Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-55250/USCOURTS-ca9-14-55250-0/pdf.json

Parties Involved:
Drywall Dynamics, Inc.
Appellee
Southwest Regional Council of Carpenters
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SOUTHWEST REGIONAL

COUNCIL OF CARPENTERS,

Plaintiff-Appellant,

v.

DRYWALL DYNAMICS, INC.,

Defendant-Appellee.

No. 14-55250

D.C. No.

2:13-cv-05350-JAK-SP

OPINION

Appeal from the United States District Court

for the Central District of California

John A. Kronstadt, District Judge, Presiding

Argued and Submitted February 12, 2016

Pasadena, California

Filed May 19, 2016

Before: Marsha S. Berzon and John B. Owens, Circuit

Judges, and Algenon L. Marbley,

*

 District Judge.

Opinion by Judge Berzon

* The Honorable Algenon L. Marbley, District Judge for the U.S.

District Court for the Southern District of Ohio, sitting by designation.

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2 SWRCC V. DRYWALL DYNAMICS

SUMMARY**

Arbitration / Labor Law

The panel reversed the district court’s order vacating an

arbitration award in a labor law case.

The arbitrator ruled that an employer was bound by a

memorandum of understanding extending the term of a labor

agreement. The district court vacated the arbitration award

on the grounds that the arbitrator’s interpretation of the

parties’ agreement was not plausible and was contrary to

public policy.

The panel held that the district court’s decision exceeded

its narrow authority to determine whether the arbitrator’s

award was based on the parties’ contract and whether it

violated an explicit, well-defined, and dominant public

policy.

COUNSEL

Melissa R. Shimizu (argued) and Daniel M. Shanley, DeCarlo

& Shanley, Los Angeles, California, for Plaintiff-Appellant.

Rick J. Sutherland (argued), Jackson Lewis, Salt Lake City,

Utah, for Respondent-Appellee.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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SWRCC V. DRYWALL DYNAMICS 3

OPINION

BERZON, Circuit Judge:

This case requires us once more to clarify the limited role

played by courts in reviewing labor arbitration awards. 

Respondent Drywall Dynamics, Inc. (“Drywall”) entered into

a labor agreement with petitioner Southwest Regional

Council of Carpenters (“SWRCC” or “the Union”) according

to which Drywall assigned to a contractors’ association

authority to bargain on its behalf. Some years later, having

grown dissatisfied with this arrangement, Drywall attempted

to terminate the agreement at what it thought was the

appropriate time, only to discover that the Union and the

association had executed a Memorandum of Understanding

extending the term of the agreement.

An arbitrator held that Drywall was bound by the

Memorandum. But the district court vacated the arbitration

award, holding that the arbitrator’s interpretation of the

parties’ agreement was not “plausible” and was, moreover,

contrary to public policy. We conclude that the district

court’s decision exceeded its narrow authority to determine

whether the arbitrator’s award was based on the parties’

contract and whether it violated an “explicit, well-defined,

and dominant public policy,” E. Associated Coal Corp. v.

United Mine Workers of Am., Dist. 17, 531 U.S. 57, 63

(2000), and accordingly reverse.

FACTUAL AND PROCEDURAL BACKGROUND

Drywall is a Utah-based construction company; SWRCC

represents workers in the construction industry. On July 15,

2005, Drywall and SWRCC entered into a Memorandum

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4 SWRCC V. DRYWALL DYNAMICS

Agreement according to which Drywall agreed to be bound

by a Master Labor Agreement (“MLA”) between the Union

and the Drywall/Lathing Conference of the Western Wall &

Ceiling Contractors Association (“WWCCA” or “the

Association”), as well as “any extensions, renewals or

subsequent Master Agreements.” Drywall waived “any right

that . . . it may have to terminate, abrogate, repudiate or

cancel this Agreement during its term or during the term of

anyfuture modifications, changes, amendments, supplements,

extensions, or renewals of or to said Master Agreement.” The

Memorandum Agreement further provided that Drywall

“authorize[d] the Association to represent” it unless Drywall

gave notice of its desire to withdraw from the agreement “at

least sixty (60) days, but no earlier than ninety (90) days prior

to the termination date” of the then-effective MLA. The

MLA in place when the parties executed the Memorandum

Agreement was due to expire on June 30, 2006, but provided

that it would “continue to remain in full force and effect from

year to year thereafter without change or modification” unless

either party proposed such changes within 60 to 90 days of

the termination date.

