PUBLISH

UNITED STATES CO URT OF APPEALS

TENTH CIRCUIT

COMMUNICATION WORKERS OF AMERICA, Plaintiff – Appellee,

v. AVAYA, INC., Defendant - Appellant. No. 11-1470

Appeal from the United States District Court for the District of Colorado (D.C. No. 1:10-CV-02464-LTB-BNB)

Patrick R. Scully (Sarah R. Peace with hi m on the brief) of Sherman & Howard L.L.C., Denver, Colorado, for Defendant-Appellant. Stanley M. Gosch of Rosenblatt & Gosch, P.L.L.C., Greenwood Village, Colorado, for Plaintiff-Appellee.

Before KELLY, Circuit Judge, BRORBY, Senior Circuit Judge, and O'BRIEN , Circuit Judge.

O’BRIEN , Circuit Judge.

I. Introduction Avaya Inc. (“Avaya”) a ppeals from the district court’s ruling compelling arbitration of its labor dispute with th e Communication Workers of America (“CWA”) FILED United States Court of Appeals Tenth Circuit 

### September 11, 2012

Elisabeth A. Shumaker Clerk of Court- 2 - over the legal status of a class of Avaya employees called “backbone engineers.” The union views the backbone engineers as non-re presented “occupational” employees and legitimate objects for its orga nizing campaigns, while Avaya sees them as managers outside the scope of the company’s labor agreements. CWA contends the parties’ collective bargaining agreement (“CBA”) requires any dispute over the status of backbone engineers to be resolved in arbitr ation. Avaya maintains the parties did not

consent to arbitrate the status of its backbone engineers and accuses CWA of trying to unilaterally enlarge the CBA to encompass disputes over company management. Having

reviewed the CBA and the evid ence submitted to the district court, we agree with Avaya’s position and reverse the district court’s order compelling arbitration.

II. Background

A. The Collective Bargaining Agreement The CBA between Avaya and CWA govern s the employment conditions of Avaya employees who have elected to be represen ted by the CWA in labor disputes with company management. This group, known as the “bargaining unit,” consists of occupational employees whose titles are listed in the CBA; it does not include management or non-represented employees, nor does it list backbone engineers among the represented members. Most important for this appeal are Article s 9 and 10, which lay out the grievance-and-arbitrati on process governing labor disp utes arising during the term of the CBA. The procedures described in th ese articles make up the exclusive process for resolving “employee disputes” under the CBA. (App. App’x 32.) “If, at any time, a- 3 - difference arises between the Company and the Union regarding the true intent and meaning of a provision under [this Agreement] , or a question as to the performance of any obligation hereunder,” th e grievance procedures shall be used to settle the differences. (App. App’x 35.) A grievance is “a complaint involving the interpretation or application of any of the pr ovisions of [the CBA], or a complaint that an employee(s) has in any manner been unfairly treated.” (App. App’x 32.) The grievance procedure consis ts of three steps. Each step requires written notice of the grievance (or, in the later steps, of the grievance appeal) and a meeting to discuss the grievance involving officials from both th e union and the company. The participating officials become progressively more senior as the process evolves, and by step three the discussions involve the union’s vice presiden t and the company’s vice president of labor relations. Only when these st eps have been exhausted and no resolution reached can the parties resort to arbitration, “it being unde rstood that the right to require arbitration extends only to matters expressly set forth in this Article and wh ich are not otherwise expressly excluded from arb itration.” (App. App’x 35.)

B. The Neutrality Agreement Appended to the CBA is a National Me morandum of Understanding (“National Memorandum”) reflecting a trilateral ag reement between Avaya, CWA, and the

International Brotherhood of Electrical Wo rkers (IBEW) and setting forth the parties’ understandings on issues like wa ges, hours, pensions, and ot her terms and conditions of employment. Over Avaya’s objection, the di strict court accepted CWA’s invitation to- 4 - treat the National Memorandum as a continuati on of the CBA. By its terms, the court observed, the National Memorandum “binds the CWA and its local labor unions, the IBEW and its affiliated local unions, and Av aya to amend and extend” their collective bargaining agreements “so as to incorporate the items hereinaf ter set forth. . . .” (App. App’x 170.) The National Memo randum “shall become effective as to the CWA . . . only if ratified by the CWA membership [before Ju ly 29, 2009],” and the “amended collective bargaining agreements between the parties” shall terminate in June 2012. (App. App’x 170.) The record does not reflect whet her CWA ratified the National Memorandum before July 29, 2009, but since both parties recognize th e National Memorandum as a live agreement governing consent elections for unrepresented employees, we assume it was timely ratified.

