Opinion ID: 493292
Heading Depth: 2
Heading Rank: 1

Heading: Arbitrability of Breach of Settlement Agreement

Text: 6 Fearn's original discharge of Niro was unquestionably an action subject to the grievance and arbitration procedures set forth in the collective bargaining agreement between Fearn and Local 744. 1 Fearn argues, however, that the settlement agreement that resolved the dispute about Niro's original discharge is not itself subject to the collective bargaining agreement and is thus not arbitrable. 7 We begin with the axiom that arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit. Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960) (part of Steelworkers Trilogy  at 363 U.S. 564, 80 S.Ct. 1343 and 363 U.S. 593, 80 S.Ct. 1358); AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986). But arbitration is favored and should be ordered unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Warrior & Gulf Navigation Co., 363 U.S. at 582-83, 80 S.Ct. at 1352-53. It is of course for the court to determine whether a dispute is subject to arbitration, unless the parties have clearly and unmistakably established that an arbitrator is to determine issues of arbitrability. AT & T Technologies, Inc., 106 S.Ct. at 1418; see John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-47, 84 S.Ct. 909, 912-13, 11 L.Ed.2d 898 (1964). 8 We conclude that a settlement agreement is an arbitrable subject when the underlying dispute is arbitrable, except in circumstances where the parties expressly exclude the settlement agreement from being arbitrated. To hold otherwise could eviscerate the usefulness of settlements reached in grievance and arbitration settings, by complicating what should be a relatively simple and cheap procedure. If parties desire that a settlement agreement should not be arbitrable they may so prescribe. We simply agree with Local 744 that in uncertain situations the presumption should favor arbitrability. Accord Bakers Union Factory No. 326 v. ITT Continental Baking Co., 749 F.2d 350, 356 (6th Cir.1984); L.O. Koven & Bro., Inc. v. Local 5767, United Steelworkers, 381 F.2d 196, 204-05 (3d Cir.1967); International Union of Operating Eng'rs, Local 564 v. Dow Chem. Co., 348 F.Supp. 1149, 1153 (S.D.Tex.1972); Elkouri & Elkouri, How Arbitration Works, 206 n. 257 (4th ed. 1985); cf. also Westinghouse Broadcasting Co. v. Local 804, Int'l Alliance of Theatrical Stage Employees, 616 F.2d 97, 100 (3d Cir.1980) (alleged breach of pension agreement arbitrable); Teamsters Local 284 v. Maremont Corp., 515 F.Supp. 168, 174 (S.D. Ohio 1980) (alleged breach of arbitration decision arbitrable); Kansas City Power & Light Co. v. Local 1464, IBEW, 506 F.Supp. 1151, 1155-56 (W.D.Mo.1981) (alleged breach of agreement supplementing labor contract arbitrable). 9 Fearn also contends that, even if the alleged breach of the settlement agreement were arbitrable, the district court here erred by failing to recognize that Niro's and Local 744's utter failure to pursue preliminary grievance procedures necessitated a conclusion that no arbitration could be ordered. Fearn essentially argues that if procedural shortcomings are severe enough, they become substantive failings and render the underlying dispute nonarbitrable. The question whether a particular dispute concerns a subject that the parties have agreed to arbitrate is ordinarily a question to be decided by the court. Questions whether a party adequately has abided by procedural requirements of an arbitration agreement, on the other hand, normally are reserved for the arbitrator's judgment. The high hurdle that Fearn fails to clear was first raised by the Supreme Court in John Wiley & Sons v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). In John Wiley the union sued under section 301 to compel the company to arbitrate pursuant to their collective bargaining agreement. The company argued that the union failed to follow procedural steps set forth in the agreement as preliminary to arbitration, and that a court should determine whether or not those procedural shortcomings precluded arbitration. The Court rejected this dichotomy, stating that labor disputes of the kind involved here cannot be broken down so easily into their 'substantive' and 'procedural' aspects. 376 U.S. at 556, 84 S.Ct. at 918. The Court's inquiry is more limited: 10 Once it is determined ... that the parties are obligated to submit the subject matter of a dispute to arbitration, procedural questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator. 11 Id. at 557, 84 S.Ct. at 918. 12 This court and others have heeded John Wiley and are slow to enter the thicket of deciding whether, under a particular collective bargaining agreement reached by private parties, an alleged violation of the agreement should be characterized as essentially procedural or substantive. Federal courts face sufficiently daunting tasks trying to classify statutory requirements into procedural and substantive categories for purposes of the diversity jurisdiction. The prospect of conducting similar analyses of private labor agreements counsels caution. We agree, therefore, that once it is determined that the underlying dispute concerns a subject matter covered by arbitration provisions, the court's only role is to order arbitration. The arbitrator should determine the effect of any procedural shortcomings of either party. See, e.g., Beer Sales Drivers, Local 744 v. Metropolitan Distribs., 763 F.2d 300, 303 (7th Cir.1985); Washington Hosp. Center v. Service Employees Int'l Union, Local 722, 746 F.2d 1503, 1506-09 (D.C.Cir.1984); Automotive Employees Union, Local 618 v. Town and Country Ford, Inc., 709 F.2d 509, 511-14 (8th Cir.1983); International Union v. Folding Carrier Corp., 422 F.2d 47, 49 (10th Cir.1970); Local 51, IBEW v. Illinois Power Co., 357 F.2d 916, 918-19 (7th Cir.), cert. denied, 385 U.S. 850, 87 S.Ct. 78, 17 L.Ed.2d 79 (1966). But see Philadelphia Printing Pressmen's Union No. 16 v. International Paper Co., 648 F.2d 900, 904 (3d Cir.1981) (failure to file written grievance as required by bargaining agreement is not merely procedural but rather substantive and precludes order to arbitrate). 13 Given the strong policy favoring settlement of labor disputes by private arbitration, see, e.g., 29 U.S.C. Sec. 173, and the concommitant presumption broadly in favor of arbitration when parties agree on an arbitration clause, especially when the clause is broadly phrased, as here, see AT & T Technologies, Inc., 106 S.Ct. at 1419, we conclude that Local 744's failure to pursue certain grievance procedures before seeking arbitration is a matter the significance of which is to be weighed by the arbitrator for whom these parties have contracted. We are convinced that the alleged violation of the settlement agreement here is a subject the parties intended to be a matter of arbitration. That is all we need and should decide. Questions of procedural slippage or shortfalls are for the arbitrator.