On April 30, 2008, Drywall notified the Union “of its

intent to no longer be bound” by the MLA as of June 30,

2008. In fact, the Union and the Association had already

negotiated a successor five-year MLA, which would expire

on June 30, 2010. In response to Drywall’s notice, the Union

informed the company that its purported termination was

untimely, although the Union erroneously asserted that the

Agreement’s new end date was September 30, 2009. Drywall

opted not to dispute this point and continued complying with

the MLA.

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SWRCC V. DRYWALL DYNAMICS 5

On April 15, 2009, Drywall again gave the Union notice

of its intent to terminate the Agreement, this time as of June

30, 2009. On May 6, the Union informed Drywall that its

proffered termination was untimely, asserting that the

Agreement remained in effect until June 30, 2010, as

provided by the successor MLA.

In fact, before sending this communication, the Union

had, on April 16, 2009, executed a Memorandum of

Understanding (“MOU”) with the Association. The MOU

provided for an extension of the MLA until June 30, 2011, in

exchange for the Union’s agreement to defer a portion of a

negotiated pay raise. The MOU further provided that “only

WWCCA Drywall/Lathing Conference Members who

affirmatively agree to this Agreement will be bound to it” and

so permitted to pay the lower rate. Those members who did

not affirmatively agree to the MOU were to “pay the full . . .

increase previously agreed upon.”

On April 13, 2010, Drywall attempted again to terminate

its agreement with the Union and the WWCCA, effective

June 30, 2010. The Union once more responded that the

termination was untimely, explaining—as was the case—that

the agreement had been extended until June 30, 2011.

On July 6, 2010, the Union filed a grievance against

Drywall with the Southern California Drywall Joint

Adjustment Board (“Adjustment Board” or “Board”),

alleging six specific contractual violations.1 The grievance

1 The Union alleged that Drywall (1) “failed to have employees referred

to jobs through the hiring hall”; (2) “failed to secure a bond”; (3) “failed

to register jobs”; (4) “failed to pay wages and benefits per agreement”;

(5) “paid apprentice wages and benefits to individuals who were not

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6 SWRCC V. DRYWALL DYNAMICS

came before an Adjustment Board arbitration panel for

hearing in August and September 2011. During the first day

of the hearing, on August 9, the Union asked the Board to

resolve, in addition to the six violations named in the initial

grievance, the question whether Drywall’s purported

termination of its agreement with the Union was effective. 

Drywall objected, arguing that whether it had effectively

terminated its contract in 2010 was not relevant to any of the

grievances filed by SWRCC. Relying on a provision of the

MLA requiring grievances to be brought “within thirty (30)

days after the complaining party has actual knowledge of the

facts giving rise to the dispute,” Drywall moved to dismiss

the termination issue “based on . . . timeliness” and argued

that the Union’s contention was “procedurally barred.” In

response, the Adjustment Board issued an “Interim Award”

in which it indicated that it would decide the validity of

Drywall’s termination “because the issue is related to the

overall grievance,” but held that issue in abeyance “pending

. . . further review of the evidence.”

Later, the Board issued “Interim Award II,” in which it

unanimously ruled that Drywall’s purported termination of

the MLA in 2010 was untimely because the 2009 MOU had

extended the Agreement until 2011. In support of that

conclusion, the Board noted that the Union and the

Association had each given consideration for the modification

of the Agreement, and that Drywall was “bound by the

negotiations and the agreements of those parties.” The parties

resolved the remaining grievance issues outside of arbitration. 

Accordingly, on July 22, 2013, the Board issued its “Final

properly indentured apprentices”; and (6) “failed to provide Union with

requested information necessary to ensure contract compliance.”

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SWRCC V. DRYWALL DYNAMICS 7

Award,” which restated its previous findings and confirmed

that there were no remaining issues.

The Union filed a petition in the district court seeking to

confirm the arbitration award. After Drywall filed a petition

to vacate the award, the district court issued an order denying

the Union’s petition and granting Drywall’s.

