The union had a prior arbitration win on its side – it wasn't enough
A federal appeals court ruled a union cannot force arbitration over a healthcare benefits dispute tied to a prior arbitration award.
On March 23, 2026, the U.S. Court of Appeals for the Third Circuit ruled 2-1 that a union grievance over healthcare contributions did not belong in arbitration – even though the collective-bargaining agreement between the parties contained a broad arbitration clause. The decision reversed a lower court that had ordered the employer to the arbitration table.
The dispute traces back to 2021. Energy Harbor Nuclear Corporation owned and operated the Beaver Valley Power Station, a nuclear power plant in Pennsylvania, where IBEW Local 29 represented roughly 400 employees. Under the existing collective-bargaining agreement, the union ran its own healthcare plan, and Energy Harbor was required to contribute premiums to it. Each year, the company had to increase those contributions by the same percentage as any increase to its own health care plan.
When the union alleged that Energy Harbor had shortchanged its contributions, the matter went to an arbitrator. In February 2022, the arbitrator sided with the union, finding that the company should have raised its 2021 contributions by 6.7 percent instead of the 2.77 percent it actually paid. The arbitrator ordered Energy Harbor to pay the unions the difference. The award did not change the company's own health plan in any way, and it said nothing about 2022.
By the time the arbitration award was issued, the parties had already signed a new collective-bargaining agreement back in October 2021. That new agreement carried forward the same contribution-matching formula but also included a merger clause that wiped out all prior agreements not specifically identified and appended to the new deal. Because the arbitration award did not yet exist when the new agreement was signed, it was not appended. Neither were the original framework agreements.
Later in 2022, the union filed another grievance. This time, it argued that Energy Harbor had failed to factor the arbitration award into its 2022 contribution calculations. The company refused to arbitrate, saying the grievance had nothing to do with the new agreement.
The union sued to force arbitration and won at the district court level. The lower court reasoned that because the grievance referenced the CBA's contribution-matching provision, it fell within the arbitration clause.
The Third Circuit disagreed. The appeals court acknowledged that the arbitration clause was broad and that labor disputes are generally presumed to be arbitrable. But it found this particular grievance fell outside that clause. The contribution-matching provision only required Energy Harbor to match increases to its own health plan – and there was no evidence the company had increased its own plan costs from 2021 to 2022. The court concluded that the union's real claim stemmed from the prior arbitration award, not from the current agreement, and that citing the matching provision was, in the court's view, a superficial attempt to fit the claim into the new contract.
One judge dissented, arguing the majority crossed a line by evaluating the strength of the union's claim rather than simply asking whether the CBA contained a relevant provision. The dissent maintained that when a union points to a specific contractual right, the merits of that claim belong to the arbitrator, not the court – no matter how weak the case may appear.
For HR professionals managing unionized workforces, this case carries a practical warning. Merger clauses in successor agreements can quietly eliminate protections that unions assume will carry forward. An arbitration win under one contract does not automatically become part of the next. And even a broadly worded arbitration clause has limits – courts can look past how a grievance is framed to determine whether the underlying claim actually connects to the current agreement.
