PECO Foods Inc. v. Retail Wholesale and Department Store Union Mid-South Council

Case: 17-13269 Date Filed: 03/15/2018 Page: 1 of 13
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-13269
Non-Argument Calendar
________________________
D.C. Docket No. 7:16-cv-01345-LSC
PECO FOODS INC,
Plaintiff - Counter
Defendant - Appellant,
versus
RETAIL WHOLESALE AND DEPARTMENT
STORE UNION MID-SOUTH COUNCIL,
Defendant - Counter
Claimant - Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(March 15, 2018)
Case: 17-13269 Date Filed: 03/15/2018 Page: 2 of 13
Before WILSON, JORDAN, and NEWSOM, Circuit Judges.
PER CURIAM:
Peco Foods, Inc. appeals from the district court’s denial of its motion to
vacate an arbitration award requiring it to reinstate Larry Richardson, an employee
who was terminated for making an allegedly threatening comment during a safety
meeting. Richardson is a member of the Retail Wholesale and Department Store
Union, which brought the arbitration proceeding on his behalf. Peco asserts that
the district court erred in refusing to vacate the arbitration award (1) because
enforcement of the award violates public policy and (2) because the arbitrator
exceeded his authority in concluding that Peco had waived its challenge to the
timeliness of the Union’s arbitration demand. In response, the Union has filed a
motion asking this Court to sanction Peco for bringing a frivolous appeal. We
affirm the district court’s decision and deny the motion for sanctions.
I
On January 21, 2015, Richardson’s supervisor held a safety meeting, during
which he reminded employees that throwing ice was prohibited during work hours.
Richardson commented, “I don’t throw ice, I throw lead.” The supervisor recalled
a recent workplace shooting at another business and reported the comment to a
human resources director, who began an investigation. The director asked
Richardson what he meant by the comment and Richardson said, “I know what
2
Case: 17-13269 Date Filed: 03/15/2018 Page: 3 of 13
other people think I mean, but I don’t know what I mean.” On January 22, 2015,
Richardson was terminated for making a threatening comment.
The Union, of which Richardson is a member, had a collective bargaining
agreement with Peco. The Agreement provides for grievance and arbitration
procedures as “the exclusive means for the disposition of all grievances.” A
grievance is defined as “any dispute, claim or complaint arising under and during
the term of this Agreement and filed by an employee in the bargaining unit of the
Union.” The Agreement sets out a multi-step grievance procedure, and if a
grievance remains unresolved after the steps have been concluded, the Union may
take the grievance to arbitration. To invoke the arbitration provision, the Union
“shall give written notice to [Peco] of its intent within fifteen (15) calendar days
of … [Peco’s] answer at Step 3 of the grievance procedure.”
The Agreement also provides that the arbitrator will have “jurisdiction and
authority” over “the interpretation and specific application of the written
provisions of [the] Agreement.” The specific provision at issue here gives Peco
the right “to manage its own business, including but not limited to the right … to
discipline and discharge employees for just cause.” The Agreement states that
“[t]he opinion and award of the arbitrator shall be final and binding upon the
parties when rendered upon a matter within the authority of the arbitrator and
within the scope of matters subject to arbitration as provided in this Agreement.”
3
Case: 17-13269 Date Filed: 03/15/2018 Page: 4 of 13
After Richardson’s termination, the Union filed a grievance on his behalf.
The parties proceeded through the steps of the grievance procedure, and Peco
denied the grievance on February 23, 2015. The Union gave written notice of its
intent to arbitrate on March 23, 2015—thirteen days after the deadline for such
notice had passed. Peco did not raise any objection to the timeliness of the notice
at that time, and the parties selected an arbitrator and a hearing date.
