Challenger Caribbean Corp. v. Union General de Trabajadores de Puerto Rico

• Decision Date: 09 February 1990
• Docket Number: No. 89-1869,89-1869
• Citation: 903 F.2d 857
• Parties: 134 L.R.R.M. (BNA) 2330, 115 Lab.Cas. P 10,064 CHALLENGER CARIBBEAN CORPORATION, Plaintiff, Appellee, v. UNION GENERAL de TRABAJADORES de PUERTO RICO, Defendant, Appellant. First Circuit. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 857

903 F.2d 857

134 L.R.R.M. (BNA) 2330, 115 Lab.Cas. P 10,064

CHALLENGER CARIBBEAN CORPORATION, Plaintiff, Appellee, v. UNION GENERAL de TRABAJADORES de PUERTO RICO, Defendant, Appellant.

No. 89-1869.

United States Court of Appeals,First Circuit.

Heard Feb. 9, 1990.

Decided May 22, 1990.

Paul Schachter, Newark, N.J., with whom Reinaldo Perez Ramirez, Hato Rey, P.R., and Reinhardt & Schachter, P.C., Newark, N.J., were on brief, for defendant, appellant.

Vincente J. Antonetti with whom Rosa Maria Cruz Niemiec and Goldman & Antonetti, Santurce, P.R., were on brief, for plaintiff, appellee.

Before CAMPBELL, Chief Judge, SELYA and CYR, Circuit Judges.

CYR, Circuit Judge.

Union General De Trabajadores de Puerto Rico ("Union") appeals a district court order vacating an arbitration award of reinstatement and back pay to employees discharged by Challenger Caribbean Corporation ("Company"). The district court vacated the award on the ground that the remedy fashioned by the arbitrator disregards the severance pay remedy prescribed by law and the contract between the parties.

Under the deferential standard of review due arbitration awards in labor disputes, we conclude that the arbitral award must be affirmed in substantial part.

I BACKGROUND

The Company manufactures electrical products in Canovanas and Comerio, Puerto Rico. On December 27, 1983, the Company and the Union entered into a collective bargaining agreement ("CBA") providing for final and binding arbitration. ¹ The parties contemporaneously executed a so-called "Agreement" ("Stipulation") as an integral part of the CBA. ² In March 1986, while the CBA and the Stipulation remained in effect, the Company permanently closed its "residential breaker production line" at the Canovanas plant, transferring it to the Comerio facility, and notified the employees that their positions at Canovanas were being eliminated for "reasons of economy, production and efficiency."

The Union filed two grievances: one in behalf of employees laid off on March 14, the other in behalf of employees already on temporary layoff as of that date. The grievances were submitted to final and binding arbitration. The parties were unable to agree on a joint submission. Without objection, the arbitrator determined to "make a final determination as to the 'issue' to be resolved in this case by taking into consideration the facts presented, the evidence, the pertinent contractual provisions, the allegations of the parties, and the submission proposals ... separately offered...." ³ The arbitrator found that the Canovanas layoffs violated the CBA and applicable provisions of Puerto Rico law. The arbitrator determined that all affected employees, including those on temporary layoff as of March 14, were entitled to reinstatement and back pay.

The Company brought suit in federal district court under Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185, to vacate the arbitral award on the ground that it does not draw its essence from the CBA and the Stipulation. See United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960). The Company moved for summary judgment, and the Union moved for enforcement of the award.

The district court did not address the arbitrator's determination that the layoffs violated the CBA and Puerto Rico law, but directed its attention exclusively to the remedy selected by the arbitrator.

In reviewing the award, we find error in the remedy chosen by the arbitrator. The stipulation, as incorporated into the collective bargaining agreement, states the specific remedy available to employees whose grievances arise due to Challenger's actions taken pursuant to a relocation of the Canovanas product lines.

....

[U]nder the scheme envisioned by the stipulation, the discharged employees would be entitled to the severance pay The remedy of reinstatement and back pay is not contemplated in Law 80. The arbitrator did not call into play any law superseding the collective bargaining agreement which makes reinstatement and back pay mandatory. Rather, recognizing the limited scope of the remedy allowed by contract and law, he chose to ignore them and fashion his own remedy....

contemplated by the law [Puerto Rico Law 80, 29 L.P.R.A. Sec. 185], crediting the money already received. That the parties would contract for a specific monetary remedy is not surprising, considering that the closing of the product lines in Canovanas mean (sic) that both the positions and the work there would be abolished.

An arbitrator does not have unfettered discretion. While he may have the power to fashion a remedy where none is created by the contract, he may not impose a remedy which directly contradicts the express language of the collective bargaining agreement.

The district court found that the arbitrator deliberately ignored the terms of the Stipulation by substituting his "own notions of industrial justice," United Paperworkers' Int'l Union v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 368, 98 L.Ed.2d 286 (1987), in place of the exclusive "layoff" remedies prescribed by the Stipulation.

