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

Justice MARSHALL, with whom Justice BLACKMUN and Justice SCALIA join, dissenting.

Although I agree with Justice STEVENS' dissent, post, I write separately to emphasize the majority's mischaracterization of our decision in Nolde Bros., Inc. v. Bakery Workers, 430 U.S. 243, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977). Nolde states a broad, rebuttable presumption of arbitrability which applies to all post-termination disputes arising under the expired agreement; it leaves the merits of the underlying dispute to be determined by the arbitrator. Today the majority turns Nolde on its head, announcing a rule that requires courts to reach the merits of the underlying posttermination dispute in order to determine whether it should be submitted to arbitration. This result is not only unfaithful to precedent but also it is inconsistent with sound labor-law policy.

* The dispute in Nolde concerned whether employees terminated after the expiration of a collective-bargaining agreement were entitled to severance pay under a severance-pay clause of the expired agreement. See id., at 248-249, 97 S.Ct., at 1070-1071. The Court stated that the severance-pay dispute "hinge[d] on the interpretation [of] the contract clause providing for severance pay" but that "the merits of the underlying claim" were not implicated "in determining the arbitrability of the dispute." Id., at 249, 97 S.Ct., at 1071. To determine whether the dispute was arbitrable, the Court looked solely to the expired agreement's arbitration clause. It found the severance-pay dispute arbitrable because "[t]he parties agreed to resolve all disputes by resort to the mandatory grievance-arbitration machinery" and "nothing in the arbitration clause &hellip; expressly exclude[d] from its operation a dispute which arises under the contract, but which is based on events that occur after its termination." Id., at 252-253, 97 S.Ct., at 1072-1073. Thus, under Nolde, the key questions for determining arbitrability are whether (1) the dispute is "based on &hellip; differing perceptions of a provision of the expired collective-bargaining agreement" or otherwise "arises under that contract," id., at 249, 97 S.Ct., at 1071 (emphasis omitted), and, if so, (2) whether the "presumptions favoring" arbitrability have been "negated expressly or by clear implication," id., at 255, 97 S.Ct., at 1074.

The majority grossly distorts Nolde's test for arbitrability by transforming the first requirement that posttermination disputes "arise under" the expired contract. The Nolde Court defined "arises under" by reference to the allegations in the grievance. In other words, a dispute "arises under" the agreement where "the resolution of [the Union's] claim hinges on the interpretation ultimately given the contract." Id., at 249, 97 S.Ct., at 1071.

By contrast, the majority today holds that a postexpiration grievance can be said to "arise under" the agreement only where the court satisfies itself (1) that the challenged action "infringes a right that accrued or vested under the agreement," or (2) that "under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement." Ante, at 206. Because they involve inquiry into the substantive effect of the terms of the agreement, these determinations require passing upon the merits of the underlying dispute. Yet the Nolde Court expressly stated that "in determining the arbitrability of the dispute, the merits of the underlying claim &hellip; are not before us." 430 U.S., at 249, 97 S.Ct. at 1071.

Since the proper question under Nolde is whether the dispute in this case "arises under" the agreement in the sense that it is "based on &hellip; differing perceptions of a provision in the expired collective bargaining agreement," ibid., I have no difficulty concluding that this test is met here. The Union's grievance "claim[ed] a violation of the Agreement," ante, at 194, by petitioner's layoffs. And, as even the majority concedes, "[t]he Agreement's unlimited arbitration clause" encompasses any dispute that "arises under the contract here in question." Ante, at 205. Thus, the dispute is arbitrable because the "presumptions favoring" arbitrability have not been "negated expressly or by clear implication." 430 U.S., at 255, 97 S.Ct., at 1074.

In fashioning its more rigorous standard for arbitrability, the majority erroneously suggests that if Nolde rendered arbitrable all post-expiration disputes about an expired agreement's substantive provisions, it would have the effect of extending the life of the entire contract beyond the date of expiration. See ante, at 206. The defect in this view is that it equates asking an arbitrator to determine whether a particular contractual provision creates rights that survive expiration with a decision that the provision does create such postexpiration rights. The majority evidently fears that arbitrators cannot be trusted to decide the issue correctly. Yet arbitrators typically have more expertise than courts in construing collective-bargaining agreements, and our arbitration jurisprudence makes clear that courts must rely on arbitral judgments where the parties have agreed to do so. Thus in Nolde, we carefully avoided expressing any view as to whether the substantive provisions of the expired agreement had any posttermination effect precisely because the parties had expressed their preference for an arbitral, rather than a judicial interpretation. See Nolde, supra, at 249, 253, 97 S.Ct., at 1070-71, 1073.

Consequently, the issue here, as it was in Nolde, is not whether a substantive provision of the expired collective-bargaining agreement (in this case the provision covering layoffs) remains enforceable but whether the expired agreement reflects the parties' intent to arbitrate the Union's contention that this provision remains enforceable. The majority itself acknowledges a general rule of contract construction by which arbitration or other dispute resolution provisions may survive the termination of a contract. Ante, at 208, and n. 3. That is all Nolde stands for.

