International Union of Operating Engineers, Local 150 v. Flair Builders, Inc.

Background

A local union and a small construction company signed a short memorandum in 1964 that tied the company to broader master agreements. A 1966 master contract included a clause requiring arbitration of “any difference” not settled within 48 hours. The union later sued, accusing the company of contract violations dating from 1966. The District Court found the union had waited too long (laches) and dismissed the suit; the Court of Appeals agreed.

Reasoning

The central question was whether a claim that a union waited too long should be decided by a court or by an arbitrator. The Supreme Court read the arbitration clause’s phrase “any difference” broadly and held that, once a court finds the parties agreed to arbitrate, even an equitable delay defense must be submitted to the arbitrator. The Court therefore reversed the Court of Appeals and ordered that the laches issue go to arbitration rather than being decided in court.

Real world impact

The decision means employers and unions who sign broad arbitration clauses will usually have to take delay defenses to arbitrators. It can increase arbitration use and shift some traditional court equity questions into private arbitration. The ruling does not decide whether the union ultimately wins — it only sends the timeliness question to the arbitrator for resolution.

Dissents or concurrances

A dissent warned this result is unfair to a small business, argued laches is an equitable issue courts should decide, and cautioned that the ruling could push other contract-defenses out of courts and into arbitration.