*The Honorable Andre w W. Bogue, United States District Judge

for the District of South Dakota, sitting by designation.



## United States Court of Appeals FOR THE EIGHTH CIRCUIT

____________ No. 96-1451

____________ American National Can Company, *
* Appellant, *

*
v. * Appeal from the United States
* District Court for the United Steelworkers of * Eastern District of Missouri America; Local No. 3628, * United Steelworkers of * America, *
* Appellees. *

____________ Submitted: November 22, 1996 Filed: July 25, 1997

____________ Before McMILLIAN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and BOGUE, District Judge.

*

____________
McMILLIAN, Circuit Judge.The Honorable Stephen N. Limb augh, United States District Judge for the Eastern 1 District of Missouri. American National Can Company (ANC) appeals from a final order entered in the United States District Court for the Ea stern District of Missouri granting summary 1 judgment in favor of United Steelworkers of America (USWA) and Unite d Steelw orkers of America, Local No. 3628 (Union) (together “defendants”) an d enforcing an arbitrator’s award which held that ANC violated the “contracting out” provision of the parties’ collective barga ining agreement (CBA) by transferring certain work and equipment from one ANC pl ant to another ANC plant. American Nat’l Can Co. v. United Steelworkers , No. 4:94 CV 2473 (E.D. Mo. Jan. 5, 1996) (hereinafter “slip op.”). The di strict court ruled that the arbitrator’s award draws its essence from the CB A and that the arbitrator was not bound by two prior arbitration award s involving the application of the same clause of the CBA. Slip op. at 5. For reversal, ANC argue s that the district court erred in enforcing the arbitrator’s award. For th e reasons discussed below, we affirm.
I. Background
The underlying facts are undisputed. ANC operates a can manufacturing plant in St. Louis, Missouri (the St. Louis plant), for which USWA is the exclusive collective bargaining representative for ANC’s St. Louis employees. The CBA, currently i n effect from February 22, 1993, through February 22, 1998, includes, among othe r provis ions, an agreement that disputes arising under the CBA will be submitted t o grievance and arbitration procedures, a management reservation of rights provision, and a "contracting out" prohibition (Article 3.3) statin g in part that "[t]he Company will not contract out work which is normally performed by employees at the particular location when there is appropriate equipment, skills, necessary time and qualified employees to perform such work."-3-

In Sept ember 1993, ANC notified the Union that it was going to transfer th e coffe e can end and sanitary can end work from its St. Louis plant to its plant i n Ho opeston, Illinois (the Hoopeston plant). The equipment for performing this wor k

was to be dismantled and removed from the St. Louis plant, and reassembled at th e Hoopeston plant. Both the St. Louis plant and the Hoopeston plant are ANC facilities, but employees at the Hoopeston plant are not represented by a labor organization.
The transfer of work and equipment took place in October 1993. As a result of the transfer, fifty to sixty bargaining unit employees were adversely affected an d several employees were laid off. The Union filed a grievance asserting tha t this transfer of work and equipment violated Article 3.3, the contracting out prohibition, amon g other provisions of the CBA. The dispute was not settled through grievanc e procedures, and the Union sought arbitration. The matter was submitted to Arbitrato r John J. Mikrut, Jr. (hereinafter “the arbitrator” or “Arbitrator Mikrut”).

At th e arbitration hearing, held on June 22, 1994, the Union argued that AN C had violated applicable provisions of the CBA, including Article 3.3 , when it transferred the coffee can end and sanitary can end work from the St. Louis plant to the Hoopeston plan t. In response, ANC argued that the arbitrator was required, according t o principles of res judicata , to follow two prior arbitration awards, American Nat’l Can Co. (Hammond Plant) v. Uni ted Steelworkers , Gr. No. 41-89 (Feb. 20, 1993) (Mikrut, Arb.) , and American Can Co. (Vancouver Plant) v. United Steelworkers, Local 2821 , Gr. No. 002-9-79 (Mar. 29, 1980) (C ole, Arb.), each of which held that a certain intracompany transfer of work did not violate Article 3.3, as identically contained in a n earlier version of the CBA. Ar bitrator Cole, in his 1980 decision, found that ANC had not violat ed the contracting out provision when it manufactured cans at its unionize d Vanco uver plant by utilizing metal sheets which had already been decorated at one of its non-union facilities in Canada. Arbitrator Mikrut, in his 1993 decision, similarl y found that ANC ha d not violated the contracting out provision when it had machinery, which had been produced at a non-union facility, repaired at the non-union facility-4-

