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Third Circuit: CBA Arbitration Provisions do not Automatically Survive Expiration

June 22, 2022

By Noah R. Jordan, Esquire

Earlier this spring, a panel of judges of the Third Circuit Court of Appeals issued a decision holding that arbitration provisions of collective bargaining agreements (CBAs) do not automatically survive expiration along with other terms related to wages, hours, and terms and conditions of employment.  Instead, the Court held in Pittsburgh Mailers Union Local 22 v. PG Publishing Co. Inc., 30 F.4th 184 (3d Cir. 2022), that unless an arbitration clause contains its own durational clause, it will expire with the rest of the CBA.

The case resulted from PG Publishing Company’s refusal to process to arbitration grievances filed by unions with which it was party to CBAs which had expired.  The company claimed that the unions’ right to process grievances to arbitration had expired with the rest of the terms of their agreements, other than those required to continue under status quo, and therefore it would refuse proceed to arbitration.  The unions filed suit in an effort to force the company to arbitrate their disputes.

In siding with PG Publishing Co., the Court overturned its own long-standing decision in Luden’s Inc. v. Local Union No. 6 of the Bakery, Confectionery & Tobacco Workers International Union (28 F.32 347 (3d Cir. 1994)) in which the Court had held that arbitration clauses may survive CBA expiration and become a term of a new, implied-in-fact agreement.  The Court explained its need to overturn its decision in Luden’s to comply with subsequent decisions which had been issued by the Supreme Court holding that if a specific provision of a CBA does not have its own durational clause, then the general durational clause of the CBA as a whole applies to that provision (M & G Polymers USA, LLC v. Tackett, 574 U.S. 427 (2015); CNH Industrial N.V. v. Reese, 138 S. Ct. 761 (2018)).  In other words, unless an arbitration provision states that it survives beyond the term of the CBA, that provision does not remain in effect as part of status quo.  The holding brings the Third Circuit in line with the Seventh, Eighth, and Ninth Circuits, all of which previously have held that there is no implied continuation of contract provisions.

This holding has the potential to have major implications for the ability of unions and employers to resolve disputes if they are unable to reach agreement on new CBAs before expiration of their current agreements.  The Court made clear that its new rule “does not preclude the parties from coming to an agreement, after the expiration of a CBA, to arbitrate disputes in accord with contract law principles.”  However, there is no requirement that the parties do so and clearly, as was the case with PG Publishing Co., an employer that does not want to continue to process grievances to arbitration post-expiration, cannot be forced to do so.  This would leave unions without the ability to avail themselves of the usual dispute resolution process of arbitration for the period during which the parties are without a new CBA, which may be significant.

Certain employers may be less inclined to reach agreement on a new CBA prior to expiration given this change in the law since they would be relieved of the obligation to arbitrate disputes post-expiration.  This, obviously, would complicate the bargaining process and deprive unions of an essential tool used to resolve disputes.  In order to avoid this, unions should consider bargaining for separate durational clauses specific to the arbitration provisions in their CBAs to ensure that such clauses would remain in effect as part of any post-expiration status quo.  If this is not achievable, unions should attempt to do that which was contemplated by the Court and negotiate explicit agreements with employers to continue to arbitrate disputes post-expiration while the parties negotiate a new agreement.

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