Ppg Industries v. International Chemical Workers

• Decision Date: 20 November 2009
• Docket Number: No. 08-2180.,08-2180.
• Citation: 587 F.3d 648
• Parties: PPG INDUSTRIES, INCORPORATED, Plaintiff-Appellee, v. INTERNATIONAL CHEMICAL WORKERS UNION COUNCIL OF the UNITED FOOD AND COMMERCIAL WORKERS; International Chemical Workers Union Council of The United Food and Commercial Workers, Local Union No. 45C, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

587 F.3d 648

PPG INDUSTRIES, INCORPORATED, Plaintiff-Appellee, v. INTERNATIONAL CHEMICAL WORKERS UNION COUNCIL OF the UNITED FOOD AND COMMERCIAL WORKERS; International Chemical Workers Union Council of The United Food and Commercial Workers, Local Union No. 45C, Defendants-Appellants.

No. 08-2180.

United States Court of Appeals, Fourth Circuit.

Argued: September 30, 2009.

Decided: November 20, 2009.

ARGUED: August Randall Vehar, ICWUC/UFCW Legal Department, Akron, Ohio, for Appellants. C. David Morrison, Steptoe & Johnson, LLP, Clarksburg, West Virginia, for Appellee. ON BRIEF: Robert W. Lowrey, UFCW Assistant General Counsel, ICWUC/UFCW Legal Department, Akron, Ohio; Tim Cogan, CAS Sidy, Myers, Cogan & Voegelin, LC, Wheeling, West Virginia, for Appellants. Carolyn A. Wade, Jill Oliverio Florio, Steptoe & Johnson, LLP, Clarksburg, West Virginia, for Appellee.

Before MOTZ and DUNCAN, Circuit Judges, and CAMERON McGOWAN CURRIE, United States District Judge for the District of South Carolina, sitting by designation.

Reversed and remanded by published opinion. Judge MOTZ wrote the opinion, in which Judge DUNCAN and Judge CURRIE joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

A reviewing court must defer to an arbitrator's construction of a contract even when the court believes that the arbitrator construed the contract incorrectly. In this case, the district court vacated the arbitration award, concluding that the arbitrator exceeded his authority by adding a term to the underlying contract. We conclude, however, that even if the arbitrator erred, he acted within the scope of his authority under the contract. Accordingly, we must reverse the judgment of the district court and remand with instructions to enforce the arbitration award.

I.

The contract at issue, a collective bargaining agreement ("CBA"), governed labor relations between PPG Industries ("Company") and certain union employees at the Company's Natrium, West Virginia plant during 2005. These employees belonged to the International Chemical Workers Union Council of the United Food and Commercial Workers and the International Chemical Workers Union Council of the United Food and Commercial Workers, Local Union No. 45C ("Union").

The CBA expressly provides that "grievances involving alleged violations with respect to the application or interpretation of the terms of this agreement may be submitted by either party to arbitration." It further provides that "[t]he Arbitrator shall have no authority to add to, take from, change or modify any of the terms of this Agreement nor shall he have any authority in the making of a new agreement."

The CBA incorporates the terms of a company-wide bonus plan, the Chlor-Alkali & Derivatives Variable Pay Plan ("Bonus Plan"). The parties agree that the CBA mandatory arbitration provision quoted above governs disputes arising under the Bonus Plan.

The Bonus Plan states that an employee becomes eligible to receive a bonus if the employee:

(1) has been Actively Employed for 1,040 or more hours during the Plan Year; and

(2)(a) is Actively Employed on the last workday of the Plan Year; or on approved leave of absence or layoff; or

(b) whose termination during the Plan Year was an Eligible Termination.

The CBA defines "Actively Employed" in two sentences:

"Actively Employed" means actively at work; on vacation; or on FMLA or Military leave of absence. "Actively Employed" does not include overtime hours, leaves of absence, other than FMLA and/or Military, or layoffs.

Union members at the Natrium plant went on strike from September 2005 until February 2006. After resolution of the strike and agreement on a new CBA, the Company refused to pay the bonuses set forth in the Bonus Plan to striking employees — even those actively employed for more than 1040 hours during 2005. Seeking payment of these bonuses, the Union filed a grievance under the CBA. The matter proceeded to arbitration.