The arbitrator held a hearing in May 2016, and both parties appeared and
presented evidence. During that hearing, Peco argued for the first time that the
arbitrator did not have the authority to decide the grievance because the Union’s
written request for arbitration was untimely. It also argued that it had acted within
its right to terminate Richardson for cause. The arbitrator rejected both of those
arguments. He first concluded that Peco had waived its challenge to the
untimeliness of the Union’s arbitration demand, and therefore that the dispute was
arbitrable. He also concluded that Peco did not have just cause to terminate
Richardson because his comment was not a threat. Specifically, the arbitrator
found that Richardson’s comment “was not specific” and was not directed at any
specific person. Moreover, the arbitrator found that none of the other employees or
his supervisor “considered his words to ‘be threatening,’” that no one called the
police, and that Richardson “was not sent home immediately.”
4
Case: 17-13269 Date Filed: 03/15/2018 Page: 5 of 13
After the arbitration proceedings concluded, Peco filed an action in federal
district court seeking to vacate the arbitration award. The Union counterclaimed,
seeking enforcement. The parties agreed to resolve the case by filing cross-
motions for summary judgment. In its motion, Peco argued, among other things,
that enforcing the award would violate public policy and that the arbitrator had
exceeded his authority in concluding that Peco waived its challenge to the
timeliness of the Union’s arbitration demand. The district court rejected those
arguments, denied Peco’s motion for summary judgment, and granted the Union’s
motion for summary judgment. This is Peco’s appeal of that decision.
II
“An arbitration award pursuant to an arbitration provision in a collective
bargaining agreement is treated as a contractual obligation that can be enforced
through a . . . lawsuit” under 29 U.S.C. § 185. United Steel, Paper & Forestry,
Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union v. Wise Alloys,
LLC, 642 F.3d 1344, 1349 (11th Cir. 2011). However, “[b]ecause the parties have
contracted to have disputes settled by an arbitrator chosen by them rather than by a
judge, it is the arbitrator’s view of the facts and of the meaning of the contract that
they have agreed to accept.” United Paperworkers Int’l Union v. Misco, Inc., 484
U.S. 29, 37–38 (1987). “Courts thus do not sit to hear claims of factual or legal
error by an arbitrator as an appellate court does in reviewing decisions of lower
5
Case: 17-13269 Date Filed: 03/15/2018 Page: 6 of 13
courts.” Id. at 38. Instead, “[a]s long as the arbitrator’s award draws its essence
from the collective bargaining agreement,” it is “legitimate” and should be
enforced. Id. at 36 (quotation marks omitted). In other words, “as long as the
arbitrator is even arguably construing or applying the contract and acting within
the scope of his authority,” a court may not “overturn his decision,” even if the
court “is convinced that he committed serious error.” Id. at 38.
We review de novo the district court’s decision denying Peco’s motion to
vacate the arbitration award and granting Union’s motion to enforce the award.
See Frazier v. CitiFinancial Corp., LLC, 604 F.3d 1313, 1321 (11th Cir. 2010).
A
Peco first argues that the district court erred in affirming the arbitration
award because enforcement of the award violates public policy. A court may
refuse to enforce an arbitration award on public policy grounds only “where the
contract as interpreted would violate some explicit public policy that is well
defined and dominant.” Misco, 484 U.S. at 43 (quotation marks omitted). The
public policy must “be ascertained by reference to the laws and legal precedents
and not from general considerations of supposed public interests.” Id. (quotation
marks omitted). “[T]he violation of such a policy must be clearly shown if an
award is not to be enforced.” Id.6
Case: 17-13269 Date Filed: 03/15/2018 Page: 7 of 13
Here, as in the district court, Peco asserts that there is “a well-defined and
dominant public policy against workplace violence.” It further asserts that the
arbitration award requiring Richardson’s reinstatement violates that public policy
because Richardson’s comment about “throwing lead” was—in Peco’s opinion—a
threat of violence. The district court concluded that even assuming that Peco “had
established a public policy sufficient to vacate an arbitration award, no violation of
that policy was clearly shown.”
