Paper, Allied-Industrial Chemical & Energy Workers International Union, Local 4-12 v. Exxon Mobil Corp.

Case: 07-30559 Document: 00511604848 Page: 1 Date Filed: 09/16/2011

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
September 16, 2011

No. 07-30559 Lyle W. Cayce
Clerk

PAPER, ALLIED-INDUSTRIAL CHEMICAL AND ENERGY WORKERS
INTERNATIONAL UNION, LOCAL 4-12, also known as Baton Rouge Oil
and Chemical Workers Union,

Plaintiff–Appellee–Cross-Appellant,
v.

EXXON MOBIL CORPORATION, formerly known as Exxon Chemicals
America, formerly known as Exxon Company USA,

Defendant–Appellant–Cross-Appellee.

Appeals from the United States District Court
for the Middle District of Louisiana

Before BARKSDALE, OWEN, and SOUTHWICK, Circuit Judges.
PRISCILLA R. OWEN, Circuit Judge:
Paper, Allied-Industrial, Chemical and Energy Workers International
Union, Local 4-12 (the Union) brought this suit to compel Exxon Mobil
Corporation (ExxonMobil) to arbitrate two labor grievances pursuant to the
parties’ collective bargaining agreement. The district court granted the Union’s
motion for summary judgment with respect to one grievance but denied it with
respect to the other and denied ExxonMobil’s motion for summary judgment.
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The Union and ExxonMobil have both appealed. We reverse in part and affirm
in part, holding that neither grievance is arbitrable.
I
The Union represents certain employees at ExxonMobil’s Baton Rouge,
Louisiana, refinery and chemical plant. The Union and ExxonMobil entered into
two collective bargaining agreements (to which we will refer in the singular as
the collective bargaining agreement or the agreement), the first effective from
April 1996 to March 2002 and the second from April 2002 to March 2006. The
two agreements are identical in all relevant respects and contain an arbitration
clause that defines an “arbitrable grievance” as “a good faith claim by one party
that the other party has violated a written provision of this agreement.”
The parties’ dispute focuses on the following provisions of the agreement:
212. Recognition of Management Functions

(a) The Union recognizes that the Employer has the right, on its
own initiative, to perform any function of management at any
time, so long as it does not violate any express provision of
this Agreement.

(b) The following acts are functions of management:

(1) Those acts which are not within the area of collective
bargaining as required by the National Labor Relations
Act;

(2) Those acts which are usually exercised by other
employers; and

(3) Those acts which management should exercise in order
to properly manage the business.

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251. What Grievances Are Arbitrable

An arbitrable grievance is a good faith claim by one party that the
other party has violated a written provision of this Agreement. If
the claim is disputed, the issue is either

(1) The interpretation of the provision, or

(2) The facts, or both.

1131. General

(a) The company may let independent contracts. But it will not
let a maintenance contract or contracts that will cause an
employee in either Mechanical Division who has five or more
years of Plant Service to be laid off for lack of work during the
term of this agreement.

(b) A maintenance contract is one which provides for the
performance of maintenance work within the Refinery and
Chemical Plant bounds which has customarily been
performed by employees in the Mechanical Divisions.

1151. Exercising Rights

Neither party shall exercise any right under this agreement in an
arbitrary manner, but each party shall exercise its rights in a
reasonable manner and in good faith.

In 1997, ExxonMobil announced that it would begin contracting out the
loading and unloading of tank trucks and railroad tank cars at its Baton Rouge
chemical plant. This action displaced bargaining unit employees but resulted
in no layoffs, since those employees were assigned to other work at the plant
with the same classification, seniority, and pay rate. The Union filed a grievance
(the contracting-out grievance) with ExxonMobil asserting that a number of
sections of the collective bargaining agreement, including Sections 1131 and

