Natl Gypsum Co v. Oil, Chem & Atomic ( 1998 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________
No. 97-30699
__________________
NATIONAL GYPSUM COMPANY,
Plaintiff-Appellant,
versus
OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION; OIL,
CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, Local 4-447,
Defendants-Appellees.
______________________________________________
Appeal from the United States District Court for the
Eastern District of Louisiana
______________________________________________
July 17, 1998
Before BARKSDALE, BENAVIDES, and DENNIS, Circuit Judges.
BENAVIDES, Circuit Judge:
The district court granted summary judgment to the Oil,
Chemical, and Atomic Workers International Union and its Local 4-
447 on their motion to enforce an arbitration award and denied
National Gypsum Company summary judgment on its motion to vacate
that award. We affirm.
I.
On January 30, 1994, National Gypsum Company and Oil,
Chemical, and Atomic Workers International Union Local 4-447
entered into a collective bargaining agreement (“the Agreement”),
which covered nonsupervisory production employees at National
Gypsum’s plant in Westwego, Louisiana, from February 1, 1994,
through February 1, 1997. Before September 1994, employees at the
Company were scheduled to work seven consecutive days each week
with attendant overtime pay. Workers were paid time and a half on
Saturdays and double time on Sundays. The seven-day work week had
been in effect for 30 years at the Westwego plant. In the summer
of 1994, however, the Company announced a “day-off” program,
effective in September 1994, under which no employee would work
more than six days in any week. Although at first blush the day-
off program might seem advantageous to the employees, the program
resulted in the loss of overtime pay. Consequently, on September
1, 1994, the Union filed a grievance in which it complained that
“[t]he company refuses to pay premium pay to the employees affected
by the day off,” and that the refusal violated Article I, § 28 of
the Agreement and any other provisions of the Agreement found to
apply. Section 28 provides that “[n]o employee will be laid off1
during the work week for the sole purpose of offsetting overtime
worked during the week.” The parties were unable to resolve their
dispute.
1
The parties agree that the term “laid off” can mean not
having work for a period as short as one day.
2
In June 1995, the Company demanded arbitration in accordance
with Article X, § 69, which allows either party to request
arbitration if more informal dispute resolution mechanisms fail.
The parties agreed to bifurcate the liability and damage portions
of the arbitration. The liability portion of the arbitration took
place on July 10, 1996. The arbitrator found in favor of the
Union, reasoning that, because the day-off program was a wage
change and because the Agreement required the Company to negotiate
with the Union over wage changes, the Company had violated the
Agreement by instituting the day-off program unilaterally. The
arbitrator further concluded that the parties intended the
Agreement to reflect the seven-day work week with its attendant
overtime pay. In support of this conclusion, he relied on § 22 of
the Agreement, which defines the work week as running from Monday
to Monday, and §§ 23-24, which address overtime pay.
The Company filed a motion to vacate the arbitration award in
federal district court. The Union filed a counterclaim to enforce
it. Both parties filed motions for summary judgment. The district
court denied the Company’s motion and granted the Union’s. This
appeal followed.
II.
We review the district court’s decision to enforce the
arbitration award de novo, using the same standards used by the
district court. See Gulf Coast Indus. Workers Union v. Exxon
Corp., 991 F.2d 244, 248 (5th Cir. 1993). Our review of the
3
arbitrator’s decision is extremely deferential. See Executone
Information Sys., Inc. v. Davis, 26 F.3d 1314, 1320 (5th Cir.
1994). An arbitrator’s award cannot be reversed if the matter was
subject to arbitration and the arbitrator’s decision “drew from the
essence of the collective bargaining agreement.” International
Ass’n of Mach. & Aerospace Workers, Dist. 776 v. Texas Steel Co.,
538 F.2d 1116, 1119 (5th Cir. 1976).
Although the arbitrator’s construction of a contractual
provision may not be the only possible construction or even a
correct one, it must nevertheless be upheld unless the arbitrator’s
decision does not “concern[] the construction of the contract,”
United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593,
599, 80 S. Ct. 1358, 1362 (1960), or is not “rationally inferable”
from the letter (or even the purpose) of the collective bargaining
agreement, Local Union 59, International Bhd. of Elec. Workers v.
Green Corp., 725 F.2d 264, 268 (5th Cir. 1984) (citations omitted).
Reversal is not proper when “the arbitrator misreads the contract,
where there is room to do so . . . .” Id. (citing United
Paperworkers Int’l Union v. Misco, 484 U.S. 29, 38, 108 S. Ct. 364,
371 (1987)). Even if “a court is convinced [that the arbitrator]
committed serious error[, that] does not suffice to overturn his
decision.” Misco, 484 U.S. at 38, 108 S. Ct. at 371.
