                      FOR PUBLICATION

      UNITED STATES COURT OF APPEALS
           FOR THE NINTH CIRCUIT

 SEIU UNITED HEALTHCARE                              No. 13-55672
 WORKERS-WEST,
              Petitioner-Appellant,                    D.C. No.
                                                    2:12-cv-09387-
                      v.                                 R-SH

 LOS ROBLES REGIONAL MEDICAL
 CENTER,                                               OPINION
              Respondent-Appellee.


         Appeal from the United States District Court
            for the Central District of California
          Manuel L. Real, District Judge, Presiding

                    Submitted March 6, 2015*
                      Pasadena, California

                     Filed December 3, 2015

      Before: Harry Pregerson, Barrington D. Parker, Jr.**,
          and Jacqueline H. Nguyen, Circuit Judges.

                   Opinion by Judge Pregerson


  *
    The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
 **
    The Honorable Barrington D. Parker, Jr., Senior Circuit Judge for the
U.S. Court of Appeals for the Second Circuit, sitting by designation.
2           SEIU V. LOS ROBLES REG’L MED. CTR.

                           SUMMARY***


                             Labor Law

    The panel reversed the district court’s summary judgment
and vacated its order dismissing a petition to compel
arbitration under Section 301 of the Labor Management
Relations Act.

   Service Employees International Union, United
Healthcare Workers-West, and Los Robles Regional Medical
Center were parties to a collective bargaining agreement.
The Union sought arbitration of a grievance objecting to
the Medical Center’s reorganization of its engineering
department.

     The panel held that the Union’s petition to compel
arbitration was not barred by Section 301’s six-month statute
of limitations because the limitation period did not begin to
run until the Medical Center officially replied to the Union’s
letter demanding arbitration. Reading the record in the light
most favorable to the Union, the non-moving party, the panel
concluded that an earlier email from the Medical Center did
not “make it clear” that the Medical Center refused to
arbitrate because the Union did not request arbitration until
after the email was sent. The panel concluded that the
Medical Center’s delay in responding to the Union’s letter
demanding arbitration must be considered a violation of good
faith because the five-month delay was a period of time
nearly equal to the entire six-month limitation period.

  ***
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
          SEIU V. LOS ROBLES REG’L MED. CTR.                  3

    The panel reversed the district court’s grant of summary
judgment and remanded for further proceedings. It vacated
the district court’s award of costs for reconsideration in light
of the reversal of summary judgment.


                         COUNSEL

Bruce A. Harland, Monica T. Guizar, and Jacob J. White,
Weinberg, Roger, & Rosenfeld, PC, Los Angeles, California,
for Petitioner-Appellant.

Paul Ramsey Beshears, Ford & Harrison, LLP, Atlanta,
Georgia; Michelle B. Abidoye, Ford & Harrison, LLP, Los
Angeles, California for Respondent-Appellee.


                          OPINION

PREGERSON, Circuit Judge:

    Service Employees International Union, United
Healthcare Workers-West (the Union) appeals the district
court order granting summary judgment to Los Robles
Regional Medical Center (the Medical Center) and dismissing
the Union’s Petition to Compel Arbitration under Section 301
of the Labor Management Relations Act, 29 U.S.C. § 185.

    The district court ruled that the Union’s September 20,
2012 Petition to Compel Arbitration was time barred by
Section 301’s six-month statute of limitations. The district
found that the limitations period started to run on December
2, 2011, when the Medical Center emailed an “unequivocal,
express rejection of the union’s request for arbitration.”
4           SEIU V. LOS ROBLES REG’L MED. CTR.

Local Joint Exec. Bd. v. Exber, Inc., 994 F.2d 674, 676 (9th
Cir. 1993). The Union disputes that Medical Center’s
December 2, 2011 email “[made] it clear” that the Medical
Center refused to arbitrate. Id. at 676. The Union argues that
Section 301’s six-month limitation period did not begin to run
until the Medical Center officially replied on June 22, 2012,
to the Union’s January 17, 2012 letter demanding arbitration.

    We have jurisdiction under 28 U.S.C. § 1291. We reverse
the grant of summary judgment, vacate the district court’s
order dismissing the Petition to Compel Arbitration, and
remand to the district court for further proceedings. We also
vacate the award of costs in light of our reversal of summary
judgment.1

                                    I.