In addition to being without legal foundation, the majority's displacement of Nolde's simple, interpretive presumption with a case-by-case test is unsound from a policy standpoint. Ironically, whereas parties that have agreed to a broad arbitration clause have expressed a preference for "a prompt and inexpensive resolution of their disputes by an expert tribunal," Nolde, supra, at 254, 97 S.Ct., at 1073, the majority invites protracted litigation about what rights may "accrue" or "vest" under the contract-litigation aimed solely at determining whether the dispute will be resolved by arbitration. More fundamentally, because the arbitrator is better equipped than are judges to make the often difficult determination of the post-termination effect of an expired contract's substantive provisions, the majority's assignment of this task to courts increases the likelihood of error. See id., at 253, 97 S.Ct., at 1073 (" 'The ablest judge cannot be expected to bring the same experience and competence to bear upon the determination of a grievance, because he cannot be similarly informed,' " quoting Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960)).

The majority's resolution of the merits of the contract dispute here reinforces my conviction that arbitrators should be the preferred resolvers of such questions. The Union based its grievance on the following provision of the contract: "[I]n case of layoffs, lengths of continuous service will be the determining factor if other things such as aptitude and ability are equal." App. 30. The Union's contention that postexpiration layoffs violated this provision rests on the assertion that this contractual provision created rights that survive termination of the contract. The majority rejects this assertion on the ground that "factors such as aptitude and ability do not remain constant, but change over time" and thus "cannot be said to vest or accrue." Ante, at 210. This conclusion strikes me as utterly implausible.

As the majority appears to concede, ante, at 209-210, and as the Board has held, an unconditional seniority provision can confer a seniority right that is "capable of accruing or vesting to some degree during the life of the contract." United Chrome Products, Inc., 288 N.L.R.B. 1176, 1177 (1988). Obviously, an employee's relative seniority, much like his relative "aptitude and ability," will "change over time." That is, a given member of a bargaining unit who is, for example, 12th in seniority when his collective-bargaining agreement expires may be 5th in seniority at a particular time thereafter, depending upon the number of more senior employees who have departed from the workforce. Or an employee could lose his seniority altogether where specified conditions for such loss have been met. See, e.g., n. 3, infra. The fact that, despite the volatility in individual rank, the seniority guarantee might nevertheless vest under the contract means that what vests is not the employee's seniority rank or his right to job security but rather the right to have the standard of seniority applied to layoffs.

In my view, a provision granting only "qualified" seniority may vest in the same way. (Here, the provision guaranteeing seniority is "qualified" by the requirement that the employee claiming seniority possess "aptitude and ability" that is equal to that of less senior employees who seek to avoid being laid off.) As with an employee's seniority rank, a given worker's "aptitude and ability" relative to other employees may change over time, yet the right to have layoffs made according to the standard of qualified seniority could vest under the contract. Under this view, a laid off employee would have the opportunity to prove to the arbitrator that he should not have been laid off under the terms of the contract because other factors such as aptitude and ability were equal at the time he was laid off.

Indeed, I think this is the more plausible reading of the parties' intent in this case, particularly given related contract provisions involving loss of seniority. As the Board has previously held, a contract's

"failure to specify expiration as one of the ways in which     seniority rights could be lost indicates that the parties      intended that seniority rights remain enforceable after      contract termination.  Therefore, the grievance over [the      employer's] refusal to recall employees by plantwide      seniority &hellip; involves a right worked for and accumulated      during the term of the contract and intended by the parties      to survive contract expiration." Uppco, Inc., 288 N.L.R.B.     937, 940 (1988).

In the present case, the expired agreement enumerates six specific ways an employee could lose seniority, and these do not include termination of the agreement. See App. 31. Thus, the qualified seniority at issue in this case would seem as likely to accrue as did the unconditional seniority in Uppco.

In any event, the conclusion that the contracting parties in this case did not intend qualified seniority rights to vest is sufficiently implausible as to raise serious questions about the majority's assignment of the task of deciding this interpretive issue to itself. Had the majority left this issue to the arbitrator to decide, as Nolde requires, the arbitrator would have had the benefit of an evidentiary hearing on the contractual question and the opportunity to explore petitioner's actual postexpiration seniority practices. The contractual text, alone, may not be the only relevant information in determining the parties' intent. Because arbitrators are better equipped to decide such issues and are more familiar with the " 'common law of the shop,' " Nolde, supra, 430 U.S., at 253, 97 S.Ct., at 1073, quoting ''Warrior & Gulf Nav. Co., supra,'' 363 U.S., at 582, 80 S.Ct., at 1352, I would have much more confidence in the majority's construction of the contract were that result reached by an arbitrator. In sum, the majority's problematic reasoning regarding the substance of the layoff grievance only underscores the soundness of the Nolde presumption of arbitrability which the majority today displaces. Accordingly, I dissent.