Opinion ID: 2976675
Heading Depth: 3
Heading Rank: 2

Heading: Authority to Render the Supplemental Award

Text: The Union argues that the district court erred when it found that the Arbitrator acted outside of his authority by reaching a dispute not committed to arbitration, i.e., whether the unilateral healthcare benefits increase was violative of the 2002 CBA. We disagree. Prior to reaching the question of whether the Arbitrator acted outside of his authority, thus constituting a “procedural aberration” that warrants judicial intervention, we should note what is not at issue in this appeal. The issue before this Court is not whether the Arbitrator could issue quasiinjunctive relief, or even whether he could issue such relief after the expiration of the 1998 CBA. 16 No. 07-3577 See Bixby Medical Center, Inc. v. Michigan Nurses Ass’n, 142 F. App’x 843, 850 (6th Cir. 2005) (unpublished) (affirming cease and desist arbitration order entered after the expiration of a collective bargaining agreement). The Arbitrator did so in the original award which was confirmed by the district court and is not challenged on appeal. Rather, the question before this Court under the “procedural aberration” review announced by Michigan Family Resources is whether the Arbitrator had authority to interpret the 2002 CBA in enforcing the original award during the supplemental compliance proceedings. At the outset, we note that “in Michigan Family Resources we severely curtailed the ‘scope of authority’ concept. In that case, we stated: ‘An arbitrator does not exceed his authority every time he makes an interpretive error; he exceeds his authority only when the collective bargaining agreement does not commit the dispute to resolution.’” Truck Drivers Local No. 164 v. Allied Waste Sys., 512 F.3d 211, 217 (6th Cir. 2008) (quoting Michigan Family Res., 475 F.3d at 756). When an arbitrator reaches a question not committed to him by the parties, he acts outside of his authority such that an order vacating such an award is appropriate. See Peterbilt Motors Company v. UAW Int’l Union, 219 F. App’x 434, 438 (6th Cir. 2007) (unpublished); Int’l Brotherhood of Elec. Workers v. Toshiba America, 879 F.2d 208, 211 (6th Cir. 1989). For example, in International Brotherhood of Electrical Workers v. Toshiba America, 879 F.2d 208 (6th Cir. 1989), this Court considered a challenge to an arbitrator’s award that ordered the defendant-company to reinstate five employees who were allegedly terminated in violation of a collective bargaining agreement. Id. at 208-09. There, employees who were members of a union under a collective bargaining agreement staged a job walkout in violation of the no-strike clause of 17 No. 07-3577 the agreement. Id. at 209. The agreement also provided that any disciplinary action taken as a result of a violation of the no-strike clause “shall not be altered or amended in the grievance and arbitration procedures . . . .” Id. at 210. Following the walkout, the company terminated the employees and the union filed a grievance on their behalf. Because the parties were unable to resolve the grievance, the matter was submitted to arbitration. Id. at 209. Although the arbitrator found that the company had the right to terminate the employees because of their participation in the walkout, the arbitrator nonetheless ordered the employees reinstated. The arbitrator ordered the employees reinstated because of an oral agreement made between the company and the union that none of the employees who walked out would be terminated. Id. Relying on Misco, this Court vacated the arbitrator’s award reinstating the employees. Id. at 210. We found that the arbitrator acted outside of his authority by reaching the question of the discipline imposed by the company once it had been determined that a violation of the no-strike clause occurred. Id. In other words, we found that the arbitrator exceeded his authority by reaching a question that was not properly presented to him for review under the relevant collective bargaining agreement. Similarly, in Peterbilt Motors Co. v. UAW International Union, 219 F. App’x 434 (6th Cir. 2007), albeit in an unpublished opinion, this Court vacated an arbitrator’s award upon finding that the arbitrator acted outside of his authority to reach a question that was not arbitrable under the collective bargaining agreement. There, a company and a union went to arbitration regarding an employee’s accident and insurance benefits which were denied by a separate insurer. Id. at 435. Over the company’s protest that the matter was not arbitrable because the insurer was not a party to the agreement, the arbitrator ruled that the company was required to pay for accident benefits under 18 No. 07-3577 the agreement, notwithstanding the fact that the insurer denied coverage. Id. at 437. Therefore, the arbitrator concluded, the grievance regarding the insurance benefits was arbitrable as against the company. Relying on Michigan Family Resources, this Court vacated the award after concluding that the arbitrator reached a question not committed to him by arbitration because the arbitrator’s award was “ignorant of the contract’s plain language.” Id. at 438. In the instant case, the supplemental award issued by the Arbitrator which interpreted the 2002 CBA constituted a “procedural aberration” under Michigan Family Resources. It is undisputed that the parties did not submit a grievance for resolution under the 2002 CBA. Thus, similar to Toshiba and Peterbilt, the Arbitrator