In so ruling, the district court acknowledged that

arbitration awards are “entitled to substantial deference from

the district court,” but nonetheless held the award

unenforceable, on two bases. First, the court ruled that the

arbitration panel’s interpretation of the contracts was not

“plausible.” The 2009 MOU provided that it would apply

only to those members of the Association who affirmatively

agreed to it, but “[n]o evidence was presented to the Panel

that Drywall” did so, “nor did the Panel make a finding of

fact that Drywall consented to the extension of the

2006–2010 MLA.” Absent such a finding, the court

concluded, “it was not plausible for the Panel to find that the

extension of the MLA was binding on Drywall.” Second,

relying on the Supreme Court’s decision in Charles D.

Bonanno Linen Service, Inc. v. NLRB, 454 U.S. 404 (1982),

the court held that the arbitration award violated “a clear

public policy in favor of voluntary relationships among

employers and multi-employer bargaining units” because

“[a]s interpreted by the Panel, the agreements gave WWCCA

absolute authority to negotiate on Drywall’s behalf and

perpetually bind it to extensions of the MLA without further

consent by Drywall.”

This appeal followed.

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8 SWRCC V. DRYWALL DYNAMICS

DISCUSSION

Beginning with the Supreme Court’s Steelworkers

Trilogy, the unique and critical role played by arbitration in

the context of a collective bargaining agreement has been a

bedrock of national labor policy. See United Steelworkers of

Am. v. Am. Mfg. Co., 363 U.S. 564 (1960); United

Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S.

574 (1960); United Steelworkers of Am. v. Enterprise Wheel

& Car Corp., 363 U.S. 593 (1960). As Warrior & Gulf

explained, “the grievance machinery under a collective

bargaining agreement is at the very heart of the system of

industrial self-government.” 363 U.S. at 581. Indeed,

arbitration in the labor context is more than a mechanism for

resolving disputes. Instead, the “processing of disputes

through the grievance machinery is actually a vehicle by

which meaning and content are given to the collective

bargaining agreement.” Id.

Because of the centrality of the arbitration process to

stable collective bargaining relationships, courts reviewing

labor arbitration awards afford a “nearly unparalleled degree

of deference” to the arbitrator’s decision. Stead Motors of

Walnut Creek v. Auto. Machinists Lodge No. 1173, Int’l Ass’n

of Machinists &Aerospace Workers, 886 F.2d 1200, 1204–05

(9th Cir. 1989) (en banc). This deference applies both to the

arbitrator’s interpretation of the parties’ agreement and to his

findings of fact. Id. at 1207.

With regard to contractual interpretation, as the Supreme

Court has admonished, “the parties hav[e] authorized the

arbitrator to give meaning to the language of the agreement,

[so] a court should not reject an award on the ground that the

arbitrator misread the contract.” United Paperworkers Int’l

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SWRCC V. DRYWALL DYNAMICS 9

Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987). We

have taken this instruction to heart, explaining that “even if

we were convinced that the arbitrator misread the contract or

erred in interpreting it, such a conviction would not be a

permissible ground for vacating the award.” Va. Mason

Hosp. v. Wash. State Nurses Ass’n, 511 F.3d 908, 913–14

(9th Cir. 2007) (footnote omitted). Indeed, “[s]ince the labor

arbitrator is designed to function in essence as the parties’

surrogate, he cannot ‘misinterpret’ a collective bargaining

agreement.” Stead Motors, 886 F.2d at 1205. In this sense,

“his award is their contract.” Id. (quoting Theodore J. St.

Antoine, Judicial Review of Labor Arbitration Awards,

75 Mich. L. Rev. 1137, 1140 (1977)). Thus, “as long as the

arbitrator is even arguably construing or applying the contract

and acting within the scope of his authority,” his award must

be upheld. Misco, 484 U.S. at 38. A court may intervene

only when an arbitrator’s award fails to “draw[] its essence

from the collective bargaining agreement,” such that the

arbitrator is merely “dispens[ing] his own brand of industrial

justice.” Enterprise Wheel, 363 U.S. at 597.

Similarly, “[t]he parties did not bargain for the facts to be

found by a court, but by an arbitrator chosen by them.” 

Misco, 484 U.S. at 45. “[I]mprovident, even silly, factfinding

. . . is hardly a sufficient basis for disregarding what the agent

appointed by the parties determined to be the historical facts.” 

Id. at 39. Because of this precept, “a court is barred from

disregarding the arbitrator’s factual determinations, let alone

supplementing them with its own.” Stead Motors, 886 F.2d

at 1207.

