Industrial Mut. Ass'n, Inc. v. Amalgamated Workers, Local Union No. 383

• Decision Date: 18 January 1984
• Docket Number: No. 82-1699,82-1699
• Parties: 115 L.R.R.M. (BNA) 2503, 99 Lab.Cas. P 10,749 INDUSTRIAL MUTUAL ASSOCIATION, INC., Plaintiff-Appellant, v. AMALGAMATED WORKERS, LOCAL UNION NO. 383, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 406

725 F.2d 406

115 L.R.R.M. (BNA) 2503, 99 Lab.Cas. P 10,749

INDUSTRIAL MUTUAL ASSOCIATION, INC., Plaintiff-Appellant, v. AMALGAMATED WORKERS, LOCAL UNION NO. 383, et al Defendants-Appellees.

No. 82-1699.

United States Court of Appeals Sixth Circuit.

Argued Oct. 13, 1983.

Decided Jan. 18, 1984.

John A. Entenman, argued, Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, Mich., for plaintiff-appellant.

W. Glen Jeakle, II, argued, Gregory, Van Lopik, Korney & Moore, Detroit, Mich., for defendants-appellees.

Before MARTIN and CONTIE, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

CONTIE, Circuit Judge.

Plaintiff Industrial Mutual Association, Incorporated, (I.M.A.) brought this action under Sec. 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, to vacate an arbitration award. The district court entered a judgment upholding the award and I.M.A. appeals. The arbitration award ordered the reinstatement of employees Howard Mayball and Doris King and cancelled certain debts that they owed to I.M.A. Because we find the arbitrator's order of reinstatement to have a legitimate foundation in the Collective Bargaining Agreement, we affirm that portion of the district court's judgment which upheld the arbitrator's award of reinstatement. We do not find, however, that the cancellation of the debts can be said to draw its essence from the Collective Bargaining Agreement. We therefore reverse and remand that portion of the district court's judgment which upholds the cancellation of the debts.

I.

The facts underlying this litigation are undisputed. I.M.A. is engaged in the business of selling food, work supplies, and miscellaneous other goods to factory workers in Genesee County, Michigan. I.M.A. employs "storekeepers" who purchase their inventory from I.M.A. and sell these goods to their customers. I.M.A. pays the storekeepers a percentage of their gross sales.

In May of 1979, defendants Mayball and King were discharged from their employment as storekeepers for failing to make up shortages in their accounts with I.M.A. It is undisputed that Mayball's and King's stores had unbalanced shortages of $3,833.00 and $2,566.50, respectively, at the time of their discharges. There has been no showing that the loss was due to theft or any other agency beyond the control of Mayball and King.

A Collective Bargaining Agreement was in effect at all relevant times between I.M.A. and defendant Amalgamated Workers, Local Union No. 383, Retail, Wholesale and Department Store Union, AFL-CIO. Article VII, section 3 of this agreement provided that "[s]torekeepers shall be responsible for all shortage loss, except in the case of a proven break-in of a store or loss due to mechanical failure of machines, in which case the Employer shall be responsible for such loss." Article VII, section 5 provided that "[a]ll accounts shall be balanced (including a deduction for shortage) and payable as near the 15th of the next month as possible." Article I, section 9 provided that "[i]t is understood and agreed that the Employer has all the customary and usual rights, powers, functions, and authority of Management, including the right to discipline and discharge for proper cause."

Mayball and King filed grievances over their discharges. The grievances proceeded through arbitration in accordance with Article III of the Collective Bargaining Agreement. On May 21, 1980, the arbitrator ruled that I.M.A. had improperly discharged Mayball and King and ordered their reinstatement. The arbitrator did not award backpay, but cancelled the debts that Mayball and King owed I.M.A. for the shortages. He found that the clause in the agreement requiring storekeepers to balance their accounts did not provide a sanction. Therefore, he reasoned, the discharges had to be evaluated under the "proper cause" standard of Article I, section 9. Considering the circumstances of the case, including the grievants' seniority, past work records, and I.M.A.'s prior treatment of similar cases, the arbitrator concluded that the discharges were not for proper cause.

