[00:00:00] Speaker 01: Case number 20-7043, Communications Workers of America AFL-CIO Appellant versus AT&T Inc. [00:00:08] Speaker 01: Mr. Anderson for the Appellant, Mr. Baskin for the Appellate. [00:00:13] Speaker 00: Good morning, Council. [00:00:14] Speaker 00: Good morning. [00:00:15] Speaker 00: Mr. Anderson, please proceed when you're ready. [00:00:17] Speaker 03: Good morning, Your Honor. [00:00:18] Speaker 03: Michael Anderson for the Appellant Communication Workers of America. [00:00:23] Speaker 03: AT&T and the communication workers have a contract that governs the definition of bargaining units and all parties agree that under this agreement that [00:00:35] Speaker 03: Those workplaces that existed as of the commencement of this contract would be subject to binding arbitration about the scope of bargaining units through this arbitrator. [00:00:48] Speaker 03: The question that comes up here is that during the term of the contract, AT&T acquired Time Warner as a component of its broader corporate family. [00:00:58] Speaker 03: And the union contends that under this agreement, the union is entitled to the same bargaining unit determination through the arbitrator as applied to those workplaces that existed at the outset. [00:01:11] Speaker 03: Now, there is a paragraph of this agreement that speaks to this. [00:01:14] Speaker 03: It's about the recognition of new entities and new work which expressly covers what happens when AT&T acquires new companies. [00:01:24] Speaker 03: Now, as the district court in AT&T read this provision, it [00:01:29] Speaker 03: it means that there is absolutely no binding right to arbitration. [00:01:35] Speaker 03: That in effect, everything in the agreement except for a hortatory right to use best efforts to meet and confer, that nothing binding in the contract applies as to those acquired operations. [00:01:51] Speaker 03: And if that were true, we would have expected parties to draft the agreement to say, this agreement shall not apply. [00:01:58] Speaker 03: But that's not what the parties wrote. [00:02:00] Speaker 03: The paragraph six of the agreement says that if the company acquires new companies, then the parties agree that this agreement shall apply to that acquired company. [00:02:11] Speaker 03: And the fundamental point the union makes here is that when the parties reference the agreement shall apply, they expect that the arbitration provision that is embedded within that agreement shall also apply. [00:02:24] Speaker 00: Can I ask you a question, Mr. Anderson? [00:02:27] Speaker ?: Yes. [00:02:28] Speaker 00: Under paragraph nine of the agreement, paragraph nine says, with the exception of matters referenced in paragraph three C above, the meaning or application of this argument shall not be subject to arbitration. [00:02:37] Speaker 00: So the agreement specifically says that some things are subject to arbitration and some things are not. [00:02:43] Speaker 00: And as I understand the question the Supreme court is currently considering in the Henry Schein two case, it dovetails with that kind of provision because it has to do with the circumstance in which the agreement [00:02:57] Speaker 00: provides for arbitration over some matters and carve outs over others. [00:03:02] Speaker 00: And I guess my question is, do you agree that the question that we have before us is bound up in the question that the Supreme Court has before it now in the Henry Schein case? [00:03:14] Speaker 03: Yes, I do. [00:03:15] Speaker 03: And if the Supreme Court reverses the Fifth Circuit in Henry Schein, it would not be necessary nor appropriate for this court to speak to the merits of the argument that's presented in Roman numeral one of my brief. [00:03:28] Speaker 03: You would simply refer that dispute to the arbitrator. [00:03:31] Speaker 00: Right. [00:03:31] Speaker 00: And the very issue before the Supreme Court is whether the issue gets referred to the arbitrator. [00:03:35] Speaker 03: Absolutely. [00:03:36] Speaker 00: The arbitrability question at the outset as opposed to the proper construction of the agreement. [00:03:40] Speaker 00: Absolutely. [00:03:40] Speaker 03: This court should not decide this case until we hear from the Supreme Court in Henry Schein. [00:03:47] Speaker 01: Mr. Anderson isn't, I mean the general rule about determining who determines arbitrability is a question of contract interpretation. [00:03:57] Speaker 01: So, I mean the contract here is obviously different from the contract in Henry Schein, right? [00:04:03] Speaker 01: I mean it has a general rule of no arbitration and then [00:04:07] Speaker 01: a specific area in which arbitration is to go forward. [00:04:12] Speaker 01: So I'm not sure that the contracts are necessarily analogous enough. [00:04:17] Speaker 01: And in any event, the court has to interpret the contract in order to determine the question of arbitrability. [00:04:24] Speaker 03: That's