                           A. The Dispute

   The Union and the Medical Center were parties to a
Collective Bargaining Agreement (the Agreement) effective
January 21, 2011, through March 31, 2014. The Medical
Center campus pertinent to this litigation is located in
Thousand Oaks, California.

    Edwin Valdez, the Union’s representative, filed a
grievance on October 5, 2011, objecting to the Medical
Center’s reorganization of the engineering department. The
Medical Center’s reorganization eliminated four Stationary
Engineer positions and created the new bargaining unit of



 1
   The costs of this appeal are taxed against the Medical Center. See Fed.
R. App. P. 39(a)(3).
            SEIU V. LOS ROBLES REG’L MED. CTR.                          5

Boiler Attendant.2 The four former Stationary Engineers
were re-designated as Boiler Attendants, which resulted in a
significant cut to their pay. The grievance alleged violations
of articles 32,3 44,4 and 605 of the Agreement.

    The Union alleged that the Medical Center violated the
Agreement because the reorganization: (1) resulted in loss of
wages to its members; (2) was retaliatory because of the
engineers’ safety complaints; and (3) was made during a
period that was covered by the Agreement.

   The Agreement provides for a three-step sequential
process for resolving employment grievances. At Step 1, the
Union must file its grievance in writing with the Medical
Center. The Medical Center must respond in writing, and the

 2
   The Medical Center claims that California Code of Regulations, Title
8, § 781 forced the reorganization of the engineering department and the
creation of the new position of Boiler Attendant. This portion of the
California Code of Regulations was last amended in December 31, 1974.
An email message concerning the safety of the Medical Center’s boilers
from a Union field representative on February 14, 2011, brought
California Code of Regulations, Title 8, § 781 to the attention of the
Medical Center.
 3
   Article 32 of the Agreement states: “This Agreement shall be effective
January 21, 2011 and shall remain in full force and effect without change,
addition, or amendment through March 31, 2014.”
 4
   Article 44.1 of the Agreement states: “Neither [the Medical Center] nor
the Union shall discriminate against an employee based on Union
Activity.”
  5
   Article 60 of the Agreement pertains to wages. In particular, Article
60.1 grants the employer discretion for wage increases, but requires the
Medical Center to notify the Union, as well as to meet and confer about
proposed wage changes.
6         SEIU V. LOS ROBLES REG’L MED. CTR.

parties may schedule a Step 1 meeting to address the
grievance. If the grievance is not resolved at Step 1, the
Union may then move to Step 2 by written request. Again,
the Medical Center must respond in writing, and the parties
may schedule a Step 2 meeting to address the grievance. If
the grievance is not resolved at Step 2, then the grievance
may be sent to arbitration at Step 3. The Union is required to
notify the Medical Center in writing of its intention to
arbitrate. The Medical Center may agree to arbitrate, and the
Agreement provides procedures for selecting a
mutually-agreeable arbitrator.

    On October 24, 2011, Valdez inquired whether the
Medical Center would be willing to move the grievance
directly to arbitration, which would mean jumping straight to
Step 3 of the Agreement’s grievance process. That same day,
Jonathan Berke, the Medical Center’s Labor Relations
Director, denied Valdez’s request, claiming that the Union
did not provide information explaining how its claim was
grievable and arbitrable. Berke stated that the matter was not
grievable and was precluded from arbitration pursuant to
Article 22 of the Agreement, which excludes the Medical
Center’s staff reduction decisions from arbitration.

   The following day, October 25, Valdez met with Berke
and Patrick Smith, the Medical Center’s Director of Facilities
Management, but the parties were unable to resolve the
October 5 grievance during this meeting. Smith later
described this October 25 event as “our Step-1 meeting.”

    On November 9, 2011, Smith informed Valdez via a
formal letter on the Medical Center’s letterhead, delivered
electronically, that the grievance was “not subject to the
grievance and arbitration procedure of [the Agreement]”
          SEIU V. LOS ROBLES REG’L MED. CTR.                 7

because it was covered by Article 22, Reduction in Staff, and
not Articles 32, 44, and 60. This series of events corresponds
with Step 1 of the Agreement’s grievance process.

