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

• Court: Court of Appeals for the Eleventh Circuit
• Decided: March 15, 2018
• Docket: 17-13269
• Status: Unpublished

Opinion

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[DO NOT PUBLISH]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

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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.”

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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.”

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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

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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.

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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

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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

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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

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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

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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

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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.