Majority, Concurring, And Dissenting Opinions.
Judge Bucklo, sitting by designation, describes the appeal of a labor arbitration award as "surprisingly nuanced", an "analytical puzzle" and "inscrutable." Judge Owens, concurring, believes, "most importantly, the extremely convoluted procedural posture of this case is so odd that our holding today likely will be limited to these very idiosyncratic facts." And Judge Friedland, dissenting, isn't having it. Let's try to unpack this case. Local Joint Executive Board of Las Vegas, et al. v. Mirage Casino-Hotel, Inc., No. 16-16754 (9th Cir. 12/13/18).
The Union submitted a grievance with the Mirage Casino-Hotel to arbitration. The Union had agreed by way of a Collective Bargaining Agreement (CBA), Memorandum of Agreement, and side letter, that Mirage could subcontract its operations, and the Union culinary workers could work under the subcontracting arrangements for the subcontractor, with Mirage maintaining "full control of the terms and conditions of employment." After the subcontractor, BB King's, a restaurant concession, went bankrupt, the Union members filed a grievance to obtain vested vacation pay and other accrued benefits from Mirage. Because the scope of the arbitration provision covered Union grievances, the Union submitted the grievance to arbitration.
Here's where it gets dicey. A merits issue was whether the Union members were employees, and Mirage, arguing that they were not employees of Mirage, objected that the dispute was not arbitrable, because Mirage was not the proper party for arbitrating the grievance. The arbitrator agreed, apparently concluding that the Union's remedy to recover was against BB King's, and determined that the dispute was not arbitrable, a result that was confirmed by the district court.
Judge Bucklo explained that the arbitrator, and the district court, confused the merits issue with arbitrability. While everyone seemed to agree that the merits issue was within the scope of the arbitration provision, and to be decided by the arbitrator, the threshold issue of "who should decide who should decide" was not "clearly and unmistakably" submitted to the arbitrator, who had decided that the matter was not arbitrable. Therefore, the court, not the arbitrator, should decide whether the matter was arbitrable, and deciding that the merits were arbitrable, the court should vacate the award and send the parties back to arbitration -- which is what the 9th Circuit has now done.
Judge Owens joined the majority "because I believe it is more consistent with current controlling law." But he thinks "the dissent reaches the more equitable result and, if the slate were blank, I would join it."
And Judge Friedland dissents, explaining that, under the facts here, "the 'clear and unmistakable' test for determining whether a party resisting arbitration has nevertheless consented to having the arbitrator decide substantive arbitrability" should not apply "when determining whether a party that initiates arbitration has so consented." Here, the Union submitted the matter to arbitration, and therefore should be stuck with the result.
COMMENT: Yes, the Union submitted the grievance to arbitration, but obviously the disagreement among the judges is about whether the Union submitted the threshold question of "who should decide who should decide" arbitrability to the arbitrator by submitting the grievance to arbitration and participating in the arbitration.
If the matter is now returned to the arbitrator, and the arbitrator focuses on whether the CBA and other agreements impose on Mirage an obligation to provide the benefits that BB King's should have provided, then I suppose the arbitrator might reach a result in favor of the Union. But this could instead end up as an exercise, albeit quite an interesting one, in futility, if the arbitrator, upon concluding earlier that Mirage was not the employer, also believed that BB King's was the employer, and that Mirage was not the guarantor of the employer's obligations.
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