United States Court of Appeals

Fifth Circuit

FILED

March 6, 2007

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 05-30813

RESOLUTION PERFORMANCE PRODUCTS, LLC,

Plaintiff-Appellee,

versus

PAPER ALLIED INDUSTRIAL CHEMICAL AND ENERGY WORKERS INTERNATIONAL

UNION, PACE LOCAL 4-1201 F/K/A NORCO CHEMICAL WORKERS UNION,

Defendants-Appellants.

______________________

Appeal from the United States District Court

for the Eastern District of Louisiana

USDC No. 2:04-CV-2324

______________________

Before HIGGINBOTHAM, DENNIS, and CLEMENT, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

As part of RPP’s purchase of a subsidiary of Shell Oil

Company, RPP signed a collective bargaining agreement with the

Union, which had had a longstanding relationship with Shell. After

the purchase, RPP used only subcontractors, not Union members, for

maintenance work, contrary to Shell’s past practice. The Union

complained that RPP should hire Union members for maintenance work,

as Shell had in the past. The arbitrator agreed. The federal

district court vacated the award. We reverse and remand. 

I

From at least 1950 to 2000, Shell Oil Company owned a
1 PACE subsumed NCWU in 2001, succeeding it in all respects.

2

subsidiary named Shell Epoxy Resins. During that time, Shell and

the Norco Chemical Workers Union, later the Paper Allied Industrial

Chemical and Energy Workers International Union,1 had a collective

bargaining agreement covering both production workers and

maintenance workers. Over that fifty-year span, the understanding

captured in the CBA was enriched by bargaining and several

arbitrations.

In 2000, Shell sold the resin subsidiary to Resolution

Performance Products, now Hexion Chemical Company. In the sale

agreements, RPP agreed to recognize the Union and adopt the CBA

with all past letters of agreement. RPP did so, adopting a CBA

identical in all relevant respects to the Shell-Union CBA. The CBA

stated, in pertinent part and italicized for importance:

Preamble

. . . . The Company hereby recognizes the Union as the

exclusive bargaining representative of the following

collective bargaining unit...[including both production

and maintenance workers.]

This Agreement constitutes the entire agreement between

the parties, and it is agreed that no prior understanding

or agreement shall hereafter be operative unless it was

reduced to writing and is not in conflict or inconsistent

with the terms hereof. 

Article III — Classification of Employees

1. Craftsmen [maintenance workers]

. . .

(D) Nothing herein shall require the Company to adjust or
2 There is no comparable provision under the section governing production

workers.

3 Neither party discusses whether RPP is paying the subcontractors

according to these compensation guidelines. See infra note 4 and accompanying

text (discussing how RPP now uses only subcontractors for maintenance).

4 According to RPP, Shell and RPP had agreed as part of the deal that Shell

would identify before the sale any openings for maintenance workers in the new

resin company (how Shell would know this is unclear) or maintenance workers

eligible to transfer, but it identified no such openings or workers through its

“posting” system. The record on appeal lacks this agreement, although the

arbitrator found that, “[a]pparently, Shell wished to retain all of its

[maintenance workers]” and “the [maintenance workers] wished to continue to be

employed [by Shell].” RPP also alleges that Shell and the Union refused to

release maintenance workers for whom RPP had offered jobs; although it cites only

briefs, not record evidence, for this allegation, it is consistent with the

arbitrator’s findings. 

3

maintain any given number of craftsmen in any craft.

2

Article XIV — Contractors Rates of Pay

Section 1 - Contractor Performing Work within the Plant

Whenever a contractor or subcontractor performs work

within the Plant which could be performed by employees

covered by this Agreement, the Company will include a

provision in the applicable contract requiring the

contractor and subcontractor to pay not less than the

rates of pay provided in this Agreement for the same

character of work; provided, however, that the foregoing

shall not apply if there is an agreement as to rates

between the contractor or subcontractor and his employees

reached through collective bargaining . . . . 3

Section 2 - Demotions or Layoffs

RPP’s obligations under Section 1 will apply only for the

period of time when,

(A) an employee is demoted or displaced from any

department or craft listed in Exhibit “A” of the

Agreement through no fault of his/her own, whereupon

Section 1 will apply on a one-for-one basis to any

contractor performing work at the Norco Plant, or

(b) an employee is laid off due to a reduction in force.