A.
The parties were unable to stipulate to the issue to be
decided by the arbitrator. The Company proposed that the
4
arbitrator decide, “Whether the Company violated Article V, [§]
28, of the parties’ Collective Bargaining Agreement on September 3
and 4, 1994, by laying off employees during the workweek for the
sole purpose of offsetting overtime during the week.” The Union,
on the other hand, believed that the arbitrator should decide, “Did
the Company violate the Collective Bargaining Agreement, in the
manner in which they begin [sic] scheduling employees[’] work week
on or about August 29, 1994 and continuing through September 1995?”
The arbitrator framed the issue broadly as “Whether the Company
violated the collective bargaining agreement by its institution of
the ‘day-off’ program on or about September 1, 1994.” More
precisely, the arbitrator considered whether the company had a duty
to bargain with the Union over the institution of the day-off
program, and, if so, whether it violated that duty by instituting
the program unilaterally.
The Company claims that the arbitrator exceeded his authority
by framing the issue as a bargaining rather than a scheduling
issue, especially in light of § 72 of the Agreement, which provides
that the arbitrator “shall deal only with the single matter which
occasioned his appointment.” The district court concluded that the
parties gave the arbitrator authority to frame the issue and that
the issue framed was “rationally derived” from the issues submitted
by the parties. We agree.
Although an arbitrator is generally “not free to reinterpret
the parties’ dispute and frame it in his own terms,” Piggly Wiggly
Operator’s Warehouse, Inc. v. Piggly Wiggly Operator’s Warehouse
5
Indep. Truck Driver’s Union, Local No. 1, 611 F.2d 580, 584 (5th
Cir. 1980), “[i]t is appropriate for ‘the arbitrator to decide just
what the issue was that was submitted to it and argued by the
parties,’” Day & Zimmerman, 791 F.2d at 369 (quoting Waverly
Mineral Prods. Co. v. United Steelworkers of Am., 633 F.2d 682, 685
(5th Cir. 1980)). Moreover, this court in Day & Zimmerman gave
“substantial weight” to the fact that the company had given “the
arbitrator authority to frame the issue.” 791 F.2d at 368. Where,
as here, the parties have not formally stipulated to the issue to
be submitted, the courts have looked to the grievance for guidance
regarding what issue is before the arbitrator. See, e.g., Piggly
Wiggly, 611 F.2d at 584.
In this case, the Company went forward with arbitration,
initiated at its own request, knowing that it had been unable to
agree with the Union as to the precise issue presented. Indeed,
the Company indicated to the arbitrator in its opening argument
that the parties disagreed on the issue presented for the
arbitrator’s resolution and presented argument to the arbitrator
regarding the scope of the issue presented. In doing so without
objecting that the arbitrator lacked the authority to determine the
issue presented, the Company impliedly consented to allow the
arbitrator to frame the issue.
The statement of the issue presented by the Union was broad
enough to be understood as a general challenge to the institution
of the day-off program. Moreover, the Union’s grievance cited to
“any other provisions of the agreement which may be found to
6
apply.” Under these circumstances, the arbitrator was entitled to
consider whether the institution of the program violated § 5, which
the arbitrator construed to create a duty to bargain with the
Union.2 Thus, we conclude that the arbitrator did not exceed his
contractual authority in framing the issue as whether the day-off
program violated the Company’s bargaining obligation.
B.
The Company also complains that the arbitrator exceeded his
contractual authority because his decision is contrary to the
express terms of the Agreement. Although this court does not
review the merits of an arbitration award, “arbitral action
contrary to express contractual provisions will not be respected.”
Delta Queen Steamboat Co. v. District 2 Marine Eng’rs Beneficial
2
The Company also argues that a portion of the testimony of a
Union representative demonstrates conclusively that the Union was
not challenging the institution of the day-off program:
Q: Just so I am clear on the union’s contention, and you were the one that
filed the grievance, it was not the union’s contention in filing that grievance
that the company didn’t have the right to institute a day-off program, was it?
A: No.
Q: Is it your contention that the entire day-off program had as its motive the
elimination or reduction of overtime?
A: Yes.
Q: And that’s the basis of your whole contention here?
A: Yes.
Q: If that’s the case, what you are really saying is that the company cannot
have a day-off program?
A: No, I’m not saying that.
Q: We can have a day-off program--
A: Yes, you can.
