Opinion ID: 3010654
Heading Depth: 2
Heading Rank: 2

Heading: Does the IACP's Complaint Raise Issues of

Text: Substantive or Procedural Arbitrability? In support of its argument that its complaint raises questions of substantive arbitrability, the IACP relies heavily on our discussion in PaineWebber v. Hartmann, 921 F.2d 507, 512-13 (3d Cir. 1990), and PaineWebber, Inc. v. Hofmann, 984 F.2d 1372, 1378 (3d Cir. 1993), two cases arising not under the RLA or the NLRA, but under the securities laws and the Federal Arbitration Act. In Hartmann and Hofmann, securities brokerage houses sued to enjoin the arbitration of customers' claims of fraud and mismanagement. Both cases concerned contractual language found in the arbitration provisions of the New York Stock Exchange rules and the National Association of Stock Dealers Code of Arbitration Procedure, to wit: No 14 dispute, claim, or controversy shall be eligible for submission to arbitration . . . where six (6) years have elapsed from the occurrence or event giving rise to the act or dispute, claim or controversy. 921 F.2d at 509. Relying on the specific language, absent in the case at bar, relating to disputes eligible for submission to arbitration, we held in Hartmann (and reiterated in Hofmann) that the application of the quoted provision was a question of substantive arbitrability for the court. 921 F.2d at 513; 984 F.2d at 1379. In Hartmann, however, we specifically noted the narrowness of our holding, stating that [l]anguage less distinct than `eligible for submission to arbitration' might well be insufficient to overcome the strong jurisprudential pull toward arbitration. 921 F.2d at 514. The IACP urges that the agreement in this case--and in particular the exhaustion requirement of the IGP--presents a substantive bar to arbitration such that our rulings in Hartmann and Hofmann apply. The IACP places principal reliance on language in the Jurisdiction portion of Section III of the IGP. The language relied on provides: The System Board shall have authority to hear only matters which are within the scope of this Agreement and which have been handled through the prior steps of this grievance procedure. This is not, however, the only part of the agreement which sets forth exhaustion principles. In Section IV of the IGP, under the heading General Provisions, the agreement states in relevant part: Unless the Company and the grievant or the IACP mutually agree otherwise, a grievant is precluded from raising in subsequent steps issues not raised in his original grievance. Further, the Step II Hearing Officer and System Board of Adjustment are precluded from considering issues not raised in the grievant's original grievance unless the Company and the grievant or the IACP mutually agree otherwise. Such issues may only be submitted as new grievances subject to all time limits, jurisdictional restrictions, and any other pertinent provisions of this Agreement. We do not find the language of Sections III and IV of the IGP to be as distinct as the language at issue in the 15 Hartmann and Hofmann cases. The mere fact that the exhaustion provisions are framed in obligatory terms does not necessarily render the provisions a substantive bar requiring judicial, rather than arbitral, interpretation. In Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023 (11th Cir. 1982), a case we referred to in Hartmann, the arbitration portion of the agreement between the investor and the broker read, in pertinent part, Arbitration must be commenced within one year after the cause of action accrued. Id. at 1026 n.4. The Eleventh Circuit concluded that compliance with this provision was an issue for the arbitrator to decide. Id. at 1028. Noting that the provision at issue in Belke presented a stark contrast with the NYSE and NASD's eligib[ility] for submission to arbitration formulation, we observed in Hartmann that the Belke court quite reasonably held thatits application should be decided by the arbitrator. 921 F.2d at 513-14. Even if the exhaustion provisions of the IGP could properly be read as approximating the distinctness of the Hartmann/Hofmann eligible for submission to arbitration provision, we would be slow to conclude that interpretation and application of the exhaustion provisions were matters for the district court rather than matters for the System Board. We think the case for judicial circumspection in defining the boundaries of the arbitral process is less compelling in the Hartmann/Hofmann setting, where the disputes to be addressed arise out of the relationship between a brokerage house and an individual customer, than in settings governed by a collective bargaining agreement which covers scores or hundreds or thousands or even tens of thousands of employees. In the collective bargaining setting, the primacy of the arbitral role is crucial to the stability of the work place. The Supreme Court made this plain almost forty years ago in United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578 (1960): Thus, the run of arbitration cases, illustrated by Wilko v. Swan, 346 U.S. 427 [a securities case], becomes irrelevant to our problem. There the choice is between the adjudication of cases or controversies