United Food and Commercial Workers International Union, Local 590, Afl-Cio-Clc v. Great Atlantic & Pacific Tea Company, Inc

734 F.2d 455, 116 L.R.R.M. (BNA) 2468, 1984 U.S. App. LEXIS 22417

• Court: Court of Appeals for the Third Circuit
• Decided: May 16, 1984
• Docket: 83-5524
• Status: Published

Opinions

OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

This appeal presents the familiar case of a collective bargaining party displeased with an arbitrator’s award. It differs somewhat from the norm in that the arbitrator here was asked not to interpret the parties’ agreement, but to determine whether an agreement existed at all. The Great Atlantic & Pacific Tea Company, Inc. (“A & P” or “the company”) was a party to a collective bargaining agreement with Local 590 of the United Food and Commercial Workers International Union (“Local 590” or “the union”). When that agreement expired the parties had not yet negotiated a successor agreement. They did agree on a hastily drawn “Memorandum of Agreement” that was intended to form the basis for a more permanent agreement. That more permanent agreement was never executed by both parties.

The arbitrator determined that no collective bargaining agreement existed between the parties. The union brought this action seeking to modify the arbitrator’s award. The district court granted summary judgment in favor of A & P, and we will affirm.

I

The Altoona Division of A & P operated nearly a hundred supermarket stores in western Pennsylvania and in portions of adjacent states. The employees in seventy-seven of these stores were covered by a collective bargaining agreement between A & P and Local 590. This agreement was signed in 1977, and was due to expire on September 27, 1980.

Beginning in June, 1980 A & P and Local 590 tried without success to negotiate a new agreement. A & P’s deteriorating position in the region led the company to seek substantial changes in the relationship— changes that the union resisted. The September 27 deadline passed, but the 1977-80 agreement by its terms continued in force during the pendency of the negotiations. On October 23, 1980, the company and union negotiators seemed finally to have reached agreement on the remaining issues. They memorialized their “agreement” in a handwritten Memorandum of Agreement the next day. The parties’ apparent intention was to integrate the Memorandum’s twenty-four modifications with the 1977-80 agreement at some later date. Until that time, the Memorandum provided, “[a]ll terms and conditions of the present [1977-80] Agreement shall remain in effect except as hereafter modified.” App. at 23a.

Some months later, representatives from A & P and Local 590 met to rework the 1977-80 agreement in light of the Memorandum's modifications. These representatives met for two days, marking the changes they jointly believed to be appropriate. The resulting draft was executed by Local 590 on May 27, 1981.

Senior officials at A & P refused to sign the new agreement, however, asserting that it did not accurately reflect the 1980 Memorandum of Agreement in three important respects. First, the draft agreement “rolled in” the Cost of Living Adjustment (“COLA”) to the new wage rates. Second, the draft agreement failed to place a 32-hour cap on part-time employees. Third, and most important, the draft failed to delete the “available hours” clause governing assignments to part-time workers.¹

Between the negotiation of the Memorandum of Agreement in October, 1980 and the company’s refusal to execute the proposed 1980-83 agreement, A & P’s economic condition had continued to worsen. To reduce costs, A & P shifted several full-time employees to part-time status. The union protested that A & P was obliged by the terms of the available hours clause in the 1977-80 agreement, continued in the draft 1980-83 agreement, to combine part-time positions to create as many full-time positions as possible. A & P countered that Item 6 of the Memorandum of Agreement had specifically provided for the elimination of the available hours clause, and that the inclusion of that clause in the 1980-83 draft agreement was a mistake.

Local 590 filed grievances on behalf of the employees whose status had been reduced, and moved for arbitration. The company objected that there was no collective bargaining agreement currently in force, and therefore nothing for an arbitrator to interpret. On June 18, 1982 the parties selected an arbitrator for the limited purpose of determining whether a valid collective bargaining agreement existed between them during the period when the grievances arose.

The parties consumed four days presenting evidence to the arbitrator. In a thirteen page opinion rendered January 5, 1983, the arbitrator carefully reviewed the protracted negotiations leading up to the handwritten Memorandum of Agreement and detailed the present disagreement between Local 590 and A & P. The arbitrator concluded that no collective bargaining agreement had existed between the parties after October 23, 1980.

