Stead Motors of Walnut Creek v. Automotive Machinists Lodge No. 1173, Intern. Ass'n of Machinists and Aerospace Workers

• Decision Date: 06 October 1989
• Docket Number: No. 87-2053,87-2053
• Citation: 886 F.2d 1200
• Parties: 132 L.R.R.M. (BNA) 2689, 58 USLW 2252, 113 Lab.Cas. P 11,538 STEAD MOTORS OF WALNUT CREEK, Plaintiff-Appellee, v. AUTOMOTIVE MACHINISTS LODGE NO. 1173, INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1200

886 F.2d 1200

132 L.R.R.M. (BNA) 2689, 58 USLW 2252,

113 Lab.Cas. P 11,538

STEAD MOTORS OF WALNUT CREEK, Plaintiff-Appellee, v. AUTOMOTIVE MACHINISTS LODGE NO. 1173, INTERNATIONAL

ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS Defendant-Appellant.

No. 87-2053.

United States Court of Appeals Ninth Circuit.

Argued En Banc and Submitted Jan. 18, 1989.

Decided Oct. 6, 1989.

David Rosenfeld, Van Bourg, Weinberg, Roger and Rosenfeld, San Francisco, Cal., for defendant-appellant.

J. Mark Montobbio, Severson, Werson, Berke and Melchior, San Francisco, Cal., for plaintiff-appellee.

Joseph Colton, Beeson, Tayer and Silbert, Bodine & Livingston, San Francisco, Cal., for amici curiae Teamsters Joint Councils 7 and 38 and California Nurses Association.

Appeal from the United States District Court for the Northern District of California.

Before GOODWIN, Chief Judge, BROWNING, WALLACE, TANG, FLETCHER, ALARCON, REINHARDT, NOONAN, O'SCANNLAIN, LEAVY and TROTT, Circuit Judges.

REINHARDT, Circuit Judge:

This case requires us to consider once again the nature and extent of the "public policy exception" to the finality of labor arbitrators' awards. In so doing, we reemphasize both the narrow manner in which we have historically construed that exception and the general deference we have afforded, and must afford, to the awards of labor arbitrators. Gale Rocks, an auto mechanic and member of appellant Lodge 1173 of the International Association of Machinists and Aerospace Workers ("Local" or "the union"), was discharged for work-related conduct. The matter was submitted to arbitration, and the arbitrator ordered Rocks reinstated to his former employment following a 120-day suspension. Appellee Stead Motors of Walnut Creek ("Stead Motors," "the employer"), sued to vacate the award in the United States District Court for the Northern District of California, alleging that Rocks' reinstatement would violate public policy by "endanger[ing] the health and safety of [its] customers and the public." The district judge apparently accepted this argument and vacated the portion of the award which ordered Rocks reinstated. A three-judge panel of this court affirmed. The case was then taken en banc. The original panel opinion, reported at 843 F.2d 357 (9th Cir.1988), is withdrawn and we now reverse.

I.

Stead Motors sells Mercedes Benz automobiles; Gale Rocks services them. First employed as a mechanic by Stead Motors in 1977, Rocks performed his duties without incident until 1984. ¹ In that year, Rocks received a written warning notice for failing properly to tighten the lug bolts on the wheels of a car he had serviced. The warning referred to Rocks' action as one of "gross negligence" and, according to the terms of the collective bargaining agreement ("the Agreement"), remained in effect for 30 days.

Approximately eleven months later, in September 1985, Rocks had a dispute with his shop foreman about the proper manner in which to tighten lug bolts after replacing the tires on a car. The arbitrator found that Rocks "was advised," although the record does not make clear precisely by whom, that his foreman had "absolute authority" over matters such as proper lug bolt tightening procedures. On October 14, 1985, Rocks replaced the front brake pads on a car, a job which required him to remove the wheels and, upon replacing them, to affix the lug bolts. As the car's owner drove home, he noticed a "very heavy" vibration in his car's front end. Stead Motors dispatched an employee to the customer's home. Upon inspecting the rough-riding Mercedes, the employee found that several lug bolts in both wheels were loose, with one bolt missing altogether.

Stead Motors, believing that Rocks's failure to secure the lug nuts amounted to "just cause" under the collective bargaining agreement, decided to terminate him. ² In a letter to Rocks and his union dated the day after the incident, the employer referred to the written warning which had been issued a year before and claimed that Rocks' failure to tighten the lug bolts on the second car was "tantamount to recklessness," a category of behavior which entitled the employer to discharge an employee without notice. Rocks, through the union, sought to have an arbitrator determine whether the conduct on which Stead Motors had based his discharge amounted to just cause under the Agreement. Although the Agreement required such matters to be adjudicated by a board comprised of representatives of management and labor and a neutral member agreeable to both, the parties decided to submit the matter to a single neutral arbitrator. (Neither party has challenged the arbitration procedures employed, and we have no cause to question them either.)

