Court Opinion

ID: 3017726
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:17:58.496197+00
Date Added: 2024-06-11T11:47:06.751998
License: Public Domain

___________

                             No. 95-3424
                              ___________

Excel Corporation,              *
                                *
           Appellee,            *
                                * Appeal from the United States
     v.                         * District Court for the
                                * Southern District of Iowa.
United Food and Commercial      *
Workers International Union,    *
Local 431,                      *
                                *
           Appellant.           *
                           ___________

                     Submitted:   March 15, 1996

                         Filed: December 26, 1996
                              ___________

Before McMILLIAN, BEAM, and HANSEN, Circuit Judges.
                           ___________

BEAM, Circuit Judge.

     The United Food and Commercial Workers International Union,
Local 431 (Union) appeals the district court's1 order vacating a
labor arbitration award in which the arbitrator concluded that
Excel Corporation (Excel) violated terms of the collective
bargaining agreement (CBA) by terminating employees who were
injured on the job after their twelve-month medical leave expired.
Because the district court correctly concluded that the arbitrator
failed to apply the plain language of the CBA and, thus, the award
does not draw its essence from the CBA, we affirm the district
court's vacation of the award.

      1
       The Honorable Ronald E. Longstaff, United States District
Judge for the Southern District of Iowa.
I.   BACKGROUND

     The undisputed facts of this case, which we summarize below,
were set out in the arbitrator's award. In 1987, Excel purchased
a pork processing plant in Beardstown, Illinois, from Oscar Mayer.
After acquiring the plant, Excel and the Union--which represents
just under 1500 production workers--engaged in collective
bargaining over the terms of a new contract to replace the one
previously existing between the Union and Oscar Mayer. Under that
previous contract, an employee's seniority was terminated if that
employee had been absent from work continuously for more than two
years due to sickness or accident. During negotiations for the new
contract, Excel proposed language under which an employee would
lose seniority if absent from work for any reason for a period of
six months. The Union countered with language providing for longer
leaves of absence (e.g., one or two years).       Furthermore, the
Union's proposal excluded from the scope of the seniority provision
employees who were injured on the job and/or who were receiving
workers' compensation.

     On January 29, 1988, the full bargaining committee met and the
parties agreed on the seniority provision now found in the CBA
(art. XIII, § 7), which provides in pertinent part:

     An employee shall lose his seniority for the following
     reasons:

          A.   Voluntary quitting.
          B.   Discharge for proper cause.
          C.   Absence for two (2) consecutive days
               without    notification    to    the
               employer.
          D.   Overstaying a leave of absence
               without justifiable cause.
          E.   Absent from work for any reason for
               [a] period of twelve (12) months.

          . . . .

                               -2-
Joint App. at 22-23 (hereafter referred to as "the seniority
provision"). In July 1988, the parties executed the final CBA,
which contains this seniority provision.

     Between 1990 and 1992, Excel terminated approximately ten
employees pursuant to section 7(E) of the seniority provision in
the CBA.    The circumstances surrounding these terminations are
unclear from the record. Excel's Human Resources Manager, however,
testified that Excel terminated employees for non-work related
injuries but he did not have specific information about these
terminations. Throughout this period, Excel assigned some injured
workers to light-duty jobs. Although these light-duty jobs paid
less than an employee's regular wage, the employee continued to
receive a steady income and health insurance, neither of which were
provided while on a medical leave of absence.

     In October 1991, after receiving complaints from some Union
members, Excel unilaterally announced to the Union and affected
employees that from that time forward it would place injured
employees on medical leaves of absence. No grievance was filed at
that time. According to the Union, no grievance was filed because
Excel did not tell the Union or affected employees that they could
be terminated if their leave of absence exceeded one year.

