Independent Laboratory Employe v. ExxonMobil Research and Engine

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 19-2988
__________
INDEPENDENT LABORATORY EMPLOYEES’ UNION,
INC.
v.
EXXONMOBIL RESEARCH AND ENGINEERING
COMPANY,
Appellant
____________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 3:18-cv-10835)
District Judge: Honorable Brian R. Martinotti
____________________________________
Argued May 19, 2020
Before: McKEE, BIBAS, and COWEN, Circuit Judges
(Opinion filed: August 26, 2021)
___________
John K. Bennett, Esq. [ARGUED]
Jackson Lewis
200 Connell Drive
Suite 2000
Berkeley Heights, NJ 07922
Daniel D. Schudroff
Jackson Lewis
666 Third Avenue
29th Floor
New York, NY 10017
Counsel for Appellant
Dominick Bratti, Esq. [ARGUED]
Annemarie T. Greenan, Esq.
Bratti Greenan
1040 Broad Street
Suite 104
Shrewsbury, NJ 07702
Counsel for Appellee
___________
OPINION
___________
McKEE, Circuit Judge.
ExxonMobil Research and Engineering Company
(“EMRE” or “the Company”) appeals the District Court’s
order affirming an arbitration award preventing EMRE from
permanently contracting out bargaining unit positions at its
Clinton, New Jersey facility. EMRE argues the award should
be vacated because the Arbitrator overstepped her role by
improperly considering extrinsic evidence contrary to the
governing collective bargaining agreement (“CBA”). As we
detail below, the standard of review for upholding arbitration
awards is highly deferential. The District Court concluded that
the award “withstands the minimal level of scrutiny
appropriate for review of an arbitration award.” 1 We agree.
As the Supreme Court has explained, “courts have no business
overruling [an award] because [our] interpretation of the
contract [may differ].” 2 Accordingly, we will affirm the
District Court’s decision.
I.
1
Indep. Lab. Emps.’ Union, Inc. v. ExxonMobil Research and
Eng’g Co., No. 3:18-cv-10835-BRM-DEA, 2019 WL
3416897, at *9 (D.N.J. July 29, 2019).
2
United Steelworkers of Am. v. Enter. Wheel and Car Corp.,
363 U.S. 593, 599 (1960).
2
A. Factual Background
Independent Laboratory Employees’ Union, Inc.
(“ILEU” or “the Union”) represents about 165 employees at
the Clinton research facility. EMRE research supports several
hundred of ExxonMobil’s laboratories and plants. The
positions at EMRE fall into “core” or “non-core” positions. As
described by the Company, “core” positions are those that are
directly associated with EMRE’s research and business
functions. 3 Support roles such as security and materials
delivery jobs are defined as “non-core” positions. Currently,
the Union represents about twenty-five percent of all EMRE
staff. Although the bargaining unit has remained roughly the
same size over the years, proportionally, the percentage of core
positions has increased, and the percentage of non-core
positions has decreased. Today, at least eighty percent of
Union members are in “core” positions.
EMRE and the ILEU have a long history of negotiation,
arbitration, and litigation concerning EMRE’s hiring of
independent contractors to do work typically done by
bargaining unit members. This history includes prior
grievances and arbitrations pertaining to the duration of
independent contracts initiated in 1977, 1983 (the Stark
Award), and 1984 (the Florey Award). The current dispute
arose in 2015, when a bargaining unit member in the position
of materials coordinator retired. 4 After advertising internally
failed to fill the open position, EMRE contracted independent
contractors to staff the material coordinator position. Shortly
thereafter, the Union filed a grievance regarding the propriety
of EMRE contracting out bargaining unit positions in this way.
It is undisputed that EMRE is permitted to hire
independent contractors under the CBA. However, the Union
claims that EMRE was not simply hiring an independent
contractor. The Union claims EMRE was attempting to
permanently fill bargaining unit positions with contractors, and
3
Appx. at 56.
