Armco Employees v. AK Steel Corp , 149 F. App'x 347 ( 2005 )

File Name: 05a0717n.06
Filed: August 17, 2005NOT RECOMMENDED FOR
FULL-TEXT PUBLICATION
No. 04-4110
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
ARMCO EMPLOYEES INDEPENDENT )
FEDERATION, INC. )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR
) THE SOUTHERN DISTRICT OF
AK STEEL CORPORATION, ) OHIO
)
Defendant-Appellant ) OPINION
Before: BATCHELDER, GIBBONS and McKEAGUE, Circuit Judges.
McKEAGUE, Circuit Judge. Defendant-appellant, AK Steel Corp. (“AK Steel”), appeals
the district court’s grant of partial summary judgment in favor of Plaintiff-Appellee, Armco
Employees Independent Federation (“AEIF”or the “Union”). AEIF filed this action against AK
Steel to enforce an arbitration award pursuant to Section 301 of the Labor Management Relations
Act (“LMRA”), 29 U.S.C. § 185. The district court granted, in part, plaintiff’s motion for summary
judgment on the basis that AK Steel waived the right to assert that the Arbitrator’s award applied
only to employees who complied with grievance procedures under the Collective Bargaining
Agreement (“CBA”). For the following reasons, we reverse the district court’s order granting partial
summary judgment in favor of AEIF and remand for further proceedings consistent with this
opinion.
I. FACTUAL AND PROCEDURAL HISTORY
This dispute between AEIF and AK Steel arose from AK Steel’s decision, effective October
1, 2001, to terminate a paid transportation program for apprentices attending training classes at
Sinclair Community College in Dayton, Ohio. AK Steel provided transportation to all apprentices
from its Middletown, Ohio facility to the training classes and paid for travel time for over two years
prior to October 2001. AK Steel discontinued the paid transportation program in order to cut costs.
This decision affected over 300 apprentices.
On or about October 1, 2001, a group of apprentices filed a grievance, Grievance No. 01-X-
453, seeking reinstatement of the transportation service and paid travel time, as well as monetary
damages. The CBA generally requires that grievances originate with and be signed by the
employees involved. An exception applies to the processing of group grievances. Group grievances
must be signed by a union representative and at least one of the aggrieved parties. Group grievances
further require that “[t]he names (and check numbers) of all employees alleged to be aggrieved must
be identified and submitted with the grievance at the time of the filing or appeal to Step II [of the
grievance procedure].” Deviations from the group grievance procedures “must be approved by
Industrial Relations.” Industrial Relations did not approve any deviation here. Eighty-seven
apprentices signed Grievance No. 01-X-453 and provided their check numbers on the grievance.
Eighty-six apprentices signed the grievance without providing their check numbers.1
AEIF initiated arbitration proceedings after AK Steel denied Grievance No. 01-X-453 on
February 6, 2002. The parties participated in an arbitration hearing before an Arbitrator in August
2002. After the hearing, the parties simultaneously submitted briefs on September 26, 2002. In its
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An additional 145 apprentices who attended training without paid transportation did not
sign the grievance.
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post-hearing brief, AEIF argued that all apprentices, including those who did not comply with
grievance procedures, should be compensated for their out-of-pocket transportation expenses. On
October 17, 2002, the Arbitrator issued an Opinion and Award sustaining the grievance. The
Arbitrator recognized in the Opinion and Award that Grievance 01-X-453 was filed by “some of the
apprentices.” In issuing his award, the Arbitrator cited five provisions of the CBA. None of the
provisions cited by the Arbitrator specifically govern the grievance procedure.
The Arbitrator ordered AK Steel to reinstate the paid transportation program and to “make
whole all apprentices for travel time and out of pocket transportation expenses” incurred after the
company terminated the transportation program. After the award, a dispute arose over whether the
Arbitrator provided his award to all apprentices, or only those who complied with the grievance
procedures as required by the CBA. AK Steel reinstated the transportation program for all
apprentices after the Arbitrator issued his award. AK Steel paid damages to only those eighty-seven
grievants who signed the grievance and provided their check numbers.
