Baltimore County Fraternal Order of Police Lodge No. 4 v. Baltimore County

ADKINS, J. The central issue in this appeal is whether a duty to arbitrate may survive expiration of the agreement that contains the arbitration clause. The seemingly 1 peripheral issue is who decides this question initially: the arbitrator or the court. An additional consideration lurking beneath the surface of these two questions, but necessary to their resolution, is when a dispute may be said to arise “under” an expired agreement so as to be arbitrable despite the agreement’s expiration. We now place these concepts into the context of this case.

A collective-bargaining agreement between Baltimore County and Baltimore County Fraternal Order of Police, Lodge 4 (“FOP”) contained an arbitration clause and a retiree health-insurance provision. FOP believed the provision locked in ⁵³⁷ place the health-insurance subsidy, as it existed at the time of an officer’s retirement. After the agreement expired and the County decreased the health-insurance subsidy, FOP initiated arbitration. The County protested, arguing that it had no duty to arbitrate because the collective-bargaining agreement had expired.

The County also maintained that the health-insurance subsidy was not locked in place but was subject to change from year to year. FOP was successful in arbitration and on appeal before the circuit court, but the Court of Special Appeals vacated the arbitration award. FOP presents the following issues for our review: 1. Under Maryland’s common law, should an arbitration clause in a collective bargaining agreement be enforced after that agreement’s expiration when an otherwise arbitrable grievance is presented concerning vested rights that arise out of the collective bargaining agreement? 2.

Does the common law of Maryland require the court or the arbitrator to determine the arbitrability of a postexpiration grievance arising out of a collective bargaining agreement containing an arbitration clause? 2 We shall hold that an arbitration clause may survive the expiration of a collective bargaining agreement when it concerns rights that vested during the life of the agreement. We shall also hold that, when deciding the issue of arbitrability requires interpretation of the underlying agreement and consideration of the merits of the dispute, the issue of arbitrability should be initially determined by the arbitrator. The Circuit Court for Baltimore County properly granted summary judgment in FOP’s favor. We thus reverse the Court of Special Appeals’ judgment. ⁵³⁸ FACTS AND LEGAL PROCEEDINGS Baltimore County government employs approximately 8,000 employees.

FOP has represented the County’s 1,700 police officers for approximately 20 years. The County and FOP have been parties to a succession of one-year 3 collective bargaining agreements, called memoranda of understanding (“MOU”). These MOUs set forth the negotiated terms of conditions of employment for active and retired police officers. All MOUs contained an article on the grievance procedure, which provided — among other things — that all “grievances,” including “[a]ny dispute concerning the application or interpretation of the terms of this [MOU]” that are not settled internally “shall be subject to binding arbitration.” 1992 Through 1995: No Mention of Health Insurance in MOUs In 1991, Baltimore County instituted a Retirement Incentive Program.

As part of the Program, the County agreed to pay 90 percent of retirees’ health insurance premium, while the retirees would pay the remaining 10 percent. Maintenance of this 90/10 split, however, was guaranteed only to officers who retired on or before January 31, 1992. The Incentive Program also made clear that employees retiring on or after February 1, 1992 would receive the same subsidy as active employees and that the subsidy could go up or down subject to future labor negotiations. From February 1, 1992 to July 1, 1995, the MOUs made no reference to retiree health insurance.

