Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-02180/USCOURTS-ca10-91-02180-0/pdf.json

Nature of Suit Code: 720
Nature of Suit: Labor Management Relations Act
Cause of Action: 

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PUBLISH 

FILLV 

Unit.ed States Court of Appeal, Tenth Circuit 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

NOV 2 O 1992 

ROBERT L. HOECKER 

Clerk 

INTERNATIONAL BROTHERHOOD ) 

OF ELECTRICAL WORKERS, ) 

LOCAL UNION NO. 611, ) 

AFL-CIO, ) 

) 

Plaintiff-Appellee, ) 

) 

v. ) 

) 

PUBLIC SERVICE COMPANY ) 

OF NEW MEXICO, ) 

) 

Defendant-Appellant. ) 

91-2180 

On Appeal From The 

United States District Court 

For The District Of New Mexico 

(D.C. No. CIV-90-409-JC) 

George Cherpelis (Timothy L. Salazar and Jeffrey S. Landers with 

him on the briefs) of Cherpelis, Vogel, and Salazar, P.A., 

Albuquerque, New Mexico, for Defendant-Appellant. 

John L. Hollis of John L. Hollis, P.A., Albuquerque, New Mexico, 

for Plaintiff-Appellee. 

Before BRORBY, SETH, and EBEL, Circuit Judges. 

SETH, Circuit Judge. 

Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 1 
Appellee International Brotherhood of Electrical Workers 

Local No. 611 brought suit in district court under section 301 of 

the Labor Management Relations Act, 29 U.S.C. § 185(a), seeking to 

set aside an arbitration award in favor of Appellant Public 

Service Company of New Mexico. Appellant filed a motion for 

summary judgment, and Appellee timely filed a reply. The district 

court, sua sponte treating the pleadings as cross-motions for 

summary judgment, vacated the arbitrator's award and granted 

summary judgment in favor of Appellee. We reverse. 

In July 1988 Appellant notified Appellee that it intended to 

lay off employees in a particular "occupational group" who were 

covered by the collective bargaining agreement ("Agreement"). The 

parties futilely attempted to negotiate the method to be used for 

the layoffs. Ultimately, the Appellant laid off several 

employees, using the method that Appellant perceived to be 

appropriate. Thereafter, Appellee filed grievances, and pursuant 

to Article V, Section 3, of the Agreement, the grievances were 

submitted for arbitration. 

The key issue to be resolved by the arbitrator was whether 

the layoff method employed by the Appellant was proper under 

Article V, Section 16B.2.a., of the Agreement. That section 

provides: 

"If a reduction in the number of employees in 

any classification of any occupational group 

should become necessary, then the first 

demoted shall be those with shortest job 

seniority (Company wide) in any like 

occupational groups. Employees so demoted 

shall then have preemptive rights to a job in 

the occupational group in the next lower 

classification." 

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Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 2 
The arbitrator determined that the plain language of the 

Article V provision ("Provision") was patently ambiguous because 

"[t]he first half of the opening sentence 

indicates a method. which cannot be reconciled 

with the procedure stated in the second half 

of the same sentence. That is, the initial 

part of the statement focuses on a reduction 

in the 'occupational group' (singular) which 

per Article IV, Section 2, definitions is, for 

example, 'each' electric line department found 

in the Company's various divisions, which 

supports the Company's interpretation herein. 

However, the latter part of that opening 

sentence switches to a focus on Company-wide 

seniority 'in any like occupational groups' 

(plural). Hence, in the 'expert opinion' of 

this neutral, this clause requires two forms 

of layoff methodology which cannot be 

reconciled, and therefore, it is ambiguous." 

Aplt. App. Vol. I, at 46-7. In addition to this clearly 

identified reason, the arbitrator's decision suggests other 

reasons supporting his conclusion that the Provision was 

ambiguous. For example, the arbitrator noted that the Provision, 

as interpreted by Appellee, conflicted with the Management Rights 

provision of the Agreement as the "Company's right to determine 

work force numbers and to lay off would be completely 

stifled" by Appellee's interpretation. Aplt. App. Vol. I, at 49. 

