Opinion ID: 2973339
Heading Depth: 3
Heading Rank: 2

Heading: The validity of the arbitration award

Text: The arbitrator’s finding that the January 8, 2003 agreement restricted Spero’s rulemaking authority contradicts the express terms of the CBA regarding the method of modifying that document. Article II, Section 2 of the CBA grants Spero the exclusive right to make rules without consulting the IBEW and to change them at any time. This unilateral right is confirmed by the following preamble language included in each of the successive sets of rules: “The Work Rules stated in this handbook are subject to change at any time at the sole discretion of the Company.” Even the arbitrator acknowledged that, “[i]n the abstract, there can be no quarrel with the Company’s position” that “it has the right to establish or amend rules at any time.” Despite recognizing such a right, the arbitrator held that Spero had contracted it away with respect to the nosmoking rule and thus was unable to unilaterally change the rule on January 17, 2003. The arbitration award therefore diminished Spero’s rulemaking authority from that granted by the CBA. In order for any amendment to the CBA to be effective, the requirements of the “method-ofmodification” clause contained in Article I, Section 3 must be met. This issue was squarely addressed by this court in Pleasantview Nursing Home, Inc. v. NLRB, 351 F.3d 747 (6th Cir. 2003). In Pleasantview, the nursing home and the union entered into an initial CBA in 1985. Id. at 750. This and all subsequent CBAs contained two relevant provisions. One required that the nursing home collect union dues from the employees’ pay each month. Id. Another stated that any amendment must be executed in writing and signed by both parties. Id. In May of 1996, the last in a series of written CBAs expired. Id. at 751. The parties orally agreed to extend the last CBA until a new agreement could be negotiated. Id. For ten years after the initial CBA was executed, the company did not collect union dues from the employees’ pay. Id. at 750-51. This was based on an “informal understanding” reached between the company and the union. Id. at 750. An unsigned letter from the company to the union confirmed their understanding by “stating that the collection clause would be inoperative for the period covered by the initial CBA.” Id. at 753. When union-management relations ultimately broke down, the union filed an unfair-laborpractice charge against the nursing home. Id. at 751-52. The union claimed, among other things, that the nursing home had committed an unfair labor practice by failing to collect union dues in contravention of the CBA. Id. at 753 & n.1. In its defense, the nursing home cited the “informal understanding” with the union, calling attention to the ten years of consistent practice, an oral agreement between the parties, and the letter from the company to the union referencing their agreement. Id. at 753. No. 04-4142 Spero Electric Corp. v. Int’l Page 5 Brotherhood of Electrical Workers This court, holding that the method-of-modification clause contained in the CBA was enforceable, invalidated the nursing home’s defense: [W]e need not decide whether oral modification in general is impermissible because all CBAs here contained an express zipper clause prohibiting modification except by written agreement executed by both parties. Such zipper clauses are legally effective. See Martinsville Nylon Employees Council Corp. v. NLRB, 969 F.2d 1263, 1267-68 (D.C. Cir. 1992) . . . . Because neither an oral agreement, nor an unsigned letter that by its own terms only covers the initial CBA, constitutes a valid modification of the final CBA at issue here, its unambiguous language controls. Id. at 754 (citations and footnote omitted). The Pleasantview court thus held that the NLRB did not err in finding that the company’s failure to collect union dues from its employees was an unfair labor practice. Id. at 755. Turning now to the case at hand, the arbitrator’s finding that a superseding agreement was made on January 3 and confirmed in the January 8 correspondence from Spero’s attorney effectively modified the CBA with respect to the company’s rulemaking authority. But Article I, Section 3 requires that any modification to the CBA (1) be reduced to writing, (2) state its effective date, (3) be executed in the same manner as the CBA, and (4) be approved by the international office of the IBEW. Even though the arbitrator found that the January 3 meeting had “all of the trappings of a negotiation,” the purported “contractual undertaking” that resulted did not comport with the method-of-modification clause. The January 8 letter was not executed in the same manner as the CBA because it was neither signed by a representative of the IBEW nor approved by the IBEW’s international office. This case is analogous to Pleasantview. In both cases, a subsequent agreement purportedly changed the employers’ rights and obligations as spelled out in a CBA. The alleged agreement in both cases also failed to comply with the method-of-modification clause contained in the CBA. In Pleasantview, the writing was not signed by either party. Here, there was no writing executed in the same manner as the CBA, i.e., bearing the signature of an IBEW official and approved by the international office of the IBEW. This court held in Pleasantview that an agreement to modify the rights and obligations under a CBA must comply with the terms of the method-of-modification clause in order to be given effect. Pleasantview, 351 F.3d at 754. The purported agreement found by the arbitrator in this case did not meet the requirements of the CBA’s method-of-modification clause. Our conclusion is further supported by the actions of the parties, which illustrate that they did not intend the January 8 letter to amend the CBA. In his decision, the arbitrator held that the January 8 letter represented an agreement to effectively modify the CBA with respect to Spero’s rulemaking authority. But the January 8 letter was a follow-up to the January 3 meeting, at which both the no-smoking rule and the floating-holiday policy were discussed. If the parties had intended to modify their rights under the CBA with respect to both issues, one would expect the issues to have been treated in the same manner by the January 8 letter. In fact, the January 8 letter treated the two issues quite differently. The January 8 letter, on the one hand, simply enclosed an updated set of the work rules that contained the revised no-smoking policy. With respect to the floating-holiday policy, however, the correspondence included a “side letter” that required the IBEW to sign and return the document before it became effective. By its own terms, the side letter “represent[ed] certain understandings between the Company and the Union which w[ere] inadvertently omitted as part of the Collective No. 04-4142 Spero Electric Corp. v. Int’l Page 6 Brotherhood of Electrical Workers Bargaining Agreement.” The correspondence thus treated the implementation of the floatingholiday policy like a true amendment of the CBA, but treated the no-smoking policy change as a routine unilateral alteration of the work rules. Finally, the terms of the CBA provided that the arbitrator could not “add to, subtract from, change or modify” any part of the agreement. Contrary to this express limitation on the arbitrator’s authority, the arbitration award restricted Spero’s unilateral rulemaking power under the CBA. The arbitration award therefore did not “draw its essence from the agreement” and must be set aside. See Beacon Journal, 114 F.3d at 600. This is not to say, however, that there is nothing further for an arbitrator to decide in this case. The issues of whether Salters had adequate notice of the rule change before his January 28, 2003 smoking violation and whether Salters’s termination under the one-strike no-smoking rule was for just cause, for example, were never reached because the arbitrator improperly decided that the January 17, 2003 change in the work rules was ineffective.