Matteson v. Ryder System Inc. ( 1996 )

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
10-28-1996
Matteson v. Ryder Sys Inc
Precedential or Non-Precedential:
Docket 95-5821
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
NO. 95-5821
___________
GUY A. MATTESON, III; TIMOTHY L. BELL; THOMAS GATI; BRENT E.
ROZELL; LENWORTH BROWN; BARRIS A. CAMERON; CRAIG CANADY,
SR.; MICHAEL CLAYTON; WILLIAM COLON; JOSEPH COURTER; MICHAEL
CRUZ; WILLIE DAVIS, JR.; EARL W. DAWSON; CHARLES W. DUDLEY;
MORDECHAI EPSTEIN; ROBERT E. FEDAK; JOSEPH DEGUIDA; JOSEPH
E. HENRY; VAUGHN L. HURON; DONALD INGRAM; LEVERN JEFFERY;
ROBERT W. LEE, SR.; FREDERICK MADDEN; DONALD MANNING; THOMAS
PATRICK MCGEEHAN; JERRY R. MCINTOSH; JOHN K. MOSLEY; HUGH K.
MULLIN; WILLIAM C. NIXON; ANTHONY OSBORNE; MARK OSTROFSKY;
ROBERT H. PETERSEN; WILLY P. ROJAS; DOMINGOS SANTOS; GARY W.
SEXTON; JAY W. SHARRER; PRINCE A. SNOWDEN; MATTHEW SOWINSKI;
PATRICK A. VENTURA; CARL E. WIGGINS; LANCE A. MCLEE; RONALD
NUNZIANTE; RICHARD RUFF; CHRISTOPHER STOWERS; DANIEL A.
SEBIA; LOCAL NO. UNION 917 OF THE INTERNATIONAL BROTHERHOOD
OF TEAMSTERS; LOCAL UNION NO. 560 OF THE INTERNATIONAL
BROTHERHOOD OF TEAMSTERS, LESTER SMITH
Appellants
v.
RYDER SYSTEM INC; F.J. BOUTELL DRIVEWAY CO; M&G CONVOY INC;
COMMERCIAL CARRIERS, INC.
____________________________
On Appeal From the United States District Court
for the District of New Jersey
(D.C. Civ. No. 94-cv-04967)
____________________________
Argued: June 5, 1996
Before: BECKER, MANSMANN, Circuit Judges, and
SCHWARZER, District Judge.
(Filed October 28, 1996)
James A. Scarpone, Esquire (ARGUED)
Brian D. Winters, Esquire
Hellring, Lindeman, Goldstein
& Siegal
One Gateway Center
Newark, NJ 07102-5386
Counsel for Appellants
Irving L. Hurwitz, Esquire (ARGUED)
Vimal K. Shah, Esquire
Carpenter, Bennett & Morrissey
100 Mulberry Street
Three Gateway Center
Newark, NJ 07102
Counsel for Appellees
_____________________________
OPINION OF THE COURT
_____________________________
BECKER, Circuit Judge.
This is an appeal from an order of the district court
granting summary judgment for defendant trucking companies in an
action by plaintiff owner-operators seeking to set aside a labor
arbitration award. Jurisdiction arises under § 301 of the Labor
Management Relations Act. 29 U.S.C. § 185. The appeal presents
the question whether the arbitrators acted within the authority
conferred upon them by the parties' agreement, or rather decided
issues beyond the parties' submissions. Concluding that the
arbitrators exceeded their authority, we reverse.
I. Facts and Procedural History
Plaintiffs are 46 truck drivers and two local chapters
of their union, Local 560 and Local 917 of the International
Brotherhood of Teamsters. Defendants Ryder Systems, Inc. and
related companies ("Ryder" or "company") are engaged in the
commercial carriage of automobiles. Plaintiffs use their own
tractors to pull defendants' trailers, delivering cars and light
trucks out of Ryder's terminal in Northern New Jersey to new car
dealers throughout New England, the Middle Atlantic States, and
parts of the Midwest.