Officers who retired during that time received the same health-insurance premium split that active officers were receiving at that time. 1995 Through June 30, 2007: Retiree Health Insurance Provision This changed with the 1995 negotiations for a new collective bargaining agreement, when FOP was able to negotiate the ⁵³⁹ following health-insurance provision to be included in the MOU: Section 7.13: Retiree Health Insurance-The County shall provide the same health insurance benefits ... to retirees under the age of sixty-five (65) as it does for active employees, at the time ... the employees retire[ ]. The health insurance subsidy at the time of retirement will remain in effect until the retiree or the retiree’s surviving beneficiary reaches age sixty-five (65). 4 This language remained in subsequent MOUs until 2004, 5 when the reference to “age sixty-five” was changed to eligibility for “Medicare”: “The health insurance subsidy in place at the time of retirement shall remain in effect until the retiree becomes eligible for Medicare.” Between February 1, 1992 and June 30, 2007, the health-insurance subsidy for active employees — and therefore retirees — remained at 85 percent. 2007 Decrease in Health-Insurance Subsidy and FOP’s Grievance In 2007, as part of its effort “to control escalating health care costs for County employees,” the County negotiated a phased-in decrease in the health-insurance premium subsidy from 85 to 80 percent, which was to take effect gradually over the next five years. 6 On July 1, 2007, the County decreased the health-insurance premium split from 85/15 to 84/16 for retirees, as well active members. ⁵⁴⁰ On September 14, the FOP filed a class grievance 7 on behalf of the officers who retired from February 1, 1992 to August 31, 2007, alleging that the 85/15 health-insurance subsidy split was a “lifetime promise” to those retirees, and that, as a result, those retirees were not subject to the decreased premium split. 8 On November 6, 2007, Labor Commissioner George Gay conducted a Grievance Appeal Hearing, and on November 17, he denied FOP’s grievance. Gay believed that MOUs are “one-year agreements which are re-opened and renegotiated annually,” and which, unlike pension benefits, do not create “vested rights.” FOP filed for arbitration. The arbitrator granted FOP’s grievance, concluding that it was arbitrable even though the MOU had expired because the 85/15 health-insurance premium split was a “vested right” that “was not, and could not be, changed by the [subsequent] negotiations.” Thus, the arbitrator ordered that the County (1) rescind the modification as applied to police officers who retired from 1995 to June 30, 2007, (2) continue the 85/15 split until those retirees became eligible for Medicare, and (3) reimburse them for wrongful deductions.

The County filed a Complaint to Vacate the Arbitration Award in the Circuit Court for Baltimore County. It argued, inter alia, that (1) the arbitrator lacked jurisdiction and exceeded his authority because the MOU containing the arbitration clause had expired, (2) “there was no agreement to arbitrate” because the MOU had expired, and (3) the award “involve[d] mistakes so gross as to constitute manifest injustice.” The Circuit Court disagreed, however, and granted ⁵⁴¹ summary judgment in FOP’s favor, refusing to vacate the Arbitration Award. The County appealed. The Court of Special Appeals reversed the Circuit Court’s grant of summary judgment in FOP’s favor, 9 and FOP filed a petition for certiorari, which we granted.

Balt Cnty. Fraternal Order of Police, Lodge No. 4 v. Balt. Cnty., 425 Md. 395 , 41 A.3d 570 (2012). DISCUSSION The first issue before us is whether an arbitration clause contained in an expired MOU survived the expiration of that MOU, making the dispute over the health-insurance premium split arbitrable.

FOP argues that — even though the MOU expired — the County’s decrease in health-insurance subsidy was an arbitrable grievance because “absent specific contractual evidence to the contrary, [a broad] arbitration clause survives expiration of the agreement and requires that disputes arising out of it, but after expiration of, the underlying agreement are arbitrable.” The County argues the opposite: the arbitration clause was narrow, “FOP’s grievance was based upon an MOU that no longer existed,” and therefore the arbitrator had “no power, authority, or jurisdiction” to resolve the dispute. The parties also ask us to decide who determines this very issue: the arbitrator or the court. I. Arbitrability of a Grievance Arising After Expiration of a Collective-Bargaining Agreement In deciding whether an arbitration clause may survive expiration of the agreement that gave it existence, the arbitrator ⁵⁴² in this case relied extensively on two United States Supreme Court cases: Nolde Bros. v. Bakery & Confectionery Workers Union, 430 U.S. 243 , 97 S.Ct. 1067 , 51 L.Ed.2d 300 (1977) and Litton Fin. Printing Div. v. NLRB, 501 U.S. 190 , 111 S.Ct. 2215 , 115 L.Ed.2d 177 (1991).

FOP and the County have also spent a considerable amount of time in their briefs discussing these cases. We accept the parties’ invitation and examine Nolde and Litton. A. The Vesting Principles of Nolde and Litton Both Nolde and Litton addressed arbitrability of a grievance arising after expiration of a collective-bargaining agreement. In Nolde, the agreement had a broad arbitration clause and provided for severance pay upon employment termination. 430 U.S. at 245 , 97 S.Ct. at 1068-69 .

