Peabody Holding Co. v. United Mine Workers of America, Int'l Union

• Decision Date: 11 January 2012
• Docket Number: No. 10–2134.,10–2134.
• Citation: 192 L.R.R.M. (BNA) 2517,665 F.3d 96,161 Lab.Cas. P 10438
• Parties: PEABODY HOLDING COMPANY, LLC; Black Beauty Coal Company, LLC, Plaintiffs–Appellants, v. UNITED MINE WORKERS OF AMERICA, INTERNATIONAL UNION, Defendant–Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

161 Lab.Cas. P 10,438

192 L.R.R.M. (BNA) 2517

665 F.3d 96

PEABODY HOLDING COMPANY, LLC; Black Beauty Coal Company, LLC, Plaintiffs–Appellants,

v.UNITED MINE WORKERS OF AMERICA, INTERNATIONAL UNION, Defendant–Appellee.

No. 10–2134.

United States Court of Appeals, Fourth Circuit.

Argued: Oct. 27, 2011.Decided: Jan. 11, 2012.

ARGUED: John R. Woodrum, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Washington, D.C., for Appellants. Deborah Stern, United Mine Workers of America, Triangle, Virginia, for Appellee. ON BRIEF: John R. Mooney, Mooney, Green, Saindon, Murphy & Welch, P.C., Washington, D.C., for Appellee.

Before NIEMEYER, WYNN, and DIAZ, Circuit Judges.

Affirmed by published opinion. Judge DIAZ wrote the opinion, in which Judge NIEMEYER and Judge WYNN joined.

OPINION

DIAZ, Circuit Judge:

Appellee United Mine Workers of America, International Union (“Union”) entered into a limited job-preference agreement with Peabody Coal Company (“Peabody Coal”). The agreement, which included an arbitration clause, also bound Peabody Coal's parent company and the parent company's subsidiaries. Positing that the parent company—Peabody Holding Company, LLC (“Peabody Holding”)—and a subsidiary—Black Beauty Coal Company (“Black Beauty”)—had shirked their obligations under the agreement, the Union submitted a grievance to the arbitrator. The arbitrator found that the matter was arbitrable but deferred a ruling on the merits.

Peabody Holding and Black Beauty (“Appellants”) responded to the arbitrator's ruling by seeking a declaratory judgment in federal court that the dispute is not arbitrable. The Union filed a counterclaim, requesting a declaratory judgment that Appellants must proceed before the arbitrator. The district court entered judgment in favor of the Union. It first ruled that the arbitrator properly determined the arbitrability of the dispute. In the alternative, the court concluded that the dispute was arbitrable, even if the arbitrator lacked authority to decide the arbitrability question. Appellants timely noted an appeal.

We affirm the judgment of the district court. As an initial matter, we find that the court, not the arbitrator, must decide whether the dispute is arbitrable. The parties' agreement lacks the requisite “clear and unmistakable” language evincing an intent to arbitrate arbitrability. Exercising our independent judgment on the arbitrability question, we conclude that Appellants have not rebutted the ordinary presumption in favor of arbitrability. Accordingly, the parties must proceed to arbitration.

I.

A.

From time to time, the Union negotiates a labor agreement with the Bituminous Coal Operators' Association, Inc. (“BCOA”). The BCOA is a bargaining group comprising a number of employers, each of whom is bound by the resulting agreements. Employers subject to these agreements are known as “signatory” companies.

In 1993, the Union sought to extend certain obligations to nonsignatory companies that were either parent companies of a signatory company or subsidiaries of such a parent company. Acceding to at least some of the Union's demands, signatory companies agreed to bind their nonsignatory parent companies and nonsignatory subsidiaries of those parent companies to a set of job-preference terms.

Peabody Coal, as a signatory company, executed a contract with the Union in 1993 that memorialized the job-preference agreement. The agreement was renewed in 1998, 2002, and 2007. The 2007 Memorandum of Understanding Regarding Job Opportunities (“Jobs Agreement”) forms the basis of this action. The Jobs Agreement bound, among others, Peabody Coal; Peabody Holding, the parent company of Peabody Coal; and Black Beauty, a subsidiary of Peabody Holding.

The Jobs Agreement aims to “provide job opportunities for work of a classified nature to certain laid-off and active miners.” J.A. 76. Specifically, it mandates that the nonsignatory companies offer a fixed percentage of jobs to miners who are either currently working for Peabody Coal or were laid off by Peabody Coal. The Jobs Agreement applies only to “existing, new, or newly acquired nonsignatory bituminous coal mining operations of the nonsignatory Companies,” and it “does not constitute a covenant running with the land and does not apply to the sale of nonsignatory coal lands, coal reserves or coal operations (either asset sales or stock sales) of the non-signatory Companies.” Id. 78. Moreover, nothing in the Jobs Agreement “encumber[s] or limit[s] in any way the rights of the nonsignatory Companies to sell, exchange, release, or otherwise similarly convey ... any of their nonsignatory coal lands, coal reserves or coal operations to third parties.” Id. The contract lists 11:59 p.m. on December 31, 2011 as the agreement's time of termination.

