Case Name: CLINCHFIELD COAL COMPANY, et al., Appellees, v. DISTRICT 28, UNITED MINE WORKERS OF AMERICA & LOCAL UNION # 1452, Appellants, Westmoreland Coal Company, Amicus Curiae
Court: United States Court of Appeals for the Fourth Circuit
Jurisdiction: United States
Decision Date: 1983-11-03
Citations: 720 F.2d 1365
Docket Number: No. 83-1147
Parties: CLINCHFIELD COAL COMPANY, et al., Appellees, v. DISTRICT 28, UNITED MINE WORKERS OF AMERICA & LOCAL UNION # 1452, Appellants, Westmoreland Coal Company, Amicus Curiae.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 720
Pages: 1365–1373

Head Matter:
CLINCHFIELD COAL COMPANY, et al., Appellees, v. DISTRICT 28, UNITED MINE WORKERS OF AMERICA & LOCAL UNION # 1452, Appellants, Westmoreland Coal Company, Amicus Curiae.
No. 83-1147.
United States Court of Appeals, Fourth Circuit.
Argued July 11, 1983.
Decided Nov. 3, 1983.
Rehearing Denied Dec. 15, 1983.
Gerald P. Sharp, Castlewood, Va. (Peter Mitchell, Alexandria, Va., on brief), for appellant.
Ronald E. Meisburg, Washington, D.C. (S.W. Zanolli, Smith, Heenan, Althen & Za-nolli, Washington, D.C., Paul R. Thomson, Jr., Roanoke, Va., Louis Dene, Abingdon, Va., Forrest H. Roles, Charleston, W.Va., Hugh P. Cline, Carl E. McAfee, Cline, McAfee & Adkins, Norton, Va., on brief), for appellees.
Clinton S. Morse, Woods, Rogers, Muse, Walker & Thornton, Houston, Tex., Scott L. Messmore, F. Thomas Rubenstein, Big Stone Gap, Va., on brief, for amicus curiae.
Before PHILLIPS, SPROUSE and ERVIN, Circuit Judges.

Opinion:
ERVIN, Circuit Judge:
The United Mine Workers of America and Local Union No. 1452 (hereinafter collectively referred to as the "Union") appeal from the United States District Court for the Western District of Virginia wherein summary judgment was granted in favor of Clinchfield Coal Company and intervening coal companies (hereinafter collectively referred to as "Clinchfield") against the Union. Clinchfield brought this action to vacate an arbitrator's award on a grievance filed by the Union against Clinchfield. Because we agree with the district court that the arbitrator's award did not draw its essence from the labor agreement, we affirm.
I.
Clinchfield is the owner and lessee of coal lands in southwestern Virginia. Clinchfield operates twelve large underground mines, three preparation plants, and four raw coal-loading facilities.
Clinchfield also licenses coal lands to independent contractors. Although the licensees sell all coal mined to Clinchfield, they nevertheless conduct their own independent coal mining operations. The licensees hire and supervise their own employees, set production schedules, and own or rent the necessary machines, equipment, and tools. Clinchfield's assistance is limited to making available on a cost reimbursable basis electricity, access roads, and engineering services.
The licensed lands contain small, isolated, remote pockets of coal. Clinchfield- itself will mine only those coal lands that contain sufficiently large seams of coal to justify large underground mining operations which require extensive machinery, material, staff, and commitment of capital. Clinch-field has licensed out coal lands since the 1940's and currently has 54 such licenses outstanding. Of those 54, only one parcel had previously been mined by Clinchfield.
The yearly amounts of coal mined by the licensees and by Clinchfield's own mines generally have been roughly equal. Since the licensees' mining operations have been more efficient than Clinchfield's mines, Clinchfield has, in effect, subsidized its less efficient mines by obtaining cheaper coal from the licensees. So long as the demand for coal remained high, this pattern of subsidization continued.
In April, 1982, the demand for coal sharply declined, a downturn that was expected to be long term. The decline was accompanied by falling coal prices. In response to the need to cut production and costs, Clinchfield shut down its least efficient mines. Among the closed mines was the Camp Branch No. 1 Mine ("CBM"), an old and costly mine.
CBM was closed on May 22, 1982, requiring the layoff of Union members. In effectuating the layoff, Clinchfield was bound by the provisions of the National Bituminous Coal Wage Agreement of 1981 (the "Agreement"), to which Clinchfield is a signatory.
On June 3, 1982, the Union filed a grievance against Clinchfield under the Agreement, alleging a violation of If 2 of article lA(h) of the Agreement. Paragraph 2 provides:
Licensing out of coal mining operations on coal lands owned or held under lease or sublease by any signatory operator hereto shall not be permitted unless the licensing out does not cause or result in the layoff of Employees of the Employer.
