REVISED United States Court of Appeals,
Fifth Circuit.
No. 96-40279.
BRUCE HARDWOOD FLOORS, DIVISION OF TRIANGLE PACIFIC CORPORATION, Plaintiff-Appellant,
v.
UBC, SOUTHERN COUNCIL OF INDUSTRIAL WORKERS, LOCAL UNION NO. 2713, Defendant-Appellee.
UBC, SOUTHERN COUNCIL OF INDUSTRIAL WORKERS, LOCAL UNION NO. 2713, Plaintiff-Appellee,
BRUCE HARDWOOD FLOORS, A DIVISION OF TRIANGLE PACIFIC CORPORATION, Defendant-Appellant.
Jan. 21, 1997.
Appeal from the United States District Court for the Eastern District of Texas.
Before BARKSDALE, EMILIO M. GARZA and BENAVIDES, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
Plaintiff Bruce Hardwood Floors ("Bruce") appeals the district
court's grant of summary judgment enforcing an arbitration award in favor of Defendant UBC, Southern Council of Industrial Workers,
Local Union No. 2713 ("the Union") and the court's award of
attorneys' fees to the Union. We reverse the district court's
decisions on both issues.
I
Sheila Dixon, a Dryer Tailer/Grader on a production line in
Bruce's Veneer Department, asked her supervisor for leave from work
to take her truck to her daughter who needed it to go to the doctor. Dixon's supervisor approved her request. However, while
Dixon was absent from work, other employees informed her supervisor
that Dixon actually needed the time off to pay an overdue electric
bill. When questioned by her supervisor the next day about her
reasons for needing the absence from work, Dixon admitted that she
had fabricated the story about her daughter's doctor appointment.
After conferring with his own supervisor, the plant's personnel
manager, and the plant manager, Dixon's supervisor discharged Dixon
for obtaining time off from work under false pretenses.
Dixon thereafter filed a grievance contesting her termination.
Her grievance was processed in accordance with the four-step
procedure in the parties' collective bargaining agreement ("CBA").
When Dixon's termination could not be resolved through the
grievance procedure, the Union submitted the dispute to
arbitration.
The arbitrator held that Bruce should have applied progressive
discipline provisions of the CBA, rather than discharge
provisions.1 He concluded that Bruce's contention that Dixon's
1 The pertinent discharge and progressive discipline provisions of the CBA are as follows:
Article 24, Section 2. The Company will take action against an employee based upon conduct which warrants immediate discharge, or for other conduct, while less serious, which initially warrants less severe discipline. (a) An employee will be discharged immediately without prior warning for the following or similar reasons:
(16) Stealing, immoral conduct, or any act on the Company premises intended to destroy property or inflict bodily injury.
(b) An employee will be subject to progressive discipline for the following or similar reasons: conduct warranted discharge under the CBA was "unreasonable," but
found that Dixon had "fabricated her story."2 The arbitrator
(1) Absenteeism.
(2) Tardiness.
(3) Inefficiency or poor work performance.
(4) Abuse of rest periods and lunch periods.
(5) Neglecting duty or failing to maintain work standards.
Section 3. In the case of offenses where the application of progressive discipline would be appropriate as set forth in (b) above, the Company shall endeavor to adhere to the following order:
(a) Verbal warning with written record of warning for the first incident.
(b) Written warning for the second incident.
(c) Disciplinary suspension of three (3) unpaid days for the third incident.
(d) Discharge for the fourth incident.
In agreeing to the foregoing, however, the Company does not intend to waive the exercise of its right to discipline or discharge without following such order in any case where it determines that the seriousness of the particular offense involved warrants discipline of a different order. 2 Specifically, the arbitrator concluded:
The Grievant's conduct was not such that demands the supreme industrial penalty of immediate discharge. The Company wrongfully attempted to apply the referenced provisions of the Collective Bargaining Agreement to the Grievant's conduct. The parties negotiated a progressive discipline policy which the Company failed to follow.
Considering the evidence adduced at the arbitration hearing, and considering the presentations made by the parties in their post hearing briefs, the Arbitrator has adequate reason to substitute his judgement [sic] for that of Company's management. reinstated Dixon with full seniority and back pay and imposed a
ten-day suspension from work.