At all relevant times, the parties were subject to a
collective bargaining agreement known as The National Master
Automobile Transporters Agreement ("Master Agreement"). From
June 1, 1991, when the Master Agreement went into effect, until
August 16, 1994, when the arbitration award that is the subject
of this appeal was rendered, the drivers' compensation was
governed by the Master Agreement and related leases by which the
drivers dedicated their tractors exclusively to Ryder's business.
Payment to the drivers was based on a percentage of the gross
revenue paid to Ryder by the shippers. Despite the fact that the
Master Agreement provides that no negotiated agreement between an
employer and its drivers shall entitle the drivers to payment of
any amount less than 65% of the gross revenues the employer
receives from a shipper, the lease agreements provide that
drivers receive 60% or 61% depending on the number of vehicles
shipped. It was the lease agreements that determined the
drivers' share. The agreement (and practice under the lease)
further makes clear that the drivers were to be reimbursed for
the full amount of all tolls they actually paid.
The Master Agreement and the related leases also
included a "toll schedule," which (very roughly) represented an
average of the tolls that would be incurred on a trip from
Ryder's terminal to certain broadly defined geographical areas
encompassing entire states or groups of states. Prior to
calculating the driver's share, Ryder would deduct from the gross
revenue the amount specified by the toll schedule for the
particular trip. At some point, Ryder unilaterally (and in the
drivers' submission, arbitrarily) increased this toll schedule,
retroactive to April 1992. In so doing, Ryder decreased the base
(gross revenue) from which the drivers' share was calculated,
thereby decreasing payments to the drivers. Ryder's actions
precipitated the dispute that is now before us.
In addition to concern over changes in the toll
schedule, a number of drivers discovered instances in which Ryder
paid them 60% of the gross revenue when, in their opinion, they
were entitled to 61%. Those drivers invoked the grievance
machinery of the Master Agreement. In the initial grievance
(the "Matteson grievance"), they complained that Ryder's actions
with respect to the toll schedule and the gross revenue share
calculations had violated "Addendum 'C'" and "Exhibit 'B'" of the
lease agreements. Addendum C of the lease agreements
establishes the toll schedule for trips originating from the Port
Jersey terminal; Exhibit B assigns the threshold number of cars a
driver must transport to receive 61% rather than 60% of the
company's gross revenue.
When members of Local 560 learned that they were also
being charged increases in the toll schedule and that the
increases were effective retroactively to April 1992, their shop
steward, Fred Worth, submitted a "class action" grievance on
behalf of the drivers (the "560 grievance"). The written
grievance identified the subject matter in the following
language:
"TO WHOM IT MAY CONCERN
I FIND THE COMPANY IN VIOLATION OF ARTICAL [sic] #49 OF
THE MASTER AGREMENT [sic]. I ASK FOR ALL MONIES TO BE
RETURN [sic] TO DRIVERS AFECTED [sic] AND A CEASE AND
DESIST.
SECTION 4 A, C SECTION 5 TOLLS"
Article 49 of the Master Agreement, entitled "Owner-
Operator," covers a broad range of issues including, but by no
means limited to, toll charges and revenue shares. Section 4(a)
of Article 49 deals with the revenue share for the driver and
requires that the drivers receive no less than 65% of the gross
revenue. Section 4(c) of Article 49 ensures that any increases
in the payments Ryder receives will be reflected in the drivers'
receipts, and briefly mentions tolls. Finally, Section 5
delineates the payment responsibilities as between the drivers
and Ryder, including the responsibilities for "turnpike fees,
road tolls and bridge tolls." Larry Ervin, Ryder's Director of
Labor Relations, has acknowledged (in his October 31, 1994
Affidavit) that "[r]epresentatives of Locals 560 and 917 advised
me that this grievance protested the changes the April 1992
ancillary schedule made to the February 1991 schedule."
The Local 560 grievance together with the Matteson
grievance were heard before the Joint Committee. See supra note
2. On a pre-hearing information form, used by the Joint
Committee "as a preliminary general statement of [the parties']
position[s]," Daniel Coughlin, a union representative, set forth
the basis for the unions' grievance before the Joint Committee.
