PSC Custom, LP v. United Steel, Paper, etc. , 763 F.3d 1005 ( 2014 )

United States Court of Appeals
For the Eighth Circuit
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No. 13-2405
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PSC Custom, LP
lllllllllllllllllllll Plaintiff - Appellee
v.
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union, Local No. 11-770
lllllllllllllllllllll Defendant - Appellant
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Appeal from United States District Court
for the Western District of Missouri - Springfield
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Submitted: April 16, 2014
Filed: August 19, 2014
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Before WOLLMAN, BYE, and SHEPHERD, Circuit Judges.
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WOLLMAN, Circuit Judge.
Local 11-770 of the United Steel, Paper and Forestry, Rubber, Manufacturing,
Energy, Allied Industrial and Service Workers International Union (the Union)
appeals from the district court’s order vacating an arbitration award. We reverse.
I. Background
PSC Custom, LP (PSC), manufactures tanks that are used to transport liquids.
On May 17, 2011, PSC discharged Roy Buscher, an employee represented by the
Union, for failing to perform a task that his supervisor had directed him to complete.
As a member of the Union, Buscher was covered by a five-year collective bargaining
agreement (the CBA) and by PSC’s Standards of Conduct, a rule manual created
pursuant to Article 29 of the CBA.
With respect to discharge, Article 21 of the CBA provides that “[n]o employee
shall be discharged, demoted, or otherwise disciplined without good and sufficient
cause.” Article 29 sets forth certain “acts and conditions” that violate PSC’s rules as
well as the penalties associated with these violations. Relevant here, Article 29 states
that insubordination carries the penalty of discharge: “Insubordination such as refusal
to work on the job assigned, etc. consistent with the employee’s classification and
safety (penalty-discharge).” The Standards of Conduct also identify insubordination
as a violation of PSC’s rules that “will result in immediate termination.” Buscher was
discharged for insubordination under Article 29 and the Standards of Conduct. The
Union grieved Buscher’s discharge.
The CBA allows the Union to appeal grievances to arbitration. As is typical,
the CBA limits the arbitrator’s authority:
The arbitrator shall only have jurisdiction and authority to interpret,
apply, or determine compliance and/or application of the express
provisions of this Agreement at issue between the Union and the
Company. It is understood that the arbitrator shall not have jurisdiction
or authority to add to, disregard, or alter in any way the terms of this
Agreement.
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The CBA also provides that any dispute between PSC and the Union concerning the
existence of good and sufficient cause for discharge is to be resolved in accordance
with the arbitration provisions. The Union ultimately submitted the issue of
Buscher’s termination to arbitration.
The parties stipulated the issue for the arbitrator as follows: “Did [PSC] have
just cause to indefinitely suspend and/or discharge the Grievant, Roy Buscher?”1 The
arbitrator answered this question in the negative and awarded Buscher reinstatement
subject to a ten-day suspension. In resolving the dispute, the arbitrator concluded that
Buscher had been insubordinate in violation of Article 29 and the Standards of
Conduct. The arbitrator, however, proceeded to conduct a just cause analysis in
accordance with the parties’ stipulated issue and determined that, even though
Buscher had been insubordinate, PSC did not have just cause to discharge Buscher.
Specifically, the arbitrator noted that “[j]ust cause allows the termination of an
employee in two different situations: a final step in the progressive disciplinary
process or a single incident of very serious misconduct.” After acknowledging
various mitigating circumstances, such as the fact that Buscher was ill on the day of
the insubordination and Buscher’s near perfect attendance record, the arbitrator
concluded that Buscher’s single incident of insubordination was not severe enough
to constitute just cause for the discharge.
PSC then commenced this action against the Union seeking to vacate the
arbitrator’s award; the Union counterclaimed to enforce the award. The district court
granted PSC’s cross-motion for summary judgment and vacated the award. In so
doing, the district court concluded that the arbitrator exceeded his authority by
1
The parties have not submitted the materials that they provided to the
arbitrator containing their actual stipulation of the issue. The arbitrator’s award,
however, frames the issue as set forth above, and neither party objects to the
arbitrator’s framing of the stipulated issue.
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modifying the penalty set forth in the CBA for insubordination. The district court
also denied the Union’s subsequent motion for reconsideration. The Union appeals.
II. Standard of Review
“[W]e review the district court’s decision to vacate the arbitrator’s award de
novo.” Alcan Packaging Co. v. Graphic Commc’n Conference, Int’l Bhd. of
Teamsters & Local Union No. 77-P, 729 F.3d 839, 841 (8th Cir. 2013).
PSC’s action to vacate the arbitrator’s award arises under section 301 of the
Labor Management Relations Act, 29 U.S.C. § 185. “Under this section, we review
an arbitrator’s award to determine whether: (1) the parties agreed to arbitrate; and (2)
the arbitrator had the power to make the award.” Excel Corp. v. United Food &
Commercial Workers Int’l Union, Local 431, 102 F.3d 1464, 1467 (8th Cir. 1996).