Bruce then filed a complaint in district court seeking vacatur
of the arbitration award. The Union subsequently filed a complaint
seeking enforcement of the award. The district court consolidated
the actions and the parties filed cross-motions for summary
judgment. The district court granted the Union's motion and denied
Bruce's motion, thereby enforcing the arbitration award.3 The
district court also awarded the Union attorneys' fees. Bruce
appeals.
II
Bruce argues that the arbitrator improperly ignored the terms
of the parties' CBA and that the district court should therefore
have vacated the arbitration award. Where a party appeals a grant
of summary judgment in a suit to vacate an arbitration award, we
review the district court's ruling de novo. Houston Lighting &
Power Co. v. International Bhd. of Elec. Workers, Local Union No.
66, 71 F.3d 179, 181 (5th Cir.1995), cert. denied, --- U.S. ----,
117 S.Ct. 52, 136 L.Ed.2d 16 (1996). As long as the arbitrator's
decision draws its essence from the collective bargaining agreement
and the arbitrator is not fashioning his own brand of industrial
justice, we will decline to vacate the award. Id. at 182. In
applying the "essence" test, we have stated that an arbitration
3 In granting the Union's motion for summary judgment to enforce the arbitration award, the district court found that "the arbitrator confined his decision and remedy to the interpretation and application of the collective bargaining agreement" and that the arbitrator "provide[d] an award which was within the essence of the collective bargaining agreement." award "must have a basis that is at least rationally inferable, if
not obviously drawn, from the letter or purpose of the collective
bargaining agreement.... [T]he award must, in some logical way, be
derived from the wording or purpose of the contract." Executone
Info. Sys., Inc. v. Davis, 26 F.3d 1314, 1325 (5th Cir.1994)
(citation omitted).
Although we accord an arbitrator's decision considerable
deference regarding the merits of the controversy, the CBA
circumscribes his jurisdiction. Delta Queen Steamboat Co. v.
District 2 Marine Eng'rs Beneficial Ass'n, 889 F.2d 599, 602 (5th
Cir.1989), cert. denied, 498 U.S. 853, 111 S.Ct. 148, 112 L.Ed.2d
114 (1990). Where the arbitrator exceeds the express limitations
of his contractual mandate, judicial deference ends and vacatur or
modification of the award is an appropriate remedy. Id.
After reviewing both the CBA and the arbitration award, we
conclude that the award is not "derived from the wording or purpose
of the contract." Executone, 26 F.3d at 1325. Article 9, § 3 of
the CBA binds an arbitrator to the terms of the contract. See id.
("No arbitrator shall have authority to add to, amend or depart
from the terms of this written Agreement...."). The arbitrator
found, based on Dixon's own admission, that Dixon lied to obtain
time off from work. Lying is specifically covered by Article 24,
§ 2(a) of the CBA, which states that an employee will be discharged
immediately for engaging in immoral conduct.4 In refusing to apply
4 The dissent criticizes us for interpreting the term "immoral conduct." We do not. By definition, lying is immoral conduct—that is, it is inconsistent with principles of morality. See BLACK'S LAW DICTIONARY 751 (6th Ed.1990). this provision, the arbitrator exceeded the express limitations of
his contractual mandate.5
The arbitration award is further undermined by the penalty
imposed. Nowhere does the CBA provide for a penalty of a ten-day
suspension from work. Although the Supreme Court has stated that
"[n]ormally, an arbitrator is authorized to disagree with the
sanction imposed for employee misconduct," United Paperworkers
Int'l Union v. Misco, Inc., 484 U.S. 29, 41, 108 S.Ct. 364, 373, 98
L.Ed.2d 286 (1987), the Court clarified that "[t]he parties, of
course, may limit the discretion of the arbitrator in this
respect...." Id. By so doing, it is possible to vest in the
employer complete discretion over terminations which the arbitrator
is not free to usurp. Delta Queen, 889 F.2d at 602.
As noted, the CBA in this case prohibits an arbitrator from
adding to, amending or departing from the terms of the agreement.
