S.D. Warren Co., a Div. of Scott Paper Co. v. United Paperworkers' Intern. Union, AFL-CIO, Local 1069

• Decision Date: 21 April 1988
• Docket Number: No. 86-1405,LOCAL,AFL-CI,86-1405
• Citation: 845 F.2d 3
• Parties: 128 L.R.R.M. (BNA) 2175, 56 USLW 2663, 108 Lab.Cas. P 10,450 S.D. WARREN COMPANY, A DIVISION OF SCOTT PAPER COMPANY, Petitioner, Appellant, v. UNITED PAPERWORKERS' INTERNATIONAL UNION,1069, Respondent, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 3

845 F.2d 3

128 L.R.R.M. (BNA) 2175, 56 USLW 2663,

108 Lab.Cas. P 10,450

S.D. WARREN COMPANY, A DIVISION OF SCOTT PAPER COMPANY, Petitioner, Appellant, v. UNITED PAPERWORKERS' INTERNATIONAL UNION, AFL-CIO, LOCAL

1069, Respondent, Appellee.

No. 86-1405.

United States Court of Appeals, First Circuit.

Submitted Feb. 3, 1988.

Decided April 21, 1988.

S. Mason Pratt, Jr. with whom Elizabeth S. Pearce and Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, Me., were on brief, for petitioner, appellant.

Stephen P. Sunenblick with whom Charles W. March and Sunenblick & Reben, Portland, Me., were on brief, for respondent, appellee.

Before CAMPBELL, Chief Judge, TORRUELLA, Circuit Judge, and PIERAS, ^* District Judge.

TORRUELLA, Circuit Judge.

After our opinion in this case, S.D. Warren Co. v. United Paperworkers' International Union, 815 F.2d 178 (1st Cir.1987) (Warren I ), the Supreme Court of the United States decided United Paperworkers International Union, AFL-CIO v. Misco, Inc., --- U.S. ----, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987). Thereafter, appellant's pending petition for a writ of certiorari was granted, our judgment was vacated, and the case was remanded to us for further consideration in light of that decision. --- U.S. ----, 108 S.Ct. 497, 98 L.Ed.2d 496. It is thus incumbent upon us to determine whether our prior ruling should in any manner be altered by this recent case. In our view, although Misco may partially preempt Warren I, it does not affect its basic holding.

In Misco the employer and the union entered into a collective bargaining agreement in which they agreed to submit to arbitration any grievance that arose from the interpretation or application of its terms and made the arbitrator's decision final and binding upon the parties. The agreement further provided that the arbitrator's authority was limited to the interpretation and application of the terms contained in the agreement itself. In addition, the agreement reserved to management the right to establish, amend, and enforce "rules and regulations regulating the discipline or discharge of employees," and the procedures for imposing discipline, but these rules, after posting, were subject to be "ruled on by grievance and arbitration procedures as to fairness and necessity." Id. 108 S.Ct. at 367. One of the rules enacted by the employer provided as a cause for discharge bringing intoxicants, narcotics, or controlled substances on to plant property or consuming them there. ¹ Id. at 367-68.

An employee suspected of drug-related activities was observed by police in an automobile with two other persons while the car was in the company's parking lot during working hours. After the two persons left, the police approached the car and found the employee in the back seat of the car. They detected marijuana smoke in the air and found a lighted marijuana cigarette in the front seat ashtray. Thereafter the police proceeded to search the employee's own car, where they found a plastic scales case as well as marijuana gleanings. On the basis of this later incident, the employee was arrested and charged with possession of marijuana, a charge to which he pleaded guilty.

The employer discharged the employee, asserting that his presence in the first car, in which the marijuana smoke and lighted marijuana cigarette were found, violated the company rule against having drugs on plant premises. At the time of this personnel action the employer was unaware of the incident or charges involving the employee's own car.

The employee filed a grievance protesting his discharge, and the matter proceeded to arbitration. At the hearing the issue stipulated to be decided by the arbitrator was whether the company had just cause to discharge the employee under the rule prohibiting possession of drugs on company premises, and " '[i]f not, what if any should be the remedy.' " Id. at 368.

In ruling that the employer lacked just cause to discharge the employee for possession of marijuana on company premises, the arbitrator excluded evidence regarding the marijuana found in the employee's own car. The arbitrator concluded that this evidence was irrelevant to the employee's discharge because the employer was unaware of the same at the time of the disciplinary action. The arbitrator then ruled that the employee's mere presence in the first vehicle was not sufficient evidence to establish that the employee was in possession of drugs on company premises.