On January 28, 2003, AEIF filed suit in the district court against AK Steel requesting that
the court enforce the Arbitrator’s Opinion and Award. On December 3, 2003, the parties filed cross
motions for summary judgment. On August 3, 2004, the district court entered an order and
judgment denying AK Steel’s motion for summary judgment and granting in part and denying in
part AEIF’s motion for summary judgment. The district court held that AK Steel failed to raise the
issue of compliance with the CBA group grievance procedures to the Arbitrator, that it was
foreseeable that the Arbitrator might award monetary relief to all apprentices if he sustained
Grievance No. 01-X-453, and therefore, AK Steel had waived its objection. The district court
ordered AK Steel to “make whole all apprentices for travel time and out of pocket transportation
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expenses, including but not limited to mileage, gas and parking expenses incurred after the 1
October 2001 termination of the Company provided and paid transportation.” AK Steel instituted
this appeal on August 8, 2004.
II. STANDARD OF REVIEW
We review a district court’s denial and grant of summary judgment in labor arbitration cases
de novo. Monroe Auto Equip. Co. v. Int’l Union, UAW, 981 F.2d 261, 265 (6th Cir. 1992). Our
scope of review, however, is extremely limited. Id. The arbitrator’s award must draw its essence
from the contract and cannot simply reflect the arbitrator’s own notions of industrial justice. See
id. at 265-67. “[A]s long as the arbitrator is even arguably construing or applying the contract and
acting within the scope of his authority, that a court is convinced he committed serious error does
not suffice to overturn his decision.” United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29
(1987). The question of waiver is one of mixed law and fact. Nationwide Mut. Ins. Co. v. Home Ins.
Co., 330 F.3d 843, 846 n.3 (6th Cir. 2003). Here, where the underlying facts are not in dispute, all
issues are reviewed de novo. See Sandler v. AII Acquisition Corp., 954 F.2d 382, 385 (6th Cir.
1992).
III. DISCUSSION
A. The district court erred in enforcing an interpretation of the Arbitrator’s award
that exceeded the Arbitrator’s authority under the CBA.
“Federal law governs the enforcement and interpretation of collective bargaining agreements
under § 301 of the [LMRA], but traditional rules of contract interpretation apply insofar as they are
consistent with federal labor policies.” Int’l Bhd. of Teamsters, Local 519 v. United Parcel Serv.,
Inc., 335 F.3d 497, 506-07 (6th Cir. 2003) (citing UAW v. Yard-Man, Inc., 716 F.2d 1476, 1479 (6th
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Cir. 1983)). “To discern the intent of the parties, we consider the explicit language of a collective
bargaining agreement in the context that gave rise to its inclusion and in the context of the entire
agreement.” Id. at 506. The agreement "must be construed so as to render [no term] nugatory and
[to] avoid illusory promises.” Yard-Man, 716 F.2d at 1480. An arbitration award fails when: (1) it
conflicts with express terms of the agreement; (2) it imposes additional requirements not expressly
provided for in the agreement; (3) it is not rationally supported by or derived from the agreement;
or (4) it is based on general considerations of fairness and equity instead of the exact terms of the
agreement. United Parcel Serv., 335 F.3d at 507 (citing UAW v. Dana Corp., 278 F.3d 548, 554 (6th
Cir. 2002) (quotation omitted)).
Arbitrators are confined to interpretation and application of the collective bargaining
agreement. United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597 (1960). In
order to determine whether an arbitrator’s decision “drew its essence” from the contract, we must
consider “whether the language of the contract at hand is sufficiently clear so as to deny the
arbitrator the authority to interpret the agreement as he did.” Bruce Hardwood Floors v. S. Council
of Indus. Workers, 8 F.3d 1104, 1108 (6th Cir. 1993) (citation omitted).
AEIF argues that the award should be enforced, due to the deferential standard of review,
as the Arbitrator cited and relied upon five separate articles of the CBA. AEIF argues that any
misapplication of the provisions in the CBA is irrelevant, as an award should be upheld if the
arbitrator was arguably applying the contract. Misco, 484 U.S. at 38. AEIF further argues that the
Arbitrator was fully cognizant of the fact that the grievance was filed by only some of the
apprentices, and that he was aware that the grievance sought relief on behalf of all apprentices.
