Centralab, Inc., Fort Dodge, Iowa v. Local No. 816, International Union of Electrical, Radio and MacHine Workers of America

827 F.2d 1210, 126 L.R.R.M. (BNA) 2937, 1987 U.S. App. LEXIS 11573
CourtCourt of Appeals for the Eighth Circuit
DecidedSeptember 1, 1987
Docket86-2091
StatusPublished
Cited by18 cases

This text of 827 F.2d 1210 (Centralab, Inc., Fort Dodge, Iowa v. Local No. 816, International Union of Electrical, Radio and MacHine Workers of America) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Centralab, Inc., Fort Dodge, Iowa v. Local No. 816, International Union of Electrical, Radio and MacHine Workers of America, 827 F.2d 1210, 126 L.R.R.M. (BNA) 2937, 1987 U.S. App. LEXIS 11573 (8th Cir. 1987).

Opinions

MAGILL, Circuit Judge.

Local No. 816, International Union of Electrical, Radio and Machine Workers of America, AFL-CIO (the “Union”), appeals from the district court’s1 order granting in part Centralab, Inc.'s (“Centralab”) motion for summary judgment. The district court upheld that part of an arbitrator’s award finding that Centralab’s new time standards for incentive pay were improper, but vacated that part of the arbitrator’s award setting new rates and ordering retroactive pay adjustments. For the reasons discussed below, we affirm.

I. BACKGROUND.

The facts in this case are not in dispute. Centralab, the employer, operates a plant at Fort Dodge, Iowa, where it manufactures electrical switches. The Union represents production and maintenance employees at the plant. Centralab and the Union are parties to a collective bargaining agreement governing the terms and conditions of employment, and providing for final and binding arbitration of grievances.

The dispute in this case arose under a provision of the agreement dealing with incentive pay. Article V, Section 6 of the agreement provides for an employee incentive plan, with incentive pay for increased productivity. The stated objective of the plan is:

to provide an opportunity for the normal, skilled, efficient operators, using the proper method, to earn one hundred twenty-five (125) percent of the base wage when applying one hundred twenty-five (125) percent effort on incentive jobs on which the operator is experienced. The Company does not guarantee the earnings objective nor is there any limit on incentive earnings.

Paragraphs (a), (b), and (c) of Section 6 govern the development of an appropriate time standard for the incentive jobs.

In March of 1984, Centralab established new time standards for the job involving final assembly and sonic sealing of two spring, non-lighted, momentary switches (Operations 14 2017A and 14 2019A). Operators met these standards during the first several days after they were implemented, and were therefore eligible to re[1212]*1212ceive incentive pay earnings in excess of 125 percent of their base wage. Thereafter, operators were unable to meet the new standards. The Union, in late March, informed Centralab that it questioned the standards. After unsuccessful attempts to resolve the dispute, the Union filed formal grievances pursuant to the collective bargaining agreement. The Union requested arbitration of the grievances, and on April 11, 1985, an arbitration hearing was held before a duly-selected arbitrator.

During the arbitration hearing, Centralab objected when the Union suggested that the arbitrator fix a different time standard if he determined that the standards set by Centralab were improper. Centralab argued that the arbitrator was without authority to fix a different time standard because Article III, Section 4, paragraph (f) of the collective bargaining agreement limited the arbitrator’s authority in a grievance case of this type solely to determining whether the company’s rates were in line with Article V. Paragraph (f) provides:

The arbitrator selected for arbitration of an incentive rate shall be one technically qualified in the subject. The arbitrator shall limit his decision to whether the rate set by the Employee [sic] may reasonably be expected to yield the earnings provided in Article V. The impartial arbitrator may review the Company’s rate development and determine whether or not it has been established consistent with the terms of the agreement and with the methods used by the Company in establishing production standards. [Emphasis supplied.]

Also during the hearing, Centralab invited the arbitrator to do an on-site inspection to determine whether the “rates in question, the employees in question or some other mysterious hidden factor is responsible for this grievance.” The arbitrator did so, and further, with a stopwatch in hand, conducted his own time study of the operations.

Based on the testimony and exhibits entered at the hearing, and on his own time study analysis of the operations in question, the arbitrator found and awarded that Centralab’s new time standards for Operations 14 2017A and 14 2019A did not provide operators with an opportunity to earn incentive pay in line with Article V of the agreement. As a further part of his award, the arbitrator set and ordered into effect his own time standards.

In his accompanying opinion, the arbitrator specifically addressed Centralab’s objection to his authority to set new rates by stating that he did not interpret Article III, Section 4, paragraph (f) “to limit his authority to order a remedy.” He reasoned that Centralab’s interpretation of the agreement would deny the parties finality in the resolution of their disputes. The arbitrator further stated that Article III, Section 5, which provides for retroactive adjustment of rates in the event of a grievance,2 supported his conclusion that he had authority to set new rates. Centralab subsequently brought suit to set aside the award.3

Ruling upon cross-motions for summary judgment, the district court upheld part and vacated part of the arbitrator’s award. The court determined that the agreement authorized the arbitrator to determine whether Centralab’s new standards were improper, and therefore upheld that part of the arbitrator’s award finding that Centralab’s standards did not allow operators to achieve incentive pay earnings in line with Article V of the agreement. The court further determined that the agreement did not authorize the arbitrator to set new standards, and thus vacated that part of the arbitrator’s award, reasoning as follows:

In this case the parties clearly agreed that in the arbitration of an incentive rate question the authority of the arbitrator was strictly limited to determining [1213]*1213“whether the rate set by the Employee [sic] may reasonably be expected to yield the earnings provided for” in the incentive provisions. Had the parties intended to vest the arbitrator with the power to make the determination of what precise rate was correct, they would not have agreed to such a limitation upon the arbitrator in the agreement. When the arbitrator in this case decided the rate to be used, he decided something the parties had not agreed to let him decide and he exceeded his grant of authority as contained in the contract.

The arbitrator claimed implied authority to determine what rate was correct from Section 5 of Article III. No such authority can be there found. While the parties themselves may be able to “adjust” rates by separate agreement during the grievance resolution procedures, and Section 5 of Article III would then determine the effective date of such agreed upon adjustments, the language of Section 5 does nothing to empower anyone (let alone the arbitrator) to “adjust” anything. Section 5 merely establishes the effective date of any adjustments made during the grievance resolution procedure. The power to make those “adjustments” must emanate from an independent agreement between the parties to do so or from some other source in the collective bargaining agreement.

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Bluebook (online)
827 F.2d 1210, 126 L.R.R.M. (BNA) 2937, 1987 U.S. App. LEXIS 11573, Counsel Stack Legal Research, https://law.counselstack.com/opinion/centralab-inc-fort-dodge-iowa-v-local-no-816-international-union-of-ca8-1987.