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September 16, 2022 Practice Points

Non-Signatory May Be Stuck With Award

The court decided that a non-signatory may be bound by an agreement to arbitrate if it consents to arbitrate without reserving rights.

By Robert Arrington

Greenhouse Holdings, LLC, doing business as Clearview Glass and Glazing (Clearview Kentucky), operates a glass cutting and glazing business in Kentucky. It also owns 90 percent of a Tennessee company, Clearview Glass and Glazing Contractors of Tennessee, LLC, (Clearview Tennessee). Clearview Tennessee operates under a collective bargaining agreement (CBA). Clearview Kentucky is not a party to the CBA and has no separate CBA for its operation. The union at Clearview Kentucky filed a grievance against Clearview Glass which did not specify which entity, or what combination, was or were the respondent(s). The union, however, took the position that the CBA binds Clearview Kentucky as well as Clearview Tennessee. Clearview Kentucky disputes that contention but sent a representative to the arbitration hearing. The arbitrator found the CBA to be binding on Clearview Kentucky, and Clearview Kentucky moved to vacate the award in the U.S. district court.

The district court vacated the award as to Clearview Kentucky, and the union appealed.

The Sixth Circuit panel first disposed of two preliminary issues: Was there federal jurisdiction? Yes. This case is governed by the Labor Management Relations Act, and the motion to vacate was properly filed in U.S. district court under the language of the statute and “well-settled” case law. Was the motion to vacate timely filed? Yes. The union argued that the 90 day window to seek vacutur rain from the interim award that held the CBA binding on Clearview Kentucky. The court, however, found that the award was not “final” for purposes of the statute until entry of the final award. Measured by the latter date, the motion to vacate was timely.

Clearview Kentucky did not sign the CBA, which contains the agreement to arbitrate. It argued the arbitrator lacked jurisdiction over it. The court, however, said that a non-signatory may be bound by an agreement to arbitrate if it consents to arbitrate without reserving rights. Whether Clearview Kentucky did so was not litigated in the trial court. The circuit panel found that it should have been, unless the parties had agreed that the arbitrator should decide arbitrability. But there was nothing in the record to show the district court had made that inquiry, either.

Thus, the district court’s judgment was vacated, and the case remanded for further proceedings consistent with the opinion. Greenhouse Holdings, LLC v. Int’l Union of Painters, No. 21-6164, (6th Cir. July 26, 2022).

Robert Arrington is of counsel at Wilson Worley in Kingsport, Tennessee.

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