The district court concluded that “the arbitrator could have
reasonably interpreted the Union representative’s concession that
the company could implement a day-off program to in no way preclude
a claim that the institution of this particular day-off program was
violative of the collective bargaining agreement.” Slip. op. at 11
(emphasis in original). We agree.
7
Ass’n, 889 F.2d 599, 604 (5th Cir. 1989). If the arbitrator
ignores or refuses to apply a contractual provision that permitted
the Company’s action, “the arbitrator exceed[s] the express
limitations of his contractual mandate.” Bruce Hardwood Floors v.
UBC Southern Council of Indus. Workers, Local No. 2713, 103 F.3d
449, 452 (5th Cir.), cert. denied, 118 S. Ct. 329 (1997).
Moreover, the Agreement in this case limits the arbitrator to
interpreting “the specific terms of this Agreement which are
applicable to the particular issue,” and to issuing an award that
is “not contrary to, and which in no way adds to, subtracts from,
or alters the terms of this Agreement.” Agreement, Art. X, § 73.
1.
The arbitrator concluded that the Company had a duty to
bargain with the Union before it instituted the day-off program.
This conclusion was grounded in the language of Article I, § 5 of
the Agreement:
The Company recognizes the Union as the exclusive
bargaining agent for all production employees, as
hereinafter defined, for the purpose of collective
bargaining in respect to wages, hours of employment and
all other conditions of employment.
Agreement, art. I, § 5. The arbitrator could have rationally
inferred from this section that the Company had a duty to bargain
over the institution of the day-off program, which, in the
arbitrator’s words, was used as a “wholesale reduction of the wage
bargain.” The arbitrator could have reasonably thought that if
this section does not create a duty to bargain over wages, hours of
8
employment, and other employment conditions, it would have little
or no meaning, given that no other section of the Agreement
provides for collective bargaining on these topics.
Moreover, the arbitrator’s interpretation of § 5 is consistent
with the Company’s statutory bargaining obligations. As the
arbitrator noted, the National Labor Relations Act creates a duty
to bargain with employees over “wages, hours, and other terms and
conditions of employment . . . .” 29 U.S.C. § 158(d). In this
regard, the Company argues that the arbitrator’s award cannot be
enforced because it was based on statutory rather than contractual
grounds.3 We disagree. Although the arbitrator’s interpretation
of the agreement was bolstered by the fact that that interpretation
is consistent with the Company’s statutory duty, his decision was
based on the contract, not on statutory duty. Moreover, the
Supreme Court has made clear that although the arbitrator’s
decision may not be based “‘solely upon the arbitrator’s view of
the requirements of enacted legislation . . . ,’” Alexander v.
Gardner-Denver Co., 415 U.S. 36, 53, 94 S. Ct. 1011, 1022
(1974)(quoting United Steelworkers v. Enterprise Wheel & Car Corp.,
363 U.S. 593, 598, 80 S. Ct. 1358, 1361 (1960)), the arbitrator
may “look for guidance from many sources . . . so long as [the
arbitration award] draws its essence from the collective bargaining
3
The Company also complains that the arbitrator relied on
external law in concluding that the Union had not waived its right
to rely on § 28 of the Agreement. This complaint does not detain
us because the arbitrator ultimately concluded that § 28 did not
aid the Union’s cause. Thus, even if the arbitrator erred, that
error was harmless.
9
agreement,” 363 U.S. at 597, 80 S. Ct. at 1361. The arbitrator’s
decision in this case drew its essence from the agreement, and the
arbitrator properly “look[ed] to ‘the law’ for help in determining
the sense of the agreement.” Id.
2.
The Company argues that the arbitrator’s conclusion that it
had a duty to bargain regarding the day-off program ignored Article
I, § 7 of the Agreement, which requires the Company to “meet with
the accredited representatives of the Union for the purpose of
settling any disputes which may arise, during the term of this
agreement.” Agreement, art. I, § 7 (emphasis added). In the
previous agreement, which governed from 1990 to January 31, 1994,
this section provided that the Company had a duty to “negotiate
with” the Union to settle disputes. The Company argues that the
arbitrator’s finding that the Company had a duty to bargain under
§ 5 conflicts with § 7, which requires only that the Company “meet
with,” not that it “negotiate with” the Union to resolve disputes.
Section 7 did not expressly preclude the arbitrator from
interpreting § 5 to require bargaining over changes to the wage
bargain. These provisions can reasonably be read to mean that the
company has a duty to bargain over wages, hours of employment, and
conditions of employment, but only has a duty to meet with Union
representatives over other disputes. To the extent that there is
any ambiguity regarding the meaning of these two sections or a
10
conflict between the two, the arbitrator was entitled to resolve
it.