true, but in agreeing to proceed under AAA rules, the parties agree that disputes over the arbitrator's authority, that is, which disputes fall across the line of what is arbitrable and what is not, is delegated to the arbitrator. [00:04:40] Speaker 03: the court can't frame a consistent rule of law based on how big the carve-out is. [00:04:49] Speaker 01: Well, I guess I wouldn't say this is a carve-out. [00:04:51] Speaker 01: I think, I mean, this is a different kind of case because in most of those other cases, there's an arbitration provision that says something like all disputes to be governed by arbitration under AAA rules, maybe except for a few. [00:05:03] Speaker 01: But here, I mean, Section 3C is very [00:05:07] Speaker 01: specific about the narrow things that will be arbitrated. [00:05:11] Speaker 01: It says the issue of the description of such unit shall be submitted to arbitration. [00:05:16] Speaker 01: And then it goes on to say the arbitrator shall be confined solely to the determination of the appropriate unit for bargaining. [00:05:24] Speaker 01: And I think if you read that in connection with with section nine, which says with the exception of matters referenced in paragraph three, see the meaning or application of this agreement shall not be subject to arbitration. [00:05:36] Speaker 01: I mean, reading all of that together doesn't suggest a clear and unmistakable intent to leave questions of arbitrability to the arbitrator. [00:05:47] Speaker 03: That's correct as a general matter, except here, the union is coming to the arbitrator or wants to come to the arbitrator to say, we think that this is an appropriate unit that needs to be determined by you. [00:05:59] Speaker 03: And to the extent that there's a dispute over whether Time Warner units fall within the scope of the arbitrator's authority, that's exactly the kind of thing that's delegated under the AAA rules. [00:06:12] Speaker 01: Well, that goes to whether the dispute is arbitrable. [00:06:15] Speaker 01: It doesn't go to the dispute about whether a court or the arbitrator should decide arbitrability. [00:06:22] Speaker 03: Yes, but the point is there's a dividing line here between what's arbitrable and what's not. [00:06:28] Speaker 03: And the parties disagree about whether the time Warner units fall on what side of that line. [00:06:36] Speaker 03: And if the Supreme Court decides in Henry Schein, [00:06:40] Speaker 03: that the limitation on the arbitration clause doesn't change the arbitrator's authority to decide arbitrability under AAA rules, then there really isn't a meaningful distinction between this case and Henry Schein. [00:06:54] Speaker 03: Otherwise, the court would have to say, well, if there's an exception to a general rule of arbitrability, then the arbitrator gets to decide. [00:07:02] Speaker 03: But if a narrow subject matter is defined, [00:07:08] Speaker 03: then the court has the power to decide. [00:07:11] Speaker 03: That ends up making distinctions between an exception to the rule and a rule to which there are exceptions. [00:07:19] Speaker 03: And that simply doesn't result in a consistent rule of law. [00:07:23] Speaker 01: But, you know, I guess the overall question, though, still is under the Supreme Court's cases in First Options and its AT&T case, [00:07:31] Speaker 01: a question of contract interpretation. [00:07:33] Speaker 01: It's not a question about a general rule and a carve out and things like that. [00:07:36] Speaker 01: And every contract is arguably different and you have to take a look at the way a specific contract is written. [00:07:44] Speaker 01: I'm not sure that you can establish specific rules for the interpretation of every single contract because contracts are very diverse. [00:07:55] Speaker 03: That's true, but to the extent the parties knew what they were doing when they said that the arbitrator would be governed by AAA rules. [00:08:02] Speaker 03: And they knew that those AAA rules empowered the arbitrator to decide disputes about arbitrability. [00:08:09] Speaker 03: It doesn't matter whether the arbitrated matter is a small percentage or a large percentage of the total amount of disputes that might be subject. [00:08:18] Speaker 03: There's still a delegation with the arbitrator to decide that question. [00:08:24] Speaker 03: And if I may, I'd like to reserve my remaining time for rebuttal unless the court has further questions. [00:08:32] Speaker 00: Sure. [00:08:34] Speaker 00: Thank you, Mr. Anderson. [00:08:35] Speaker 00: We'll hear from Mr. Baskin now. [00:08:40] Speaker 02: Good morning, Murray Baskin for AT&T. [00:08:44] Speaker 02: We begin by saying that the district court had it exactly right. [00:08:48] Speaker 02: because the parties did not agree to arbitrate the issues arising under paragraph six, which I must say has been somewhat mischaracterized by imposing counsel because paragraph six is not merely a meet and confer