The Jobs Agreement contains an arbitration clause, which extends dispute-resolution authority to a Jobs Monitor:

In order to effectuate the implementation of these job opportunity provisions, the [Union] and the non-signatory Companies subject to this [Jobs Agreement] agree that the impartial Jobs Monitor ... shall serve as the monitor under this [Jobs Agreement]. The monitor shall review the job selections pursuant to these provisions and investigate any alleged violations herein. The monitor shall have the authority to request such information which may be reasonably necessary in order to secure compliance with the job selection provisions. The parties have the obligation to comply with such requests.

Id. 79.

“Any dispute alleging a breach of this [Jobs Agreement],” if not resolved by the parties, may be submitted to the Jobs Monitor for resolution. Id. The Jobs Monitor's resulting decisions are “final and binding on all parties.” Id. But the Jobs Agreement forbids the Jobs Monitor to “alter, amend, modify, add to or subtract from, or change in any way the provisions” of the contract. Id. The Jobs Agreement further prohibits non-signatory companies, the Union, and miners from using “any existing or future contractual grievance procedure ... to resolve any dispute that may arise concerning the interpretation or application” of the contract. Id.

B.

In a November 20, 2008 letter to Peabody Holding, the Union stated its expectation that Peabody Holding and its nonsignatory subsidiaries would continue to comply with the Jobs Agreement. The Union highlighted its concern with Black Beauty's mining operations in Lynnville, Indiana and the company's apparent unwillingness to extend job preferences in accordance with the Jobs Agreement.

Peabody Holding responded in a December 8 letter. It stated its belief that neither it nor any of its subsidiaries was bound by the Jobs Agreement any longer. Previously, on October 31, 2007, Peabody Energy Corporation (“Peabody Energy”), the owner of Peabody Holding and Black Beauty, divested itself of Peabody Coal, transferring the company to Patriot Coal Corporation (“Patriot”). Because Peabody Coal—the only signatory company once having a corporate relationship with Peabody Holding and Black Beauty—no longer shared any ties with Appellants, Peabody Holding contended that its obligations under the Jobs Agreement had been terminated. “An obligation to secure job opportunities for [Union] members under the [Jobs Agreement],” wrote Peabody Holding, “does not survive conveyance of the [Union]-represented subsidiary to a third party such as [Patriot].” J.A. 97. According to Peabody Holding, then, its responsibilities under the Jobs Agreement had extinguished on October 31, 2007, well before the Union had raised its current complaint.

Disputing Peabody Holding's assertions that it was no longer bound by the Jobs Agreement, the Union submitted its grievance to the Jobs Monitor. Both the Union and Peabody Holding provided the Jobs Monitor with materials supporting their respective arguments, though Peabody Holding maintained that it did not “accept or acquiesce to consideration by the Job [sic] Monitor of claims asserted under the [Jobs Agreement], as that instrument no longer applies” to the company, id. 121.

The Jobs Monitor concluded that he, as the arbitrator, must decide the arbitrability of the dispute under the Jobs Agreement. He ultimately decided that the dispute was arbitrable but deferred a final resolution on the merits until further argument could take place.

Appellants responded to the Jobs Monitor's decision by filing a declaratory action in the district court. They sought an order vacating the Jobs Monitor's decision, declaring that the Union's claim is not arbitrable, and declaring that they have no obligation to provide hiring preferences. The thrust of Appellants' argument was that the divestiture of Peabody Coal left them without a corporate relationship with any signatory company, thereby extinguishing their obligations under the Jobs Agreement. The Union, for its part, filed a counterclaim. It sought an order declaring that the Jobs Monitor's decision is enforceable and directing Appellants to comply with the decision and proceed to a hearing on the merits before the Jobs Monitor.

After the parties filed competing motions for summary judgment, the district court entered judgment in favor of the Union. It first concluded that the Jobs Monitor, not the court, must decide whether this dispute is arbitrable. Construing the Supreme Court's recent decision in Rent–A–Center, West, Inc. v. Jackson, ––– U.S. ––––, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), the court held that the arbitrator decides arbitrability where, as here, the defendant challenges the enforceability of the agreement as a whole.

In the alternative, the court held that the dispute was arbitrable. Even if the court, not the arbitrator, must resolve the arbitrability question, the district court still found that the Union prevailed. The court emphasized the purportedly broad language of the arbitration clause and noted that Appellants' arguments impermissibly implicated the merits question at the...