We agree with the district court. Peco’s public policy argument rests
entirely upon its assertion that Richardson’s comment about “throwing lead” was a
threat of workplace violence. But the arbitrator found that Richardson’s statement
was not a threat of violence, and this Court is not permitted to second-guess the
arbitrator’s findings of fact. Misco, 484 U.S. at 45. That is because “[t]he parties
did not bargain for the facts to be found by a court, but by an arbitrator chosen by
them.” Id. Nor are we permitted to second guess the arbitrator’s findings of fact
merely because we are “inquiring into a possible violation of public policy.” Id.Peco’s public policy argument relies heavily on Delta Air Lines, Inc. v. Air
Line Pilots Association, 861 F.2d 665 (11th Cir. 1988), but that decision is
distinguishable. In Delta Air Lines, this Court refused to enforce an arbitration
award that would have required reinstatement of a commercial airline pilot who
had flown a plane filled with passengers while drunk. There, it was undisputed
7
Case: 17-13269 Date Filed: 03/15/2018 Page: 8 of 13
that the pilot had flown the plane while drunk, in violation of numerous laws and
company policies. Id. at 667–68. The arbitration panel nonetheless concluded that
the airline did not have just cause to fire the pilot because it first should have
offered him the chance to enter a rehabilitation program. Id. at 668. This Court
concluded that enforcement of the award would violate an explicit and well-
defined public policy against flying an aircraft while drunk. Id. at 674. The Court
did not overturn any of the arbitration panel’s findings of fact; instead, it concluded
that enforcement of the award would violate public policy, given those undisputed
facts. Id. Here, by contrast, in order to vacate we would be required to overturn
the arbitrator’s finding that Richardson’s statement was not a threat of violence in
order to hold that the award violates public policy. We therefore reject Peco’s
public policy argument.
B
Peco next argues that the arbitrator “exceeded his authority” under the
Agreement by finding that Peco had waived its challenge to the timeliness of the
Union’s written request for arbitration. Specifically, the arbitrator concluded that
Peco had “accepted” the grievance for arbitration by “fully participat[ing] in
meetings” after the grievance process had concluded—including meetings to select
an arbitrator and set a time, place, and date for a hearing—all without ever raising
its timeliness challenge. Peco asserts that the arbitrator exceeded his authority
8
Case: 17-13269 Date Filed: 03/15/2018 Page: 9 of 13
because the terms of the Agreement “are unambiguous and required the Union to
provide written notice of its intent to request arbitration no later than March 10,
2015,” and because it is undisputed that the Union requested arbitration after that
date. Id. According to Peco, those undisputed facts left nothing for the arbitrator
to interpret. The district court rejected that argument, concluding that the arbitrator
was acting within his authority when he concluded that Peco had waived its
timeliness challenge. We agree.
We addressed a similar argument in Shopmen’s Local 539 of the
International Association of Bridge, Structural and Ornamental Iron Workers v.
Mosher Steel Co., 796 F.2d 1361 (11th Cir. 1986). The collective bargaining
agreement in Mosher allowed the union to refer a matter to arbitration, “provided
the request … is made within 20 days of the date upon which the decision was
rendered.” Id. at 1362. The union did not request arbitration until five days after
that deadline. The employer waited until the arbitration hearing to raise the
untimeliness of the notice, and the arbitrator determined that the employer had
waived its argument. This Court enforced the arbitration award, noting that the
employer did not “raise the issue of the untimeliness of the notice when given,”
and “affirmatively proceeded towards the arbitration” by “naming an arbitrator and
setting the date of the arbitration, thus clearly requiring the Union to prepare its
evidence for the hearing before the arbitrator without any knowledge that [the
9
Case: 17-13269 Date Filed: 03/15/2018 Page: 10 of 13
employer] would, at that time, raise the issue of untimeliness of the notice.” Id. at
1365. We reasoned that “[w]hether or not the Court would agree with the
arbitrator that these facts amounted to a waiver, it is not the function of the Court
to second guess the arbitrator on matters that were within his power to decide.” Id.Similarly, in Drummond Coal Co. v. United Mine Workers of America,
District 20, this Court held that an arbitrator’s decision “not to resolve the dispute
on the basis of … language in the collective bargaining agreement requiring
submission of [a form] within five days does not…require this court to vacate the
arbitral award.” 748 F.2d 1495, 1498 (11th Cir. 1984). Instead, the award “rested
upon the application of the doctrine of waiver,” and “[a]rbitrators have frequently
recognized that parties may waive or otherwise be estopped from asserting rights
granted under the collective bargaining agreement.” Id. Therefore, the award was
“based upon the arbitrator’s factual assessment of the actions and intentions of the
parties,” which courts are not allowed to review. Id.Peco argues that this case is distinguishable from Mosher and Drummond
because here, it says, the Agreement “only allows written waiver of the grievance
procedure, and does not allow for waiver by conduct.” The provision to which
Peco refers states in full:
Should a [Peco] representative fail to give his written answer within
any time limit set forth above, the Union may appeal the grievance to
the next step at the expiration of such time limit. The grievance shall
be considered settled if not appealed to a higher step within an
10
Case: 17-13269 Date Filed: 03/15/2018 Page: 11 of 13
established time limit and shall not be the subject of any further
proceeding. This provision may be waived in specific instances by
mutual written agreement of the parties.