Hence, once the arbitrator found that Dixon fabricated her story,
he was bound to impose the penalty provided by the CBA for that
conduct. Id at 604 ("If a collective bargaining agreement defines
"proper cause' to include a non-exhaustive list of offenses, an
5 The arbitrator concluded that Bruce should have applied the CBA's progressive discipline policy to Dixon's conduct, but did not specify which of the five enumerated progressive discipline offenses incorporated Dixon's lie. Likewise, though the Union urges that Dixon's conduct deserves progressive discipline because it is similar to the listed progressive discipline offenses, it also fails to specify which of the offenses implicates lying. For our part, we discern no similarity between lying and absenteeism, tardiness, inefficiency or poor work performance, abuse of rest periods and lunch periods, or neglect of duty or failure to maintain work standards. The plain language of the progressive discipline policy simply does not support a finding that the policy applies to lying, particularly in light of the clear applicability of the discharge provisions to Dixon's conduct. arbitrator cannot ignore the natural consequence of his finding
that a listed offense was committed."). In fashioning a remedy not
contained in the CBA, despite finding that Dixon committed an
offense covered by the CBA, the arbitrator exceeded his contractual
authority by adding to, amending and/or departing from the terms of
the agreement. As a result, we vacate the arbitration award. See
Houston Lighting & Power Co., 71 F.3d at 179 ("[T]he rule in this
circuit, and the emerging trend among other courts of appeals, is
that arbitral action contrary to express contractual provisions
will not be respected."). Thus, we reverse the district court's
grant of summary judgment in favor of the Union and reinstate
Dixon's discharge. See Container Prods., Inc. v. United
Steelworkers of Am., and its Local 5651, 873 F.2d 818, 820 (5th
Cir.1989) (affirming district court order vacating remedy imposed
by arbitrator and reinstating discharge).
III
Bruce also contends that the district court abused its
discretion in awarding the Union attorneys' fees. We review an
award of attorneys' fees for an abuse of discretion. International
Union of Elec., Radio and Mach. Workers v. Ingram Mfg. Co., 715
F.2d 886, 893 (5th Cir.1983), cert. denied, 466 U.S. 928, 104 S.Ct.
1711, 80 L.Ed.2d 184 (1984). An award of attorneys' fees is
permitted when a party has refused to abide by an arbitration
decision "without justification." International Ass'n of
Machinists & Aerospace Workers, Dist. 776 v. Texas Steel Co.
("Texas Steel II"), 639 F.2d 279, 283 (5th Cir. Unit A 1981).
Because we have concluded that the arbitrator exceeded his contractual authority, we do not find that Bruce's refusal to abide
by the arbitration decision was without justification. See id. at
283-84 (explaining that in cases where arbitration award exceeds
power conferred upon arbitrator, challenge is proper and not
without justification). Hence, we reverse the district court's
award of attorneys' fees to the Union.
IV
For the foregoing reasons, we REVERSE the district court's
grant of summary judgment in favor of the Union, VACATE the
arbitration award and reinstate Dixon's discharge. In addition, we
REVERSE the district court's award of attorneys' fees to the Union.
BENAVIDES, Circuit Judge, dissenting:
I dissent. The majority substitutes its own interpretation of
the collective bargaining agreement ("CBA") for the arbitrator's
interpretation. In doing so, it disregards fundamental Supreme
Court precedent setting forth the deferential standard for
reviewing arbitration awards. An arbitration award can be
overturned only if it fails to draw its essence from the collective
bargaining agreement. See United Steelworkers of Am. v. Enterprise
Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4
L.Ed.2d 1424 (1960). A corollary of this principle is that we
cannot overturn an arbitration award even if "the arbitrator
misread the contract." United Paperworkers Int'l Union AFL-CIO v.
Misco, Inc., 484 U.S. 29, 36-37, 108 S.Ct. 364, 370, 98 L.Ed.2d 286
(1987). "[A]s long as the arbitrator is even arguably construing
or applying the contract and acting within the scope of his
authority, that a court is convinced he committed serious error does not suffice to overturn his decision." Misco, 484 U.S. at 38-
39, 108 S.Ct. at 371.
The arbitrator in this case construed the CBA in light of the
evidence before him and determined that the company's decision to
terminate Dixon involved an unreasonable construction of the CBA
and that the company should have imposed progressive discipline
instead. The arbitrator's conclusions are rationally inferable
from the CBA. No more is required. Accordingly, I would affirm
the judgment of the district court upholding the award.
