Richmond, Fredericksburg & Potomac R. Co. v. Transportation Communications Intern. Union

• Decision Date: 10 September 1992
• Docket Number: No. 92-1007,92-1007
• Citation: 973 F.2d 276
• Parties: 141 L.R.R.M. (BNA) 2115, 122 Lab.Cas. P 10,308 RICHMOND, FREDERICKSBURG & POTOMAC RAILROAD COMPANY, Plaintiff-Appellee, v. TRANSPORTATION COMMUNICATIONS INTERNATIONAL UNION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 276

973 F.2d 276

141 L.R.R.M. (BNA) 2115, 122 Lab.Cas. P 10,308

RICHMOND, FREDERICKSBURG & POTOMAC RAILROAD COMPANY, Plaintiff-Appellee, v. TRANSPORTATION COMMUNICATIONS INTERNATIONAL UNION,

Defendant-Appellant.

No. 92-1007.

United States Court of Appeals, Fourth Circuit.

Argued May 6, 1992.

Decided Aug. 17, 1992.

As Amended Sept. 10, 1992.

Joseph Guerrieri, Jr., Guerrieri, Edmond & James, Washington, D.C., argued (John A. Edmond, Mark Masling, Guerrieri, Edmond & James, Washington, D.C., Mitchell M. Kraus, General Counsel, Transp. Communications Intern., Union, Rockville, Md., on the brief), for defendant-appellant.

I. Michael Greenberger, Shea & Gardner, Washington, D.C., argued (Mark S. Raffman, Timothy P. Brooks, on the brief) for plaintiff-appellee.

Before WILKINSON and HAMILTON, Circuit Judges, and HOWARD, United States District Judge for the Eastern District of North Carolina, sitting by designation.

OPINION

WILKINSON, Circuit Judge:

This case arises out of a labor dispute between a railroad and a union that was initially submitted to arbitration. The railroad and union both agreed to submit to an arbitrator the question of whether the railroad could make unilateral severance offers to its clerical employees. The arbitrator decided in favor of the union. The railroad then sought to have the arbitrator's decision overturned in the district court, however, and the court entered summary judgment in favor of the railroad. In so doing, we think the district court failed to accord proper deference to the arbitrator and improperly deprived the union of the benefit of its agreement to submit the dispute to final resolution by an arbitrator. Accordingly, we reverse and remand with directions to reinstate the arbitration award.

I.

In April 1990, the Richmond, Fredricksburg & Potomac Railroad Co. (RF & P) offered to make severance payments to each clerical employee at its Potomac Yard facility who would agree to retire. The severance offer was designed to create room for clerks who, because of a decline in business, were being paid to sit at home under a lifetime labor protection provision in their collective bargaining agreement. The clerks' union, Transportation Communications International Union (TCU), contended that RF & P's unilateral severance offer was invalid. The union argued that the railroad could not legally negotiate with individual employees, but was required to bargain with the union. TCU refused to assent to the severance offer 6350 35 1 unless RF & P would agree to higher severance payments.

RF & P refused to bargain with the union, but ultimately agreed to submit the dispute to expedited arbitration in order "[t]o avoid the unnecessary expense and possible delays that would result from litigation." The parties agreed to submit to arbitration the question "whether the RF & P can unilaterally separate employees without an agreement with TCU." The arbitrator reviewed the briefs of the parties and conducted a hearing. ¹ He found that RF & P had failed to establish any contractual authority to deal directly with employees over severance payments, and that there was no established practice between the parties on the matter. The arbitrator also cited federal district court opinions finding a duty under the Railway Labor Act (RLA) to bargain with the union over questions of "lump-sum buy-outs." On these bases, the arbitrator ruled in favor of the union.

RF & P then filed this suit seeking to set aside the arbitration award. The district court granted RF & P's motion for summary judgment, holding that the arbitrator exceeded the scope of the parties' submission in basing his award on the requirements of the RLA and suggesting that the arbitrator's legal analysis was flawed. 776 F.Supp. 1109 (E.D.Va.1991).

The union now appeals that judgment.

II.

Our decision in this case rests upon a reluctance to undercut a process whose importance to labor-management relations has been reaffirmed repeatedly by Congress and the courts. By submitting a dispute to arbitration, labor and management can secure a decisive resolution of their differences without the delay inherent in litigation or the disruption of a strike or lockout. Arbitration, in this sense, is "the substitute for industrial strife." United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578, 80 S.Ct. 1347, 1351, 4 L.Ed.2d 1409 (1960). It is a "major factor in achieving industrial peace," id.--"a vital force in establishing confidence and minimizing confusion at all levels of the labor-management relationship and ... a major constructive force in the collective bargaining process itself." Frank Elkouri & Edna A. Elkouri, How Arbitration Works 852 (4th ed. 1985).

