NCR Corp., E&M-Wichita v. International Ass'n of Machinists and Aerospace Workers, Dist. Lodge No. 70

• Decision Date: 05 July 1990
• Docket Number: P,No. 88-1479,M-WICHIT,88-1479
• Citation: 906 F.2d 1499
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: 134 L.R.R.M. (BNA) 2694, 115 Lab.Cas. P 10,155 NCR CORPORATION, E &laintiff-Appellee, v. The INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT LODGE NO. 70, Defendant-Appellant.

Page 1499

906 F.2d 1499

134 L.R.R.M. (BNA) 2694, 115 Lab.Cas. P 10,155

NCR CORPORATION, E & M-WICHITA, Plaintiff-Appellee, v. The INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE

WORKERS, DISTRICT LODGE NO. 70, Defendant-Appellant.

No. 88-1479.

United States Court of Appeals, Tenth Circuit.

July 5, 1990.

David K. Holmes, of Render & Kamas, Roger M. Theis, Wichita, Kan., for defendant-appellant.

Douglas L. Stanley, of Foulston, Siefkin, Powers & Eberhardt, Gerald Sawatzky, Gloria G. Flentje, Wichita, Kan., for plaintiff-appellee.

Before TACHA, BALDOCK, and GARTH, Circuit Judges. ^*

GARTH, Circuit Judge.

I.

This appeal arises from a grant of summary judgment by the district court in favor of the plaintiff, NCR Corporation, E & M-Wichita ("NCR"). The judgment in favor of NCR also vacated and set aside an Arbitrator's Decision and Award.

Our review of the district court's ruling is plenary, and we utilize the same standard that the district court was required to apply. Russell v. American States Insurance Co., 813 F.2d 306, 308 (10th Cir.1987); Solomon v. Klein, 770 F.2d 352 (3d Cir.1985); Millmen Local 550 v. Wells Exterior Trim, 828 F.2d 1373, 1375 (9th Cir.1987) (appellate court "reviews de novo a grant of summary judgment" vacating or enforcing an arbitration award).

Because the district court failed to adhere to the standard of review that has been established by legal precedent in this area, we reverse and reinstate the arbitrator's award in its entirety.

II.

A.

In 1986, NCR and District Lodge No. 70 of the International Association of Machinists, etc. ("union") were parties to a three-year collective bargaining agreement effective March 31, 1985. Pursuant to that contract, unresolved disputes during the contract term were to be submitted for arbitration to one of a group of mutually agreed-upon professional arbitrators. No article of the Agreement specifically addressed the issue of subcontracting as it pertained to machine shop operations, although the subject of subcontracting was referred to in the Management Functions clause. At the same time, the collective bargaining Agreement's Recognition clause made the union the exclusive representative for "all production and maintenance employees" at the Wichita location in regard to "conditions of employment."

On January 16, 1986, NCR informed the union that a work backlog had developed in its core machine shop operations. NCR required additional personnel to perform welding and brake work. Accordingly, NCR sought to hire outside temporary workers from Olsten Temporary Services to perform the welding and brake work inside the plant. The union objected on the grounds that welding and brake jobs were core job classifications covered in the parties' Agreement and were to be performed only by members of the bargaining unit pursuant to the terms and conditions of the Agreement. The union proposed that either additional workers be hired or that existing employees be scheduled to work overtime. ¹

Beginning January 27, 1986, NCR hired two workers from Olsten who performed welding and brake work for about the next three weeks. On January 29, the union filed a grievance objecting to these hirings. NCR ultimately hired 24 temporary workers. ²

NCR claimed that, under the collective bargaining Agreement, it was at liberty to subcontract its welding and brake work. Contrary to NCR's position, the union contended that only bargaining unit members were permitted to work at these jobs. Unable to resolve this disagreement themselves, an arbitrator was designated pursuant to the procedures provided for in the Agreement.

B.

Both NCR and the union agreed that the key issue for interpretation was created by the construction to be given to the Recognition article of the Agreement on the one hand, and to the Management Functions article of the Agreement on the other. On July 3, 1987, after a full hearing with briefs by the parties, the arbitrator issued a detailed and lengthy opinion of over 50 pages.