Clinchfield denied the grievance and the matter was submitted to arbitration before Arbitrator Robert J. Abies.
On October 30,- 1982, Arbitrator Abies rendered his decision sustaining the Union's grievance. The arbitrator held that Clinch-field had the burden of proving that its licenses did not cause the layoffs at CBM, a burden that was not carried by irrelevant evidence concerning the decline in demand for coal and the resultant economic nonvia-bility of CBM. Arbitrator Abies thus ordered CBM to put the grievants back to work.
Clinchfield then filed this action to vacate the arbitrator's award and on January 27, 1983, the district court entered an order vacating the award, 556 F.Supp. 522. This appeal followed.
II.
Federal courts are empowered by § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, to review the decisions of labor arbitrators. That review is limited. In The Steelworkers Trilogy, the courts were admonished that "[t]he refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements." United States Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1960); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960). "[S]o far as the arbitrator's decision concerns construction of the contract [i.e., labor agreement], the courts have no business overruling him because their interpretation of the contract is different from his." Enterprise Wheel, 363 U.S. at 599, 80 S.Ct. at 1362. Nonetheless, the award must "draw its essence" from the collective bargaining agreement.
[A]n arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources; yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.
Id. at 597, 80 S.Ct. at 1361 (emphasis supplied). Furthermore, "the arbitrator must take into account any existing common law of the particular plant or industry, for it is an integral part of the contract." Norfolk Shipbuilding and Drydock Corp. v. Local No. 684, 671 F.2d 797, 799-800 (4th Cir. 1982).
The district court held that Arbitrator Ables's award did not "draw its essence" from the Agreement because the arbitrator (1) "ignored or overlooked and failed to interpret the words 'coal mining operations' " as used in 12 of article lA(h), (2) improperly disregarded Clinchfield's evidence of an economic cause for the layoffs, and (3) erroneously placed the burden on Clinchfield to show that the licenses did not cause the layoffs. Because we agree with the first two of these criticisms, we likewise conclude that the award did not draw its essence from the Agreement.
A.
At the outset of the hearing before Arbitrator Abies, the Union stipulated that it was alleging a violation of only H 2, and not H1, of article lA(h) of the Agreement. Paragraph 2 enjoins licenses of "coal mining operations" that result in layoffs. This is to be compared with ¶ 1's prohibition of licenses of "coal lands" where the purpose thereof is to avoid the application of the Agreement. The parties now do not dispute that the challenged transactions are licenses. Instead, they dispute whether Arbitrator Abies determined that there had been licenses of "coal mining operations." Clinchfield claimed before the arbitrator that it had licensed only "coal lands" and not "coal mining operations."
The district court found that Arbitrator Abies neither discussed nor decided the issue of whether "coal mining operations" or "coal lands" were licensed. The district court also reasoned that the terms had special legal meanings to the parties and that "the contracting parties were aware of the literal distinction between naked coal lands and coal mining operations." The district court further found that Clinchfield had not licensed out any ongoing coal mining operations; rather, Clinchfield licensed coal lands that, with one exception, had not been previously mined, to independent contractors who had to initiate their own coal mining operations. Since there was no license of coal mining operations, the district court concluded that the award did not draw its essence from the Agreement.
The Union responds on appeal by noting that Arbitrator Abies was aware of the "coal mining operations or coal lands" issue because he listed it as one of the four questions raised by Clinchfield. The Union then argues that "[h]aving stated the company's position, it is clear by virtue of his award that he rejects it, although his decision does not develop his reasons in detail." The Union thus charges the district court with overstepping the limited review authorized in the Steelworkers Trilogy: "under the argument of lack of satisfactory discussion by the arbitrator, [the court] substituted its view for that of the arbitrator."
The Union's argument is wholly unsatisfactory for it would allow an arbitrator to shield his award simply by the ruse of stating an issue without discussing it. Furthermore, in this case, the undiscussed issue concerns the operative clause of 12. Indeed, it seems that a reasonable interpretation of that clause might require a contrary result. Where, as here, the arbitrator fails to discuss critical contract terminology, which terminology might reasonably require an opposite result, the award cannot be considered to draw its essence from the contract.
B.
