Kaiser Foundation Health Plan v. Office and Professional Employees…

Background

Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and the Permanente Medical Group, Inc. sued Office and Professional Employees International Union, Local 29, AFL-CIO, over Local 29’s participation in a sympathy strike on November 18, 2021. Kaiser alleged that the strike breached the parties’ collective bargaining agreement. The complaint sought specific performance of the agreement, an order requiring arbitration, and damages or other relief for breach of contract.

The agreement stated that there would be no strikes, lockouts, or work stoppages and that disputes would be resolved through the agreement’s grievance procedure. It set out several grievance steps and stated that disputes involving work stoppages would be settled through that procedure. Kaiser submitted a grievance after Local 29 notified Kaiser of its intent to join the sympathy strike. After Local 29 did not respond, Kaiser advanced the grievance to the second step. Local 29 responded that Kaiser had not processed the grievance on time and had therefore waived it. Local 29 refused to arbitrate, arguing that the grievance was untimely.

Local 29 moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the dispute was not subject to arbitration and that Kaiser had not adequately alleged a breach of the agreement. Kaiser argued that the agreement required arbitration and that procedural questions should be decided by the arbitrator.

Arbitration

The court explained that it decides whether a dispute is substantively arbitrable—meaning whether the parties agreed to arbitrate that type of dispute—unless the agreement clearly and unmistakably gives that decision to the arbitrator. The court found that the agreement did not give the arbitrator authority to decide arbitrability, so the court addressed that question.

The court held that Kaiser had a right to arbitrate the grievance. The agreement was ambiguous because its statement that “all disputes” involving work stoppages would be resolved through the grievance procedure suggested that either party could submit such a dispute, while other provisions referred to grievances involving employees or stated that the union could appeal a grievance. The court reasoned that interpreting the agreement to prevent Kaiser from starting arbitration could leave Kaiser without a remedy if Local 29 breached the agreement.

Because the agreement did not provide clear assurance that arbitration was barred, the court held that the dispute must be arbitrated. The court separately held that procedural questions—including whether the grievance was timely and whether either party waived rights—must be decided by the arbitrator because factual disputes existed about those issues.

Disposition

The court DENIED Local 29’s motion to dismiss. It also set a case-management conference for October 3, 2023, to discuss the proper mechanism for sending the case to arbitration. The opinion does not state that the claims were dismissed or that the case was closed.