After the agreement’s expiration, the bakery closed and refused to pay any severance. It maintained that “since severance pay was a creation of the collective-bargaining agreement, its substantive obligation to provide such benefits terminated with the Union’s unilateral cancellation of the contract.” Id. at 249 , 97 S.Ct. at 1071 . The bakery also resisted arbitration, arguing that “the duty to arbitrate ... must necessarily expire with the collective-bargaining contract that brought it into existence.” Id. at 250 , 97 S.Ct. at 1071 . The Supreme Court disagreed: the “termination of a collective-bargaining agreement [does not] automatically extinguish^] a party’s duty to arbitrate grievances arising under the contract.” Id. at 251 , 97 S.Ct. at 1071 .

If that were true, the Court explained, there could be no arbitration of a dispute that “arose during the life of the contract but arbitration proceedings had not begun before termination” or if “arbitration processes began but were not completed, during the contract’s term.” Id., 97 S.Ct. at 1072 . Yet, in both of these instances, “the parties’ contractual obligation to resolve such a dispute in an arbitral, rather than a judicial forum” would continue to exist even after the contract’s expiration. Id. Thus, even though the dispute arose “after” the contract’s expiration, because the parties’ arguments were “based on their differing perceptions of a [con ⁵⁴³ tract’s] provision,” the dispute arose “under” that contract, and as such, was arbitrable. 10 Id. at 249, 255 , 97 S.Ct. at 1071, 1074 .

Almost two decades later, in Litton, the Court reaffirmed that “[w]e presume as a matter of contract interpretation that the parties did not intend a pivotal dispute resolution provision to terminate for all purposes upon the expiration of the agreement.” 501 U.S. at 208 , 111 S.Ct. at 2226 . The Court further delineated three circumstances in which a post-expiration grievance may be considered to arise under the expired contract: (1) where the grievance “involves facts and occurrences that arose before expiration, [2] where an action taken after expiration infringes a right that accrued or vested under the agreement, or [3] where, under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement.” Id. at 206 , 111 S.Ct. at 2225 . B. The Applicability of the Nolde/Litton Vesting Principles in Maryland FOP urges us to adopt Nolde’s reasoning, arguing that Nolde is directly on point and in accordance with our decisions and the decisions of other Maryland courts. It maintains that adopting Nolde’s vesting principles would be consistent with ⁵⁴⁴ our treatment of broad arbitration clauses as encompassing any and all disputes not specifically excluded, NSC Contractors, Inc. v. Borders, 317 Md. 394, 403 , 564 A.2d 408, 412 (1989), and as severable from the rest of the agreement, Holmes v. Coverall N. Am., 336 Md. 534, 547 , 649 A.2d 365, 371 (1994).

FOP also directs our attention to several cases in which this Court and the Court of Special Appeals have looked for guidance to federal courts in arbitration cases, including NSC Contractors, 317 Md. at 403 , 564 A.2d at 412 , Gold Coast Mall v. Larmar Corp., 298 Md. 96, 104-05 , 468 A.2d 91, 95-96 (1983), and Mayor of Balt. v. Balt. City Fire Fighters, Local 734, 49 Md.App. 60, 65 , 430 A.2d 99, 102 (1981). Moreover, FOP provides a table with over a dozen cases from other states relying on Nolde to hold that disputes arising after an agreement’s expiration but arising under it may be arbitrable. On the contrary, the County argues that we should not adopt Nolde, challenging Nolde’s applicability and insisting that Nolde “is simply not good law,” 11 and that “its holding is imprecise and embraces ... disparate, inconsistent propositions.” The County contends “[t]here is a sufficient body of Maryland common law” on the interpretation of arbitration agreements.

It also maintains that Nolde and Litton are not applicable here because they involved the National Labor Relations Act, 29 U.S.C. § 152 (2) (“NLRA”), from which labor relations between local governments and their employees are excepted. ⁵⁴⁵ We find the County’s arguments unconvincing. We are aware of no Maryland case applying Maryland law in a situation like this, where the agreement containing an arbitration clause has expired, but a party seeks to arbitrate a dispute it alleges arises under that agreement. Nolde and Litton, however, provide clear guidance on this issue. Also, even though Nolde and Litton, involved NLRA, that fact did not play a role in the Court’s reasoning in either of the two cases.