To be sure, there are limited circumstances in which the

vacatur of a labor arbitration award is justified. We have

recognized four such circumstances:

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10 SWRCC V. DRYWALL DYNAMICS

(1) when the award does not draw its essence

from the collective bargaining agreement and

the arbitrator is dispensing his own brand of

industrial justice; (2) where the arbitrator

exceeds the boundaries of the issues submitted

to him; (3) when the award is contrary to

public policy; or (4) when the award is

procured by fraud.

S. Cal. Gas Co. v. Util. Workers Union of Am., Local 132,

AFL-CIO, 265 F.3d 787, 792–93 (9th Cir. 2001). The district

court concluded that the first and third of these circumstances

obtain in the present case. Drywall further urges that the

arbitrator’s decision “excced[ed] the boundaries of the issues

submitted to him.” We discuss each proffered basis for

vacatur in turn.

I. The Scope of the Grievance

We address as an initial matter whether the Adjustment

Board’s decision to consider the termination issue, even

though it was not one of the issues initially articulated,

provides grounds to vacate the Board’s determination on that

issue. We agree with the district court that it does not.

Once a matter is submitted to arbitration, “‘procedural

questions which grow out of the dispute and bear on its final

disposition’ are presumptively not for the judge, but for an

arbitrator, to decide.” Howsam v. Dean Witter Reynolds, Inc.,

537 U.S. 79, 84 (2002) (quoting John Wiley & Sons, Inc. v.

Livingston, 376 U.S. 543, 557 (1964). “So, too, the

presumption is that the arbitrator should decide ‘allegation[s]

of waiver, delay, or a like defense to arbitrability.’” Id.

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SWRCC V. DRYWALL DYNAMICS 11

(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 24–25 (1983)).

In this case, in response to the Union’s request on the first

day of arbitration hearings that the Board decide whether

Drywall’s contract with the union was still in existence or had

terminated, Drywall moved to dismiss the termination issue

“based on . . . timeliness” and argued that the Union’s

contention was “procedurally barred.” The Board, in its first

Interim Award, noted Drywall’s objection but ruled that the

termination issue “will be decided by the panel because the

issue is related to the overall grievance and because the

contractor presented evidence and argument on this issue.” 

The Board’s rejection of Drywall’s timeliness argument was

a quintessentially procedural decision to which the district

court was required to—and properly did—defer.

II. The District Court’s “Plausibility” Ruling

The 2009 MOU between the Union and the Association

provided that it would apply to “WWCCA Drywall/Lathing

Conference Members who affirmatively agree to this

Agreement.” The district court concluded that it was

“implausible” for the arbitration panel to interpret this

agreement as applying to Drywall, for two reasons: first,

evidence before the district court indicated that Drywall was

not a member of the Association at the time of the MOU;

second, no evidence was presented to the Adjustment Board

indicating that Drywall affirmatively agreed to be bound by

the extension.

The district court erred in two respects in making its

“plausibility” ruling. Most fundamentally, the court

conducted the wrong inquiry. Under controlling Supreme

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12 SWRCC V. DRYWALL DYNAMICS

Court precedent, a court may not evaluate an arbitrator’s

interpretation of an agreement to determine whether it meets

some judicial standard of acceptability as a construction of

the contract. Rather, “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.” Misco, 484 U.S. at 38. “It is only when the

arbitrator strays from interpretation and application of the

agreement and effectively ‘dispense[s] his own brand of

industrial justice’ that his decision may be unenforceable.” 

Major League Baseball Players Ass’n v. Garvey, 532 U.S.

504, 509 (2001) (quoting Enterprise Wheel, 363 U.S. at 597). 

The question is not, therefore, whether the arbitrator’s

interpretation of the agreement was “plausible,” in the sense

of one a court might render, but instead whether he made any

interpretation or application of the agreement at all. Ifso, the

court’s inquiry ends.

The district court’s error is perhaps understandable in

light of language from a long line of Ninth Circuit cases

articulating Enterprise Wheel’s admonition that an

arbitrator’s decision must “draw its essence” from the

agreement as requiring a “plausible interpretation of the

contract.” Sheet Metal Workers’ Int’l Ass’n Local Union No.

