International Brotherhood of Electrical Workers v. XL Electric, Inc. , holding that “the question of arbitrability is a question for the court

. . . even if answering the arbitrability question requires a construction of the contract.” Other circuits have taken a 1 3 similar approach. 1 4 The Union argues that Litton no longer applies and that two subsequent Supreme Court decisions, Howsam v. Dean Witter Reynolds, Inc. and Green 1 5 Tree Financial Corp. v. Bazzle , set forth a new standard that this court should 1 6
ap p l y i n t h e instant case. In Howsam , the question before the Court was whether a dispute over the applicability of a National Association of Securities Dealers (NASD) time limit bar was a “question of arbitrability” for a co u r t to decide or a question reserved for the arbitrator. Noting that a “ q u e s t ion of 1 7 arbitrability” was one “where contracting parties would likely have expected a court to have decided the g a t e w a y m atter,” the Court then held that, in the absence of an agreement, procedural arbi trability questions were reserved for th e a rb itrator, while substantive arbitrability questions were for a court to

380 F.3d 868, 870 (5t h Cir. 2004) (int erp ret ing a cont rac t to det erm ine wh ethe r it had 1 3 been ter mi nate d in a cas e in wh ich the arbit rabil ity claus e did not per mi t arbit rat ion aft er the expir atio n o f the cont rac t)

.

See Crow n Cork & Seal Co., Inc. v. Int’l As s’n of Ma chi nis ts & Ae ros pa ce Workers , 501 1 4 F.3d 912, 917 (8t h Cir. 2007) (int erp ret ing the pr ovis ions of an a gr e e m e n t to det erm ine wh ethe r ret iree healt h benef its vest ed unde r the agree me nt) ; U n i te d Parc el Serv ., Inc. v. Uni on De Tro nqui stas De P.R. , L oca l 901 , 426 F.3d 470, 472 (1s t Cir. 2005) (d ete rm ining wh ethe r right s to v a c a t i o n tim e acc rued unde r an expir ed CBA) ; Indep. Lif t Truc k Buil ders Uni on v. Hy ster Co. , 2 F.3d 233, 235 (7t h C i r . 1993) (“ [T] he rule that cour ts mus t dec ide arbit rat ors ’ juris dic tio n tak es pr ece denc e over the rule that cour ts are not to dec ide the me rit s of the unde rlying dis put e. If the cour t mus t, to dec ide the arbit rabil ity iss ue, rule on the me rit s, s o b e i t. ”)

. 537 U .S

. 79 ( 2002)

. 1 5
539 U .S

. 444 (200 3). 1 6
Ho ws am , 537 U. S. at83. 1 7 8 Case: 07-30559 Document: 00511604848 Page: 8 Date Filed: 09/16/2011No. 07-30559

decide. Because the applicability of the NASD time limit rule was a “gateway

1 8 question” that “called the grievance procedures into play,” the Court left the question to the arbitrator. The disputes presently before us do not concern an 1 9 issue of procedural arbitrability. In Bazzle , a plurality of the Court concluded that the question of whether

a contract prohibited class arbitration was a procedural questi o n f o r an arbitrator to decide. Subsequently, t h e Court discussed the Bazzle plurality 2 0 opinion at s o m e l e n gth in Sto l t

- N i e ls e n S.A. v. AnimalFeeds International Corp. 2 1 The Court ultimately held that “the parties cannot be compelled to submit their dispute to class arbitration” when “the parties stipulated that there was ‘no agreement’” on whether “the part i e s agreed to authorize class arbitration.” 2 2 Nothing in AnimalFeeds International alters our conclusion that it is within the province of the courts to decide whether “a good faith claim by one party that the

o t h er party has violated a written provision” of the bargaining agreement ha s been asserted. IV The Union bases its c o ntracting-out grievance on two provisions of the collective bargaining agreement—Section 1131 and Section 1151. ExxonMobil