The parties do not dispute that the grievance was subject to arbitration, so the
question before us is whether the arbitrator had the authority to enter the award.
Judicial review of an arbitrator’s decision is extremely limited. Courts “must
accord ‘an extraordinary level of deference’ to the underlying award itself.” Boise
Cascade Corp. v. Paper Allied-Indus., Chem. & Energy Workers, 309 F.3d 1075,
1080 (8th Cir. 2002) (quoting Keebler Co. v. Milk Drivers & Dairy Emps. Union,
Local No. 471, 80 F.3d 284, 287 (8th Cir. 1996)). “[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.” Boehringer Ingelheim Vetmedica, Inc. v. United Food &
Commercial Workers, 739 F.3d 1136, 1140 (8th Cir. 2014) (quoting United
Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38 (1987)); see also Alcan
Packaging, 729 F.3d at 843. Also, “[a] mere ambiguity in the opinion accompanying
an award, which permits the inference that the arbitrator may have exceeded his
authority, is not reason for refusing to enforce the award.” United Steelworkers v.
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Enter. Wheel & Car Corp., 363 U.S. 593, 598 (1960). An arbitrator’s decision,
however, is not completely free from judicial review. Boise Cascade, 309 F.3d at
1080. We may vacate an arbitrator’s award when it does not “draw[] its essence from
the collective bargaining agreement” and instead reflects the arbitrator’s “own brand
of industrial justice[.]” Misco, 484 U.S. at 36 (quoting Enter. Wheel, 363 U.S. at
597). That is to say, “[t]he arbitrator may not ignore the plain language of the
contract[,]” id. at 38, and “may not . . . modify unambiguous contract provisions[,]”
Trailmobile Trailer, LLC v. Int’l Union of Elec., Elec., Salaried, Mach. & Furniture
Workers, 223 F.3d 744, 747 (8th Cir. 2000).
III. Discussion
PSC argues that the plain language of the CBA and the Standards of Conduct
mandate that an employee found guilty of insubordination be discharged. According
to PSC, after the arbitrator found that Buscher had been insubordinate, he was
required to uphold Buscher’s discharge. PSC thus argues that the arbitrator exceeded
his authority by proceeding to a just cause analysis after he concluded that Buscher
had been insubordinate, a violation mandating discharge under Article 29 and the
Standards of Conduct, and by reducing the penalty from discharge to suspension
under this analysis.2 We disagree.
Whether Buscher was discharged for just cause was a matter of contract
interpretation that was within the arbitrator’s authority. PSC’s contention that the
arbitrator ignored the plain language of the CBA is based on a reading of Article 29
and the Standards of Conduct in isolation, which provide that the penalty for
2
Because our holding is not based on the Union’s argument regarding the safety
clause in Article 29’s description of insubordination, we need not address whether the
Union waived that argument by raising it for the first time in its motion for
reconsideration.
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insubordination is discharge. Collective bargaining agreements, however, are to be
construed as a whole with the terms read in the context of the entire agreement. Sheet
Metal Workers Int’l Ass’n v. Lozier Corp., 255 F.3d 549, 551 (8th Cir. 2001).
Article 21 of the CBA requires that no employee be discharged without just
cause. There is nothing in Article 29 or the Standards of Conduct that states that
Article 21’s just cause requirement does not apply when considering the discharge of
an employee pursuant to those provisions. It was for the arbitrator to harmonize any
possibly discordant provisions within the CBA relating to the authority granted to
management to discharge employees for insubordination and the just cause
requirement limiting that authority. See PSC Custom, LP v. United Steel, Paper &
Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union, Local
No. 11-770, No. 13-1943, 2014 WL 2884087, at *4 (8th Cir. June 26, 2014) (quoting
Trailmobile Trailer, 223 F.3d at 747); Bureau of Engraving, Inc. v. Graphic Commc’n
Int’l Union, 284 F.3d 821, 825 (8th Cir. 2002). Indeed, we have previously upheld
an arbitrator’s award that found discharge was improper when there was tension
between a shop rule and a term of the collective bargaining agreement, reasoning that
“[i]t is a question of interpretation and construction under the facts—what
relationship exists between the two provisions.” Kewanee Mach. Div. v. Local Union
No. 21, Int’l Bhd. of Teamsters, 593 F.2d 314, 318 (8th Cir. 1979). While it might
have been reasonable for the arbitrator to conclude that Article 29 and the Standards
of Conduct are not subject to Article 21’s just cause requirement, it was just as
reasonable for the arbitrator to conclude that Article 21 gave him the authority to
conduct a just cause analysis. Because the arbitrator had the authority to adopt one
reasonable interpretation of the CBA over the other, his interpretation must not be
disturbed. See Bureau of Engraving, 284 F.3d at 825; Kewanee Mach., 593 F.2d at
318; see also Misco, 484 U.S. at 38.
