Communications Workers of America, AFL-CIO v. AT&T Inc. ( 2021 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 11, 2021 Decided August 3, 2021
No. 20-7043
COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO,
APPELLANT
v.
AT&T INC.,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:19-cv-01220)
Michael T. Anderson argued the cause for appellant. With
him on the briefs was Arlus J. Stephens.
Maurice Baskin argued the cause and filed the brief for
appellee.
Before: SRINIVASAN, Chief Judge, TATEL and RAO,
Circuit Judges.
Opinion for the Court filed by Chief Judge SRINIVASAN.
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SRINIVASAN, Chief Judge: This case arises out of a
contract between AT&T and a union representing company
employees. The contract provides for arbitration of disputes
over certain subjects. When a dispute arose between the parties
following AT&T’s acquisition of Time Warner, the union
invoked the contract’s arbitration clause. The company refused
to submit to arbitration, prompting the union to bring an action
seeking to compel arbitration. The district court determined
that it had jurisdiction to decide whether the dispute is
arbitrable and then held that it is not.
We conclude that the parties’ agreement delegates
threshold questions of arbitrability to an arbitrator. The
question whether the parties’ dispute falls within the contract’s
arbitration clause, then, is for an arbitrator, not a court, to
decide. It follows that the district court lacked jurisdiction to
determine whether the parties’ dispute must be submitted to
arbitration.
I.
Communications Workers of America, AFL-CIO (the
Union) is the certified union for non-management employees
of AT&T, Inc. In April 2017, the Union and AT&T entered
into a contract governing certification of the Union and the
relationship between the parties. See Memorandum of
Agreement Regarding Neutrality and Card Check Recognition
(the Agreement), App. 15–21. The Agreement requires the
parties to arbitrate disputes over “the description of an
appropriate unit for bargaining” and the definition of “non-
management” employees. Id. ¶¶ 2(c), 3(c)(1)–(2), 9, App. 15–
16, 19. All other disputes arising under the contract “shall not
be subject to arbitration.” Id. ¶ 9, App. 19.
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For disputes that are subject to arbitration, the Agreement
requires that they “be submitted to arbitration administered by,
and in accordance with, the rules of the American Arbitration
Association (AAA).” Id. ¶ 3(c)(1), App. 16. The AAA’s Labor
Arbitration Rules in turn provide that “[t]he arbitrator shall
have the power to rule on his or her own jurisdiction, including
any objections with respect to the existence, scope, or validity
of the arbitration agreement.” AAA Lab. Arb. R. 3(a), App.
57.
After AT&T acquired Time Warner in June 2018, the
Union initiated discussions about “appropriate potential
bargaining units in the newly acquired company.” App. 80.
The parties, though, could not agree on which employees count
as non-management workers (and are thus subject to the
Agreement). The Union demanded arbitration under the
Agreement, but AT&T disagreed that the Agreement required
arbitration of the dispute.
The Union brought an action in the district court seeking
to compel arbitration. AT&T moved to dismiss the Union’s
complaint for failure to state a claim. In AT&T’s view, the
parties’ dispute does not fall within the categories of disputes
subject to arbitration under the Agreement—i.e., disputes about
the scope of the bargaining unit and the definition of non-
management employees. The Union filed a cross-motion to
compel arbitration. It argued that the dispute fits within the
scope of the Agreement’s arbitration coverage, and also that,
under the Agreement, the question whether the dispute is
arbitrable must be decided by an arbitrator rather than a court.
The district court granted AT&T’s motion to dismiss and
denied the Union’s motion to compel arbitration. The court
agreed with AT&T that the parties’ dispute does not lie within
the categories of arbitrable disputes under the Agreement. And
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the court held that it (as opposed to the arbitrator) could make
that threshold determination of arbitrability. The Union now
appeals.
II.
Two lines of precedent control the outcome of this case.
First, our circuit precedent compels concluding that an
arbitration agreement’s incorporation of the AAA rules
constitutes an assignment of the question of arbitrability—i.e.,
whether a given dispute is subject to arbitration—to the
arbitrator. Second, when there is such an assignment, Supreme
Court precedent forbids courts from speaking to the question
of arbitrability and requires leaving it strictly to the arbitrator.
The result here is that the question whether the parties’ dispute
is arbitrable must be decided by an arbitrator, not a court.
A.
