Armstrong County Memorial Hospital v. United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union , 419 F. App'x 217 ( 2011 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 10-2495
_______________
ARMSTRONG COUNTY MEMORIAL HOSPITAL,
v.
UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL
UNION AND ITS LOCAL UNION 158-06,
Appellants
_______________
On Appeal from the United States District Court
For the Western District of Pennsylvania
(D.C. No. 2-09-cv-1551)
District Judge: Honorable Terrence F. McVerry
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Submitted Under Third Circuit LAR 34.1(a)
January 25, 2011
_______________
Before: FUENTES and CHAGARES, Circuit Judges, and POLLAK, Senior District
Judge*
(Opinion filed March 14, 2011)
_______________
OPINION
_______________
*
Honorable Louis H. Pollak, District Judge of the United States District Court for the
Eastern District of Pennsylvania, sitting by designation.
POLLAK, District Judge
This case arises from a labor arbitration between appellee Armstrong County
Memorial Hospital (―Hospital‖) and appellant United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers Union, AFL-CIO/CLC
and USW, Local 158-06 (―Union‖). The Union and Hospital are parties to a collective
bargaining agreement (―CBA‖) which provides for binding arbitration. On January 1,
2009, during the term of the CBA, the Hospital implemented a policy prohibiting
smoking anywhere on Hospital property. The Union filed a grievance challenging the
policy as a violation of the CBA, and the dispute proceeded to arbitration. The arbitrator
found in favor of the Union, and thereafter the Hospital brought an action in the Western
District of Pennsylvania to vacate the arbitration award. Ruling on the parties‘ cross-
motions for summary judgment, the District Court found that the arbitrator‘s decision
contradicted the plain language of the CBA and therefore vacated the award. For the
reasons that follow, we affirm the judgment of the District Court.
I.
In 1992, the Hospital implemented a ―no smoking‖ policy within its buildings,
except for the psychiatric unit. Under this policy, which remained in place until 2009,
employees were permitted to smoke outside the buildings in designated smoking areas
and in their personal vehicles while on Hospital property. Joint Appendix (―JA‖) at 91,
104. In 2007, the Hospital revised its mission statement, and in 2007 and early 2008 the
Hospital held a series of meetings with employees and volunteers to discuss the new
mission statement. In the meetings, Hospital administrators were confronted on a number
1
of occasions about the inconsistency of the Hospital having a mission statement which
promoted healthy behavior, while it knowingly permitted and provided accommodations
for employees to smoke on Hospital property. JA 104. Hospital administrators also
heard frequent complaints that smokers did not stay in the designated smoking areas,
causing smoke to come into patients‘ rooms and the Hospital‘s main entrance. JA 93.
After conducting surveys regarding the number of smokers among Hospital
employees and making inquiries regarding smoking policies at other local hospitals, the
Hospital concluded that smoking on the Hospital campus created a significant health risk
not only to smokers but also to patients, volunteers, and visitors. JA 93. In August 2008,
the Hospital‘s Board of Directors directed the Hospital‘s administration to pursue a
Tobacco Free Campus Policy (―TFC Policy‖). Thereafter, Hospital administrators
developed the new policy, which became effective January 1, 2009. Under the policy,
employees may not smoke anywhere on Hospital property, including in their private
vehicles parked on Hospital property, and violators are subject to discipline up to and
including termination. JA 110.
In November 2008, the Hospital notified the Union of its intention to implement
the TFC Policy. JA 89. The Union responded by filing a grievance on November 12,
2008, which charged that the new policy was ―unreasonable‖ and that the Hospital had
failed to raise this proposed change during earlier negotiations over the CBA. JA 88-89.
The Hospital implemented the TFC Policy as scheduled, and the Union submitted the
grievance to arbitration.
2
The CBA took effect on June 23, 2008 and runs until June 22, 2011. JA 53. As
relevant to this case, the CBA provides as follows:
ARTICLE 4 – MANAGEMENT RIGHTS
4.01 The functions and responsibilities of Management are retained and
vested exclusively in the Employer. The rights reserved in the Employer
include all matters of inherent managerial policy plus those necessitated by
the unique nature of the Employer‘s operations. In the exercise of these
rights, the Employer agrees that it will not violate the specific provisions of
this Agreement.