The applicability of Nolde and Litton’s vesting principles to disputes not involving NLRA is further evidenced by the acceptance of the Court’s reasoning in these two cases by many state courts. See, e.g., Ahtna, Inc. v. Ebasco Constructors, Inc., 894 P.2d 657, 663 (Alaska 1995) (applying the Nolde vesting principle in the context of a joint-venture agreement); Ajida, Techs., Inc. v. Roos Instruments, Inc., 87 Cal.App.4th 534 , 104 Cal.Rptr.2d 686, 694-95 (2001) (relying on Nolde in holding that parties’ obligations to arbitrate may survive expiration of a marketing and development agreement); Shams v. Howard, 165 P.3d 876, 879 (Colo.App.2007) (applying Litton’s vesting principles to the vesting of rights under an expired warranty agreement); Auchter Co. v. Zagloul, 949 So.2d 1189, 1194 (Fla.Dist.Ct.App.2007) (following the guidance of Nolde and Litton in deciding arbitrability of a dispute arising under an expired construction contract); Homes by Pate, Inc. v. DeHaan, 713 N.E.2d 303, 309 (Ind.Ct.App.1999)(relying on Nolde in holding that “a logical reading of the [residential building] warranty leads to the conclusion that, so long as a defect has occurred within the ... warranty coverage, any dispute concerning that coverage must be arbitrated”). Indeed, the Massachusetts high court has applied the Nolde vesting principles in a situation very similar to this case. See Boston Lodge 261, Dist. 38, Int’l Ass’n of Machinists & Aerospace Workers v. Mass.

Bay Transp. Auth., 389 Mass. 819, 452 N.E.2d 1155 (1983). In Boston Lodge 261, the collective-bargaining agreement between the union and Massachusetts Bay Transportation Authority (“MBTA”) called for cost-of-living adjustments benefitting union members. Id. at ⁵⁴⁶ 1156.

The same agreement also provided for binding arbitration of any disputes arising under the agreement. Id. When the agreement expired and MBTA failed to make the adjustments, the union initiated arbitration. MBTA refused to arbitrate, arguing that the dispute was not arbitrable because the collective bargaining agreement had expired.

Id. Relying on Nolde, the Supreme Judicial Court of Massachusetts held that the dispute was arbitrable: Although the term of the collective bargaining agreement had ended, there continued both a contractual obligation to make cost-of-living adjustments under certain conditions and an agreement to arbitrate any unresolved grievance arising out of the agreement. The fact that the term of a collective bargaining agreement has expired does not mean there can be no duty to arbitrate issues arising out of that agreement, where the agreement includes obligations extending beyond its term and where there is a broadly expressed agreement to arbitrate grievances arising out of that agreement. Id.

(citing, among others, Nolde, 430 U.S. at 254-55 , 97 S.Ct. at 1073-74 ). Following in the footsteps of our sister states, we adopt the Nolde/Litton vesting principles and hold that a broad arbitration clause may survive expiration of the underlying agreement when the dispute arises under the agreement. This may happen when the dispute (1) “involves facts and occurrences that arose before expiration” of the agreement, (2) where the rights that are the subject of the dispute “accrued or vested” during the life of the agreement, or (3) “where, under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement.” Litton, 501 U.S. at 206 , 111 S.Ct. at 2225 . Our acceptance of the Nolde and Litton vesting principles in this situation is not inconsistent with our reliance on the Supreme Court for guidance in other arbitration cases, many of which are interlaced with the Supreme Court’s reasoning. ⁵⁴⁷ In addition to the Maryland cases cited by FOP, reproduced above, we have followed the lead of the Supreme Court in Holmes , when we held an arbitration clause to be severable from the rest of the contract, 336 Md. at 541-42 , 649 A.2d at 368 (quoting Prima Paint Corp. v. Flood & Conklin Mfg.

