Natl Gypsum Co v. Oil, Chem & Atomic

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 17, 1998
• Docket: 97-30699
• Status: Published

Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________

No. 97-30699 __________________

NATIONAL GYPSUM COMPANY,

Plaintiff-Appellant,

versus

OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION; OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, Local 4-447,

Defendants-Appellees.

______________________________________________

Appeal from the United States District Court for the Eastern District of Louisiana ______________________________________________ July 17, 1998

Before BARKSDALE, BENAVIDES, and DENNIS, Circuit Judges.

BENAVIDES, Circuit Judge:

The district court granted summary judgment to the Oil,

Chemical, and Atomic Workers International Union and its Local 4-

447 on their motion to enforce an arbitration award and denied

National Gypsum Company summary judgment on its motion to vacate

that award. We affirm. I.

On January 30, 1994, National Gypsum Company and Oil,

Chemical, and Atomic Workers International Union Local 4-447

entered into a collective bargaining agreement (“the Agreement”),

which covered nonsupervisory production employees at National

Gypsum’s plant in Westwego, Louisiana, from February 1, 1994,

through February 1, 1997. Before September 1994, employees at the

Company were scheduled to work seven consecutive days each week

with attendant overtime pay. Workers were paid time and a half on

Saturdays and double time on Sundays. The seven-day work week had

been in effect for 30 years at the Westwego plant. In the summer

of 1994, however, the Company announced a “day-off” program,

effective in September 1994, under which no employee would work

more than six days in any week. Although at first blush the day-

off program might seem advantageous to the employees, the program

resulted in the loss of overtime pay. Consequently, on September

1, 1994, the Union filed a grievance in which it complained that

“[t]he company refuses to pay premium pay to the employees affected

by the day off,” and that the refusal violated Article I, § 28 of

the Agreement and any other provisions of the Agreement found to

apply. Section 28 provides that “[n]o employee will be laid off1

during the work week for the sole purpose of offsetting overtime

worked during the week.” The parties were unable to resolve their

dispute.

1 The parties agree that the term “laid off” can mean not having work for a period as short as one day.

2 In June 1995, the Company demanded arbitration in accordance

with Article X, § 69, which allows either party to request

arbitration if more informal dispute resolution mechanisms fail.

The parties agreed to bifurcate the liability and damage portions

of the arbitration. The liability portion of the arbitration took

place on July 10, 1996. The arbitrator found in favor of the

Union, reasoning that, because the day-off program was a wage

change and because the Agreement required the Company to negotiate

with the Union over wage changes, the Company had violated the

Agreement by instituting the day-off program unilaterally. The

arbitrator further concluded that the parties intended the

Agreement to reflect the seven-day work week with its attendant

overtime pay. In support of this conclusion, he relied on § 22 of

the Agreement, which defines the work week as running from Monday

to Monday, and §§ 23-24, which address overtime pay.

The Company filed a motion to vacate the arbitration award in

federal district court. The Union filed a counterclaim to enforce

it. Both parties filed motions for summary judgment. The district

court denied the Company’s motion and granted the Union’s. This

appeal followed.

II.

We review the district court’s decision to enforce the

arbitration award de novo, using the same standards used by the

district court. See Gulf Coast Indus. Workers Union v. Exxon

Corp., 991 F.2d 244, 248 (5th Cir. 1993). Our review of the

3 arbitrator’s decision is extremely deferential. See Executone

Information Sys., Inc. v. Davis, 26 F.3d 1314, 1320 (5th Cir.

1994). An arbitrator’s award cannot be reversed if the matter was

subject to arbitration and the arbitrator’s decision “drew from the

essence of the collective bargaining agreement.” International

Ass’n of Mach. & Aerospace Workers, Dist. 776 v. Texas Steel Co.,

538 F.2d 1116, 1119 (5th Cir. 1976).

Although the arbitrator’s construction of a contractual

provision may not be the only possible construction or even a

correct one, it must nevertheless be upheld unless the arbitrator’s

decision does not “concern[] the construction of the contract,”

United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593,

599, 80 S. Ct. 1358, 1362 (1960), or is not “rationally inferable”

from the letter (or even the purpose) of the collective bargaining

agreement, Local Union 59, International Bhd. of Elec. Workers v.

Green Corp., 725 F.2d 264, 268 (5th Cir. 1984) (citations omitted).

