NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 10-2495

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ARMSTRONG COUNTY MEMORIAL HOSPITAL,

v.

UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, 

ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL 

UNION AND ITS LOCAL UNION 158-06,

Appellants

_______________

On Appeal from the United States District Court

For the Western District of Pennsylvania

(D.C. No. 2-09-cv-1551)

District Judge: Honorable Terrence F. McVerry

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Submitted Under Third Circuit LAR 34.1(a)

January 25, 2011

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Before: FUENTES and CHAGARES, Circuit Judges, and POLLAK, Senior District 

Judge*

(Opinion filed March 14, 2011)

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OPINION

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* Honorable Louis H. Pollak, District Judge of the United States District Court for the 

Eastern District of Pennsylvania, sitting by designation.
1

POLLAK, District Judge

This case arises from a labor arbitration between appellee Armstrong County 

Memorial Hospital (―Hospital‖) and appellant United Steel, Paper and Forestry, Rubber, 

Manufacturing, Energy, Allied Industrial and Service Workers Union, AFL-CIO/CLC 

and USW, Local 158-06 (―Union‖). The Union and Hospital are parties to a collective 

bargaining agreement (―CBA‖) which provides for binding arbitration. On January 1, 

2009, during the term of the CBA, the Hospital implemented a policy prohibiting

smoking anywhere on Hospital property. The Union filed a grievance challenging the 

policy as a violation of the CBA, and the dispute proceeded to arbitration. The arbitrator 

found in favor of the Union, and thereafter the Hospital brought an action in the Western 

District of Pennsylvania to vacate the arbitration award. Ruling on the parties‘ crossmotions for summary judgment, the District Court found that the arbitrator‘s decision

contradicted the plain language of the CBA and therefore vacated the award. For the 

reasons that follow, we affirm the judgment of the District Court. 

I.

In 1992, the Hospital implemented a ―no smoking‖ policy within its buildings, 

except for the psychiatric unit. Under this policy, which remained in place until 2009, 

employees were permitted to smoke outside the buildings in designated smoking areas 

and in their personal vehicles while on Hospital property. Joint Appendix (―JA‖) at 91, 

104. In 2007, the Hospital revised its mission statement, and in 2007 and early 2008 the 

Hospital held a series of meetings with employees and volunteers to discuss the new 

mission statement. In the meetings, Hospital administrators were confronted on a number 
2

of occasions about the inconsistency of the Hospital having a mission statement which 

promoted healthy behavior, while it knowingly permitted and provided accommodations 

for employees to smoke on Hospital property. JA 104. Hospital administrators also 

heard frequent complaints that smokers did not stay in the designated smoking areas, 

causing smoke to come into patients‘ rooms and the Hospital‘s main entrance. JA 93. 

After conducting surveys regarding the number of smokers among Hospital 

employees and making inquiries regarding smoking policies at other local hospitals, the 

Hospital concluded that smoking on the Hospital campus created a significant health risk 

not only to smokers but also to patients, volunteers, and visitors. JA 93. In August 2008, 

the Hospital‘s Board of Directors directed the Hospital‘s administration to pursue a 

Tobacco Free Campus Policy (―TFC Policy‖). Thereafter, Hospital administrators 

developed the new policy, which became effective January 1, 2009. Under the policy, 

employees may not smoke anywhere on Hospital property, including in their private 

vehicles parked on Hospital property, and violators are subject to discipline up to and 

including termination. JA 110.

In November 2008, the Hospital notified the Union of its intention to implement 

the TFC Policy. JA 89. The Union responded by filing a grievance on November 12, 

2008, which charged that the new policy was ―unreasonable‖ and that the Hospital had 

failed to raise this proposed change during earlier negotiations over the CBA. JA 88-89. 

The Hospital implemented the TFC Policy as scheduled, and the Union submitted the 

grievance to arbitration. 
3

The CBA took effect on June 23, 2008 and runs until June 22, 2011. JA 53. As 

relevant to this case, the CBA provides as follows: 

ARTICLE 4 – MANAGEMENT RIGHTS

4.01 The functions and responsibilities of Management are retained and 

vested exclusively in the Employer. The rights reserved in the Employer 

include all matters of inherent managerial policy plus those necessitated by 

the unique nature of the Employer‘s operations. In the exercise of these 

rights, the Employer agrees that it will not violate the specific provisions of 

this Agreement.