AK Steel argues that the grievance procedure, under the CBA, requires strict compliance
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with that procedure. The proper procedures include, inter alia, placing the aggrieved employee’s
name and check number on the grievance. AK Steel argues that the Arbitrator exceeded his
authority by granting an award to those apprentices who did not comply with the grievance
procedures as outlined in the CBA. According to AK Steel, limiting monetary relief to the group
grievants who complied with the grievance procedure is consistent with the express terms of the
CBA as well as the rule that “arbitrators exceed their powers when they determine rights and
obligations of individuals who are not parties to the arbitration proceedings.” NCR Corp. v. Sac-Co,
Inc., 43 F.3d 1076, 1080 (6th Cir. 1995).
In arbitration between the same parties in 1986, a different arbitrator issued an award to “all
employees,” but recognized in a supplemental award that “all” referred to all employees who filed
a proper grievance. The arbitrator noted that he would exceed the scope of his authority if he found
that “all” meant non-grievants, as this would allow the Union to pursue grievances in a
representative capacity. In 1992, a different arbitrator awarded relief, in a similar situation, to only
those grievants who properly complied with grievance procedures. While former arbitrators’
decisions are not binding on this panel, they are instructive for purposes of determining the proper
scope of the Arbitrator’s authority and award.
The provisions on which the Arbitrator relied have little relevance to the issues raised herein,
as the provisions involve maintenance of the apprenticeship program and general concerns regarding
the bargaining process. Limiting relief to those apprentices who properly complied with the group
grievance procedure is consistent with the terms of the CBA and the rule that “arbitrators exceed
their powers when they determine rights and obligations of individuals who are not parties to the
arbitration proceedings.” Id. The Arbitrator’s award to all the apprentices demonstrates a “clear
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infidelity” to the agreement itself. AFL-CIO v. U.S. Postal Serv., 751 F.2d 834, 842 (6th Cir. 1985).
Only eighty-seven apprentices complied with the group grievance procedure. While the Arbitrator
may have been aware of various provisions of the CBA, and indeed, relied on some of those
provisions, it is not clear, in granting his award, that he took those provisions of the CBA dealing
with the proper grievance procedure into account or applied those provisions to this case. See Alken-
Ziegler, Inc. v. United Auto., Aerospace & Agric. Implement Workers of Am., Local Union 985, No.
04-1193, 2005 WL 1285746 (6th Cir. May 23, 2005) (vacating arbitration award where arbitrator
failed to enforce unambiguous language of labor contract); see also AFL-CIO v. Hurd Corp., Nos.
00-5016/5119, 7 Fed. Appx. 329, 334, 2001 WL 210578 (6th Cir. Feb. 20, 2001) (reversing district
court’s grant of summary judgment where arbitrator’s decision clearly conflicted with terms in the
collective bargaining agreement); Ficks Reed Co. v. Local Union 112, Allied Indus. Workers, 965
F.2d 123, 126 (6th Cir. 1992) (finding that the arbitrator exceeded his authority by ignoring the
express terms of an agreement).
Enforcement of the arbitration award to all apprentices affected by AK Steel’s decision to
stop providing transportation conflicts with the plain language of the CBA. The arbitration award
conflicts with the terms of the CBA, as it awards monetary relief to those apprentices who did not
fulfill the grievance requirements under the CBA. Allowing such relief would permit the Union to
bring collective or “representative” grievances. Such an interpretation of the CBA runs counter to
the parties’ intent in entering into an agreement that sets forth such detailed provisions for filing
grievances. Therefore, even giving due deference to the Arbitrator’s decision as required by Monroe
Auto Equip., we conclude that the Arbitrator’s award did not “draw its essence” from the CBA and
the Arbitrator exceeded his authority in awarding monetary relief to all apprentices.
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B. The district court erred in finding that AK Steel waived its objection at the hearing
to an award to persons who did not comply with the CBA’s grievance procedures.
AEIF contends that AK Steel waived its argument that the Arbitrator could only issue a
monetary award to the group grievants. AK Steel contends that it had no opportunity to raise this
issue at the arbitration hearing, as it was not on notice that AEIF sought an award as to all
apprentices until the parties simultaneously submitted post-hearing briefs.
Generally, arguments not presented to an arbitrator are deemed waived and cannot be raised
for the first time in an enforcement action in a district court. See, e.g., Nationwide Mut. Ins. Co. v.