The company challenged this ruling in district court, claiming that it was contrary to public policy, a contention with which that court agreed. The court of appeals affirmed, ruling that the arbitrator should have taken into consideration the evidence uncovered by the police in the employee's car. See Misco v. United Paperworkers, 768 F.2d 739, 742-43 (5th Cir.1985). In light of such evidence the court of appeals concluded that public policy prevented enforcement of the arbitrator award. Id. at 743.

Although the Supreme Court granted a writ of certiorari "on the question of when courts may set aside arbitration awards as contravening public policy," Misco, 108 S.Ct. at 369, the parties argued in the alternative, and the Court also decided, the issue of whether the court of appeals had exceeded its limited authority to review an arbitrator's award. Id.

In reversing, the Supreme Court first attacked the court of appeals' review of the arbitrator's findings. Quoting extensively from the time-honored standards of the Steelworkers Trilogy ² the Court reemphasized that it was "the arbitrator's view of the facts and of the meaning of the contract that [the parties had] agreed to accept," and that "[c]ourts [did] not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of lower courts." Misco, 108 S.Ct. at 370. The Court also ruled that "where it [was] contemplated that the arbitrator [would] determine remedies for contract violations that he [found], courts [had] no authority to disagree with his honest judgment in that respect." Id. at 371.

In applying these principles the Court concluded that the court of appeals had exceeded its authority in ruling, contrary to what was determined by the arbitrator, that the employee's presence in the first car was ample proof of violation of the rule against possession of narcotics on company premises. Id. It also held that the court of appeals had overextended itself in considering the rejected evidence that was found in the employee's car. Id.

On the question of the remedy, the Court ruled that although "[t]he parties, of course, may limit the discretion of the arbitrator in this respect," where "the parties stipulated that the issue before the arbitrator was whether there was 'just' cause for discharge, and the arbitrator, in the course of his opinion ... observed that [the rule in question] merely listed causes for discharge and did not expressly provide for immediate discharge," the court of appeals was obliged, "before disposing of the case on the ground that [the rule] had been violated and discharge was therefore proper ... [to] remand to the arbitrator for a definitive construction of the contract in this respect." Id. at 372-73.

The Court then went on to discuss the court of appeals' principal holding that "to reinstate a person who had brought drugs onto the property was contrary to public policy." Id. at 373. The Court ruled that such grounds were unavailable as a basis for "refusal to enforce an arbitrator's interpretation of [a collective bargaining contract unless] the contract as interpreted would violate 'some explicit public policy' that is well defined and dominant, and is to be ascertained 'by reference to the laws and legal precedents and not from general considerations of supposed public interests.' " Id. (emphasis in the original; citations omitted). The Court concluded that no violation of such policy had been clearly shown. Id. at 374.

The factual background in Warren I differs from Misco on significant points.

In Warren I, as in Misco, the collective bargaining agreement provides for arbitration of grievances following informal conciliation attempts. Also, the scope of the arbitrator's authority is "concerned solely with the interpretation and/or application of the collective bargaining agreement," as to which "[t]he decision of the arbitrator shall be final and binding on the parties." The parties also agree that "the arbitrator shall have no power to render a decision which in any way modifies any provision of the agreement." However, in Warren I the management rights clause provides that "[t]he Company reserves the sole right to manage the business of the Company and to direct the working force." (emphasis supplied). This sole "right includes but is not limited to ... the right to ... discharge employees for proper cause...." More significantly, the parties specifically negotiated and agreed to the disciplinary rules to be applied in the plant. The negotiated rules were appended to the contract. One of them, Mill Rule 7(a), stated as follows:

7. Causes for Discharge.... Violations of the following rules are considered causes for discharge: (a) Possession, use or sale on Mill property of ... marijuana....

As a result of a police undercover operation in the company's plant, twelve employees were discharged for violating Mill Rule 7(a). The union filed a grievance regarding three of these employees which eventually came before an arbitrator. The arbitrator "found to be proved beyond a reasonable doubt, that all three employees violated Mill Rule 7(a)." S.D. Warren v. United Paperworkers Intern., 632 F.Supp. 463, 465 (D.Me.1986). The arbitrator, however, after rejecting the company's position that the plain meaning of the contract provided for immediate discharge for violation of Mill Rule 7(a), determined that the employees' discharges were not justified, and proceeded to...