in courts with established procedures or even special statutory 16 safeguards on the one hand and the settlement of them in the more informal arbitration tribunal on the other. In the commercial case, arbitration is the substitute for litigation. Here arbitration is the substitute for industrial strife. . . . For arbitration of labor disputes under collective bargaining agreements is part and parcel of the collective bargaining process itself. Id. at 578. A recent illustration of the centrality of arbitration in the collective bargaining context is our decision in Association of Flight Attendants v. USAir, 960 F.2d 345 (3d Cir. 1992). In Association of Flight Attendants, an RLA case, we were called upon to decide whether the district court erred in ruling that a particular item of evidence--the grievant's expunged criminal records--must be admitted in the arbitral proceeding. While finding that this issue could not correctly be characterized as presenting either a major or a minor dispute, we determined that the issue was one of procedure for the arbitrator to decide. Id. at 348-49.7 In so holding, we found guidance in John Wiley, which held that under the National Labor Relations Act, [o]nce it is determined . . . that the parties have agreed to submit the subject matter of the dispute to arbitration, `procedural questions' which grow out of the dispute and bear on its final disposition should be left to the arbitrator. Id. at 557. Following the logic of John Wiley, we concluded in Association of Flight Attendants that the general subject matter of the dispute--i.e., the termination of the grievant-- was subject to arbitration and that the evidentiary question was one for the arbitrator to decide.8 960 F.2d 349-350. _________________________________________________________________ 7. It bears noting that we decided Association of Flight Attendants after Hartmann. 8. The procedural arbitrability doctrine of John Wiley, long a mainstay of NLRA jurisprudence, has been held applicable to RLA cases by other courts of appeals as well. In Brotherhood [of] Railway Carmen v. Atchison, Topeka & Santa Fe Railway Co., 956 F.2d 156 (7th Cir. 1992), the court came to a conclusion similar to the one we reached in Association of Flight Attendants, albeit in a case arising in a different procedural posture. In that case, the union sued on the basis of an arbitral award entered in favor of a discharged employee by an RLA board of 17 In the case at bar, the IACP, in its first count for relief, asked the district court to rule that the arbitrator must determine the merits of the issue of whether Continental violated paragraph 6(B)--an issue which Continental contended, in advance of arbitration, was not previously raised in the grievance procedure. Thus the IACP requested a judicial determination of whether or not any applicable exhaustion requirement was met (and, if not, whether there was ground for excusing exhaustion). In doing so, IACP raised, in the RLA context, an argument which, in the NLRA context, the Supreme Court in John Wiley had occasion to reject. In John Wiley, the employer resisted arbitration of an employee's grievance on a number of grounds, one of which concerns us here: the employer's argument that the court should find arbitration precluded because the employee failed to exhaust the preliminary steps of the grievance procedure. 376 U.S. at 556 & n.11. Rejecting the employer's argument that it was for the court to decide the exhaustion issue (as well as the issue whether the grievance was timely instituted) the Court stated: Doubt whether grievance procedures or some part of them apply to a particular dispute, whether such _________________________________________________________________ adjustment. On appeal, the issue was whether the district court erred in ruling, in the first instance, that the employer had waived its right to oppose the full award because it failed to introduce the evidence that supported its opposition during arbitration. Id. at 158. The court held that the interpretation of the contractual provision relating to the manner in which grievances were to be presented to the arbitrators-- each written submission shall be limited to the material submitted by the parties to the dispute [in the earlier stages of the grievance proceeding]--was a procedural question for the arbitrators to decide. Id. at 158, 159. In doing so, the court pointed out that it is customary for collective bargaining agreements to require the exhaustion of the preliminary stages of the grievance procedure before resorting to arbitration . . . for why establish remedies if the parties are free to bypass them? Id. at 158. And in Larsen v. American Airlines, Inc., 313 F.2d 599 (2d Cir. 1963), the court noted [W]here a labor agreement provides for arbitration or other internal resolution of disputes, this court has held that questions of `procedural arbitrability' are for the arbitrator (citing Livingston v. John Wiley & Sons, Inc., 313 F.2d 52 (2d Cir. 1963), subsequently affirmed as John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964)). 