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Subject: 90-285 -- DISSENT, LITTON FINANCIAL PRINTING DIV. v. NLRB




    SUPREME COURT OF THE UNITED STATES


No. 90-285



LITTON FINANCIAL PRINTING DIVISION, A DIVISION OF LITTON BUSINESS SYSTEMS,
INC., PETITIONER v. NATIONAL LABOR RELATIONS BOARD et al.

on writ of certiorari to the united states court of appeals for the ninth
circuit

[June 13, 1991]



    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 mischaracteri zation of our decision
in Nolde Bros., Inc. v. Bakery Workers, 430 U. S. 243 (1977).  Nolde states
a broad, rebuttable presumption of arbitrability which applies to all
posttermination 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.

I


    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.  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.  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 . . . 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. {1}  Thus, under Nolde, the key
questions for determining arbitrability are whether (1) the dispute is
"based on . . . differing perceptions of a provision of the expired
collective-bargaining agreement" or otherwise "arises under that contract,"
id., at 249 (emphasis omitted), and, if so, (2) whether the "presumptions
favoring" arbitrability have been "negated expressly or by clear
implication," id., at 255.

    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.
    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 14.  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 . . . are not before
us."  430 U. S., at 249.

    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 . . .
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 2, 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 13.  Thus, the
dispute is arbitrable because the "presumptions favoring" arbitrability
have not been "negated expressly or by clear implication."  430 U. S., at
255.

    In fashioning its more rigorous standard for arbitrability, the
majority erroneously suggests that if Nolde rendered arbitrable all
postexpiration 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 14.  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.

    Consequently, the issue here, as it was in Nolde, is not whether a
substantive provision of the expired collectivebargaining 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 16, and n. 3.  That is all Nolde stands for. {2}

    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, 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 (" `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 (1960)).

II



    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 postex piration
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 18.  This conclusion
strikes me as utterly implausible.

    As the majority appears to concede, ante, at 17-18, 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 .
. . 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. {3}  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, at 253,
quoting Warrior & Gulf Nav. Co., supra, at 582, 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. {4}








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1
    I agree with the majority that the National Labor Relations Board's
(Board) determination as to arbitrability under the contract is not
entitled to deference.  See ante, at 10-11.

2
    The majority "presume[s] as a matter of contract interpretation that
the parties did not intend a pivotal dispute resolution provision to
terminate for all purposes upon the expiration of the agreement."  Ante, at
16.  But the arbitration clause of the expired collective-bargaining
agreement does not distinguish among types of disputes that the parties
would and would not submit to arbitration.  As in Nolde, the parties agreed
to submit all disputes arising under the agreement to arbitration.  By
looking to the terms of the agreement's layoff provision to draw a
conclusion about whether the parties intended rights under that provision
to survive termination, the majority is deciding the merits of the dispute
rather than the issue of its arbitrability.  Notably, the layoff provisions
do not contain any language suggesting an intent to preclude
posttermination grievances over layoffs from arbitration.  See App. 30-31.

3
    Section 12 of the expired agreement, entitled "Notice of Layoutt"
[sic], contains six subsections addressing, inter alia, issues of
seniority, layoffs, and recalls.  Subsection F, which addresses the
recalling of laid off workers, enumerates the six ways in which "[a]n
employee shall lose his seniority."  App. 31.  The "seniority" referred to
in subsection F reasonably could be construed as the same seniority that is
implied in subsection A, concerning layoffs, and that is expressly
identified in subsection E, which requires the employer to "supply the
Union with an updated seniority list semi-annually," id.  See id., at
30-31.

4
    Although I believe the parties have a contractual duty to arbitrate in
this case, I agree with the majority's conclusion that the Board
articulated rational grounds for not imposing a statutory duty under the
National Labor Relations Act, 29 U. S. C. MDRV 151 et seq., to arbitrate
grievances arising after the termination of a collective-bargaining
agreement.  See Ante, at 8-9.  In Indiana and Michigan Electric Co., 284 N.
L. R. B. 53 (1987), the Board noted that "an agreement to arbitrate is a
product of the parties' mutual consent to relinquish economic weapons, such
as strikes or lockouts" and therefore the contractual obligation to
arbitrate could be distinguished from other "terms and conditions of
employment routinely perpetuated [after termination of a
collective-bargaining agreement] by the [statutory] constraints of [the
unilateral change doctrine]."  Id., at 58.  Under MDRV 13 of the Act, 29 U.
S. C. MDRV 163, the Act may not be construed to interfere with a union's
right to strike.  Therefore, the Board rationally concluded that employers
should not, as a matter of statutory policy, be compelled to arbitrate and
thus forbear from using their economic weapons, when no concomitant
statutory obligation can be imposed on a union.