International Brotherhood of Teamsters, Local 396 v. NASA Services, Inc., No. 19-55166 (9th Cir. 2020)
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The Ninth Circuit reversed the district court's order compelling arbitration of a labor dispute between a waste management company, NASA Services, and the union. The company and union signed a Labor Peace Agreement containing an arbitration clause, and the agreement's terms were expressly conditioned upon the City entering into an exclusive franchise agreement with NASA.
The panel held that the agreement clearly and unambiguously contains a condition precedent to formation that is both ascertainable and lawful. Therefore, NASA and the union were parties to a proposed agreement that would become operative, effective, and enforceable if and only if the condition precedent therein was satisfied. Consequently, the condition failed and the district court may not compel arbitration.
Court Description: Labor Law. The panel reversed the district court’s order compelling arbitration of a labor dispute and remanded. A waste management company and a union signed a Labor Peace Agreement containing an arbitration clause. The LPA’s terms were conditioned upon the company entering into an exclusive franchise agreement with the City of Los Angeles by December 31, 2016. The franchise agreement was signed by the President of the Board of Public Works on January 31, 2017. The panel held that under California contract law, the LPA clearly and unambiguously contained a condition precedent to formation, rather than a condition precedent to performance. If the condition precedent failed, then there was no contract. The panel remanded for the district court to determine in the first instance whether the city and the company entered an exclusive franchise agreement by December 31, 2016. The panel held that if that condition failed, then the district court could not compel arbitration. INT’L BHD. OF TEAMSTERS V. NASA SERVS. 3
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