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

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued En Banc March 18, 1998 Decided June 2, 1998

No. 96-7270

Madison Hotel,

Appellee

v.

Hotel and Restaurant Employees, Local 25, AFL-CIO,

Appellant

Appeal from the United States District Court

for the District of Columbia

(96cv01433)

Jeremiah A. Collins argued the cause for appellant. With

him on the briefs were Mady Gilson, David M. Silberman,

and Francis R.A. Sheed.

Jonathan W. Greenbaum argued the cause and filed the

brief for appellee.

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Before: Edwards, Chief Judge, Wald, Silberman,

Williams, Ginsburg, Sentelle, Henderson, Randolph,

Rogers, Tatel, and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Opinion concurring in the judgment filed by Circuit Judge

Henderson.

Randolph, Circuit Judge: Hotel and Restaurant Employees, Local 25, AFL-CIO, appeals from the judgment of the

district court vacating an arbitration award in Local 25's

favor. We reverse.

In July 1992, the Madison Hotel laid off its bus employees,

abolished the bus employee classification, and reassigned the

bus duties to the Hotel's waiters. The layoff prompted a

dispute with Local 25, the union representing the Hotel's food

and beverage employees. The dispute proceeded to arbitration. In a January 1994 opinion, the arbitrator found that the

Hotel "violated the layoff, seniority and classification provisions of the [collective bargaining agreement], ... insofar as

it eliminated completely the Bus Employee classification, laid

off all of the Bus Employees and transferred the substantial

remaining Bus Employee duties to the Waiters, in the absence of a demonstrated legitimate business reason...."

J.A. 31. The arbitrator directed the Hotel "to reinstate the

[bus employees] to their former positions and to make them

whole for all losses, including seniority, attributable to their

improper layoff." J.A. 36.

When all of the laid-off bus employees indicated that they

no longer sought reinstatement to their former positions, the

Hotel claimed the matter was at an end. Invoking the

arbitration award, Local 25 insisted that the Hotel restore the

bus employee classification and hire new employees to fill the

positions. The parties returned to the arbitrator for clarification, whereupon the arbitrator explained that his award required the Hotel "to reinstate the Bus Employee classification

... [,] to fill the number of Bus Employee positions ... which

existed at the time of the layoff and to operate with such Bus

Employee classifications until it can demonstrate an appropriUSCA Case #96-7270 Document #356782 Filed: 06/02/1998 Page 2 of 10
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ate basis, under the [collective bargaining agreement], to

abolish such positions." J.A. 49.

The Hotel then sued to vacate the award. The district

court granted summary judgment in the Hotel's favor.

Among other things, the district court found that, because the

original grievance was filed "on behalf of" the bus employees,

arbitration extended only to whether the rights of those

employees had been violated; accordingly the arbitrator exceeded his authority in ordering the Hotel to restore the bus

classification. Madison Hotel v. Hotel & Restaurant Employees Local 25, 955 F. Supp. 1 (D.D.C. 1996).

We believe the district court had no adequate basis for

disagreeing with the arbitrator's view of what was before him

for decision. In his first opinion, the arbitrator framed the

dispute this way: "Whether the Hotel violated the Agreement

by its abolishment of the Bus Employee position, its transfer

of the duties of the Bus Employees to other positions and its

layoff of the Grievants in July 1992 and, if so, what is the

appropriate remedy?" J.A. 19. Given this statement, the

arbitration encompassed not only the propriety of the Hotel's

laying off the bus employees, but also its abolishing the bus

classification and transferring the bus employees' duties to

the waiters. The "scope of the arbitrator's authority is itself

a question of contract interpretation that the parties have

delegated to the arbitrator." W.R. Grace & Co. v. Local

Union 759, Int'l Union of United Rubber, Cork, Linoleum &

Plastic Workers of America, 461 U.S. 757, 765 (1983). An

arbitrator's view of the issues submitted to him for arbitration therefore receives the same judicial deference as an

arbitrator's interpretation of a collective bargaining agreement.1 See, e.g., Sheet Metal Workers' Int'l Ass'n Local

________

1 This question--the scope of the submission to the arbitrator--

should not be confused with the question of arbitrability--whether

the employer and the union agreed in the collective bargaining

agreement to put a particular issue to arbitration. The latter

question is reviewed by a federal court de novo. See, e.g., Williams

v. E.F. Hutton & Co., 753 F.2d 117, 119 (D.C. Cir. 1985); Davis v.

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Union No. 359 v. Madison Indus., 84 F.3d 1186, 1190 (9th

Cir. 1996); Richmond, Fredericksburg & Potomac R.R. v.

