Revocation of Required Security Clearance does not Change Nature of Discharge Dispute subject to Arbitration

In Int'l Bhd. of Elec. Workers Local 2150 v. NextEra Energy Point Beach, LLC (2014 WL 3895757), NextEra attempted to avoid arbitration after terminating an employee by claiming the discharge and arbitration was dependent on the separate issue of maintaining security clearance and outside the arbitration agreement. NextEra employed John Hofstra at their Point Beach nuclear power plant.  In order to comply with Nuclear Regulatory Industry standards, employees had to maintain specific security clearance.  After Hofstra reported that he was being charged with a DUI, NextEra revoked his security clearance and fired him shortly after.  The Union then filed a grievance alleging NextEra terminated Hofstra without just cause.  NextEra denied the grievance and refused to arbitrate the claim.  The Union then moved to compel arbitration, was denied, and appealed to the Seventh Circuit.

The Seventh Circuit stated a decision to deny or compel arbitration is determined by the claim’s facial applicability to the arbitration clause and will not be denied unless positive assurance demonstrates otherwise.  Both public policy and law (29 U.S.C. 173(d)) strongly favor arbitration.  Here, the arbitration provision stated that any termination without just cause is subject to a grievance procedure followed by arbitration.  It specifically directed discharge disputes to arbitration.

NextEra attempted to argue that the clause applied only to disciplinary discharges.  They claimed Hofstra’s discharge was not disciplinary, but resulted from the loss of security clearance.  They argued the dispute was not subject to arbitration, and, alternatively, that forceful evidence of intent to exclude this type of dispute existed.  The Court rejected the claim that failing to meet the terms and conditions of employment was not disciplinary.  However, the Court declined to hold that the issue of revoking security clearance was subject to, or reversible by, arbitration.  The Seventh Circuit stated that NextEra could have demonstrated the arbitration clause did not apply to this type of discharge, but provided no positive assurance.  NextEra premised their final claim on the rule that an arbitration agreement can be avoided if the opposing party provides “forceful evidence of a purpose to exclude the claim from arbitration.”  NextEra offered evidence of bargaining history and established practices, but the bargaining history addressed security disputes, not discharge disputes, and the established practices were unilaterally created by NextEra, not both parties.

Because the arbitration clause applied to the dispute, the Seventh Circuit reversed the district court decision and ordered arbitration.