Aramark Facility v. Service Employees, Local 1877

• Decision Date: 16 June 2008
• Docket Number: No. 06-56662.,06-56662.
• Citation: 530 F.3d 817
• Parties: ARAMARK FACILITY SERVICES, Plaintiff-counter-defendant-Appellee, v. SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1877, AFL CIO. CLC, Defendant-counter-claimant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

530 F.3d 817

ARAMARK FACILITY SERVICES, Plaintiff-counter-defendant-Appellee, v. SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1877, AFL CIO.

CLC, Defendant-counter-claimant-Appellant.

No. 06-56662.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 10, 2008.

Filed June 16, 2008.

Steven R. Wall and Robert Jon Hendricks, Morgan, Lewis & Brockius, Philadelphia, PA, and Los Angeles, CA, for the defendant-counter-claimant-appellant.

Manjari Chawla and David A. Rosenfeld, Weinberg, Roger & Rosenfeld, Alameda, CA, for the plaintiff-counter-defendant-appellee.

Monica Guizar, National Immigration Law Center, Los Angeles, CA, for the amicus curiae.

Appeal from the United States District Court for the Central District of California; George P. Schiavelli, District Judge, Presiding. D.C. No. CV-06-00608-GPS.

Before: CYNTHIA HOLCOMB HALL, THOMAS G. NELSON, and BARRY G. SILVERMAN, Circuit Judges.

HALL, Circuit Judge:

I. INTRODUCTION

This case arose from the response by Aramark Facility Services ("Aramark") to a "no-match letter" from the Social Security Administration ("SSA"), which indicated that Aramark had reported information for 48 of its employees at the Staples Center in downtown Los Angeles that did not match the SSA's database. Suspecting immigration violations, Aramark told the listed employees they had three days to correct the mismatches by proving they had begun the process of applying for a new social security card. Seven to ten days later, Aramark fired the 33 employees who did not timely comply.

Local 1877 of the Service Employees International Union ("SEIU") filed a grievance on behalf of the fired workers, contending the terminations were without just cause and thus in breach of the collective bargaining agreement ("CBA") between Aramark and SEIU. An arbitrator ruled for SEIU and awarded the fired workers back-pay and reinstatement, finding there was no convincing information that any of the fired workers were undocumented. The district court vacated the award on the ground that it violated public policy. SEIU timely appealed.

This case boils down to a single issue: whether the SSA's no-match letter — and the fired employees' responses — put Aramark on constructive notice that it was employing undocumented workers. If so, the arbitrator's award would force Aramark to violate federal immigration law, and therefore was properly vacated as against public policy. If not, the award must stand.

As we explain below, Aramark has not established constructive knowledge of any immigration violations. Constructive knowledge is to be narrowly construed in the immigration context and requires positive information of a worker's undocumented status. Moreover, we are required to defer to the arbitrator's factual findings even when evaluating an award for violation of public policy. Accordingly, given the extremely short time that Aramark gave its employees to return with further documents and the arbitrator's finding that Aramark had no "convincing information" of immigration violations, the employees' failure to meet the deadline simply is not probative enough of their immigration status to indicate that public policy would be violated if they were reinstated and given backpay. Therefore, the district court erred and the award must be confirmed.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The Letter Sent to Aramark and Aramark's Response

Aramark is a corporation that employs approximately 170,000 people in the United States, and its facilities management division provides labor for the Staples Center, a 19,000-seat sports and entertainment venue in downtown Los Angeles. In early 2003, Aramark received letters from the SSA notifying it that the social security numbers of some 3,300 of its employees nationwide did not match those in the SSA's database. Aramark reacted to these "no-match" letters by asking its regional managers to confirm that the information it provided SSA matched the information provided by employees and, if so, to require corrective steps from the employees they supervised. On April 15 and 16, 2003, instructions were relayed to 48 Aramark employees working at the Staples Center, who were represented by SEIU and employed pursuant to a CBA between SEIU and Aramark. Aramark's instructions to the Staples Center employees read as follows:

1. Please return to the [SSA] office to correct [the] discrepancy

2. Return to Aramark Facility Services at Staples Center with one of two items.

a) A new social security card, [sic] photo copies will not be accepted

b) Verification form that shows a new card is being processed.