The matter was heard before Arbitrator Robert Le Prohn, who subsequently issued a written opinion and award. ³ At the hearing Stead Motors had asserted three factors in support of its discharge decision: 1) the 1984 warning for lug bolt malfeasance; 2) Rocks' "attitude problems"; and 3) the "reckless" October 1985 failure to affix the lug bolts properly. With respect to the 1984 warning, Le Prohn found that the collective bargaining agreement clearly established that warning letters could not remain in effect for more than thirty days, making the year-old letter an improper factor on which to rely. As to Rocks' "attitude problems," the arbitrator ruled that Stead Motors' reliance on that factor was unwarranted. At the same time, he noted that, while the union had made out a prima facie case that Rocks' union activity was a motivating factor in Stead Motor's discharge decision, the record established that Rocks would not have been fired but for the October 14 lug bolt incident. (See supra n. 1.)

Turning to the final factor asserted by Stead Motors, that of the October lugs, Arbitrator Le Prohn first rejected the union's contention that Stead Motors should have been bound by its treatment of the similar incident for which it issued the written warning in 1984 as one of "gross negligence." He then ruled that Rocks' repeat offense suggested indifference to the consequences of his actions and was therefore properly deemed "reckless." Consequently, he reasoned, discipline was appropriate under the collective bargaining agreement.

The "Remedy" section of the arbitrator's award is the most important to our review; in some respects it is also the most confusing. We set out the relevant passages:

One of the three bases relied upon by [Stead Motors] to support [Rocks'] removal has been established; two have not. [Stead Motors'] failure to establish that pursuant to the contract it was justified in relying on each of the factors leads to the conclusion that discharge is too severe a disciplinary action.

[Rocks] is entitled to reinstatement to his former position. However, his reckless conduct on October 14, 1985[ ] warrants severe discipline.... Discipline is aimed at rehabilitation; reinstatement with a one-hundred and twenty (120) day suspension should serve as an object lesson and impress upon [him] that he is required to follow instructions and perform his job duties fully and carefully.

Stead Motors, dissatisfied with the outcome of the arbitration procedure, filed suit in the Superior Court of Contra Costa County, California to vacate the portion of the award that ordered Rocks reinstated. It argued that the arbitrator had exceeded his authority, that his award "d[id] not draw its essence from the Agreement," and that reinstatement would violate public policy inasmuch as it would allow Rocks to "endanger the lives and safety of the traveling public."

The union removed the action to federal court under 28 U.S.C. Sec. 1441(a), on the ground that Stead Motors' claim was cognizable under the federal courts' original jurisdiction pursuant to Sec. 301 of the National Labor Relations Act, 29 U.S.C. Sec. 185. ⁴ The district judge issued an order vacating the arbitrator's award, to the extent that it ordered reinstatement, on public policy grounds. ⁵

The union appealed to a three-judge panel of this court which affirmed the district court. Stead Motors v. Automotive Machinists Lodge 1173, 843 F.2d 357 (9th Cir.1988). The panel's brief opinion found that reinstatement of Rocks would violate California's public policy "regarding automobile safety and maintenance," 843 F.2d at 359, a policy it gleaned from two sections of the California Code. Turning first to Sec. 24002 of the state Vehicle Code, the panel reasoned that California's pronouncement that "[i]t is unlawful to operate any vehicle or combination of vehicles which is in an unsafe condition." amounted to an " 'express legislative recognition' " of the danger posed by improperly maintained vehicles. Id., (quoting Maloney v. Rath, 69 Cal.2d 442, 448, 71 Cal.Rptr. 897, 900, 445 P.2d 513, 516 (1968)). The panel looked next to California's Automotive Repair Act, Business and Professions Code Sec. 9880 et seq., which established a state Bureau of Automotive Repair and provided for the inspection and certification of automobile repair facilities, and concluded that the Bureau's power to revoke the certification of a repair facility for cases of "gross negligence," Sec. 9884.7(1)(e), meant that "Stead Motors could not have kept Rocks and stayed in business." 843 F.2d at 359.

We decided to rehear the matter en banc.

II.

In reviewing the merits of Stead Motors' challenge to the arbitrator's award, we must acknowledge that the task is different from that which judges are accustomed to perform; for, when reviewing the award of an arbitrator chosen by the parties to a collective bargaining agreement, we are bound--under all except the most limited circumstances--to defer to the decision of another, even if we believe that the decision finds the facts and states the law erroneously. Possibly because the nature of our review in these cases is so unusual, there may be a tendency for judges, often with the most...