United Transp. Union Local 1589 v. Suburban Transit Corp.

• Decision Date: 16 March 1995
• Docket Number: No. 94-5336,AFL-CIO,94-5336
• Citation: 51 F.3d 376
• Parties: 148 L.R.R.M. (BNA) 2796, 63 USLW 2640, 129 Lab.Cas. P 11,297 UNITED TRANSPORTATION UNION LOCAL 1589 v. SUBURBAN TRANSIT CORP. SUBURBAN TRANSIT CORP., a corporation of the State of New Jersey v. UNITED TRANSPORTATION UNION LOCAL 1589,United Transportation Union Local 1589, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 376

51 F.3d 376

148 L.R.R.M. (BNA) 2796, 63 USLW 2640,

129 Lab.Cas. P 11,297

UNITED TRANSPORTATION UNION LOCAL 1589 v. SUBURBAN TRANSIT CORP.

SUBURBAN TRANSIT CORP., a corporation of the State of New Jersey v. UNITED TRANSPORTATION UNION LOCAL 1589, AFL-CIO.

United Transportation Union Local 1589, Appellant.

No. 94-5336.

United States Court of Appeals Third Circuit.

Argued Dec. 6, 1994.

Decided March 16, 1995.

Timothy R. Hott (argued), Hott & Margolis, Jersey City, NJ, for appellant.

Francis A. Mastro (argued), Apruzzese, McDermott, Mastro & Murphy, Liberty Corner, NJ, for appellee.

BEFORE: STAPLETON, ROTH and LEWIS, Circuit Judges.

OPINION OF THE COURT

LEWIS, Circuit Judge.

United Transportation Union, Local 1589, AFL-CIO (the "Union") appeals a district court order vacating an arbitration award in favor of Joseph Nagy, a former employee of Suburban Transit Corporation ("Suburban"). Because we agree with the Union that the district court failed to accord the arbitration award proper deference, we will reverse.

I.

A.

Suburban and the Union are parties to a collective bargaining agreement ("CBA"). Under the CBA, Suburban is given certain rights to discipline and discharge its employees, and the Union is entitled to contest any disciplinary action of management. The parties agreed in the CBA to submit to arbitration any grievance that they cannot resolve.

More specifically, Article I, Section 5 of the CBA states that "[t]he Union recognizes the right of the Company to exercise all functions of management, including ... the right to hire, promote, demote, transfer, and discipline or discharge for proper cause." CBA, art. I Sec. 5. The same provision explains that "[t]he Union shall retain the right to contest any action of management in accordance with the appropriate provisions of this contract." In Article IV, entitled "Discipline Procedure," the CBA sets forth eleven sections describing a variety of disciplinary procedures. For most alleged infractions, an employee is entitled to a hearing before discipline is imposed. However, in certain circumstances, Suburban has the right to suspend the employee immediately and then promptly hold a hearing. In virtually all circumstances, an employee may appeal from his hearing to "the highest officer of Suburban" (CBA art. IV, Sec. 3), and if the parties cannot resolve their differences even at this stage, "the dispute may be presented to an arbitrator selected through the rules of the American Arbitration Association or the N.J. State Board of Mediation...." Id. art. V, Sec. 1(d). With respect to arbitration, the parties agree that "[t]he determination of th[e] arbitrator shall be final and binding on both parties" (id.), but the CBA also explains that the arbitrator's authority is not plenary; rather,

[a]uthority of the arbitrator shall be limited to the determination of the dispute or grievance arising out of the interpretation, application or operation of the provisions of this agreement on submission of the issues involved by the parties to this agreement. He shall not have any authority whatsoever to alter, amend or modify any of the provisions of this agreement.

Id. art. V, Sec. 3.

B.

On December 15, 1992, Nagy was involved in a bus accident on the New Jersey Turnpike: he rear-ended a tractor trailer because he was tailgating. In his 12 years of employment, he had been involved in 24 accidents, nine of which were deemed preventable. This was his third preventable rear-end collision.

Suburban fired Nagy, and the Union protested. When the parties could not resolve their dispute, the matter was submitted to arbitration on the following questions:

Was the discharge of Joseph Nagy for just cause?

If not, what shall be the remedy?

After a hearing, the arbitrator ruled that Nagy was responsible for the accident, but that Suburban should not have fired him. Instead, the arbitrator concluded, discharge was too harsh a sanction for a long term employee where the employee had been afforded no opportunity to improve his driving skills through a retraining program.