3.
The Company also contends that the arbitrator’s decision
contravenes the Agreement’s management rights clause, which states:
The management of this Plant and the direction of the
working force are reserved and vested exclusively in the
Company, except as expressly limited by the written terms
of this Agreement. Such rights of the Company shall
include, but are not limited to, the right to . . .
schedule and reschedule employees as required by the
business needs and operations requirements; to determine
the number of employees, jobs, shifts or crews to be
utilized in the operation; . . . [and] to establish,
eliminate or combine jobs as it deems necessary for
efficient operation.
Agreement, art. XVIII, § 104. The Company argues that the
arbitrator’s finding that the Company had a duty to bargain with
the Union over the day-off program conflicts with this provision.
The arbitrator went to considerable lengths to explain how his
conclusion was grounded in the text of the agreement. The
arbitrator specifically addressed the effect of the management
rights clause on the parties’ dispute and concluded that, although
the provision gives management scheduling rights, it does not allow
management to exercise those rights “as a vehicle for the wholesale
reduction of the wage bargain.” The arbitrator found that the
program was not “wage neutral,” but “resulted in substantial wage
reductions upsetting thereby the wage bargain between the parties.”
Further, as the arbitrator observed, the management rights
11
conferred by § 104 are not boundless, but may be “expressly limited
by the written terms of [the] Agreement.”
Because changes in scheduling will often affect wages, the
arbitrator’s reading of the management rights clause does cabin the
Company’s rights under that clause. His reading does not, however,
render the clause meaningless. The arbitrator did not conclude
that any scheduling change would require bargaining, but rather
only that the fundamental change brought about by the day-off
program, which substantially altered the union’s wage bargain,
required the Company to bargain with the Union over the program’s
implementation.
Without question, there is some tension between the
arbitrator’s construction of § 5 and the management rights clause.
To the extent that § 5 and § 104 are in conflict, however, the
arbitrator had the authority to resolve this conflict in favor of
the Union. The arbitrator did not ignore § 104, but attempted to
harmonize that provision with the bargaining requirement he found
in § 5. The Company and the Union bargained for the arbitrator’s
interpretation of the Agreement, not ours. See Enterprise Wheel,
363 U.S. at 597, 80 S. Ct. at 1361. Because we cannot say that the
arbitrator’s decision did not “concern[] the construction of the
contract . . . ,” we must enforce it. Id. at 599, 80 S. Ct. at
1362.
12
4.
13
Finally, the Company argues that the arbitrator impermissibly
based his findings on the parties’ past practices (i.e., the 30-
year history of the seven-day work week with attendant overtime) in
violation of § 104 of the Agreement, which states:
This agreement contained the full scope of the agreements
between the parties and expressly supersedes and cancels
any and all provisions written or oral agreements or
practices, previous to this agreement.
Although the arbitrator discussed past practices extensively and
erroneously stated that past practice is “part of the collective
bargaining agreement as though it had been reduced to writing,” his
decision was ultimately based on his interpretation of the
Agreement. He concluded that the seven-day work week is reflected
in § 22 of the Agreement, which states that “[t]he work week and
payroll week shall be from seven a.m. Monday to seven a.m. the
following Monday.” The arbitrator described this provision as
“coterminous” with prior practice. He also relied on the
Agreement’s overtime provisions, which provide that employees will
receive time and a half on Saturdays and double time on Sundays.
In sum, the arbitrator concluded that the parties intended that
their Agreement reflect a seven-day work week.
Because we conclude that the arbitrator’s decision was based
on his interpretation of the contract and supported by practice
after the adoption of the Agreement in question,4 his reference to
4
Not only was the seven-day work week in effect before the
Company and the Union entered into the January 1994 Agreement, but
the practice also continued for nearly seven months after the
Agreement was signed. Thus, the arbitrator’s construction of the
Agreement as reflecting a seven-day work week is consistent not
only with prior practice, but also with the seven months of
14
past practice is not “fatal” to his award, as the Company suggests.
Here, there is room in the contract to allow for the reading made
by the arbitrator. Thus, even if we were convinced that the
arbitrator’s understanding of §§ 22 and 23-24 as reflecting a
seven-day work week was erroneous or even “seriously erroneous,”
that would not provide a sufficient basis for refusing to enforce
his award. See Misco, 484 U.S. at 38, 108 S. Ct. at 371.
III.
Mindful of our limited role in the review of arbitration
awards, we affirm the judgment of the district court enforcing the
arbitrator’s award.
practice under this collective bargaining agreement.
15