    On November 28, 2011, Valdez requested that the
Medical Center continue to follow the terms of the
Agreement’s grievance process and hold a Step 2 meeting
with the Union. Berke refused to meet with Valdez. On
December 2, 2011, Berke emailed Valdez, stating, “I am
declining to process this grievance as this matter is neither
grievable nor arbitrable.” On December 15, 2011, Valdez
sent an email to Berke stating, “[I]f you are refusing to
schedule a step II meeting, we have no choice but to . . . move
this matter to the next step (arbitration).” In response, Berke
again declined to process the grievance that day.

    Following the grievance process procedure, in a letter
dated January 17, 2012, Valdez notified Berke that the Union
appealed the grievance to Step 3—arbitration. With this
notice, Valdez included an additional allegation that the
Medical Center violated Article 41 of the Agreement by not
providing notice and an opportunity to bargain with the
Union before changing the job description of the bargaining
unit.

  Five months then passed with no response from the
Medical Center.

    The Medical Center finally responded on June 22, 2012.
Paul Beshears, counsel for the Medical Center, sent a letter to
Kristina Hillman, counsel for the Union, advising the Union
that the Medical Center had not changed its position and
would not arbitrate the grievance based on the express
language in Article 22 of the Agreement.
8         SEIU V. LOS ROBLES REG’L MED. CTR.

    On July 31, 2012, Bruce Harland, counsel for the Union,
responded by letter to the Medical Center. The Union’s July
31, 2012 letter informed the Medical Center that the Union
was complying with the grievance process outlined in Article
40 of the Agreement and that the June 22 letter from the
Medical Center was the “first official communication . . .
after the Union demanded arbitration” in which the Medical
Center informed the Union that it would not arbitrate. The
Union’s July 31 letter also identified a “pattern . . . whereby
the employer claims that the Union’s grievance lacks merit,
and then refuses to arbitrate.” The Union’s July 31 letter
urged the Medical Center to “let an arbitrator determine
whether or not the employer violated the Agreement, just as
the parties have bargained for.”

          B. Proceedings before the District Court

   On September 20, 2012, the Union filed its Petition to
Compel Arbitration (Petition) in the Superior Court of
California, County of Ventura.

    On November 1, 2012, the Medical Center filed a notice
to remove the Petition from the Superior Court of California
to the Federal District Court for the Central District of
California as a matter arising under federal law, Section 301
of the Labor Management Relations Act, 29 U.S.C. § 185.

    On November 27, 2012, the Union filed its Petition in
federal court, alleging that the grievance was arbitrable. On
February 15, 2013, the Medical Center filed a Motion for
Summary Judgment arguing that (1) the Union’s Petition was
barred by the statute of limitations, and (2) the matter is not
arbitrable under the terms of the Agreement.
           SEIU V. LOS ROBLES REG’L MED. CTR.                 9

    On March 18, 2013, the Union’s Petition and the Medical
Center’s Motion for Summary Judgment were heard before
the district court. The district court granted the Medical
Center’s Motion for Summary Judgment against the Union
and dismissed the Union’s Petition.

    Citing Exber, 994 F.2d at 676, the district court identified
December 2, 2011, as the date upon which the Medical
Center “unequivocally and expressly rejected the Union’s
request to arbitrate,” thus triggering the accrual of time for
the six-month statute of limitations. Therefore, the district
court determined that the triggering date resulted in the
Union’s Petition being time barred when filed on September
20, 2012, more that three months after the statute of
limitations closed on June 2, 2012. The district court did not
address whether the matter is arbitrable under the terms of the
Agreement. On April 1, 2013, the district court entered
judgment against the Union. The Union timely appealed.

                              II.

    We review a district court’s denial of a petition to compel
arbitration de novo. Lowden v. T-Mobile USA, Inc., 512 F.3d
1213, 1217 (9th Cir. 2008). We also review de novo a district
court’s determination of when a cause of action accrues and
whether a claim is barred by the statute of limitations. Oja v.
U.S. Army Corps of Eng’rs, 440 F.3d 1122, 1127 (9th Cir.
2006). We review with deference the factual findings of a
district court. Hells Canyon Pres. Council v. U.S. Forest
Serv., 403 F.3d 683, 691 (9th Cir. 2005).

