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Decided: March 8, 2016

The Fourth Circuit vacated and remanded the district court’s ruling.

The dispute in this case arises out of a contract signed by the United Mine Workers of America (“the Union”) and Peabody Coal Company. An arbitration clause in the contract provided that a “Jobs Monitor” would resolve any disputes involving the contract and that the decisions would be “final and binding on all parties” to the dispute. After Peabody Holding initiated a spinoff and formed a new entity, the Union alerted the Companies they were still bound by the initial contract. The entities claimed the spinoff ended their obligations. The dispute was submitted to the Jobs Monitor and the parties decided to bifurcate the issues to first resolve the questions of liability. The Jobs Monitor ruled in favor of the Union.

Appellants Peabody Holding Company, LLC and Black Beauty Coal Company, LLC seek to vacate the arbitrator’s decision against them by filing a declaratory judgment action. The Union filed a counterclaim to enforce the decision and dismiss the Companies’ complaint by arguing the judicial review of the Job’s Monitor’s decision was not proper until arbitration was complete. The district court denied the Union’s motion to dismiss due to disagreement as to the nature of the complete arbitration rule but granted the Union’s motion for summary judgment by enforcing the arbitrator’s decision as to the liability decision.

The issue in case calls for a straightforward application of the complete arbitration rule, which provides that a federal court should refrain from reviewing an arbitrator’s decision until all facets of the dispute have been decided. Here, the labor arbitrator first decided the liability questions but retained jurisdiction to decide remedial questions at a later date. The Companies argue, however, that the complete arbitration rule should not apply because the parties decided to bifurcate their dispute into separate liability and remedial proceedings, therefore allowing judicial review of the labor arbitrator’s liability decision.

The Court ruled that bifurcation of the issues does not change the fact that the parties agreed to submit the entire dispute to arbitration. Because arbitration plays a critical role in our nation’s system of labor relations and the arbitration provision was freely and contractually entered into, the Court held that a federal court should withhold review of the arbitrator’s decision until the remedial questions have been ruled on as well.

Accordingly, the Court vacated the district court’s ruling and remanded to the arbitrator for further proceedings.

Full Opinion

Whitney Kamerzel