Id. at83- 85. 1 8
Id. at 85 ( quot ing John Wil ey & Son s, Inc. v . Liv ings ton, 376 U. S. 543 , 559 (196 4)) ; 1 9
see also id

. (quo ting wi th app roval com me nts to the Revis ed Unif orm Arbit rat ion Act of 2000, R UA A § 6, com me nt 2, 7 U. L.A. 12, 13 (S upp . 2002) , wh ich sai d that “in the abs e n c e o f a n agree me nt to the cont rary, iss ues of sub st antive arbit rabil ity

. . . are for a cour t to dec ide and iss ues of pr oce dur al arbit rabil ity, i

. e ., wh ethe r pr ere qui site s such as tim e li mi ts , noti ce, lache s, es top pel , and ot her co ndit ions p rec ede nt to an o bligat ion to arbit rat e h ave b een me t, ar e f or the arbit rat ors t o d ecid e.” ).

Bazzl e , 539 U. S. at451

. 2 0
130 S .Ct

. 1758, 177 1-17 72 ( 2010)

. 2 1
Id

. at 1776. 2 2 9 Case: 07-30559 Document: 00511604848 Page: 9 Date Filed: 09/16/2011No. 07-30559

argues that Section 1131 canno t support a claim that the contracting out violate d t h e CBA because the express language of that section authorizes ExxonMobil to do what it did. Exx o n M obil also contends that this court’s opinion in Baton Rouge Oil & Chemical Workers Union v. ExxonMobil Corp. (BROCWU) forecloses the Union’s reliance on Section 1151 a s a b a s is for

2 3 arbitration. We agree with ExxonMobil and hold that the district court erred in granting summary judgment to the Union compelling arbitration of the contracting-out grievance. Section 1131 specifically states that “[t]he company may let independent contracts,” with the exception of “m aint e n a nc e c o ntr ac t [ s] ”

—th at i s , contracts for maintenance work that would otherwise be per f o r med by employees in the Mechanical Divisions—that would “cause an employe e i n either Mechanical Division who has f

iv e or more years of Plant Service to be laid off for lack of work.” The Union does not dispute that the contracted-out loading wor k is considered process work, not maintenance work, and that the con t r a c t ing out resulted in no layoffs. Nor does the Union dispute that, on its face, Section 1131 authorizes the contracting out that occurred. Instead, the Union argues that the contracting out violates the original intent of Section 1131, which was to allow Ex xonMobil to “obtain workers during peaks and valleys without diminishing the core of i t s work force.” However, in a case in which, as in this one, the language of the contract is clear and unambiguous, courts may not inquire into t h e intent of the parties to contradict that plain meaning. The Union h a s 2 4 pointed to no ambiguities in the contr a c t t h a t w o uld open the door for an
exa m i n a t i on of the parties’ intent. In light of the clarity of the parties’

289 F. 3d 373 (5t h Cir

. 2002)

. 2 3 See, e. g., LA

. C IV

. C ODE AN N

. art

. 2046 (200 8) (“When the wo rd s of a cont rac t are clea r 2 4 and expli cit and lead to no abs urd cons equenc es , no fur ther inte rp ret atio n may be mad e in se arc h o f the par tie s’ in tent .” ). 10 Case: 07-30559 Document: 00511604848 Page: 10 Date Filed: 09/16/2011No. 07-30559

agreement, the Union’s claim that ExxonMobil has violated Section 1131 when the language of that section explicitly authorizes its actions is not colorable and cannot cons t i t u t e a good faith claim within the meaning of the arbitration clause. The Union insists tha t r e a d i ng Section 1151 in conjunction with Section 1131 c r eates a basis for a good faith claim that the contracting out violated the collective bargaining agreement. Section 1151 pr ovides t h a t both parties to that agreement must not exercise their ri ghts in an “arbitrary manner,” but must exerci s e them “in a reasonable manner and in good faith.” T h e Union contends that ExxonMobil’s refusals 1) to provide evidenc e t o t h e Union that the contracting out was necessary for cost savings or 2) to consider offers about how the Union employees could perform more economically to save the company money were arbitrary and in bad faith. E xx o n M obil argues that Section 1151 cannot serve as a basis f o r arbitration, citing this court’s opinion in BROCWU , a case involving a dispute 2 5 between the Union’s p r edecessor and ExxonMobil arising under the same collective bargaining agreement at i s s u e h e r e . In BROCWU , we determined that the agreement did not require ExxonMobil to arbitrate a grievance protesting the discharge of probationary employees. The collective bargaining agreement 2 6 gave non-probationary employees a right to arbitrate the imposition of serious