Under the section entitled "Circumstances of the Dispute,"
Coughlin typed "XXX" on the appropriate line to indicate a "Back
Pay Claim" and typed "TOLLS" on the line to indicate "Others."
He also noted that the relevant sections of the Master Agreement
about which he was concerned were "ARTICLE 49, SECTION 4A, 4C
SECTION 5, ARTICLE 49, SECTION 14." Section 14 of Article 49
states that no lease entered into pursuant to the Master
Agreement may conflict with the Master Agreement.
In an additional, undated submission to the Joint
Committee, Coughlin attempted to explain more clearly the
grievance he was pursuing. He wrote almost exclusively about the
toll increases, noting that each lease agreement had a toll
schedule and that "[t]he toll charges have been raised
dramatically by the Company and they raised these charges with no
explanation or substantiating paper work reflecting why the
charges are raised." In a further, also undated submission,
Coughlin quoted from the Master Agreement the provisions on which
the unions' grievance is based. He cited the same provisions as
those cited on the pre-hearing information form.
The minutes of the hearing itself, though unfortunately
not transcriptions, further inform the reasons for the grievance.
Coughlin began the argument over the merits of the grievance by
discussing the increases in the toll schedules. He went on to
object to the "entire structure." (No explanation is provided as
to what that phrase refers.) Local 917 joined in protest of the
manner in which Ryder was charging the unions for tolls. In
response, Ervin referred to the documents submitted by the unions
and claimed that those same documents allowed Ryder to implement
increases in the toll structure.
Without deciding the matter, the Joint Committee
referred the grievance back to the parties for negotiations to be
completed within sixty days. When the parties could not reach an
agreement, the unions requested, by letter, that the Joint
Committee re-hear the case. In the letter, Coughlin again
importuned the Joint Committee to hold the increase in the toll
schedule to be in violation of the Master Agreement. Coughlin
also maintained that the original toll charge, presumably the
toll schedule itself, was in violation of the Master Agreement.
The Joint Committee re-heard the grievance. Al Valle,
on behalf of Local 560, reported to the Joint Committee that
"[i]t is the position of the locals that the Company illegally
raised the toll tariffs and requests that they be rescinded and
to be made whole for all increases made at the time it was
initiated." Jack Shea, on behalf of Local 917 "agreed that this
was the position of both locals." Finally, Ervin, on behalf of
Ryder, began by noting that the original grievance included
complaints about the percentage of gross revenue to which the
drivers were entitled. Through discussions, however, the parties
narrowed the issue to the toll increases. Ervin went on to
state, inter alia,
What is at issue is the increase in the tolls hold
back which was instituted in 1992.
and,
Now the grievance indicates that the only issue is
that the leases remain the same. There is no
protest regarding the percentage; that all they
want to do is protest the toll increase that was
implemented in 1992. That is the current case.
At the close of the hearing, the case was referred to a
subcommittee comprised of one union representative and one
management representative. Prior to the referral, the Joint
Committee instructed the parties to provide the subcommittee with
the previous toll schedule; the toll schedule in dispute; any and
all documents justifying the toll schedule increase; and, a
description of what is contained in the toll schedule. Based
upon the report of the subcommittee, the full Committee made the
following decision:
1. All owner operators will receive 65% of
the revenue received by the Company
beginning July 18, 1994.
2. An ancillary charge of $13.35,
which has been justified, will be
charged on both the headhaul and
backhaul.
3. The Company will convert to a
single factor tariff concept, with
drivers paying their own tolls with
no Company reimbursement. This
will eliminate the Company's toll
holdback system.
4. The Company is directed to pay the
difference between the two (2) toll
schedules in question for all owner
operators party to this grievance
beginning April 1, 1994.
5. This decision resolves all
outstanding grievances on all
related issues.
6. The Committee finds that because
the Company failed to respond in a
timely manner to the wage reviews
filed by grievants Matteson, Gati
and Rozell, these claims are upheld
for the full amounts claimed,
consistent with Article 7.
7. This settlement should set no
precedent for any other cases.
