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Arbitrator Did Not Exceed Authority by Reducing Discipline for Offense CBA Deemed Termination-worthy: Eighth Circuit
Practical Law Legal Update 8-578-8009 (Approx. 7 pages)
Arbitrator Did Not Exceed Authority by Reducing Discipline for Offense CBA Deemed Termination-worthy: Eighth Circuit
by Practical Law Labor & Employment
| Law stated as of 22 Aug 2014 • USA (National/Federal) |
In PSC Custom, LP v. United Steelworkers, Local No. 11-770, the US Court of Appeals for the Eighth Circuit held that a labor arbitrator did not exceed his authority by reducing a discharge for insubordination to a ten-day suspension even though the governing collective bargaining agreement deemed insubordination a termination-worthy offense. The Eighth Circuit reversed a district court's summary judgment vacating a labor arbitration award and remanded the matter to the district court to reinstate the arbitration award.
On August 19, 2014, in PSC Custom, LP v. United Steelworkers, Local No. 11-770, the US Court of Appeals for the Eighth Circuit held that a labor arbitrator did not exceed his authority by reducing a discharge for insubordination to a ten-day suspension even though the governing collective bargaining agreement (CBA) deemed insubordination a termination-worthy offense. The Eighth Circuit reversed a district court's summary judgment vacating a labor arbitration award and remanded the matter to the district court to reinstate the arbitration award. (13-2405, (8th Cir. Aug. 19, 2014).)
Background
PSC Custom, LP and Local 11-770 of the United Steelworkers had a CBA. The CBA includes a typical just cause provision, stating in Article 21 that "[n]o employee shall be discharged, demoted, or otherwise disciplined without good and sufficient cause."
Article 29 of the CBA sets out the penalties associated with infractions, including "Insubordination such as refusal to work on the job assigned, etc. consistent with the employee’s classification and safety (penalty-discharge)." PSC also had a Standards of Conduct, a rule manual flowing from Article 29 in the CBA. The Standards of Conduct also notes insubordination as a rule violation that "will result in immediate termination."
The CBA has a grievance procedure that permits the union to appeal grievance determinations to arbitration. The CBA limits an arbitrator’s authority in the following terms:
The arbitrator shall only have jurisdiction and authority to interpret, apply, or determine compliance and/or application of the express provisions of this Agreement at issue between the Union and the Company. It is understood that the arbitrator shall not have jurisdiction or authority to add to, disregard, or alter in any way the terms of this Agreement.
The CBA also provides that any dispute about whether PSC has good and sufficient cause for a discharge would be resolved according to the arbitration provisions.
PSC discharged Buscher, a bargaining unit employee covered by the CBA, for failing to perform a task as directed, citing Article 29 and the Standards of Conduct. The union grieved the discharge and appealed the grievance to arbitration. PSC and the union stipulated that the arbitrator must decide whether PSC had "just cause to indefinitely suspend and/or discharge" Buscher.
The arbitrator:
- Noted that:
- there is just cause for a termination only as a final step in a progressive disciplinary process or a single incident of very serious misconduct; and
- there were mitigating circumstances, such as Buscher being ill on the day of his insubordination and Buscher's nearly perfect attendance record.
- Found that:
- Buscher violated CBA Article 29 and the Standards of Conduct by being insubordinate; and
- Buscher’s single incident of insubordination was not severe enough to be just cause for his discharge.
- Sustained the grievance, concluding that:
- PSC did not have just cause for indefinitely suspending or discharging Buscher; and
- Buscher must be reinstated, subject to a ten-day suspension.
PSC petitioned a federal district court to vacate the arbitrator’s award and the union counterclaimed to enforce the award. The district court:
- Granted PSC’s motion for summary judgment and vacated the award, concluding that the arbitrator exceeded his authority by modifying the CBA's penalty for insubordination.
- Denied the union's motion for reconsideration.
The union appealed.
Outcome
The Eight Circuit:
- Noted that:
- it was required to review the district court's decision to vacate the arbitrator’s award de novo (Alcan Packaging Co. v. Graphic Commc’n Conference, Int’l Bhd. Of Teamsters & Local Union No. 77-P, 729 F.3d 839, 841 (8th Cir. 2013));
- when petitioned to vacate a labor arbitration award under section 301 of the Labor Management Relations Act (29 U.S.C. § 185), courts must review whether:
- the parties agreed to arbitrate; and
- the arbitrator had the power to make the award.