s anctions or discharge. We held that this grant of an arbitration right to non probationary employees implied that probationary employees did not have such

a right. The Union argued that, d espite this specific provision limiting

2 7 arbitration to non-probationary employees, the discharge was arbitrary and not

289 F. 3d 373 (5t h Cir

. 2002)

. 2 5
Id. at374

. 2 6
Id. at 376. 2 7
11 Case: 07-30559 Document: 00511604848 Page: 11 Date Filed: 09/16/2011No. 07-30559

in good faith in violation of Section 1151, and that, accordingly, the arbitration clause contained in Section 251 made that grievance arbitrable. 2 8 We held that Section 1151 and Section 251 did not make the otherwise non-arbitrable grievance arbitrable. We “decline[d] to re l y o n this catchall phrase [Section 1151] to create a right of arbitration that clearly does not exist under the terms of the CBA, and which would explicitly conflict with the CBA’s
express provision allowing ExxonMobil to discharge probationary employees ‘at will.’” We held that the s p e c i f i c p rovision that excluded the grievance from 2 9 arbitration would have been “rende r e d m eaningless” if Section 1151 were interpreted to allow arbitration for probationary employees. 3 0 We agree with ExxonMobil that BROCWU forecloses reliance on Section 1151 as an independent basis for arbitrability of the contracting-out grievance. To read Section 1151 in a way that would transform an otherwise non-arbitrable grievance into an arbitrable one would render Section 251’s goo d f a i t h requirement meaningless, since the Union could always assert that ExxonMobil

was exercising its r i gh t s a rbitrarily or not in good faith under Section 1151. Such a reading would also explicitly conflict with the collective bargaining agreement’s exp r e s s p rovision allowing ExxonMobil to contract out process work that does not result in layoffs. Accordingly, the rationale behind the BROCWU decision applies equally here and the Union may not rely on Section 1151 as a basis for arbitrability.

Id. 2 8
Id. 2 9
Id. 3 0 12 Case: 07-30559 Document: 00511604848 Page: 12 Date Filed: 09/16/2011No. 07-30559 V The Union also bases its pos t

- r eduction grievance on Section 1151. The Union asserts that the post-reduction grievance is arbitrable because it is a good faith claim that ExxonMobil has violated Sections 212 and 1151 by unilaterally reducing two and one-half barg a i n i n g unit posts. Section 212 permits ExxonMobil to “perform any function of management at any time, so long as it does not violate any express provision of this Agreemen t

. ” T h o u gh the Union does not dispute that the post reduction was a function of management, it argues that this right was exercised arbitrarily and in bad faith in violation of Section 1151. The Union expends great effort discussing the facts underpin n i n g its claims. But the Union cites to no “express provision” of the collective bargaining agreement within the meaning of Section 212 that ExxonMobil has violated. For the same reasons that we ho l d t h a t t he contracting-out grievance is not arbitrable under Section 1151, we hold that Section 1151 cannot serve as a basis for requiring arbitration of the post-reduction claim. * * * For the foregoing reasons, we REVERSE the district court’s grant of the Union’s motion for summary judgment with regard to the contractin g - o ut grievance, AFFIRM the district court’s denial of the Union’s motion f o r s u m mary judgment with regard to the post-r eduction grievance, and REVERSE the district court’s denial of ExxonMobil’s motion for summary judgment.

13 Case: 07-30559 Document: 00511604848 Page: 13 Date Filed: 09/16/2011