359 v. Madison Indus., Inc. of Ariz., 84 F.3d 1186, 1190 (9th

Cir. 1996); see also, e.g., Ass’n of W. Pulp & Paper Workers,

Local 78 v. Rexam Graphic, Inc., 221 F.3d 1085, 1090 (9th

Cir. 2000); United Food & Commercial Workers Union,

Local 1119, AFL-CIO v. United Markets, Inc., 784 F.2d 1413,

1415 (9th Cir. 1986); Holly Sugar Corp. v. Distillery,

Rectifying, Wine & Allied Workers Int’l Union, AFL-CIO,

412 F.2d 899, 903 (9th Cir. 1969). As we have carefully

explained, however, “the ‘plausibility’ inquiry does not

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SWRCC V. DRYWALL DYNAMICS 13

represent an independent avenue for a merits-based attack on

an arbitral award. Rather, it is nothing more than another

way of formulating the old rule of Enterprise Wheel that an

arbitrator may not ‘dispense his own brand of industrial

justice.’” Haw. Teamsters & Allied Workers Union, Local

996 v. United Parcel Serv., 241 F.3d 1177, 1183 (9th Cir.

2001). Hawaii Teamsters reiterated that the relevant inquiry

is simply whether “the arbitrator’s decision concerns

construction of the contract,” not an evaluation of the merits

of that construction. Id. (quoting Enterprise Wheel, 363 U.S.

at 599) (emphasis added in Hawaii Teamsters).

As a description of the appropriate standard for evaluating

a labor arbitration award, the word “plausible” is thus

somewhat misleading. It could suggest some inquiry into the

quality of the arbitrator’s interpretation. The likelihood of

such a misunderstanding, we fear, has been exacerbated in

recent years. In the wake of the Supreme Court’s decision in

Ashcroft v. Iqbal, 556 U.S. 662 (2009), the term “plausible”

has taken on additional coloration in legal parlance. Iqbal

described the “plausibility” determination it requires at the

motion-to-dismiss stage of litigation as “a context-specific

task that requires the reviewing court to draw on its judicial

experience and common sense” in determining the legal

sufficiency of a federal court complaint. Id. at 679. Such an

active, substantive judicial role is in sharp contrast to the

judicial “hands off” approach long required in labor

arbitration cases, as long as the arbitrator engages with the

interpretive task.

We conclude that it is time for us to retire the use of

“plausibility” as a term to describe the courts’ role in

reviewing labor arbitration awards. We do not, of course,

propose any substantive change to the settled law in this area,

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14 SWRCC V. DRYWALL DYNAMICS

nor could we. We merely reiterate, and emphasize, the

fundamental concept Hawaii Teamsters articulated, drawing

on decades of Supreme Court jurisprudence: the quality—that

is, the degree of substantive validity—of an arbitrator’s

interpretation is, and always has been, beside the point. 

Instead, the appropriate question for a court to ask when

determining whether to enforce a labor arbitration award

interpreting a collective bargaining agreement is a simple

binary one: Did the arbitrator look at and construe the

contract, or did he not?

Here, there can be little doubt that the Adjustment

Board’s decision was grounded in its reading of the parties’

agreements. There are three paragraphs in the Board’s

second Interim Award that directly address its understanding

of the contract, including why it regarded Drywall as bound

by the 2009 MOU extending the term of the agreement. The

Board looked to the provisions of the MOU in determining

that both the Union and the Association had given

consideration for the agreement, and it read the Memorandum

Agreement between the Union and Drywall as binding

Drywall to future negotiations between the Union and the

Association, unless and until Drywall timely terminated.

The Adjustment Board also interpreted the agreements in

light of the past practices of the parties. Drywall had acceded

to the extension of the initial MLA until June 2010, despite

the fact that it had not affirmatively agreed to that extension. 

The Board concluded that “in light of the fact that the

contractor had been bound” by those prior negotiations, it was

also bound by the extension of the contract until June 2011. 

The Supreme Court has explained that “the industrial

common law—the practices of the industry and the shop—is

equallya part of the collective bargaining agreement although

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SWRCC V. DRYWALL DYNAMICS 15

not expressed in it.” Warrior & Gulf, 363 U.S. at 581–82. 

The Adjustment Board based its decisions on the parties’

agreements, both as written and as informed by past practice. 

The district court should have deferred to the panel’s

interpretation rather than inquiring into its substantive merit.

