Montana Public Employees’ Assoc. (MPEA) v. City of Bozeman

Montana Public Employees’ Assoc. (MPEA) v. City of Bozeman, 2015 MT 69 (March 3, 2015) (Baker, J.) (5-0, rev’d)

Issue: (1) Whether the district court improperly decided an issue of procedural arbitrability; and (2) whether the dispute is substantively arbitrable.

Short Answer: Yes, and (2) yes.

Reversed and remanded

Facts: Following the employee grievance procedure in the collective bargaining agreement between MPEA and the city of Bozeman, MPEA gave timely notice in 2009 to the city of its decision to arbitrate the grievance of a terminated employee, Robert Chase. MPEA then failed to timely request a list of potential arbitrators from the Montana Board of Personnel Appeals. In June 2010, the city declined to participate in arbitration on the basis of that failure.

Procedural Posture & Holding: MPEA filed suit in April 2013 seeking declaratory judgment that the city must participate in arbitration. The city counterclaimed for declaratory relief, and both parties moved for summary judgment. Concluding that Chase’s grievance did not survive MPEA’s failure to adhere to the time limits in the agreement, and that MPEA waived any right to arbitrate through its four-year delay, the district court granted summary judgment to the city. MPEA appeals, and the Supreme Court reverses.

Reasoning: (1) An arbitration agreement is a matter of contract law. Questions of substantive arbitrability concern whether a valid arbitration agreement exists, and whether the issue falls within the agreement’s terms. If the arbitration agreement is valid, procedural questions are to be decided by the arbitrator. MPEA’s adherence to time limits or issues of waiver, are procedural issues to be decided by the arbitrator.

(2) The agreement’s arbitration clause addresses all disputes involving the agreement. There is no dispute that an employee’s dismissal is an issue the parties agreed to arbitrate, nor is there a dispute about the validity of the parties’ agreement to arbitrate. The dispute is substantively arbitrable and all other issues are left to the arbitrator.