Union Pacific Railroad Company v. American Railway ( 2020 )


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  • Case: 18-50110     Document: 00515676481          Page: 1    Date Filed: 12/16/2020
    United States Court of Appeals
    for the Fifth Circuit
    United States Court of Appeals
    Fifth Circuit
    FILED
    December 16, 2020
    No. 18-50110                          Lyle W. Cayce
    Clerk
    Union Pacific Railroad Company,
    Plaintiff—Appellee,
    versus
    American Railway & Airway Supervisors’ Association, a
    Division of The Transportation Communications
    Union/IAM; Roland Beltran,
    Defendants—Appellants.
    Appeal from the United States District Court
    for the Western District of Texas
    USDC No. 5:17-CV-270
    Before Owen, Chief Judge, and King and Stewart, Circuit Judges.
    Per Curiam:*
    After a second positive drug test, Union Pacific permanently
    terminated Roland Beltran’s employment. During arbitration, the Public
    Law Board concluded the second drug test was a false-positive and ordered
    *
    Pursuant to 5th Circuit Rule 47.5, the court has determined that this
    opinion should not be published and is not precedent except under the limited
    circumstances set forth in 5th Circuit Rule 47.5.4.
    Case: 18-50110     Document: 00515676481           Page: 2   Date Filed: 12/16/2020
    No. 18-50110
    Beltran reinstated. Union Pacific refused to reinstate Beltran and seeks to
    vacate the arbitration award. Beltran seeks to enforce the award. The district
    court vacated the Public Law Board’s order on public policy grounds, and
    this appeal followed. Because we conclude the Public Law Board did not
    violate public policy and all other relevant arguments were waived, we
    REVERSE the district court’s order of vacatur and REMAND this case for
    further proceedings.
    I.
    Defendant-appellant Roland Beltran worked as a Car Foreman for
    plaintiff-appellee Union Pacific, a railroad carrier within the meaning of the
    Railway Labor Act (“RLA”). The American Railway & Airway Supervisors’
    Association (“ARASA”) is a labor organization that represents employees of
    Union Pacific, like Beltran. This appeal centers around a collective
    bargaining agreement (“CBA”), which governs the hours of service and
    working conditions of ARASA-represented employees. The CBA requires
    disputes to be arbitrated in accordance with the RLA. See 45 U.S.C. § 151 et
    seq.
    Beltran’s position with Union Pacific required him to hold a
    commercial driver’s license, making him subject to random drug testing
    under Department of Transportation (“DOT”) regulations and company
    policy. Beltran first tested positive for cocaine on December 23, 2010. He and
    ARASA signed a last-chance agreement. Beltran was thereafter reinstated,
    pursuant to Union Pacific’s Drug and Alcohol Policy for a “one-time return
    to service opportunity.” According to that policy, “[a]n employee who has
    been granted a one-time return to service. . . and who violates the Union
    Pacific Drug and Alcohol policy again within a ten (10) year period will be
    dismissed permanently.”
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    Beltran tested positive for amphetamines and methamphetamine in a
    follow-up test on November 20, 2014. Dr. Randy Barnett, the Medical
    Review Officer (“MRO”), interviewed Beltran over the phone and asked
    what medications he was taking. The MRO verified the positive result to
    Union Pacific and stated that the test was conducted in accordance with 49
    C.F.R. Part 40 and Part 382.
    Union Pacific then conducted an investigation and hearing on the
    matter, at which the parties submitted testimonial and documentary
    evidence. Union Pacific, through Tracy W. Brown, laid out the charges and
    the testing procedures that documented the confirmed positive result for
    amphetamines and methamphetamine. Beltran testified that he had taken
    prescription and over-the-counter medications that could have led to a false-
    positive. Beltran also submitted a letter from Dr. Michael Zeitlin which
    identified the medications that Beltran was allegedly taking that could cause
    false positives. The letter from Dr. Zeitlin noted that “[a]mphetamine or
    methamphetamine is the most common[ly] reported false-positive urine drug
    test result.”
    Dr. Barnett, the MRO, testified as a witness for Union Pacific, and his
    report was made an exhibit. Dr. Barnett stated that none of the medications
    listed by Dr. Zeitlin would cause a false positive for methamphetamine, and
    thus there was no legitimate medical explanation for Beltran’s positive test.