The district court further erred when it both faulted the

Adjustment Board for failing to make any finding regarding

Drywall’s agreement to the MOU and improperly made its

own findings on that point. Courts “do not require labor

arbitrators to make the sorts of explicit or exhaustive

‘findings of fact’ we demand of district courts; likewise, the

reasons for arbitral rulings need not be spelled out in detail. 

Indeed, ‘[a]rbitrators have no obligation . . . to give their

reasons for an award’ at all.” Stead Motors, 886 F.2d at 1206

(quoting Enterprise Wheel, 363 U.S. at 598). That the

Adjustment Board made no explicit factual findings

concerningDrywall’s consent to the MOU was not, therefore,

a proper basis for vacating the award. As long as the panel

was applying the agreement, the district court could not fault

it for “improvident, even silly, factfinding.” Misco, 484 U.S.

at 39. Nor may a court “infer the non-existence of a

particular reason merely from the award’s silence on a given

issue.” Stead Motors, 886 F.2d at 1213; see also Aramark

Facility Servs. v. Serv. Emps. Int’l Union, Local 1877, AFL

CIO, 530 F.3d 817, 830 (9th Cir. 2008) (explaining that it

was “improper” for a district court to “disturb[] the

arbitrator’s implicit conclusion”).

Finally, compounding the error, the district court

explicitly made its own findings—“Drywall was not a

member of the WWCAA” and“[n]o . . . consent was given”

by Drywall. The law requires deference to an arbitrator’s

decision even where a court “believe[s] that the decision finds

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the facts . . . erroneously.” Stead Motors, 886 F.2d at 1204. 

Because “[t]he parties did not bargain for the facts to be

found by a court, but by an arbitrator chosen by them,”

Misco, 484 U.S. at 45, the district court erred in vacating the

award on this basis.

III. The Public Policy Exception

The labor arbitration case law has long recognized a very

limited “public policy exception” to the stringent rule

ordinarily requiring courts’ enforcement of arbitrators’

decisions interpreting and applying collective bargaining

agreements. See W.R. Grace & Co. v. Local Union 759, Int’l

Union of United Rubber, Cork, Linoleum & Plastic Workers

of Am., 461 U.S. 757, 766 (1983); Stead Motors, 886 F.2d at

1209–10. This exception is “a specific application of the

more general doctrine, rooted in the common law, that a court

may refuse to enforce contracts that violate law or public

policy.” Misco, 484 U.S. at 42.

“[T]he public policy exception is narrow,” E. Associated

Coal, 531 U.S. at 63, and “courts should be reluctant to

vacate arbitral awards on public policy grounds,” Ariz. Elec.

Power Co-op., Inc. v. Berkeley, 59 F.3d 988, 992 (9th Cir.

1995). Specifically, a court may vacate an arbitration award

that “run[s] contrary to an explicit, well-defined, and

dominant public policy, as ascertained by reference to

positive law and not from general considerations of supposed

public interests.” E. Associated Coal, 531 U.S. at 63 (citing

Misco, 484 U.S. at 43).2

2 As Eastern Associated Coal noted, “in principle, . . . courts’ authority

to invoke the public policy exception is not limited solely to instances

where the arbitration award itself violates positive law.” 531 U.S. at 63. 

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In this case, the district court determined that the

arbitrator’s award violated “a clear public policy in favor of

voluntaryrelationships among employers and multi-employer

bargaining units.” The court pointed to two sources for this

policy: the Supreme Court’s decision in Bonanno, 454 U.S.

404, and the Eighth Circuit’s decision in Action Electric, Inc.

v. Local Union No. 292, International Brotherhood of

Electrical Workers, 856 F.2d 1062 (8th Cir. 1988). Neither

case relied upon by the district court establishes an “explicit,

well-defined, and dominant public policy” sufficient to justify

vacating the arbitration award here.