     Under this new policy, Excel would occasionally offer plant
tours to medically restricted employees to see if they could
perform any job within their medical restrictions. Excel recalled
about three employees on medical leaves of absence once their
restrictions changed. During this time neither the Union nor the
employees on medical leave asked Excel to make accommodations for
them.   In October 1992, however, Excel terminated approximately
eight employees who had medical restrictions which caused them to
work in non-bargaining unit jobs.      One such employee filed a
grievance on October 12, 1992, alleging that the seniority
provision (art. XIII, § 7) of the CBA was not intended to terminate

                               -3-
employees who were laid off due to work-related injuries.
Subsequently, about twelve employees joined in the grievance. The
parties were unable to resolve the grievance and proceeded to
arbitration. In total, by the time of the arbitration hearing,
Excel terminated approximately fifty employees who were injured on
the job and on medical leaves of absence.

        At the arbitration hearing, the Union argued, among other
things, that Excel's termination policy violated the true meaning
of the CBA's seniority provision. The Union also asserted that the
seniority provision must be read in harmony with the "for cause"
provisions contained in the CBA. Finally, the Union contended that
"loss of seniority" did not mean termination. Excel argued that
the plain language of the seniority provision in the CBA gave it
the right to terminate an employee for any reason after an absence
of one year.

     Although the arbitrator determined that the "loss of
seniority" language in the seniority provision meant termination,
the arbitrator concluded that "the Company has violated Article III
and Article XIII, Section 7E, of the contract by terminating such
employees after their twelve-month medical leaves of absence
expired." Joint App. at 61. The arbitrator reasoned that while
the seniority provision, standing alone, supported Excel's
position, it must be analyzed by considering it alongside article
III, which states:

          The Company and the Union agree that they will
          not discriminate against any employee or
          applicant for employment because of race, sex,
          color, creed, nationality, age, religion,
          veteran status, handicaps, or national origin.

Id. at 48 (hereafter referred to as "the anti-discrimination
clause"). Thus, the arbitrator deemed it necessary to consider
parole evidence to discern the intent of the parties as to the

                               -4-
interplay between the seniority provision and the anti-
discrimination clause. The arbitrator determined that there was no
evidence in the record that the Union ever expressly dropped its
insistence that employees injured on the job be excluded from the
scope of the seniority provision. Moreover, the arbitrator found
that Excel's silence--i.e., failure to respond to the Union's
reiteration of its position during negotiations--constituted a
valid acceptance of the Union's position.         Therefore, the
arbitrator awarded judgment to the Union.2

     Excel filed the present lawsuit in federal district court
requesting vacation of the arbitrator's award. The district court
granted Excel's motion for summary judgment and vacated the
arbitrator's award for the Union. The district court concluded
that the arbitrator disregarded the unambiguous language of the
contract and, thus, the award did not draw its essence from the
CBA.

     The Union appeals the district court's order, contending that
the district court erred because the arbitrator noted an ambiguity
in the contract and properly looked to the parties' negotiations to
resolve such ambiguity. The Union alternatively contends that the
arbitrator could have sustained the grievance on other theories and
thus the case should be remanded to the arbitrator to consider
those theories.    Excel asserts that the arbitrator erroneously
ignored the plain language of the CBA and instead created an
ambiguity where none existed.

       2
        The arbitrator did not discuss the Union's alternative
argument that Excel also violated the "for cause" language in the
CBA when it discharged employees under the seniority provision.

                               -5-
II.   DISCUSSION

     Excel filed the present lawsuit pursuant to section 301 of the
Labor Management Relations Act. See 29 U.S.C. § 185. Under this
section, we review an arbitrator's award to determine whether: (1)
the parties agreed to arbitrate; and (2) the arbitrator had the
power to make the award. See, e.g., Keebler Co. v. Milk Drivers
and Dairy Employees Union, Local No. 471, 80 F.3d 284, 287 (8th
Cir. 1996).3 Because the parties do not dispute that the grievance
was subject to arbitration, we focus on whether the arbitrator had
the power to enter the award.