The drivers responded to the Joint Committee's ruling
by filing a complaint in the District Court for the District of
New Jersey. The relevant count in the complaint for present
purposes is Count I, which contended that the arbitration award
should be vacated because the arbitrators went beyond the scope
of the submissions to reach their conclusion and the ultimate
award, on its merits, did not draw its essence from the
collective bargaining agreement. Of particular concern to the
drivers was the imposition of the ancillary charges from
Paragraph 2 of the award. The drivers moved for summary judgment
as to Count I; Ryder responded with a cross motion for summary
judgment.
The district court granted Ryder's motion. It began
its discussion by noting the extreme deference a court is to
afford an arbitrator's decision, including the interpretation of
the scope of the arbitrator's own power under the collective
bargaining agreement and/or the parties' submissions. Quoting
United Transportation Union Local 1589 v. Suburban Transit Corp.,
51 F.3d 376 (3d Cir. 1995), the court stated that "'there must be
absolutely no support at all in the record justifying the
arbitrator's determinations for a court to deny enforcement of an
award.'" Id. at 379 (quoting News America Publications, Inc. v.
Newark Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir.
1990)). The court then went on to examine the submissions to the
arbitrator and concluded that the submissions covered a range of
issues including, but by no means limited solely to, the toll
schedule. Therefore, it reasoned, the submission supported the
Joint Committee's interpretation of the scope of its power.
The district court next examined the arbitration award
itself to determine if it "[drew] its essence from the collective
bargaining agreement." United Steelworkers of America v.
Enterprise Wheel and Car Corp., 363 U.S. 593, 597 (1960).
Relying again on the forgiving standard of review as set forth in
Suburban Transit, the court concluded that the arbitration award
represented an arguably reasonable interpretation of the Master
Agreement. It therefore held that the decision of the Joint
Committee as to the merits of the grievance should not be
disturbed.
II. Standard of Review
Because we review a district court decision that itself
reviewed an arbitration award subject to a particular standard,
it is fitting to elaborate just a bit on our usually brief
statement concerning the correct standard of review. In Mobil
Oil Corp. v. Independent Oil Workers Union, 679 F.2d 299 (3d Cir.
1982), we stated that the standard for reviewing an arbitrator's
interpretation of the collective bargaining agreement should be
the same as that for reviewing an arbitrator's interpretation of
the issue submitted. See id. at 302. In Exxon Shipping Co. v.
Exxon Seamen's Union, 73 F.3d 1287 (3d Cir.), cert. denied sub
nom. Seariver Maritime, Inc. v. Exxon Seamen's Union, 116 S. Ct.
2515 (1996), we noted that we apply the same standard in
reviewing the district court's decision as that court did in
reviewing the arbitrator's interpretation of the collective
bargaining agreement. See id. at 1291. Therefore, our review of
the validity of the arbitration award must be subject to the same
standard as that which governed the district court's review.
Under the Federal Arbitration Act, a district court may
vacate an arbitration award if, inter alia, "the arbitrators
exceeded their powers, or so imperfectly executed them that a
mutual, final, and definite award upon the subject matter
submitted was not made." 9 U.S.C. § 10(a)(4). In other words,
an arbitrator may not venture beyond the bounds of his or her
authority. See United Steelworkers, 363 U.S. at 597 - 98. As is
often the case, the authority of the arbitrator is defined not
simply by the collective bargaining agreement, but is determined
in large measure by the parties' submissions. See, e.g., Sun
Ship, Inc. v. Matson Navigation Co., 785 F.2d 59, 62 (3d Cir.
1986). In such cases, then, it follows that an arbitrator has
the authority to decide only the issues actually submitted. SeeUnited
Parcel Serv., Inc. v. International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local
Union No. 439, 55 F.3d 138, 142 (3d Cir. 1995) ("[A]n
[arbitration] award will, of course, be enforceable only to the
extent it does not exceed the scope of the parties'
submission."); see also United Steelworkers, 363 U.S. at 598
(upholding an arbitration award but implying that were the award
"beyond the submission" it would have been vacated). It is the
responsibility of the arbitrator in the first instance to
interpret the scope of the parties' submission, but it is within
the courts' province to review an arbitrator's interpretation.