Reversal is not proper when “the arbitrator misreads the contract,

where there is room to do so . . . .” Id. (citing United

Paperworkers Int’l Union v. Misco, 484 U.S. 29, 38, 108 S. Ct. 364,

371 (1987)). Even if “a court is convinced [that the arbitrator]

committed serious error[, that] does not suffice to overturn his

decision.” Misco, 484 U.S. at 38, 108 S. Ct. at 371.

A.

The parties were unable to stipulate to the issue to be

decided by the arbitrator. The Company proposed that the

4 arbitrator decide, “Whether the Company violated Article V, [§]

28, of the parties’ Collective Bargaining Agreement on September 3

and 4, 1994, by laying off employees during the workweek for the

sole purpose of offsetting overtime during the week.” The Union,

on the other hand, believed that the arbitrator should decide, “Did

the Company violate the Collective Bargaining Agreement, in the

manner in which they begin [sic] scheduling employees[’] work week

on or about August 29, 1994 and continuing through September 1995?”

The arbitrator framed the issue broadly as “Whether the Company

violated the collective bargaining agreement by its institution of

the ‘day-off’ program on or about September 1, 1994.” More

precisely, the arbitrator considered whether the company had a duty

to bargain with the Union over the institution of the day-off

program, and, if so, whether it violated that duty by instituting

the program unilaterally.

The Company claims that the arbitrator exceeded his authority

by framing the issue as a bargaining rather than a scheduling

issue, especially in light of § 72 of the Agreement, which provides

that the arbitrator “shall deal only with the single matter which

occasioned his appointment.” The district court concluded that the

parties gave the arbitrator authority to frame the issue and that

the issue framed was “rationally derived” from the issues submitted

by the parties. We agree.

Although an arbitrator is generally “not free to reinterpret

the parties’ dispute and frame it in his own terms,” Piggly Wiggly

Operator’s Warehouse, Inc. v. Piggly Wiggly Operator’s Warehouse

5 Indep. Truck Driver’s Union, Local No. 1, 611 F.2d 580, 584 (5th

Cir. 1980), “[i]t is appropriate for ‘the arbitrator to decide just

what the issue was that was submitted to it and argued by the

parties,’” Day & Zimmerman, 791 F.2d at 369 (quoting Waverly

Mineral Prods. Co. v. United Steelworkers of Am., 633 F.2d 682, 685

(5th Cir. 1980)). Moreover, this court in Day & Zimmerman gave

“substantial weight” to the fact that the company had given “the

arbitrator authority to frame the issue.” 791 F.2d at 368. Where,

as here, the parties have not formally stipulated to the issue to

be submitted, the courts have looked to the grievance for guidance

regarding what issue is before the arbitrator. See, e.g., Piggly

Wiggly, 611 F.2d at 584.

In this case, the Company went forward with arbitration,

initiated at its own request, knowing that it had been unable to

agree with the Union as to the precise issue presented. Indeed,

the Company indicated to the arbitrator in its opening argument

that the parties disagreed on the issue presented for the

arbitrator’s resolution and presented argument to the arbitrator

regarding the scope of the issue presented. In doing so without

objecting that the arbitrator lacked the authority to determine the

issue presented, the Company impliedly consented to allow the

arbitrator to frame the issue.

The statement of the issue presented by the Union was broad

enough to be understood as a general challenge to the institution

of the day-off program. Moreover, the Union’s grievance cited to

“any other provisions of the agreement which may be found to

6 apply.” Under these circumstances, the arbitrator was entitled to

consider whether the institution of the program violated § 5, which

the arbitrator construed to create a duty to bargain with the

Union.2 Thus, we conclude that the arbitrator did not exceed his

contractual authority in framing the issue as whether the day-off

program violated the Company’s bargaining obligation.

B.

The Company also complains that the arbitrator exceeded his

contractual authority because his decision is contrary to the

express terms of the Agreement. Although this court does not

review the merits of an arbitration award, “arbitral action

contrary to express contractual provisions will not be respected.”

Delta Queen Steamboat Co. v. District 2 Marine Eng’rs Beneficial

2 The Company also argues that a portion of the testimony of a Union representative demonstrates conclusively that the Union was not challenging the institution of the day-off program: Q: Just so I am clear on the union’s contention, and you were the one that filed the grievance, it was not the union’s contention in filing that grievance that the company didn’t have the right to institute a day-off program, was it? A: No. Q: Is it your contention that the entire day-off program had as its motive the elimination or reduction of overtime? A: Yes. Q: And that’s the basis of your whole contention here? A: Yes. Q: If that’s the case, what you are really saying is that the company cannot have a day-off program? A: No, I’m not saying that. Q: We can have a day-off program-- A: Yes, you can.