However, RPP’s obligations under Section 1 will continue

to apply to any contracted work normally performed by

Operators.

After the sale, some production workers transferred to RPP,

but no maintenance workers transferred.4 During the first year of
5 Shell was a subcontractor because, under the interim services agreement,

it retained the right to control its employees, including the right to control

hours of work and delegation of assignments. 

4

RPP’s control of the business, all maintenance workers were

subcontractors, either employees of various firms, including KBR,

or Shell employees subcontracted to RPP under the Interim Labor

Services Agreement.5 At the end of that year, RPP stopped using

Shell’s workers, who were parties to a Shell-Union CBA; and instead

of hiring Union workers, it used as maintenance workers, as it

still does, only subcontractors from firms other than Shell,

primarily KBR.

The Union asserted in a grievance in 2001 that RPP improperly

used subcontractors instead of union workers for maintenance. RPP

responded that it would not recognize the grievance because, among

other things, it was not timely, the CBA did not require it to

employ any maintenance workers, RPP had never employed any

maintenance workers and thus could not have subcontracted out the

work to the Union’s detriment, and Shell maintenance employees had

rejected employment with RPP, forcing the company to subcontract

out the work. Arbitration followed, and in July 2004 the

arbitrator concluded that the grievance was timely and that RPP

violated the CBA by subcontracting out all the maintenance work. 

The arbitrator began by acknowledging the unique

circumstances: while RPP had never employed any Union workers for

maintenance, Shell had for fifty years. She then concluded that
5

RPP, by assuming the obligations of the CBA and all past letters of

agreement, “logically...accepted” the “rich bargaining history” and

“past arbitral interpretations of its obligations under the CBA.”

Hence, she concluded, “the issue should be resolved in the same

manner as any other contracting out grievance” — analyzing the text

of the CBA and prior arbitral interpretations of that text. 

First, she noted that the CBA addressed subcontracting only in

Article XIV, which prescribed subcontractor pay. She then stated,

“It is generally accepted that a CBA...which is silent about

subcontracting...does not give Management the unfettered right to

subcontract.” She did not mention the applicability of Article

III, which grants RPP the right to determine the number of

maintenance workers, or discuss the “recognition clause” in the

preamble, which the Union argues on appeal is a limitation on the

right to subcontract, stating only that the CBA is silent as to

RPP’s right to subcontract.

Turning then to past arbitral interpretations to inform that

silence, the arbitrator analyzed four prior matters, quoting

passages showing a desire to protect the integrity of the

bargaining unit:

[Even when subcontracting,] the Company is still

obligated to act reasonably and in good faith in such

matters, so as not to subvert the labor agreement or to

seriously damage the bargaining unit....

...

Arbitrators are hesitant to permit wholesale

subcontracting even where the labor contract is silent
6

regarding such restrictions, if the subcontracting act

would significantly undermine the integrity of the

bargaining unit or its members rights.

...

[T]he fact that the grievance may create a scheduling

difficulty or cost a bit more, does not change the fact

that this is bargaining unit work and, as such, cannot be

assigned to [ ] contract workers. 

...

[Where Shell filled one position with an outside

subcontractor,] Shell’s decision . . . had absolutely no

impact on the scope or integrity of the bargaining unit.

The arbitrator distinguished the instant case from the fourth

arbitration, which arose when the last Union member serving as an

insulator retired and Shell hired for the waning position one

subcontractor, instead of a Union member. She noted that the

current case is about the entire maintenance unit, not just one

position, and that there is plenty of maintenance work for the unit

here, unlike the prior arbitration where there was not even one

daily full-time job for an insulator. She observed that the

arbitrator in the prior arbitration sensibly read the CBA not to

force Shell to maintain obsolete positions.