4
Whether the person who departed was “core” or “non-core”
does not impact our analysis.
3
the resulting attrition thereby undermines the longevity of the
Union. EMRE maintains that its practice of contracting out
work was consistent with the CBA and any resulting impact on
the bargaining unit is irrelevant to whether it has violated the
terms of the CBA. The Arbitrator considered the impact on the
bargaining unit in adjudicating the resulting grievance. EMRE
argues such consideration was improper and beyond the scope
and terms of the CBA.
B. The Collective Bargaining Agreement
The 2013 CBA between EMRE and ILEU generally
governs this dispute. It sets “rates of pay, hours of
employment, and other conditions of employment” of
bargaining unit members at the Clinton Facility during the
relevant period. 5 Most relevant to this dispute is the Article I
§ 2 Recognition Clause of the CBA in which
[t]he Company recognizes the Union as the
exclusive representative of all EMRE employees
whose job classifications are listed in Exhibit II
and who are based at the Clinton, New Jersey
facility as covered by this Agreement for the
purposes of collective bargaining with respect to
rates of pay, hours of employment, and other
conditions of employment as provided by the
certification of the National Labor Relations
Board. 6
The CBA also governs the Company’s hires of
independent contractors and their work. The relevant
provision allows the Company to “let independent contracts”
as long as:
during any period of time when an independent
contractor is performing work of a type
customarily performed by employees and
employees qualified to perform such work
together with all of the equipment necessary in
the performance of such work are available in the
5
Indep. Lab. Emps.’ Union, Inc., 2019 WL 3416897, at *1.
6
Appx. at 77.
4
Company facilities, the Company may not
because of lack of work demote or lay off any
employee(s) qualified to perform the contracted
work. 7
The CBA also provides a mechanism for dispute
resolution, including arbitration. As is customary, it states that
arbitrators may not “enlarge, modify, rewrite, or alter any of
the terms” of the CBA. 8 Either party may initiate an
arbitration. Once resolved, the arbitrator’s decision is “final
and binding on the Company and the Union, unless it is
contrary to law, and shall conclusively determine the disputed
question for the life of this Agreement, or any renewal or
renewals thereof.” 9
C. The Klein Award
In the award that is the subject of this appeal, Arbitrator
Klein found that by “expressly limit[ing] layoffs or
demotion[s] . . . ‘during any period of time when an
independent contractor is performing work of a type
customarily performed by employees …’ . . . Article XVIII [of
the CBA] expressly limits contracting to a ‘period of time.’” 10
In reaching that conclusion, the Arbitrator relied on the text of
the Recognition Clause and Article XVIII of the CBA; prior
statements of EMRE vice president R.L. Weeks and Project
Manager Dan O’Rourke; as well as past awards in disputes
between the Company and the Union.
Following the denial of a similar grievance brought by
ILEU in 1977, 11 EMRE’s vice president, R.L. Weeks, issued a
letter assuring the Union that any future contracts between the
Company and non-union personnel would “only be done when
operations require, and in conjunction with, a combined
program of employment and uprates [sic] of our own [union]
7
Id. at 122.
8
Id. at 86.
9
Id. at 85–86 (emphasis added).
10
Id. at 69.
11
The Klein Award references this letter as coming in both
1977 and 1979. Id. at 56, 61. For consistency, this opinion
will use the same date used by the District Court.