    On January 9, 2015, Union Pacific notified Beltran that his
    employment was terminated based on the hearing. In accordance with the
    procedures set forth in the RLA and the CBA, ARASA moved the matter to
    arbitration before a Public Law Board (“PLB”). The parties submitted
    written briefs and exhibits, including the transcript of the initial hearing. PLB
    No. 5514 issued Award No. 101, which ordered Beltran to return to work,
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    without back pay, but with seniority and other benefits intact. Union Pacific
    did not return Beltran to service.
    Instead, Union Pacific filed suit in the District Court for the Western
    District of Texas seeking to set aside the award. Beltran and ARASA counter-
    claimed seeking to enforce the award. The parties prepared a stipulated
    record consisting of the submissions and evidence before the PLB and cross-
    moved for summary judgment. The district court granted Union Pacific’s
    motion and vacated the arbitration award, concluding that the PLB violated
    public policy. Beltran and ARASA timely appealed.
    II.
    We review de novo the district court’s order to vacate the arbitration
    award. Gulf Coast Indus. Workers Union v. Exxon Co., U.S.A., 
    991 F.2d 244
    ,
    248 (5th Cir. 1993); see Cont’l Airlines, Inc. v. Int’l Bhd. Of Teamsters, 
    391 F.3d 613
    , 616 (5th Cir. 2004).
    The CBA at issue requires arbitration in accordance with the RLA’s
    mandatory procedures for the resolution of disputes, both major and minor.
    See Mitchell v. Cont’l Airlines, Inc., 
    481 F.3d 225
    , 230 (5th Cir. 2007). This
    dispute over a drug-testing result is classified as a “minor dispute” under the
    RLA.
    Id. at 230-31.
    Minor disputes must be resolved through compulsory and
    binding arbitration. Cont’l Airlines, Inc. v. Air Line Pilots Ass’n, Int’l, 
    555 F.3d 399
    , 405 (5th Cir. 2009) (citing 
    Mitchell, 481 F.3d at 231
    ). Judicial review of
    arbitration decisions arising from the terms of a CBA is narrowly limited, and
    courts should afford great deference to arbitration awards.
    Id. at 405
    (quoting
    Resolution Performance Prods., LLC v. Paper Allied Indus. Chem. and Energy
    Workers Int’l, Local 4-1201, 
    480 F.3d 760
    , 764 (5th Cir. 2007)). The standard
    of review is “among the narrowest known to the law” and flows from the
    RLA’s “preference for the settlement of disputes in accordance with
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    contractually agreed-upon arbitration procedures.”
    Id. (quoting Andrews v.
       Louisville & Nashville R.R. Co., 
    406 U.S. 320
    , 323 (1972)).
    We will defer to an arbitrator’s decision unless: (1) the arbitrator failed
    to comply with the RLA; (2) there is evidence of fraud or corruption in the
    arbitrator; or (3) the order by the arbitrator did not “confine itself to matters
    within the scope of [its] jurisdiction.”
    Id. at 406
    (quoting 
    Mitchell, 481 F.3d at 231
    ). This court has also held that we may vacate an arbitrator’s decision
    pursuant to an exceedingly narrow, judicially created exception for public
    policy concerns. See
    id. at 415-20. III.
                The parties ask that we address whether: (1) public policy review is
    available under the RLA; (2) the award violates public policy; (3) Union
    Pacific forfeited the jurisdictional argument by failing to present the relevant
    regulation to the arbitrator; (4) the jurisdictional argument fails on the merits.
    We address the parties’ public policy concerns and jurisdictional arguments
    below.
    A. Public Policy Concerns
    Union Pacific contends that the PLB violated an explicit, well-defined
    public policy by failing to defer to the MRO’s finding that Beltran’s second
    drug test was positive. The district court agreed and vacated the PLB’s award
    accordingly. ARASA argues on appeal that public policy review is unavailable
    and, in the alternative, that the argument fails on the merits.
    As a threshold matter, in Continental Airlines v. Air Line Pilots, this
    court recognized a narrow public policy exception in the relevant context and
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    distilled three guiding principles. 1
    Id. at 406
    . First, “public policy. . . must be
    well defined and dominant, and is to be ascertained by reference to the laws
    and legal precedents . . . .”
    Id. at 415-16
    (omission in original) (quoting W.R.
    Grace & Co. v. Local Union 759, Int’l Union of the United Rubber, Cork,
    Linoleum & Plastic Workers of Am., 
    461 U.S. 757
    , 766 (1983)). Second, the
    relevant point of inquiry is whether the ultimate arbitration award violates
    public policy. See
    id. at 416.
