Court Opinion

ID: 4643877
Source: CourtListenerOpinion
Date Created: 2020-12-17 01:00:17.038203+00
Date Added: 2024-06-11T08:00:42.137627
License: Public Domain

Case: 18-50110     Document: 00515676481          Page: 1    Date Filed: 12/16/2020

              United States Court of Appeals
                   for the Fifth Circuit
                                                                       United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                      December 16, 2020
                                   No. 18-50110                          Lyle W. Cayce
                                                                              Clerk

   Union Pacific Railroad Company,

                                                             Plaintiff—Appellee,

                                       versus

   American Railway & Airway Supervisors’ Association, a
   Division of The Transportation Communications
   Union/IAM; Roland Beltran,

                                                        Defendants—Appellants.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 5:17-CV-270

   Before Owen, Chief Judge, and King and Stewart, Circuit Judges.
   Per Curiam:*
          After a second positive drug test, Union Pacific permanently
   terminated Roland Beltran’s employment. During arbitration, the Public
   Law Board concluded the second drug test was a false-positive and ordered

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 18-50110     Document: 00515676481           Page: 2   Date Filed: 12/16/2020

                                    No. 18-50110

   Beltran reinstated. Union Pacific refused to reinstate Beltran and seeks to
   vacate the arbitration award. Beltran seeks to enforce the award. The district
   court vacated the Public Law Board’s order on public policy grounds, and
   this appeal followed. Because we conclude the Public Law Board did not
   violate public policy and all other relevant arguments were waived, we
   REVERSE the district court’s order of vacatur and REMAND this case for
   further proceedings.
                                         I.
          Defendant-appellant Roland Beltran worked as a Car Foreman for
   plaintiff-appellee Union Pacific, a railroad carrier within the meaning of the
   Railway Labor Act (“RLA”). The American Railway & Airway Supervisors’
   Association (“ARASA”) is a labor organization that represents employees of
   Union Pacific, like Beltran. This appeal centers around a collective
   bargaining agreement (“CBA”), which governs the hours of service and
   working conditions of ARASA-represented employees. The CBA requires
   disputes to be arbitrated in accordance with the RLA. See 45 U.S.C. § 151 et
   seq.
          Beltran’s position with Union Pacific required him to hold a
   commercial driver’s license, making him subject to random drug testing
   under Department of Transportation (“DOT”) regulations and company
   policy. Beltran first tested positive for cocaine on December 23, 2010. He and
   ARASA signed a last-chance agreement. Beltran was thereafter reinstated,
   pursuant to Union Pacific’s Drug and Alcohol Policy for a “one-time return
   to service opportunity.” According to that policy, “[a]n employee who has
   been granted a one-time return to service. . . and who violates the Union
   Pacific Drug and Alcohol policy again within a ten (10) year period will be
   dismissed permanently.”

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          Beltran tested positive for amphetamines and methamphetamine in a
   follow-up test on November 20, 2014. Dr. Randy Barnett, the Medical
   Review Officer (“MRO”), interviewed Beltran over the phone and asked
   what medications he was taking. The MRO verified the positive result to
   Union Pacific and stated that the test was conducted in accordance with 49
   C.F.R. Part 40 and Part 382.
          Union Pacific then conducted an investigation and hearing on the
   matter, at which the parties submitted testimonial and documentary
   evidence. Union Pacific, through Tracy W. Brown, laid out the charges and
   the testing procedures that documented the confirmed positive result for
   amphetamines and methamphetamine. Beltran testified that he had taken
   prescription and over-the-counter medications that could have led to a false-
   positive. Beltran also submitted a letter from Dr. Michael Zeitlin which
   identified the medications that Beltran was allegedly taking that could cause
   false positives. The letter from Dr. Zeitlin noted that “[a]mphetamine or
   methamphetamine is the most common[ly] reported false-positive urine drug
   test result.”
          Dr. Barnett, the MRO, testified as a witness for Union Pacific, and his
   report was made an exhibit. Dr. Barnett stated that none of the medications
   listed by Dr. Zeitlin would cause a false positive for methamphetamine, and
   thus there was no legitimate medical explanation for Beltran’s positive test.
          On January 9, 2015, Union Pacific notified Beltran that his
   employment was terminated based on the hearing. In accordance with the
   procedures set forth in the RLA and the CBA, ARASA moved the matter to
   arbitration before a Public Law Board (“PLB”). The parties submitted
   written briefs and exhibits, including the transcript of the initial hearing. PLB
   No. 5514 issued Award No. 101, which ordered Beltran to return to work,