4.02 The Employer reserves the right to establish, revise and administer
reasonable policies and procedures, . . . to control and regulate the use of
facilities, supplies, equipment, and other property of the Employer; . . . to
make or change reasonable Employer rules, regulations, policies and
practices, provided the Employer gives advance notice to the Union; . . . to
establish or change standards; . . . and otherwise to help the Employer attain
and maintain full operating efficiency and effectiveness of the Hospital to
ensure that the parties promote the highest quality patient care and
treatment possible.
4.05 The management rights set forth in this Article are by way of example
and not by way of limitation and specifically are not limited by existing or
―prior practices‖ or ―side agreements‖ which existed prior to this
Agreement and are not incorporated herein.
ARTICLE 23 – SAFETY
23.01 The Employer will make every effort to maintain its facilities and
equipment in such physical condition so as to provide a safe and healthy
work environment . . . .
JA 55, 72. The CBA also establishes a grievance and arbitration procedure. Under
Section 14.04, an arbitrator‘s award ―shall be final and binding upon both parties.‖ In
addition, Section 14.04 provides that an arbitrator ―shall have no power to add to,
subtract from, or modify any provision of this Agreement.‖ JA 65.
3
On September 2, 2009, the arbitrator held a hearing at which the parties were
given an opportunity to present evidence, examine witnesses, and argue their respective
positions. JA 91. On October 22, 2009, the arbitrator issued an opinion and award in
favor of the Union. The crux of the arbitrator‘s opinion is as follows:
I have carefully considered the evidence presented, the arguments put forth
by the parties and the applicable Agreement language. . . . I certainly don‘t
want to minimize the intent of the overall tobacco free policy, and its
attempt to improve the health of all concerned. These objectives of the
policy are appropriate, and show that the Employer is trying to meet its
overall mission. While the approach of the Employer is commendable, the
specific issue in this case centers on the reasonableness of the policy. In
this case, the evidence shows there has been a no smoking policy in effect
since 1992, but all during this time there has been an opportunity for
employees to smoke in certain designated areas outside the hospital
buildings. In my considered opinion, what has occurred in this
circumstance was the establishment of a past practice regarding employees
having a designated location to smoke. The employees had come to expect
they would have a specific location to smoke, and in my considered
opinion, this expectation rose to the level of a protected local working
condition. The Employer was well aware of this practice, as it had been in
place for many years, but it never took steps to alter this working condition.
It is quite clear from the evidence which has been established that the
Employer never attempted to negotiate a change to the existing practice in
its recent negotiations with the Union, but chose to continue with the
existing arrangements that existed for employees to smoke in designated
areas. It was only subsequent to the conclusion of its negotiations that the
Employer decided to alter the existing smoking arrangements, and in doing
so changed the established local working conditions.
The Employer has contended its policy is reasonable, and it can be
unilaterally implemented, as other policies have been implemented in the
past. I understand the contentions of the Employer in this regard, and
recognize that certain policies can in fact be unilaterally implemented.
Also, I am not saying that the policy of the Employer has no basis and is to
be disregarded. It is my opinion the unilateral implementation of a policy
can occur, but where such policy alters the existing rights of the employees,
that such rights need to be considered in the development of the policy. It
should be understood that the Employer‘s tobacco free policy is not
completely unacceptable, as many of the provisions of such policy are well
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meaning and provide a positive message. The problem with the policy is
that it fails to make a reasonable accommodation for employees who
previously had a designated location to smoke. It is also readily apparent
that the Employer has previously had problems policing the designated
smoking areas, but this should not deter the Employer from established
[sic] a controlled designed [sic] smoking area for its employees, so as to
properly provide for the established working condition enjoyed by the
employees pursuant to the prior smoking policy. Making such alteration to
the existing policy would satisfy the past practices which previously
existed, while providing for a reasonable tobacco free policy.
JA 107-108 (emphases added). The arbitrator then proceeded to issue an award which
directed the Hospital to meet with Union officials ―for the purpose of providing for a
reasonable accommodation for employees to smoke in a designated area.‖ JA 108.