See, e.g., Mobil Oil, 679 F.2d at 302.
We must now determine the appropriate standard for our
review of that interpretation. We are not writing here on a
blank slate. In Mobil Oil, we wrote that "the deference that is
accorded to an arbitrator's interpretation of the collective
bargaining agreement should also be accorded to an arbitrator's
interpretation of the issue submitted." 679 F.2d at 302. We
provided three reasons for such deference, which results in
"singularly undemanding" judicial review. United Transp. Union,
51 F.3d at 379 (quoting News America, 918 F.2d at 24). First, a
more searching judicial review of submissions to an arbitrator
would undermine the congressional policy of promoting speedy,
efficient, and inexpensive resolution of labor grievances. SeeMobil Oil,
679 F.2d at 302. Second, interpretation of a
submission must often occur in the context of the collective
bargaining agreement itself. Therefore, it would be inconsistent
to accord deference to the interpretation of the collective
bargaining agreement but not to the submission. See id.
Finally, requiring courts to engage in a close examination of the
submissions to arbitrators would put a considerable strain on
judicial resources. See id.
Given the language employed to describe the standard
for reviewing an award on the merits, there is no doubt that our
review of the interpretation of a submission is highly
deferential. See, e.g., News America, 918 F.2d at 24 ("[T]here
must be absolutely no support at all in the record justifying the
arbitrator's determinations for a court to deny enforcement of an
award.") (emphasis added); Ludwig Honold Mfg. v. Fletcher, 405
F.2d 1123, 1128 (3d Cir. 1969) (upholding an arbitrator's award
so long as its "interpretation can in any rational way be derived
from the [collective bargaining] agreement") (emphasis added).
Effusively deferential language notwithstanding, the
courts are neither entitled nor encouraged simply to "rubber
stamp" the interpretations and decisions of arbitrators. See,e.g., Leed
Architectural Prods., Inc. v. United Steelworkers of
America, Local 6674, 916 F.2d 63, 65 (2d Cir. 1990) ("This great
deference, however, is not the equivalent of a grant of limitless
power."). Courts still maintain a significant role in the labor
arbitration process; they have not been relegated to the status
of merely offering post-hoc sanction for the actions of
arbitrators. Rare though they may be, there will be instances
when it is appropriate for a court to vacate the decision of an
arbitrator. This is one of them.
III. Did the Arbitrators Exceed Their Authority?
We turn to the ultimate decision of the Joint Committee
to determine if it went beyond the scope of the authority
conferred upon it by the parties. As we have noted, an
arbitrator has the authority to decide only the issues actually
submitted. See, e.g., United Parcel Serv., 55 F.3d at 142. We
are hampered in the effort to define the issues submitted by the
failure of the parties in this case to prepare a single document
containing the issues they wished to submit to the Joint
Committee. Instead, we are confronted with a tangle of
documents, penned over a two-year time period, no single one of
which is dispositive and many of which are hand written,
incomplete, and obviously drafted without expert assistance.
The obvious first step is to prescribe the relevant
time frame. Must we consider all of the documents during the
entire two years of the dispute, or should we study only those
documents generated at or near the time of the final hearing?
Precedent sheds little light on this question, because in the
usual arbitration the parties formulate a single, controlling
submission. See, e.g., Sun Ship, 785 F.2d at 62. Reasoning from
the general principles set forth in that precedent, we can,
however, answer the question.