3. You have three working days from the post-marked date of this letter to bring either. [] You have 90 days from the date of re-application on your receipt to bring in your new card.

4. A new card or verification of renewal must be in the office no later then [sic] close of business 4pm on Wednesday April 23rd, 2003.

...

If you fail to comply with this letter and you do not bring in the proper documents then unfortunately your employment with Aramark will be terminated.

(emphasis added).

No employee was aware of the policy before receiving the mismatch letter. Believing the three-day turnaround time was too onerous, SEIU requested an extension, but Aramark denied this request.

Fifteen of the Staples Center employees obtained the requested documentation in time and continued to work. However, 33 employees did not timely comply and were fired. The last day of work for virtually all of them was either April 16, 2003, or April 18, 2003. Most were officially fired effective April 23, while a few were fired April 28, 2003. Although the instruction letters from Aramark stated that employees were expected to visit an SSA office and provide the initial documentation within three days, the employees were actually given seven to ten days to provide the required paperwork, though nothing in the record indicates that they knew they had this much time. The fired workers were told that they would be rehired if they supplied the required documentation; nothing indicates when they received this information.

Though it suspected immigration violations, Aramark did not know for sure why the terminated employees did not provide additional documents and even argued to the arbitrator that they could have had "valid" work eligibility. Each of the fired employees had, at the time they were hired, properly completed the federal Employee Eligibility Verification Form ("Form I-9") and provided Aramark with facially valid documents establishing their identity and eligibility to work in the United States. Moreover, Aramark was not notified by any federal agency that its workers were suspected of being undocumented.

B. Arbitration

After the terminations, SEIU filed a grievance on behalf of the Staples Center employees, contending that Aramark had violated the CBA by firing them without just cause. Pursuant to the CBA, the matter was submitted to binding arbitration. Over two days of hearings, the parties presented testimony concerning the no-match letters, Aramark's obligation to comply with applicable tax and immigration laws, and the procedures by which the Staples Center employees were fired.

Ultimately, the arbitrator concluded that there was no "convincing information" that any of the terminated workers were undocumented. He thus found that the firings were without just cause, ruled in favor of SEIU, and awarded the workers back-pay and reinstatement.

C. District Court Proceedings

After the arbitrator's ruling, Aramark filed a complaint in U.S. District Court to vacate the arbitration award, and SEIU counter-claimed to confirm it. The parties filed cross-motions for summary judgment, and at a hearing held September 29, 2006, the district court ruled in favor of Aramark. The court reasoned that because the fired employees failed to indicate that they were beginning the process of correcting the SSN mismatch, Aramark had constructive notice that they were ineligible to work in the United States. Therefore, the court held that the arbitrator's award of reinstatement and back-pay violated public policy because it would require Aramark to violate the immigration laws. SEIU timely appealed.

III. STANDARD OF REVIEW

We review vacation of arbitration awards like "any other district court decision ... accepting findings of fact that are not `clearly erroneous' but deciding questions of law de novo." Barnes v. Logan, 122 F.3d 820, 821 (9th Cir.1997) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947-48, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)). Here, the district court resolved the matter on the parties' cross-motions for summary judgment, which necessarily present questions of law. We must therefore decide de novo whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. See Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir.2004); Arakaki v. Hawaii, 314 F.3d 1091, 1094 (9th Cir.2002) (stating standard for cross-motions).

IV. DISCUSSION

A. The Legal Standard for Review of the Arbitrator's Award

"The scope of review of an arbitrator's decision in a labor dispute is extremely narrow." Federated Dep't Stores v. United Food & Commercial Workers Union, Local 1442, 901 F.2d 1494, 1496 (9th Cir.1990). Arbitration awards are ordinarily upheld so long as they represent a "plausible interpretation of the contract." Phoenix Newspapers, Inc. v. Phoenix Mailers Union Local 752, 989 F.2d 1077, 1080 (9th Cir.1993). However, one narrow exception to this generally deferential review is the "now-settled rule that a court need not, in fact cannot, enforce an award which violates public policy." Stead Motors v. Automotive Machinists Lodge No. 1173, 886 F.2d 1200, 1209 (9th Cir.1989) (en banc); accord SFIC Properties, Inc. v. Int'l Ass'n of Machinists & Aerospace Workers, 103 F.3d 923, 925 (9th...