Nolde Brothers and the Union were parties to a collective-bargaining agreement covering bakery employees that required arbitration of "all grievances" and included a severance-pay provision for employees with at least three years of service. After negotiations for a new agreement failed, the Union gave written notice terminating the agreement effective August 27, 1973. Four days later, Nolde permanently closed the bakery, paid accrued wages and vacation pay, but refused both the Union's demand for severance pay and its demand to arbitrate, arguing that any duty to arbitrate ended with the contract.
Issue
Whether a party may be compelled to arbitrate a dispute over severance pay under the arbitration clause of an expired collective-bargaining agreement when the dispute arises after termination of the agreement but is governed by that agreement. Put differently, does the duty to arbitrate automatically end when the contract terminates as to disputes arising under the contract?
Rule
Termination of a collective-bargaining agreement does not automatically extinguish the duty to arbitrate disputes arising under that contract. Where the dispute concerns a provision of the expired agreement, and the arbitration clause is broad, presumptions favoring arbitrability apply and are overcome only if post-termination disputes are excluded expressly or by clear implication.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Granite Valley Packaging in Toledo, Ohio, and Warehouse Employees Guild had a collective-bargaining agreement requiring arbitration of “all grievances” and providing a relocation stipend for employees transferred or displaced after at least four years of service. The agreement expired during bargaining for a successor, and ten days later the company shut its Toledo warehouse and refused both to pay the stipend and to arbitrate, arguing that the arbitration promise ended with the contract.
If the union files a § 301 action to compel arbitration, how should the court rule?
Explanation. The majority held that expiration of a collective-bargaining agreement does not automatically extinguish the duty to arbitrate disputes arising under that agreement. Where a post-termination dispute depends on competing interpretations of a provision in the expired contract, and the arbitration clause is broad, presumptions favoring arbitrability apply unless post-termination disputes are excluded expressly or by clear implication. The court decides arbitrability, not the merits of whether the stipend is actually owed. (Derived from Nolde Brothers, Inc. v. Local No. 358, Bakery & Confectionery Workers Union, AFL-CIO (1977).)