Under a subsection relati ng to union-management relations, the National Memorandum includes a Neutrality Agreem ent governing union organizing efforts directed at unrepresented “non-manageme nt” employees. (App. App’x 246.) In recognition of the union’s goal of growing its membership, the agre ement sets forth the “exclusive means” by which the union will co nduct efforts to organize unrepresented non-management employees. (App. App’x 246 .) The organizing and election procedures are meant to foster a “neutral” organizing environment in which the union is afforded a reasonable opportunity to co mmunicate with non-management employees. (App. App’x 246-48.)- 5 - Alleged violations of the ne utrality provisions are to be “handled via the dispute resolution process contained in this Agreement.” (App. App’x 250.) Under that process, disputes arising during the course of an orga nizing effort will be addressed in the first place by the parties themselves, preferably at the local level, and in the event good faith

efforts to resolve the matter fa il, by a “third party neutral” (TPN) agreed upon by the parties. Compared to the th ree-step process prescribed in the CBA, dispute resolution under the Neutrality Agreement is fluid and in formal, the only precon dition to arbitration being a good faith attempt by the parties to resolve the matter. (App. App’x 250.)

C. CWA’s Organizing Drive In March 2010, CWA comme nced an organizing drive directed at Avaya backbone engineers located in Denver, Co lorado. Backbone engineers provide engineering support for the company’s hard ware and software products. They are classified as management in the corporate title guide and benefits program, and many of them dispatch and oversee the wo rk of teams of technicians. In the chain of correspondenc e following the organizing dr ive, the parties laid out their positions on the status of the backbone engineers, the propriety of the organizing drive, and the appropriate course for resolvin g what looked by then to be an unavoidable conflict. Avaya insisted the Neutrality Agreement does not apply to the union’s organizing campaign, because backbone engi neers are management employees outside the scope of the Neutrality Agreement. In Avaya’s view, the only method of organizing the backbone engineers is th rough the procedures set forth by the National Labor- 6 - Relations Board (NLRB). By contrast, CWA maintained that back bone engineers are non-represented occupational employees who are eligible to be organized under the consent-election procedures in the Neutrality Agreement. CWA proposed appointing a TPN to determine whether backbone engineers qualify as non-management within the m eaning of the Neutrality Agreement. Maintaining the dispute falls outside th e scope of the Neutrality Agreement (and therefore outside the scope of the Neutrality Agreement’s dispute-resolution process), Avaya refused. With no hope of a private settlement, CWA filed a formal grievance under the CBA accusing Avaya of improperly denying access to backbone engineers and then failing to follow the dispute-resolution proced ures in the Neutrality Agreement. The remedy sought: order Avaya to choose a TPN to resolve the dispute over the status of the backbone engineers. Avaya rejected the grie vance, and CWA appealed to step three of the CBA’s dispute-resolution process, at which point the parties held a settlement meeting but ultimately failed to resolve their dispute. Having exhausted the grievance procedure, CWA notified Avaya that it would be submitting the grievance to arbitration. Avaya refused arbitration and, in a June 8 letter, explained it’s position: the di spute was not arbitrable beca use the CBA does not apply to backbone engineers.- 7 - D. CWA’s Suit to Compel Arbitration On October 8, 2010, four months after Av aya’s June 8 refusal to arbitrate, CWA filed a complaint to compel arbitration in the District of Colorado. Contending the parties never agreed to arbitrate disputes over management employees, Avaya moved for summary judgment. It cited materials showi ng backbone engineers were classified as managers and provided benef its commensurate with those received by management. It also cited documents showing the parties’ un derstanding that “man agement” does refer not to “manager” as that term is defined by the federal labor laws, but rather to the class of Avaya employees who perform non-occupatio nal duties. CWA submitted only one bit of evidence refuting Avaya’s designation of backbone engineer s as management—an affidavit from a CWA official expressing hi s “belief” that backbone engineers are occupation employees eligible for union representation. Following cross motions for summary judgment, the distri ct court denied Avaya’s motion and granted CWA’s. The court conclude d the catch-all arbitration clause in the CBA covers the dispute over whether the back bone engineers’ status is arbitrable under the Neutrality Agreement. The court addr essed Avaya’s contention about backbone engineers being managers outside the scope of the arbitration agreements, by saying “such [a] determination is an assessment of the underlying merits before an arbitrator and, as such, is not before me.” 1

