International Chemical Workers Union, Local No. 566 v. Mobay Chemical Corporation ( 1985 )

BUTZNER, Senior Circuit Judge:

Mobay Chemical Corporation appeals from a district court’s order denying its motion to dismiss the amended complaint of the International Chemical Workers’ Union, Local 566, for lack of jurisdiction. Mo-bay also assigns error to the district court’s entry of summary judgment vacating, on the ground that the arbitrator exceeded his authority, a part of the award that sustained the discharge of an employee. We hold that the district court had jurisdiction and that the award is valid.

I

Mobay and the union are parties to a collective bargaining agreement, which, among other things, provides for qualification of employees for production jobs, the right of management to discharge for just cause, and the arbitration of grievances. Sherri Hill, the grievant, had been hired as a chemical operator and, like other new employees, began on the utility crew.

Hill bid into the polycarbonate department in April, 1979, classified as a B operator, and remained there until March, 1980. She then bid into an A operator position in the iron oxide department. However, while training for this position, she disqualified herself and returned to the utility crew. When no one bid for an iron oxide B operator position in June, 1980, Mobay assigned Hill to that job. She failed a test to qualify for the position and returned to the utility crew. She was subsequently assigned to an opening in the polyester I department.

Following the established testing procedure after 90 days on the job, Hill was given a test by her supervisor to determine her progress in the polyester I training. Hill failed that test, as well as a retest conducted at her request by a different supervisor in the presence of a union representative.

Mobay interpreted the bargaining agreement to authorize discharge after an employee was disqualified three times from performing production work. It sent Hill a discharge letter, which, after referring to her three disqualifications and the pertinent provisions of the bargaining agreement, concluded:

Therefore, in light of this third disqualification, whether due to either your inability or unwillingness to demonstrate job performance, you are separated from employment effective February 20, 1981. Hill and the union filed an unjust dis-

charge grievance. Mobay refused to alter its decision. The dispute resulted in arbitration proceedings before an impartial arbitrator with over 25 years of experience, selected by the parties from a panel furnished by the Federal Mediation and Conciliation Service.

The arbitrator held that the bargaining agreement did not authorize discharge for a third disqualification. Consequently, he ruled that Mobay’s letter did not provide an adequate basis for discharging Hill.

The arbitrator also held that all parties had consented to proceed in arbitration on the basis of additional specifications filed by Mobay disclosing Hill’s unsatisfactory work record. He found that the proof supported the specifications and that the evidence was sufficient for a just cause discharge. Inasmuch as the bargaining agreement recognized management’s right to discharge for just cause, he sustained the discharge. In reaching this conclusion, he found that a person with Hill’s deficiencies should not be working in the production phase of a potentially dangerous chemical plant. He also pointed out that reinstatement of Hill because of the inadequate discharge letter would not preclude prompt, justifiable discharge for cause.

The arbitrator concluded, however, that Hill’s discharge of February 20 should be made effective July 13, 1981, the date Mo-bay filed its specifications detailing the unsatisfactory work record that became the basis for the arbitrator’s decision. Accordingly, he awarded back pay.

The district court held that the discharge letter and Hill’s grievance constituted the entire scope of the submission to the arbitrator. In its view, Mobay’s specification of the employee’s deficiencies or “bill of particulars” was intended to be no more than an explanation of the disqualifications, and it was not an enlargement of the cause for discharge beyond the three disqualifications. The court concluded that the arbitrator went beyond the scope of the submission, contrary to his authority under the bargaining agreement. It upheld the award of back pay but vacated the part of the award that sustained the discharge.

II

Mobay’s assignment of error to the district court’s denial of its motion to dismiss for lack of jurisdiction is without merit. The union’s complaint alleged jurisdiction under section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185 and the Arbitration Act, 9 U.S.C. § 10. It sought modification of the award and other appropriate relief. The union filed its complaint and gave notice within the three-month period prescribed by 9 U.S.C. § 12.

Mobay moved to dismiss on the ground that 9 U.S.C. § 10 authorizes vacation but not modification of the award. The court then granted the union leave to amend the prayer of its complaint to seek vacation of that part of the award that sustained Hill’s discharge.

Section 301 of the Labor-Management Act conferred jurisdiction on the court. Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957); Textile Workers Union v. American Thread Co,, 291 F.2d 894 (4th Cir. 1961). The court could grant the union the relief to which it was entitled even though specific demand was omitted from the original complaint. Federal Rule of Civil Procedure 54(c).

