Int'l Bhd. of Elec. Workers v. Pub. Serv. Co. of Colo.

• Decision Date: 09 December 2014
• Docket Number: No. 13–1207.,13–1207.
• Citation: 773 F.3d 1100
• Parties: INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL # 111, Plaintiff–Appellant, and Domingo N. Moreno; David L. Williams; Guy E. Forti; Gerald E. King; Vicki Williams, Plaintiffs, v. PUBLIC SERVICE COMPANY OF COLORADO; Xcel Energy Inc. Employee Welfare Benefit Plan, a/k/a the Public Service Company and Participating Subsidiary Companies Retirees' Medical Managed Care/Medicare Coordinated Plan, Defendants–Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

773 F.3d 1100

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL # 111, Plaintiff–Appellant,andDomingo N. Moreno; David L. Williams; Guy E. Forti; Gerald E. King; Vicki Williams, Plaintiffs,

v.PUBLIC SERVICE COMPANY OF COLORADO; Xcel Energy Inc. Employee Welfare Benefit Plan, a/k/a the Public Service Company and Participating Subsidiary Companies Retirees' Medical Managed Care/Medicare Coordinated Plan, Defendants–Appellees.

No. 13–1207.

United States Court of Appeals, Tenth Circuit.

Dec. 9, 2014.

Ellen M. Kelman of Buescher, Kelman & Perera, P.C., Denver, CO, (Thomas B. Buescher and Andrew H. Turner of Buescher, Kelman & Perera, P.C., Denver, CO, with her on the briefs) for Plaintiff–Appellant.

Charles C. Jackson of Morgan, Lewis & Bockius LLP, Chicago, IL, (Christopher J. Boran of Morgan, Lewis & Bockius LLP, Chicago, IL; Lisa Hogan and William C. Berger of Brownstein Hyatt Farber Schreck, LLP, Denver, CO; Ronald E. Manthey and Ellen L. Perlioni of Morgan, Lewis & Bockius LLP, Dallas, TX; with him on the briefs) for Defendants–Appellees.

Before HARTZ, EBEL, and PHILLIPS, Circuit Judges.

PHILLIPS, Circuit Judge.

In 2009, the Public Service Company of Colorado entered into a collective-bargaining agreement with the International Brotherhood of Electrical Workers Local # 111, a union that represents some of the Company's employees. About two years later, the Company unilaterally modified its retired workers' healthcare benefits by increasing their copayment obligations for prescription drugs. The Union claimed that the Company had violated the collective-bargaining agreement by doing so and demanded arbitration. When the Company refused to arbitrate, the Union sued and asked the district court to stay the case and compel arbitration. When the district court denied that motion, the Union filed an interlocutory appeal.

This appeal presents two questions sharing a common theme: where does this case belong? The first question is whether it belongs in front of us—that is, whether appellate jurisdiction exists to hear it. We conclude that appellate jurisdiction does indeed exist under the Federal Arbitration Act. The second question is whether this case belongs in a courtroom or a conference room—that is, whether the district court should have sent the case to arbitration. We conclude that the district court properly kept the case in the courtroom because the collective-bargaining agreement's arbitration provision is not susceptible to an interpretation that covers disputes over retired workers' healthcare benefits. Thus, we affirm the district court's order and remand the case to the district court for further proceedings.¹

FACTS

The Company and the Union go way back. They entered into their first collective-bargaining agreement in 1946, and they have entered into a new one every few years ever since.

In 1990, the parties signed a letter of understanding that sowed the seed for the present dispute. Among other things, the letter amended Article 11, § 3 of the 1989–1992 collective-bargaining agreement to address healthcare plans for retiring employees. Those plans touched on several topics, including retirees' copayment obligations for prescription drugs—the subject of the dispute here.

In the operative 2009–2014 collective-bargaining agreement (the “Agreement”), Article 11, § 3 references a separate plan providing for retired workers' healthcare benefits:

For the term of this Agreement, health care benefits for employees and dependents will be provided according to the terms of the Public Service Managed Health Care Plan. Retirees' and future retirees' and their dependents' health care benefits will be provided according to the terms of the Retirees' Medical Managed Care/Medicare Coordinated Plan (M/M). Future plan changes in the Managed Health Care Plan will also be reflected in the retiree plan for individuals under age 65. These changes do not affect the medical coverage of retirees with Medical plans other than (M/M).

App. vol. 3, at 425.

We pause here to describe some other provisions in the Agreement. Article 21 outlines the grievance procedure. It says that an aggrieved employee may attempt to resolve an alleged grievance either informally or through Article 21's formal grievance process—a process intended to provide “prompt, equitable and common sense adjustment of alleged grievances relating to hours, wages or conditions of employment as covered by this Agreement.” Id. at 570.

