Fifth Circuit Affirms Vacatur of Arbitration Award Where Intent to Arbitrate Was Not Clear and Unmistakable

The Fifth Circuit Court of Appeals has affirmed a lower court’s vacatur of an arbitral award in an employment dispute.  In ConocoPhillips, Inc. v. Local 13-0555 United Steelworkers International Union, No. 12-31225 (5th Cir. Jan. 30, 2014), a Louisiana oil refinery worker was fired after he failed a random substance abuse test.  When the worker was terminated, his employer, ConocoPhillips, and his union had a collective bargaining agreement (“CBA”) in place which stated any discharge for failing a drug test is not subject to the grievance or arbitration provisions contained in the CBA.  Still, the CBA stated arbitration was available for any disputes related to how a drug testing specimen was handled.

Following the man’s termination, the union sought arbitration over his allegedly false positive drug test result.  ConocoPhillips objected to arbitration, but an arbitrator determined the dispute was arbitrable and ruled in favor of the terminated worker following a hearing that the company participated in.  After the hearing, ConocoPhillips immediately filed a motion to vacate the arbitration award in a federal district court.  According to the company, the arbitration was improper because the issue of arbitrability was not for the arbitrator to decide and ConocoPhillips never consented to arbitration.  The Western District of Louisiana agreed with the company and vacated the award.  The union then filed an appeal with the Fifth Circuit Court of Appeals.

On appeal, the appellate court rejected the union’s argument that ConocoPhillips consented to arbitration by participating in the hearing and failing to appropriately offer objections.  According to the court,

…to the extent that Conoco presented arguments—either in its case-in-chief or on rebuttal—that extended to the merits of the dispute, it cannot be the case that merely countering your opponent’s case demonstrates an intent to be bound by the arbitrator’s decision. Even believing that the arbitrator lacked jurisdiction and with full intent to appeal, it would be prudent for Conoco to address USW’s merits arguments, just in case it lost its jurisdictional argument and lost again on appeal. Indeed, the district court could uphold Conoco’s jurisdictional challenge—vesting the “arbitrability” decision in the courts—but still find the dispute arbitrable and uphold the arbitration award in favor of USW. When weighed against its consistent objections to arbitrating anything beyond the chain of custody, Conoco’s decision to address issues beyond the arbitrability of arbitrability does not clearly and unmistakably demonstrate an intent to be bound by the arbitrator’s decision.

The Fifth Circuit also dismissed the union’s claim that ConocoPhillips “clearly and unmistakably” agreed to let the arbitrator determine whether the parties’ dispute should be arbitrated.

Conoco consistently objected to the jurisdiction of the arbitrator to arbitrate Buller’s discharge, going so far as to object to its power over “anything more than just what the Contract says” and “anything else” besides the chain of custody. USW must bear the burden of demonstrating Conoco’s “clear and unmistakable” intent to be bound by the arbitrator’s decision on arbitrability. Because silence, ambiguity, and merely arguing the arbitrability issue to the arbitrator are insufficient to meet this burden, we affirm the district court’s judgment that Conoco did not clearly and unmistakably agree to arbitrate arbitrability.

After the court distinguished two similar cases decided by the Fourth and Sixth Circuits, the Fifth Circuit Court of Appeals affirmed the district court’s decision to vacate the arbitral award.