Moreover, the district court’s permission to amend eliminated any ambiguity about the relief the union sought. Although the amendment was filed after the three-months period specified in 9 U.S.C. § 12, it related back to the date of the original complaint because it arose out of the same occurrence and simply amplified the prayer for “other relief.” Rule 15(c). See 6 Wright and Miller, Federal Practice and Procedure § 1497 (1971).

Ill

The collective bargaining agreement reserved management’s right to discharge for cause. Consequently, the arbitrator did not stray beyond the bargaining agreement to find a contractual basis for Hill’s discharge. The critical issue is whether the parties’ submission empowered the arbitrator to invoke this clause. In short, did the parties submit to the arbitrator simply the issue involving three disqualifications, as the district court held? Or, did the submission include the issue involving specifications of Hill’s work record that disclosed just cause for discharge, as the arbitrator held?

The parties, not the arbitrator, must define the issues. The submission is “the source and limit” of the arbitrator’s power. Textile Workers Union v. American Thread Co., 291 F.2d 894, 898 (4th Cir.1961). The record does not disclose that Mobay and the union presented the arbitrator with a formal submission agreement. But this was not a fatal omission, for the agreement to arbitrate particular issues need not be express. It may be implied or established by the conduct of the parties. Ficek v. Southern Pacific Co., 338 F.2d 655, 656 (9th Cir.1964).

In May, on the first day of arbitration, the parties could not agree on the issue. They resolved this dilemma by agreeing to postpone the arbitration until July. In the meantime, Mobay, pursuant to the accord reached by the parties, furnished the union and the arbitrator the specifications of the incidents that Mobay contended gave it just cause for discharging Hill under the management rights clause in the bargaining agreement. The specifications include Hill’s absence from her job site, altercations with a supervisor and a fellow employee, absenteeism, lateness, safety violations resulting in her injury, and a problem with drugs, which unfortunately resulted from her attempts to lose weight. In July, after the union had an opportunity to prepare its defense of the incidents set forth in the specifications, the parties introduced evidence on the issues pertaining to both the disqualifications and the specifications.

The arbitrator stated that the parties consented to submit for his decision the incidents set forth in the specifications to show just cause for discharge as well as the disqualifications mentioned in the letter of discharge. In his opinion, he said:

A question might arise as to the right of an arbitrator to consider matters beyond those contained in the letter of discharge. Aside from the fact that the matter proceeded by agreement of all parties after the first day of the arbitrator’s hearing, there is precedent for considering such matters.

Excerpts from the transcript of the arbitration, which are set forth in the margin, amply support the arbitrator’s finding of consent by both parties to the issues that he decided in making his award.¹

Contrary to the conclusion expressed by the district court, the specifications, sometimes called a “bill of particulars,” were intended by the parties to be much more than an explanation of the reasons for disqualification. The specifications included incidents that occurred when Hill was not working in the jobs for which she was disqualified. These incidents were irrelevant to the disqualifications, but they were relevant to the issue of just cause. The parties introduced proof about them, and the arbitrator did not exclude them in reaching his decision.

Furthermore, the union offered to stipulate to the three disqualifications. One disqualification was voluntary, the other two resulted from failure to pass qualifying tests. Had the parties intended to limit the submission to the disqualifications there would have been no reason for the specifications of other deficiences. The disqualification issue could have been readily determined by interpretation of the provisions of the bargaining agreement dealing with the effect of disqualifications. Instead, with the acquiescence of all parties, the hearing lasted three days and generated 475 pages of transcript, much of which is testimony about the specified incidents that were not relevant to the disqualifications.

Hill’s grievance stated in response to the inquiry about the nature of the grievance, “unjustly discharged.” Although Mobay initially wrote she was discharged for the disqualifications, nothing in the bargaining agreement precluded the parties from agreeing to submit to the arbitrator reasons for discharge not mentioned in the discharge letter. The bargaining agreement does not require that all reasons be set forth in the letter.² As the union attorney acknowledged at the July arbitration session, the specifications provided by Mo-bay stated the reasons, and the union was prepared to answer them.