The courts have long recognized that arbitration can succeed in achieving these goals only to the extent it is accorded finality by the judiciary. See United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1960). "[T]he effectiveness of any pro-arbitration policy is dependent, in the first instance, on a limited scope of judicial review of the arbitrator's determination." U.S. Bulk Carriers, Inc. v. Arguelles, 400 U.S. 351, 360, 91 S.Ct. 409, 414, 27 L.Ed.2d 456 (1971) (Harlan, J., concurring). Thus, judicial review of an arbitration award is "among the narrowest known to the law." Union Pac. R.R. Co. v. Sheehan, 439 U.S. 89, 91, 99 S.Ct. 399, 401, 58 L.Ed.2d 354 (1978). "Every presumption is in favor of the validity of the award." Burchell v. Marsh, 58 U.S. (17 How.) 344, 351, 15 L.Ed. 96 (1855).

In this case the district court offered two reasons for overturning the strong presumption in favor of respecting the parties' choice to have their dispute resolved conclusively by an arbitrator. First, the court held that the arbitrator exceeded his authority in relying on cases construing the RLA rather than on an interpretation of the collective bargaining agreement. 776 F.Supp. at 1114-15. Second, the court suggested that the arbitrator's reading of these cases was wrong. 776 F.Supp. at 1115-16.

We shall address these two rationales in turn.

A.

We first consider the district court's conclusion that the arbitrator lacked the authority to consider federal case law in arriving at his decision. The district court suggested that the arbitrator's analysis contravened Supreme Court precedent holding that "[i]f an arbitral decision is based 'solely upon the arbitrator's view of the requirements of enacted legislation,' rather than on an interpretation of the collective-bargaining agreement, the arbitrator has 'exceeded the scope of the [parties'] submission,' and the award will not be enforced." Alexander v. Gardner-Denver Co., 415 U.S. 36, 53, 94 S.Ct. 1011, 1022, 39 L.Ed.2d 147 (1974) (quoting Enterprise Wheel, 363 U.S. at 597, 80 S.Ct. at 1361). In the district court's view, the arbitrator's reliance upon federal case law interpreting the RLA so tainted his decision as to render it unenforceable.

We disagree. First, we note that the Supreme Court cases relied on by the district court do not announce any sort of blanket prohibition on an arbitrator's recourse to legal authority. Rather, the Court has recognized that the limits of an arbitrator's authority are defined by the terms of the parties' own submission. AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986); Warrior & Gulf, 363 U.S. at 582, 80 S.Ct. at 1352. We know of no statutory basis for any sort of rule that would require arbitrators to remain willfully ignorant of the governing statutes and case law. Contrary to the contention of RF & P, we find nothing in the RLA that expresses a policy preference for such an ill-informed pool of arbitrators. ² If anything, the statute points in the direction of consulting relevant sources of statutory interpretation, for the RLA provides that an arbitration award may be set aside where the arbitrator fails "to comply with the requirements" of the statute, 45 U.S.C. § 153 First (q).

We thus conclude that it is up to the parties to define the issues submitted, and that there is no statutory barrier to submitting questions involving the interpretation of statutes or case law. See High Concrete Structures, Inc. v. United Electrical, Radio and Machine Workers of America, Local 166, 879 F.2d 1215, 1218-19 (3d Cir.1989) (terms of a submission "may empower an arbitrator to resolve disputes that go beyond the four corners of a collective bargaining agreement"); Jones Dairy Farm v. Local No. P-1236, United Food and Commercial Workers Int'l Union, 760 F.2d 173, 176 (7th Cir.1985) ("If people want a question of law resolved by an arbitrator rather than a judge, there is nothing to stop them.") If, as in Enterprise Wheel, the parties confine their submission narrowly to an interpretation of the collective bargaining agreement, 363 U.S. at 594, 80 S.Ct. at 1359, then the arbitrator's decision must "draw[ ] its essence from" the agreement. Id. at 597, 80 S.Ct. at 1361. If, on the other hand, the parties submit an issue without limiting the sources the arbitrator may consult, the arbitrator may base his decision on any of a number of grounds, including statutes and case law:

Unless the parties specifically limit the powers of the arbitrator in deciding various aspects of the issue submitted to him, it is often presumed that they intend to make him the final judge on any questions which arise in the disposition of the issue, including not only questions of fact but also questions of contract interpretation, rules of interpretation, and questions, if any, with respect to substantive law.

Elkouri & Elkouri, supra, at 366. See also Jones Dairy, 760 F.2d at 175-76 (voluntary and unreserved submission authorizes arbitrator to determine parties' legal rights).

In this case, RF & P and TCU submitted to the arbitrator the broad issue of ...