We agree with the district court that the Stipulation became an integral part of the CBA. We agree as well that the severance pay specifically prescribed by the Stipulation thereby became the exclusive remedy for layoffs subject to the Stipulation. The district court mistakenly assumed, however, that the Stipulation applied to the Canovanas layoffs on March 14. ⁴ While we have no doubt that the district court's interpretation of the CBA and the Stipulation is plausible, we are satisfied that it is not the only plausible one. Unless the arbitrator's decision--that the remedial limitations contained in the Stipulation do not apply to the Canovanas layoffs--is not even arguably based on a plausible interpretation of the contract between the parties, the arbitral award is entitled to deference. See Misco, 484 U.S. at 38, 108 S.Ct. at 368.

The district court held that the award of reinstatement and back pay was specifically preempted by the exclusive severance pay remedy prescribed by the Stipulation, without first considering whether the layoffs had been effected, or need have been effected, by the Company in accordance with certain substantive provisions of the CBA proper relating to discharge from employment. The arbitrator, on the other hand, found that the Canovanas layoffs, having been effected contrary to applicable substantive provisions of the CBA proper, did not activate the remedy limitations prescribed by the Stipulation.

II DISCUSSION

"[C]ourts play only a limited role when asked to review the decision of an arbitrator." Misco, 484 U.S. at 36, 108 S.Ct. at 366. See also Maine Cent. R.R. v. Brotherhood of Maintenance of Way Employees, 873 F.2d 425, 428 (1st Cir.1989); Georgia-Pacific Corp. v. Local 27, United Paperworkers Int'l Union, 864 F.2d 940, 944 (1st Cir.1988); Bayamon Can Co. v. Congreso de Uniones Industriales, 843 F.2d 65, 66 (1st Cir.1988); Berklee College of Music v. Massachusetts Fed'n of Teachers, Local 4412, 858 F.2d 31, 32 (1st Cir.1988), cert. denied, --- U.S. ----, 110 S.Ct. 53, 107 L.Ed.2d 22 (1989); Bettencourt v. Boston Edison Co., 560 F.2d 1045, 1048-49 (1st Cir.1977).

We do not sit as a court of appeal to hear claims of factual or legal error by an arbitrator or to consider the merits of the award. We cannot vacate the award because the arbitrator misreads the contract, where there is room to do so, nor are we authorized to reject his honest Georgia-Pacific, 864 F.2d at 944 (quoting Misco, 484 U.S. at 38, 108 S.Ct. at 368) (citations omitted).

judgment as to the appropriate remedy, if the contract gives him authority to decide that question. 'As 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.'

The considerable deference due an arbitrator's decision "does not grant carte blanche approval to any decision that the arbitrator might make...." International Bhd. of Firemen Local 261 v. Great N. Paper Co., 765 F.2d 295, 296 (1st Cir.1985).

'The arbitrator may not ignore the plain language of the contract.' If the language of an agreement is clear and unequivocal, an arbitrator cannot give it a meaning other than that expressed by the agreement.

Georgia-Pacific, 864 F.2d at 944 (quoting Misco, 484 U.S. at 38, 108 S.Ct. at 369) (citation omitted). See also S.D. Warren Co. v. United Paperworkers' Int'l Union, Local 1069, 845 F.2d 3, 7-8 (1st Cir.1988) (vacating arbitrator's remedy as contrary to those predetermined in CBA); Hoteles Condado Beach v. Union De Tronquistas, Local 901, 763 F.2d 34, 41 (1st Cir.1985) (arbitrator may not disregard unambiguous provisions in CBA). An arbitral award may be vacated where the arbitrator's

interpretation is 'unfounded in reason and fact, is based on reasoning so palpably faulty that no judge or group of judges could ever conceivably have made such a ruling, or is mistakenly based on a crucial assumption which is decidedly a non-fact.'

In re Hotel Da Vinci, 797 F.2d 33, 34 (1st Cir.1986) (quoting Bettencourt, 560 F.2d at 1048). See also Local 1445, United Food & Comm'l Workers Union v. Stop & Shop Cos., 776 F.2d 14, 21 (1st Cir.1985); Trustees of Boston Univ. v. Boston Univ. Chapter, Am. Ass'n. of Univ. Professors, 746 F.2d 924, 926 (1st Cir.1984). An "arbitrator's award settling a dispute with respect to the interpretation and application of a labor agreement must draw its essence from the contract and cannot simply reflect the arbitrator's own notions of industrial justice." Misco, 484 U.S. at 38, 108 S.Ct. at 368. When an award "manifest[s] an infidelity to this obligation, courts have no choice but to refuse enforcement of the award." Enterprise Wheel & Car Corp., 363 U.S. at 597, 80...