18 procedures have been followed or excused, or whether the unexcused failure to follow them avoids the duty to arbitrate cannot ordinarily be answered without consideration of the merits of the dispute which is presented for arbitration. . . . . It would be a curious rule which required that intertwined issues of substance and procedure growing out of a single dispute and raising the same questions on the same facts had to be carved up between two different forums, one deciding after the other. Neither logic nor considerations of policy compel such a result. 376 U.S. at 557. We find this reasoning and result fully applicable to the case at bar. The second issue raised in IACP's complaint, whether the arbitrator must entertain the Martin grievance on behalf of all pilots, is likewise an issue for the arbitrator to decide. This issue is not only procedural in nature, but also requires considerable investigation into the meaning of the parties' agreements. The IACP in effect requests that the court certify the grievance as a class action before the arbitrator proceeds to hear the case, a proposed partyjoinder ruling that would be procedural as that term is normally understood. Furthermore, resolving this issue would involve an analysis of the interplay between the CRM's wage-restoration provision--paragraph 6(A)--and the me too provision--paragraph 6(B)--on the one hand, and the IGP's provisions governing the conduct of grievance proceedings on the other. If we were to assume that an arbitrator would find any applicable exhaustion requirement satisfied, then the arbitrator might also find within the language of the parties' agreements, as elucidated by the law of the shop, a basis for considering paragraph 6(B) claims to mandate or permit class-wide relief (that is to say, perhaps the me too clause is better understood as an us too clause). But such a determination requires a much more searching interpretation of the contract than the courts are permitted under the RLA. In this case, as in John Wiley, this procedural issue cannot be answered without consideration of the merits of the dispute which is presented for arbitration. 376 U.S. at 557. 19 The IACP seeks not a determination of the subject matter covered by the agreement to arbitrate, but a judicial determination of the parameters and scope of the award that the system board may permissibly enter, that is, (1) whether the me-too clause was properly invoked (and if not, whether the union can interpolate this claim at the arbitral stage), and (2) whether the arbitrator has authority to grant relief on a class-wide basis. In the latter regard, it bears noting that Section III.B of the IGP contains the following general grant of remedial authority (also under the subheading Jurisdiction): The System Board shall have the authority to issue rulings and make awards necessary to compensate a pilot for actual damages suffered as a result of any policy violations it finds to have occurred. The System Board's jurisdiction to award damages is strictly limited to actual, compensatory damages, and does not include jurisdiction or authority to award damages in the nature of a penalty, i.e., punitive damages. The Board shall have the authority, however, to order a party to comply with any provision(s) of the [agreement] or policies as necessary to remedy or correct violations, or to require specific enforcement of a provision of the [agreement] or policies. The interpretation of such remedial provisions is a task for which arbitrators conversant with industry practice are likely to be better suited than judges. Cf. Carey v. General Elec. Co., 315 F.2d 499, 508 (2d Cir. 1963)(We cannot divine now, nor do we deem it proper to predict, the precise form in which the arbitrator will frame his decree.), cert. denied, 377 U.S. 908 (1964). When a court is called on to determine whether aspects of a dispute arising out of a collective bargaining agreement are to be determined by an arbitrator or by the court, judicial restraint is an institutional imperative. Excessive judicial intrusion can undermine arbitral expertise and authority.9 Further, lengthy court proceedings can seriously _________________________________________________________________ 9. It is particularly underscored that the arbitral process in collective bargaining presupposes that the parties wanted the informed judgment of an arbitrator, precisely for the reason that judges cannot provide it. Concurring Opinion of Brennan, J., joined by Frankfurter and Harlan, JJ., in United Steelworkers of America v. American Manufacturing Company, 363 U.S. 564, 570 (1960). 20 undermine the capacity for prompt adjudication which is the hallmark of arbitration. As the Court cautioned in John Wiley, the opportunities for deliberate delay and the possibility of well-intentioned but no less serious delay created by separation of the procedural and substantive elements of a dispute are clear. . . . [S]uch delay may entirely eliminate the prospect of a speedy arbitrated settlement of the dispute, to the disadvantage of the parties (who, in addition, will have to bear increased costs) and contrary to the aims of national labor policy. 376 U.S. at 558.10 Accordingly, both of the matters raised by the IACP's complaint are questions of procedure for the arbitral tribunal to decide.