Co., 388 U.S. 395 , 87 S.Ct. 1801 , 18 L.Ed.2d 1270 (1967)); in Curtis G. Testerman Co. v. Buck, when we concluded that a non-party to an arbitration agreement may not be compelled to arbitrate, 340 Md. 569, 584 , 667 A.2d 649, 656 (1995) (citing Moses H. Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 20 , 103 S.Ct. 927, 939 , 74 L.Ed.2d 765 (1983)); and in Messersmith, Inc. v. Barclay Townhouse, when we held that the issue of whether there was an agreement to arbitrate was to be decided by the court, not the arbitrator, 313 Md. 652 , 661 & n. 3, 547 A.2d 1048 , 1052 & n. 3 (1988) (citing John Wiley & Sons, Inc.v. Livingston, 376 U.S. 543, 547 , 84 S.Ct. 909, 913 , 11 L.Ed.2d 898 (1964) and AT & T Techs., Inc. v. Commc’ns Workers, 475 U.S. 643 , 106 S.Ct. 1415 , 89 L.Ed.2d 648 (1986)).

II

Who Decides Validity of Arbitration Clause in an Expired Agreement: the Arbitrator or the Court The second issue before us is who decides whether an arbitration clause survives expiration of the underlying agreement, or using Nolde’s and Litton’s terms, whether the grievance concerns a right that arose or vested under an expired agreement. Nolde and Litton reached conflicting conclusions on this issue. Under Nolde, to determine that a dispute is arbitrable, the court only needs to recognize — -without deciding — that the merits of the dispute depend on the interpretation of the agreement. 12 See 430 U.S. at 249 , 97 S.Ct. at 1071 . ⁵⁴⁸ But the ultimate “question of interpretation of the collective bargaining agreement is a question for the arbitrator.” 13 430 U.S. at 253 , 97 S.Ct. at 1073 (citation omitted). In contrast, the Litton Court held that courts “must determine whether the parties agreed to arbitrate this dispute, and we cannot avoid that duty because it requires us to interpret a provision of a bargaining agreement.” 501 U.S. at 209 , 111 S.Ct. at 2227 .

Considering ample Maryland authority on the issue of who decides whether a dispute is arbitrable, we find it unnecessary to attempt to resolve the conflict between Nolde and Litton 14 or adopt reasoning of either of the two cases, and instead look to our own jurisprudence for guidance on who — the arbitrator or the court — decides arbitrability of a dispute allegedly aris ⁵⁴⁹ ing under an expired agreement. 15 A. Arbitrability As a Threshold Issue We begin this part of the analysis by reiterating that in Maryland arbitration has often been referred to as a “favored” method of resolving disputes, as it is considered “generally a less expensive and more expeditious means of settling litigation and relieving docket congestion.” 16 Walther v. Sovereign Bank, 386 Md. 412, 425 , 872 A.2d 735, 743 (2005). In accordance with the public policy favoring arbitration, the courts’ role in the arbitration process — whether ruling on motions seeking to compel or stay arbitration or reviewing arbitration awards — is limited. Indeed, before a court can set aside an arbitration award, there must be “fraud or ... misconduct, bias, prejudice, corruption or lack of good faith on the part of the arbitrator,” or if “it was not within the scope of the issues submitted to arbitration,” or involved a “mistake so gross as to work manifest injustice.” Bd. of Ed. v. Prince George’s Cnty. Educators’ Ass’n., 309 Md. 85, 100-01 , 522 A.2d 931, 938-39 (1987) (citations omitted).

The only circumstance in which courts play a leading role in cases involving arbitration is in deciding arbitrability of a dispute. Courts have a prerogative in that instance “because the existence of an agreement to arbitrate is a threshold issue, [and] the courts must have authority to assess, independently of the arbitrator’s point of view, whether or not the parties ever reached such an agreement.” Messersmith, Inc., 313 Md. at 660 , 547 A.2d at 1052 . As this Court noted more ⁵⁵⁰ than sixty years ago, “[t]he question [of arbitrability] is one of intention.... No one is under a duty to resort to [arbitration] tribunals, however helpful their processes, except to the extent that he has signified his willingness.” Id. at 658 , 547 A.2d at 1051 (quoting Cont’l Milling & Feed Co. v. Doughnut Corp., 186 Md. 669, 675 , 48 A.2d 447, 450 (1946)).