4.02 The Employer reserves the right to establish, revise and administer 

reasonable policies and procedures, . . . to control and regulate the use of 

facilities, supplies, equipment, and other property of the Employer; . . . to 

make or change reasonable Employer rules, regulations, policies and 

practices, provided the Employer gives advance notice to the Union; . . . to 

establish or change standards; . . . and otherwise to help the Employer attain 

and maintain full operating efficiency and effectiveness of the Hospital to 

ensure that the parties promote the highest quality patient care and 

treatment possible. 

4.05 The management rights set forth in this Article are by way of example 

and not by way of limitation and specifically are not limited by existing or 

―prior practices‖ or ―side agreements‖ which existed prior to this 

Agreement and are not incorporated herein.

ARTICLE 23 – SAFETY

23.01 The Employer will make every effort to maintain its facilities and 

equipment in such physical condition so as to provide a safe and healthy

work environment . . . .

JA 55, 72. The CBA also establishes a grievance and arbitration procedure. Under 

Section 14.04, an arbitrator‘s award ―shall be final and binding upon both parties.‖ In 

addition, Section 14.04 provides that an arbitrator ―shall have no power to add to, 

subtract from, or modify any provision of this Agreement.‖ JA 65.
4

On September 2, 2009, the arbitrator held a hearing at which the parties were 

given an opportunity to present evidence, examine witnesses, and argue their respective 

positions. JA 91. On October 22, 2009, the arbitrator issued an opinion and award in 

favor of the Union. The crux of the arbitrator‘s opinion is as follows:

I have carefully considered the evidence presented, the arguments put forth 

by the parties and the applicable Agreement language. . . . I certainly don‘t 

want to minimize the intent of the overall tobacco free policy, and its 

attempt to improve the health of all concerned. These objectives of the 

policy are appropriate, and show that the Employer is trying to meet its 

overall mission. While the approach of the Employer is commendable, the 

specific issue in this case centers on the reasonableness of the policy. In 

this case, the evidence shows there has been a no smoking policy in effect 

since 1992, but all during this time there has been an opportunity for 

employees to smoke in certain designated areas outside the hospital 

buildings. In my considered opinion, what has occurred in this 

circumstance was the establishment of a past practice regarding employees 

having a designated location to smoke. The employees had come to expect 

they would have a specific location to smoke, and in my considered 

opinion, this expectation rose to the level of a protected local working 

condition. The Employer was well aware of this practice, as it had been in 

place for many years, but it never took steps to alter this working condition. 

It is quite clear from the evidence which has been established that the 

Employer never attempted to negotiate a change to the existing practice in 

its recent negotiations with the Union, but chose to continue with the 

existing arrangements that existed for employees to smoke in designated 

areas. It was only subsequent to the conclusion of its negotiations that the 

Employer decided to alter the existing smoking arrangements, and in doing 

so changed the established local working conditions. 

The Employer has contended its policy is reasonable, and it can be 

unilaterally implemented, as other policies have been implemented in the 

past. I understand the contentions of the Employer in this regard, and 

recognize that certain policies can in fact be unilaterally implemented. 

Also, I am not saying that the policy of the Employer has no basis and is to 

be disregarded. It is my opinion the unilateral implementation of a policy 

can occur, but where such policy alters the existing rights of the employees, 

that such rights need to be considered in the development of the policy. It 

should be understood that the Employer‘s tobacco free policy is not 

completely unacceptable, as many of the provisions of such policy are well 
5

meaning and provide a positive message. The problem with the policy is 

that it fails to make a reasonable accommodation for employees who 

previously had a designated location to smoke. It is also readily apparent 

that the Employer has previously had problems policing the designated

smoking areas, but this should not deter the Employer from established 

[sic] a controlled designed [sic] smoking area for its employees, so as to 

properly provide for the established working condition enjoyed by the 

employees pursuant to the prior smoking policy. Making such alteration to 

the existing policy would satisfy the past practices which previously 

existed, while providing for a reasonable tobacco free policy. 

JA 107-108 (emphases added). The arbitrator then proceeded to issue an award which 

directed the Hospital to meet with Union officials ―for the purpose of providing for a 

reasonable accommodation for employees to smoke in a designated area.‖ JA 108.