Also, the arbitrator recognized that the Provision requires 

that if there were to be a layoff, the "first demoted" must 

possess the least "Company wide" seniority. However, the 

arbitrator found that the Provision "does not set out in detail 

the actual mechanics of a layoff." Apl t. App. Vol. I, at 43 

(emphasis added). Thus the arbitrator was responsible for filling 

in the gaps as to the proper layoff method which would ensure that 

the "first demoted" would be those employees with the least 

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Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 3 
"Company wide" seniority. Specifically, the arbitrator adopted 

the Appellant's method in which senior employees in a particular 

occupational group were allowed to laterally bump into a like 

occupational group, therefore, "the employees who eventually are 

demoted [first] downward into the next lowest classification in 

their occupational groups are the least senior employees, Company 

wide." Aplt. App. Vol. I, at 42. 

After determining that the Provision was ambiguous, the 

arbitrator looked at the past practice and reasonableness of the 

parties and their interpretations in light of the entire 

Agreement. See NCR Corp., E&M-Wichita v. District Lodge No. 70, 

906 F.2d 1499 (10th Cir.) (if plain language is vague, arbitrator 

may look to permissible extrinsic evidence such as other terms of 

the contract, past practices of parties, and common law of the 

shop); United Food & Commercial Workers Local Union No. 7R v. 

Safeway, 889 F.2d 940, 948 (10th Cir.) ("Fairness is a proper 

consideration as long as the determination of fairness draws its 

essence from the collective bargaining agreement."). After four 

days of hearings, he concluded that the Appellant's layoff method 

did not violate the Provision. 

The district court, vacating the award, held that "[i]t may 

be said, and I so find, with positive assurance that the agreement 

is not susceptible to the Arbitrator's interpretation." Order 

Vacating Arbitration Award, at 4. The court also found that the 

arbitrator exceeded his scope of authority and "failed to give 

effect to the express language of the agreement," therefore, the 

award does not "draw its essence from the agreement." Id. at 4-5. 

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Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 4 
On appeal, the Appellant argues that the district court 

improperly exceeded the applicable standard of review by reviewing 

and deciding the merits of the arbitrator's award. Appellee 

counters that the district court correctly held the arbitrator's 

award to be contrary to the express language of the collective 

bargaining agreement , consequently, the award did· not draw its 

essence from the contract . 

"Our review of the district court's ruling [granting summary 

judgment in favor of Appellee] is plenary, and we utilize the same 

standard that the district court was required to apply." NCR 

Corp., 906 F.2d at 1500 (citations omitted). 

Our standard of review of "arbitral awards is among the 

narrowest known to the law. We must enforce an award which 'draws 

its essence from the collective bargaining agreement.'" Litvak 

Packing v. United Food & Commercial Workers, Local Union No. 7, 

886 F.2d 275, 276 (10th Cir. ) (quoting United Steelworkers v. 

Enterprise Wheel & Car Corp., 363 U.S. 593, 597). This has been 

interpreted to mean that "as long as the arbitrator is even 

arguably construing or applying the contract and acting within the 

scope of his authority, that a court is convinced he committed 

serious error does not suffice to overturn his decision." United 

Paperworkers Int'l v. Misco, Inc., 484 U.S. 29, 38. A corollary 

to the Misco standard is that "[w]e will not interfere with an 

arbitrator's decision 'unless it can be said with positive 

assurance that the contract is not susceptible to the arbitrator's 

interpretation.'" Safeway, 889 F.2d at 947 (quoting Sterling 

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Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 5 
Colo. Beef Co. v. United Food & Commercial Workers Local Union No. 

7, 767 F.2d 718, 720 (10th Cir.)). 

