Ludwig Honold Mfg. Co. v. Fletcher
| Decision Date | 14 January 1969 |
| Docket Number | No. 17087.,17087. |
| Citation | 405 F.2d 1123 |
| Parties | LUDWIG HONOLD MFG. CO. v. Harold A. FLETCHER and United Automobile Workers, Local 416, Appellants, |
| Court | U.S. Court of Appeals — Third Circuit |
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Richard J. Hobin, Philadelphia, Pa., for appellants.
Robert F. Jackson, Media, Pa., for appellee.
Before HASTIE, Chief Judge, and SEITZ and ALDISERT, Circuit Judges.
The District Court vacated a labor arbitration award in a grievance case which involved a plant promotion. It held that the arbitrator had exceeded his authority in the interpretation of the collective bargaining agreement.
Fletcher, the employee who won the award, and his union, Local 416, have appealed from the order of the court below, 275 F.Supp. 776.1
Initially, it should be emphasized that this case does not involve the question of the arbitrability of the dispute. We are not to decide whether the arbitrator had the power or jurisdiction to hear the grievance in question.2 The parties agree that the grievance was a proper subject of arbitration. The controversy arises over the arbitrator's interpretation of provisions of the agreement, specifically, that portion governing the promotion of personnel within certain job classifications.
Before reaching the issue of whether the District Court erred in vacating the award, we have this threshold question to consider: what is the proper role of a court in reviewing an arbitrator's interpretation of provisions of a collective bargaining agreement?
The Supreme Court has addressed itself to this specific point in United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960): "It is the arbitrator's construction which was bargained for and so far as the arbitrator's decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his."3
363 U.S. at 597, 80 S.Ct. at 1361 (emphasis supplied).
Enterprise enunciated a basic philosophy that was to apply to all labor arbitration cases. It elevated the arbitrator to an exalted status — emphasizing that there would be no interference with his award simply because a reviewing court differed with him in its interpretation of provisions of the contract. At the same time, it held a checkrein on him — confining his zone of action to the four corners of the collective bargaining agreement. Although the language setting forth these guidelines was precise and uncomplicated, one problem has emanated from the cases which have followed Enterprise: that of formulating a consistent and workable standard to be utilized by the courts in exercising the function of review. Circuit and District Court decisions have not exuded uniformity in translating the "essence" test into a pronouncement of the appropriate extent or limitation of judicial review of the arbitrator's interpretation.
Each case seems to have fashioned its own standard, and among those variously employed have been: the reviewing court should not disturb the award so long as the interpretation was not arbitrary,4 or "even though the award permits the inference that the arbitrator may have exceeded his authority",5 or merely because it believes that sound legal principles were not applied;6 the court should interfere "where the arbitrator clearly went beyond the scope of the submission",7 or where "the authority to make * * * award cannot be found or legitimately assumed from the terms of the arbitration agreement",8 or if the arbitrator made a determination not required for the resolution of the dispute.9
Three decisions suggest no review whatsoever of the arbitrator's interpretations: construction and interpretation is not for the reviewing court;10 there should be no review on the merits at all;11 review is confined to the question of whether the union agreed to arbitrate or give arbitrator power to make the award.12
In H. K. Porter Co., Inc. v. United Saw, File and Steel Products Workers of America, etc., 333 F.2d 596, 602 (3 Cir. 1964), this court vacated an arbitrator's award because there was "no ground upon which to base his interpretation".13
A comparison of review standards employed in related proceedings merits attention. The National Labor Relations Board has said that in reviewing an arbitrator's award it would "give hospitable acceptance to the arbitral process as `part and parcel of the collective bargaining process itself,' and voluntarily withhold its undoubted authority to adjudicate the matter unless it clearly appears that the proceedings were tainted by fraud, collusion, unfairness, or serious procedural irregularities."14
Reviewing an appeal from a decision of the Railway Adjustment Board, the Supreme Court has ruled that the Board's interpretations must stand unless they are "wholly baseless and completely without reason".15 Similarly, this court has concluded that a railway award should not be disturbed unless the Board acted unconstitutionally or beyond its jurisdiction.16
Although we are quick to recognize that cases involving commercial arbitration disputes under the Federal Arbitration Act17 are not controlling authority,18 an examination of standards applied by reviewing courts is invited. It has been held that a "mere error in the law or failure on the part of the arbitrators to understand or apply the law" will not justify judicial intervention,19 and that the courts' function in confirming or vacating a commercial award is "severely limited".20 If it were otherwise, the ostensible purpose for resort to arbitration, i. e., avoidance of litigation, would be frustrated.21
The Supreme Court, in Wilko v. Swan, 346 U.S. 427, 436-437, 74 S.Ct. 182, 98 L.Ed. 168 (1953), suggested that an award should be vacated if it is in "manifest disregard of the law", and in Bernhardt v. Polygraphic Co. of America, Inc., 350 U.S. 198, 203, n. 4, 76 S.Ct. 273, 100 L.Ed. 199 (1955), the Court said: "whether the arbitrators misconstrued a contract is not open to judicial review."