To be sure, each case recognizes in general terms that

“the voluntary nature of multiemployer bargaining” is a

significant interest that merits consideration. But each case

also emphasizes that an employer’s right to withdraw from a

multiemployer unit is one of two competing interests. The

other is “the stability of multiemployer units,” which must, in

each generic circumstance, be weighed against the

voluntariness value. Bonanno, 454 U.S. at 410; see also

Action Elec., 856 F.2d at 1065 (recognizing “two key

legitimate interests underlying multi-employer bargaining:

the voluntary nature of the association and the need for

stability of the multi-employer unit”). Indeed, in Bonanno,

the ultimate balance tipped in favor of the stability interest,

with the Court upholding an unfair labor practice charge

Justice Scalia observed in a concurring opinion, however, that “[t]here is

not a single decision, since this Court washed its hands of general

common-lawmaking authority, in which we have refused to enforce on

‘public policy’ grounds an agreement that did not violate, or provide for

the violation of, some positive law.” Id. at 68 (Scalia, J., concurring in the

judgment) (citation omitted). “Positive law typically consists of enacted

law — the codes, statutes, and regulations that are applied and enforced

in the courts.” Black’s Law Dictionary (10th ed. 2014).

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18 SWRCC V. DRYWALL DYNAMICS

against an employer who withdrew from a multiemployer

association during a bargaining impasse.

Where, as here, there are two competing policies

applicable with regard to a single matter, neither can be a

“dominant” policy, and therefore neither can drive a public

policy refusal to enforce an arbitration award. This

conclusion reflects the Supreme Court’s approach in Eastern

Associated Coal, which indicated that it is improper to vacate

an arbitrator’s decision on public policy grounds where there

are countervailing policy considerations. See 531 U.S. at

65–66. In Eastern Associated Coal, an arbitrator ordered

reinstatement of a worker who had been discharged after

testing positive for marijuana. Id. at 59. The employer sued,

seeking to have the award vacated on the ground that it

“contravened a public policy against the operation of

dangerous machinery by workers who test positive for

drugs.” Id. at 61. The employer argued that this policy could

be discerned in a number of statutory provisions requiring

suspension of workers who have operated commercial

vehicles while under the influence of drugs. Id. at 63–64. 

The Court concluded, however, that when read in context,

“these expressions of positive law embody several relevant

policies.” Id. (emphasis added). In addition to safety

concerns, the statutes included a “policy favoring

rehabilitation of employees who use drugs.” Id. Moreover,

“the relevant statutory and regulatory provisions must be read

in light of background labor law policy that favors

determination of disciplinary questions through arbitration

when chosen as a result of labor-management negotiation.” 

Id. As a result, the arbitrator’s award was “not contrary to

these several policies, taken together.” Id. (emphasis added).

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SWRCC V. DRYWALL DYNAMICS 19

Similarly, even if, in this case, the arbitrator’s decision

disserved a policy favoring voluntary relationships between

employers and multi-employer bargaining units, the decision

promoted the policy favoring stability of the multi-employer

unit. And in any case, as in Eastern Associated Coal, these

policies must be read in light of the background labor law

policy, which “reflect[s] a decided preference for private

settlement of labor disputes without the intervention of

government.” Misco, 484 U.S. at 37; see also 29 U.S.C.

§ 173(d) (“Final adjustment by a method agreed upon by the

parties is declared to be the desirable method for settlement

of grievance disputes arising over the application or

interpretation of an existing collective-bargaining

agreement.”). We therefore conclude that the district court

erred in vacating the panel’s award on this basis.

Drywall urges us alternatively to affirm the district

court’s decision on the basis of a separate public policy in

favor of employee free choice in union representation. 

According to the company, the panel’s award effectively

locked Drywall’s employees into ongoing union

representation without the support of a majority of the

bargaining unit.

Drywall’s argument on this point hinges on its claim that

its relationship with the Union is governed by § 8(f) of the

National Labor Relations Act (“NLRA”), 29 U.S.C. § 158(f),

rather than § 9(a), 29 U.S.C. § 159(a). Normally, under

§ 9(a) of the NLRA, a union becomes the exclusive

bargaining representative for a group of employees when it is

“designated or selected” for that purpose “by the majority of

the employees in a [bargaining unit].” 29 U.S.C. § 159(a). 

By contrast, § 8(f) “allows construction industry employers

and unions to enter into agreements setting the terms and

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20 SWRCC V. DRYWALL DYNAMICS

conditions of employment for the workers hired by the

signatory employer without the union’s majority status first

having been established in the manner provided for under § 9

of the Act.” Jim McNeff, Inc. v. Todd, 461 U.S. 260, 266

(1983). A § 8(f) “prehire agreement” is “voidable and does

not have the same stature as a collective-bargaining contract

entered into with a union actually representing a majority of

the employees and recognized as such by the employer.” 