Upon receipt of the award, the Hospital commenced this lawsuit, asking the 

District Court to vacate the award under § 301 of the Labor Management Relations Act, 

29 U.S.C. § 185(a). After the parties filed cross-motions for summary judgment, the 

District Court granted summary judgment to the Hospital. The District Court‘s opinion 

noted the deferential standard of review for labor arbitration awards set forth in this 

Court‘s precedents. See JA 6-7 (citing Brentwood Med. Assocs. v. United Mine Workers, 

396 F.3d 237 (3d Cir. 2005); Citgo Asphalt Refining Co. v. Paper Workers Int’l Union 

Local No. 2-991, 385 F.3d 809, 816 (3d Cir. 2004)). However, the court found that the 

award must nonetheless be vacated because it did not ― ̳draw its essence‘ from the 

language of the CBA.‖ JA 8.1

 

1

The court also stated that it was ―not fully persuaded‖ by the public policy and 

jurisdictional arguments raised by the Hospital, but found that it did not need to ―reach a 

final determination on those grounds‖ in light of its holding that the award did not ―draw 

its essence‖ from the language of the CBA. JA 8.
6

The District Court found that the ―fundamental error‖ made by the arbitrator was 

his determination that ― ̳employees had come to expect they would have a specific 

location to smoke, and in my considered opinion, this expectation rose to the level of a 

protected local working condition.‘‖ JA 8 (quoting arbitrator‘s opinion). As the court 

noted, Section 4.05 of the CBA provides that ―[t]he management rights set forth in this 

Article are by way of example and not by way of limitation and specifically are not 

limited by existing or ‘prior practices’ or  ̳side agreements‘ which existed prior to this 

Agreement and are not incorporated herein.‖ JA 55 (emphasis added). Noting that the 

arbitrator did not attempt to parse or apply Section 4.05, the court found that

the arbitrator based his ―considered opinion‖ on a ground that is

specifically barred by the CBA. This is the essence of ―manifest disregard‖ 

of the contractual language. Pursuant to Section 4.05, employee 

expectations regarding prior practices cannot become ―protected local 

working conditions.‖ 

JA 10 (citations omitted). The court therefore granted summary judgment to the Hospital 

and issued an order vacating the arbitration award. This appeal followed. 

II.

This court has jurisdiction over this appeal under 28 U.S.C. § 1291. We exercise 

plenary review over the district court‘s decision resolving the parties‘ cross-motions for 

summary judgment. Brentwood Med. Assocs., 396 F.3d at 240. 

The Supreme Court has long emphasized that judicial review of a labor arbitration 

decision construing a collective bargaining agreement between an employer and a labor 

organization is ―very limited.‖ Major League Baseball Players Ass’n v. Garvey, 532 

U.S. 504, 509 (2000) (per curiam); see also United Paperworkers Int’l Union v. Misco, 
7

Inc., 484 U.S. 29, 36 (1987) (―[C]ourts play only a limited role when asked to review the 

decision of an arbitrator.‖). This is because the parties ―have  ̳bargained for‘ the 

 ̳arbitrator‘s construction‘ of their agreement.‖ Eastern Assoc. Coal Corp. v. Mine 

Workers, 531 U.S. 57, 62 (2000) (quoting Steelworkers v. Enterprise Wheel & Car Corp., 

363 U.S. 593, 599 (1960)). Accordingly, courts may set aside an arbitrator‘s award only 

in the ―rare instance[]‖ when the award does not ― ̳draw its essence from the contract and 

. . . simply reflect[s] the arbitrator‘s own notions of industrial justice.‘‖ Id. at 62 (quoting 

Misco, 484 U.S. at 38). As long as an ―arbitrator is even arguably construing or applying 

the contract and acting within the scope of his authority, [the fact] that a court is 

convinced he committed serious error does not suffice to overturn his decision.‖ Misco, 

484 U.S. at 38. 

Our Court has similarly emphasized that the scope of judicial review of a labor 

arbitrator‘s decision is ―exceedingly narrow.‖ Kane Gas Light & Heating Co. v. Int’l 