At the hearing before Arbitrator Abies, Clinchfield presented substantial evidence that the proximate cause of the layoffs at CBM was the April, 1982 decline in the demand for coal. Arbitrator Abies, however, disregarded that evidence, stating that "[arguments based on need for profit are irrelevant" and that layoffs cannot be justified by the need "to make profit or simply . cut losses." The district court found that Arbitrator Abies, in so doing, ignored the history of If 2, as evidenced by the consistent approach taken by other arbitrators to evidence of an. economic proximate cause, independent of licensing, for layoffs. It has been held, for example, that ¶ 2 "is not designed to guarantee work when economic conditions depress the need for full production," Russel Fork Coal Co. and Local 8338 (Dist. 30), No. 78-40-78-57 (Beckman, August 11,1978), or where "efficiency consideration [sic] led to management's decision to close," Connelton Industries and Local 6029 (Dist. 29), No. 78-29-80-457 (Blackwell, July 9, 1980). As Arbitrator Beckman stated:
Licensing or leasing for . business reasons is not prohibited. To make a case against the company the grievant must prove that the licensing or leasing caused his lay-off.... [P]roving lay-off alone is not sufficient. In other words, it is possible to be laid off for an economic reason unrelated to the fact of licensing or leasing.
Carbon Fuel Co. and Local 6572 (Dist. 17), No. 17-77-925 (Beckman, April 15, 1977). The district court concluded that Arbitrator Abies thus disregarded the "common law of the . industry," which "is an integral part of the contract," Norfolk Shipbuilding, 671 F.2d at 800, and thereby strayed from the essence of the Agreement.
The Union responds that the arbitrator simply enforced what the parties bargained for and criticizes the district court because it "seems to find the bargain too good for the Union and has written it out of the agreement by vacating the arbitrator's award." Paragraph 2, argues the Union, protects jobs and Abies merely noted that the protection cannot be thwarted by establishing a business justification for a license that results in layoffs.
The Union misreads the district court's opinion. The court does not say that Clinchfield may cause layoffs by licensing out coal operations where the license is economically justified. Rather, it says that Clinchfield may lay off employees for economic reasons, that is, the cause of the layoffs may be a decline in demand. If the proximate cause of the layoffs at CBM was the April 1982 demand decline, then If 2 was not violated even though Clinchfield at that time was licensing out coal lands. Arbitrator Abies should have considered the evidence that CBM was closed because it was an inefficient and expensive mine from which coal no longer could profitably be mined given the depressed prices.
C.
The district court also found that Arbitrator Abies disregarded the common law of the industry by placing the burden on Clinchfield, instead of the Union, to show that the licensing did not cause the layoffs. The district court, however, does not cite some recent decisions which can be read for the proposition that, unless the employer comes forward with proof to the contrary, if layoffs occur while the company is licensing out coal operations, then the requisite causal link between the licensing and layoffs has been established. See Big Bear Mining Co. v. District 17, UMWA, Local Union 7692, 579 F.Supp. 1072 (S.D.W. Va., 1983); Clinchfield Coal Co. and UMWA Local 1098, No. 81-28-82-132 (Nicholas, November 22, 1982). In other words, the Union can make out a prima facie case merely by showing that layoffs occurred while the employer was licensing out coal mining operations. Then, the burden shifts to the employer to show that the licensing out was not the proximate cause of the layoffs. That seems to be the approach taken by Arbitrator Abies. In any event, the district court's premise— the common law of the industry is settled that the union has the burden of showing the licensing to be a proximate cause of the layoffs — is unsound. Arbitrator Abies simply interpreted the Agreement as he read it and in the absence of a clear body of contrary "common law" interpretations, his interpretation must be deemed to draw its essence from the contract.
III.
The Union cites several provisions of the Agreement that "provide for the settlement of all such grievance disputes and claims through the machinery in this contract and by collective bargaining without recourse to the courts." The Union argues that the provisions foreclose all judicial review of arbitration, which should be the sole contract grievance settlement mechanism. The argument goes too far. The integrity of the labor agreement and the public interest in having management-labor disputes resolved without unnecessary judicial involvement is fully protected by the limited standard of review handed down in the Steelworkers Trilogy cases. The Agreement cannot be read to eliminate that limited review.
IV.
For the foregoing reasons, the district court's grant of summary judgment in favor of Clinchfield, thereby vacating the arbitrator's award, is affirmed.
AFFIRMED.
. The Union also stipulated that Clinchfield did not violate ¶ 1. Since all the licensees are signatories of the Agreement, the licenses presumably were not made to avoid application of the Agreement.
. We note that Arbitrator Abies did not find, and the Union did not attempt to show, that the layoffs resulted from a particular licensing out. Nor was there a finding or attempted showing that a license closely preceding the layoffs was "the straw that broke the camel's back." Indeed, our review of the record indicates that the license nearest in time to the May 22, 1982 layoffs was made in December, 1981, well before the layoffs and the April, 1982 decline in demand.