The grievance procedure consists of three steps. At step one, a Union representative discusses an employee's alleged grievance with the employee's immediate supervisor or department head. If the grievance remains unresolved after step one, it moves to step two, where a Union committee and a Company committee attempt to resolve it. Failure at step two leads to step three, where the Union's general grievance committee and a higher-ranking Company committee attempt to resolve the dispute. If the employee's grievance remains unresolved after step three, the Union may notify the Company of its desire for arbitration.

Article 22 outlines the arbitration procedure. It says that when a dispute “relating to hours, wages, or conditions of employment, as covered by this Agreement” remains unresolved after the three-step grievance procedure, “then, and in that event, the Company and Union shall [go to arbitration].” Id. at 573.

In fall 2011, the Union invoked these procedures after the Company announced an increase in retired workers' copayment obligations for prescription drugs. A few weeks after the announcement, an employee, Robert Estrada, and the Union filed a step-one grievance on behalf of both retired workers and current employees. Estrada and the Union claimed that the announced change violated Article 11, § 3 of the Agreement.

The Company denied the grievance at step one. It reasoned that because the change affected only retired workers, the dispute didn't come within the scope of the grievance and arbitration provisions, which cover only disputes over employees' hours, wages, or conditions of employment. At step two, the Company again denied the grievance, reasserting its position that the grievance and arbitration provisions didn't apply because the dispute related to retired workers' healthcare benefits, not employees' hours, wages, or conditions of employment.The Company denied the grievance at step three as well.

Having exhausted the grievance procedure, the Union sent the Company a letter demanding arbitration. The Company refused to arbitrate that part of the grievance brought on behalf of retired workers, but it expressed its willingness to arbitrate to the extent the Union was asserting a contractual violation regarding the retirement benefits of its current employees. The Union rejected the Company's offer to arbitrate on that limited basis; it wanted to arbitrate for retired workers as well.

As a result, the Union and several retired workers sued the Company in the United States District Court for the District of Colorado. The named individual plaintiffs are all retired workers who receive healthcare benefits under the MM Plan. The Union brought its first claim under 29 U.S.C. § 185(a), a provision of the Labor Management Relations Act, alleging that the Company had violated the Agreement by refusing to arbitrate. For relief on that claim, the Union asked the district court to stay the case and compel arbitration.

A few months later, the Union asked for judgment on the pleadings on its first claim. It titled the motion, “Plaintiffs' Motion for Judgment on the Pleadings and on First Claim for Relief, and Motion to Stay Proceedings Pending Arbitration.” App. vol. 1, at 49. The motion asked the district court only to stay the case and compel arbitration. Not surprisingly, the Company opposed the motion, arguing that it had never agreed to arbitrate disputes over retired workers' healthcare benefits.

In the end, the district court denied the Union's motion, concluding that forceful evidence showed that the Company and the Union had not agreed to arbitrate disputes over retired workers' healthcare benefits. In short, the district court concluded that the dispute was not arbitrable—a term that refers to “whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.” BG Grp. PLC v. Republic of Argentina, ––– U.S. ––––, 134 S.Ct. 1198, 1206, 188 L.Ed.2d 220 (2014).

The Union timely filed this interlocutory appeal. Unsure about our appellate jurisdiction, we ordered the parties to brief the question. Having received that briefing, we'll discuss our appellate jurisdiction first. We'll then discuss the arbitrability issue.

DISCUSSION

1. Appellate Jurisdiction

Generally, under the Federal Arbitration Act (“FAA”), if a party files a motion unmistakably seeking only an order staying the action and compelling arbitration, and the district court denies the motion, the party may take an interlocutory appeal. Here, the Union did just that: it asked for an order staying the case and compelling arbitration, which the district court denied. We must decide whether appellate jurisdiction exists to hear the Union's interlocutory appeal from that order. We conclude that it does.

For the most part, we may review only the final decisions of a district court. Miller v. Basic Research, LLC, 750 F.3d 1173, 1175 (10th Cir.2014) (citing 28 U.S.C. § 1291). The FAA, however, contains certain statutory exceptions to that general rule, permitting interlocutory appeals from some district-court orders. Conrad v. Phone Directories Co., 585 F.3d 1376, 1380 (10th Cir.2009). As relevant here, the FAA allows an interlocutory appeal from an order denying a motion to stay under 9 U.S.C. § 3. See9 U.S.C. § 16(a)(1)(A). It also allows an interlocutoryappeal from an order denying a motion to compel arbitration under 9 U.S.C. § 4. See id. § 16(a)(1)(B).

We gave these provisions an interpretive gloss in Co...