The facts before the arbitrator are somewhat more textured
than the court's opinion reflects. Dixon's termination arose from
an unpaid 45-minute absence from work. Her electricity had been
turned off because she had failed to pay her bill. She planned to
pay the bill at the end of the work day on Friday, after she
received her paycheck. But during her morning break that day, she
discovered that unless she paid the bill by noon, she would have no
electricity for the entire weekend. That morning, she asked her
supervisor, Gary Henderson, for an hour off for a personal reason.
Henderson demanded details about why she needed the time. Instead
of telling him the undoubtedly embarrassing truth (that her
electricity had been shut off because she had failed to pay her
bill), she told him that she needed to take her truck to her
daughter who had a doctor's appointment. Henderson told her that
she could leave, but that it would be an "unexcused absence." She
clocked out, went to pay the electricity bill, and returned within
45 minutes. In the meantime, Dixon's co-workers told her
supervisor that she had fabricated the reason for leaving work. When Dixon returned to work the next day, her time card was
missing, and she was told that she had been discharged. At the
time of Dixon's discharge, the company stated that it was
terminating her for obtaining a leave of absence under false
pretenses.6
Neither the CBA's list of dischargeable offenses nor the list
of offenses for which progressive discipline will be imposed
specifically covers Dixon's misconduct. Both lists are
non-exhaustive and allow punishment of "similar offenses" under
their terms. It was the arbitrator's task to determine whether her
conduct was more closely analogous to a dischargeable offense or a
progressive discipline offense. The arbitrator evidently decided
that Dixon's misconduct in fabricating a story to get a 45-minute
unpaid break to pay her electricity bill was more akin to a
progressive discipline offense, such as absenteeism or "abuse of
rest period and lunch periods," than to any dischargeable offense
under the CBA. Thus, the arbitrator determined that the company
should have followed its progressive discipline policy rather than
discharging Dixon. In reaching this conclusion, the arbitrator
necessarily interpreted the CBA. It is not our business to
overturn that interpretation, even if we would have decided the
matter differently.
6 "Obtaining a leave of absence under false pretenses" is not listed as a dischargeable offense under the CBA, but rather as a ground for loss of seniority. Thus, the arbitrator reasonably concluded that the reason for termination given by the company at the time of Dixon's discharge did not provide just cause for her termination. Although the company continues on appeal to assert this as a just cause for termination, the majority does not rest its opinion on this provision. The arbitrator concluded that the company's attempt to
characterize Dixon's conduct as "immoral conduct" within the
meaning of Article 24, Section 2(a)(16) of the CBA was
unreasonable. That section allows the company to terminate
employees immediately for "stealing, immoral conduct, or any act on
the Company premises intended to destroy property or inflict bodily
injury." The majority erroneously states that "lying" is
"specifically covered" by this provision and concludes that this
provision is dispositive. Lying is not, however, specifically
listed in this provision, nor is immoral conduct expressly defined
by the CBA to include lying. Instead the majority's conclusion
requires an inferential step, that any lie is "immoral conduct"
justifying immediate termination within the meaning of the CBA. In
other words, the majority interprets the term "immoral conduct" and
comes to a conclusion different from that reached by the
arbitrator. That is not the court's proper role. In reviewing the
arbitrator's construction of the phrase "immoral conduct," the
issue is not what we believe to be moral or immoral conduct in the
philosophical sense. The issue before the arbitrator was whether
Dixon's conduct rose to the level of "immoral conduct" as that term
is used in the CBA.
The arbitrator evidently concluded that Dixon's fabrication,
though it demonstrated "poor judgment," did not rise to the level
of "immoral conduct" within the meaning of this offense. An
arbitrator has discretion to decide whether particular conduct
constitutes a dischargeable offense within the meaning of a CBA, as
the First Circuit aptly explained in Georgia-Pacific Corp. v. Local 27, United Paperworkers Int'l Union, 864 F.2d 940 (1st Cir.1988)
(holding that where the arbitrator found that an employee committed
an offense listed as a ground for discharge, he lacked discretion
to order the employee's reinstatement). The CBA in Georgia-Pacific
provided that "dishonesty" was an offense for which an employee
could be discharged. Id. at 945. As the court explained, "It is
... up to an arbitrator to decide whether a given pattern of
conduct amounts to dishonesty. For example, an arbitrator may
decide that stealing a company pencil does not amount to dishonesty
for purposes of immediate discharge." Id. at 945 n. 2. Similarly,
in this case, it was up to the arbitrator to decide whether Dixon's
conduct rose to the level of "immoral conduct" for the purposes of
immediate discharge. I fail to see how the arbitrator could be
compelled to find that Dixon's action was immoral conduct,
especially when the CBA itself specifically lists "obtaining a
leave of absence under false pretenses" as a ground for loss of
seniority, but not as a ground for discharge.