The arbitrator here found the lesson from past arbitrations

clear: though the company has some latitude to subcontract, it

cannot do so if subcontracting would significantly undermine the

integrity of the bargaining unit. Because RPP did not employ any

bargaining unit maintenance employees but instead subcontracted out

all the maintenance work, the arbitrator concluded that RPP had
6 404 F.3d 942, 944 (5th Cir. 2005).

7 Hunt v. Rapides Healthcare Sys., LLC, 277 F.3d 757, 762 (5th Cir. 2001).

7

undermined the integrity of the bargaining unit.

Finally, as the remedy, the arbitrator ordered that

the Company shall employ maintenance craft employees in

numbers comparable to that of the Epoxy Resins Department

when it was owned by Shell. Bargaining unit maintenance

employees shall be responsible for routine maintenance of

the plant. The Company may allocate work in the manner

comparable to Shell’s practices relating to employment

and contracting out, before the sale.

RPP filed suit in federal district court, seeking vacatur of

the award, and both parties moved for summary judgment. The

district court granted RPP’s motion. Although the court deferred

to the arbitrator’s conclusion that the grievance was timely, it

concluded that the arbitrator erred by considering past practice

where the CBA stated it was the entire agreement between the

parties and erred under Beaird Industries, Inc. v. Local Union 2297

International Union,

6 which directs vacatur where the arbitrator

acts contrary to an express provision of the CBA, because Article

III of the CBA unambiguously did not require RPP to maintain a

fixed number of maintenance workers. The Union appealed.

II

We review the district court’s grant of summary judgment de

novo.

7 Judicial review of arbitration decisions arising from the

terms of a CBA is “narrowly limited,” and courts should afford
8 Beaird, 404 F.3d at 944.

9 Weber Aircraft Inc. v. Gen. Warehousemen & Helpers Union Local 767, 253

F.3d 821, 824 (quoting United Paperworkers Int'l Union v. Misco, Inc., 484 U.S.

29, 38 (1987)).

10 Beaird, 404 F.3d at 944 (quoting Misco, 484 U.S. at 38).

11 Id.

12 Id. at 946–47. See also Houston Lighting & Power Co. v. Int’l Bhd. of

Elec. Workers, Local Union No. 66, 71 F.3d 179, 182 (5th Cir. 1995) (“The ‘rule

in this circuit, and the emerging trend among other courts of appeals, is that

arbitral action contrary to express contractual provisions will not be

respected.’”) (quoting Delta Queen Steamboat Co. v. Dist. 2 Marine Eng’rs

Beneficial Ass’n, 889 F.2d 599, 604 (5th Cir. 1989)).

8

“great deference” to arbitration awards.8 “As long as the

arbitrator’s decision ‘draws its essence from the collective

bargaining agreement’ and the arbitrator is not fashioning ‘his own

brand of industrial justice,’ the award cannot be set aside.”9

Additionally, “a court must affirm an arbitral award ‘as long as

the arbitrator is even arguably construing or applying the contract

and acting within the scope of his authority.’”10 Even where a

court would have interpreted the contract differently, a court must

still affirm the award.11 However, under Beaird, an arbitrator

lacks authority to render a decision contrary to an unambiguous

provision of the CBA.12

III

The Union argues that the award drew its essence from the CBA

because the CBA does not unambiguously permit RPP to subcontract,

especially in the face of the preamble’s “recognition clause,”

which recognizes the Union as the exclusive bargaining agent for
13 905 F.2d 108 (5th Cir. 1990).

14 147 F.3d 399 (5th Cir. 1998).

9

the class of maintenance workers. For this proposition it cites

three cases, which it also contends are more relevant than Beaird.

In Folger Coffee Co. v. Int’l Union,

13 the arbitrator sustained

the union’s challenge to the company’s use of subcontractors,

concluding that, despite language in the CBA permitting the company

to subcontract, the right to subcontract was not absolute. In so

concluding, the arbitrator relied in part on the past practice of

union members performing the work of subcontractors and in part on

a CBA provision stating that the CBA’s purpose was to strengthen

the parties’ relationship. This court affirmed, concluding that

reliance on past practice was permissible where the agreement was

silent or insufficient to enable the arbitrator to render a

decision and that the arbitrator’s interpretation of the “purpose”

clause as a limitation on the right to subcontract was reasonable

because, unless the agreement contained an explicit clause

entitling the company to subcontract regardless of the effect on

the bargaining unit, subcontracting should be balanced against the

rights of the union. 