      A district court's order vacating an arbitration award is
subject to de novo review on questions of law and clearly erroneous
review on findings of fact. See First Options of Chicago, Inc. v.
Kaplan, 115 S. Ct. 1920, 1926 (1995). It is well established that
a labor arbitration award is subject to a deferential standard of
review and should be enforced "so long as it draws its essence from
the collective bargaining agreement."      United Steelworkers v.
Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960).           A
reviewing court cannot overturn an arbitrator's award even if the
court is convinced the arbitrator committed serious error so long
as the arbitrator was arguably construing or applying the contract.
United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S.
29, 38 (1987). We may, however, vacate an arbitration award "when
the award does not derive its essence from the collective
bargaining agreement, or when the arbitrator ignores the plain
language of the contract." Keebler, 80 F.3d at 287.

     The Union contends that the district court erred in vacating
the arbitration award because the arbitrator properly relied on

       3
       We note that West Publishing Company initially identified
Judge Beam as both the district court judge in Keebler and the
author of the court of appeals opinion.    Obviously, this would
never occur and West has been informed of its error.

                               -6-
parole evidence to discern the intent of the parties as to whether
employees who had been injured on the job could be terminated after
a one-year medical leave of absence. Both the Union's position and
the arbitrator's award are based on the premise that the provision
of the CBA prohibiting discrimination against handicapped
individuals (art. III) conflicts with the seniority provision (art.
XIII, § 7(E)) of the CBA allowing Excel to terminate an employee
who has been absent for more than one year for any reason. Thus,
according to both the Union and the arbitrator, it is necessary to
look to parole evidence to resolve the ambiguity created by the
conflict of these two provisions in the CBA. We disagree.

     The seniority provision of the CBA states in plain,
unambiguous language that "[a]n employee shall lose his seniority
. . . [if] [a]bsent from work for any reason [for] a period of
twelve (12) months." Joint App. at 22-23 (emphasis added). The
arbitrator acknowledged that this provision supported Excel's
position that it could terminate even those employees on medical
leave for over one year who were injured on the job.4 Joint App.
at 47.   The arbitrator also recognized that article XII of the
contract supported Excel's position because that provision
expressly states that military and union leaves can last longer
than one year, thereby supporting an inference that medical leaves
of absence cannot last longer than one year. Id. at 47-48. The
arbitrator then concluded that the factual record was insufficient
to support a finding that Excel had discriminated against
handicapped individuals in violation of article III of the CBA.
Id. at 52. Despite these conclusions, however, the arbitrator went
on to hold that the anti-discrimination provision (art. III)
conflicted with the seniority provision (art. XIII, § 7) of the CBA
and looked to parole evidence--e.g., notes taken during the

       4
        The arbitrator concluded that the "loss of seniority"
language included termination of employment.

                               -7-
negotiations between Excel and the Union prior to executing the
applicable CBA--to discern the intent of the parties.

     The arbitrator's reliance on parole evidence was erroneous
because the plain language in the applicable portions of the CBA is
clear and unambiguous. Although an arbitrator's award is given
great deference by a reviewing court, the arbitrator is not free to
ignore or abandon the plain language of the CBA, which would in
effect amend or alter the agreement without authority.        E.g.,
Inter-City Gas Corp. v. Boise Cascade Corp., 845 F.2d 184, 187-88
(8th Cir. 1988). Of course, an arbitrator can and should consider
the parties' past practices and "common law of the shop" to
determine the scope of their agreement.      See, e.g., Trailways
Lines, Inc. v. Trailways, Inc. Joint Council, 807 F.2d 1416, 1423
(8th Cir. 1986). When the language of the contract is clear and
unambiguous, however, as in the present case, the arbitrator may
not rely on parole evidence. See, e.g., Coca-Cola Bottling Co. v.
Teamsters Local Union No. 688, 959 F.2d 1438, 1442 (8th Cir.),
cert. denied, 506 U.S. 1013 (1992).     The parties agreed to the
language and terms of the CBA and are bound by them. Id. Even
when the arbitrator may look to collateral sources to interpret the
CBA, the arbitrator cannot amend the agreement or impose new
obligations upon the parties. See, e.g., Keebler, 80 F.3d at 288;
Northwest Airlines, Inc. v. International Ass'n of Machinists &
Aerospace Workers, Air Transport Dist. Lodge No. 143, 894 F.2d 998,
1000 (8th Cir. 1990).5