Home Ins. Co., 330 F.3d 843, 846 (6th Cir. 2003) (stating that a party may waive objection to the
jurisdiction of arbitrators); U.S. Postal Serv., 751 F.2d at 841 n.4 (explaining that one who fails to
object promptly to procedural errors made at an arbitration hearing waives the right to later assert
those errors); Order of Ry. Conductors & Brakemen v. Clinchfield R.R. Co., 407 F.2d 985, 988 (6th
Cir. 1969) (“[D]efects in proceedings ... during arbitration may be waived by a party’s acquiescence
in the arbitration with knowledge of the defect.”).
AEIF relies on Chicago Newspaper Guild v. Field Enterprises, Inc., 747 F.2d 1153 (7th Cir.
1984), in support of its position that AK Steel waived its argument relative to the monetary award
to non-grievants. AEIF’s reliance on Chicago Newspaper is misplaced, as Chicago Newspaper
involved a case where the defendant failed to raise an issue at the arbitration hearing, of which it had
actual notice prior to the hearing. Id. at 1158. In this case, AK Steel was not on notice that the
Arbitrator might award monetary relief to apprentices who did not fully comply with the grievance
procedure.
The district court held that AK Steel had a duty to “present to the arbitrator all foreseeable
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restrictions on his authority to fashion a reasonable remedy, including those based on the express
terms of the CBA.” The district court relied on cases from the Seventh and Fourth Circuits in
reaching this conclusion. First, the district court relied on United Food & Comm. Workers v. John
Hofmeister & Son, Inc., 950 F.2d 1340 (7th Cir. 1991), where the arbitrator ordered the company
to reinstate the discharged grievant and make him whole. The court found that reinstatement and
back pay were common awards in wrongful discharge cases, and therefore, the employer should
have objected to the potential back pay award to the arbitrator. Id. at 1345. The court also noted that
the parties “cannot be expected to anticipate every possible defense or datum that might influence
an arbitrator’s award.” Id. at 1344-45. Second, the district court relied on United Food & Comm.
Workers v. Marval Poultry Co., Inc., 876 F.2d 346, 352 (4th Cir. 1989), which held that an employer
waived an objection to an award of back pay when back pay was a likely remedy. The district court
noted that AEIF sought broader relief in Grievance No. 01-X-453 than was strictly provided for in
the CBA, and that AK Steel did not distinguish between the apprentices who did and did not comply
with the grievance procedures.
This case differs from John Hofmeister and Marval Poultry. This case does not involve a
single individual, or an award of back pay in a situation where grievants typically receive back pay.
Rather, this is a case where the CBA set forth a specific grievance procedure and eighty-seven
apprentices followed that procedure. AK Steel had no reason to believe, at the time of the hearing,
that any one of the apprentices who did not follow the grievance procedure would receive a
monetary award. AEIF asked the Arbitrator, at the hearing, to make the individual
grievants/apprentices whole. Surely, “grievants” does not mean all apprentices, including those who
never even filed a grievance, as such an interpretation essentially reads out of the CBA those
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provisions that govern grievance procedures.
There is no indication that either party intentionally sought or contemplated an arbitration
award to all apprentices at the time of the hearing. Thus, at the time of the hearing, AK Steel was
not on notice that AEIF sought monetary relief for all apprentices. The district court erred in
holding that AK Steel should have foreseen that the Arbitrator would award relief to all apprentices,
when all the apprentices did not comply with the grievance procedure required by the CBA. AK
Steel should not be placed in a position of having to anticipate every possible argument or issue that
might influence the Arbitrator’s award, especially those issues that AK Steel did not know it needed
to defend and those that conflict with the plain meaning of the CBA. John Hofmeister, 950 F.2d at
1344-45. Therefore, we hold that AK Steel did not waive its right to challenge an arbitration award
to those apprentices who did not properly comply with the CBA’s grievance procedures and that the
Arbitrator exceeded his authority by awarding monetary relief to all apprentices. Accordingly, we
reverse the district court’s grant of partial summary judgment in favor of AEIF.
IV. CONCLUSION
For all the foregoing reasons, we REVERSE the district court’s grant of partial summary
judgment in favor of AEIF and remand the case for further proceedings consistent with this opinion.
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