Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB

1991-06-13

Headline: Labor contract arbitration limited: Court rules layoffs long after a contract expires are not automatically subject to arbitration, reducing forced arbitration unless specific contractual rights vested before expiration.

Holding: The Court held that layoff grievances occurring long after a collective-bargaining agreement expired are not automatically arbitrable; only disputes tied to rights that accrued or vested under the expired contract (or that clearly survive it) qualify for arbitration.

Real World Impact:

Makes post-contract layoffs less likely to be forced into arbitration.
Encourages parties to write explicit postexpiration arbitration clauses.
Keeps Board complaints as the main remedy for postexpiration layoffs.

Topics: labor contracts, arbitration rules, seniority and layoffs, collective bargaining, unfair labor practices

Summary

Background

An employer running a printing plant and the union that represented its production workers had a collective-bargaining agreement that expired in October 1979. About a year later the employer closed one operation and laid off 10 of 42 workers, many of them senior. The union filed grievances under the expired contract’s seniority clause. The employer refused arbitration. The NLRB found unfair labor practices but declined to order arbitration of the layoff grievances; the Ninth Circuit disagreed on arbitrability.

Reasoning

The Court addressed whether a dispute about layoffs that happened well after a contract expired “arises under” the contract so it can be sent to arbitration. Relying on its Nolde decision, the Court said arbitration is based on the parties’ agreement and is not automatically imposed after an agreement ends. Only disputes that rest on rights that accrued or vested during the contract, events that arose before expiration, or contractual provisions that clearly survive expiration are arbitrable. The Court concluded the seniority clause here — qualified by “aptitude and ability” — did not create a vested postexpiration right and so was not arbitrable.

Real world impact

The ruling means unions and employers cannot assume all postexpiration disputes will go to arbitration. Workers who lose jobs after a contract ends may need to pursue unfair-labor-practice complaints or rely on clear contract language saying arbitration continues. The Court did not overturn the Board’s finding that the employer committed certain unfair labor practices; it limited when arbitration may be compelled.

Dissents or concurrances

Several Justices dissented, arguing Nolde created a strong presumption that posttermination disputes tied to contract language should go to arbitrators. The dissents said arbitrators are better placed to decide whether seniority rights survived the contract and would defer the question to arbitration.