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1151, had been violated. After following the formal grievance process,
ExxonMobil denied the claim.
Five years later, in 2002, ExxonMobil eliminated two and one-half
bargaining unit posts at the Baton Rouge facility. The Union filed a grievance
(the post-reduction grievance) asserting that this action violated Section 1151
of the collective bargaining agreement. The grievance process was initiated, and
ExxonMobil ultimately denied the claim.
The Union filed a formal demand for arbitration of both grievances.
ExxonMobil declined to proceed to arbitration, asserting that the grievances
were not arbitrable under the collective bargaining agreement. The Union then
filed suit in district court seeking to compel arbitration. Both parties moved for
summary judgment, and the district court granted the Union’s motion in part
and denied the motion in part, holding that the contracting-out grievance was
arbitrable but the post-reduction grievance was not. The district court denied
ExxonMobil’s motion for summary judgment as “moot” and dismissed the
Union’s action. Both parties then appealed to this court.
II
This court reviews an order compelling arbitration de novo.1 Likewise, we
review de novo the denial of a motion to compel arbitration.2
III
In determining whether the grievances at issue are arbitrable, we must
examine the scope of the parties’ agreement, as reflected in the arbitration
clause. If the collective bargaining agreement provided that “[a]n arbitrable

1
Paper, Allied-Indus., Chem. & Energy Workers Int’l Union Local No. 4-2001 v.
ExxonMobil Refining & Supply Co., 449 F.3d 616, 619 (5th Cir. 2006).
2
Gen. Warehousemen & Helpers Union Local 767 v. Albertson’s Distrib., Inc., 331 F.3d
485, 487 (2003) (citing Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061,
1065 (5th Cir.1998)).

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grievance is a claim by one party that the other party has violated a written
provision of this Agreement,” our task would be an easy one. The Union’s claim
that Exxon-Mobil violated section 1131 of the agreement when it engaged
independent contractors would be arbitrable. But that is not what the
agreement provides. The element of “good faith” is included in the arbitration
clause. The words “good faith” are not surplusage and reflect that not every
claim that the collective bargaining agreement has been violated is arbitrable.
Only “good faith claim[s] by one party that the other party has violated a written
provision of [the CBA]” is arbitrable. As the Supreme Court has repeatedly
reminded courts and litigants, “[a]s with any agreement to arbitrate, we are
obliged to enforce the parties’ . . . agreement ‘according to its terms.’”3 “[P]arties
may agree to limit the issues they choose to arbitrate,”4 and the parties have
done so here.
The context of the term “good faith” in the collective bargaining agreement
indicates that it is not an entirely subjective standard. There must be a good
faith claim that “a written provision” of the agreement has been violated. The
plausibility of a claim that a written provision has not been honored is indicative
of whether that claim can be in good faith.
Our court had occasion to construe an identical “good faith” arbitration
provision in a case in which the meaning of the terms “other conditions of
employment” and “working conditions” in a collective bargaining agreement
were at issue.5 Our court concluded that because these terms were “sufficiently
broad to be susceptible of varying interpretations,” there was a good faith claim

3
Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758, 1772 n.8 (2010) (quoting
Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 58 (1995)).
4
Id. at 1774.
5
Humble Oil & Ref. Co. v. Indep. Indus. Workers Union, 337 F.2d 321, 324 (5th Cir.
1964).

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by the Union that the employer had violated a written provision of the collective
bargaining agreement.6 The corollary of that holding is that if a contractual
provision is not susceptible of varying interpretations under the circumstances
of the dispute, the claim that there has been a violation may not be in good faith.
This does not mean that contentions regarding an unambiguous provision
are not in good faith if a court ultimately determines, as a matter of law, that the
interpretation advanced is incorrect. “Good faith” does not necessarily equate
to “meritorious,” since a party can bring a losing argument in good faith.
Nevertheless, the merits of the claim can be probative as to the good faith of the
party bringing the claim when the claim is not colorable or is frivolous.
We recognize that in determining whether the Union’s claim regarding
contracting out is a “good faith” one and therefore arbitrable entails an
assessment of the merits of the contract construction dispute. We are mindful
of the Supreme Court’s statement in AT&T Technologies, Inc. v.
Communications Workers of America that “in deciding whether the parties have
agreed to submit a particular grievance to arbitration, a court is not to rule on
the potential merits of the underlying claims.”7 However, the context of that
statement reflects that the Court had in mind an agreement in which the parties

