Cases & Deals

Verizon wins unanimous Third Circuit ruling regarding obligation to arbitrate disputes with union

Clients Verizon Communications, Inc.

Jones Day represented Verizon Communications, Inc. and obtained a unanimous decision from the United States Court of Appeals for the Third Circuit holding that the arbitration provision in Verizon's collective bargaining agreement with Local 827 of the International Brotherhood of Electrical Workers is a "narrow" provision that makes only a few specific types of disputes subject to mandatory arbitration.

For many years, the IBEW had insisted that the arbitration provision was broadly crafted and required arbitration of every grievance that was not adjusted to the Union's satisfaction. The Union deluged the Company with dozens or hundreds of grievances annually and demanded arbitration on virtually all of them. When Verizon refused to arbitrate certain grievances, the IBEW sued in federal court, seeking an order that Verizon must arbitrate the grievances in question. Applying a legal presumption in favor of the arbitrability of labor disputes, the United States District Court for the District of New Jersey ruled in favor of the Union. Verizon then appealed to the Third Circuit.

In a decision written by Judge Dolores Korman Sloviter, the Third Circuit reversed the District Court and ordered that judgment be entered in favor of Verizon. The Court rejected the Union's argument that, because the contract's grievance provision was sweeping in its application, the arbitration provision must be similarly all-encompassing. The Court further noted that, "because the arbitration clause clearly limits the matters subject to arbitration," the District Court "erred by applying the presumption of arbitrability" in this case.

As a result of this ruling, Verizon will be able to reduce substantially the amount of management time and company resources expended on arbitrating grievances of little significance and dubious merit.

Local 827, International Brotherhood of Electrical Workers, AFL-CIO v. Verizon New Jersey, Inc; Verizon Services Corporation, No. 05-3613 (3d Cir. August 17, 2006)