In National Gypsum Co. v. Oil, Chemical, and Atomic Workers

International Union,

14 the arbitrator concluded that, although the

CBA included a management rights clause permitting the company to

“schedule and reschedule employees as required by the business
15 906 F.2d 1499 (10th Cir. 1990).

10

needs” of the company, the company had to bargain before reducing

the work week from seven to six days. The arbitrator reasoned in

part that the recognition clause recognized the Union as the

exclusive bargaining agent. In so concluding, the arbitrator

relied in part on past practice, even though the agreement

explicitly stated that it constituted the “full scope” of the

agreement between the parties. This court affirmed, concluding

that the arbitrator, whose province it was to resolve conflict

between CBA provisions, had made a reasonable interpretation; it

evinced concern about the use of past practice given the “full

scope” clause, but because the decision was otherwise grounded in

the CBA, the inquiry into past practice was not “fatal.” 

In NCR Corp. v. International Association of Machinists and

Aerospace Workers,

15 the arbitrator interpreted the recognition

clause as a limitation on the management’s right-to-subcontract

clause in sustaining the union’s challenge to the company’s use of

subcontractors. In so concluding, the arbitrator also looked to

past practice. The Tenth Circuit reversed the district court’s

vacatur, emphasizing the deferential standard of review and

affirming the use of past practice.

In Beaird, the arbitrator sustained the union’s grievance

challenging company subcontracting. The district court vacated the

award. This court affirmed, determining that the CBA provision
16 404 F.3d at 944-47. 

11

defining the company’s right to subcontract was unambiguous:

“‘[T]he Company has and retains and the Union recognizes the sole

and exclusive right of the Company to exercise all the rights or

functions of management . . . [including] the decision to

subcontract out work . . . . ’” We concluded that, because no

other provision of the CBA limited this right, the arbitrator

failed to draw his conclusion from the essence of the agreement by

acting contrary to an express CBA provision.16 We distinguished

Folger on the ground that the CBA in Beaird was explicit in

permitting subcontracting and contained no limitation on

subcontracting; we also called Folger’s holding the “outer limits”

of deference to arbitral awards.

The Union claims that Beaird is not on point because the

Union’s CBA does not contain an unambiguous “management rights”

clause reserving to RPP the right to subcontract, and because its

CBA contains a recognition clause recognizing the Union as the

exclusive bargaining agent for the maintenance workers. 

RPP counters that Article III unambiguously allows it not to

maintain maintenance workers, conflicting head-on with the

arbitrator’s award that RPP “shall employ maintenance [workers] in

numbers comparable to that of the [] Department when it was owned

by Shell....” It also contends that the arbitrator pointed to no

CBA provision which RPP violated.
17 Beaird, 404 F.3d at 944 (quoting Misco, 484 U.S. at 38). 

12

We conclude that the arbitrator’s award “drew its essence”

from the CBA. First, we put aside one area of contention. There

is a powerful argument that RPP, by explicitly assuming the ShellUnion CBA and all prior letters of agreement, assumed the prior

arbitral interpretations of the CBA. The argument is that those

interpretations did more than fill interstices and provide needed

gloss to unclear provisions, the results of which must be

controlling now; they also framed the background against which the

parties understood the terms of negotiation. RPP contends that the

arbitral history is irrelevant. 

The arbitrator here did consider past interpretations, but

only after concluding that the CBA was ambiguous as to

subcontracting. If the CBA did not unambiguously confer a right to

subcontract, then the arbitrator’s task was to construe an

ambiguous CBA, and mere disagreement with the performance of that

task is not alone a basis for vacating the award.17 Relatedly, the

role the past arbitral decisions played is not wholly clear. At

one point, after finding the CBA ambiguous, the arbitrator appeared

to construe the CBA de novo, without reference to any prior

arbitration: “It is generally accepted that a CBA...which is silent

about subcontracting...does not give Management the unfettered

right to subcontract.” That is, she seemingly decided how to
18 Her use of the term “generally accepted” suggests reliance on prior

legal interpretations of similar contracts, but that is different from reliance

on precedential interpretations of the CBA at issue. After all, all judges when

interpreting contracts, even in the first instance, use rules and maxims derived

from other cases.

