Opinion ID: 721304
Heading Depth: 4
Heading Rank: 2

Heading: Perception of risk of substantial loss

Text: 37 Nor do we believe that the parties necessarily perceived the clause as exposing EOS to a risk of substantial loss. While the arbitrator's interpretation of the clause does effectively make EOS the guarantor of its employees' salaries and fringe benefits in the event it loses its contract with the City, we do not agree that EOS must have viewed the risk associated with that guarantee as so substantial that it never would have agreed to bear it. First, the risk was temporally limited. EOS knew that the clause posed a significant risk only for the period of time that the CBA survived EOS's contract with the City, i.e., eleven months. Second, EOS also knew that, under Burns, any successor employer that assumed the operation of the plant and hired a substantial complement of EOS's employees would likely be required to recognize the Union and engage in collective bargaining. Hence, if that occurred, EOS's potential liability was limited to the extent that any future agreement between the Union and EOS's successor would be less favorable to the Union than the current CBA. Arguably, if EOS believed it had achieved the best deal possible under the current CBA, it would not have believed that a successor, required to bargain with the Union, would be able to reach a significantly better deal. Finally, EOS would have perceived the risk as substantial only to the extent that it believed that the City would not require a successor employer to assume the CBA or that an arbitrator would enforce the obligation against it. 38 In sum, as with the argument that the parties must have perceived the successor clause as imposing an impossible obligation, we do not think that, in accepting the arbitrator's interpretation, we must conclude that the parties perceived the clause as exposing EOS to a significant risk of substantial loss. Though as a matter of first impression we might well have decided this case otherwise, given our standard of deference and the ambiguity of contractual language, we cannot say the arbitrator's reading of the successor clause merely reflects the arbitrator's own notions of industrial justice. It is neither inconsistent with the text, nor so improbable that we are convinced that the arbitrator acted in a way for which neither party could [possibly] have bargained. Stop & Shop, 776 F.2d at 21. 3