We’ve made over the last several months months a point of discussing arbitration-enforcement litigation cases addressing the subject-matter jurisdiction because—particularly in the context of the Federal Arbitration Act (the “FAA”)—it is not only complex but frequently counterintuitive. (See here, here, and here.) This case— International Union, United Mine Workers of Am. v. Consol Energy Inc., ___ F.4d ___, No. 22-7110, slip op. (D.C. Cir. August 9, 2024)—caught our eye because the Court held that that it lacked subject-matter jurisdiction over the plaintiff on one ground and over the defendants’ counterclaim on an independent ground, Article III standing.
Background
The United Mine Workers of America (the “Union”) and coal mining companies (the “Mining Companies”), all subsidiaries of Consol Energy, Inc. (“Consol”), signed a collective bargaining agreement (the “CBA”) but Consol did not. The CBA provided for arbitration of grievances. It also provided to Union members lifetime health care benefits. The Union claims that the Mining Companies could not reduce benefits unilaterally, even if a member no longer mined coal.
For its part Consol was the Mining Companies’ health care administrator. Prior to the CBA’s expiration date, Consol informed the Mining Companies’ mining employees that Consol would consider modifying miner benefits once the CBA expired.
That prompted a retired miner to file a grievance against Consol, an arbitration followed, and with the support of the Union, the miner obtained an award in his favor. The arbitrators determined they had jurisdiction over Consol, a nonsignatory to the CBA, which by the time the arbitration took place, had expired. They also determined that the proposed benefit modifications would violate the CBA and made an award that prohibited Consol from making them.
The Union brought against Consol and the Mining Companies an action in district court to confirm the award, invoking Labor Management Relations Act (“LMRA”) Section 301(a)’s grant of subject-matter jurisdiction over actions “for violation of contracts between an employer and a labor organization.” 29 U.S.C. § 185(a). Consul and the Mining Companies brought a separate action to vacate the award, and the district court consolidated the two cases.
Prior to the district court reaching its decision Consol was split into two successor entities and otherwise ceased to exist. One of the two was joined but the district court dismissed it because its business did not concern coal mining. The other successor entity (the parent of the Mining Companies) was never made a party. The Mining Companies remained parties to the consolidated action.
The district court dismissed on standing grounds the Union’s confirmation action. It found the Union suffered no injury because there was no CBA violation. While Consul proposed to modify benefits it never did so. But the district court nevertheless determined on the merits that there was no basis for vacating the award, either. An appeal by both parties followed.
Subject-Matter Jurisdiction: The D.C. Circuit’s Decision
The D.C. Court of Appeals determined that “[n]o party in this appeal has shown that federal courts have jurisdiction over its claim.” United Mine Workers, slip op. at 8. It therefore affirmed the district court’s dismissal of Union’s claim, vacated the district court’s determination on the merits of the vacatur counterclaim, and remanded the counterclaim with instructions to dismiss it on standing grounds. Id.
The District Court had No Subject-Matter Jurisdiction to Confirm the Award
The Union predicated subject-matter jurisdiction on Section 301(a) of the LMRA but the Court found that Section 301(a) did not provide a jurisdictional basis, irrespective of whether the district court’s decision about standing was correct. “Section 301(a)[,]” said the Court, “authorizes certain federal suits ‘for violation of contracts between an employer and a labor organization.’” Slip op. at 4 (quoting 29 U.S.C. § 185(a); emphasis in original).
But, as the Court explained, under U.S. Supreme Court authority, “§ 301(a) does not authorize suits contemplating a future contract violation.” Slip op. at 4 (citing Textron Lycoming Reciprocating Engine Division, AVCO Corp. v. Automobile Workers, 523 U.S. 653, 656-57 (1998)). Textron, the Court said, held that a Court has jurisdiction under Section 301(a) only when the plaintiff alleges a violation of the CBA. Slip op. at 4.
Here, the Union conceded “that it has not alleged a contract violation[,]” which put the case on all fours with Textron. Slip op. at 5. The Union merely “anticipated that Consol would violate the collective bargaining agreement in the future, and the Union sought to confirm an arbitration award prohibiting that future conduct.” Slip op. at 5.