Under the Federal Arbitration Act, “arbitration is a matter
of contract, and courts must enforce arbitration contracts
according to their terms.” Henry Schein, Inc. v. Archer &
White Sales, Inc., 139 S. Ct. 524, 529 (2019). “Applying the
Act,” the Supreme Court has “held that parties may agree to
have an arbitrator decide not only the merits of a particular
dispute but also gateway questions of arbitrability, such as
whether the parties[’] . . . agreement covers a particular
controversy.” Id. (internal quotation marks omitted). Such
threshold arbitrability questions are generally presumed to be
for a court to decide, see BG Grp. PLC v. Republic of
Argentina, 572 U.S. 25, 34 (2014), but “parties may delegate
[them] to the arbitrator” if their “agreement does so by ‘clear
and unmistakable evidence,’” Henry Schein, 139 S. Ct. at 530(quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938,
944 (1995)).
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We have held that the requisite clear and unmistakable
delegation occurs when the parties’ agreement incorporates
arbitral rules that in turn assign questions of arbitrability to the
arbitrator. See Chevron Corp. v. Ecuador, 795 F.3d 200, 207–
08 (D.C. Cir. 2015); see also LLC SPC Stileks v. Republic of
Moldova, 985 F.3d 871, 878–79 (D.C. Cir. 2021). Here, the
Agreement expressly incorporates the AAA rules for
arbitration, and those rules in turn assign threshold questions of
arbitrability to the arbitrator. Under our precedents, then, the
parties clearly and unmistakably delegated arbitrability
questions to the arbitrator by incorporating the AAA rules. Our
decision in Chevron Corp. compels that conclusion.
First, the language of the arbitral rules in Chevron Corp.
and in this case leaves no room for distinction. In Chevron
Corp., we considered the United Nations Commission on
International Trade Law’s (UNCITRAL’s) arbitral rules.
Those rules provide that “[t]he arbitral tribunal shall have the
power to rule on objections that it has no jurisdiction, including
any objections with respect to the existence or validity of the
arbitration clause.” Chevron Corp., 795 F.3d at 207 (alteration
in original) (quoting UNCITRAL Arb. Rs. art. 21 (1976)). The
AAA rules are materially identical, stating that “[t]he arbitrator
shall have the power to rule on his or her own jurisdiction,
including any objections with respect to the existence, scope,
or validity of the arbitration agreement.” AAA Labor Arb. R.
3(a), App. 57; see Dist. No. 1, Pac. Coast Dist., Marine Eng’rs’
Ben. Ass’n, AFL-CIO v. Liberty Maritime Corp., 998 F.3d 449,
461 (D.C. Cir. 2021) (AAA rules and UNCITRAL rules
contain “parallel provision[s] assigning to an arbitrator the
authority to rule on her own jurisdiction”).
Second, the contractual language incorporating the
UNCITRAL rules in Chevron Corp. mirrors the language of
the Agreement’s incorporation of the AAA rules here. In
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Chevron Corp., a bilateral investment treaty between the
United States and Ecuador provided that “the investor company
may submit a matter to arbitration ‘in accordance with the
Arbitration Rules of the United Nations Commission on
International Trade Law (UNCITRAL).’” 795 F.3d at 207
(quoting treaty). And here, the Agreement provides that certain
disputes “shall be submitted to arbitration administered by, and
in accordance with, the rules of the American Arbitration
Association (AAA).” Agreement ¶ 3(c)(1), App. 16. If the
contract in Chevron Corp. incorporated the UNCITRAL rules
by reference, see 795 F.3d at 207, then the Agreement in this
case likewise incorporated the AAA rules by reference.
In short, because the contractual language incorporating
the arbitral rules is the same in this case and Chevron Corp.,
and because the relevant language of the arbitral rules is also
the same in the two cases, here, as in Chevron Corp., the parties
have clearly and unmistakably “consented to allow the arbitral
tribunal to decide issues of arbitrability.” Id. at 208; see Dist.
No. 1, 998 F.3d at 461 (“[V]irtually every court of appeals to
address the issue agrees that when parties expressly incorporate
the AAA rules, they thereby clearly and unmistakably delegate
to an arbitrator the power to decide gateway questions of
arbitrability . . . .”).
B.
When, as in this case, “the parties’ contract delegates the
arbitrability question to an arbitrator, a court may not override
the contract. In those circumstances, a court possesses no
power to decide the arbitrability issue.” Henry Schein, 139 S.
Ct. at 529. Significantly, that rule holds “even if the court
thinks that the argument that the arbitration agreement applies
to a particular dispute is wholly groundless.” Id. Still, the court
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must stay its hand and allow the arbitrator to decide whether
the parties’ arbitration agreement covers the dispute.