rather than at its unionized Hammond plant where the machinery had been in operation. Thus, AN C argued, because those two prior arbitration awards involved the sam e parties, the same language of the CBA, and similar facts, Arbitrator Mikrut was bound in the present case to hold that the transfer of the coffee can end and sanitary can end work and equipment did not qualify as contracting out wit hin the meaning of Article 3.3 of the CBA.
On September 30, 1994, the arbitr ator found that ANC had violated Article 3.3 of the CBA. United Steelworkers v. American Nat’l Can Co. , Gr. No. 93-55 (Sept. 30, 1994) (Mikrut, Arb.) (hereinafter “Mikrut 1994 Decision”). He considered the tw o prior arbitration awards cited by ANC but nevertheless concluded that “[ANC’s ] argum ent must be rejected because the Union’s counter-argument that ‘. . . intra

co rporate transfers of work’ are encompassed within the sub-contracting prohibitio n of Article 3.3, is significantly more persuasive, within the context of the instant dispute , than th at which has been adduced by [ANC] herein.” Id. at 20-21 (emphasis added). The arbitrator explained in full:

This conclusion, although seemingly inconsistent with thi s Arb itrator’s previous Award . . ., nonetheless, is perceived to be prope r insofar as the Arbitrator in the previous case was no t presente d with as thorough and comprehensive an articulation of the Union’s position therein or the applicable arbitral authorities as that which has been presented b y the Union in the instant case. Moreo ver, the Arbitrator further notes that there are significan t distin ctions between the fact circumstances involved in the tw o (2) cited cases and those which are involved in the instant case

. In the two cited cases, the subject triggering, complained-o f inci dents were largely single occurrences of relatively short duration; they appear to involve considerably smaller amounts of money; t here was some question whether the disputed work was work which “. . . is normally performed by employees at th e part icular location when there is appropriate equipment, skills , necessar y time and qualified employees to perform such work . .-5-

.” as is prescribed in Article 3.3; and lastly, perhaps mor e impo rtantly, no loss of bargaining unit jobs appears to hav e occurred as a result

of Management’s decision in the cited cases.
In the instant case, however, the amount of work involved is consid erable in terms of the scope of duties, number o f bargaining unit jobs affected, and the amount of money involved; the disputed transfer is to be a permanent transfer of work to the Hoopeston Plant; there is absolutel y no doubt whatsoever that the St. Louis bargaining unit employees are ca pable of performing the work in accordance with the provisions of Art icle 3.3; and despite the uncertainty in the record as to the exact number of St. Loui s bargai ning unit employees who were negatively impacted b y Manageme nt’s decision herein, it is conceded by [ANC] that a si gnificant number of bargaining unit jobs were lost at the St

. Louis Plant as a result of that decision, and that said loss of jobs had a res ultant, negative impact on the bargaining unit and th e Union itself.

Id. a t 21-22. In light of these “critical factual differences” between the present cas e and the two prior cases, the arbitrator concluded, n o “reasonable or proper comparison can be made” to support a finding in ANC’s f avor. Id. at 22. The arbitrator then went on to determine, based

on the facts of the present case, that ANC had violated Article 3.3 of the CBA when it transferre d the coffee can end and sanitary can end work from the St. Loui s plant to the Hoopeston plant. Id. at 24. In fashioning a remedy, th e arbitrator directed ANC to transfer the work and equipment back to the St. Louis plant and mak e whole all current and former bargaining unit employees who had bee n adversely affected by ANC’s violation. Id. at 24-25.
ANC filed the present ci vil action in federal district court seeking to vacate the arbitrator's award, and defendants filed a counterclaim seeking to enforce the award. The district court thereafter granted a motion for summary judgment filed b y defendants, denied ANC’s cross-motion for summary judgment, and ordered-6-

enf orcement of the arbitrator’s award on grounds that the arbitrator was not boun d under pr inciples of res judicatato follow the two prior arbitration decisions cited b y ANC and that the arbitrator’s decisi on draws its essence from the CBA. Slip op. at 5- 6. ANC appealed.