The arbitrator reasoned that the 1980-83 draft agreement never became effective because A & P refused to sign it and because it varied substantially from the Memorandum of Agreement. The 1980 Memorandum of Agreement, while executed by both parties, could not substitute for the ineffective 1980-83 draft agreement because the parties had never intended it to be a “formal, complete Collective Bargaining Agreement.” The arbitrator refused to create a binding contract by rewriting the 1980-83 draft agreement to conform to the Memorandum of Agreement, finding he lacked “any authority to draft a contractual instrument that is binding on the Parties.” App. at 19a. In any event, the Memorandum of Agreement was fatally ambiguous on certain vital points, primary among them the available hours clause at issue in the grievance proceedings. Finally, the arbitrator determined that the 1977-80 agreement, despite language continuing its terms during the pendency of negotiations, terminated after the parties executed the Memorandum of Agreement and began to implement its new terms. In the absence of any valid agreement between the parties, the arbitrator concluded, he had no authority to arbitrate the union’s grievances.²

Local 590 brought an action in federal district court seeking to modify the arbitrator’s award and to order A & P to arbitrate the pending grievances. On a motion for summary judgment filed by A & P, the court upheld the arbitrator’s award by Memorandum and Order - dated June 29, 1983. Local 590 timely appealed the district court’s order, which we will affirm.

II

The standard of review applied by federal courts to arbitration awards is exceedingly narrow. “[A] federal court may not overrule an arbitrator’s decision simply because the court believes its own interpretation of the contract would be the better one.” W.R. Grace & Co. v. Local 759, International Union of the United Rubber Workers, 461 U.S. 757, _, 103 S.Ct. 2177, 2182, 76 L.Ed.2d 298 (1983) (citing United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1960)). This court has described the limited nature of federal courts’ power to review in even stronger terms. A federal court should uphold an arbitrator’s interpretation, we have said,

if the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and any other indicia of the parties’ intention; only where there is a manifest disregard of the agreement, totally unsupported by principles of contract construction and the law of the shop, may a reviewing court disturb the award.

Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123, 1128 (3d Cir.1969).

Given the very narrow scope of judicial review in cases of this nature, we must affirm the district court in refusing to modify the arbitrator’s award. Having selected their arbitrator, Local 590 and A & P expressly agreed to let him decide whether an agreement existed or not. The arbitrator applied standard principles of contract law and determined that the gap between the parties’ positions on vital issues was sufficiently large to negate the existence of an enforceable collective bargaining agreement. Under these circumstances, reversal would impermissibly gainsay the parties’ chosen arbiter.

Accordingly, we will affirm the order of the district court refusing to modify the arbitrator’s award.

1 . Section 25.11 of the 1977-80 agreement provided:

Full-time employees shall have seniority over part-time employees in all cases. For all other purposes, store seniority shall prevail. A full time reduced to part time shall have store seniority for hours over all other part time. Part-time employees shall receive all available hours for a full work week in accordance with seniority and ability.

Item 6 of the Memorandum Agreement provided:

Available Hours

Eliminate the present clause and substitute the following. Within each store the Employer shall combine part-time assignments on a seniority basis unless such hours duplicate each other, providing the employee can do the work, so as to provide the maximum part-time employment, and further create as many full time positions as possible.

The 1980-83 draft agreement left § 25.11 unchanged, and merely added the operative language of Item 6 as § 3.13.

2 . The arbitrator succinctly summarized his findings as follows:

There was never a valid Collective Bargaining Agreement in effect between the Company and the Union for Company employees of the Altoona Division, for the period from September 28, 1980 to October 1, 1983. The 1977-80 Agreement temporarily was extended during negotiations, but terminated on October 23, 1980. Any grievances that are predicated either, upon the draft of the proposed 1980-83 Labor Agreement or on the 1977-80 Labor Agreement, concerning events that occurred after October 23, 1980, are not arbitrable because no valid Labor Agreement exists under which the propriety of the Company’s actions can be measured.

App. at 22a.