Although federal and not state law is controlling in this case,22 it is not inappropriate to examine those standards of reviewing arbitration awards which have been established by certain states. The Pennsylvania State Arbitration Act provides for a judicial review "Where the award is against the law, and is such that had it been a verdict of the jury the court would have entered different or other judgment notwithstanding the verdict."23 The New York Court of Appeals has stated that so long as arbitrators do not reach an irrational result, they may "fashion the law to fit the facts before them" and their award will not be set aside because they erred in the determination or application of the law, Matter of Exercycle Corp., 9 N.Y.2d 329, 214 N.Y.S.2d 353, 174 N.E.2d 463 (1961); Marcy Lee Mfg. Co. v. Cortley Fabrics Co., 354 F. 2d 42 (2 Cir. 1965).
Under the common law the arbitrators are the final judges of both law and fact and their award will not be disturbed for a mistake of either. Freeman v. Ajax Foundry Products, Inc., 398 Pa. 457, 159 A.2d 708, 709 (1960).
Our reference to the area of commercial arbitration has been deliberate, even though we recognize that identical considerations do not apply to the labor field. To the extent that these cases reflect the judicial attitude toward the concept of arbitration, however, they are singularly important in determining the correct standard for the judicial review of labor awards. We are aware of the strong public policy of encouraging the peaceful settlement of industrial disputes by means of the device of arbitration. We are also aware of what has been called the "hostility evinced by courts toward arbitration of commercial agreements".24
Bearing this in mind and perceiving that the Supreme Court's announced standards in reviewing commercial awards call for the exercise of judicial restraint, we must conclude that such a philosophy of restricted review compels even less judicial interference in matters arising from labor arbitration. At the very least this means that the interpretation of labor arbitrators must not be disturbed so long as they are not in "manifest disregard"25 of the law, and that "whether the arbitrators misconstrued a contract" does not open26 the award to judicial review.
Accordingly, we hold that a labor arbitrator's award does "draw its essence from the collective bargaining agreement" if the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and any other indicia of the parties' intention; only where there is a manifest disregard of the agreement, totally unsupported by principles of contract construction and the law of the shop, may a reviewing court disturb the award.27
We now turn to the application of this standard to the case before us.
Fletcher had been employed in various positions by the Ludwig Honold Manufacturing Company since 1948. On September 29, 1965, he was made a Sheet Metal Specialist A, the job having been posted and bid upon by him as provided in the collective bargaining agreement. The following day McGill was hired by the company and also made a Sheet Metal Specialist A. On November 16, 1965, the job of Sheet Metal Leader was posted and both Fletcher and McGill bid for it. The company gave the job to McGill on November 22,...
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...Brotherhood of Teamsters v. Western Pennsylvania Motor Carriers Association, 574 F.2d 783 (3d Cir. 1978); Ludwig Honold Manufacturing Co. v. Fletcher, 405 F.2d 1123 (3d Cir. 1969). Given this policy, and this standard of arbitrability, we are obliged to disagree with the district court's co......
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...Roll Co. v. United Steel Workers, 712 F.3d 155, 195 L.R.R.M. 2479 (3d Cir. 2013).[24] . Ludwig Honold Manufacturing Co. v. Fletcher, 405 F.2d 1123, 1128 (3d Cir. 1969).[25] . Id., 405 F.2d at 1126.[26] . Akers National Roll Co. v. United Steel Workers, n. 13.1 supra, 712 F.3d 154-165.[27] .......