II. Discussion

In a series of 1960 decisions known as the “ Steelworkers Tri logy,” the Supreme Cour t recognized the general rule that -- when parties to a collective bargainin g agreement

bargain for arbitration as a method of resolving disputes arising under the agr eement, and a dispute is then properly submitted to arbitration -- the arbitrator’ s interpretation of the collective bargain ing agreement must be afforded extreme judicial defere nce. “The function of the court is very limited when the parties have agreed to submital l questions of contract interpretation to the arbitrator. It is confined t o ascertainin g whether the party seeking arbitration is making a claim which on its face is governe d by the contract.” United Steelworkers v. American Mfg. Co. , 363 U.S

. 564, 567-68 (1960). In such circumstances, the Court explained, “[w]hether th e moving party is right or wrong is a question of contract interpretation for the arbitrator . . . [a nd] the moving party should not be deprived of the arbitrator’s judgment, when it was his [or her] judgment and all that it connotes that was bargained for.” Id. at 568. In United Steelworkers v. Warrior & Gulf Navigation Co. , 363 U.S. 574, 582 (1960), the Cour t explained “[t]he labor arbitrator is usually chosen because of the parties ’ confidence in his [or her] knowledge of the common law of the shop and their trust in his [or her] personal judgment to bring to bear considerations which are not expressed in the co ntract as criteria for judgment.” In comparison, the Court observed, “[t]h e ablest judge cannot be ex pected to bring the same experience and competence to bear upon the determination of a grievance, because he [or she] cannot be similarl y informed.” Id. In United Steelworkers v. Enterprise Wheel & Car Corp. , 363 U.S

. 593, 596 (1960), the Court admoni shed “[t]he refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining-7-

agreements.” Thus, the Supreme Court conc luded, a court must enforce an arbitrator's award so long as the award draws its essence from the collective ba rgaining agreement,

no twithstanding the court's possible disagreement with the arbitrator’s interpretation. Id. at 597-99. More recently, the Supreme Court reiterated these principles and noted that, absent fraud, the arbitrator’s dishone sty, or other considerations of that nature, an arbitra tor’s award must be enforced “as long as the arbitrator is even arguabl y
con struing or applying the contract and acting within the scope of his [or her ] authority[;] that a court is convinced [the arbitrator] committed serious error does not suffice to o verturn his [or her] decision.” United Paperworkers Int’l Union v. Misco, Inc. , 484 U.S. 29, 38 (1987). Fi nally, these principles are to be followed “even when the basis for the arbitrator's decision may be ambig uous." W. R. Grace & Co. v. Local Union 759, Int’l Union of United Rubber, Cork, Linoleum & Plastic Work ers , 461 U.S. 757, 764 (1983) ( W. R. Grace & Co. ).

In United Elec., Radio & Mach. Workers, Local 1139 v. Litton Microwav e Cooking Prods. , 728 F.2d 970, 972 (8 Cir. 1984) (en banc), this court similarl y th observed “[i]t is not for us to decide whether we would have awarded this particular relief, or whether the arbitrator correctly inter preted the contract. Those questions are, in all but the clearest cases, the arbitrator’s business, not ours.” Upon noting that the arbitrator had not clearly exceeded his authority or violated the collective bargaining agreement

in that case, this court held that the union was entitled to full enforcement of the arbitration award. Id. “It was, after all, the arbitrator’s judgment an d interp retation for which the parties bargained when they agreed that disputes arisin g under the contract woul d be submitted to arbitration.” Id. In Kewanee Mach. Div. v. Loca l 21, Int’l Bhd. of Teamsters , 593 F.2d 314, 316 (8 Cir. 1979), this court noted th the principles se t forth in the “ Steelworkers Trilogy” and further highlighted the wellestablished rule that “[t]he grant of power by the agreement mu st be broadly construed, with any doubt resolved in favor of the arbitrator’s authority.” Id