Pursuant to 9 U.S.C. Sec. 10(b), the Union and Suburban moved in the district court to enforce and vacate, respectively, the arbitrator's award. The district court, in a written opinion, denied the Union's motion to enforce and granted Suburban's motion to vacate the award, reasoning that the arbitrator had read into the CBA terms that were not there. The district court had jurisdiction under 29 U.S.C. Sec. 185(a), and we have jurisdiction under 28 U.S.C. Sec. 1291.

II.

On appeal, the Union argues that because the arbitrator's award was at least arguably based upon a construction of the CBA, the district court erred when it granted Suburban's motion to vacate the award. We agree.

A.

District courts have very little authority to upset arbitrators' awards. As we explained in News America Publications, Inc. v. Newark Typographical Union, Local 103, 918 F.2d 21 (3d Cir.1990), "courts play an extremely limited role in resolving labor disputes." Id. at 24. "A court may not overrule an arbitrator simply because it disagrees with the arbitrator's construction of the contract ... or because it believes its interpretation of the contract is better than that of the arbitrator." Id. (internal citation omitted). Rather, "[a]s long as the arbitrator has arguably construed or applied the contract, the award must be enforced, regardless of the fact that a court is convinced that [the] arbitrator has committed a serious error." Id. Thus, "there must be absolutely no support at all in the record justifying the arbitrator's determinations for a court to deny enforcement of an award." Id. "[O]nly 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." Id. (internal quotation omitted). Thus, as we wryly concluded, "[i]t should be clear that the test used to probe the validity of a labor arbitrator's decision is a singularly undemanding one." Id.

Although News America is notable for the thoroughness of its exposition, it is by no means the only source of our longstanding disinclination to allow district courts to overturn arbitration awards. To the contrary, our case law is uniform on this point. E.g., Roberts & Schaefer Co. v. Local 1846, UMW, 812 F.2d 883, 885 (3d Cir.1987) ("[e]ven when the award was dubious, and the result one that we would not have reached had the matter been submitted to the court originally, we have upheld the arbitrator's decision"); United Indus. Workers v. Government of the Virgin Islands, 987 F.2d 162, 170 (3d Cir.1993) (scope of review is "narrowly circumscribed"); Newark Morning Ledger Co. v. Newark Typographical Union, 797 F.2d 162, 165 (3d Cir.1986) (our "strict standard means that a reviewing court will decline to sustain an award 'only in the rarest case' "). As long as an arbitrator's decision arguably construes or "draws its essence" from the CBA, a district court is not permitted to vacate the award. "An arbitration award draws its essence from the 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.' " Tanoma Min. Co., Inc. v. Local Union No. 1269, UMWA, 896 F.2d 745, 748 (3d Cir.1990), quoting and adding emphasis to Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123, 1128 (3d Cir.1969). Only when an arbitrator "acted in manifest disregard of the law, or if the record before the arbitrator reveals no support whatsoever for the arbitrator's determination," may a district court invade the province of the arbitrator. United Indus. Workers, 987 F.2d at 170.

The reason for such a lenient standard is not difficult to discern. "[F]requent judicial disapproval of the awards of labor arbitrators would tend to undermine a system of private ordering that is of the highest importance to the well-being of employer and worker alike." Newark Morning Ledger, 797 F.2d at 165.

B.

With these considerations in mind, we turn to the district court's decision to vacate the arbitration award in this case. Although the district court recognized that it had limited authority to review in this case, the court nevertheless found that the arbitrator's award did not draw its essence from the CBA here because the arbitrator "read[ ] into" the CBA terms that were not there--specifically, provisions dealing with retraining, progressive discipline, setting criteria for retraining, and defining who is entitled to retraining. This conclusion, however, was inaccurate.

Contrary to the district court's reasoning, the arbitrator did not impermissibly "read into" the parties' agreement terms that were not there. Rather, the arbitrator simply interpreted the ambiguous term "proper cause" in a manner unsatisfactory to management. The CBA allows Suburban to discipline or discharge for "proper cause" (art. I, Sec. 5), but does not define the phrase. When the grievance was submitted to arbitration, the arbitrator was forced to decide what "proper cause" meant (or "just cause" according to the language of the questions submitted to arbitration, supra p. 379). We cannot say that the arbitrator was engrafting provisions onto the CBA when he evidently decided that he must decide whether it was fitting (a synonym for "proper") and fair or equitable (two synonyms of "just," the term used in the actual submission to the arbitrator) for Suburban to have discharged a long-term employee for the accident in question. In making this determination, the arbitrator wrote that although it was clear that Nagy had been negligent, what was not clear was the "validity of the punishment" imposed by Suburban. He noted that although Nagy had been involved in many accidents, some were minor and occurred shortly after he was hired, and he had also received three annual...