6
Id.
7
475 U.S. 643, 649 (1986); see also id. at 649-50 (quoting Steelworkers v. Am. Mfg. Co.,
363 U.S. 564, 568 (1960)):

[I]n deciding whether the parties have agreed to submit a particular
grievance to arbitration, a court is not to rule on the potential merits of the
underlying claims. Whether “arguable” or not, indeed even if it appears to the
court to be frivolous, the union’s claim that the employer has violated the
collective-bargaining agreement is to be decided, not by the court asked to order
arbitration, but as the parties have agreed, by the arbitrator. “The courts,
therefore, have no business weighing the merits of the grievance, considering
whether there is equity in a particular claim, or determining whether there is
particular language in the written instrument which will support the claim.
The agreement is to submit all grievances to arbitration, not merely those which
the court will deem meritorious.”

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agreed “‘to submit all grievances to arbitration, not merely those which the court
will deem meritorious.’”8 The Union and ExxonMobil have not agreed to submit
all grievances to arbitration. We must therefore discern whether the particular
grievances at issue are within the scope of the arbitration agreement, even if we
must delve into the merits of the underlying dispute to some degree.
Our reading of AT&T is consistent with the Supreme Court’s subsequent
decision in Litton, in which the Court cited AT&T in response to a dissenting
opinion’s argument that the Court was impermissibly deciding “an issue of
contract interpretation to be submitted to an arbitrator in the first instance.”9
The Supreme Court observed that “[w]hether or not a company is bound to
arbitrate, as well as what issues it must arbitrate, is a matter to be determined
by the court, and a party cannot be forced to ‘arbitrate the arbitrability
question.’”10 The Supreme Court expressly held in Litton that “we must
determine whether the parties agreed to arbitrate this dispute, and we cannot
avoid that duty because it requires us to interpret a provision of a bargaining
agreement.”11 In Litton, the collective bargaining agreement in question had
expired before the grievances were filed and both the merits of the case and the
arbitrability question hinged on whether the rights asserted in the grievances
“accrued or vested under the Agreement” or “carried over after expiration of the
Agreement.”12

8
Id.
9
Litton Fin. Printing Div., A Div. of Litton Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 208-
09 (1991).
10
Id. (quoting AT&T, 475 U.S. at 651).
11
Id. at 209.
12
Id. at 209.

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We followed Litton in Local Union No. 898 of the International
Brotherhood of Electrical Workers v. XL Electric, Inc., holding that “the question
of arbitrability is a question for the court . . . even if answering the arbitrability
question requires a construction of the contract.”13 Other circuits have taken a
similar approach.14
The Union argues that Litton no longer applies and that two subsequent
Supreme Court decisions, Howsam v. Dean Witter Reynolds, Inc.15 and Green
Tree Financial Corp. v. Bazzle,16 set forth a new standard that this court should
apply in the instant case. In Howsam, the question before the Court was
whether a dispute over the applicability of a National Association of Securities
Dealers (NASD) time limit bar was a “question of arbitrability” for a court to
decide or a question reserved for the arbitrator.17 Noting that a “question of
arbitrability” was one “where contracting parties would likely have expected a
court to have decided the gateway matter,” the Court then held that, in the
absence of an agreement, procedural arbitrability questions were reserved for
the arbitrator, while substantive arbitrability questions were for a court to

13
380 F.3d 868, 870 (5th Cir. 2004) (interpreting a contract to determine whether it had
been terminated in a case in which the arbitrability clause did not permit arbitration after the
expiration of the contract).
14
See Crown Cork & Seal Co., Inc. v. Int’l Ass’n of Machinists & Aerospace Workers, 501
F.3d 912, 917 (8th Cir. 2007) (interpreting the provisions of an agreement to determine
whether retiree health benefits vested under the agreement); United Parcel Serv., Inc. v.
Union De Tronquistas De P.R., Local 901, 426 F.3d 470, 472 (1st Cir. 2005) (determining
whether rights to vacation time accrued under an expired CBA); Indep. Lift Truck Builders
Union v. Hyster Co., 2 F.3d 233, 235 (7th Cir. 1993) (“[T]he rule that courts must decide
arbitrators’ jurisdiction takes precedence over the rule that courts are not to decide the merits
of the underlying dispute. If the court must, to decide the arbitrability issue, rule on the
merits, so be it.”).
15
537 U.S. 79 (2002).
16
539 U.S. 444 (2003).
17
Howsam, 537 U.S. at 83.