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   without back pay, but with seniority and other benefits intact. Union Pacific
   did not return Beltran to service.
          Instead, Union Pacific filed suit in the District Court for the Western
   District of Texas seeking to set aside the award. Beltran and ARASA counter-
   claimed seeking to enforce the award. The parties prepared a stipulated
   record consisting of the submissions and evidence before the PLB and cross-
   moved for summary judgment. The district court granted Union Pacific’s
   motion and vacated the arbitration award, concluding that the PLB violated
   public policy. Beltran and ARASA timely appealed.
                                           II.
          We review de novo the district court’s order to vacate the arbitration
   award. Gulf Coast Indus. Workers Union v. Exxon Co., U.S.A., 991 F.2d 244,
   248 (5th Cir. 1993); see Cont’l Airlines, Inc. v. Int’l Bhd. Of Teamsters, 391
F.3d 613, 616 (5th Cir. 2004).
          The CBA at issue requires arbitration in accordance with the RLA’s
   mandatory procedures for the resolution of disputes, both major and minor.
   See Mitchell v. Cont’l Airlines, Inc., 481 F.3d 225, 230 (5th Cir. 2007). This
   dispute over a drug-testing result is classified as a “minor dispute” under the
   RLA. Id. at 230-31. Minor disputes must be resolved through compulsory and
   binding arbitration. Cont’l Airlines, Inc. v. Air Line Pilots Ass’n, Int’l, 555 F.3d
399, 405 (5th Cir. 2009) (citing Mitchell, 481 F.3d at 231). Judicial review of
   arbitration decisions arising from the terms of a CBA is narrowly limited, and
   courts should afford great deference to arbitration awards. Id. at 405 (quoting
   Resolution Performance Prods., LLC v. Paper Allied Indus. Chem. and Energy
   Workers Int’l, Local 4-1201, 480 F.3d 760, 764 (5th Cir. 2007)). The standard
   of review is “among the narrowest known to the law” and flows from the
   RLA’s “preference for the settlement of disputes in accordance with

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   contractually agreed-upon arbitration procedures.” Id. (quoting Andrews v.
   Louisville & Nashville R.R. Co., 406 U.S. 320, 323 (1972)).
            We will defer to an arbitrator’s decision unless: (1) the arbitrator failed
   to comply with the RLA; (2) there is evidence of fraud or corruption in the
   arbitrator; or (3) the order by the arbitrator did not “confine itself to matters
   within the scope of [its] jurisdiction.” Id. at 406 (quoting Mitchell, 481 F.3d
   at 231). This court has also held that we may vacate an arbitrator’s decision
   pursuant to an exceedingly narrow, judicially created exception for public
   policy concerns. See id. at 415-20.
                                           III.
            The parties ask that we address whether: (1) public policy review is
   available under the RLA; (2) the award violates public policy; (3) Union
   Pacific forfeited the jurisdictional argument by failing to present the relevant
   regulation to the arbitrator; (4) the jurisdictional argument fails on the merits.
   We address the parties’ public policy concerns and jurisdictional arguments
   below.
      A. Public Policy Concerns
            Union Pacific contends that the PLB violated an explicit, well-defined
   public policy by failing to defer to the MRO’s finding that Beltran’s second
   drug test was positive. The district court agreed and vacated the PLB’s award
   accordingly. ARASA argues on appeal that public policy review is unavailable
   and, in the alternative, that the argument fails on the merits.
            As a threshold matter, in Continental Airlines v. Air Line Pilots, this
   court recognized a narrow public policy exception in the relevant context and