In undertaking the just cause analysis, the arbitrator necessarily was concerned
“with a question of remedy—whether there was ‘sufficient just cause’ to warrant
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termination[.]” Local 238, Int’l Bhd. of Teamsters v. Cargill, Inc., 66 F.3d 988, 990
(8th Cir. 1995) (per curiam). The arbitrator concluded that PSC did not have just
cause to discharge Buscher and instead that suspension was an appropriate remedy.
“[T]hough the arbitrator’s decision must draw its essence from the agreement, he ‘is
to bring his informed judgment to bear in order to reach a fair solution of a problem.
This is especially true when it comes to formulating remedies.’” Id. (alteration in
original) (quoting Misco, 484 U.S. at 41). Thus, the arbitrator did not ignore the plain
language of the CBA when he determined that PSC did not have just cause to
discharge Buscher and when he reduced the penalty from discharge to suspension.
Moreover, the parties’ stipulation gave the arbitrator the authority to decide the
issue whether just cause for discharge existed. See Homestake Mining Co. v. United
Steelworkers, 153 F.3d 678, 680 (8th Cir. 1998) (“[W]e will not give credence to [the
company’s] argument ‘that the arbitrator had no authority to decide an issue it agreed
to submit.’” (quoting Cargill, 66 F.3d at 991)). “When two parties submit an issue
to arbitration, it confers authority upon the arbitrator to decide that issue.” Cargill,
66 F.3d at 990-91. “[O]nce the parties have gone beyond their promise to arbitrate
and have actually submitted an issue to an arbiter, we must look both to their contract
and to the submission of the issue to the arbitrator to determine his authority.” John
Morrell & Co. v. Local Union 304A of the United Food & Commercial Workers, 913
F.2d 544, 561 (8th Cir. 1990) (alteration in original) (quoting Piggly Wiggly
Operators’ Warehouse, Inc. v. Piggly Wiggly Operators’ Warehouse Indep. Truck
Drivers Union, Local No. 1, 611 F.2d 580, 584 (5th Cir. 1980)).
The parties requested that the arbitrator decide whether Buscher was terminated
for just cause. Having entered into a stipulation calling for a just cause analysis, PSC
will not now be heard to complain that the arbitrator performed the very analysis PSC
asked him to undertake instead of limiting his decision to the purely factual finding
of whether Buscher had been insubordinate. See Trailmobile Trailer, 223 F.3d at
747; see also Misco, 484 U.S. at 37 (“[T]he moving party should not be deprived of
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the arbitrator’s judgment, when it was his judgment and all that it connotes that was
bargained for.” (quoting United Steelworkers v. Am. Mfg. Co., 363 U.S. 564, 568
(1960))).
The cases from our circuit upon which PSC relies do not conflict with our
holding. In Truck Drivers & Helpers Union Local 784 v. Ulry-Talbert Co., 330 F.2d
562, 564-65 (8th Cir. 1964), the collective bargaining agreement limited the arbitrator
to determining whether the employee had been guilty of the conduct for which he had
been disciplined. Thus, after concluding that the employee had engaged in the
misconduct, the arbitrator did not have the authority to assess the penalty to be
imposed for the misconduct. Id. Similarly, in St. Louis Theatrical Co. v. St. Louis
Theatrical Brotherhood Local 6, 715 F.2d 405, 408 (8th Cir. 1983), “the collective
bargaining agreement provide[d] that the only arbitrable issue be the fact of an
employee’s participation in a prohibited activity.” Here, the CBA does not place
remedial restrictions on the arbitrator’s authority, and the parties expressly requested
that the arbitrator evaluate the propriety of the discipline imposed by PSC.
We cannot interfere with the arbitrator’s award “unless it can be said with
positive assurance that the contract is not susceptible of the arbitrator’s
interpretation.” Kewanee Mach., 593 F.2d at 318 (quoting Int’l Bhd. of Elec.
Workers, Local Union Nos. 12, 111, 113, 969 v. Prof’l Hole Drilling, Inc., 574 F.2d
497, 503 (10th Cir. 1978)). Such is not the case here, because it is possible to
interpret the CBA as allowing a just cause analysis after the determination that an
employee has engaged in misconduct for which the shop rules contained in the CBA
mandate discharge. Accordingly, the arbitrator did not exceed his authority by
concluding that PSC did not have just cause to discharge Buscher and by reducing the
penalty from discharge to suspension, because his award draws its essence from the
CBA.
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IV. Conclusion
The judgment of the district court is reversed, and the case is remanded with
directions that the arbitration award be reinstated.
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