Doc. 16-2 at 9, ¶ 3. Peco’s argument focuses on the last sentence allowing “[t]his
provision” to be waived by “mutual written agreement of the parties.” Peco asserts
that in light of this provision, the Agreement “only allows written waiver.”
But the provision quoted above appears to apply to the multi-step grievance
procedure that must be exhausted before arbitration is requested, not to written
arbitration requests. It immediately follows a provision detailing the four steps,
and provides that the grievance “shall be considered settled” if not appealed to “a
higher step” within the required time. The provisions governing arbitration come
later in the Agreement. Importantly, the provision requiring the Union to “give
written notice to [Peco] of its intent” to arbitrate within 15 days of Peco’s answer
at step three of the grievance procedure is in a later paragraph, and that paragraph
says nothing about methods of waiver. At the very least, it is unclear whether the
provision concerning “written waiver” applies to the 15-day deadline for
arbitration demands. We therefore agree with the district court that the arbitrator
was acting within his broad discretion to interpret and apply the terms of the
Agreement in concluding that Peco waived its challenge through its conduct. See,
e.g., Mosher Steel, 796 F.2d at 1366 (courts must “uphold an arbitrable award that
11
Case: 17-13269 Date Filed: 03/15/2018 Page: 12 of 13
is premised on the arbitrator’s construction of the contract and his understanding of
the intent of the parties”) (quoting Drummond, 748 F.2d at 1497).
III
Finally, we briefly address the Union’s “Motion for Frivolity Determination
under F.R.A.P 38,” which seeks “a determination that the appeal filed by [Peco] in
this matter is frivolous,” an award of “just damages and costs,” and “any other
remedy deemed appropriate by the Court.” The Union asserts that this Court “has
expressed exasperation with parties ‘who attempt to salvage arbitration losses
through litigation that has no sound basis in the law applicable to arbitration
awards’” and has “warn[ed]” that sanctions may be appropriate in such cases.
Appellee’s Mtn. at 1–2 (quoting B.L. Harbert Int’l v. Hercules Steel Co., 441 F.3d
905, 913–914 (11th Cir. 2006)).
Although we ultimately conclude that Peco’s arguments are meritless, we do
not think they sink to the level of frivolous. Specifically, this Court’s decision in
Delta Air Lines provided at least a colorable basis for Peco’s public policy
argument, even if it was unsuccessful. Moreover, as to the arbitrator’s authority to
find waiver, Peco presented a colorable, even if unsuccessful, argument that the
contractual provisions at issue here are distinguishable from those at issue in
Mosher and Drummond.
IV
12
Case: 17-13269 Date Filed: 03/15/2018 Page: 13 of 13
We hold that the district court did not err in concluding that enforcing the
arbitration award does not violate public policy because the arbitrator found that
Richardson’s comment was not a threat of workplace violence. Nor did the district
court err by holding that the arbitrator was acting within his authority in finding
that Peco had waived its challenge to the timeliness of the Union’s arbitration
notice. We also deny the Union’s motion for sanctions.
AFFIRMED.
13