    And third, “courts should be particularly chary
    when divining public policy [where] ‘two political branches have created a
    detailed regulatory regime in a specific field.’”
    Id. at 417-18
    (quoting E.
    Associated Coal Crop v. United Mine Workers of Am., 
    531 U.S. 57
    , 63 (2000)).
    Against that backdrop, we analyze whether the arbitration award
    contravenes public policy. “[W]e cannot embrace public policy as an end-run
    around RLA deference,”
    id. at 420,
    and we consider whether the ultimate
    arbitration award violated 49 C.F.R. § 40.149(c). We look, then, to see not if
    the false-positive determination itself violates public policy, but whether the
    PLB’s failure to defer to the MRO creates a conflict between the arbitration
    award and the federal regulation. See
    id. at 419-20;
    see also United
    Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 
    484 U.S. 29
    , 45 (1987).
    Subpart 40 of Title 49 of the Code of Federal Regulations “tells all
    parties who conduct drug and alcohol tests required by [DOT] agency
    regulations how to conduct these tests and what procedures to use,” and
    “concerns the activities of transportation employers, safety-sensitive
    transportation employees . . . and service agents.” 49 C.F.R. § 40.1. These
    regulations were issued pursuant to the Federal Omnibus Transportation
    Employee Testing Act of 1991 (the “Testing Act”), which places certain
    1
    Air Line Pilots both recognized and went to great lengths to circumscribe the
    narrow exception. And, absent an intervening change in the law, this panel has no authority
    to overrule binding precedent. See Mercado v. Lynch, 
    823 F.3d 276
    , 279 (5th Cir. 2016).
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    restrictions on workers who test positive for using controlled substances. See
    Pub. L. No, 102-143, tit. V, 105 Stat. 917 (1991). The Testing Act’s aims are
    complex and primarily remedial; these state that “rehabilitation is a critical
    component of any testing program,” § 2(7), 105 Stat. 953, that rehabilitation
    “should be made available to individuals, as appropriate,” ibid., and that
    DOT must promulgate regulations for “rehabilitation programs.” E.
    Associated 
    Coal, 531 U.S. at 64
    .
    On close inspection, it becomes apparent that § 40.149(c), the specific
    regulation at issue here, only purports to grant the MRO the “sole authority
    under this part to make medical determinations.” 49 C.F.R. § 40.149(c)
    (emphasis added). To that end, an arbitration award would directly
    contravene § 40.149(c) if it disregarded the MRO’s medical determination
    in ordering an employer to allow an employee to return to performing safety-
    sensitive work without going through DOT’s rehabilitative measures. See 49
    C.F.R. § 40.305 (prescribing return-to-duty requirements for employees who
    failed a drug or alcohol test); cf. E. Associated 
    Coal, 531 U.S. at 64
    (discussing
    the relevant legislation’s “remedial aims”). 2
    In other words, an arbitrator may disagree with the MRO as long as its
    remedy does not conflict with Part 40’s return-to-duty procedures. The
    MRO has the sole authority to establish the validity of a drug test for
    2
    Although this issue was not briefed, there was some discussion at oral argument
    as to whether the PLB ordered Beltran be returned to a safety-sensitive position. Appellants
    stated that the PLB did not do as much. Union Pacific, however, indicated this might be
    the consequence of the PLB award, given Beltran was reinstated with his seniority intact.
    Nevertheless, Union Pacific conceded that DOT regulations would have to be followed
    before Beltran resumed any safety-sensitive position pursuant to the award. We conclude,
    therefore, that this hypothetical outcome—which would nevertheless not mandate the
    employee be returned to performing safety-sensitive work without going through DOT’s
    rehabilitative measures—proves insufficient to sustain a finding that the arbitration award
    was violative of public policy.
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    determining whether those procedures are necessary—not for making
    personnel decisions. Indeed, DOT’s authoritative guidance interpreting
    § 40.149(c) says as much:
    There may be instances in which an arbitrator makes a decision
    that purports to cancel a DOT test for reasons that the DOT
    regulation does not recognize as valid. . . [In such instances the]
    employer may still be bound to implement the personnel policy
    outcome of the arbitrator’s decision . . . .
    To that end, in this case, a meaningful distinction lies in whether the drug
    test is valid for purposes of “personnel policy” or a “federal safety
    regulation.” Under the RLA, the arbitrator has the authority to decide the
    drug    test’s   validity   for    the       former   purpose,   while       under
    § 40.149(c), the MRO has the authority to decide the drug test’s validity for
    the latter purpose.