   We also review a grant of summary judgment de novo.
Travelers Cas. & Sur. Co. of Am. v. Brenneke, 551 F.3d 1132,
1137 (9th Cir. 2009). In reviewing a district court’s grant of
10         SEIU V. LOS ROBLES REG’L MED. CTR.

summary judgment, we affirm only if the record, when “read
in light most favorable to the non-moving party, reveals no
genuine issue of material fact and establishes that the moving
party is entitled to judgment as a matter of law.” Int’l Ass’n
of Machinists & Aerospace Workers, AFL-CIO v. Aloha
Airlines, Inc., 776 F.2d 812, 815 (9th Cir. 1985).

                              III.

    The parties in this case agree that the Petition is properly
brought under Section 301 of the Labor Management
Relations Act, 29 U.S.C. § 185. Neither party disputes that
a claim for a petition to compel arbitration under Section 301
has a six-month statute of limitations. Teamsters Union
Local 315 v. Great W. Chem. Co., 781 F.2d 764, 769 (9th Cir.
1986). The dispute between the parties centers on when that
six-month period commenced. The Union argues the six-
month period commenced on June 22, 2012. The Medical
Center argues that the period commenced on either October
24, December 2, or December 15, 2011.

    “As a general rule in cases to which federal law applies,
federal labor policy requires . . . use of the contract grievance
procedure agreed upon by employer and union as the mode of
redress.” Republic Steel Corp. v. Maddox, 379 U.S. 650, 652
(1965). The intent of Congress in passing Section 301 was to
encourage mutually agreed upon grievance procedures
between parties to “promote a higher degree of responsibility
upon the parties to such agreements . . . thereby promot[ing]
industrial peace.” Drake Bakeries, Inc. v. Local 50, Am.
Bakery & Confectionery Workers Int’l, AFL-CIO, 370 U.S.
254, 263 (1962) (quoting S. Rep. No. 105, 80th Cong., 1st
Sess. 17). “That policy can be effectuated only if the means
chosen by the parties for settlement of their differences under
          SEIU V. LOS ROBLES REG’L MED. CTR.                11

a collective bargaining agreement is given full play.” Id.
(citing United Steelworkers v. American Mfg. Co., 363 U.S.
564, 566 (1960)). This goal is embodied in Article 40.2 of
the Agreement which states that “[a]ll grievances must be
presented at the proper steps.”

    We have held that the Section 301 statute of limitations
can start to run before the completion of a collective
bargaining agreement’s grievance process. Exber, 994 F.2d
at 675–76. The Exber court held that “for an employer to
‘make it clear’ that it refuses to arbitrate and, therefore, to
start the statute of limitations running, an unequivocal,
express rejection of the union’s request for arbitration must
be communicated to the union. Constructive notice is not
sufficient.” Id. at 676.

     We therefore must determine—considering the grievance
process that parties must to follow under the
Agreement—when the Union requested arbitration, and when
the Medical Center unequivocally and expressly rejected that
request. The Union generally followed the three-step process,
initiating Step 1 by filing a written grievance on October 5,
2011. The parties negotiated by email about whether the
Union’s complaint fell within the terms of the Agreement’s
grievance procedures. The parties held a Step 1 meeting on
October 25, 2011. After that meeting did not resolve the
grievance, the Union requested a Step 2 meeting in writing.
The Medical Center responded on December 2, 2011, stating
that it was “declining to process this grievance” because it
believed “this matter is neither grievable nor arbitrable.” The
Union wrote back to the Medical Center on December 15,
2011, “[I]f you are refusing to schedule a step II meeting, we
have no choice but to appeal and move this matter to the next
step (arbitration).” That same day, the Medical Center
12         SEIU V. LOS ROBLES REG’L MED. CTR.

refused the Union’s request, and, under the terms of the
Agreement, the refusal to schedule the meeting meant that the
Medical Center denied the grievance at Step 2. Then, as
promised, the Union sent a written request to arbitrate on
January 17, 2012, which stated, “The [grievance] is hereby
moved to Step 3 and referred to arbitration for final and
binding resolution.”

