Opinion ID: 195502
Heading Depth: 2
Heading Rank: 2

Heading: The Past Practices Clause

Text: With this circumscribed standard for reviewing arbitration awards in mind, there is little question that the arbitrator's interpretation of the Project Agreement -- at least -9- to the extent that he found that the past practices clause bars consideration of the plaintiffs' evidence of prior fringe benefit arrangements -- must be upheld as a plausible reading of the contract. This result is compelled because the arbitrator's holding comports with the district court's own interpretation of the past practices clause when properly applied to the facts of this case. Thus, even if the arbitrator exceeded his authority in finding that the past practices clause wiped the slate clean of all established practices between all parties, an issue we do not decide, he certainly did not exceed his authority by wiping the slate clean between the Union and the plaintiffs in this particular case. The district court apparently failed to consider the possibility that plaintiffs in this case are other parties and therefore not privy to the past practice of excluding owneroperators from the payment of fringe benefits. According to the district court, the plain language of the past practices provision in the preamble provides merely that past practices established between parties A and B shall not be binding on party C, although they will continue to be binding on A and B themselves. Applying this interpretation to the present case reveals that fringe benefit practices between the Union and other employer-contractors (parties A and B respectively) are not binding on the plaintiffs (both party C's), who did not have an established past practice with the Union and are thus any other parties under the past practices clause. As a result, the -10- contract could be read to require the arbitrator to ignore evidence of past practices between the Union and other parties when applying the provisions of the Project Agreement to disputes between the Union and the plaintiffs. Because such an interpretation is a plausible one, we must reverse the district court's vacation of the arbitration ruling with respect to the arbitrator's construction of the Project Agreement. The plaintiffs take issue with such an application of the past practices clause to the facts of this case. They argue that because the Union itself was privy to the practice of not requiring fringe benefit payments for owner-operators, the Union can still be held to that practice, regardless of the fact that plaintiffs cannot in any way be bound by such a practice. Plaintiffs point to the language of the clause, which states that [n]o practice . . . between a Contractor and a Union party . . . shall be binding on any other party, to argue that the clause itself concerns only the effects of past practices on new parties to the project agreement but in no way limits the effect of past practices on the Union itself. The plaintiffs' interpretation is certainly reasonable, but, for our purposes, it is also irrelevant. Our task is to determine whether the arbitrator exceeded his authority by failing to apply the contract in a plausible manner, not to seek out the most reasonable meaning of the contract. Interpreting the past practices clause to bar consideration of plaintiffs' evidence of past practice in this case is clearly plausible. The -11- clause can be read to preclude application of all established past practices to any other party, even if that practice is in the other party's favor. Such a reading stems from one of several plausible constructions of the language in the clause: (1) no practice between parties A and B shall be binding between parties A and C; (2) practices not binding on party C are likewise unavailable to C for use against parties A or B (i.e., C is not entitled to rely on or benefit from a practice which is not binding on itself); and (3) no practice shall be binding unlessalreadyestablished betweenaUnion andaparticular contractor. In this case, the arbitrator could plausibly find that the practice of excluding fringe benefits for owner-operators, established between the Union and other contractors, is not binding between the Union and the plaintiffs. Alternatively, the arbitrator could find that plaintiffs cannot benefit from the past fringe benefit practice because each plaintiff is an any other party and thus could not be bound by the practice were it beneficial to the Union instead of to the employer. Plaintiffs protest that we cannot now employ such reasoning to retroactively salvage an otherwise unsustainable arbitration award. They point out that even if the Union's interpretation of the past practices clause is plausible, the arbitrator did not arrive at that interpretation himself, but instead, arrived at an interpretation that ignored the plain language of the contract. The arbitrator found that the past practices clause wiped the slate clean of all practices between -12- all parties, not just practices between parties A and C as discussed above. The arbitration award cannot be upheld, plaintiffs argue, on the basis of an interpretation of the contract that the arbitrator did not even make, because, in this case at least, the arbitrator might have come to a different conclusion as to whether past practice evidence could be considered if he adopted the district court's interpretation of the past practices clause at the time of his decision. We see no problem with upholding the arbitrator's decision on grounds or reasoning not employed by the arbitrator himself. To begin with, an arbitrator has no obligation to give his or her reasons for an award. Raytheon Co. v. Automated Business Sys., 882 F.2d 6, 8 (1st Cir. 1989). Once an arbitrator chooses to provide such reasons, courts should upset the award, or remand for clarification, only when the reasons that are given strongly imply that the arbitrator may have exceeded his or her authority. Randall v. Lodge No. 1076, 648 F.2d 462, 468 (7th Cir. 1981); see also Cannelton Indus. v. District 17, UNWA, 951 F.2d 591, 594 (4th Cir. 1991) (remanding portion of arbitration award because it may have been based on a grant of punitive, as opposed to compensatory, damages, in which case the award did not draw its essence from the contract). Absent a strong implication that an arbitrator exceeded his or her authority, the arbitrator is presumed to have based his or her award on proper grounds. Saturday Evening Post Co. v. Rumbleseat Press, Inc., 816 F.2d 1191, 1197 (7th Cir. 1987); see also -13- Chicago Newspaper Publishers' Ass'n v. Chicago WEB Printing Pressman's Union, 821 F.2d 390, 394-95 (7th Cir. 1987) ('[i]t is only when the arbitrator must have based his award on some body of thought, or feeling, or policy, or law that is outside the contract . . . that the award can be said not to 'draw its essence from the collective bargaining agreement.'') (quoting Ethyl Corp. v. United Steelworkers, 768 F.2d 180, 185 (7th Cir. 1985)) (emphasis in original). In this case, despite the arbitrator's allegedly erroneous reasoning, there is nothing to indicate the arbitrator exceeded his authority by not arguably construing or applying the contract. Misco, 484 U.S. at 38; see General Teamsters, Auto Truck Drivers & Helpers, Local 162 v. Mitchell Bros. Truck Lines, 682 F.2d 763 (9th Cir. 1982) (upholding arbitrator for doing the right thing for the wrong reason). The arbitrator's interpretation of the past practices clause in the preamble as precluding the use of past practice evidence in determining plaintiffs' obligations under the Project Agreement is a plausible interpretation of the contract and as such, must be upheld. El Dorado, 961 F.2d at 319. The fact that the arbitrator's wipe-the-slate-clean construction of the past practices clause might indicate that the arbitrator exceeded his authority if he had applied that construction to other parties not present in this litigation does not mean that he might have exceeded his authority in this particular case. Rather, we know the arbitrator did not exceed his authority because his -14- application of the past practice clause to the plaintiffs' claims drew its essence from the collective bargaining agreement. Therefore, we need not speculate how the arbitrator might have resolved this case had he considered the district court's construction of the contract language at issue.