19 Subcontracting is mentioned once, but only in the section requiring any

subcontractors to be paid at certain rates.

20 In NCR Corp., 906 F.2d at 1505-06, the Tenth Circuit construed a

recognition clause as a limitation on an express right-to-subcontract clause.

This goes even further than we do since the CBA here contains no express rightto-subcontract clause.

At oral argument, RPP contended that we cannot rely on the recognition

clause because the arbitrator did not rely on it in her analysis. This mistakes

the nature of our review of arbitral awards, which we review in toto only to

determine whether they draw their “essence” from the CBA. After all, arbitrators

need not, and sometimes do not, attach any reasoning to their awards, and we do

not by virtue of that fact vacate such awards. See Sarofim v. Trust Company of

the West, 440 F.3d 213, 218 (5th Cir. 2006). Moreover, we can affirm a federal

district court’s judgment on grounds presented by the parties but not relied on

by the court, see Brown v. Nationsbank Corp., 188 F.3d 579, 586 (5th Cir. 1999);

certainly our review of arbitral awards is no less deferential. In short, we can

and should uphold an award on any reasonable ground. See Brabham v. A.G. Edwards

& Sons, Inc., 376 F.3d 377, 385 (5th Cir. 2004).

13

construe this CBA as a matter of first impression.18 Regardless,

the question for us is whether the CBA unambiguously gave RPP the

right to subcontract. We conclude that it did not.

That the CBA did not unambiguously give RPP the right to

subcontract is apparent. At the very least, that conclusion is

defensible and, therefore, we must defer to it. Most importantly,

the CBA is silent as to RPP’s right to subcontract,19 and the CBA

recognizes the Union as the representative of maintenance workers,

suggesting that RPP cannot subcontract all maintenance work.20

There was no recognition clause in Beaird, and the CBA there

included a “management rights” clause expressly reserving to

management the right to subcontract, absent here. Our result

accords with Folger Coffee Co. v. International Union, where the
21 905 F.2d at 109. Beaird distinguished Folger precisely because the CBA

in Beaird had the explicit management rights clause and no contradictory clauses,

again highlighting the lack of such an explicit clause here. 404 F.3d at 945-46.

22 Contrary to RPP’s assertion, the arbitrator need not have pointed to a

specific, explicit CBA provision that RPP violated. The CBA was ambiguous about

subcontracting; the arbitrator reasonably interpreted that ambiguity to preclude

wholesale subcontracting, thus RPP violated the CBA. Our holdings in Folger and

Beaird, and traditional principles of contract interpretation, do not require

violation of a specific, explicit provision.

14

CBA explicitly gave management the right to subcontract, absent

here, but that clause was contradicted by others.21 In sum, the CBA

here did not speak in unambiguous terms about subcontracting.

Because the CBA was ambiguous about RPP’s right to subcontract, we

must defer to the arbitrator’s interpretation, which draws its

essence from the CBA, that the CBA does not permit wholesale

subcontracting.22

RPP’s best argument, that advanced by the district court, is

that Article III unambiguously gives RPP a right to subcontract by

stating that RPP has no obligation to maintain any specific number

of maintenance workers. Article III, of course, makes no mention

of subcontracting. Rather, both RPP and the district court focus

on the wording in the arbitrator’s award that “the Company shall

employ maintenance...employees in numbers comparable to that of the

Epoxy Resins Department when it was owned by Shell.” Just one or

two pages before that statement, however, the arbitrator stated

that “the CBA cannot mandate that a job classification remain

filled if there is inadequate work” due to modernization, a

changing market, or similar business reasons. That is, she
23 Again, we need not decide the appropriate precedential effect of prior

arbitral decisions. In addressing the prior arbitrations, the arbitrator

confirmed her own view that the company cannot be made to retain a certain number

of positions in the face of certain circumstances: “As Arbitrator Fox correctly

observed, the CBA cannot mandate....” The relevant point is that the conflict

arises from her own statements, the precedential force of prior arbitrations

aside.