5
personnel.” 12 Weeks stressed the Company’s policy regarding
independent contracting by declaring, “I can state positively
that there was not in this case, nor will there be in the future,
any intent to erode the bargaining unit nor to limit the number
of bargainable employees.” 13
These statements by Weeks were not the only Company
communications Arbitrator Klein relied upon in resolving the
current dispute. She also considered a more recent Company
position articulated by Project Manager Dan O’Rourke. “[A]s
employees have retired from the stockroom, they have been
replaced with contractors. We were moving towards the fully
contracting model that we had mentioned a number of times.” 14
A few years after Weeks’ statement, the Union grieved
EMRE’s plan to contract out entry-level mailroom staff
positions while Exxon—EMRE’s parent corporation—
underwent a long overhaul of the mail processing system. The
overhaul impacted EMRE and other companies affiliated with
Exxon. 15 The grievance was resolved in 1981. There,
Arbitrator Stark found that EMRE had failed to provide ILEU
notice of the contracting as required by the controlling CBA. 16
In reaching this conclusion, Arbitrator Stark wrote that Article
XVIII “is not onerous” or a “very restrictive provision” and the
parties should not read Article XVIII “in a highly legalistic
manner.” 17 Ultimately, the Company’s decision to let a
contract for five months was affirmed. 18 The parties disputed
12
Id. at 56 (quoting Letter from R.L. Weeks, Vice President,
EMRE, to ILEU (Aug. 5, 1977)).
13
Id. (emphasis added).
14
Id. at 58.
15
Id. at 68.
16
Id. (discussing the Stark Award).
17
See Indep. Lab. Emps.’ Union, Inc., 2019 WL 3416897, at
*2 (quoting the Stark Award).
18
Arbitrator Stark found that the contract letting work to
independent contractors was “the ‘type of activity . . .’ the
parties intended to cover by Article XVIII.” Appx. at 68.
6
a similar issue again in 1983 and that dispute was resolved by
Arbitrator Florey. 19
Like Arbitrator Stark, Arbitrator Florey found the hiring
of independent contractors permissible because EMRE was
able to demonstrate operational need. In reaching that
conclusion, Arbitrator Florey posed a hypothetical of an
impermissible situation where hiring independent contractors
would replace a bargaining unit rather than respond to an
operational need. 20 However, that concern did not preclude
Florey from allowing the use of independent contractors in
1983 because “the use of [non-union] personnel [there] was in
response to a true operational problem and not designed to
undermine the bargaining unit in violation of the recognition
clause of the [CBA].” 21 He concluded that “even with the
broad language of Article XVIII,” the CBA would not support
“the position that [EMRE] need not hire any more persons into
the bargaining unit so that [ILEU] would atrophy by
attrition.” 22
Here, Arbitrator Klein considered the 1983 Florey
Award as part of the history of the shop that was both relevant
and helpful to resolving the current dispute. The Union took
the same position in the arbitration leading to the Florey
Award, that it is taking here. Specifically, the Union had
objected to EMRE hiring independent contractors to reduce a
backlog that developed during the installation of a new
computer system. 23 The Union had been concerned with
bargaining unit members being deprived of opportunities that
could delay future promotion.
19
See ILEU v. EMRE (“Florey Award”), Grievance No. WP-
75, at 2 (Apr. 11 & 19, 1983) (Florey, Arb.). The record
contains an incomplete copy of the Florey Award. (ECF No.
52-1). The parties provided the Court with a complete copy.
20
Id. at 13.
21
Id. (emphasis added). See also Indep. Lab. Emps.’ Union,
Inc., 2019 WL 3416897, at *2.
22
See Florey Award. at 13–14. See also Indep. Lab. Emps.’
Union, Inc., 2019 WL 3416897, at *2.
23
Appx. at 68–69.
7
Arbitrator Klein distinguished EMRE’s current position
from the underlying circumstances addressed by Arbitrators
Stark and Florey. In the previous arbitrations, the Arbitrators
found that the independent contracts were let to address an
operational problem or need of the Company. “Both
Arbitrator Stark and Arbitrator Florey recognized the tension
between the Company’s need to contract for operational
reasons and the Union’s need to maintain the composition of
its bargaining unit.” 24 In the current award, Arbitrator Klein
found EMRE “pursued an operational plan to replace
employees with contractors in ‘non-core’ positions” as they
left EMRE. 25 Although she did not find the Company
specifically intended to undermine the bargaining unit, she
concluded that the “focus on what [the Company] views as
‘core’ job families versus ‘non-core’ job families, which it
plans to contract permanently, serves to undermine the
composition and breadth of the bargaining unit and, by doing
so, is not authorized by the [CBA].” 26
II
The Labor Management Relations Act, 29 U.S.C. § 141et seq., gives district courts jurisdiction to review arbitration
awards between employers and labor unions. We have
appellate jurisdiction under 28 U.S.C. § 1291.