reached a question not submitted to him by the parties when he opined that “if Management’s decision was violative of the 1998-2001 agreement it is violative of the 2002-2007 agreement.” Consequently, in reaching the question of the violation of the 2002 CBA, the Arbitrator acted outside of his authority and therefore the supplemental award was properly vacated even under the narrow standard announced by Michigan Family Resources. Indeed, at the initiation of the arbitration process, the central questions presented to the Arbitrator were whether the Company violated the 1998 CBA and if so, what measures would appropriately remedy the violation. When the parties returned to the Arbitrator for compliance proceedings the question addressed to the Arbitrator shifted somewhat. The question of liability under the 1998 CBA had been resolved inasmuch as the Arbitrator’s original award found that the Company had violated the 1998 CBA. In addition, the Company’s non-compliance with the original award was unquestioned because the health care premiums had not been rescinded, nor had employees been reimbursed for the cost of the increase. Rather, the central dispute at the compliance 19 No. 07-3577 proceeding came down to whether the Arbitrator’s orders were coterminous with the 1998 CBA or whether they were to have effect after its expiration. Clearly, while the issues in dispute varied between the original proceeding and the compliance proceeding, the basic question submitted to the Arbitrator remained the same: the Company’s required duties under the 1998 CBA. Thus, when the Arbitrator addressed the question of the 2002 CBA, he acted outside of his authority by reaching a question not presented to him by the parties.3 The Union, however, argues that the Arbitrator properly considered the 2002 CBA, not for the purpose of determining whether a violation of that agreement occurred, but for the purpose of determining whether the Company was obliged to comply with his previous order after the expiration of the 1998 CBA. The Union argues that the Arbitrator’s reference to the 2002 CBA was not an attempt to interpret the agreement, but rather, an attempt to evaluate the veracity of the Company’s “intervening-event defense.” The Union argues that the Arbitrator was considering whether the parties to the 2002 CBA may have taken intervening action that undermined, made unnecessary, or “mooted out” the rescission, reinstatement, and cease and desist orders issued in the original award. Absent this “intervening event” defense, argues the Union, the 2002 CBA would not have been 3 Indeed, were we to uphold the Arbitrator’s supplemental decision, as the dissent would urge us to do, we would likely undermine the parties’ freely negotiated, bargained-for procedures which require the submission of a grievance prior to the determination of remedies. This end-run around the collective bargaining agreement would, therefore, produce a windfall to the Union by opening up an opportunity for the Union to seek sanctions against the Company for the violations of the 2002 CBA as found by the Arbitrator. The Company, on the other hand, would be stuck with a decision, rendered in the absence of a full hearing, finding that it violated the 2002 CBA. In the end, both the Union and the Company would have been subjected to remedies and obligations under the 2002 CBA that they did not agree to arbitrate. For this reason alone, we must vacate the Arbitrator’s supplemental award. 20 No. 07-3577 relevant to the compliance determination at all. The Union asserts that “[i]n making reference to the successor CBA, the Arbitrator was not doing anything significantly different from, or more than, what the NLRB would do in a compliance proceeding, which is analogous to what the Arbitrator was doing in the Supplemental Award proceedings.” (Union Br. at 41) In support of this proposition, the Union cites a case from the National Labor Relations Board, Lawrenceville Ready-Mix, 305 NLRB 1010 (1991). In Lawrenceville Ready-Mix, the NLRB considered a charge by a union alleging that an employer engaged in an unfair labor practice by refusing to bargain collectively with the representatives of his employees regarding an increase to healthcare costs in violation of § 8(a)(5) of the NLRA. Id. at 1012-13. A judge considered the charge and found in favor of the union, ordering a number of remedies including reimbursements to employees for the increased healthcare costs. Id. The employer later challenged the order, alleging that the order was “no longer appropriate because the parties have entered into a new collective bargaining agreement.” Id. at 1010. In consideration of the employer’s allegation, a panel of the NLRB permitted the introduction of evidence at the compliance stage regarding the new agreement to determine if the new agreement cut off the employer’s obligations under the prior order. Id. at 1011. The Union asserts that, like the NLRB in Lawrenceville Ready-Mix, the Arbitrator’s consideration of the 2002 CBA was relevant to whether the new agreement cut off the Company’s responsibility to implement the original award beyond the expiration of the 1998 CBA, as was alleged by the Company. The Union’s argument seems logical enough. Here, the Arbitrator issued an order for the Company to reimburse its employees for the increased health care costs and to cease and desist from 21 No. 07-3577 further unilateral action. The Company responded that it only had to cease and desist and reimburse