24 See, e.g., Cannelton Indus., Inc. v. Dist. 17, United Mine Workers of

Am., 951 F.2d 591, 594 (4th Cir. 1991) (explaining that courts sometimes look to

an arbitrator’s reasoning in determining whether the award draws its essence from

the CBA).

15

acknowledged that the CBA does not mandate that RPP maintain

positions it wants to eliminate, as the Union conceded at oral

argument.23 Reading the “award” as not just the final section

entitled “award” but rather the entire document,24 we see ambiguity

in the award stemming from these two statements. Put another way,

with this dispute, drawn as it is over the right of RPP to

subcontract, we do not read the arbitrator’s remedy as

unambiguously imposing the obligation to engage unneeded workers.

That reading is defied by the circumstance that the issue in

dispute is subcontracting or not, as the arbitrator herself made

clear in dispensing with the idea that RPP would have to employ a

certain number of workers. The critical element in the remedy is

the obligation to “employ,” that is “not subcontract,” not the

phrase “in numbers comparable.” In context, it is not unreasonable

to read the award as ordering that to the extent that RPP chooses

to use routine maintenance workers, it must meet that need as its

predecessor did by employing Union workers, not by wholesale
25 RPP suggested at oral argument that maintenance workers might become

obsolete. About that we say only that RPP is not obligated to use any workers

to do maintenance. 

26 The Union incorrectly argues that RPP has forfeited this issue by

failing to cross-appeal it. We may affirm a lower court’s grant of summary

judgment on a ground not relied upon (or rejected) by that court as long as the

movant below asserted the ground, see Black v. North Panola School District, 461

F.3d 584, 593 (5th Cir. 2006); hence before us now is the propriety of the entire

order of summary judgment. 

27 RPP also argued in front of the arbitrator and the district court that

the underlying grievances were not timely filed, but it abandons this argument

on appeal.

16

subcontracting.25

In sum, the CBA did not clearly allow RPP to subcontract out

the maintenance work. The arbitrator resolved the dispute over

this uncertainty by precluding subcontracting, a resolution we

cannot fault, footed as it is in the terms of the contract.

IV

RPP presses an alternative ground for affirmance,26 that the

arbitrator, whose action on this point was affirmed by the district

court, improperly found the grievance arbitrable. Namely, RPP

contends that the arbitrator ignored the plain language of the CBA

requiring the party requesting arbitration, the Union, to apply for

a panel of arbitrators within thirty days of requesting

arbitration.27

Although the Union waited more than thirty days to apply for

a panel of arbitrators, the district court explained that

[t]he arbitrator found the matter arbitrable after

reviewing correspondence between the parties’ counsel

regarding the original grievances and the Union’s desire

to proceed to arbitration....The Arbitrator...concluded
28 The arbitrator also concluded that the CBA, by stating that the party

seeking arbitration “may” apply for a panel of arbitrators within thirty days,

did not require the Union to act within thirty days. We do not address this

issue.

29 Misco, 484 U.S. at 38.

17

the delay in proceeding to arbitration was a result of

RPP counsel’s failure to correspond with the Union in a

timely fashion.28

On appeal, RPP argues that the arbitrator’s focus on the

correspondence improperly contradicts the plain meaning of the CBA.

In other words, RPP contends that the Union should have requested

a panel within thirty days, regardless of any dilatory tactics or

obstruction, intentional or not, on RPP’s part.

We are unwilling to say that the arbitrator’s conclusion did

not “draw[] its essence from the collective bargaining agreement”

and that the arbitrator was not “even arguably construing or

applying the contract and acting within the scope of h[er]

authority.”29 The CBA’s prescribed arbitration procedures are

necessarily somewhat flexible, and the CBA sustains the

interpretation that a party cannot obstruct the procedures and then

benefit from that obstruction. And we do not second-guess the

arbitrator’s factual finding that RPP’s counsel’s correspondence

led to the delay.

We REVERSE the district court’s judgment and REMAND for

proceedings consistent with this opinion.