    The district court ruled that the Medical Center’s
December 2, 2011 email was “an unequivocal, express
rejection of the union’s request for arbitration” under Exber,
994 F.2d at 676, starting the six-month statutory period. We
recognize that the Union initially sought to bypass Steps 1
and 2 of the grievance process by requesting on October 24,
2011 that the Medical Center move the matter directly to Step
3 arbitration. After that point, however, the parties engaged
in Step 1 and Step 2 of the grievance process, as noted above.
We construe this record in favor of the Union, as we must on
summary judgment, and conclude the Union made its Step 3
request for arbitration in its January 17, 2012 letter.

    Because the Union did not request arbitration until
January 17, 2012, the Medical Center’s December 2, 2011
email could not have been an express rejection of the Union’s
Step 3 request for arbitration. The Medical Center responded
to the Union’s request in a June 22, 2012 letter, stating it
“will not arbitrate this matter.” Thus, contrary to the district
court’s ruling, the June 22, 2012 letter was the Medical
Center’s unequivocal, express rejection of the Union’s Step
3 request for arbitration. As a result, the statute of limitations
began to run that day, on June 22. Exber, 994 F.2d at 675-76.
The Union filed its Petition in state court within six months
of June 22, 2012, so the district court erred in concluding the
Petition was untimely.
          SEIU V. LOS ROBLES REG’L MED. CTR.                 13

    Notably, the Medical Center delayed for five months in
responding to the Union’s letter demanding arbitration, from
January 17 to June 22, 2012. During that period the Union
awaited a response to its January 17 letter requesting
arbitration of its grievance regarding the retaliatory
elimination of four Stationary Engineer jobs and the creation
of a lower paid Boiler Attendant position. The contents of the
Medical Center’s eventual response letter hardly merited such
a delay as the response letter merely reiterated, “The
Hospital’s position has not changed from what it
communicated to the Union on November 9, 2011.” Rather
than delaying five months, the Medical Center could have
responded promptly to the Union’s letter, likely eliminating
the need for litigation regarding the application of the Section
301 statute of limitations. See Great W., 781 F.2d at 766
(“[I]t is important that [arbitration] be promptly invoked and
promptly administered . . . [A]ll need to know where they
stand.”).

     Reading the record in the light most favorable to the
Union as we must, Int’l Ass’n of Machinists, 776 F.2d at 815,
it is plausible that the Medical Center, forecasting a dispute
over the statute of limitations for this grievance, made a
conscious decision to wait six months from the December 15,
2011 email exchange with the Union before responding to the
Union’s January 17 letter. Under this theory, waiting until
June 22 to respond had the potential effect of rendering any
effort by the Union to compel arbitration time-barred.

      When passed, Section 301 carried with it “a
congressional mandate to the federal courts to fashion a body
of federal common law to be used to address disputes arising
out of labor contracts.” Allis-Chalmers Corp. v. Lueck,
471 U.S. 202, 209 (1985) (citing Textile Workers v. Lincoln
14         SEIU V. LOS ROBLES REG’L MED. CTR.

Mills, 353 U.S. 448, 456 (1957)). As the Supreme Court
remarked in Auto Workers v. Hoosier Cardinal Corp., a suit
“caused by an alleged breach of an employer’s obligation
embodied in a collective bargaining agreement . . . closely
resembles an action for breach of contract cognizable at
common law.” 383 U.S. 696, 705 n.7 (1966).

    As such, and since the statute of limitations poses no bar
to the Union’s claims, we consider whether the parties to a
collective bargaining agreement acted in accordance with the
principles of good faith performance required by the common
law of contracts. See Scribner v. Worldcom, Inc., 249 F.3d
902, 910 (9th Cir. 2001) (remarking that Commentary on the
Second Restatement of Contracts “provide[s] that [g]ood faith
performance or enforcement of a contract emphasizes
faithfulness to an agreed common purpose and consistency
with the justified expectations of the other party. . . . [and]
that [s]ubterfuges and evasions violate the obligation of good
faith in performance even though the actor believes his
conduct to be justified”) (internal quotation marks omitted).

    Good faith performance principles must apply here,
considering that Congress codified the duty of employers to
act in “good faith with respect to wages, hours, and other
terms and conditions of employment, or the negotiation of an
agreement, or any question arising thereunder” in the
National Labor Relations Act (NLRA). 29 U.S.C. § 158(d)
(emphasis added). Indeed, our court established the six-
month statute of limitations for Section 301 in part by looking
to the duties and procedures of the NLRA. See Great W.,
781 F.2d at 768–69.