The district court concluded that “the arbitrator could have reasonably interpreted the Union representative’s concession that the company could implement a day-off program to in no way preclude a claim that the institution of this particular day-off program was violative of the collective bargaining agreement.” Slip. op. at 11 (emphasis in original). We agree.

7 Ass’n, 889 F.2d 599, 604 (5th Cir. 1989). If the arbitrator

ignores or refuses to apply a contractual provision that permitted

the Company’s action, “the arbitrator exceed[s] the express

limitations of his contractual mandate.” Bruce Hardwood Floors v.

UBC Southern Council of Indus. Workers, Local No. 2713, 103 F.3d

449, 452 (5th Cir.), cert. denied, 118 S. Ct. 329 (1997).

Moreover, the Agreement in this case limits the arbitrator to

interpreting “the specific terms of this Agreement which are

applicable to the particular issue,” and to issuing an award that

is “not contrary to, and which in no way adds to, subtracts from,

or alters the terms of this Agreement.” Agreement, Art. X, § 73.

1.

The arbitrator concluded that the Company had a duty to

bargain with the Union before it instituted the day-off program.

This conclusion was grounded in the language of Article I, § 5 of

the Agreement:

The Company recognizes the Union as the exclusive bargaining agent for all production employees, as hereinafter defined, for the purpose of collective bargaining in respect to wages, hours of employment and all other conditions of employment.

Agreement, art. I, § 5. The arbitrator could have rationally

inferred from this section that the Company had a duty to bargain

over the institution of the day-off program, which, in the

arbitrator’s words, was used as a “wholesale reduction of the wage

bargain.” The arbitrator could have reasonably thought that if

this section does not create a duty to bargain over wages, hours of

8 employment, and other employment conditions, it would have little

or no meaning, given that no other section of the Agreement

provides for collective bargaining on these topics.

Moreover, the arbitrator’s interpretation of § 5 is consistent

with the Company’s statutory bargaining obligations. As the

arbitrator noted, the National Labor Relations Act creates a duty

to bargain with employees over “wages, hours, and other terms and

conditions of employment . . . .” 29 U.S.C. § 158(d). In this

regard, the Company argues that the arbitrator’s award cannot be

enforced because it was based on statutory rather than contractual

grounds.3 We disagree. Although the arbitrator’s interpretation

of the agreement was bolstered by the fact that that interpretation

is consistent with the Company’s statutory duty, his decision was

based on the contract, not on statutory duty. Moreover, the

Supreme Court has made clear that although the arbitrator’s

decision may not be based “‘solely upon the arbitrator’s view of

the requirements of enacted legislation . . . ,’” Alexander v.

Gardner-Denver Co., 415 U.S. 36, 53, 94 S. Ct. 1011, 1022

(1974)(quoting United Steelworkers v. Enterprise Wheel & Car Corp.,

363 U.S. 593, 598, 80 S. Ct. 1358, 1361 (1960)), the arbitrator

may “look for guidance from many sources . . . so long as [the

arbitration award] draws its essence from the collective bargaining

3 The Company also complains that the arbitrator relied on external law in concluding that the Union had not waived its right to rely on § 28 of the Agreement. This complaint does not detain us because the arbitrator ultimately concluded that § 28 did not aid the Union’s cause. Thus, even if the arbitrator erred, that error was harmless.

9 agreement,” 363 U.S. at 597, 80 S. Ct. at 1361. The arbitrator’s

decision in this case drew its essence from the agreement, and the

arbitrator properly “look[ed] to ‘the law’ for help in determining

the sense of the agreement.” Id.

2.

The Company argues that the arbitrator’s conclusion that it

had a duty to bargain regarding the day-off program ignored Article

I, § 7 of the Agreement, which requires the Company to “meet with

the accredited representatives of the Union for the purpose of

settling any disputes which may arise, during the term of this

agreement.” Agreement, art. I, § 7 (emphasis added). In the

previous agreement, which governed from 1990 to January 31, 1994,

this section provided that the Company had a duty to “negotiate

with” the Union to settle disputes. The Company argues that the

arbitrator’s finding that the Company had a duty to bargain under

§ 5 conflicts with § 7, which requires only that the Company “meet

with,” not that it “negotiate with” the Union to resolve disputes.

Section 7 did not expressly preclude the arbitrator from

interpreting § 5 to require bargaining over changes to the wage

bargain. These provisions can reasonably be read to mean that the

company has a duty to bargain over wages, hours of employment, and

conditions of employment, but only has a duty to meet with Union

representatives over other disputes. To the extent that there is

any ambiguity regarding the meaning of these two sections or a

10 conflict between the two, the arbitrator was entitled to resolve

it.

