Granite Rock Company v. International Brotherhood of Teamsters
United States Court of Appeals for the Ninth Circuit
22 October 2008
Cite as 07-15040

CBA Tortious Interference and Arbitration Agreement

Granite Rock, the petitioner herein, is a California company supplying ready mixed concrete for commercial use.

One of the respondents, International Brotherhood of Teamsters, Local 287, represents certain employees at Granite Rock’s San Jose Facility, while the other respondent, the International Brotherhood of Teamsters (IBT), is the union where Local 287 is affiliated.

It appears that Granite Rock and Local 287 had an existing Collective Bargaining Agreement (CBA). Before the expiration of which, the parties began negotiation. During the course of the process, IBT, thru its General President, advised Local 287 that certain provisions of the CBA were inadequate.

After the CBA expired, no resolution was reach between Granite Rock and Local 287. Members of the Local 287 went on strike. Shortly thereafter, negotiation resumed and the parties reached a tentative four-year agreement. This agreement contained a broad arbitration clause requiring the parties to arbitrate “all disputes arising under this agreement.”

During the end of the successful bargaining session, Local 287 told Granite Rock CEO that they will put the new CBA to a vote among the union members, would recommend ratification and would cease picketing. The topic of “back-to-work” agreement was agreed to be discussed on a later date.

Thereafter, the new CBA was allegedly ratified. However, IBT and members of Local 287 called workers to instruct them not to return to work the next day. On that day, an officer of Local 287 demanded a back to work agreement that would explicitly shield Local 287, its member, and IBT from any liability arising from the strike.

Granite refused to sign such an agreement so Local 287 continued its strike in violation of no-strike clause. Granite Rock then sued Local 287 and the IBT under section 3019(a) of the Labor Management Relations Act.

It anchored its action against Local 287 on the latter’s breach of the CBA and against IBT for tortuous interference with the CBA between Granite and Local 287.

The district court dismissed the claim against IBT under Federal Rule of Civil Procedure for failure to state a claim. While the dispute between Granite Rock and Local 287 was denied by the district court to compel arbitration. Granite appeals.

The United States Court of Appeals concluded that the district court was correct in dismissing Granite Rock’s claim against IBT because a claim for tortious interference cannot be said to “arise under” the new CBA between Granite Rock and Local 287 following the ruling in Majestic Housing, 743 F.2d at 1345. That agreement, said the Court, did not mention IBT, and did not govern any rights or duties of IBT. Indeed, Granite Rock concedes that the alleged tortious interference could only be a violation of a general tort duty, not a violation of any specific contractual duty.

As to the dismissal of the motion to compel arbitration, the Court held that following the decisions of the Supreme Court, a party generally may not sue in federal court under a contract that, by its terms, require arbitration.

In this case, Granite Rock brings a section 301(a) breach of contract action based on its alleged new CBA with Local 287, which includes an arbitration clause covering “[a]ll disputes arising under this agreement.” This clause is broad enough to cover the dispute over contract formation, and Granite Rock does not make an independent challenge to the arbitration clause. Granite Rock “thus ha[s] no ground on which to repudiate the arbitration agreement.”

The Court dismissed Granite Rock’s claim in favor of arbitration.