provision. [00:09:04] Speaker 02: It establishes detailed binding obligations on the company that it otherwise would not have, which are legally enforceable about how to deal with new lines and acquisitions [00:09:18] Speaker 02: companies that are required. [00:09:22] Speaker 02: Moreover, the assumption was made that the agreement applies automatically to these new acquisitions. [00:09:29] Speaker 02: But in fact, it only applies to new acquisitions where there is no bargaining agreement in place. [00:09:37] Speaker 02: And in fact, the WarnerMedia acquisition is heavily unionized. [00:09:41] Speaker 02: This is a neutrality agreement to organize. [00:09:45] Speaker 02: Well, if it's already organized, it does not apply and that is what paragraph six means. [00:09:51] Speaker 02: And we have a general rule of arbitration not applying. [00:09:56] Speaker 02: This is what has already been discussed and I should turn to the Schein case because as for the reasons that we said and that have frankly been identified by Judge Grau, Schein is the flip side. [00:10:09] Speaker 02: It is not the same. [00:10:10] Speaker 02: And one need only look at the very narrow [00:10:14] Speaker 02: question on which SERP was granted in the Shine case, which was discussed extensively in the oral argument there, and it was described by commentators as the most prominent theme of the argument was how narrow the question was, because they assumed in the question that it was an otherwise clear and unmistakable delegation of the question of arbitrability as to the dispute to the arbitrator. [00:10:40] Speaker 02: And I think Justice Salido commented, well, once we've [00:10:42] Speaker 02: So that's the question. [00:10:44] Speaker 02: We pretty much answered it and it's such a narrow question. [00:10:47] Speaker 02: It's an artificial question. [00:10:49] Speaker 02: It is not the question in this case. [00:10:52] Speaker 02: We do not have a clear and unmistakable delegation to the arbitrator about an issue which the parties have designated as not covered by arbitration. [00:11:04] Speaker 00: it's ironic the union attorney isn't that just a question about how clear and unmistakable it is because there's if you think if one were to think that the incorporation of the aaa means that the question of arbitrability goes to the arbitrator at least in some situations covered by the agreement would you at least allow for that or do you dispute that [00:11:27] Speaker 02: It allows it for what it's specifically limited to, section three. [00:11:33] Speaker 00: So it allows for something. [00:11:34] Speaker 00: Yeah, I think then we're agreeing at least on the premise, which is it at least contemplates arbitrability of some things. [00:11:41] Speaker 00: And I'm not necessarily taking issue with your proposition that, well, OK, well, the things that it allows for arbitrability of are narrow. [00:11:50] Speaker 00: That may or may not be true. [00:11:53] Speaker 00: But I guess all I'm saying is, [00:11:55] Speaker 00: by incorporating the AAA rules as expressly as this does without any kind of caveating, then it's at least talking about are the arbitrator making arbitrability determinations in some corpus of situations. [00:12:11] Speaker 00: And then if one of the parties said, well, this is one of those situations and the other party says, well, no, it's not. [00:12:19] Speaker 00: then it seems like the difference we're talking about between this case and Henry Schein is kind of a ratio question of how big or small is the corpus of things as to which arbitrability goes to the arbitrator. [00:12:33] Speaker 00: And it's not immediately apparent to me why it at least wouldn't be the case that what the Supreme Court says in Henry Schein could bear on the resolution of a case like this and whether there's an admissible line to be drawn between cases where [00:12:49] Speaker 00: there's a narrower set of issues that are subject to arbitrability and the arbitrator determining arbitrability and contracts in which there's a broader set of situations in which the arbitrability question goes to an arbitrator. [00:13:07] Speaker 00: We're just talking about a ratio at that point. [00:13:09] Speaker 00: Or am I misunderstanding, please? [00:13:12] Speaker 00: Sorry. [00:13:12] Speaker 02: Sorry. [00:13:13] Speaker 02: Let me just provide two answers to that. [00:13:16] Speaker 02: One is that the Supreme Court [00:13:18] Speaker 02: unless they're going to overrule AT&T technologies. [00:13:21] Speaker 02: In that case, the Supreme Court said it does make a difference as to how broad or narrow the delegation is. [00:13:27] Speaker 02: And also the Supreme Court said that where there's a positive assurance that the arbitration clause does not discover the dispute in question, that too is a factor that is supposed to be considered. [00:13:39] Speaker 02: So the Supreme Court has always said that there are [00:13:43] Speaker 