     In the present case, the seniority provision does not facially
discriminate against handicapped individuals. It clearly applies
to any employee absent from work for more than one year for any
reason. Thus, the seniority provision is facially neutral and does

     5
      The CBA itself contains this limitation on the arbitrator's
authority in article XIV, which provides in relevant part: "The
arbitrator shall have no right to add to, modify, or amend the
terms of the agreement." Joint App. at 23.

                               -8-
not conflict with the anti-discrimination clause.      The plain,
unambiguous language of the CBA, therefore, negates the
arbitrator's conclusion that the two provisions conflict.

     Moreover, the seniority provision and the anti-discrimination
clause do not conflict because the seniority provision does not
discriminate against handicapped individuals as applied in this
case. This conclusion is supported by the arbitrator's own factual
findings--or more accurately, finding of insufficient facts. The
arbitrator expressly states that "it is impossible to make a
definitive finding as to whether the Company has discriminated
against employees in contravention of Article III's handicape [sic]
ban." Joint App. at 52. The arbitrator nevertheless concludes
that "the Company has violated Article III and Article XIII,
Section 7E, of the contract by terminating such employees after
their twelve-month medical leaves of absence expired." Id. at 61.
Therefore, the arbitrator's own factual findings not only directly
contradict with the arbitrator's ultimate ruling, but also support
our conclusion that the seniority provision has not been shown to
be discriminatory against handicapped individuals as applied in
this case. Accordingly, no conflict exists between the seniority
provision and the anti-discrimination clause in this case and the
arbitrator's reliance on parole evidence was unwarranted and
erroneous.

     We also agree with the district court's conclusion that the
arbitrator ignored the plain language of article XXII of the CBA,
which states:

          Section 1:   Entire Agreement.

          This is the complete Agreement providing all
     benefits to which any employee may be entitled, and it is
     expressly understood and agreed that the Company has no
     obligation to any employee or employees other than those
     provided herein.

                                -9-
          Section 2:   Waiver.

          The parties acknowledge that, during the negotiation
     which resulted in this Agreement, each has the unlimited
     right and opportunity to make demands and proposals with
     respect to any subject or matter not removed by law from
     the area of collective bargaining, and that the
     understanding and agreements arrived at by the parties
     after the exercise of that right and the opportunity are
     set forth in this Agreement. Therefore, the Company and
     the Union, for the term of this Agreement, each
     voluntarily and unqualifiedly waives the right, and each
     agrees that the other shall not be obligated to bargain
     collectively with respect to any subject or matter
     referred to or covered in this Agreement.

          Section 3:   Amendments.

          Any modification or supplement to this Agreement to
     be effective must be reduced to writing and executed by
     the Business Manager of the Local Union or his designated
     representative and the Vice-President-Human Resources of
     the Company or his designated representative.

Joint App. at 26 (emphasis added). By ignoring the plain language
of several provisions in the CBA, the arbitrator created an
ambiguity where none existed and proceeded "`to dispense his own
brand of industrial justice.'" See Coca-Cola Bottling Co., 959
F.2d at 1440 (quoting Enterprise Wheel & Car Corp., 363 U.S. at
597). This, the arbitrator was not free to do.

     We have also considered the Union's alternative argument that
this case must be remanded for the arbitrator to reconsider
alternative grounds for its decision.     Specifically, the Union
asserts that terminating employees injured on the job after a one
year medical leave of absence violates the "for cause" provisions
found in the CBA. We disagree.