Following a hearing at which both sides presented evidence and arguments, the arbitrator issued his order and opinion awarding relief to the Union. After setting forth the parties' respective arguments, the arbitrator noted that the "strike extending through the last day of the year" presented a situation "never discussed, or in all probability contemplated, by the parties during meetings regarding [the Bonus Plan]." The arbitrator rejected the Union's claim that the Company unlawfully retaliated in denying the strikers benefits under the Bonus Plan. The arbitrator explained that although he could "understand the Union's view of [the Company's] motivation," the Company had "made a plausible argument" for its decision and, if he viewed the matter "without full consideration of all the surrounding circumstances[,][he] would be inclined to accept the Company's claim of ineligibility."¹

The arbitrator did not explain precisely what he meant by "all the surrounding circumstances," but he did immediately follow this observation with the statement that he was "fully aware of the limitations" that the CBA arbitration provision imposed on him and the Supreme Court's requirement that any arbitration award "draw[ ] its essence from the collective bargaining agreement." United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). The arbitrator then quoted several arbitration decisions that set forth various rules of contract construction. These include the rule that "if the terms of an agreement `unambiguously resolve the point at issue, the arbitrator has no choice but to apply them as written,'" and the rule that arbitrators should attempt to determine, "from the instrument as a whole, the true intent of the parties."

The arbitrator considered evidence submitted by both parties that during a series of meetings held in 1995, employees asked questions about the Bonus Plan. In response to questions about the definition of "active employment," a Company official had stated that employees were either "employed" or "terminated," suggesting that an employee not "terminated" was "actively employed" for purposes of the Bonus Plan. The arbitrator noted that the Company had drafted the language of the Bonus Plan, and that any ambiguity in the term "actively employed" should be "construed against the drafter" (internal quotation marks omitted) (quoting another arbitration decision).

The arbitrator next addressed the argument of the Company based on the axiom that the expression of one thing implies the exclusion of others. Specifically, the Company contended that because the Bonus Plan enumerates four groups of active employees, but does not name strikers, it thereby excludes strikers from the ranks of the "actively employed" and so from eligibility for bonuses. The arbitrator found that "[w]hile the principle of exclusion is a solid one . . . there is a dilemma here with the wording" of the Bonus Plan. That is, the arbitrator noted, the Bonus Plan also contains another list of groups of employees — those expressly not within the category "actively employed" — and this list too does not name strikers. The arbitrator observed that the presence of the two lists "gives rise to the question to which list does the exclusion rule apply? If it is the latter list then the grievants are not ineligible [for bonuses]."

To resolve the "dilemma" created by the two contractual lists addressing active employment, the arbitrator referred again to the Company's comments at its 1995 meetings with the Union. The arbitrator concluded that "the explanations given to the Union in the 1995 discussions were, if not misleading, lacking in a satisfactory or clear definition of" the term "actively employed" and therefore unclear as to eligibility for benefits under the Bonus Plan. Accordingly, the arbitrator found that the strikers, who were otherwise entitled to bonuses "[u]nder the language of the [CBA] and the [Bonus] Plan . . . did not forfeit that entitlement by going on strike at the termination of their Labor Agreement and continuing on strike through 12/31/2005."

The Company contested the arbitration award in the district court. On cross-motions for summary judgment, the court vacated the award, finding that the arbitrator had exceeded his authority. The court reasoned that "nothing in the [Bonus Plan], the CBA, or the parties' 1995 discussions concerning the [Bonus Plan] indicates that the parties intended to include or exclude, or even considered including or excluding, striking employees as falling within the meaning of `Actively Employed.'" For this reason, the court believed that the arbitrator had "effectively changed the term `Actively Employed' by adding `on strike' to its list of inclusions, in violation of the restrictions imposed upon his authority by the CBA."

The Union timely filed this appeal.

II.

Whether an arbitrator acts within the scope of his authority presents a question of law, and so we review the judgment of the district court de novo. Island Creek Coal Co. v. Dist. 28, United Mine Workers of Am., 29 F.3d 126, 129 (4th Cir.1994).

"[J]udicial review of arbitration awards is . . . `among the narrowest known to the law.'" U.S. Postal Serv. v. Am. Postal Workers Union, 204 F.3d 523, 527 (4th Cir.2000) (quoting Union Pac. R.R. v. Sheehan, 439 U.S. 89, 91, 99 S.Ct. 399, 58 L.Ed.2d 354 (1978)). Indeed, the Supreme Court has recently explained that "[j]udicial review of a labor-arbitration decision" is not merely limited but "very limited." Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509, 121 S.Ct. 1724, 149 L.Ed.2d 740 (2001) (per curiam). A court must "determine only whether the arbitrator did his job — not whether he did it well, correctly, or reasonably, but simply whether he did it." Mountaineer Gas Co. v. Oil, Chem. & Atomic Workers Int'l Union, 76 F.3d 606, 608 (4th Cir.1996).

Of course, the arbitrator cannot "ignore the plain language of the contract" to impose his "own...