Transportation Communications Int'l Union, 973 F.2d 276,

280 (4th Cir. 1992); El Dorado Technical Servs., Inc. v.

Union General De Trabajadores de Puerto Rico, 961 F.2d

317, 321 (1st Cir. 1992); Lattimer-Stevens Co. v. United

Steelworkers of America, Dist. 27, Sub-Dist. 5, 913 F.2d 1166,

1170 (6th Cir. 1990); Mobil Oil Corp. v. Independent Oil

Workers Union, 679 F.2d 299, 302 (3d Cir. 1982); Waverly

Mineral Prods. Co. v. United Steelworkers of America, Local

No. 8290, 633 F.2d 682, 685-86 (5th Cir. 1980). The Hotel

has identified nothing to cast the slightest doubt on the

arbitrator's judgment about the scope of this arbitration.

The Hotel conceded at oral argument that there is no record

of any formal "submission" of issues for arbitration.2 As is

commonplace in arbitration proceedings, the scope of the

issues developed informally during the course of the parties'

presentations. See, e.g., Elkouri & Elkouri, How Arbitration

Works 323-24 (5th ed. 1997). The Hotel never objected to

the arbitrator's framing of the issue in his first written

opinion, and it said so at oral argument.3

________

Chevy Chase Fin. Ltd., 667 F.2d 160, 166-67 (D.C. Cir. 1981). The

former, as we have just indicated, is not.

2 Counsel for the Hotel acknowledged that the submission "was

an oral submission to the arbitrator which is set forth in his

opinion." When the Court asked whether this meant that "the

submission" could only be defined by reference to "the arbitrator's

definition of the grievance and the issue," counsel answered, "That's

correct."

33%B5The Court:"Where is it, in all these documents, that you say to the 

arbitrator, 'Hey,

you can't arbitrate the abolishment of the classification'?"

Counsel:"We haven't set that out."

The Court:"Was there some argument ... in the arbitration where you said to 

the

arbitrator ..., 'You're not understanding this correctly, that's not before 

you'?"

Counsel:"No Your Honor."

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A copy of Local 25's initial grievance letter to the Hotel,

submitted to us on appeal, recites the union's objection to the

Hotel's layoff of one of the bus employees. The letter's

caption reads, "Re: Bus Employees/Local 25 Members," and

its first sentence states: "This is to advise you that the Hotel

& Restaurant Employees Local 25, AFL-CIO, pursuant to

our collective bargaining agreement is opposing and taking to

arbitration the action taken by your establishment against the

above-captioned employee." We place no weight on this

letter. As both parties now concede, the letter did not

purport to encompass all the questions the parties intended to

place before the arbitrator; its function was to set the

informal arbitration process in motion.4

Quoting from the first paragraph of the arbitrator's opinion, the district court thought it significant that Local 25 had

initiated arbitration "on behalf of" the former bus employees,

the theory being that the only permissible remedy could run

to them. The quoted language will not bear the weight the

district court placed on it. From the second paragraph of his

opinion onward, the arbitrator treated the Hotel's unilateral

abolishment of the bus employee classification as a chief topic

of dispute between the parties. This firmly indicates what

the parties believed they were arbitrating, and what the

arbitrator believed he had been called upon to resolve.

The district court also found that the arbitrator's June 1996

final award "did not draw its essence from the collective

bargaining agreement." Madison, 955 F. Supp. at 3. The

Hotel thinks this is correct because the arbitrator improperly

considered some contractual provisions while ignoring others,

________

4 Counsel for Local 25 stated that the "letter ... is not

regarded as a jurisdictional type of document," that it "was sent to

the employer to initiate the proceedings," and that "there is absolutely nothing in the parties' contract which says that that letter ...

defines the limits of the arbitrator's authority in a subsequent case."

Counsel for the Hotel agreed, noting that "the first step in the

[arbitration] process is the filing of a grievance, which is what this

letter is," and that the grievance letter "just gets us to the

arbitration arena."

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and because he imposed "extra-contractual" obligations on

the Hotel. Of course, an arbitration award that fails to draw

its essence from the collective bargaining agreement cannot

stand. See United Steelworkers of America v. Enterprise

Wheel & Car Corp., 363 U.S. 593, 597 (1960). While courts

therefore may review the substance of an arbitration award,

only the narrowest circumstances will justify setting the

award aside. An arbitrator cannot, for instance, "render[ ] a

judgment based on external legal sources, wholly without

regard to the terms of the parties' contract." American

Postal Workers Union v. United States Postal Serv., 789 F.2d

1, 8 (D.C. Cir. 1986). Nor can an arbitrator simply ignore the

contract and "dispense his own brand of industrial justice."