Even in deciding arbitrability issues, however, “courts are limited to determining only one thing: whether a valid arbitration agreement exists” and must be careful not to “stray into the merits of any underlying agreements.” Cheek v. United Healthcare of the Mid-Atl., Inc., 378 Md. 139, 155, 159-60 , 835 A.2d 656, 666-68 (2003); Holmes, 336 Md. at 546 , 649 A.2d at 370-71 (“The scope of the court’s involvement extends only to a determination of the existence of an arbitration agreement.”); see also Gold Coast Mall, 298 Md. at 103-04 , 468 A.2d at 95 (stating the same limited scope of review under the Maryland Uniform Arbitration Act). This is not so difficult when parties disagree on issues “relating to the formation of the arbitration agreement, ... such as a claim of novation, or an allegation that the agreement is void for lack of mutual consent.” 17 Holmes , 336 Md. at 540 , 649 A.2d at 367 -68 (quoting Holmes v. Coverall N. Am., 98 Md.App. 519, 530 , 633 A.2d 932, 937 (1993), aff'd, 336 Md. 534 , 649 A.2d 365 (1994)). B. When Arbitrability and Merits Overlap Avoiding the merits of the dispute or the underlying agreement becomes more difficult in cases where the very arbitrability of the dispute overlaps with its merits. This may happen (1) when the parties have agreed to arbitrate, but the scope of the arbitration clause is unclear, making it necessary ⁵⁵¹ to interpret the entire contract, Gold Coast Mall, 298 Md. at 107-08 , 468 A.2d at 97 ; or (2) when a party challenges the validity of an arbitration clause based on some irregularity of the entire contract, which also requires inquiring into the merits of the dispute, Holmes, 336 Md. at 534 , 649 A.2d at 365 .

These types of arbitrability challenges may involve “issues arising after the formation of the arbitration agreement, ... such as rescission, fraud in the inducement, waiver, and termination of the contract.” Id., 649 A.2d at 368 . In those circumstances, “fwjhether the party seeking arbitration is right or wrong is a question of contract application and interpretation for the arbitrator, not the court, ... and the court should not deprive the party seeking arbitration of the arbitrator’s skilled judgment by attempting to resolve the ambiguity.” NRT Mid-Atl., Inc. v. Innovative Props., Inc., 144 Md.App. 263, 281, 797 A.2d 824, 834 (2002) (citation omitted). We have distinguished arbitrability issues that require interpretation of the entire contract from those that do not depend on the merits of the dispute in Gold Coast Mall , where the lease agreement contained conflicting language. 298 Md. at 100 , 468 A.2d at 93 . On the one hand, there was a broad arbitration clause requiring the parties to arbitrate any disputes arising out of the contract; on the other hand, other clauses in the contract provided the landlord with rights and remedies other than arbitration.

Id. Appreciating the difficulty of deciding arbitrability under those facts, we identified three sets of circumstances involving arbitrability issues and explained their proper treatment by the courts: Where the language of the arbitration clause is clear, and it is plain that the dispute sought to be arbitrated falls within the scope of the arbitration clause, arbitration should be compelled. If it is apparent, on the other hand, that the issue sought to be arbitrated lies beyond the scope of the arbitration clause, the opposing party should not be compelled to arbitration, since there is no agreement to arbitrate .... A problem is created for the court when the language of the arbitration clause is unclear as to whether ⁵⁵² the subject matter of the dispute falls within the scope of the arbitration agreement.

Courts that have considered this problem have recognized that under such circumstances the question of substantive arbitrability initially should be left to the decision of the arbitrator, not the courts. Id. at 104-05 , 468 A.2d at 95 -96 (citing a long line of cases from other states). Unable to resolve the arbitrability issue without considering the lease agreement as a whole, we held that the “question of substantive arbitrability should be left to the decision of the arbitrator.” Id. at 108 , 468 A.2d at 97 . We took the same approach in Holmes, 336 Md. 534 , 649 A.2d 365 .