As we noted in the beginning, the standard of review of
an arbitrator’s decision is extremely deferential. Thus, we may
only vacate an arbitration award where it was “procured by
corruption, fraud, or undue means; where there was [evidence
of] partiality or corruption in the arbitrators . . . ; where the
arbitrators were guilty of misconduct . . . ; or . . . where the
arbitrators exceeded their powers.” 27 We also will not overturn
an arbitration award unless we conclude there is a “manifest
disregard of the agreement, totally unsupported by the
24
Id. at 69.
25
Id.
26
Id. at 70 (emphasis added).
27
9 U.S.C. § 10(a).
8
principles of contract construction and the law of the shop. . .
.” 28
III.
EMRE argues that the Klein Award did not draw its
essence from the CBA and that the Arbitrator improperly relied
on extrinsic evidence. EMRE also claims that Arbitrator Klein
improperly resolved this grievance by applying her own brand
of industrial justice rather than relying on the CBA. We
disagree. As we explain below, Arbitrator Klein properly read
the Recognition Clause as providing some limitation to the
Company’s ability to hire contracts. In addition, she properly
relied upon the prior Stark and Florey Awards as well as
statements made by Company managers in interpreting the
CBA and resolving this grievance.
A.
Our review of an arbitration award turns on whether it
“draws its essence from the [CBA]. . . .” 29 This inquiry is not
circumscribed by a rigid and mechanical examination of the
text of the CBA. Long-established labor law does not allow us
to take the view that “an employee’s claim must fail unless he
[or she] can point to a specific contract provision upon which
the claim is founded.” 30 Our narrow scope of review arises
from the recognition of the realities of the relationship between
labor and management. Too many unforeseeable
contingencies may arise in an industrial setting for us to
mechanically reject an arbitrator’s interpretation of a collective
bargaining agreement. Such agreements are often
comprehensive resolutions of competing interests within the
complex environment of a workplace that often has competing
economic, managerial, and interpersonal dynamics. 31
28
Citgo Asphalt Refining Co. v. Paper, Allied-Indus., Chem.,
& Energy Workers Int’l Union Local No. 2-991, 385 F.3d
809, 816 (3d Cir. 2004) (internal citation omitted).
29
Id. (internal citation omitted).
30
United Steelworkers of Am., v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 579 (1960).
31
Id.9
The Supreme Court recognized the need to achieve a
workable balance in such an environment in deciding United
Steelworkers v. Warrior & Gulf Navigation Co. There, the
Court described the “common law of the shop.” 32 Unlike other
contractual relationships, the relationship between an employer
and a labor union entering a labor agreement is unique because
a relationship almost always exists between the employer and
the union before the parties enter negotiations. 33 “Law of the
shop” is a gap filler that necessarily arises from the
impossibility of creating a CBA sufficient to regulate every
aspect of the relationship between an employer and a union. 34
Moreover, arbitration plays its own role in developing the “law
of the shop” since “[t]he processing of disputes through the
grievance machinery is actually a vehicle by which meaning
and content are given to the [CBA].” 35 Thus, an arbitrator must
be able to look to the practices of the industry and the shop—
including past arbitration agreements and company
statements—in addition to a CBA in adjudicating a labor
dispute. Accordingly, we uphold arbitration awards as long as
“they are not in ‘manifest disregard of the law’ and can be
rationally derived from the permissible sources of law.” 36
B.
