Third Circuit Holds Arbitration Provisions Do Not Survive Expiration of CBA

On March 30, 2022, a panel in the Third Circuit Court of Appeals overruled nearly 30-year-old precedent and held that arbitration provisions do not survive the expiration of a collective bargaining agreement (CBA) in Pittsburgh Mailers Union Local 22 v. PG Publishing Co. The previous rule, first articulated in Luden’s Inc. v. Local No. 6 Union of the Bakery, Confectionary & Tobacco Workers International Union, 28 F.3d 347 (3d Cir. 1994), was premised on the idea that where an employer and a union agree to maintain certain terms and conditions of employment after the expiration of a CBA, a “new implied-in-fact-CBA” is formed that implicitly incorporates the expired CBA’s dispute resolution mechanisms. The only exceptions were situations where both parties intended the arbitration clause to expire with the contract or where one party, under the totality of the circumstances “objectively manifest[ed] to the other a particularized intent . . . to disavow or repudiate that term.” These exceptions were exceedingly narrow.

In overruling Luden’s, the Third Circuit pointed to a pair of Supreme Court decisions, M&G Polymers USA v. Tackett and CNH Industrial N.V. v. Reese, dealing with the post-contract expiration survival of health benefits and holding that where a specific provision of a CBA does not have its own durational clause, it is subject to the general durational clause of the CBA. The court noted that under the National Labor Relations Act (NLRA), most “wages, hours and terms and conditions of employment” must survive the expiration of a collective bargaining agreement (the surviving obligations are created not by a “new implied-in-fact-CBA,” but exist as a matter of statutory law, and the breach of those surviving obligations are remedied not by advancing a contractual claim but by filing a charge with the National Labor Relations Board (NLRB). The court decided that arbitration clauses do not survive as a matter of law, rejecting the concept of having a “new implied-in-fact-CBA,” and held that they will expire with the CBA unless the CBA expressly provides otherwise, or the parties agree that the arbitration clause will remain in effect beyond the original term of the CBA. The panel’s decision, which may still be subject to en banc review, brings the Third Circuit in line with the Seventh, Eighth and Ninth Circuits which also apply general durational clauses to arbitration agreements found in CBAs.

This is another example of the Third Circuit attempting to alleviate some of the confusion regarding the mechanics of challenging CBA arbitration awards. In PG Publishing, Inc. v. Newspaper Guild of Pittsburgh Local 38061, 19 F.4th 308 (3d Cir. 2021), the court refused to apply the Federal Arbitration Act’s (FAA) 90-day statute of limitations in an action to vacate a CBA arbitration award filed concurrently under the FAA and the Labor Management Relations Act (LMRA). The court held that a general reference to the FAA in the petition was insufficient to invoke the FAA’s statute of limitations and instead applied the relevant state statute of limitations, the standard that courts have applied with respect to LMRA cases, which in Pennsylvania — under these facts — was 30 days.  Because it has been well-settled that the LMRA provides federal courts with jurisdiction to vacate or confirm CBA arbitration awards, many Third Circuit labor law practitioners preferred to utilize the LMRA as the basis for those actions, avoiding the FAA altogether. Given the Supreme Court’s recent decision in Badgerow v. Walters, No. 20-1148, holding that the FAA itself does not provide federal courts with jurisdiction for actions to confirm or vacate arbitration awards, this preference for sticking with the LMRA, with its well-developed and widely understood case-law, is likely to continue. 

With these recent decisions, employers and unions in the Third Circuit now have the opportunity to think more strategically about whether they want their CBA’s arbitration provisions to survive contract expiration. They also have more clarity on the jurisdictional basis and limitations period for actions to confirm or vacate arbitration awards. If you have any questions about your arbitration requirements, your options when seeking review of an arbitration decision, or any other questions about how these decisions may affect your business please contact an attorney on the Faegre Drinker labor and employment team.