employees for the four months between the increase in healthcare costs and the expiration of the 1998 CBA. Thus, it would seem that the 2002 CBA would be relevant in determining whether it properly cut off obligations on the part of the Company. Despite the logic of this argument, it still does not resolve the question of the Arbitrator’s authority to construe the 2002 CBA. Because this question remains unanswered, the analysis offered in Lawrenceville Ready-Mix is inapposite. First, the Union cites no binding authority suggesting that an arbitrator has powers that are coextensive with the NLRB such that statutory violations can be resolved in arbitration. Second, even assuming that the Arbitrator had powers analogous to those of the NLRB, Lawrenceville Ready-Mix does not suggest that the Arbitrator would have had authority to determine that a violation of a new agreement occurred absent a separate charge or grievance being filed under that agreement. The Union, however, asserts that the Arbitrator had authority to construe the 2002 CBA based on “the Recognition Clause, as well as the deferred Charge, to determine whether the Company had met its contractual and statutory bargaining obligations.” (Union Reply Br. at 14) The Recognition Clause of the 1998 CBA provided that the Company recognized the Union “for the purpose[] of collective bargaining with regard to . . . working conditions and all other terms and conditions of employment . . . .” The Union argues that “[s]uch contractual clauses have been interpreted as, effectively, incorporating an employer’s statutory obligation to bargain in good faith with a union, including its obligation not to make unilateral changes.” (Id.) The Union cites two cases from other circuits which approved of arbitration awards where the arbitrators found that employers’ statutory duties to bargain in good faith were incorporated into 22 No. 07-3577 a contractual recognition clause, even where such duties are not explicitly referenced in an agreement. See Five Star Parking v. Union Local 723, 2007 WL 2110716, at  (3d Cir. 2007) (unpublished); Virginia Mason Hosp. v. Washington State Nurses Ass’n, 511 F.3d 908, 914 (9th Cir. 2007). We need not resolve whether the Recognition Clause incorporated the Company’s statutory duty, however, because the cases relied upon by the Union are inapposite. First, in Five Star and Virginia Mason Hospital, the arbitrators that found violations of the contractual recognition clauses were interpreting the terms of the collective bargaining agreements actually committed to them by the parties and heard testimony regarding the negotiations that went into crafting the agreements. In the instant case, the Arbitrator was not referencing an agreement that was actually put before him when he found that the 2002 agreement was violated by the healthcare changes. Second, and most important, in each of the cases the arbitrators explicitly based their decisions in favor of the unions on the contractual recognition clauses of each agreement at issue. Here, the Arbitrator did not rest his decision on the contractual recognition clause, and we are not at liberty to delve into the merits of the arbitration dispute to find an alternative rationale that would allow the award to be affirmed. This is not a typical appeal where this Court may affirm for any reason supported by the record, even if the opinion below did not rely on such grounds. To do so would be to impermissibly replace the judgment of this Court for that of the arbitrator. Indeed, this Court has “no business weighing the merits of the grievance, considering whether there is equity in a particular claim, or determining whether there is particular language in the written instrument which will support the claim.” Michigan Family Res., 475 F.3d at 750 (quoting Enterprise Wheel & Car Corp., 363 U.S. at 568). 23 No. 07-3577 In the alternative, the Union argues that under Michigan Family Resources, this Court must presume that an arbitrator is acting within his authority to construe an agreement that is properly before him. Thus, the Union argues that the district court should have viewed the Arbitrator’s reference to the 2002 CBA as dicta and affirmed the award on the permissible rationale discussed in the supplemental award. In other words, the Union asserts, “the district court failed to interpret and apply this supplemental ‘contract’ as it should have to make it enforceable, if possible, rather than striking it down.” (Union Br. at 34). We do not, however, read Michigan Family Resources as suggesting that courts reviewing arbitration awards must overlook instances “[w]hen the arbitrator’s words manifest an infidelity” to address questions committed to him by the parties. Enterprise Wheel & Car Corp., 363 U.S. at 596. Certainly, reversals of arbitration awards should be few and far between and reserved for only the most “egregious” of errors. In the instant case, the Arbitrator’s supplemental award constitutes such an occasion because the Arbitrator did not confine himself “to interpretation and application of the collective bargaining agreement” put before him by the parties. Id. at 597. Inasmuch as the Arbitrator went outside of his authority by interpreting the 2002 CBA, thus entering “the forbidden world of ‘effectively dispens[ing] his own brand of industrial justice,’” we must uphold the district court’s order vacating and remanding the supplemental award. Michigan Family Res., 475 F.3d at 752 (quoting Garvey, 532 U.S. at 509).