     The CBA contains "for cause" language in two separate
provisions. First, under the seniority provision of the CBA (art.
XIII, § 7(B)), "[a]n employee shall lose his seniority . . . [if]
[d]ischarge[d] for proper cause." Joint App. at 22. Second, under

                                 -10-
the management rights provision (art. IV, § 1) of the CBA,
management retains "the right to hire, suspend, discipline or
discharge for cause, to assign jobs, to determine qualifications
and the ability of employees, to transfer, promote or demote
employees, [and] to increase and decrease the working force . . .
."   Id. at 17.    As discussed further below, neither provision
containing "just cause" language conflicts with the provision
authorizing Excel to discharge an employee who has been absent from
work for over one year.

     Analyzing first the terms of the seniority provision, absence
for any reason for over one year is one of several express reasons
for discharging an employee enumerated in that provision of the
CBA. As previously noted, an employee can also be discharged for
"proper cause" under a separate catchall subsection (§ 7(B)) of the
seniority provision.    Had employees been discharged pursuant to
this catchall subsection, a remand would be necessary for the
arbitrator to examine the facts of the discharge and to determine
whether the employee was terminated for proper cause.       In the
present case, however, the employees were discharged pursuant to a
different, and independent, subsection (§ 7(E)) that expressly
authorizes Excel to discharge employees who have been absent for
any reason for more than one year. Therefore, the "proper cause"
language in subsection 7(B) of the seniority provision does not
apply in the present case.

     Turning next to the "for cause" language in the management
rights provision (art. IV, § 1) of the CBA, we conclude that no
ambiguity exists as to the interplay between that language and the
seniority provision, which was interpreted by the arbitrator to
include discharging employees.    The management rights provision
retains management's general right to discharge employees "for
cause."    As noted above, however, the seniority provision
enumerates other specific conduct for which Excel could demote or
discharge an employee, in addition to the catchall subsection that

                               -11-
allows termination for "proper cause." When the CBA contains an
express provision authorizing the termination of an employee for
specific conduct, the general "for cause" provision in the CBA does
not conflict with the express discharge provision and thus no
ambiguity exists.    See Local 238 Int'l Bhd. of Teamsters v.
Cargill, Inc., 66 F.3d 988, 990 (8th Cir. 1995) (per curiam); see
also Warrior & Gulf Nav. Co. v. United Steelworkers, 996 F.2d 279,
281 (11th Cir. 1993) (per curiam), cert. denied, 114 S. Ct. 1834
(1994).

     In Cargill, we upheld an arbitration award in which the
arbitrator concluded that the company failed to demonstrate
sufficient cause to warrant the discharge of an employee who
violated the express terms of a drug and alcohol policy
incorporated by reference into the CBA. Importantly, however, we
noted that "[i]f the collective bargaining agreement expressly
provided that an employee who refuses to take an alcohol test `will
be terminated,' we would agree with the district court's decision
that the arbitrator's award `ignored the plain mandatory language'
of that agreement [notwithstanding the just cause provision in the
CBA.]" Cargill, 66 F.3d at 990. In Warrior & Gulf, 996 F.2d at
281, the court held that where the CBA expressly states that an
employee who tests positive a second time for drugs is "subject to
discharge," the company can fire an employee pursuant to that
provision and such termination satisfies the "just cause"
requirement as a matter of law. Therefore, Excel can discharge an
employee who violates one of the express conditions set out in the
seniority provision and that termination satisfies the general "for
cause" language in the management rights provision of the CBA.

     The only ambiguity found by the arbitrator in the language of
the seniority provision has already been resolved by the
arbitrator--i.e., that "loss of seniority" means termination.
Joint App. at 53.    Both the clear language of the CBA and the
arbitrator's interpretation of the seniority provision support our

                               -12-
conclusion that discharging an employee after an absence of more
than one year does not conflict with the "for proper cause" or "for
cause" language in the CBA. Any other interpretation of the CBA
would ignore its plain language and contradict the arbitrator's
interpretation of an ambiguous term in the CBA.       We conclude,
therefore, that this issue need not be remanded to the arbitrator.