02: lines, degrees, and this is at the extreme opposite end from what is being talked about in the Henry Schein case. [00:13:50] Speaker 02: And I want to add one other reason that distinguishes this. [00:13:53] Speaker 02: It's a matter of faulty pleading that the union has identified not a single bargaining unit whose definition is improper and that needs to be arbitrary. [00:14:06] Speaker 02: They just make this broad conclusory statement in violation of Twombly and [00:14:11] Speaker 02: about the standard test, which the district court applied. [00:14:16] Speaker 02: And they don't identify a single unit that previously exists, which is all that the arbitrator would be allowed to consider. [00:14:23] Speaker 02: They don't identify a single unit, which is organizationally different. [00:14:27] Speaker 02: Not only that, they don't identify under paragraph six, a single unit of Warner media that is not already organized. [00:14:34] Speaker 02: And the irony of this is they have said that our reading [00:14:38] Speaker 02: paragraph six makes it meaningless. [00:14:40] Speaker 02: Well, their reading of paragraph three makes the entire rest of the agreement meaningless. [00:14:44] Speaker 02: It makes paragraph nine meaningless. [00:14:46] Speaker 02: The parties deliberately said they do not consent to arbitration on anything except that one. [00:14:52] Speaker 00: Can I say, it sounds to me like your argument at the end of the day is that the union's argument that this is arbitrable is totally groundless. [00:15:06] Speaker 00: And that's what Henry Schein said still goes to the arbitrator. [00:15:10] Speaker 02: Well, we haven't said that. [00:15:12] Speaker 02: What we have said is that the dispute is that it, two things, that the dispute at issue is totally under paragraph six, which has no arbitration provision. [00:15:22] Speaker 02: It has no delegation. [00:15:23] Speaker 02: There is no clear and unmistakable delegation. [00:15:27] Speaker 02: And one can say with positive assurance that it is not subject to arbitration and not subject to delegation [00:15:35] Speaker 02: to the arbitrator, combined with the failure of the union to plead with specificity a plausible unit that is in dispute. [00:15:49] Speaker 02: Without that, they don't get into the questions that are discussed where there is a clear and unmistakable delegation over a particular dispute. [00:15:59] Speaker 02: There is no particular dispute. [00:16:01] Speaker 02: identified anywhere in the union complaint. [00:16:04] Speaker 04: Mr. Baskin, if I, this is a hypothetical, if I don't agree with you about paragraph six, if I think that paragraph three C one is applicable here, [00:16:18] Speaker 04: Just assume that I think that's the case. [00:16:22] Speaker 04: The parties here are disagreeing about the definition of a bargaining unit, right? [00:16:27] Speaker 04: In other words, whether it includes time, work, or jobs. [00:16:30] Speaker 04: That's what the dispute is. [00:16:33] Speaker 04: So if the court decides that question, then what's left for the arbitrator? [00:16:40] Speaker 04: Isn't that what's left? [00:16:44] Speaker 02: Well, that's what AT&T Technologies [00:16:51] Speaker 04: But paragraph 3C1 says disputes arising under are subject to arbitration under the AAA rules. [00:17:01] Speaker 04: And under your view, that wouldn't occur. [00:17:03] Speaker 04: There would be no arbitration because it would be resolved by the district court. [00:17:07] Speaker 02: If there is no dispute over a definition of a previously existing unit, then that is the inevitable conclusion. [00:17:16] Speaker 02: So I guess it's the premise of the hypothetical cannot be accepted. [00:17:21] Speaker 02: Oh, because. [00:17:22] Speaker 04: Right, but under my hypothetical, you're eviscerating the arbitration part of it. [00:17:26] Speaker 04: There'd be no arbitration. [00:17:28] Speaker 04: That's why I said it was a hypothetical, if I'm right. [00:17:31] Speaker 04: If paragraph 3C1 applies, then would you concede then that if we think interpreting this contract that is subject to paragraph 3C1, would you then concede that the district court was wrong and that the question of [00:17:48] Speaker 04: whether it includes sign order jobs is subject to arbitration, right? [00:18:00] Speaker 04: You would agree with that. [00:18:04] Speaker 04: So the case terms really on the broader question that you were raising about the other aspects of the contract, right? [00:18:11] Speaker 04: And whether it's clear and indisputable. [00:18:13] Speaker 04: Okay, got it. [00:18:14] Speaker 04: Thank you. [00:18:15] Speaker 02: Yes, that is impossible. [00:18:16] Speaker 02: to make a finding that 3C1 applies. [00:18:19] Speaker 02: So we're- It's impossible what? [00:18:21] Speaker 02: It is impossible to make a finding under the plain reading of this agreement that 3C1 apply has any application. [00:18:28] Speaker 