    And although 49 C.F.R. § 40.149(c) falls in the category of DOT
    safety regulations, these do not purport to regulate labor–management
    relations. Cf. E. Associated 
    Coal, 531 U.S. at 65
    (“[W]hen promulgating these
    regulations, DOT decided not to require employers either to provide
    rehabilitation or to ‘hold a job open for a driver’ who has tested positive, on
    the basis that such decisions ‘should be left to management/driver
    negotiation.’” (quoting Controlled Substances & Alcohol Use and Testing,
    59 Fed. Reg. 7484, 7502 (Feb. 15, 1994))).
    At bottom, transportation-safety policy and labor policy are driven by
    different concerns, and “basic background labor law principles, [] caution
    against interference with labor-management agreements about appropriate
    employee discipline.” E. Associated 
    Coal, 531 U.S. at 65
    . Because § 40.149(c)
    did not preclude the PLB from disagreeing with the MRO, there is no direct
    conflict between the established regulation and the arbitration award. The
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    award was, therefore, not in violation of public policy, and the district court
    should not have set it aside.
    We now tun to the parties’ dispute over the scope of the PLB’s
    jurisdiction and conclude Union Pacific waived the jurisdictional argument
    by failing to raise it below.
    B. Jurisdictional Argument
    Absent a finding that the arbitration award violated public policy,
    Union Pacific argues that the award should nevertheless be vacated because
    the PLB exceeded its jurisdiction by ignoring the express language of the
    contract.
    Unlike an objection to a federal court’s lack of subject-matter
    jurisdiction, which can never be waived, an argument that an arbitrator lacked
    subject-matter jurisdiction is waivable. See Lodge No. 725, Int’l Ass’n of
    Machinists v. Mooney Aircraft, Inc., 
    410 F.2d 681
    , 683 (5th Cir. 1969).
    It is well established that a party may not sit idle through an arbitration
    procedure and then collaterally attack the procedure on grounds not raised
    before the arbitrators. Brook v. Peak Int’l, Ltd., 
    294 F.3d 668
    , 674 (5th Cir.
    2002). If the issue was arbitrable and was not presented to the arbitrator, it is
    waived. See Lodge No. 
    725, 410 F.2d at 683
    ; see also Int’l Chem. Workers Union
    v. Columbian Chems. Co., 
    331 F.3d 491
    , 498-99 (5th Cir. 2003) (refusing to
    consider whether an arbitration award for backpay was ambiguous because
    the company did not argue for reduction before arbitrator); 
    Brook, 294 F.3d at 673
    (refusing to vacate award granted by improperly selected arbitrator
    because worker did not object to the defect during arbitration).
    As Union Pacific failed to point out the regulation during arbitration,
    it waived its argument that the PLB exceeded its jurisdiction by not following
    49 C.F.R. § 40.149(c). Union Pacific was aware, certainly, that the validity of
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    the drug test was before the PLB. And, although Union Pacific now claims
    the regulation is binding, it instead argued throughout arbitration that there
    was sufficient evidence for the PLB to find that the drug test was, in fact,
    positive. We therefore decline to consider whether the PLB acted outside its
    jurisdiction by overturning the MRO’s false-positive determination, and we
    find that the PLB acted well within its jurisdiction by conditionally reinstating
    Beltran to his position with Union Pacific.
    IV.
    For the reasons stated above, we conclude that the PLB’s arbitration
    award did not violate public policy, and Union Pacific’s arguments on
    jurisdictional grounds fail. The district court’s judgment vacating the PLB’s
    award is REVERSED, and this case is REMANDED for further
    proceedings consistent with this opinion.
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    PRISCILLA R. OWEN, Chief Judge, dissenting:
    With respect, I dissent. If Beltran can be reinstated without being
    placed in a safety-sensitive position, then the award does not violate public
    policy and the arbitrator had jurisdiction to disagree with the MRO for
    “personnel policy” matters—namely, the arbitrator can say the drug test was
    a false positive for purposes of the last-chance agreement.
    However, the record does not reflect whether Beltran can be
    reinstated to a position that is not safety sensitive. If Beltran can only be
    placed in a safety-sensitive position, then the award violates public policy to
    the extent that it declares the test a false positive. Under that circumstance,
    the arbitrator exceeded its jurisdiction by reinstating Beltran in direct
    violation of the last-chance agreement.
    Though I believe the majority opinion’s overall framing of the case is
    correct, the underlying fact issue remains, and I would remand to the district
    court for its resolution.
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