Bhd. of Firemen, Local 112, 687 F.2d 673, 675 (3d Cir. 1982). We must defer to an 

arbitrator‘s decision if it ―can in any rational way be derived from the agreement, viewed 

in light of its language, its context, and any other indicia of the parties‘ intention.‖ 

Brentwood Med. Assocs., 396 F.3d at 241 (emphasis in original); see also Citgo Asphalt, 

385 F.3d at 816 (― ̳[O]nly where there is a manifest disregard of the agreement, totally 

unsupported by the principles of contract construction and the law of the shop, may a 

reviewing court disturb the award.‘‖ (quoting Exxon Shipping Co. v. Exxon Seamen’s 

Union, 73 F.3d 1287, 1295 (3d Cir. 1996))). 
8

III.

The CBA reserves to the Hospital ―the right to establish, revise and administer 

reasonable policies and procedures‖ and to ―to make or change reasonable Employer 

rules, regulations, policies and practices, provided the Employer gives advance notice to 

the Union.‖ JA 55 (emphasis added). The arbitrator determined that the TFC Policy was 

unreasonable because ―what has occurred in this circumstance was the establishment of a 

past practice regarding employees having a designated location to smoke,‖ which created 

an expectation that ―rose to the level of a protected local working condition.‖ JA 107. 

As the Hospital notes, the CBA never uses the term ―protected local working condition,‖ 

and Section 4.05 of the CBA explicitly provides that ―[t]he management rights set forth 

in this Article are by way of example and not by way of limitation and specifically are 

not limited by [1] existing or  ̳prior practices‘ or [2]  ̳side agreements‘ which existed prior 

to this Agreement and are not incorporated herein.‖ JA 55.

The Union attempts to defend the arbitrator‘s construction of the CBA by 

suggesting that ―[a]t most, Section 4.05 arguably barred consideration of practices and 

side agreements as they existed prior to the time the CBA entered into force. It did not 

bar consideration of such practices existing during the course of the agreement.‖ 

Appellant‘s Br. at 24 (emphasis added). We note, first, that the arbitrator gave no 

indication that he understood Section 4.05 in this way. See, e.g., JA 107 (―The Employer 

was well aware of this practice, as it had been in place for many years, but it never took 
9

steps to alter this working condition.‖).2 Second, we find the Union‘s speculative reading 

of Section 4.05—that it affects only practices that ―existed prior to the time the CBA 

entered into force‖—to be untenable because it renders the word ―existing‖ superfluous. 

See JA 55 (providing, in Section 4.05, that management rights ―are not limited by 

existing or  ̳prior practices‘‖ (emphasis added)). If the parties had intended to limit 

Section 4.05 to only ―prior‖ practices, they could simply have omitted the word 

―existing‖ entirely. See New Castle Cnty. v. Nat’l Union Fire Ins. Co., 174 F.3d 338, 349 

(3d Cir. 1999) (―[T]his Court takes care not to render other portions of a provision or 

contract superfluous when construing contract language.‖). 

In addition, contrary to the suggestion of the Union, the arbitrator did not merely 

―consider‖ past practices in his assessment of whether the TFC Policy was reasonable. 

Rather, the arbitrator held that an existing practice affecting employees creates

―expectation[s],‖ which in turn create ―a protected local working condition,‖ and that

under the CBA the Hospital was bound to respect such ―protected local working 

conditions.‖ See JA 107-08 (―It is my opinion the unilateral implementation of a policy 

can occur, but where such policy alters the existing rights of the employees, that such 

rights need to be considered in the development of the policy . . . . The problem with the 

policy is that it fails to make a reasonable accommodation for employees who previously 

 

2 We note further that the Union‘s arguments in the arbitration proceeding, as understood 

by the arbitrator, do not appear consistent with the argument it now raises on appeal. See 

JA 96 (According to the arbitrator, ―[i]t is the position of the Union that the policy of the 

hospital infringes on the viable long standing past practice that has been employed by the 

tobacco users who have been employed at the hospital for many years.‖ (emphases 

added)). 
10

had a designated location to smoke.‖). As noted above, however, the CBA never uses the 

phrase ―protected local working condition,‖ and nothing in Article 4 can remotely be 

construed to grant employees enforceable rights solely on the basis of an ―expectation‖ 

arising from a past or existing practice. On the contrary, Section 4.05 expressly states 

that management rights are not limited by ―existing or  ̳prior practices‘‖ and other 

sections of Article 4 state that the ―functions and responsibilities of Management are 

retained and vested exclusively in the Employer‖ and that the ―Employer reserves the 

right to establish, revise and administer reasonable policies and procedures.‖ JA 55

(emphasis added). 