EMRE claims the District Court erred in affirming the
Klein Award because it does not draw its essence from the
parties’ CBA. We cannot agree with this rather myopic view
of the limits of the CBA and the restrictions it places on this or
any future arbitrator. EMRE asks us to focus solely on the
32
Id. at 580 (internal citation omitted).
33
Id.34
Id. “Gaps may be left to be filled in by reference to the
practices of the particular industry and of the various shops
covered by the agreement.” Id. (balancing “. . .the compulsion
to reach agreement. . .the breadth of the matters covered, as
well as the need for a fairly concise and readable instrument .
. . .”).
35
Id. at 581.
36
Virgin Islands Nursing Ass’n’s Bargaining Unit v.
Schneider, 668 F.2d 221, 223 (3d Cir. 1981) (quoting Ludwig
Honold Mfg. Co. v. Fletcher, 405 F.2d 1123, 1128 (3d Cir.
1969)).
10
2013 CBA between it and the Union. We agree that the 2013
CBA is certainly relevant to the current dispute. The Union
correctly points out that its exclusive right to represent covered
positions contained in the Recognition Clause becomes
illusory if the Company can replace all bargaining unit
members with contractors over time. 37 Moreover, we agree
with Arbitrator Klein’s conclusion that “[w]hile Article XVIII
permits the Company to contract the work performed by these
positions without express limitation, these positions remain
covered by the [CBA and] . . . [a]s a result, both Article XVIII
and the Recognition Clause prohibit the permanent contracting
of these positions” is a plausible reading of the agreement, and
we must therefore uphold her interpretation of the CBA. 38
This Court and the Supreme Court have repeatedly
explained that “[t]he labor arbitrator’s source of law is not
confined to the express provisions of the contract, as the
industrial common law—the practices of the industry and the
shop—is equally a part of the [CBA] although not expressed in
it.” 39 Thus, it was not only appropriate, it was necessary, for
Arbitrator Klein to also consider the overall relationship
between the Union and the Company and their unique history
as part of the “law of the shop,” as long as doing so did not
violate an unambiguous contrary provision of the CBA. This
award was not a clear violation of the restrictions and rights
bargained for in the CBA. 40
C.
37Appx. at 60. “Permanently contracting positions covered by
the Recognition Clause has the effect, over time, as additional
positions are contracted permanently, of changing the scope
of the Recognition Clause and potentially eroding both the
coverage and size of the bargaining unit.” Id. at 70.
38
Id. at 70.
39
Ludwig, 405 F.2d at 1131 (quoting United Steelworkers of
Am., v. Warrior & Gulf Navigation Co., 363 U.S. at 581–82.).
40
The parties agreed in the CBA that previous arbitral
decisions would be “final and binding” thus, it follows
logically an arbitrator would be able to turn to those decisions
in issuing his or her award. Appx. at 85–86.
11
Arbitrator Klein appropriately relied on the 1981 Stark
Award and the 1983 Florey Award—both of which
distinguished temporary contracting to meet operational need
from permanent outsourcing and erosion of the bargaining unit
in violation of the Recognition Clause. Given that history,
Arbitrator Klein’s conclusion here was not only plausible but
reasonable. Rather than imposing “her own sense of justice”
as EMRE argues, Arbitrator Klein thoughtfully and
appropriately considered past statements of certain EMRE
officials regarding outsourcing and interpreted the pertinent
language in this CBA in that context.