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   distilled three guiding principles. 1 Id. at 406. First, “public policy. . . must be
   well defined and dominant, and is to be ascertained by reference to the laws
   and legal precedents . . . .” Id. at 415-16 (omission in original) (quoting W.R.
   Grace & Co. v. Local Union 759, Int’l Union of the United Rubber, Cork,
   Linoleum & Plastic Workers of Am., 461 U.S. 757, 766 (1983)). Second, the
   relevant point of inquiry is whether the ultimate arbitration award violates
   public policy. See id. at 416. And third, “courts should be particularly chary
   when divining public policy [where] ‘two political branches have created a
   detailed regulatory regime in a specific field.’” Id. at 417-18 (quoting E.
   Associated Coal Crop v. United Mine Workers of Am., 531 U.S. 57, 63 (2000)).
           Against that backdrop, we analyze whether the arbitration award
   contravenes public policy. “[W]e cannot embrace public policy as an end-run
   around RLA deference,” id. at 420, and we consider whether the ultimate
   arbitration award violated 49 C.F.R. § 40.149(c). We look, then, to see not if
   the false-positive determination itself violates public policy, but whether the
   PLB’s failure to defer to the MRO creates a conflict between the arbitration
   award and the federal regulation. See id. at 419-20; see also United
   Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 45 (1987).
           Subpart 40 of Title 49 of the Code of Federal Regulations “tells all
   parties who conduct drug and alcohol tests required by [DOT] agency
   regulations how to conduct these tests and what procedures to use,” and
   “concerns the activities of transportation employers, safety-sensitive
   transportation employees . . . and service agents.” 49 C.F.R. § 40.1. These
   regulations were issued pursuant to the Federal Omnibus Transportation
   Employee Testing Act of 1991 (the “Testing Act”), which places certain

           1
             Air Line Pilots both recognized and went to great lengths to circumscribe the
   narrow exception. And, absent an intervening change in the law, this panel has no authority
   to overrule binding precedent. See Mercado v. Lynch, 823 F.3d 276, 279 (5th Cir. 2016).

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   restrictions on workers who test positive for using controlled substances. See
   Pub. L. No, 102-143, tit. V, 105 Stat. 917 (1991). The Testing Act’s aims are
   complex and primarily remedial; these state that “rehabilitation is a critical
   component of any testing program,” § 2(7), 105 Stat. 953, that rehabilitation
   “should be made available to individuals, as appropriate,” ibid., and that
   DOT must promulgate regulations for “rehabilitation programs.” E.
   Associated Coal, 531 U.S. at 64.
           On close inspection, it becomes apparent that § 40.149(c), the specific
   regulation at issue here, only purports to grant the MRO the “sole authority
   under this part to make medical determinations.” 49 C.F.R. § 40.149(c)
   (emphasis added). To that end, an arbitration award would directly
   contravene § 40.149(c) if it disregarded the MRO’s medical determination
   in ordering an employer to allow an employee to return to performing safety-
   sensitive work without going through DOT’s rehabilitative measures. See 49
   C.F.R. § 40.305 (prescribing return-to-duty requirements for employees who
   failed a drug or alcohol test); cf. E. Associated Coal, 531 U.S. at 64 (discussing
   the relevant legislation’s “remedial aims”). 2
           In other words, an arbitrator may disagree with the MRO as long as its
   remedy does not conflict with Part 40’s return-to-duty procedures. The
   MRO has the sole authority to establish the validity of a drug test for

           2
             Although this issue was not briefed, there was some discussion at oral argument
   as to whether the PLB ordered Beltran be returned to a safety-sensitive position. Appellants
   stated that the PLB did not do as much. Union Pacific, however, indicated this might be
   the consequence of the PLB award, given Beltran was reinstated with his seniority intact.
   Nevertheless, Union Pacific conceded that DOT regulations would have to be followed
   before Beltran resumed any safety-sensitive position pursuant to the award. We conclude,
   therefore, that this hypothetical outcome—which would nevertheless not mandate the
   employee be returned to performing safety-sensitive work without going through DOT’s
   rehabilitative measures—proves insufficient to sustain a finding that the arbitration award
   was violative of public policy.