Thus, the arbitrator‘s opinion effectively rewrote the parties‘ agreement to state 

that (1) a past or existing practice affecting employees creates a ―protected local working 

condition‖ and (2) any policy unilaterally adopted by the Hospital which eliminates a 

―protected local working condition‖ could not be considered ―reasonable‖ under Article 

4. Although we are aware that the scope of our review of a labor arbitration award is 

―very narrow,‖ Garvey, 532 U.S. at 509, we find that this interpretation—directly 

contrary to the plain meaning of Section 4.05 and premised entirely on a term that is 

never used in the agreement—is so untethered from and contrary to the language of 

Article 4 that we cannot say that the arbitrator was even ―arguably construing‖ the 

agreement. Misco, 484 U.S. at 38; see also id. (noting that ―[t]he arbitrator may not 

ignore the plain language of the contract‖). Nor can we say that this construction of the 
11

CBA can ―in any rational way be derived from the agreement.‖ Brentwood Med. Assocs., 

396 F.3d at 241.3

We also find that this case is unlike Brentwood Medical Associates, in which we 

upheld an arbitration award despite the arbitrator‘s interpolation of words into the 

contract because ―the remainder of the justification for the award offered by the arbitrator 

was capable of separation from the aberrant language.‖ 396 F.3d at 243. As the District 

Court found, the arbitrator in this case ―to his professional credit, clearly explained the 

rationale for his decision.‖ JA 8. The arbitrator explained that ―[t]he employees had 

come to expect they would have a specific location to smoke, and in my considered 

opinion, this expectation rose to the level of a protected local working condition.‖ JA 

107. Because the arbitrator‘s decision was fundamentally premised on the notion of a 

―protected local working condition,‖ we believe that his decision is not ―capable of 

separation from the aberrant language.‖ 396 F.3d at 243.

We find the various other arguments raised in the Union‘s brief unpersuasive. In 

particular, we reject the Union‘s argument that the Hospital waived reliance on Section 

4.05. First, the Union failed to raise this argument in the District Court and therefore 

waived it for purposes of appeal. See JA 9 n.1 (District Court opinion) (noting that the 

Union failed to ―discuss, distinguish, or even to recognize the existence of Section 4.05‖ 

 

3

In addition, even if it might have been more generous for the Hospital to have bargained 

with the Union over the TFC Policy rather than implement it unilaterally, ―an arbitrator‘s 

opinion and award based on  ̳general considerations of fairness and equity‘ as opposed to 

the exact terms of the CBA, fails to derive its essence from the CBA.‖ Citgo Asphalt, 

385 F.3d at 817 (quoting MidMichigan Reg’l Med. Ctr-Clare v. Professional Employees 

Div., 183 F.3d 297, 502 (6th Cir. 1999)). 
12

in its brief to the district court). Second, Article 4, which is set forth in its entirety on two 

pages of the CBA, see JA 55, was readily available to the arbitrator for construction as a 

whole, and the Hospital had no reason to expect that the arbitrator would adopt a reading 

of Article 4 that added a new substantive right—that employee ―expectations‖ can give 

rise to a ―protected local working condition‖—directly at odds with Section 4.05. Thus, 

this is not a case in which the employer attempted to ―keep silent at arbitration, hoping 

perhaps to  ̳sandbag‘‖ the union later. United Steelworkers v. Danly Mach. Co., 852 F.2d 

1024, 1028 (7th Cir. 1988).4 

For these reasons, we will affirm the judgment of the district court vacating the

arbitral award.

 

4 We will grant the Hospital‘s Motion to Strike the Hospital‘s post-hearing brief from the 

Union‘s Addendum, because this document was not part of the record before the District 

Court. See Fed. R. App. P. 10(a); Webb v. City of Philadelphia, 562 F.3d 256, 259 (3d 

Cir. 2009) (―[A]n appellate court may only review the record as it existed at the time 

summary judgment was entered.‖ (citation omitted)).