III. CONCLUSION

     Because the arbitrator ignored the plain language of the CBA,
the award did not draw its essence from the agreement.
Accordingly, we affirm the district court's order vacating the
arbitration award and granting summary judgment to Excel.

McMILLIAN, Circuit Judge, dissenting.

     I respectfully dissent.    The arbitrator correctly observed
that the CBA must be read as a whole in determining the respective
rights and responsibilities of the parties. Joint App. at 47. I
agree with the arbitrator's conclusion, upon review of the CBA as
a whole, that tension exists between Article XIII, Section 7E, and
Article III of the CBA, resulting in ambiguity in the contract.
Therefore, in my opinion, the arbitrator acted appropriately in
resolving the ambiguity by reference to parole evidence.

     The evidence presented to the arbitrator demonstrated that the
Company   initially   proposed   in   the   collective   bargaining
negotiations a provision requiring loss of seniority based upon
absences from work for any reason for a period of six months. Id.
at 34. The Union responded by proposing a two-year time period
instead of six months, with an exclusion for any employees injured
on the job or receiving workers' compensation.       Id. at 34-35.
Consistent with these facts, the handwritten notes of Robert D.
Mellinger, the Company's chief negotiator, included the following
notation: "2 years - W.C. excluded." Id. at 35. The Company and

                               -13-
the Union then agreed to submit certain issues, including this loss
of seniority issue, to subcommittees. Union representative Gerald
E. Dodds testified that he, along with Company representative Dave
Wessling and others, was on the subcommittee that addressed the
loss of seniority issue and that they met on January 28, 1988. Id.
According to Dodds, the Company again proposed, in the
subcommittee, contract language that required loss of seniority
based upon absences from work "for any reason [for] a period of six
(6) months." Id. Dodds further testified that "the Union then
proposed that leaves of absences last twelve months, provided that
employees injured on the job and/or who were on workers'
compensation be retained past that period." Id. at 35-36. Dodds
also testified that "we were in a subcommittee meeting and it was
settled that one would lose seniority after one year with the
exception of workman's comp." Id. at 36. Dodds' contemporaneous
handwritten notes (which the Company provided) accordingly stated
in the margin: "work comp. doesn't count." Id.

     Upon review of this and other evidence presented, the
arbitrator observed "it is undisputed that the Union in
negotiations steadfastly insisted on excluding employees injured on
the job from any agreement to limit the time of other leaves.
Thus, Mellinger's own October 22-23, 1987, bargaining notes state
that the Union had proposed: '2 years - W.C. excluded.'" Id. at
53. The arbitrator further noted "there is no evidence in this
record showing that the Union ever expressly dropped its insistence
that employees injured on the job be so excluded.           Indeed,
Mellinger testified that his bargaining notes contain no reference
whatsoever to any such drop."      Id.   Moreover, the arbitrator
observed, "Dodds testified without contradiction that the Union on
January 28, 1988, reiterated this exclusion to Wessling and that
the Union then agreed to the one year limitation ultimately agreed
to on the express condition that it not cover employees injured on
the job."   Id. at 53-54.    In light of these circumstances, the
arbitrator   reasoned,   "the   Company   was  then   required   to

                               -14-
affirmatively state that it was not agreeing to the workers'
compensation exclusion if that was the message it wanted to convey
at the time." Id. at 59. Having failed to do so, the arbitrator
opined, the Company, by its silence and other conduct, manifested
its assent to the exclusion as stated in the Union's
counterproposal. Id. In other words, the Company had induced the
Union into believing it had agreed to the exclusion and,
consequently, it was bound to honor the exclusion. Id. at 59-60.

     I agree. The parole evidence presented at the arbitration
hearing was appropriately considered and abundantly supported the
conclusion that the parties intended to exclude from Article XIII,
Section 7E, any employee on leave due to injury on the job or on
medical leave.   The arbitrator's award therefore does draw its
essence from the CBA. Accordingly, I would reverse the order of
the district court and uphold the arbitrator's award.

     A true copy.

          Attest:

               CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

                              -15-