The federal courts of appeals and other courts have been split on whether the presumption favoring arbitrability applies to questions about who may enforce (or is bound by) an agreement to arbitrate. Some courts treat all such questions as contract formation issues to which the presumption does not apply. Others treat such questions as matters of scope, where there is a valid and enforceable arbitration agreement, and apply the presumption. Last week, the Sixth Circuit joined the latter group of courts in applying the presumption to decide whether former employees could arbitrate grievances against their former employer under a collective bargaining agreement.
In Teamsters Local Union No. 89 v. Kroger Co., the Sixth Circuit affirmed a district court’s judgment compelling arbitration of grievances filed on behalf of union members who had been, but were no longer, employed by Kroger. As permitted by its collective bargaining agreement (CBA) with the union, Kroger had subcontracted certain operations to other firms, which then hired all of the Kroger employees who had been performing those operations and entered their own CBAs with the union. Later, however, Kroger subcontracted work previously done by these employees to firms that did not have CBAs. The union filed class-action grievances alleging that this violated Kroger’s CBA. Kroger responded that the grievance and arbitration procedure in the CBA did not apply because the affected union members were not employed by Kroger.
The court, observing that the arbitration clause in the Kroger CBA was a broad one, applied the presumption in favor of arbitrability in deciding that the former Kroger employees could enforce the obligation to arbitrate. Notably, Kroger relied in part on a letter of understanding that was executed after the CBA and provided for arbitration of outstanding grievances, but not subsequent grievances, after subcontracting. The court declined to infer that subsequent grievances were not to be arbitrated, holding that such an inference would “reverse the presumption.” With this decision, the Sixth Circuit came down on the side of other courts that apply the arbitrability presumption to questions of who may arbitrate. The circuit split on this issue is currently before the Supreme Court on a petition for certiorari. (Disclosure: Squire Sanders represents the petitioner in that proceeding.)