There, a franchisee attempted to avoid arbitration, alleging fraudulent inducement and violations of the Franchise Act in an agreement with a broad arbitration clause. Id. at 537, 541 , 649 A.2d at 366-67, 368 . Stressing the difference between “the issue of the validity of an arbitration agreement in a contract” and “the merits of a dispute under such a contract,” we observed that the franchisee did not allege that he “was fraudulently induced into agreeing to arbitrate disputes or that the parties did not agree to arbitrate this type of dispute.” Id. at 545-46 , 649 A.2d at 370-71 . Rather, we emphasized, the allegations of fraudulent inducement “go to the validity of the contract as a whole.” Id. at 546 , 649 A.2d at 371 .

As such, “[tjhese claims run to the merits of the dispute between the parties and do not suggest a ‘substantial and bona fide dispute’ as to the actual existence of an arbitration agreement between the parties.” Id. We concluded that because the party resisting arbitration “has not alleged fraud in the inducement as to the arbitration clause itself or that the parties did not intend to arbitrate this type of a dispute, ... the underlying dispute is one for the arbitrator.” Id. at 547 , 649 A.2d at 371 . Our intermediate appellate court considered the overlap of the arbitrability issue with the merits of the underlying agreement under the circumstances even more similar to this case in Nowak v. NAHB Research Center, Inc., 157 Md.App. 24 , 848 A.2d 705 (2004). There, former employees sought to ⁵⁵³ stay arbitration of their employer’s claims after termination of their employment.

Id. at 30 , 848 A.2d at 709 . The employer relied on the arbitration clause in the employment agreements, which required that any “dispute arising out of or relating to” the contracts be subject to arbitration. Id. at 28 , 848 A.2d at 708 . The employees argued, however, that their duty to arbitrate under the contract expired upon termination of their employment.

Finding such arguments to implicate the merits of the case, the Court of Special Appeals refused to decide the arbitrability issue: [I]t is clear that a mutually agreed upon arbitration provision existed in the Contract.... Rather, [employees] argue that the arbitration agreement ... was no longer valid once they were terminated as employees.... [T]his argument clearly goes to the merits of the contract as a whole and is a question for the arbitrator to decide. Id. at 34 , 848 A.2d at 711 . Thus, while “the validity of an arbitration agreement” is an issue for the courts, which a circuit court reviews anew, “the merits of the contract itself’ are for the arbitrator’s consideration, subject only to a deferential standard of review.

Id. at 33-34 , 848 A.2d at 711 ; see also Holmes, 336 Md. at 534 , 649 A.2d at 365 . C. The Arbitrability of FOP’s Grievance With these principles in mind, we turn to the arbitrability issue in this case. 18 If one could decide that FOP’s grievance was arbitrable without interpreting the underlying MOU or addressing the merits of FOP’s claims, the arbitrability issue in this case was an issue for the court to decide initially. But if the arbitrability issue cannot be so decided, it was within the arbitrator’s purview. ⁵⁵⁴ The arbitration clause here was part of the 2006-2007 MOU. It defined as a “grievance” “[a]ny dispute concerning the application or interpretation of the terms of [the MOU]” and subjected to “binding arbitration” any “grievance” that was not settled through other internal mechanisms.

The same MOU that contained the arbitration clause also stated that “[t]he County shall provide the same health insurance benefit plans offered to active employees for retirees not eligible for Medicare---- The health insurance subsidy in place at the time of retirement shall remain in effect until the retiree becomes eligible for Medicare.” The MOU expired on June 30, 2007. Before the arbitrator, the Circuit Court, and the Court of Special Appeals, the County painted a black and white picture of the arbitrability — or, rather, non-arbitrability — of FOP’s grievance, arguing that the MOU’s expiration rendered inapplicable the arbitration clause. 19 As far as the County was concerned, FOP had “nothing to arbitrate because [it] ha[d] no agreement, there was no agreement in existence at the time this grievance was filed.” 20 ⁵⁵⁵ FOP responds that the arbitrability issue is not that simple. It contends that the MOU’s expiration does not determine the arbitrability of its grievance, but that the arbitrability depends on whether the retiree health-care clause quoted above and other clauses “in each of the MOUs governing retirements between 1992 and 2007 ... reflect binding and irrevocable promises by the County to provide the retiree health insurance subsidy in effect at the time of [the officers’] retirement.” Although the County’s approach to the