1 The district court rejected Avaya’s additional arguments. First, it rejected- 8 - III. Discussion Avaya challenges the order compelling arbitr ation on three grounds. It argues the parties’ dispute is not subject to the CBA’s arbitration clause, 2 because Backbone engineers are neither members of the bargaini ng unit nor eligible to become members in the future. They are management , Avaya insists, a class of workers whose terms of employment are outside the CBA a nd of no concern to the unio n. The district court did not challenge this assertion in concludi ng the dispute was arbitrable. Rather, it determined the question of arb itrability—whether the parties agre ed to arbitrate the status of the backbone engineers under the Neutrality Agreement—was itself an arbitrable issue under the CBA. Avaya contends that this, t oo, was error: the scope of an arbitration clause is a matter for judicial resolution, and Avaya maintains th e district court was required to examine the Neutrality Agreemen t at the outset to determine whether it

Avaya’s argument that the co mplaint to compel arbitrati on was untimely because it was filed more than six months after Avaya first re fused arbitration. The court concluded that the complaint had been filed w ithin six months of Avaya’s re fusal to arbitrate, which, contrary to Avaya’s assertions, came on J une 8, shortly after CWA announced it would be submitting the grievance to arbitration und er the CBA. Second, the court rejected Avaya’s contention that the case belongs before the National Labor Relations Board rather than a federal court; it explained that questions of contract interpretation, and particularly questions about the scope of an arbitration clause, are squarely within the jurisdiction of the federal courts.

2 Avaya also argues (1) the complaint was untimely a nd should not have been considered, and (2) the district court lacked jurisdiction because CWA sought to arbitrate issues within the primary juri sdiction of the National Labor Re lations Board. Because we agree with Avaya that the dispute is not arbitrable and th at reversal is proper on that basis alone, we do not address these alternative arguments.- 9 - covered the dispute over backbone engineers. Had it done so, Avaya continues, the court would have been compelled to conclude the ar bitration clause does not extend to disputes over employees, like backbone engineers, whom Avaya classifies as managers. We review a grant of summary judgment without deference, applying the same legal standard as the district court. Byers v. City of Albuquerque , 150 F.3d 1271, 1274 (10th Cir. 1998). Summary judgment is appropr iate if the “movant s hows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).

Because arbitration is a creature of contra ct, a party cannot be forced to arbitrate any issue he has not agreed to submit to arbitration. AT & T Tech., Inc. v. Commc’n

Workers , 475 U.S. 643, 648 (1986); Local 5-857 Paper, Allied

- Industrial, Chemical and Energy Workers Int’l Union v. Conoco, Inc. , 320 F.3d 1123, 1126 (10th Cir. 2003). The Supreme Court has recognized a presumption in favor of arbitr ation in the labor relations

context. United Steelworkers v. Warri or & Gulf Navigation Co. , 363 U.S. 574, 582 (1960). Accordingly, where a dispute arises under a collective bargaining agreement, it must be arbitrated unless “it may be said with positive assurance that the arbitration clause is not susceptible of an interpreta tion that covers the asserted dispute.” Id . Where, as here, the parties have agreed upon an incl usive arbitration clause covering any dispute arising out of the CBA, the court’s role is limited to determining whether a party is “making a claim which on its face is governed by the contract.” United Steelworkers v. Am. Mfg. Co. , 363 U.S. 564, 567-68 (1960).- 10 - This case requires reconciling two competing principles governi ng judicial review in this area. First, courts (rather than arb itrators) must evaluate the threshold question of whether the parties consented to submit a particular dispute to arbitration. See AT & T Tech., 475 U.S. at 649. Second, courts making this determination are not to rule on the potential merits of th e underlying claims. Id . These rules clash in cases where the merits of the claim are bound up with the question of arbitrability. See, e.g. , Int’l Bhd. of Elec. Workers, Local 1 v. GKN Aerospace N. Am., Inc. , 431 F.3d 624, 627 (8th Cir. 2005); Rite Aid of Penn. v. United Food and Comm. Workers Union, Local 1776 , 595 F.3d 128, 141- 42 (3d Cir.), cert denied , 131 S. Ct. 187 (2010). On those occasions, the Supreme Court tells us, the court’s duty to determine whet her the party intended the dispute to be arbitrable trumps its duty to avoid reaching the merits: “Although ‘doubts should be resolved in favor of coverage,’ we must dete rmine whether the partie s agreed to arbitrate this dispute, and we cannot avoid that duty because it require s us to interpret a provision of a bargaining agreement.” Litton Fin. Printing Div. v. NLRB , 501 U.S. 190, 209 (1991) (quoting AT&T Tech , 475 U.S. at 560). This is a se nsible compromise, not least because it avoids a situation where arbitrability hi nges on what the party seeking arbitration

characterizes as arbitrable. The federal courts of appeal have been faithful to the principle expressed in Litton