We have held where an arbitrator’s award deviates from
the plain meaning of a provision it can be upheld if it can find
“prior practices demonstrating relaxation of the literal
language.” 41 The 1977 statement from Vice President Weeks,
“there was not in this case, nor will there be in the future, any
intent to erode the bargaining unit nor limit the number of
bargainable employees[,]” provides such language. 42 This
award is therefore distinguishable from the award we reviewed
in Monongahela Valley Hospital v. United Steel Paper and
Forestry Rubber Manufacturing Allied Industrial and Service
Workers International Union AFL-CIO. 43
The dispute in Monongahela Valley arose when a
bargaining unit member wanted to take a vacation that
conflicted with a non-bargaining unit supervisor’s preferred
vacation time. The two employees could not be away at the
same time, nor could they come to an agreement about who
should get the vacation. Arbitration followed. There, the
applicable CBA between the Union and the Hospital stated that
the Hospital exclusively reserved the final right to allow
vacation and to change vacation periods. 44 However, the
41
Akers Nat’l Roll Co. v. United Steel, Paper & Forestry,
Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l
Union, 712 F.3d 155, 162 (3d Cir. 2013).
42
Appx. at 56 (quoting Letter from R.L. Weeks, Vice
President, EMRE, to ILEU (Aug. 5, 1977)).
43
946 F.3d 195 (3d Cir. 2019).
44
The Union at Monongahela Valley Hospital represented
about half of the Hospital’s 1,100 employees. Id. at 197. The
12
Monongahela Valley Arbitrator reasoned that since the
Hospital could always deny a bargaining unit member’s
vacation, it could impermissibly undermine the bargaining
unit. The Arbitrator found that “‘notwithstanding the
Hospital’s reservation of exclusive rights contained in Section
13[B](6)of the Agreement,’ the CBA precluded the Hospital
from using ‘blackout’ periods and prevented it from ‘deny[ing]
senior employees in the bargaining unit their desired vacation[
] when there is no operating need.’” 45 The District Court
vacated the award finding that it manifested plain disregard for
the CBA and ignored the clear intentions of the parties. 46
We affirmed the District Court because “the award in
no rational way [drew] its essence from the CBA[] and the
arbitrator . . . exceeded his authority under the CBA by
dispensing his own brand of industrial justice.” 47 The required
deference did not preclude us from recognizing that we should
not “rubber stamp an arbitrator’s decision” when an award was
entirely unsupported by the record. 48 We found the Arbitrator
ignored the plain language of the CBA and exceeded his
authority.
Here, EMRE also objects to the Arbitrator’s reading of
temporal restrictions into the CBA. 49 But Arbitrator Klein’s
award can be distinguished from the award in Monongahela
Valley because Klein rested her decision largely upon the “law
of the shop.” In addition to relying on relevant statements by
Company officials, she drew upon past awards which explicitly
considered the operational needs of the Company. 50 Where the
Monongahela Valley CBA unambiguously stated that the
Hospital had “final and exclusive right to deny employees their
CBA provision in question “provides that [v]acation will, so
far as possible, be granted at times most desired by
employees; but the final right to allow vacation periods, and
the right to change vacation periods[,] is exclusively reserved
to the Hospital.” Id. (emphasis in original).
45
Id. at 198.
46
Id. at 199.
47
Id.
48
Id. (citation omitted).
49
Appellant’s Br. at 16.
50
See Florey Award at 13.
13
desired vacation,” 51 Arbitrator Klein found the EMRE-ILEU
CBA did not unambiguously provide for permanent
elimination of bargaining unit positions. 52
Arbitrator Klein looked to the “law of the shop” and her
decision is supported by it. The Florey and Stark Awards both
addressed the “tension between the Company’s need to
contract for operational reasons and the Union’s need to
maintain the composition of the bargaining unit.” 53 This is the
same situation the parties found themselves in when the
materials coordinator position was left vacant. Yet, the
situation EMRE was facing in the 1970s and 1980s
fundamentally differed from the situation faced by the 2010s.
By then, EMRE had arguably begun to “pursue[] an
operational plan to replace employees with contractors in ‘non-
core’ positions . . . .” 54 Arbitrator Klein found there were
bargaining unit positions—like the materials coordinator
position at issue as well as waste water treatment positions—
that EMRE had “not evinced a plan to fill [] with employees
covered by the [CBA] at any point in the future.” 55 Thus, she
reasonably concluded that efforts to fill these positions
indefinitely with non-union workers did not come from
operational need similar to installing a new computer system
or overhauling the mailroom. Rather, Arbitrator Klein
reasoned that it was the result of planned understaffing of
certain positions with the intent to fill them with independent
contractors. 56 Arbitrator Klein properly followed precedent
from past arbitrations between the Union and the Company.
