Houston Ref., L.P. v. United Steel

Decision Date25 August 2014
Docket NumberNo. 13-20384,13-20384
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

HOUSTON REFINING, L.P., Plaintiff - Appellant
UNITED STEEL WORKERS LOCAL UNION NO. 13-227, Defendants - Appellees

No. 13-20384


August 25, 2014

Appeal from the United States District Court for the Southern District of Texas

Before JOLLY, GARZA, and HIGGINSON, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

After filing for bankruptcy, Houston Refining, L.P. ("Houston Refining"), suspended matching contributions to its employees' 401(k) plans. The company later agreed to enter into arbitration regarding the suspension with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, acting on behalf of itself and its local unions (collectively "Union"). After the arbitrator found that the suspension violated the parties' collective bargaining agreement, Houston Refining brought an action in the district court to vacate the arbitral award, and the Union counterclaimed to enforce the award. Both parties moved for summary

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judgment. The district court denied the company's motion, granted the Union's motion in part, and remanded to the arbitrator for clarification of the remedy. Houston Refining timely appealed. We reverse and remand.


Houston Refining operates a refinery on the east side of Houston. Many of its employees are members of the Union. In 2006, the Union and Houston Refining executed a collective bargaining agreement ("2006 CBA"). Ahead of the 2006 CBA's scheduled expiration on January 31, 2009, the parties began negotiating a successor contract. When the negotiation stalled, they agreed to a twenty-four-hour rolling extension of the 2006 CBA ("extension agreement"), which could be cancelled with twenty-four hours' notice.

Article 30 of the 2006 CBA establishes grievance and arbitration procedures, while Article 40 references various employee benefits. Article 30 defines a "grievance" as "any difference regarding wages, hours or working conditions between the parties . . . covered by this Agreement," 2006 CBA, art. 30, ¶ 1, and sets forth a grievance procedure that culminates in arbitration, id. art. 30, ¶ 7. Article 40 provides that employees are eligible to participate in various benefit plans. Among these plans is the "401K and Savings Plan for Represented Employees," id. art. 40, pt. III, ¶ 1(e) ("401(k) Plan"), administered by the Benefits Administrative Committee. Article 40 further provides that "the Company will provide advance notice of proposed changes to the benefit plans," after which the Union will have "[a] reasonable time period . . . to elect inclusion in or exclusion from the amended benefits plan." Id. art. 40, pt. III, ¶ 5.

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According to Houston Refining negotiators, the Union negotiator informed them that the extension agreement would expire upon ratification of a successor CBA. In February 2009, the parties' negotiators reached a tentative agreement on a new CBA ("2009 CBA"), which the Union's local membership ratified by majority vote days later. However, the Union subsequently refused to sign the 2009 CBA after a disagreement arose over certain terms. The parties now agree that the 2009 CBA never took effect.1

In March 2009, having filed for Chapter 11 bankruptcy in the Southern District of New York, Houston Refining informed the Union that it would suspend its matching contributions to employees' 401(k) plans.2 Although the Union representative did not mention an exclusion from the plan amendment, he responded, "Well you know I'm going to have to sue you." Houston Refining proceeded to eliminate the matching contributions by means of an amendment to the 401(k) Plan.

After the suspension came into effect, the Union filed a grievance with Houston Refining, demanding that the company resume matching contributions and compensate employees for any unpaid contributions. The text of the grievance quoted from the 2009 CBA, rather than the 2006 CBA. Houston Refining refused to process the grievance, claiming that the

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suspension was not a grievable issue. Months later, the Union commenced an adversary proceeding in the bankruptcy court to compel Houston Refining to arbitrate the grievance under the 2009 CBA. The complaint was amended to allege that, in the alternative, the 2006 CBA mandated arbitration.

The parties then concluded the Settlement Agreement to submit the grievance to arbitration, which the bankruptcy court approved. The Settlement Agreement provided in relevant part:

1. The parties agree to proceed to arbitration with the grievances [regarding 401(k) matching contributions] expeditiously and in compliance with the arbitration procedures . . . in the applicable collective bargaining agreements.
[ . . . ]
4. At arbitration, the parties shall reserve all rights to present any and all arguments and advance any and all defenses to them including, without limitation, arguments concerning whether or not an applicable collective bargaining agreement was in effect at the time that a particular grievance arose.

Settlement Agreement, ¶¶ 1, 4. Pursuant to the terms of the Settlement Agreement, the parties entered into arbitration.

Following a two-day hearing, Arbitrator Charles G. Griffin rendered an award in favor of the Union. The arbitrator found that the 2006 CBA, by way of the extension agreement, was in effect when the Union filed its grievance and that the grievance was an arbitrable dispute over "wages" under that CBA's arbitration clause because the matching contributions "had monetary value." He also found immaterial the fact that the grievance quoted from the 2009 CBA. Lastly, he concluded that Houston Refining violated Article 40 of

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the 2006 CBA by unilaterally amending the 401(k) Plan, because the Union had effectively elected exclusion from the amendment when it expressed intention to sue over the suspension.

Houston Refining filed suit in the district court seeking to vacate the arbitral award under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and the Union counterclaimed to enforce the award. Both parties moved for summary judgment. The district court found that because the Settlement Agreement evinced the parties' clear agreement to have the arbitrator decide questions of arbitrability, its review of this issue would be deferential. The district court then upheld the arbitrability determinations—that the 2006 CBA existed when the grievance was filed, and that the arbitrator acted within his authority under that CBA's arbitration clause. On the merits, the district court upheld the arbitrator's finding that Houston Refining violated Article 40 of the 2006 CBA, but concluded that the arbitral award's remedy was ambiguous in certain respects. The district court accordingly denied the company's motion and granted the Union's motion in part,3 but remanded to the arbitrator for clarification of the award's monetary value, among other issues. Houston Refining timely appealed.


Questions of subject-matter jurisdiction are reviewed de novo. Wagner v. United States, 545 F.3d 298, 300 (5th Cir. 2008). "Subject-matter jurisdiction cannot be forfeited or waived and should be considered when fairly in doubt."

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Ashcroft v. Iqbal, 556 U.S. 662, 671 (2009); see also Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998).

This court reviews a district court's grant of summary judgment de novo. Resolution Performance Prods., LLC v. Paper Allied Indus. Chem. & Energy Workers Int'l Union, Local 4-1201, 480 F.3d 760, 764 (5th Cir. 2007).


Houston Refining first contends that the existence of an applicable CBA is necessary for subject-matter jurisdiction under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185. The company further claims that courts can assume jurisdiction to address the merits when factual issues are common to both, and that in this case, the CBA's existence is precisely such a common factual issue—without an existing CBA, the Union's grievance would not be arbitrable.4 Thus, in Houston Refining's view, we must remand to allow the district court to determine whether a CBA existed, and if it decides in the negative, it could vacate the arbitral award on the grounds that the parties never agreed to arbitrate the dispute.


The first question is whether, under section 301(a), the existence of a labor contract is a requirement for federal subject-matter jurisdiction, as Houston Refining submits. Relatedly, we ask if anything less would be sufficient to support such jurisdiction. Section 301(a) provides:

Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this

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chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.

29 U.S.C. § 185(a). If the existence of a contract were jurisdictional, then because the district court's subject-matter...

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