. (citing cases); Walsh

v. Union Pac. R.R. Co. , 803 F.2d 412, 414 (8 Cir. 1986) (same), cert. denied , 48 2 th U.S. 928 (1987). Thus, this court has consistently echoed the Supreme Court’s-8-

teachings that, wh ile an arbitrator may not dispense his or her own brand of industrial just ice, the arbitrator may look for guidance from many sources, and the resultin g arbitration award is entitled to extreme judicial deference so lon g as it was not obtained by unlawful or improper means and it draws its essence from the collective bargaining agreement. We now turn to the case at bar.
To begin, we note that the arbitrator carefully considered ANC's argument that the contracting out issue was control led by two previously issued arbitration awards --

one issued by Arbitrator Cole in 1980 and the other by Arbitrator Mikrut himself i n 1993. The arbitrator decide d that those two prior arbitration awards were based upon materia lly distinguishable facts and not dispositive under applicable principles of res judicata

. Mikrut 1994 Decision at 22. The arbitrator noted that, in the two prio r cases, the transfers of work were single occurrences of relatively short duration, th e tran sfers involved considerably smaller amounts of money, there was some questio n regarding the c apability of the bargaining unit employees to perform the subject work withinthe terms of Article 3.3, and it appeared that no bargaining unit jobs were lost

as a resu lt of the transfers. Id. at 21. By contrast, in the present case, he noted, th e trans fer of work affected a significant number of bargaining unit employees and a substantial amount of money, the transfer wa s permanent, the St. Louis bargaining unit

em ployees were unquestionably capable of performing the work within the terms o f Article 3.3, and some bargaining unit jobs were lost as a result of the transfer. Id. at 21-22. Interpreting the CBA as it applied to the fact s of the present case, the arbitrator then concluded that ANC’s transfer of the coffee can end and sanitary can end work and equipment from the St. Louis plant to the Hoopeston plant violated Article 3.3.
Recognizing that the scope of our review is very limited, we hold that the award of the arbitrator is rationally based upon, and draws its essence from, the CBA. The

ar bitrator turned primarily to the language of Article 3.3, which states that “[t]h e company will not contrac t out work which is normally performed by employees at the particular location when there is appropriate equipment, skills, necessary time and-9-

qualified employees to perform such work .” The arbitrator interpreted this prohibition to cover the transfer of the coffee can end and sanitary can end work outside th e bargai ning unit, but within the corporation. His interpretation of the CBA was no t unreasonable in light of the absence of any express definition in the CBA of “contract out.” The arbitrator also took into consideration numerous p rior arbitration awards and practices in the industry. Of critical importance were his findings that

[i ]n the instant case . . . the amount of work involved i s conside rable in terms of the scope of the duties, number o f bargaining unit jobs affected, and the amount of money involved; the disputed transfer is to be a permanent transfer of work to the Hoopeston Plant; there is absolutel y no doubt whatsoever that the St. Louis bargaining unit employees are ca pable of performing the
wo rk in accordance with the provisions of Article 3.3; and . . . it is conceded by [ANC] that a significant number of bargaining unit jobs were lost at the St. Louis plant as a result of that decision.

Mi krut 1994 Decision at 21-22. These critical facts adequately distinguish this cas e fromthe prior awards upon which ANC relies and also support the arbitrator’ s interpretation and application of the CBA.

Moreover, the arbitrator’s finding that a violation of Article 3.3 had occurre d under the present facts is well within the mainstream of arbitral decisions which have hel d that an intra-corporate, extra-unit work transfer may constitute prohibite d contracting out where, as here, the purpose of the contracting out clause is th e preservation of bargaining unit work. See, e.g. , National Steel Corp., Granite City Div.

v. United Steelworkers, Local 16 , Gr. No. 310-87-10 (June 27, 1991) (McDermott , Arb.) (rejecting the employer’s argument that contracting out requires “a < contract,’ a

< contractor,’ and an <

out’ . . .” and holding t

hat the employer’s transfer of ladle-banding work from a steelworkers’ unit to a brick layer s’ unit within the same plant violated the contracting out provision); White Motor Co. v. International Bhd. of Teamhousemen,-10-

Local 710 , 43 Lab. Arb. 682, 684 (1964) (McGury, Arb.) (holding that transfer o f clerical and ac counting work from one branch to another branch of the same company violat ed the contracting out provision of the collective bargaining agreement; “[t]h e
essence of the Union bargain in obtaining the no-contracting out clause is to keep the contracted w ork within the bargaining unit[;] the question of where it ends up i s normally of no concern”).