AT&T nonetheless contends that a court should decide
whether the dispute in this case is subject to arbitration under
the Agreement. The company describes the parties’ underlying
dispute in this case as involving “new acquisitions,” and
submits that “the plain language of the [Agreement] establishes
that the parties did not intend to delegate new entity acquisition
issues to an arbitrator.” Appellee’s Br. 18. “Given this,”
AT&T maintains, “there is no basis for finding ‘clear and
unmistakable’ evidence of delegation by the parties of any
arbitrability question to an arbitrator, and the district court
properly decided the question of arbitrability.” Id.That argument would seem to run headlong into the
Supreme Court’s decision in Henry Schein. Under AT&T’s
approach, a court first assesses whether the parties “intend[ed]
to delegate [the] issues [at hand] to an arbitrator.” Id. If not,
the “court properly decide[s] the question of arbitrability,”
id.—i.e., whether the dispute must be submitted to arbitration.
That approach is circular: in determining who decides (the
arbitrator or the court) whether a particular dispute must be
submitted to arbitration, the court first determines whether the
particular dispute must be submitted to arbitration. Yet if the
court were to do so, it would have already decided that it (and
not the arbitrator) determines whether the underlying dispute
must be submitted to arbitration.
Henry Schein charts the opposite course. The Supreme
Court described the “who decides” question as an
“‘antecedent’” one—that is, one to be decided first. 139 S. Ct.
at 529, 531 (quoting Rent-A-Center, West, Inc. v. Jackson, 561
U.S. 63, 70 (2010)). In accordance with that understanding, the
Court explained that “a court possesses no power to decide the
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arbitrability issue” if “the parties’ contract delegates the
arbitrability question to an arbitrator.” Id. In other words, the
court must first determine if the parties’ agreement provides for
the arbitrator to decide whether the underlying dispute must be
submitted to arbitration, and if so, the court “possesses no
power” to address the issue. Id. Under AT&T’s approach, by
contrast, in determining whether the court has power to address
the arbitrability of the underlying dispute, the court would
decide the very matter it may lack power to address.
AT&T attempts to distinguish Henry Schein based on the
proportion of issues that the parties agree to submit to
arbitration. In the company’s view, the rule of Henry Schein
applies in the case of “broad arbitration agreements with
limited exceptions.” Appellee’s Br. 19 (emphasis removed).
But this case, AT&T asserts, involves “an agreement limiting
arbitration to one narrow band of disputes.” Id. at 21.
Once again, the company’s argument is difficult to
reconcile with Henry Schein. Any arbitration agreement will
need to define the set of issues that it makes subject to
arbitration. And however broad or narrow that set may be,
questions can arise at the margins as to whether a particular
dispute fits within its boundaries. In that event, Henry Schein
holds, if the parties clearly and unmistakably assign threshold
arbitrability questions to the arbitrator, then the question
whether the “particular dispute” is arbitrable is exclusively one
for the arbitrator, not a court. 139 S. Ct. at 529.
In addition, the criterion suggested by AT&T—how broad
the arbitration agreement is considered to be—would raise
significant questions of administration. How are courts to
measure whether an arbitration agreement is sufficiently
broad? Would breadth be based strictly on an effort to count
the number of issues that are subject to arbitration against some
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(seemingly elusive) count of the number of issues that are not?
If the agreement contemplates arbitration of a relatively small
number of issues, but those issues will likely account for the
bulk of the disputes between the parties, would the arbitration
agreement count as a broad one? And apart from the number
of the issues and the frequency with which they arise, how
about their importance to the parties: should it matter how
fundamental the arbitrable issues may seem to the contracting
parties, and, if so, how would that be assessed?
Rather than adopt an approach calling for an uncertain
inquiry into the relative breadth of an arbitration agreement, we
adhere to the straightforward rule we understand Henry Schein
to have established: once the parties subject some set of issues
to an arbitrator for resolution, and once the parties clearly and
unmistakably assign to an arbitrator the authority to decide
whether disputes fit within that set of issues, the question
whether a particular dispute is arbitrable is strictly for the
arbitrator, not a court. Pursuant to that understanding, the
district court in this case lacked jurisdiction to decide whether
the parties’ dispute should be submitted to arbitration. That is
for the arbitrator to decide.
* * * * *
For the foregoing reasons, we vacate the judgment of the
district court and remand for further proceedings consistent
with this opinion.
So ordered.