02: That's what the district court found. [00:18:29] Speaker 02: He said there's no indication whatsoever that the party's delegated to the arbitrator to decide the actual dispute, which is what to do with new entities and acquisitions. [00:18:41] Speaker 02: I see my time has run out, but thank you very much. [00:18:45] Speaker 00: Can I just follow up? [00:18:46] Speaker 00: I'm not following one thing, which is to say, if there's no dispute whatsoever, what's the difference between that? [00:18:53] Speaker 00: Where's the line between that and saying it's wholly groundless to say that the dispute is arbitrable? [00:18:59] Speaker 02: Well, I'm not frankly sure what the Fifth Circuit meant by wholly groundless. [00:19:06] Speaker 00: Well, what do they mean other than it's not there's no mistake. [00:19:09] Speaker 00: I mean, it just sounds it sounds similar to me, but I'm well, there are different there are different formulations. [00:19:14] Speaker 02: And that's why I prefer to use the formulation of the Supreme Court and AT&T technologies, which it has to be clear and unmistakable on the disputing question. [00:19:23] Speaker 02: And even where there is a presumption, if there is positive assurance, that's the Supreme Court's phrasing. [00:19:29] Speaker 02: I think that's a good good one. [00:19:30] Speaker 02: And there certainly is positive assurance. [00:19:33] Speaker 02: that that delegation has no application to this case and has not been pleaded to establish facts to justify that. [00:19:45] Speaker 00: Okay. [00:19:45] Speaker 02: Thank you. [00:19:46] Speaker 00: Thank you, Mr. Baskin. [00:19:48] Speaker 00: Mr. Anderson, we'll give you two minutes for your bottle. [00:19:53] Speaker 03: Thank you, your honor. [00:19:54] Speaker 03: Just to touch on two points. [00:19:56] Speaker 03: To the extent that council was arguing that the union's submission to the arbitrator is [00:20:03] Speaker 03: not ripe and insufficiently detailed. [00:20:06] Speaker 03: He's making a 12b6 type of argument, which is an argument for the arbitrator. [00:20:10] Speaker 03: It's for the arbitrator to decide whether the union's pleading meets sufficient requirements in order for him to decide a question. [00:20:22] Speaker 03: There is something that goes to the possibility that the Supreme Court may say that these issues are for the court that I do want to touch on. [00:20:31] Speaker 03: It is not correct to say that the parties did not in any way delegate matters under paragraph six to arbitration. [00:20:43] Speaker 03: Paragraph six D says, except as specified in paragraph nine, the union shall retain any legal rights it may have to challenge any management decision. [00:20:52] Speaker 03: which tells you that the parties understood paragraph nine somewhere to contain an obligation, a limitation on the union's ability to proceed outside the contract. [00:21:04] Speaker 03: And when you look at paragraph nine, aside from pledging best efforts to meet and confer, the only binding obligation to be found in paragraph nine is in the initial proviso, except as to disputes referenced in paragraph three C of this agreement. [00:21:21] Speaker 03: So that to the extent that the court may end up having to decide this question, you should see paragraph nine as being understood by the parties in paragraph six D as providing a binding obligation that limits the unions rights under background law and the only possible [00:21:40] Speaker 03: Part of paragraph nine that supports that is the proviso that preserves paragraphs 3C. [00:21:47] Speaker 03: So based on that, it's simply not true to say that the parties did not contemplate that paragraph 3C arbitration would apply to new entities under paragraph six. [00:21:57] Speaker 03: And I see my time is up, but I'm anxious to answer any questions. [00:22:04] Speaker 04: Could you just repeat once more in the clearest way you can [00:22:08] Speaker 04: Your answer to Mr. Baskin's argument that it's impossible to read this agreement as applying paragraph 3C1 to this case. [00:22:21] Speaker 04: Just as clearly as you can. [00:22:23] Speaker 04: What's your answer to that? [00:22:24] Speaker 03: The party said disagreement shall apply, which presumptively means that the arbitration provision within that agreement applies. [00:22:34] Speaker 03: Paragraph 6D identifies paragraph nine as a limitation on the union's background legal rights. [00:22:41] Speaker 03: And paragraph nine in turn provides only for paragraph 3C arbitration as the only meaningful form of limitation [00:22:51] Speaker 03: on the party's background rights and remedies. [00:22:53] Speaker 03: So to that extent, the parties agreed that paragraph three C arbitration will apply. [00:22:59] Speaker 00: Thank you. [00:23:02] Speaker 00: Okay. [00:23:02] Speaker 00: Thank you. [00:23:04] Speaker 00: Thank you to both counsel. [00:23:05] Speaker 00: We'll take this case under submission.