The arbitrator found that the plain language of the collective bargaining Agreement, insofar as it concerned subcontracting of production work, was ambiguous even though both sides had provided "many contract references." Because he could not resolve the dispute by reference to plain and explicit language found in the contract's terms, the arbitrator turned to an extensive analysis of extrinsic and other evidence. In his opinion the arbitrator reviewed and examined evidence and authorities that would help give meaning to the ambiguous language of the contract. This included: other terms in the contract; the negotiating and contractual history of the parties, which would also help reveal their intent; evidence of past practices; a number of published arbitration, NLRB, and judicial decisions; and the common law of the shop. ³

Specifically, the arbitrator found that Article I, the Recognition clause, rendered the union the sole representative of the employees whose jobs were covered by the contract. ⁴ Thus, he held that NCR's right to subcontract, as provided in Article III, the Management Functions clause, ⁵ could not be construed so as to preclude or undermine the union's exclusive representation for conditions of employment affecting "all production and maintenance" workers. Hence, the arbitrator interpreted the contract as limiting those operations or functions that could be subcontracted within the plant to non-bargaining unit employees. Essentially, the arbitrator held that permissible subcontracting consisted of, or involved work of, a special or unusual sort, not central to the productive activity of the plant in question, often taking place outside the plant itself, or involving peripheral or fully ancillary activities such as security, janitorial and cleaning services, some trucking, installation of equipment, painting, roofing, food service, and the like.

Thus, he held that subcontracted work, as that concept has emerged from the common law of the shop, is not generally under the supervision or control of the employer. Furthermore, subcontracted workers may not displace employees covered by the collective bargaining Agreement. In so holding, the arbitrator adopted the criteria espoused in leading arbitration cases and which we discuss infra at 1505.

The arbitrator's opinion concluded that NCR had violated its contract with the union by subcontracting welding and brake work. As a consequence of finding a continuing violation, he imposed a back pay remedy. ⁶

C.

On March 13, 1987 NCR filed a complaint in the district court asking that the arbitrator's award be vacated on the grounds that it was "arbitrary and capricious," did not "draw its essence" from the contract, was not "within the terms of the agreement," and "represented only the arbitrator's own brand of industrial justice." NCR amended its complaint in August to accommodate the final version of the arbitrator's opinion and award and on October 5, 1987 moved for summary judgment. ⁷

On February 26, 1988 the district court judge issued a Memorandum and Order vacating and reversing the arbitrator's Decision and Award and granting summary judgment to NCR. 1988 WL 122736. The district court, relying on Article III of the collective bargaining Agreement (see supra n. 5), held that NCR retained the exclusive right to subcontract work as it deemed necessary. The district court concluded that " '[s]ubcontract' is not an ambiguous term, and the arbitrator's statement to the contrary is unfounded and unsupportable." Dist. ct. op., at 6. The district court also held that the arbitrator had rewritten the collective bargaining Agreement, "ignoring ... the contract itself as well as the parties' intent." Id., at 9. Thus, the district court concluded that the arbitrator's decision did not draw its essence from the contract because, in its view, the Agreement was not susceptible to the arbitrator's interpretation. This appeal followed.

III.

A.

Nearly thirty years ago the Supreme Court determined that a labor arbitration award should be enforced "so long as it draws its essence from the collective bargaining agreement." United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960). The Court has resisted any erosion of that position, holding as recently as 1987 that

the parties having authorized the arbitrator to give meaning to the language of the agreement, a court should not reject an award on the ground that the arbitrator misread the contract. ... [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 International Union v. Misco, Inc., 484 U.S. 29, 37-38, 108 S.Ct. 364, 370-71, 98 L.Ed.2d 286 (1987). ⁸

This court has elaborated the same position. See, Jenkins v. Prudential-Bache Securities, Inc., 847 F.2d 631, 635 (10th Cir.1988) ("the court will not interfere with an arbitrator's decision unless it can be said with positive assurance that the contract is not susceptible to the arbitrator's interpretation") (quoting, Sterling Colorado Beef Co. v. United Food and Commercial Workers, 767 F.2d 718, 720 (10th Cir.1985)). Indeed, the Courts of Appeals have uniformly called for deference to an arbitrator's decision even where the arbitrator has arguably misconstrued a contract--providing, of course, that the arbitrator's award draws its essence from the collective bargaining agreement. ⁹

Even when the terms of a collective bargaining agreement may be characterized as ambiguous, judicial deference to the arbitrator is still in order. "[A]mbiguity in the opinion accompanying an award, which permits the inference that an arbitrator may have exceeded his authority, is not a reason for refusing to enforce the award." Enterprise Corp., 363 U.S., at 598, 80 S.Ct.,...