Following the Misco standard, we must determine (1) whether 

the arbitrator acted within the contractual scope of his 

authority; and (2) if so, whether he was even arguably construing 

or applying the Agreement thus drawing the essence of his award 

from the Agreement. 

When addressing the first part of the Misco standard, it is 

important to realize that the "parties have contracted for an 

arbitrator to resolve their disputes, not a court. They have 

agreed to be bound by the arbitrator's factfinding and contract 

interpretation whether his findings and conclusions are correct or 

not." Litvak, 886 F.2d at 276 (citations omitted). Specifically, 

the arbitrator was, among other things, authorized by the parties 

to interpret the Provision in order to determine the proper method 

for the layoffs. Aplt. App. Vol. I, at 46. The Appellee concedes 

this point in its brief. Aple. Brief, at 4 ("The Arbitrator 

found, as recognized by the parties, that ' ... the critical 

provision to be interpreted is Article V, Section 16, paragraph 

B.2.a. Demotions and Layoffs'" (emphasis added)). We can find 

nothing in the record to suggest that by interpreting the 

Provision the arbitrator exceeded the scope of this authority. On 

the contrary, he was acting precisely according to the authority 

granted to him by the parties. 

Given that the arbitrator acted within the scope of his 

authority, we must next determine whether the award draws its 

essence from the Agreement. As previously discussed, the 

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Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 6 
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arbitrator was hired to interpret the Provision and, for numerous 

reasons, concluded that the Provision was ambiguous. Then he 

effectively applied permissible extrinsic evidence to formulate 

his decision. See NCR Corp. -~ 906 F.2d 1499. The record reflects 

that the arbitrator, in rendering his award, satisfied the second 

part of the Misco standard by arguably construing the Provision 

and applying his understanding of the Agreement. It is apparent 

that "the arbitrator did not stray beyond the four corners of the 

agreement to find the essence of his decision .... " NCR Corp., 

906 F.2d at 1504. In fact, the arbitrator's painstaking analysis 

of the Provision and of the permissible extrinsic evidence 

definitively demonstrates that his award drew its essence from the 

Agreement, and was not an attempt to dispense his own sense of 

industrial justice. See United Steelworkers, 363 U.S. 593. 

In addition, we are not convinced, as was the district court, 

that it can be said with positive assurance that the Provision is 

not susceptible to the arbitrator's interpretation. See Safeway, 

889 F.2d at 947. We must conclude that the arbitrator's award is 

not "so unfounded in reason and fact, so unconnected with the 

wording and purpose of the ... agreement as to 'manifest an 

infidelity to the obligation of the arbitrator'", Mistletoe 

Express Service v. Motor Expressmen's Union, 566 F.2d 692, 694 

(10th Cir.) (quoting Brotherhood of Railroad Trainmen v. Central 

of Georgia Railway Co., 415 F.2d 403, 415 (5th Cir.)), that the 

essence of the award has not been drawn from the Agreement or that 

it violates the express language of the Agreement. 

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Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 7 
Because "[i]t is the arbitrator's construction which was 

bargained for; and so far as the arbitrator's decision concerns 

construction of the contract, the courts have no business 

overruling him because their. interpretation of the contract is 

different from his." United Steelworkers, 363 U.S. at 599. As we 

held in NCR Corp., 906 F.2d at 1506, it is not our function to 

determine whether the arbitrator misinterpreted the Agreement. 

"[A]s we have explained and emphasized, our function is to do no 

more than determine whether the arbitrator's decision was drawn 

from the Agreement and the several permissible sources he employed 

to enable him to render his ... [a]ward. We hold that the 

arbitrator here fully complied with his assignment, in that his 

award drew its essence form the parties' collective bargaining 

Agreement." Id. 

Accordingly, the district court's order of July 15, 1991 is 

REVERSED, and the arbitrator's Opinion and Award is to be 

reinstated in its entirety. 

IT IS SO ORDERED. 

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Appellate Case: 91-2180 Document: 010110149204 Date Filed: 11/20/1992 Page: 8