On July 2, 1980, I.M.A. filed a complaint under Sec. 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, and Sec. 10 of the Federal Arbitration Act, 9 U.S.C. Sec. 10, to vacate the arbitrator's award. The complaint alleged that the arbitrator altered and modified the terms of the Collective Bargaining Agreement, specifically Article VII, sections 3 and 5 and Article 1, section 9, and thus acted in excess of his authority. The parties filed opposing motions for summary judgment with the district court and, on August 26, 1982, a judgment was entered against I.M.A. I.M.A. filed a timely notice of appeal. This court has jurisdiction under 28 U.S.C. Sec. 1291 and 29 U.S.C. Sec. 185.

II.

We begin by noting the narrow standard of review of arbitration awards. United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960) established the rule that the "refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements." Id. at 596, 80 S.Ct. at 1360. Our review is limited to determining whether the award "draws its essence from the collective bargaining agreement." Id. at 597, 80 S.Ct. at 1361. As the parties "have bargained for the arbitrator's decision, not the court's," Anaconda Co. v. District Lodge No. 27 of the International Association of Machinists, 693 F.2d 35, 37 (6th Cir.1982) (per curiam), our only duty is to assure that the arbitrator delivers this bargained-for interpretation.

I.M.A. attacks the arbitrator's award on several fronts. The arbitrator found that "there is no clear penalty/or deadline for a failure to pay." I.M.A. argues that this ignores the express terms of Article VII, section 5, which provides that "accounts shall be balanced ... and payable as near the 15th of the next month as possible." This language, I.M.A. contends, provides both a clear deadline and a clear penalty.

We need not pause long over this argument. If there is any deadline imposed by this clause, it is an uncertain one. The requirement is only that the accounts be payable "as near the 15th of the next month as possible." This language could, with justification, be relied upon by the arbitrator to find that there is an element of flexibility in the process of settling accounts. Moreover, the arbitrator could have found that the word "payable" is not necessarily to be equated with the word "due." Payable could as easily mean that the accounts could be balanced during a period of time beginning on the fifteenth of the next month and extending to a future, unspecified date. Accordingly, the arbitrator was justified in reading this clause as not setting a firm deadline.

Nor can we say that the arbitrator erred in determining that the agreement provided no automatic sanction for the failure to balance accounts. Since the clause does not specify the consequences of a failure to balance the accounts, it cannot be said to have a clear penalty. Accordingly, the arbitrator was entitled to conclude that the discharges could only be justified if they were for proper cause under Article I, section 9.

This construction of the agreement is clearly permissible and may not be questioned by a reviewing court. "[I]t is immaterial whether we believe the arbitrator's analysis to be the best interpretation of the collective bargaining agreement; it is sufficient that it be a permissible interpretation." Retail Clerks Union Local No. 1557 v. Murfreesboro Vending Service, Inc., 689 F.2d 623, 626 (6th Cir.1982) (per curiam) (emphasis in original).

I.M.A. also contends that the arbitrator added terms to the agreement. It argues that, although the arbitrator found that "the contract ... does not take into consideration years of loyal and sustained service," he ordered reinstatement based in part upon the length and quality of Mayball's and King's work record. There are two components to this portion of I.M.A.'s argument. First, I.M.A. argues that the express terms of the agreement do not allow a consideration of employee work records and that the arbitrator erred in relying on these records. Second, I.M.A. points out that regardless of how the agreement ought to be interpreted, the arbitrator expressly found that it "does not take into consideration" an employee's work record. In basing the award in part upon these records after making a finding that they are not relevant under the agreement, the arbitrator, I.M.A. argues, was necessarily modifying or adding to the agreement.

Our response to these contentions is twofold. First, when analyzing a discharge under a proper cause provision or other clause of similar import, it is entirely appropriate for the arbitrator to consider all of the circumstances. As we said in Anaconda:

The arbitrator was not modifying the provisions of the collective bargaining agreement on absenteeism but rather was interpreting the provision that the Company treat its employees "fairly and justly." While this provision is very broad and gives the arbitrator great discretion, the Company agreed to such discretion when it signed the agreement.

693 F.2d at 37. I.M.A. similarly agreed to an element of arbitral discretion when it signed this agreement. It may not now complain of the exercise of that discretion.

Second, I.M.A. may not benefit from any ambiguity in the arbitrator's form of expression. The arbitrator's decision could be read as stating that work history is expressly excluded under the agreement, but that he would consider it anyway out of a sense of fairness. The Supreme Court has made it clear, however, that reviewing courts are not to vacate awards merely because an arbitrator's reasoning could be interpreted in several ways, one of which would lead to the conclusion that the award does not draw its essence from the contract.

A mere ambiguity in the...