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decide.18 Because the applicability of the NASD time limit rule was a “gateway
question” that “called the grievance procedures into play,” the Court left the
question to the arbitrator.19 The disputes presently before us do not concern an
issue of procedural arbitrability.
In Bazzle, a plurality of the Court concluded that the question of whether
a contract prohibited class arbitration was a procedural question for an
arbitrator to decide.20 Subsequently, the Court discussed the Bazzle plurality
opinion at some length in Stolt-Nielsen S.A. v. AnimalFeeds International Corp.21
The Court ultimately held that “the parties cannot be compelled to submit their
dispute to class arbitration” when “the parties stipulated that there was ‘no
agreement’” on whether “the parties agreed to authorize class arbitration.”22
Nothing in AnimalFeeds International alters our conclusion that it is within the
province of the courts to decide whether “a good faith claim by one party that the
other party has violated a written provision” of the bargaining agreement has
been asserted.
IV
The Union bases its contracting-out grievance on two provisions of the
collective bargaining agreement—Section 1131 and Section 1151. ExxonMobil

18
Id. at 83-85.
19
Id. at 85 (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 559 (1964));
see also id. (quoting with approval comments to the Revised Uniform Arbitration Act of 2000,
RUAA § 6, comment 2, 7 U.L.A. 12, 13 (Supp. 2002), which said that “in the absence of an
agreement to the contrary, issues of substantive arbitrability . . . are for a court to decide and
issues of procedural arbitrability, i.e., whether prerequisites such as time limits, notice, laches,
estoppel, and other conditions precedent to an obligation to arbitrate have been met, are for
the arbitrators to decide.”).
20
Bazzle, 539 U.S. at 451.
21
130 S.Ct. 1758, 1771-1772 (2010).
22
Id. at 1776.

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argues that Section 1131 cannot support a claim that the contracting out
violated the CBA because the express language of that section authorizes
ExxonMobil to do what it did. ExxonMobil also contends that this court’s
opinion in Baton Rouge Oil & Chemical Workers Union v. ExxonMobil Corp.
(BROCWU)23 forecloses the Union’s reliance on Section 1151 as a basis for
arbitration. We agree with ExxonMobil and hold that the district court erred in
granting summary judgment to the Union compelling arbitration of the
contracting-out grievance.
Section 1131 specifically states that “[t]he company may let independent
contracts,” with the exception of “maintenance contract[s]”—that is, contracts for
maintenance work that would otherwise be performed by employees in the
Mechanical Divisions—that would “cause an employee in either Mechanical
Division who has five or more years of Plant Service to be laid off for lack of
work.” The Union does not dispute that the contracted-out loading work is
considered process work, not maintenance work, and that the contracting out
resulted in no layoffs. Nor does the Union dispute that, on its face, Section 1131
authorizes the contracting out that occurred. Instead, the Union argues that the
contracting out violates the original intent of Section 1131, which was to allow
ExxonMobil to “obtain workers during peaks and valleys without diminishing
the core of its work force.” However, in a case in which, as in this one, the
language of the contract is clear and unambiguous, courts may not inquire into
the intent of the parties to contradict that plain meaning.24 The Union has
pointed to no ambiguities in the contract that would open the door for an
examination of the parties’ intent. In light of the clarity of the parties’

23
289 F.3d 373 (5th Cir. 2002).
24
See, e.g., LA. CIV. CODE ANN. art. 2046 (2008) (“When the words of a contract are clear
and explicit and lead to no absurd consequences, no further interpretation may be made in
search of the parties’ intent.”).

