Local Joint Exec. Bd. v. Mirage Casino-Hotel

The panel reversed the district court’s summary judgment confirming, pursuant to the Labor Management Relations Act, an arbitration award entered in favor of Mirage Casino-Hotel, Inc., on a union’s grievance under the parties’ collective bargaining agreement.

Mirage subcontracted with another company to operate a venue, and the memorandum of agreement provided that the other company would “directly employ” the union’s food and beverage workers and would be responsible for paying their wages and employee benefits. Mirage, however, would control the terms and conditions of employment. The other company soon declared bankruptcy and failed to pay certain benefits before closing. Mirage declined to step in, and the union filed a grievance. The arbitrator ruled that the union’s grievance, filed pursuant to the CBA, was not arbitrable. 

The panel explained that the parties’ substantive dispute concerned whether Mirage was obliged under Article 29 of the CBA and the MOA to ensure that the workers received payment for accrued benefits. The dispute was arbitrable if it fell within the arbitration agreement expressed in Article 21 of the CBA. Its arbitrability was to be determined by the arbitrator if the parties “clearly and unmistakably” agreed to submit that question to him. The union’s position would be meritorious if its theory was supported by the CBA and the other evidence.

The panel concluded that the arbitrator conflated these inquiries in concluding that the dispute was not arbitrable because Mirage was not the workers’ employer. The panel held that, under the terms of the CBA, which required Mirage to arbitrate grievances, the dispute was substantively arbitrable. Further, the union’s assent to the arbitrator deciding arbitrability could not be inferred from its post-hearing briefing or its failure to call a halt to the arbitration proceedings and seek judicial review of arbitrability. The panel reversed the district court’s judgment and remanded with instructions to vacate the arbitration award.

Concurring, Judge Owens wrote that, although the dissent reached a more equitable result, the majority’s opinion was more consistent with controlling law. 

Dissenting, Judge Friedland wrote that the “clear and unmistakable” test for determining whether a party resisting arbitration has nevertheless consented to having the arbitrator decide substantive arbitrability does not also apply when determining whether a party that initiates arbitration has so consented. Because the union submitted the dispute to arbitration in the first place, Judge Friedland would instead apply traditional standards of waiver to the union’s actions. She would hold that, under those standards, the union waived its objection to the arbitrator’s deciding the substantive arbitrability question.

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