Enterprise Wheel, 363 U.S. at 597. But if an arbitrator was

"arguably construing or applying the contract," a court must

defer to the arbitrator's judgment. United Paperworkers

Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987). Courts

"have no business ... determining whether there is particular language in the written instrument which will support the

claim" submitted for arbitration. United Steelworkers of

America v. American Mfg. Co., 363 U.S. 564, 568 (1960). The

arbitrator's June 1996 final remedy falls well within the

bounds of this deferential standard. In a series of thorough

opinions explicitly considering the relevant contract provisions, the arbitrator decided upon the remedy of restoring the

bus classification. That the arbitrator gave more weight to

some provisions--such as the seniority and classification provisions--and less weight to others--such as the Management

Rights Clause--than the district court or the Hotel might

have preferred is not a permissible basis for vacating the

award. It should hardly need repeating that "courts have no

business overruling [an arbitrator] because their interpretation of the contract is different from his." Enterprise Wheel,

363 U.S. at 599; see United States Postal Serv. v. National

Ass'n of Letter Carriers, 789 F.2d 18, 20 (D.C. Cir. 1986).

The "parties having authorized the arbitrator to give meaning

to the language of the agreement," courts cannot "reject [the]

award on the ground that the arbitrator misread the contract." Misco, 484 U.S. at 38.

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As to the Hotel's complaint about the arbitrator's imposing

"extra-contractual" obligations, it is well-established that the

"labor arbitrator's source of law is not confined to the express

provisions of the contract." United Steelworkers of America

v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581 (1960).

The parties' past practice, the "industrial common law" of the

hotel business, the structure of the contract as a whole--all of

these matters could be properly considered by the arbitrator

in interpreting the contract and formulating the award. See

id. at 581-82; Enterprise Wheel, 363 U.S. at 597; American

Postal Workers, 789 F.2d at 5; see generally Elkouri &

Elkouri, supra, at 470-515. An arbitrator's familiarity and

experience with such matters is commonly acknowledged as

one of the primary considerations favoring judicial deference

to arbitration awards. See, e.g., Warrior & Gulf, 363 U.S. at

582. In this case it is enough to sustain the award that the

arbitrator, permissibly drawing on the sources just mentioned

as well as on the explicit provisions of the contract itself,

"purport[ed] to be interpreting the contract" in rendering his

final decision. Utility Workers Union of America, Local 246

v. NLRB, 39 F.3d 1210, 1216 (D.C. Cir. 1994).

The district court erred in concluding that the arbitrator's

final remedy exceeded the scope of the issues presented to

him for arbitration and did not draw its essence from the

collective bargaining agreement. Accordingly, the decision of

the district court is reversed.

So ordered.

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Karen LeCraft Henderson, Circuit Judge, concurring in the

judgment:

I agree that the district court should be reversed but on

the narrow ground that the Hotel failed to object before the

arbitrator to restoration of the eliminated bus positions--the

issue on which Local 25 sought clarification. See 12/14/94

Letter from Union Requesting Clarification from Arbitrator

(JA 87-89).1 By not objecting to submission of the restoration issue to the arbitrator, the Hotel waived its right to

challenge in court the scope of the submission and the

arbitrator's authority thereunder to resolve the issue.2 Cf.

Davis v. Chevy Chase Fin. Ltd., 667 F.2d 160, 165 (D.C. Cir.

1981) (finding no waiver because party "did ... raise the

arbitrability question" before arbitrator "with full reservation

of his right to have the arbitrator's determination subjected

to judicial review"); see also United Industrial Workers v.

Government of the Virgin Islands, 987 F.2d 162, 168 (3d Cir.

1993) ("[B]ecause arbitrators derive their authority from the

contractual agreement of the parties, a party may waive its

right to challenge an arbitrator's authority to decide a matter

by voluntarily participating in an arbitration and failing to

object on the grounds that there was no agreement to arbitrate."); Jones Dairy Farm v. Local No. P-1236, United

Food & Commercial Workers Int'l Union, 760 F.2d 173, 175

(7th Cir.), cert. denied, 474 U.S. 845 (1985); George Day

Constr. Co. v. United Bhd. of Carpenters & Joiners of Am.,

Local 354, 722 F.2d 1471, 1475-76 (9th Cir. 1984); Piggly

Wiggly Operators' Warehouse, Inc. v. Piggly Wiggly Operators' Warehouse Indep. Truck Drivers Union, Local No. 1,

611 F.2d 580, 584 (5th Cir. 1980). Once the bus positions

were restored, they became, as the arbitrator observed unex-

________

1In opposing Local 25's clarification request, the Hotel's counsel

argued only that the arbitrator lacked authority to fill the restored,

but vacant, positions. See Letter from Hotel Counsel to Arbitrator

in Opposition to Union Clarification Letter at 1 (JA 90) (whether

"the hotel must hire new buspersons to fill the classification" "is not

before the arbitrator").