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agreement, the Union’s claim that ExxonMobil has violated Section 1131 when
the language of that section explicitly authorizes its actions is not colorable and
cannot constitute a good faith claim within the meaning of the arbitration
clause.
The Union insists that reading Section 1151 in conjunction with
Section 1131 creates a basis for a good faith claim that the contracting out
violated the collective bargaining agreement. Section 1151 provides that both
parties to that agreement must not exercise their rights in an “arbitrary
manner,” but must exercise them “in a reasonable manner and in good faith.”
The Union contends that ExxonMobil’s refusals 1) to provide evidence to the
Union that the contracting out was necessary for cost savings or 2) to consider
offers about how the Union employees could perform more economically to save
the company money were arbitrary and in bad faith.
ExxonMobil argues that Section 1151 cannot serve as a basis for
arbitration, citing this court’s opinion in BROCWU,25 a case involving a dispute
between the Union’s predecessor and ExxonMobil arising under the same
collective bargaining agreement at issue here. In BROCWU, we determined that
the agreement did not require ExxonMobil to arbitrate a grievance protesting
the discharge of probationary employees.26 The collective bargaining agreement
gave non-probationary employees a right to arbitrate the imposition of serious
sanctions or discharge. We held that this grant of an arbitration right to non-
probationary employees implied that probationary employees did not have such
a right.27 The Union argued that, despite this specific provision limiting
arbitration to non-probationary employees, the discharge was arbitrary and not

25
289 F.3d 373 (5th Cir. 2002).
26
Id. at 374.
27
Id. at 376.

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in good faith in violation of Section 1151, and that, accordingly, the arbitration
clause contained in Section 251 made that grievance arbitrable.28
We held that Section 1151 and Section 251 did not make the otherwise
non-arbitrable grievance arbitrable. We “decline[d] to rely on this catchall
phrase [Section 1151] to create a right of arbitration that clearly does not exist
under the terms of the CBA, and which would explicitly conflict with the CBA’s
express provision allowing ExxonMobil to discharge probationary employees ‘at
will.’”29 We held that the specific provision that excluded the grievance from
arbitration would have been “rendered meaningless” if Section 1151 were
interpreted to allow arbitration for probationary employees.30
We agree with ExxonMobil that BROCWU forecloses reliance on Section
1151 as an independent basis for arbitrability of the contracting-out grievance.
To read Section 1151 in a way that would transform an otherwise non-arbitrable
grievance into an arbitrable one would render Section 251’s good faith
requirement meaningless, since the Union could always assert that ExxonMobil
was exercising its rights arbitrarily or not in good faith under Section 1151.
Such a reading would also explicitly conflict with the collective bargaining
agreement’s express provision allowing ExxonMobil to contract out process work
that does not result in layoffs. Accordingly, the rationale behind the BROCWU
decision applies equally here and the Union may not rely on Section 1151 as a
basis for arbitrability.

28
Id.
29
Id.
30
Id.

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V
The Union also bases its post-reduction grievance on Section 1151. The
Union asserts that the post-reduction grievance is arbitrable because it is a good
faith claim that ExxonMobil has violated Sections 212 and 1151 by unilaterally
reducing two and one-half bargaining unit posts. Section 212 permits
ExxonMobil to “perform any function of management at any time, so long as it
does not violate any express provision of this Agreement.” Though the Union
does not dispute that the post reduction was a function of management, it argues
that this right was exercised arbitrarily and in bad faith in violation of Section
1151. The Union expends great effort discussing the facts underpinning its
claims. But the Union cites to no “express provision” of the collective bargaining
agreement within the meaning of Section 212 that ExxonMobil has violated. For
the same reasons that we hold that the contracting-out grievance is not
arbitrable under Section 1151, we hold that Section 1151 cannot serve as a basis
for requiring arbitration of the post-reduction claim.
* * *
For the foregoing reasons, we REVERSE the district court’s grant of the
Union’s motion for summary judgment with regard to the contracting-out
grievance, AFFIRM the district court’s denial of the Union’s motion for summary
judgment with regard to the post-reduction grievance, and REVERSE the
district court’s denial of ExxonMobil’s motion for summary judgment.

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