"[A]rbitration is a creature of contract." United
Steelworkers of America v. American Mfg., 363 U.S. 564, 570
(1960) (Brennan, J., concurring). Though spoken in the context
of interpreting the collective bargaining agreement, Justice
Brennan's simple description aptly frames our inquiry. As in
contract law, the touchstone for interpreting a submission must
be the intention of the parties. See Local 1199, Drug Hospital
and Health Care Employees Union, RWDSU, AFL-CIO v. Brooks Drug
Co., 956 F.2d 22, 25 (2d Cir. 1992). It is the parties, not the
arbitrator, who decide the issues submitted; absent a formal,
written submission, we must look to the parties' conduct as a
whole. See International Chemical Workers Union, Local No. 566
v. Mobay Chemical Corp., 755 F.2d 1107, 1110 (4th Cir. 1985). To
determine the intent of the parties given the circumstances in
this case, then, we cannot limit ourselves simply to one or a few
documents. Nor can we rely on isolated statements within those
documents. Rather, we must examine the documents with an eye
towards arranging each of them to create a complete picture.
When we examine the entire history of the grievance in
this case, it becomes patent that the issue the parties
ultimately agreed to submit to the Joint Committee was the
increase in the toll schedule. The drivers did draft documents
and made statements that, if taken out of context, could be
construed as referring to issues beyond the toll schedule,
especially in the early stages of the dispute. Some documents
referred to the percentage of gross revenue due the drivers; more
documents referenced provisions of the Master Agreement that
governed issues well beyond toll payments. As the dispute
progressed, however, the drivers ceased to mention the gross
revenue percentages. And, the referenced provisions in the
Master Agreement, though often governing a wide range of issues,
invariably included references to toll payments.
The only consistent theme running through all the early
documents and statements is the increase in the toll schedule.
As the dispute progressed further, it became ever more plain that
the parties focused their dispute on the increase in the toll
schedule. By the time of the last hearing before the Joint
Committee, it was the toll schedule, and nothing more, over which
the parties argued. The clearest statement of the dispute, in
fact, comes from Ervin, the Ryder representative, who reported to
the Joint Committee that "all [the drivers] want to do is protest
the toll increase."
The drivers maintain that the request of the Joint
Committee to have the parties provide information about the toll
schedule is important. We agree that the request is important,
but, as the district court stated, it is not dispositive. But
the fact that the Joint Committee requested only information
about the toll schedules suggests that, at the time of the final
hearing, the Joint Committee believed that the only issue the
parties wished to submit to it was the toll schedule. The
request is, in other words, support for our conclusion that the
intent of the parties was to arbitrate only the increase in the
toll schedule.
Ryder and the district court emphasize isolated
statements and documents without contextualizing them. As we
have explained above, such a narrow focus is inappropriate in
this case. Ryder and the district court attach too great
significance to documents drafted early in the dispute that
contain references to the percentage of gross revenues due the
drivers. Similarly, both Ryder and the district court devote
much attention to references to provisions in the Master
Agreement that discuss issues beyond the toll schedules. Such
attention is especially misplaced when other language in those
documents makes clear that what the drivers were concerned about
was the tolls.
For example, both Ryder and the district court point to
a letter Coughlin, a union representative, wrote that quotes from
the Master Agreement. In that same letter, however, he wrote
almost exclusively about the toll schedules. Additionally, both
Ryder and the district court correctly point out that in the
minutes before the Joint Committee Coughlin "not only protests
the raise, but the entire structure." However, the surrounding
language in the minutes, which referred only to the toll
schedule, makes it obvious that this reference to "the entire
structure" is not a reference to the entire compensation scheme.
Finally, Ryder observes that, when Ervin stated that
the only matter before the Joint Committee was the increase in
the toll schedule, Coughlin did not agree, but rather raised a
point of order. Ryder claims that if the drivers truly did wish
to arbitrate only the increase in the toll schedule their
representative would have said as much at this point in the
proceedings. However, just as significantly, Coughlin did not
object to Mr. Ervin's characterization of the dispute. Moreover,
the point of order appears directed not at the characterization
but at the argument Ervin proceeded to make about the merits of
the dispute.
IV. Conclusion
Because the Joint Committee exceeded its authority as
arbitrator by deciding issues not submitted to it by the drivers
and Ryder, we will reverse the order of the district court and
remand the case with instructions to vacate the entire
arbitration award pursuant to 9 U.S.C. § 10(a)(4). It is
unnecessary to reach the merits of the arbitration award and we
do not make a determination as to whether the award drew its
essence from the collective bargaining agreement.