If the union objected to the arbitrator’s consideration of Mobay’s specifications, it had an obligation to present its challenge to the arbitrator. The union could not voluntarily engage in the arbitration of the issues submitted to the arbitrator and then attack the award on grounds not raised before the arbitrator. United Steelworkers v. Smoke-Craft, Inc., 652 F.2d 1356, 1360 (9th Cir.1981); Piggly Wiggly Operators’ Warehouse, Inc. v. Piggly Wiggly Operators’ Warehouse Independent Truck Drivers Union, 611 F.2d 580, 584 (5th Cir.1980); Ficek v. Southern Pacific Co., 338 F.2d 655, 657 (9th Cir.1964).³

Courts are not empowered to restrict the scope of the authority the parties have conferred on the arbitrator. In United Steelworkers v. Enterprise Wheel and Car Corp., 363 U.S. 593, 598, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960), the Court stated the following principles: “A mere ambiguity in the opinion accompanying an award, which permits the inference that the arbitrator may have exceeded his authority, is not a reason for refusing to enforce the award.” Furthermore, a court cannot assume without reason that an arbitrator “has not stayed within the areas marked out for his consideration.” The award should be enforced when “[i]t is not apparent that [the arbitrator] went beyond the submission.”

Tested by these principles, there is no justification for drawing the inference that the arbitrator may have exceeded his authority. Nor is it apparent that he went beyond the submission. The award is valid. We, therefore, find it unnecessary to address Mobay’s other assignments of error. The judgment of the district court is reversed, and the case is remanded for entry of an order enforcing the award.

1 . At the conclusion of the arbitration session on May 26, 1981, the following colloquy took place:

[Union attorney]: My point is this: I feel now after hearing one witness, hearing the argument of counsel, that we have got to go back and prepare a defense. I think we were misled — not deliberately by any means — but we were misled in thinking what was going to be the issue. Now, we know it, and what I’d like to urge is that this matter be continued, give us a chance to prepare.

[Mobay attorney]: ... [S]ince you made that statement, I think you will agree that when I talked to you last Friday, I told you exactly what I had to show here when you offered to stipulate three disqualifications. And I said, ... I’m still going to have to show the reasons for just cause for dismissal; and I’m going to have to show these safety infractions.

******

[Union attorney]: I think you said you wanted to show the reasons for the disqualifications.

[Mobay attorney]: —the reason for just cause for discharge.

******

[Union attorney]: ... I would like to have some specificity relating to the acts that are going to be relied on by the Company. In other words, I would like to know that on July 12th, 1980, contrary to the policy of the plant she did such and such and such and such. I have got to have at least that much to go on.

******

What I think you need to give me is what is going to convince the Arbitrator. ... Whatever you feel you are going to need to sustain your burden of proof that this was a discharge for just cause, just let me see them.

******

[Arbitrator]: [A] list of dates and just maybe a one-sentence statement related to each date as to what the infraction — whether it resulted in a warning or not. Maybe a third column if there was a warning notice or counselling session or suspension or whatever that might appear in the third column. The understanding would be that in the proof of your case, you would be confined to these items. Would that do it?

[Union attorney]: That would be perfectly satisfactory.

[Mobay attorney]: ... There were various things we did not want to bring out which I think would be embarrassing and I’ve already alluded to those this morning. We will put these things in, if you want.

******

[Union attorney]: I'm perfectly ready and before the hearing, I will make sure that Miss Hill is ready for them.

When arbitration resumed on July 21, 1981, the proceedings commenced as follows:

[Arbitrator]: Just to review where we are [the union attorney] indicated at the prior hearing that he had insufficient notice of the Company’s basis for discharge and that deprived his client of due process in defending against the allegations of the Company in this arbitration____

I received in the mail on July 13th, ... a list of specifications____ Now, may I ask [the union’s attorney] if he now feels that the matters raised last time have been satisfied.

[Union attorney]: We do. I feel that we are sufficiently apprised now of what the Company’s position is as to the reasons for the discharge.

[Arbitrator]: And as far as you are concerned ... the Company may proceed from the point where we left off last time?

[Union attorney]: Yes. I think perhaps along the lines that we mentioned at the close of the hearing____ You said: "In the proof of the case, you will be confined to these items."

[Arbitrator]: All right.

[Union attorney]: With that understanding, we are ready to meet the proof.

2 . The arbitrator noted: "No criticism is intended regarding the Company’s method of discharge. We suspect management was trying to be considerate of Miss Hill’s feelings and reputation as well as her future employment.”

3 . In Ficek, the Court said:

The rule is sometimes stated in terms of waiver: A claimant may not voluntarily submit his claim to arbitration, await the outcome, and, if the decision is unfavorable, then challenge the authority of the arbitrators to act.