Litton Financial Printing Division Division of Litton Business Systems Inc. v. National Labor Relations Board

Syllabus Among other things, the collective-bargaining agreement (Agreement) between petitioner Litton and the Union representing the production employees at Litton's printing plant broadly required that all differences as to contract construction or violations be determined by arbitration, specified that grievances that could not be resolved under a two-step grievance procedure should be submitted for binding arbitration, and provided that, in case of layoffs, length of continuous service would be the determining factor "if other things such as aptitude and ability [were] equal." The Agreement expired in October 1979. A new agreement had not been negotiated when, in August and September 1980 and without any notice to the Union, Litton laid off 10 of the workers at its plant, including 6 of the most senior employees, pursuant to its decision to close down its cold-type printing operation. The Union filed grievances on behalf of the laidoff employees, claiming a violation of the Agreement, but Litton refused to submit to the contractual grievance and arbitration procedure, to negotiate over its layoff decision, or to arbitrate under any circumstances. Based on its precedents dealing with unilateral postexpiration abandonment of contractual grievance procedures and postexpiration arbitrability, the National Labor Relations Board (Board) held that Litton's actions violated § 8(a)(1) and (5) of the National Labor Relations Act (NLRA). However, although it ordered Litton, inter alia, to process the grievances through the two-step grievance procedure and to bargain with the Union over the layoffs, the Board refused to order arbitration of the particular layoff disputes, ruling that they did not "arise under" the expired contract as required by its decision in Indiana & Michigan Electric Co., 284 N.L.R.B. 53, and its interpretation of this Court's decision in Nolde Bros., Inc. v. Bakery Workers, 430 U.S. 243, 97 S.Ct. 1067, 51 L.Ed.2d 300. The Court of Appeals enforced the Board's order, with the exception of that portion holding the layoff grievance not arbitrable, ruling that the right to lay off in seniority order, if other things such as aptitude and ability were equal, did arise under the Agreement. Held: The layoff dispute was not arbitrable. Pp. 198-210. (a) The unilateral change doctrine of NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 whereby an employer violates the NLRA if, without bargaining to impasse, it effects a unilateral change of an existing term or condition of employment-extends to cases in which an existing agreement has expired and negotiations on a new one have yet to be completed. See, e.g., Laborers Health and Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S. 539, 544, n. 6, 108 S.Ct. 830, 833, n. 6, 98 L.Ed.2d 936. However, since Hilton-Davis Chemical Co., 185 N.L.R.B. 241, the Board has held that an arbitration clause does not, by operation of the NLRA as interpreted in Katz, continue in effect after expiration of a collective-bargaining agreement. Pp. 198-200. (b) This Court will not extend the unilateral change doctrine to impose a statutory duty to arbitrate postexpiration disputes. The Board's Hilton-Davis Chemical Co. rule is both rational and consistent with the NLRA, under which arbitration is a matter of consent and will not be imposed beyond the scope of the parties' agreement. See, e.g., Gateway Coal Co. v. Mine Workers, 414 U.S. 368, 374, 94 S.Ct. 629, 635, 38 L.Ed.2d 583. The Board's rule is therefore entitled to deference. If parties who favor labor arbitration during a contract's term also desire it to resolve postexpiration disputes, they can draft their agreement to so indicate, to eliminate any hiatus between expiration of the old and execution of the new agreement, or to remain in effect until they bargain to impasse. Pp. 200-201. (c) The Board's decision not to order arbitration of the layoff grievances in this case is not entitled to substantial deference. Although the Board has considerable authority to structure its remedial orders to effectuate the NLRA's purposes and to order the relief it deems appropriate, its decision here is not based on statutory considerations, but rests upon its interpretation of the Agreement, applying Nolde Bros. and the federal common law of collective bargaining. Arbitrators and courts, rather than the Board, are the principal sources of contract interpretation under § 301 of the Labor Management Relations Act. Deferring to the Board in its interpretation of contracts would risk the development of conflicting principles. Pp. 201-203. (d) Nevertheless, as Nolde Bros. recognized, a postexpiration duty to arbitrate a dispute may arise from the express or implied terms of the expired agreement itself. Holding that the extensive obligation to arbitrate under the contract there at issue was not consistent with an interpretation that would eliminate all duty to arbitrate upon expiration, Nolde Bros., supra, 430 U.S., at 255, 97 S.Ct., at 1074, found a presumption in favor of postexpiration arbitration of disputes unless negated expressly or by clear implication, so long as such disputes arose out of the relation governed by contract. Pp. 203-204. (e) The Agreement's unlimited arbitration clause places it within the precise rational of Nolde Bros., such that other Agreement provisions cannot rebut the Nolde Bros. presumption. P. 205. (f) However, Nolde Bros. does not announce a broad rule that post-expiration grievances concerning terms and conditions of employment remain arbitrable, but applies only where a dispute has its real source in the contract. Absent an explicit agreement that certain benefits continue past expiration, a postexpiration grievance can be said to arise under the contract only where it involves facts and occurrences that arise before expiration, where a postexpiration action infringes a right that accrued or vested under the agreement, or where, under the normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement. And, as Nolde Bros. found, structural provisions relating to remedies and dispute resolution-e.g., an arbitration provision-may in some cases survive in order to enforce duties under the contract. It is presumed as a matter of contract interpretation that the parties did not intend a pivotal dispute resolution provision to terminate for all purposes upon the Agreement's expiration. Pp. 205-208. (g) Application of the foregoing principles reveals that the layoff dispute at issue does not arise under the Agreement. Since the layoffs took place almost one year after the Agreement expired, the grievances are arbitrable only if they involve rights which accrued or vested under the Agreement or carried over after its expiration. The layoff provision here does not satisfy these requirements and, unlike the severance pay provision at issue in Nolde Bros., cannot be construed as a grant of deferred compensation for time already worked. The order of layoffs under the Agreement was to be determined primarily with reference to "other [factors] such as aptitude and ability," which do not remain constant, but either improve or atrophy over time, and which vary in importance with the requirements of the employer's business at any given moment. Thus, any arbitration proceeding would of necessity focus upon whether such factors were equal as of the date of the layoff decision and the decision to close down the cold-type operation, and an intent to freeze any particular order of layoff or vest any contractual right as of the Agreement's expiration cannot be inferred. Pp. 208-210. 893 F.2d 1128 (CA9), reversed in part and remanded. KENNEDY, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, O'CONNOR, and SOUTER, JJ., joined. MARSHALL, J., filed a dissenting opinion, in which BLACKMUN and SCALIA, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BLACKMUN and SCALIA, JJ., joined. Mathias J. Diederich, Torrance, Cal., for petitioner. Lawrence G. Wallace, Washington, D.C., for respondent N.L.R.B. in support of petitioner. David A. Rosenfeld, San Francisco, Cal., for respondent Printing Specialties. Justice KENNEDY delivered the opinion of the Court.