Upon receipt of the award, the Hospital commenced this lawsuit, asking the
District Court to vacate the award under § 301 of the Labor Management Relations Act,
29 U.S.C. § 185(a). After the parties filed cross-motions for summary judgment, the
District Court granted summary judgment to the Hospital. The District Court‘s opinion
noted the deferential standard of review for labor arbitration awards set forth in this
Court‘s precedents. See JA 6-7 (citing Brentwood Med. Assocs. v. United Mine Workers,
396 F.3d 237 (3d Cir. 2005); Citgo Asphalt Refining Co. v. Paper Workers Int’l Union
Local No. 2-991, 385 F.3d 809, 816 (3d Cir. 2004)). However, the court found that the
award must nonetheless be vacated because it did not ―‗draw its essence‘ from the
language of the CBA.‖ JA 8.1
1
The court also stated that it was ―not fully persuaded‖ by the public policy and
jurisdictional arguments raised by the Hospital, but found that it did not need to ―reach a
final determination on those grounds‖ in light of its holding that the award did not ―draw
its essence‖ from the language of the CBA. JA 8.
5
The District Court found that the ―fundamental error‖ made by the arbitrator was
his determination that ―‗employees had come to expect they would have a specific
location to smoke, and in my considered opinion, this expectation rose to the level of a
protected local working condition.‘‖ JA 8 (quoting arbitrator‘s opinion). As the court
noted, Section 4.05 of the CBA provides that ―[t]he management rights set forth in this
Article are by way of example and not by way of limitation and specifically are not
limited by existing or ‘prior practices’ or ‗side agreements‘ which existed prior to this
Agreement and are not incorporated herein.‖ JA 55 (emphasis added). Noting that the
arbitrator did not attempt to parse or apply Section 4.05, the court found that
the arbitrator based his ―considered opinion‖ on a ground that is
specifically barred by the CBA. This is the essence of ―manifest disregard‖
of the contractual language. Pursuant to Section 4.05, employee
expectations regarding prior practices cannot become ―protected local
working conditions.‖
JA 10 (citations omitted). The court therefore granted summary judgment to the Hospital
and issued an order vacating the arbitration award. This appeal followed.
II.
This court has jurisdiction over this appeal under 28 U.S.C. § 1291. We exercise
plenary review over the district court‘s decision resolving the parties‘ cross-motions for
summary judgment. Brentwood Med. Assocs., 396 F.3d at 240.
The Supreme Court has long emphasized that judicial review of a labor arbitration
decision construing a collective bargaining agreement between an employer and a labor
organization is ―very limited.‖ Major League Baseball Players Ass’n v. Garvey, 532
U.S. 504, 509 (2000) (per curiam); see also United Paperworkers Int’l Union v. Misco,
6
Inc., 484 U.S. 29, 36 (1987) (―[C]ourts play only a limited role when asked to review the
decision of an arbitrator.‖). This is because the parties ―have ‗bargained for‘ the
‗arbitrator‘s construction‘ of their agreement.‖ Eastern Assoc. Coal Corp. v. Mine
Workers, 531 U.S. 57, 62 (2000) (quoting Steelworkers v. Enterprise Wheel & Car Corp.,
363 U.S. 593, 599 (1960)). Accordingly, courts may set aside an arbitrator‘s award only
in the ―rare instance[]‖ when the award does not ―‗draw its essence from the contract and
. . . simply reflect[s] the arbitrator‘s own notions of industrial justice.‘‖ Id. at 62 (quoting
Misco, 484 U.S. at 38). As long as an ―arbitrator is even arguably construing or applying
the contract and acting within the scope of his authority, [the fact] that a court is
convinced he committed serious error does not suffice to overturn his decision.‖ Misco,