3.

The Company also contends that the arbitrator’s decision

contravenes the Agreement’s management rights clause, which states:

The management of this Plant and the direction of the working force are reserved and vested exclusively in the Company, except as expressly limited by the written terms of this Agreement. Such rights of the Company shall include, but are not limited to, the right to . . . schedule and reschedule employees as required by the business needs and operations requirements; to determine the number of employees, jobs, shifts or crews to be utilized in the operation; . . . [and] to establish, eliminate or combine jobs as it deems necessary for efficient operation.

Agreement, art. XVIII, § 104. The Company argues that the

arbitrator’s finding that the Company had a duty to bargain with

the Union over the day-off program conflicts with this provision.

The arbitrator went to considerable lengths to explain how his

conclusion was grounded in the text of the agreement. The

arbitrator specifically addressed the effect of the management

rights clause on the parties’ dispute and concluded that, although

the provision gives management scheduling rights, it does not allow

management to exercise those rights “as a vehicle for the wholesale

reduction of the wage bargain.” The arbitrator found that the

program was not “wage neutral,” but “resulted in substantial wage

reductions upsetting thereby the wage bargain between the parties.”

Further, as the arbitrator observed, the management rights

11 conferred by § 104 are not boundless, but may be “expressly limited

by the written terms of [the] Agreement.”

Because changes in scheduling will often affect wages, the

arbitrator’s reading of the management rights clause does cabin the

Company’s rights under that clause. His reading does not, however,

render the clause meaningless. The arbitrator did not conclude

that any scheduling change would require bargaining, but rather

only that the fundamental change brought about by the day-off

program, which substantially altered the union’s wage bargain,

required the Company to bargain with the Union over the program’s

implementation.

Without question, there is some tension between the

arbitrator’s construction of § 5 and the management rights clause.

To the extent that § 5 and § 104 are in conflict, however, the

arbitrator had the authority to resolve this conflict in favor of

the Union. The arbitrator did not ignore § 104, but attempted to

harmonize that provision with the bargaining requirement he found

in § 5. The Company and the Union bargained for the arbitrator’s

interpretation of the Agreement, not ours. See Enterprise Wheel,

363 U.S. at 597, 80 S. Ct. at 1361. Because we cannot say that the

arbitrator’s decision did not “concern[] the construction of the

contract . . . ,” we must enforce it. Id. at 599, 80 S. Ct. at

1362.

12 4.

13 Finally, the Company argues that the arbitrator impermissibly

based his findings on the parties’ past practices (i.e., the 30-

year history of the seven-day work week with attendant overtime) in

violation of § 104 of the Agreement, which states:

This agreement contained the full scope of the agreements between the parties and expressly supersedes and cancels any and all provisions written or oral agreements or practices, previous to this agreement.

Although the arbitrator discussed past practices extensively and

erroneously stated that past practice is “part of the collective

bargaining agreement as though it had been reduced to writing,” his

decision was ultimately based on his interpretation of the

Agreement. He concluded that the seven-day work week is reflected

in § 22 of the Agreement, which states that “[t]he work week and

payroll week shall be from seven a.m. Monday to seven a.m. the

following Monday.” The arbitrator described this provision as

“coterminous” with prior practice. He also relied on the

Agreement’s overtime provisions, which provide that employees will

receive time and a half on Saturdays and double time on Sundays.

In sum, the arbitrator concluded that the parties intended that

their Agreement reflect a seven-day work week.

Because we conclude that the arbitrator’s decision was based

on his interpretation of the contract and supported by practice

after the adoption of the Agreement in question,4 his reference to

4 Not only was the seven-day work week in effect before the Company and the Union entered into the January 1994 Agreement, but the practice also continued for nearly seven months after the Agreement was signed. Thus, the arbitrator’s construction of the Agreement as reflecting a seven-day work week is consistent not only with prior practice, but also with the seven months of

14 past practice is not “fatal” to his award, as the Company suggests.

Here, there is room in the contract to allow for the reading made

by the arbitrator. Thus, even if we were convinced that the

arbitrator’s understanding of §§ 22 and 23-24 as reflecting a

seven-day work week was erroneous or even “seriously erroneous,”

that would not provide a sufficient basis for refusing to enforce

his award. See Misco, 484 U.S. at 38, 108 S. Ct. at 371.

III.

Mindful of our limited role in the review of arbitration

awards, we affirm the judgment of the district court enforcing the

arbitrator’s award.

practice under this collective bargaining agreement.