“Florey found the Company could not ‘undermine the
bargaining unit in violation of the recognition clause of the
Agreement…’ or to ‘…not hire anymore persons into the
bargaining unit so that the Union would atrophy by attrition.’”
51
Monongahela Valley, 946 F.3d at 198 (internal quotations
omitted).
52
Appx. at 70.
53
Id. at 69. See also id. at 77.
54
Id. at 69.
55
Id.
56
Id. (“The Company [sought] to retain an employee
workforce consisting of ‘core’ employees while permanently
contracting other ‘non-core’ positions . . . .”).
14
57
To the contrary, Arbitrator Klein produced a well-reasoned
decision based on the long history of arbitrations between
EMRE and ILEU and did not overstep her authority in doing
so.
IV.
For the reasons we have explained, we hold that the
arbitration award resolving this dispute between EMRE and
ILEU draws its essence from the CBA and the controlling “law
of the shop,” which includes past arbitration awards. The
District Court found the award “withstands the minimal level
of scrutiny appropriate for review of an arbitration award.”58
We agree and will affirm its well-reasoned decision.
57
Id. at 61.
58
Indep. Lab. Emps.’ Union, Inc., 2019 WL 3416897, at *9.
15
BIBAS, Circuit Judge, concurring in the judgment.
Judicial review of labor arbitration is deferential but not
toothless. We must ensure that parties get the benefit of their
bargain. Usually, that means deferring to the arbitrator: the par-
ties bargained for her decision, not ours. But not always. When
an arbitrator sets aside the text and rewrites the contract, we
will reverse.
Here, the arbitrator approached that line but did not cross
it. Because she misread Article XVIII, I cannot join Judge
McKee’s endorsement on that ground. Yet we must uphold an
arbitral award if it has any toehold in the text. Here, two other
provisions give it that toehold: the Recognition Clause plus the
term incorporating past arbitral decisions. So I agree that we
should affirm.
I. THE ARBITRATOR MISREAD THE PLAIN TEXT
OF ARTICLE XVIII
The central pillar of the arbitrator’s decision, Article XVIII,
is no support at all. The arbitrator read it as “expressly
limit[ing] … contracting to a ‘period of time.’ ” App. 69 (em-
phasis added). Not so. Far from imposing limits, that Article
empowers Exxon to contract out work:
The Company may let independent contracts.
…
However, during any period of time when an in-
dependent contractor is performing work …, the
Company may not because of lack of work de-
mote or lay off any employee(s) qualified to per-
form the contracted work.
App. 122.
The phrase “period of time” just puts a condition on con-
tracting out: Exxon “may not … demote or lay off” a Union
employee “during any period of time” when a contractor is
working for it. That does not mean, as the arbitrator ruled, that
Exxon must limit contracting out to a fixed period. The text lets
Exxon hire contractors indefinitely, so long as it does not fire
or demote qualified Union employees during that time. Thus, I
cannot agree with Judge McKee that the arbitrator was right to
“conclu[de] that ‘… Article XVIII … prohibit[s] the perma-
nent contracting [out of certain] positions.’ ” McKee Op. 13
(quoting App. 70).
If this were a contract case, I would stop there and reverse
the award. The specific contracting-out power in Article XVIII
means what it says: Exxon may hire contractors. But labor ar-
bitration is different. And our highly deferential standard of re-
view requires us to uphold the award.