484 U.S. at 38.
Our Court has similarly emphasized that the scope of judicial review of a labor
arbitrator‘s decision is ―exceedingly narrow.‖ Kane Gas Light & Heating Co. v. Int’l
Bhd. of Firemen, Local 112, 687 F.2d 673, 675 (3d Cir. 1982). We must defer to an
arbitrator‘s decision if it ―can in any rational way be derived from the agreement, viewed
in light of its language, its context, and any other indicia of the parties‘ intention.‖
Brentwood Med. Assocs., 396 F.3d at 241 (emphasis in original); see also Citgo Asphalt,
385 F.3d at 816 (―‗[O]nly where there is a manifest disregard of the agreement, totally
unsupported by the principles of contract construction and the law of the shop, may a
reviewing court disturb the award.‘‖ (quoting Exxon Shipping Co. v. Exxon Seamen’s
Union, 73 F.3d 1287, 1295 (3d Cir. 1996))).
7
III.
The CBA reserves to the Hospital ―the right to establish, revise and administer
reasonable policies and procedures‖ and to ―to make or change reasonable Employer
rules, regulations, policies and practices, provided the Employer gives advance notice to
the Union.‖ JA 55 (emphasis added). The arbitrator determined that the TFC Policy was
unreasonable because ―what has occurred in this circumstance was the establishment of a
past practice regarding employees having a designated location to smoke,‖ which created
an expectation that ―rose to the level of a protected local working condition.‖ JA 107.
As the Hospital notes, the CBA never uses the term ―protected local working condition,‖
and Section 4.05 of the CBA explicitly provides that ―[t]he management rights set forth
in this Article are by way of example and not by way of limitation and specifically are
not limited by [1] existing or ‗prior practices‘ or [2] ‗side agreements‘ which existed prior
to this Agreement and are not incorporated herein.‖ JA 55.
The Union attempts to defend the arbitrator‘s construction of the CBA by
suggesting that ―[a]t most, Section 4.05 arguably barred consideration of practices and
side agreements as they existed prior to the time the CBA entered into force. It did not
bar consideration of such practices existing during the course of the agreement.‖
Appellant‘s Br. at 24 (emphasis added). We note, first, that the arbitrator gave no
indication that he understood Section 4.05 in this way. See, e.g., JA 107 (―The Employer
was well aware of this practice, as it had been in place for many years, but it never took
8
steps to alter this working condition.‖).2 Second, we find the Union‘s speculative reading
of Section 4.05—that it affects only practices that ―existed prior to the time the CBA
entered into force‖—to be untenable because it renders the word ―existing‖ superfluous.
See JA 55 (providing, in Section 4.05, that management rights ―are not limited by
existing or ‗prior practices‘‖ (emphasis added)). If the parties had intended to limit
Section 4.05 to only ―prior‖ practices, they could simply have omitted the word
―existing‖ entirely. See New Castle Cnty. v. Nat’l Union Fire Ins. Co., 174 F.3d 338, 349
(3d Cir. 1999) (―[T]his Court takes care not to render other portions of a provision or
contract superfluous when construing contract language.‖).
In addition, contrary to the suggestion of the Union, the arbitrator did not merely
―consider‖ past practices in his assessment of whether the TFC Policy was reasonable.
Rather, the arbitrator held that an existing practice affecting employees creates
―expectation[s],‖ which in turn create ―a protected local working condition,‖ and that
under the CBA the Hospital was bound to respect such ―protected local working
conditions.‖ See JA 107-08 (―It is my opinion the unilateral implementation of a policy
can occur, but where such policy alters the existing rights of the employees, that such
rights need to be considered in the development of the policy . . . . The problem with the
policy is that it fails to make a reasonable accommodation for employees who previously
2
We note further that the Union‘s arguments in the arbitration proceeding, as understood
by the arbitrator, do not appear consistent with the argument it now raises on appeal. See
JA 96 (According to the arbitrator, ―[i]t is the position of the Union that the policy of the
hospital infringes on the viable long standing past practice that has been employed by the
tobacco users who have been employed at the hospital for many years.‖ (emphases
added)).