. See, e.g. , United Parcel Serv., Inc. v. Un ion de Tronquistas, Local 901 , 426 F.3d 470, 472-74 (1st Cir. 2005); Int’l Bhd. of Elec. Workers , 431 F.3d at 628-29 (“[I]f a court is entirely blind to the merits of a grievance, th en the parties could be forced to arbitrate- 11 - grievances that have no relationship wh atsoever to the co llective bargaining agreement.”); see also Rite Aid of Penn. , 595 F.3d at 136 (3d Cir. 2010) (“[W]here the merits and arbitrability questions are inextri cably intertwined, a court’s arbitrability decision may, of necessity, touch incidentally on the merits.”); Indep. Lift Truck Builders Union v. Hyster Co. , 2 F.3d 233, 236 (7th Cir. 1993) (“[A] court cannot address the arbitrability question without at the same time addressing th e underlying merits of the dispute.”). And consistent with Litton , we have held that facts are more important than legal labels in determining whether a claim is arbitrable. See Chelsea Family Pharmacy,

PLLC v. Medco Health Solutions , 567 F.3d 1191, 1197-98 (10th Cir. 2009); see also P & P Indus., Inc. v. Sutter Corp. , 179 F.3d 861, 871 (10th Ci r. 1999) (“[I]n determining whether a particular claim falls within the scope of the parties’ arbitration agreement, we focus on the factual allegations in the complaint ra ther than the legal causes of action asserted.”) (quotati on marks omitted). In light of these principles, the district court was wrong to compel arbitration based on nothing more than CWA’s “belief” that backbone engineers were legitimate targets for an organizing drive. Concerne d about intruding on the province of the arbitrator, the district court lost sight of its duty to determine whether the parties consented to arbitrate the dispute in the first place. Without a judicial determination of arbitrability, the scope of the arbitration clause became subject to the artful pleading of the union, resulting in CWA having “unilatera l and unfettered discretion” to determine- 12 - when and on what basis Avaya had to participate in arbitration. See E.M. Diagnostic Sys. v. Local 169, Int’l Bhd. of Teamsters , 812 F.2d 91, 95 (3d Cir. 1987). This case well illustrates the point. Had th e court addressed the threshold question of consent, it would have f aced compelling evidence that the parties did not agree to submit the dispute over the backbone engineers to arbitration. Two key facts strongly suggest the dispute is not governed by the pa rties’ labor agreements. First, the parties understood the Neutrality Agreement, wh ich by its terms app lies only to “nonmanagement employees,” to govern consent elections for occupational workers. This

much was clear from the record , which included an affidav it from Avaya’s Director of Labor Relations stating that the partie s understood ‘management’ to denote “nonoccupational employees.” (App. App’x 381). But it was also clear from the parties’ use