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   determining whether those procedures are necessary—not for making
   personnel decisions. Indeed, DOT’s authoritative guidance interpreting
   § 40.149(c) says as much:
          There may be instances in which an arbitrator makes a decision
          that purports to cancel a DOT test for reasons that the DOT
          regulation does not recognize as valid. . . [In such instances the]
          employer may still be bound to implement the personnel policy
          outcome of the arbitrator’s decision . . . .
   To that end, in this case, a meaningful distinction lies in whether the drug
   test is valid for purposes of “personnel policy” or a “federal safety
   regulation.” Under the RLA, the arbitrator has the authority to decide the
   drug    test’s   validity   for    the       former   purpose,   while       under
   § 40.149(c), the MRO has the authority to decide the drug test’s validity for
   the latter purpose.
          And although 49 C.F.R. § 40.149(c) falls in the category of DOT
   safety regulations, these do not purport to regulate labor–management
   relations. Cf. E. Associated Coal, 531 U.S. at 65 (“[W]hen promulgating these
   regulations, DOT decided not to require employers either to provide
   rehabilitation or to ‘hold a job open for a driver’ who has tested positive, on
   the basis that such decisions ‘should be left to management/driver
   negotiation.’” (quoting Controlled Substances & Alcohol Use and Testing,
   59 Fed. Reg. 7484, 7502 (Feb. 15, 1994))).
          At bottom, transportation-safety policy and labor policy are driven by
   different concerns, and “basic background labor law principles, [] caution
   against interference with labor-management agreements about appropriate
   employee discipline.” E. Associated Coal, 531 U.S. at 65. Because § 40.149(c)
   did not preclude the PLB from disagreeing with the MRO, there is no direct
   conflict between the established regulation and the arbitration award. The

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   award was, therefore, not in violation of public policy, and the district court
   should not have set it aside.
          We now tun to the parties’ dispute over the scope of the PLB’s
   jurisdiction and conclude Union Pacific waived the jurisdictional argument
   by failing to raise it below.
      B. Jurisdictional Argument
          Absent a finding that the arbitration award violated public policy,
   Union Pacific argues that the award should nevertheless be vacated because
   the PLB exceeded its jurisdiction by ignoring the express language of the
   contract.
          Unlike an objection to a federal court’s lack of subject-matter
   jurisdiction, which can never be waived, an argument that an arbitrator lacked
   subject-matter jurisdiction is waivable. See Lodge No. 725, Int’l Ass’n of
   Machinists v. Mooney Aircraft, Inc., 410 F.2d 681, 683 (5th Cir. 1969).
          It is well established that a party may not sit idle through an arbitration
   procedure and then collaterally attack the procedure on grounds not raised
   before the arbitrators. Brook v. Peak Int’l, Ltd., 294 F.3d 668, 674 (5th Cir.
   2002). If the issue was arbitrable and was not presented to the arbitrator, it is
   waived. See Lodge No. 725, 410 F.2d at 683; see also Int’l Chem. Workers Union
   v. Columbian Chems. Co., 331 F.3d 491, 498-99 (5th Cir. 2003) (refusing to
   consider whether an arbitration award for backpay was ambiguous because
   the company did not argue for reduction before arbitrator); Brook, 294 F.3d
   at 673 (refusing to vacate award granted by improperly selected arbitrator
   because worker did not object to the defect during arbitration).
          As Union Pacific failed to point out the regulation during arbitration,
   it waived its argument that the PLB exceeded its jurisdiction by not following
   49 C.F.R. § 40.149(c). Union Pacific was aware, certainly, that the validity of

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   the drug test was before the PLB. And, although Union Pacific now claims
   the regulation is binding, it instead argued throughout arbitration that there
   was sufficient evidence for the PLB to find that the drug test was, in fact,
   positive. We therefore decline to consider whether the PLB acted outside its
   jurisdiction by overturning the MRO’s false-positive determination, and we
   find that the PLB acted well within its jurisdiction by conditionally reinstating
   Beltran to his position with Union Pacific.
                                         IV.
          For the reasons stated above, we conclude that the PLB’s arbitration
   award did not violate public policy, and Union Pacific’s arguments on
   jurisdictional grounds fail. The district court’s judgment vacating the PLB’s
   award is REVERSED, and this case is REMANDED for further
   proceedings consistent with this opinion.

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   PRISCILLA R. OWEN, Chief Judge, dissenting:
          With respect, I dissent. If Beltran can be reinstated without being
   placed in a safety-sensitive position, then the award does not violate public
   policy and the arbitrator had jurisdiction to disagree with the MRO for
   “personnel policy” matters—namely, the arbitrator can say the drug test was
   a false positive for purposes of the last-chance agreement.
          However, the record does not reflect whether Beltran can be
   reinstated to a position that is not safety sensitive. If Beltran can only be
   placed in a safety-sensitive position, then the award violates public policy to
   the extent that it declares the test a false positive. Under that circumstance,
   the arbitrator exceeded its jurisdiction by reinstating Beltran in direct
   violation of the last-chance agreement.
          Though I believe the majority opinion’s overall framing of the case is
   correct, the underlying fact issue remains, and I would remand to the district
   court for its resolution.

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