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had a designated location to smoke.‖). As noted above, however, the CBA never uses the
phrase ―protected local working condition,‖ and nothing in Article 4 can remotely be
construed to grant employees enforceable rights solely on the basis of an ―expectation‖
arising from a past or existing practice. On the contrary, Section 4.05 expressly states
that management rights are not limited by ―existing or ‗prior practices‘‖ and other
sections of Article 4 state that the ―functions and responsibilities of Management are
retained and vested exclusively in the Employer‖ and that the ―Employer reserves the
right to establish, revise and administer reasonable policies and procedures.‖ JA 55
(emphasis added).
Thus, the arbitrator‘s opinion effectively rewrote the parties‘ agreement to state
that (1) a past or existing practice affecting employees creates a ―protected local working
condition‖ and (2) any policy unilaterally adopted by the Hospital which eliminates a
―protected local working condition‖ could not be considered ―reasonable‖ under Article
4. Although we are aware that the scope of our review of a labor arbitration award is
―very narrow,‖ Garvey, 532 U.S. at 509, we find that this interpretation—directly
contrary to the plain meaning of Section 4.05 and premised entirely on a term that is
never used in the agreement—is so untethered from and contrary to the language of
Article 4 that we cannot say that the arbitrator was even ―arguably construing‖ the
agreement. Misco, 484 U.S. at 38; see also id. (noting that ―[t]he arbitrator may not
ignore the plain language of the contract‖). Nor can we say that this construction of the
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CBA can ―in any rational way be derived from the agreement.‖ Brentwood Med. Assocs.,
396 F.3d at 241.3
We also find that this case is unlike Brentwood Medical Associates, in which we
upheld an arbitration award despite the arbitrator‘s interpolation of words into the
contract because ―the remainder of the justification for the award offered by the arbitrator
was capable of separation from the aberrant language.‖ 396 F.3d at 243. As the District
Court found, the arbitrator in this case ―to his professional credit, clearly explained the
rationale for his decision.‖ JA 8. The arbitrator explained that ―[t]he employees had
come to expect they would have a specific location to smoke, and in my considered
opinion, this expectation rose to the level of a protected local working condition.‖ JA
107. Because the arbitrator‘s decision was fundamentally premised on the notion of a
―protected local working condition,‖ we believe that his decision is not ―capable of
separation from the aberrant language.‖ 396 F.3d at 243.
We find the various other arguments raised in the Union‘s brief unpersuasive. In
particular, we reject the Union‘s argument that the Hospital waived reliance on Section
4.05. First, the Union failed to raise this argument in the District Court and therefore
waived it for purposes of appeal. See JA 9 n.1 (District Court opinion) (noting that the
Union failed to ―discuss, distinguish, or even to recognize the existence of Section 4.05‖
3
In addition, even if it might have been more generous for the Hospital to have bargained
with the Union over the TFC Policy rather than implement it unilaterally, ―an arbitrator‘s
opinion and award based on ‗general considerations of fairness and equity‘ as opposed to
the exact terms of the CBA, fails to derive its essence from the CBA.‖ Citgo Asphalt,
385 F.3d at 817 (quoting MidMichigan Reg’l Med. Ctr-Clare v. Professional Employees
Div., 183 F.3d 297, 502 (6th Cir. 1999)).
11
in its brief to the district court). Second, Article 4, which is set forth in its entirety on two
pages of the CBA, see JA 55, was readily available to the arbitrator for construction as a
whole, and the Hospital had no reason to expect that the arbitrator would adopt a reading
of Article 4 that added a new substantive right—that employee ―expectations‖ can give
rise to a ―protected local working condition‖—directly at odds with Section 4.05. Thus,
this is not a case in which the employer attempted to ―keep silent at arbitration, hoping
perhaps to ‗sandbag‘‖ the union later. United Steelworkers v. Danly Mach. Co., 852 F.2d
1024, 1028 (7th Cir. 1988).4
For these reasons, we will affirm the judgment of the district court vacating the
arbitral award.
4
We will grant the Hospital‘s Motion to Strike the Hospital‘s post-hearing brief from the
Union‘s Addendum, because this document was not part of the record before the District
Court. See Fed. R. App. P. 10(a); Webb v. City of Philadelphia, 562 F.3d 256, 259 (3d
Cir. 2009) (―[A]n appellate court may only review the record as it existed at the time
summary judgment was entered.‖ (citation omitted)).
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