The arbitrator's apparent interpretation of "immoral conduct"
also draws support from the context in which the phrase appears.
It is a fundamental canon of construction that a word is known by
its company. Applying this principle, "immoral conduct" should be
construed in relation to the other offenses listed with it in
Section 2(a)(16): "stealing" and "any act on the Company premises
intended to destroy property or inflict bodily injury." The
arbitrator could have concluded that immoral conduct in this
context does not encompass any act that violates the Golden Rule,
but only conduct that rises to the serious level of stealing or intentional infliction of property damage or personal injury.
Although this court may not agree with the arbitrator's
interpretation and indeed may be convinced that the interpretation
was a "serious error," it may not overturn the award simply because
it disagrees.
The company and the court rely heavily on Delta Queen
Steamboat Co. v. District 2 Marine Eng'rs Beneficial Ass'n, 889
F.2d 599 (5th Cir.1989), cert. denied, 498 U.S. 853, 111 S.Ct. 148,
112 L.Ed.2d 114 (1990). This case is easily distinguished from
Delta Queen. In that case, the CBA expressly listed "carelessness"
as a ground for discharge, and the arbitrator expressly found that
the discharged riverboat captain was "grossly careless." Id. at
601. In that circumstance, we held that the arbitrator, having
found that the riverboat captain had committed a dischargeable
offense, was not free to ignore the terms of the CBA. If the
arbitrator in this case had made an express finding that Dixon
engaged in immoral conduct, then, of course, he could not ignore
the terms of Article 24, Section 2, which makes immoral conduct a
dischargeable offense. But he made no such finding.
The majority further suggests that the fact that the remedy
imposed by the arbitrator, a ten-day suspension, is not provided
for by the CBA agreement somehow undermines the arbitrator's
decision that the company lacked just cause to terminate Dixon.
But appropriate discipline for the offense is a distinct question
from whether the termination was with just cause. The parties'
submission of two questions to the arbitrator ("Was the Grievant,
Sheila Dixon, discharged for just cause? If not, what is the remedy?") underscores the separateness of the two inquiries. That
the arbitrator imposed a harsher punishment on Dixon than would be
available to the company under the CBA does not undermine the
arbitrator's decision on the termination question. Further, it is
difficult to see how the company can complain of the imposition of
a punishment more severe than that which it would have been able to
impose under the CBA's progressive discipline policy. A three-day
unpaid suspension is the most severe progressive discipline
provided for by the CBA, short of termination. At oral argument,
the company in essence conceded that if it lacked just cause to
terminate Dixon, it does not seek a remand for the purpose of
imposing a lesser punishment on Dixon under the CBA's progressive
discipline policy.
The arbitrator was charged with deciding whether the company
had just cause to discharge Dixon. To do so, he had to evaluate
Dixon's particular conduct and determine whether that conduct fell
within the CBA's discharge provision. He concluded that, plotted
on a spectrum of bad behavior, Dixon's actions fell closer to
absenteeism or abuse of a rest period than to stealing, immoral
conduct, or intentional infliction of personal injury or property
damage. Unlike the majority, I would not overturn the arbitrator's
decision merely because I do not agree with its outcome. Clearly,
his decision drew its essence from the CBA. I would affirm the
judgment of the district court, including the award of attorney's
fees. See International Ass'n of Machinists & Aerospace Workers,
Dist. 776 v. Texas Steel Co., 639 F.2d 279, 283 (5th Cir. Unit A
1981). The district court did not clearly err in concluding that the company's challenge to the arbitrator's award was "without
justification."
. . . . .