To arbitrate arbitrability or not to arbitrate arbitrability? That is the question!

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Whether the parties to a collective bargaining agreement (“CBA”) agreed to arbitrate arbitrability (i.e. whether an issue is subject to arbitration at all) was the key issue ConocoPhillips, Inc. v. Local 13-0555 United Steelworkers In’tl Union, No. 12-31225 (5th Cir. Jan. 30, 2014). After an employee tested positive for drugs, the employer terminated him pursuant to its zero tolerance drug policy. The union filed a grievance, alleging wrongful discharge. The CBA specifically excluded from arbitration an employee’s discharge for a positive drug test, but it allowed related issues to go forward. Despite the CBA language, the arbitrator decided he had the authority to decide arbitrability and that wrongful discharge for a positive drug test was subject to arbitration. Ultimately, he ruled against the employer. The employer appealed to federal court, seeking to vacate the arbitral award. The court held that the union failed to meet its burden by clear and convincing evidence that the parties agreed to have an arbitrator, and not a court, decide the threshold question of arbitrability.

The presumption is that parties have not agreed to submit arbitrability to an arbitrator, and an agreement’s silence or ambiguity on the issue is not enough to rebut the presumption. The takeaway is that employers can carve out issues they do not want to submit to arbitration, including whether a court or an arbitrator gets to decide which issues are subject to arbitration. As a best practice, an arbitration agreement should expressly state the terms of the parties’ agreement on the threshold issue of arbitrability.