- there is no dispute about whether the parties agreed to arbitrate this grievance;
- courts must give great deference to an arbitrator's award as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, even if a court is convinced that the arbitrator committed serious error (United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (1987));
- courts may vacate an arbitrator's award if the arbitrator ignored the plain language of the contract and may not modify unambiguous contract provisions (Misco and Trailmobile Trailer, LLC v. Int’l Union of Elec., Elec., Salaried, Mach. & Furniture Workers, 223 F.3d 744 (8th Cir. 2000));
- a CBA must be construed as a whole with the terms read in the context of the entire agreement (Sheet Metal Workers Int’l Ass’n v. Lozier Corp., 255 F.3d 549 (8th Cir. 2001));
- courts cannot interfere with an arbitrator's award unless it can be said with positive assurance that the CBA is not susceptible to the arbitrator's interpretation (Kewanee Mach. Div. v. Local Union No. 21, Int’l Bhd. of Teamsters, 593 F.2d 314, 318 (8th Cir. 1979)); and
- once parties have gone beyond their promise to arbitrate and submitted an issue to an arbitrator, courts must look both to their contract and to the submission of the issue to the arbitrator to determine the arbitrator's authority (John Morrell & Co. v. Local Union 304A of the United Food & Commercial Workers, 913 F.2d 544 (8th Cir. 1990)).
- Found that:
- the arbitrator was not constrained by the plain language of Article 29 or the Standards of Conduct, read in isolation, to uphold the discharge after finding Buscher was insubordinate;
- nothing in Article 29 specified that Article 21’s just cause requirement for discipline does not apply when a bargaining unit employee is discharged under Article 29 or the Standards of Conduct;
- it was up to the arbitrator to harmonize any possibly discordant provisions within the CBA relating to the authority granted to management to discharge employees for insubordination and the just cause requirement limiting that authority (see PSC Custom, LP v. United Steelworkers, Local No. 11-770, 13-1943, (8th Cir. June 26, 2014)); and
- an arbitrator must bring his informed judgment to bear in order to reach a fair solution of a problem, especially when it comes to formulating remedies (Misco, 484 U.S. at 41).
- Held that the arbitrator did not exceed his authority either by applying a just cause analysis or by reducing the penalty from discharge to suspension after finding Buscher was insubordinate because:
- it was reasonable for the arbitrator to conclude that Article 21 gave him the authority to conduct a just cause analysis;
- the parties stipulated that the arbitrator was to resolve whether PSC had just cause for indefinitely suspending or discharging Buscher; and
- the CBA provisions here were distinguishable from provisions in CBAs interpreted in vacated labor arbitration awards previously considered by the Eighth Circuit. This CBA did not limit the arbitrator’s authority to determining whether the employee had been guilty of the conduct for which he had been disciplined or whether the employee in fact participated in a prohibited activity (see Truck Drivers & Helpers Union Local 784 v. Ulry-Talbert Co., 330 F.2d 562 (8th Cir. 1964) and St. Louis Theatrical Co. v. St. Louis Theatrical Brotherhood Local 6, 715 F.2d 405 (8th Cir. 1983)).
- Reversed summary judgment for PSC and remanded the case to the district court to reinstate the arbitration award.
Practical Implications
This decision highlights the broad discretion federal courts grant arbitrators selected by parties to decide disputes about interpretations of CBAs.
If an employer wants to limit an arbitrator’s authority to interpret just cause or otherwise apply "industrial common law" when evaluating whether a discharge for what the CBA deems a termination-worthy offense, it should:
- Consider negotiating for:
- CBA language setting out what offenses are termination-worthy;
- CBA language clarifying that the just cause provision does not apply to the identified termination-worthy offenses; and
- CBA arbitration clause language that limits the arbitrator's authority to determining whether the employee had been guilty of the conduct for which he had been disciplined, at least for offenses that the CBA mandates particular discipline.
At the arbitration hearing, the employer:
- Should frame the issue for the arbitrator within what the employer perceives to be the bounds of the arbitrator's authority.
- Should not stipulate that the arbitrator must decide the customary issue of whether the employer had just cause for the grieved discipline if the employer believes that the arbitrator is constrained to determine whether the employer complied with particular CBA proscriptions or mandates.
- Should consistently, throughout the proceedings, object to the jurisdiction of the arbitrator to decide an issue believed to be beyond the arbitrator's jurisdiction to prevent a finding that the employer agreed to let the arbitrator determine the issue.