The Court therefore held that Section 301(a) did not authorize subject matter jurisdiction. Because the Union asserted no other basis for federal subject-matter jurisdiction, the Court concluded it was proper for the district court to dismiss. Slip op. at 6.
The Mining Companies Had No Standing to Vacate the Award
As respects the counterclaim to vacate the award, the Court concluded that the Mining Companies had “not shown how they are injured by an arbitration award to which they are not a party, they lack standing to challenge it.” Slip op. at 6.
To establish standing for their counterclaims, the counter claimants had to “show ‘(1) an injury-in-fact, (2) causation, and (3) redressability.’” Slip op. at 6 (quoting Kapur v. FCC, 991 F.3d 193, 196 (D.C. Cir. 2021)).
As respect the injury-in-fact requirement there “must be ‘an invasion of a legally protected interest which is (a) concrete and particularized. . . and (b) actual or imminent, not conjectural or hypothetical.’” Slip op. at 6 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (cleaned up)). But there was none. The Mining Companies were not named parties to the award and the award did not purport to require anything of them. Slip op. at 6-7 (record citations omitted).
While the award might have injured Consol, who was the Mining Companies “former parent and healthplan administrator[,]” “[b]ut Consol no longer exists. . . .” Slip op. at 7.
Nor were the Mining Companies authorized to assert the claim on Consol’s behalf. Slip op. at 7. Consol was split into two successors and the successor who might have asserted Consol’s claims was never made a party to the litigation. Id. (record citations omitted). (The Court did not decide whether this company, the Mining Companies’ new parent or healthcare administrator, would have had standing. Slip op. at 7 n.5.)
There was also no injury-in-fact because the Mining Companies’ allegations of injury were speculative. The Mining Companies asserted that the legal conclusions set forth in the award could be used against them in other arbitration proceedings. “But[,]” explained the Court, “that theory requires quite a chain of ‘maybes[:]’”
Maybe the Subsidiaries will someday become their own plan administrators; maybe they will unilaterally reduce benefits; maybe the Union will file another arbitration grievance; and maybe the arbitrator will apply the Consol award’s legal conclusions.
Slip op. at 7.
“Or[,]” as the Court put it, “maybe not.” Slip op. at 7. The mining companies were neither named or otherwise parties to the award. Slip op. 7. The CBA apparently authorized arbitrators to revisit previous awards. And, in any event, “‘the mere fact that an adjudication creates a precedent that could harm a non-party does not create the injury-in-fact required for Article III standing.’” Slip op. at 7-8 (quoting Conference Group, LLC v. FCC, 720 F.3d 957, 959 (D.C. Cir. 2013)).
Observing that the Mining Companies “have not shown an injury that is both concrete and imminent,” the Court concluded that they lacked standing. Slip op. at 8.
Putting Aside the Lack of Article III Standing, Did the Court have a Basis Under LMRA Section 301(a) for Subject-Matter Jurisdiction over the Vacatur Counterclaim?
The Court did not rule on whether there was a basis for subject matter jurisdiction under LMRA Section 301(a) over the vacatur counterclaims. Having found no standing under Article III, the Court understandably did not need to address the question whether the vacatur counterclaim alleged a violation of the collective bargaining agreement.
That question was fairly straightforward as respects the claim to confirm the award because the Union did not allege that the arbitration or the award resulted from a violation of the CBA, or that the Award itself suggested that such a violation had occurred. But whether the vacatur counterclaim alleged such a violation presented a different question. The counterclaim presumably alleged that the award had to be vacated because its making itself constituted a violation of the CBA. That suggests that, but for the lack of Article III standing, there was a basis under Section 301(a) for subject-matter jurisdiction. While the Court did not need to rule on this question, it is easy to see how it could arise in a future case.
Contacting the Author
If you have any questions about this article, arbitration, or arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094 or PJL1@LoreeLawFirm.com.
Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has nearly 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act, as well as in insurance or reinsurance-related, and other, matters.
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Tags: 301(a), Article III, Award, collective bargaining agreement, Confirm, Consol, D.C. Circuit, healthcare benefits, Injury-in-Fact, Labor Arbitration, Labor Management Relations Act, LMRA 301, Miners, Mining Companies, Standing, Subject Matter Jurisdiction, Subsidiaries, suit, Textron, United Mine Workers of America, Vacate