Finally, we disagree with ANC’s argument that, under Trailways Lines, Inc. v. Trailw ays, Inc. Joint Council , 807 F.2d 1416 (8 Cir. 1986) ( Trailways ), and Wilbu r th Chocolate Co. v. Bakery, Confectionary and Tobacco Workers ’ Int’l Union, Local 464 , No. CIV. A. 86-5479, 1988 WL 33881 (E.D. Pa. Mar. 31, 1988) ( Wilbur Chocolate ), aff’d with out opinion , 862 F.2d 312 (3d Cir. 1988), we should reverse the distric t court’s de cision to enforce the arbitrator’s award. We have examined both of thos e decisi ons and conclude that neither supports ANC’s contention that the district cour t erred in th e present case. It is true that, in Trailways , 807 F.2d at 1425-26, this court affirmed the district court’s summary judgment decision to vacate the arbitr ator’s award, where that award conflicted with a prior arbitrator’s award involving the same union, the same c ompany, the same issue, and the same clause of a collective bargainin g agr eement. In that case, however, this court specifically found that the arbitrator’ s award at issue did not draw its essence from the collective bargaining agreement but, rather, represented the arbitrator’s “personal notions o f what was proper.” Id. at 1426. Moreover, unlike in the present case, the arbitrator in Trailways did not seriousl y consider the potential preclusive ef fect of the prior award, despite the apparent identity of material facts. Id. at 1425 (“[the arbitrator] did not discuss the similar nature of the two grie vances and why, in light of this fact, the [prior award] was not to be give n preclusive ef

fect”; “[i]f an arbitrator does not accord any precedential effect to a prior award in a cas e like this, or at least explain the reasons for refusing to do so, it i s ques tionable when, if ever, a ‘final and binding’ determination will evolve from th e arbitration process”). Finally, we note that the Trailways court specifically explained “[a]lthough an arbitrator generally has the power to determine whether a-11-

prior award is to be given preclusive effect . . . courts have also recognized that th e doctrin e of res judicatamay apply to arbitrations with strict factual identities .” Id

. (emphasi s added). The court then went on to recognize that there may be som e situations where an arbitrator will properly refuse to defer to a prior award involving the

sam e issue. Id. at 1425 & n.16 (discussing instances where such a refusal may b e justifie d). Likewise, in Wilbur Chocolate , 1988 WL 33881, at *5, the district cour t granted summary judgment for the plaintiff-company and vacated the arbitrator’s award becau se the arbitrator’s award did not draw its essence from the collective bargaining agreement

-- not solely because the arbitrator failed to follow a prior award involving the same union, the same company, the same collective bargaining agreement, and the same issue. Moreover, in Wilbur C hocolate , the arbitrator had expressly stated that he disagreed on the merits with the prior arbitration decision and, thus, made no effort to disti nguish

the prior case from the case before him, even though it was apparentl y identical in its material facts. Id. at *4-5. Consistent with defendants’ position in the present ca se, the district court in Wilbur Chocolate also noted that there are situations where an arbitrator may refuse to defer to a prior award involving the same issue, even where t he CBA states that arbitration awards should be final and binding. Id. at *4

. Finally, t he district court in Wilbur Chocolate noted that whether a prior arbitrator’ s award sho uld be given binding effect under the agreement is a matter of contrac t interpretation for the arbitrator. Id.