NLRB v. Local Union No. 103, Int’l Ass’n of Bridge,

Structural & Ornamental Iron Workers, AFL-CIO, 434 U.S.

335, 341 (1978).3

The Memorandum Agreement between Drywall and the

Union provides that Drywall has recognized the Union as the

majority representative of its employees; “the Union has

provided, or has offered to provide, evidence of its status as

the majority representative” of Drywall’s employees; and

“the parties intend to and are establishing a collective

bargaining relationship under Section 9” of the NLRA. 

Drywall, however, asserts that notwithstanding these

provisions, the Union never made an affirmative showing of

majority support. Given that “bargaining relationships in the

construction industry are presumed to be covered by section

8(f),” Allied Mech. Servs., Inc. v. NLRB, 668 F.3d 758, 766

3 Following the National Labor Relations Board’s decision in John

Deklewa & Sons, 282 NLRB No. 184, 1385 (1987), enforced sub nom.

Int’l Ass’n of Bridge, Structural & Ornamental Iron Workers, Local 3 v.

NLRB, 843 F.2d 770 (3d Cir. 1988), however, a § 8(f) agreement cannot

be unilaterally repudiated during the term of the agreement. “[U]pon the

contract’s expiration, the signatory union will enjoy no majority

presumption and either party may repudiate the 8(f) relationship.” Id. at

1386; see also Mesa Verde Constr. Co. v. N. Cal. Dist. Council of

Laborers, 861 F.2d 1124, 1125–26 (9thCir. 1988) (en banc) (adopting the

Deklewa rule).

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SWRCC V. DRYWALL DYNAMICS 21

(D.C. Cir. 2012), Drywall argues, absent a showing of

majority support, contractual language alone is insufficient to

establish a § 9(a) relationship. Compare In re Staunton Fuel

& Material, Inc., 335 NLRB No. 59 (2001) (holding that a

written agreement alone can establish a § 9(a) relationship if

certain conditions are met), with Nova Plumbing, Inc. v.

NLRB, 330 F.3d 531, 536–37 (D.C. Cir. 2003) (holding that

contractual language alone cannot establish a § 9(a)

relationship where the union actually lacks majority support),

and Madison Indus., Inc. & Dist. Council of Iron Workers of

the State of Cal. & Vicinity, 349 NLRB No. 114, 1308 n.9

(2007) (noting that Nova Plumbing had “called the viability

of Staunton Fuel into question”).

We need not resolve whether the agreement between

Drywall and the Union was a § 9(a) or a § 8(f) agreement. 

For present purposes, it is sufficient that there is nothing in

the record to indicate one way or another whether the

employees did or did not want union representation. Drywall

submitted no evidence to the arbitration panel to substantiate

its claim that the Union lacked majority status, nor did it

introduce any evidence pertaining to whether its relationship

with the Union was governed by § 9(a) or § 8(f). As

explained above, neither we nor the district court may engage

in independent factfinding on these issues.

Moreover, Drywall fails to recognize that, if its

relationship with the Union were governed by § 8(f), the

employees, if dissatisfied with their union representation,

could call for an election at any time, see Deklewa,

282 NLRB at 1377, belying Drywall’s contention that the

extension of the agreement locked unwilling employees into

union representation. Even if Drywall’s factual claims were

established, therefore, they would not indicate a violation of

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22 SWRCC V. DRYWALL DYNAMICS

a public policy in favor of employee free choice as to union

representation. The district court correctly rejected this

argument.

CONCLUSION

Over 25 years ago, an en banc panel of this court

recognized that when courts review the decisions of

arbitrators in the context of collective bargaining agreements,

“there may be a tendency for judges, often with the most

unobjectionable intentions, to exceed the permissible scope

of review and to reform awards in our own image of the

equities or the law.” Stead Motors, 886 F.2d at 1204. The

persistence of the “plausibility” language in this area of our

circuit’s law has unwittingly exacerbated this tendency, as the

present case demonstrates. As in Stead Motors, therefore, we

once again “reemphasize the unique character of an

arbitrator’s function and the nearly unparalleled degree of

deference we afford his decisions,” id. at 1205, and reverse

the decision of the district court.

REVERSED.

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