    We consider the “federal policies at stake and the
practicalities of litigation” in deciding this matter. Id. at 768
           SEIU V. LOS ROBLES REG’L MED. CTR.                 15

(quoting DelCostello v. Int’l Bhd. of Teamsters, 462 U.S. 151,
171–72 (1983)). As Justice Goldberg reminded us, “[I]n this
Court’s fashioning of a federal law of collective bargaining,
it is of the utmost importance that the law reflect the realities
of industrial life and the nature of the collective bargaining
process.” Humphrey v. Moore, 375 U.S. 335, 358 (1964)
(Goldberg, J., concurring in the result).

    At summary judgment, the Medical Center’s five-month
delay in responding to the Union’s January 17, 2012 letter
must be considered a violation of good faith. The Medical
Center’s five-month delay was a period of time nearly equal
to the entire six-month statute of limitations, a period
designed “to accommodate a balance of interests” in labor
disputes, not simply as an artificial clock for an employer to
run out while stonewalling a union’s attempt to follow a
grievance procedure. Great W., 781 F.2d at 769 (quoting
DelCostello, 462 U.S. at 169).

    In Great Western the Ninth Circuit also noted that “it is
important that [arbitration] be promptly invoked and
promptly administered—important to the named parties and
especially important to the aggrieved employee union
member, and to those in management who have had direct
relationships with the grievant. They all need to know where
they stand.” Id. at 766. Our court observed, “A long period
of controversy and conflict can be a serious burden, both for
the grievant and for the management, and can poison the
relationship between the contracting parties that the contract
was designed to establish and preserve.” Id.

    In this case, the Union invoked arbitration within the
timeline of the Agreement and faithfully followed the
grievance procedure. It was the delay of more than five
16           SEIU V. LOS ROBLES REG’L MED. CTR.

months by the Medical Center, a length of time nearly as long
as the statute of limitations itself, that resulted in a
contentious dispute over summary judgment. Rather than
making a good faith attempt to address the merits of the
dispute, the Medical Center “poison[ed] the relationship
between the contracting parties.” Id.

    In deciding this matter we are required to read the record
“in [the] light most favorable to the non-moving party.” Int’l
Ass’n of Machinists, 776 F.2d at 815. We are mindful that
Article 40.2 of the Agreement states that “[a]ll grievances
must be presented at the proper steps.”6

    We hold that it is a breach of the duty of good faith
performance under Section 301 for an employer to fail to
respond within a reasonable time to a union’s communication
which seeks to abide by a grievance process set forth in a
collective bargaining agreement. Only an “unequivocal,
express rejection of the union’s request for arbitration” will
start the six-month limitations period under Section 301.
There is no such thing as constructive notice of an employer’s
refusal to arbitrate; if an employer offers varying responses
to a request to arbitrate, its responses do not constitute an
unequivocal, express rejection. Exber, 994 F.2d at 676. It
was not reasonable for the Medical Center to wait in silence
for more than five months following the Union’s letter

     6
      Indeed, failing to follow the steps of the Agreement’s grievance
procedure can result in the dismissal of a union’s petition to compel
arbitration. See, e.g., Beriault v. Local 40, Super Cargoes & Checkers of
Int’l Longshoremen’s & Warehousemen’s Union, 501 F.2d 258, 262–63
(9th Cir. 1974) (affirming the dismissal of a petition to compel arbitration
because, “[a]s a general rule, employees must attempt to exhaust the
grievance and arbitration procedures established by the bargaining
agreement before seeking judicial enforcement of their rights”).
          SEIU V. LOS ROBLES REG’L MED. CTR.              17

demanding arbitration, and then claim in litigation that the
Union missed the statute of limitations. See Appendix A.

    We reverse the grant of summary judgment and remand
for further proceedings consistent with this opinion. We also
vacate the award of costs for reconsideration in light of our
reversal of summary judgment. See Fed. R. Civ. Pro.
54(d)(1).

  REVERSED and REMANDED in part; and
VACATED in part.
                                          (293 of 425)




18   SEIU V. LOS ROBLES REG’L MED. CTR.

               APPENDIX A