Here, in stark contrast to the underlying arbitrators’ decisions in Trailways and Wi lbur Chocolate , Arbitrator Mikrut specifically identified the critical factua l differences betwe en the arbitral decisions cited by ANC and the case before him and, based upon those material distinctions, determined that no preclusive effect should be

acco rded the two prior decisions. Thus, the present case is analogous to severa l federal court decisions which have required the enforcement of an arbitrator’s award

even though the arbitrator declined to accord preclusive effect to a prior arbitrator’ s award involving the same contract language and a similar issue. See W. R. Grace & Co. , 461 U.S. at 765; Hotel Ass’n of Washington, D.C., Inc. v. Hotel & Restaurant-12-

Employees Union, Local 25 , 963 F.2d 388 (D.C. Cir. 1992) ( Hotel Association ) ; McGraw Edison, Wagner Div. v. Local 1104, Int’l Union of Elec., Radio & Mach

. Workers , 767 F.2d 485 (8 Cir. 1985) ( McGraw Edison ); Westinghouse Elevators of th Puerto Rico, Inc. v. S.I.U. de Puerto Rico , 583 F.2d 1184 (lst Cir. 1978 ) ( Westinghouse Elevators ). In Westinghouse Elevators , a dispute arose concerning a cont ract provision entitling employees to an allowance for expenses incurred whil e working outs ide the city of San Juan, Puerto Rico. One arbitrator held that th e provision precluded any payment unless the employee actually incurred lodging or meal expenses while working outside of the city; six years later , a second arbitrator held that the same provision entitled employees to the allowance regardless of wh ether expenses

we re actually incurred while working outside of the city. 583 F.2d at 1185-86. The district court dismissed the employer’s action to vaca te the second award, and the First Circuit affirmed, stating:
Unless the Parties agree otherwise in their contr act, an arbitrator’s
aw ard rendered in a prior arbitration proceeding--even betwee n the same parties--does not s top either party from raising the same issue in a subsequent arbitration; nor does it bar the arbitrato r from determining the same or a similar iss ue anew. The arbitrator
may consider prior awards between the same parties or between other parties if offered in the proceeding before him [or her], but he [or she] is not bound to follow them.

Id. at 1187 (quoting Federal Bearings Co. v. United Auto., Aircraft & Agric. Implement Workers, Local 297 , 22 Lab. Arb. 721, 726 (1954) (Justin, Arb.)). Similarly, Hote l Association

involved p remium pay to part-time workers, and the first arbitrator denied the premium pay but the se cond arbitrator, construing the same clause in the collective bargaini ng agreement, granted the premium pay under similar factual circumstances

. 963 F.2 d at 388-89. The D.C. Circuit, in upholding the second award, stated “th e question whether a prior arbitral decision binds a subsequent arbitrator can b e determined only by reference to the agreement itself. It falls to the second arbitrator,-13-

therefore, to a

nswer that question in the first instance.” Id. at 391. In a case from our own circuit, McGraw Ediso n , this court reversed the district court’s decision to vacate the arbitrator’s award because the di strict court based its finding that the award did not draw its essence from the collective bargaining agreement on an improper basis. 767 F.2d at 488 (“the Company does not cite and our independent research fails to reveal any decisions of this Court or of the Supreme Court vacating an arbit ration award on the gro und that the arbitrator grossly erred in construing the collective bargainin g agreem ent”). In rejecting the employer’s alternative argument that the district cour t ord er should be affirmed because the arbitrator failed to follow an earlier arbitrator’ s award, this court quoted the Second Circuit as follows:

Courts revi ewing [inconsistent] arbitration awards have generally concluded that arbitrat ors are not bound by the rationale of earlier decisions . . . that inconsistency with another award is not enough in itself to justify vacating an award . . . [and] that neither award will be set aside where both draw their essence from the collective bargaining agreement.

Id. at 489 (quoting Connecticut Light & Power Co. v. Local 420, IBEW , 718 F.2d 14, 20 (2d Cir. 1983)).
Appl ying the above-quoted statements of law to the present case, we conclude that, although there may appear to be some inconsistency between the arbitrator’ s decision and the two prior arbitral decisions cited byANC, the arbitrator’s award in the present case nevertheless draws its essence from the CBA and is thu s entitled to judicial deference.

III. Conclusion-14-

In sum, we agree with the district court’s rejection of ANC’s res judicat a argument and also agree

with the district court’s conclusion that the arbitrator’s award draws its essence from the collective bargaining a greement. Accordingly, the judgment of the district court is affirmed, and the arbitrator’s award shall be enforced.
A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.