2
II. THE RECOGNITION CLAUSE AND PAST DECISIONS
SUPPORT THE AWARD
The arbitrator stretched the parties’ bargain to its limit. But
I may not overturn the award if it “even arguably constru[es]
or appl[ies] the contract.” Major League Baseball Players
Ass’n v. Garvey, 532 U.S. 504, 509–10 (2001) (per curiam)
(internal quotation marks omitted). Here, it does. There are two
colorable textual bases for the arbitrator’s decision: the Recog-
nition Clause and the parties’ agreement to treat arbitral awards
as precedent.
The Recognition Clause “recognizes the Union as the ex-
clusive representative of all [Exxon] employees.” App. 77 (Art.
I, § 2). The arbitrator read this clause to prevent Exxon from
permanently filling covered position with contractors. Other-
wise, Exxon could steadily “erod[e] both the coverage and the
size of the bargaining unit.” App. 70. Supplanting Union mem-
bers, she thought, would make the Union’s exclusive role illu-
sory.
This reading, though, is hardly obvious. Article XVIII is
more specific than the Recognition Clause, so it should govern.
Even so, the award “draws its essence from the collective bar-
gaining agreement.” Ludwig Honold Mfg. Co. v. Fletcher, 405
F.2d 1123, 1125 (3d Cir. 1969). So we must defer to it. Cf.
Monongahela Valley Hosp. v. United Steel Workers Int’l Un-
ion AFL-CIO, 946 F.3d 195, 199 (3d Cir. 2019) (overturning
an “award [that] in no rational way dr[e]w[ ] its essence from
the [agreement]”). Thus, the arbitrator could and did find that
3
the Recognition Clause limited contracting out to preserve the
Union’s exclusive role.
The arbitrator properly supported this conclusion by look-
ing to previous arbitral decisions. The parties agreed that, “for
the life of this Agreement,” arbitral awards would remain “fi-
nal and binding” precedent. App. 85–86 (Art. VIII, § 7(B)).
One such precedent is relevant. In 1983, the Union challenged
Exxon’s use of contractors to address a backlog of work. An
arbitrator rejected this claim. But in doing so, he drew a line
between permissible contracting out “in response to a true op-
erational problem” and problematic hiring “designed to under-
mine the bargaining unit in violation of the recognition clause
of the Agreement.” Indep. Lab’y Emps. Union v. ExxonMobil
Rsch. & Eng’g, Grievance No. WP-75, at 13 ¶ 27 (Apr. 11 &
19, 1983) (Florey Arb.). The parties’ agreement makes this de-
cision a precedent. So the arbitrator could and did rely on it to
keep Exxon from eroding the bargaining unit here.
Finally, the arbitrator could and did consider the “law of the
shop.” Even when an arbitral award deviates from the most
natural meaning of a contractual provision, it can find support
in “prior practices demonstrating relaxation of the literal lan-
guage.” Akers Nat’l Roll Co. v. United Steel Workers Union,
712 F.3d 155, 162 (3d Cir. 2013) (internal quotation marks and
emphasis omitted). Here, there is evidence from past practice.
In 1979, Exxon’s Vice President R.E. Weeks insisted that
“there was not in this case, nor will there be in the future, any
intent to erode the bargaining unit nor to limit the number of
bargainable employees.” App. 61 (emphasis added). This
4
extrinsic evidence buttresses the arbitrator’s conclusion that
Exxon cannot use contracting out to undermine the Union.
On this plausible reading, Exxon violated the agreement.
Exxon admitted that its plan was to reduce the number of Un-
ion jobs “as employees have retired,” in the course of “moving
towards [a] fully contracting model.” App. 58. But on the arbi-
trator’s understanding, it cannot use contracting to do that.
****
This case is at the very outer edge of our deference. The
arbitral award is contrary to the fairest reading of the text. But
the arbitrator here, unlike in Monongahela, did not just make
it up. Because the award is plausible in light of the Recognition
Clause, the term incorporating past arbitral awards, and the law
of the shop, we must affirm.
5
COWEN, Circuit Judge, concurring in the judgment.
I join in the judgment for the reasons set forth in Judge Bibas’s concurring
opinion.