2Waiver was not argued to the initial panel.

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ceptionably, "subject to being filled as vacancies in accordance with the [Collective Bargaining] Agreement." 6/6/96

Clarification Letter at 3 (JA 43) (quoting 2/6/95 Clarification

Letter at 3 (JA 40)). The arbitrator was therefore justified in

directing the Hotel to "fill" and "operate with" the restored

busing positions "until it can demonstrate an appropriate

basis under the Agreement, to abolish such positions." Id. at

9 (JA 49). Given the Hotel's waiver, there is no need to

explore here the metes and bounds of arbitral authority, as

the majority has done. Since the majority has chosen to do

so, however, I will respond briefly.

First, it should be noted that our circuit is not always eager

to enforce arbitration agreements so strictly. See Cole v.

Burns Int'l Sec. Servs., 105 F.3d 1465, 1489 (D.C. Cir. 1997)

(holding arbitration agreement binding on Title VII plaintiff

only if employer agrees to pay arbitration costs). Second, I

do not agree with the majority's assertion that there is

"nothing to cast the slightest doubt on the arbitrator's judgment about the scope of this arbitration." Majority Op. at 4.

The arbitrator's first decision, on the merits, treated the

arbitration as having been brought on behalf of and to

provide a remedy for the named grievants only--a view the

arbitrator acknowledged in each of the clarification letters.

See 2/6/95 Clarification Letter at 2 (JA 39) ("The Arbitrator

notes that the remedy set forth in the [January 2, 1994]

Opinion contemplated reinstatement of, and a make whole

award to, the identified Grievants only. That is, nothing in

this Arbitration proceeding raised, or was intended to resolve,

any issue with respect to any potential remedy to any individuals other than the identified Grievants.") (emphasis added);

6/6/96 Clarification Letter at 8 (JA 48) ("[I]t is correct that

the Arbitrator, in finding the violation, balanced Management's right to manage, including the right to determine

staffing, against the Grievants' seniority rights ....") (emphasis added). The tenor of the merits decision presumably

reflects the intent of the parties at that time, as expressed in

their briefs and at the hearing. And the scope of an arbitrator's authority is limited to those subjects the parties intend

to submit to arbitration. See Williams v. E.F. Hutton & Co.,

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753 F.2d 117, 119 (D.C. Cir. 1985) ("There is no duty to

arbitrate matters not subject to the arbitration agreement,

and no authority on the part of arbitrators to consider

matters not necessary to the resolution of disputes actually

submitted.") (citing Davis, 667 F.2d at 165) (emphasis added);

Washington-Baltimore Newspaper Guild, Local 35 v. Washington Post Co., 442 F.2d 1234, 1236 (D.C. Cir. 1971) ("In

determining the scope of an arbitrator's authority we look to

two sources: the collective bargaining agreement, and the

submission of the parties to the arbitrator.") (emphasis added); Matteson v. Ryder Sys. Inc., 99 F.3d 108, 114 (3d Cir.

1996) ("[T]he touchstone for interpreting a submission must

be the intention of the parties."). If an arbitrator oversteps

the authority delegated by the parties, it is the duty of the

reviewing court to rein him in. See Matteson v. Ryder Sys.

Inc., 99 F.3d at 1113-15 (reversing arbitral decision "[b]ecause the [arbitral tribunal] exceeded its authority as arbitrator by deciding issues not submitted to it by the [parties]");

John Morrell & Co. v. Local Union 304a of the United Food

& Commercial Workers, 913 F.2d 544, 559-61 (8th Cir. 1990)

(affirming district court determination that arbitral decision

was beyond scope of issues submitted because appellate court

was "satisfied that the arbitrator was not 'even arguably ...

acting within the scope of his authority' "), cert. denied, 500

U.S. 905 (1991); Bowater Carolina Co. v. Rock Hill Local

Union No. 1924, 871 F.2d 23 (4th Cir. 1989) (directing district

court to vacate decision on issue not submitted by parties);

Courier-Citizen Co. v. Boston Electrotypers Union No. 11,

702 F.2d 873, 830-31 (1st Cir. 1983) (vacating district court

order enforcing back pay award to employee not mentioned in

submission). Nonetheless, because the Hotel failed to object

before the arbitrator to the expanded scope of the arbitration,

it has waived any right to do so now.

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