of the term in the CBA and National Memo randum. Although neither agreement defines “management,” context suggests the term refers not to a legal definition but rather to a readily identifiable class of non-occupatio nal Avaya employees. In other words, “management” includes those employees whom Avaya designates as managers. If “management” meant something else, indeed if it meant anything but the opposite of “occupational employee,” otherw ise straightforward terms governing the dayto-day dealings between company and un ion would become vexing and difficult to comply with. Take the pr ovision about union activity on company premises, which permits union representatives to “enter upon Company premises after obtaining approval from a management representative of the Co mpany” (App. App’x 28) ; or the provision- 13 - requiring starting rates to be granted “based on the Comp any’s non-management employee starting wage policy” (App. App’x 46 ); or the one about layoffs, which “shall be in inverse order of seniority” except for certain employees who have been “assigned to a management title” for more than a year prio r to returning to the bargaining unit (App. App’x 48). These provisions presume a familiarity with Avaya management—an ability to readily distinguish it from non-management , which would be impractical if the parties had to consult a legal definition each time the meaning of “manag ement” came into question. This would disrupt labor relations between the parties and turn day-to-day disputes—entry on company pr emises, the availability of certain starting rates—into highly fraught questions of legal interpre tation. Given the frequency with which the undefined term appears in the labor agreemen ts and the practical necessity of having a working definition, we think it clear from the record that “managemen t” refers to those employees classified by Avaya as managers. The second important fact the court wo uld have noticed is this: backbone engineers are not among the employees classi fied by the company as “occupational.” That Avaya held this view is plain from its corporate title guide , which classifies backbone engineers as management, as well as from its benefits program, which creates separate plans for managers and occupationa l employees and specifies that backbone engineers will participate in only the form er. But Avaya also introduced evidence of CWA sharing the company’s understanding of backbone engineers. Documents from previous grievance disputes show CWA representatives refe rring to backbone engineers- 14 - as management employees. In one grie vance, CWA complained about backbone engineers performing dispatching and routing wo rk that should have been reserved for occupational workers. In a second, the union comp lained about Avaya unlawfully shifting bargained-for work to management po sitions (like backbone engineers) in order to justify layoffs. Implicit in these grievanc es is the notion that backbone engineers are managers who should not be performing work reserved for represented employees— further support for Avaya’s argument about a mutual understanding—backbone engineers are managers. The record provides forceful evidence that parties did not contractually consent to arbitrate disputes over Avaya’s backbone en gineers. The Neutra lity Agreement provides a process for resolving disputes arising from organizing drives directed at “nonmanagement employees.” If, as the evidence establishes, the partie s understood the term “management” to denote non-occupational em ployees; and if there is no real dispute about the classification of backbone engine ers as non-occupational; there can be only one

conclusion to draw from the reco rd: the parties did not consent to submit the underlying dispute to arbitration.

CWA contends the district court had no business evaluating the Neutrality Agreement because the scope of the agreemen t was not before the court as a part of CWA’s motion to compel arbitrat ion. Rather, the question presented to the district court concerned the scope of the CBA and the ar bitrability of the underlying arbitration dispute; that is, the court was asked to decide whether the parties agr eed to arbitrate their- 15 - disagreement over the status of backbone engineers under th e Neutrality Agreement. In CWA’s view, a judicial determination that th e parties did not consent to arbitrate the labor dispute under the Neutrality Agreement would be an answer to a question never

asked. The inquiry cannot be so easily compartmentalized. Wh ile it is true the question of arbitrability under the Neutrality Agreement was not directly before the court, it was a question the court was nevertheless required to answer. The pr esumption favoring arbitration does not apply when the di spute itself concerns arbitration. Peabody Holding

Co. v. United Mine Workers , 665 F.3d 96, 102 (4th Cir. 2012 ). Such disputes are to be resolved by the courts unless the parties have agreed, in “clear and unmistakable” terms,

to submit them to arbitration. Rent-A-Center, W., Inc. v. Jackson , 130 S.Ct. 2772, 2783 (2010).

In this case it is neither “clear” nor “ unmistakable” that the parties agreed the dispute resolution procedures in the CBA would cover arbitr ation disputes arising under the Neutrality Agreement. It is not enough fo r the parties to have an arbitration clause purporting to sweep up all disputes arising from the labor agreement. See Peabody Holding Co. , 665 F.3d at 102 (“The ‘clear and unmis takable’ standard is exacting, and the presence of an expansive arbitration cl ause, without more, w ill not suffice.”). Yet that is precisely the type of clause we have here: “[the arbitration provisions] provide the mutually agreed upon and ex clusive forums for resolutio n and settlement of employee disputes during the term of this agreement.” Nothing in that sentence suggests the parties- 16 - meant to reserve for th e arbitrator disputes about arbitr ability, much less disputes arising under an entirely independent arbitrati on clause in the Neutrality Agreement. In the end, the district court had its pr esumptions backwards: instead of applying the presumption in favor of arbitration, it shou ld have applied the presumption in favor of judicial resolution. The court should ha ve begun its analysis by asking whether the parties did or said anything to rebut the pr esumption that questions about the arbitrability of an arbitration dispute will be resolved by the courts. Assuming the answer was no, the

court should have then determined whether th ere was a fact issue regarding the parties’ consent to submit to arbitration the dispute ov er the backbone engineer s. Any doubts in this regard could have been resolved in favor of arbitration, see United Steelworkers , 363 U.S. at 582, but as we have already explai ned, the record leaves no room for doubt: a plain reading of the Neutrality Agreement confirms Avaya’s assertion that the parties never agreed to submit the dispute to arbitrati on. The district cour t should have denied CWA’s motion to compel arbitr ation and dismissed the case. For the foregoing reasons, we REVERSE the district court’s order compelling

arbitration and REMAND for resolutio n consistent with this opinion.