Court Opinion

ID: 3027240
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:37:47.216004+00
Date Added: 2024-06-11T09:39:28.004458
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 00-3564
                                   ___________

Duluth, Missabe & Iron Range       *
Railway Company, Inc.,             *
                                   *
                   Appellee,       *
                                   * Appeal from the United States
       v.                          * District Court for the
                                   * District of Minnesota.
International Brotherhood of       *
Locomotive Engineers, AFL-CIO      *
000-101                            *
                                   *
                  Appellant.       *
                              ___________

                             Submitted: June 14, 2001

                                 Filed: August 30, 2001
                                  ___________

Before MURPHY, HEANEY and BEAM, Circuit Judges.
                          ___________

HEANEY, Circuit Judge.

       This case involves a labor dispute between the Duluth, Missabe and Iron Range
Railway Company (“DM&IR”) and the Brotherhood of Locomotive Engineers
(“Union”). The dispute was submitted to Public Law Board No. 5764 (“Board”) under
the Railway Labor Act (RLA), 45 U.S.C. §§ 151-163, 181-188. The arbitrator ruled
in favor of the Union. DM&IR then asked the district court to set aside the award on
the ground that it was in excess of the board’s jurisdiction. The district court granted
DM&IR’s motion. We reverse and remand to the district court with directions to
remand to the Board.

I. BACKGROUND

       DM&IR and the Union are parties to a labor agreement that defines the
circumstances in which an engineer becomes eligible for “road overtime pay.” The
current dispute was initiated in 1994 when the Union filed claims with DM&IR on
behalf of individual engineers alleging that they were entitled to receiving overtime pay
by virtue of Article IV, Section 2(c) of the 1986 National Agreement entered into by
the Union and most of the nation’s railroads--including DM&IR--in 1986. DM&IR
denied the claims on the grounds that no overtime pay was due under the parties’ labor
agreements. It took the position that the national agreement did not intend to modify
the rules and parties respecting the computation of overtime that had been in place on
DM&IR since 1923. It asserted that neither the Union nor any individual engineer had
submitted a claim disputing DM&IR’s practice, or otherwise objected to it from 1986
until 1994, and that it reversed its course in the latter year. The parties were unable to
resolve the dispute and submitted it to arbitration before the Board, a three-person
arbitration panel created by the parties under the RLA. Gil Vernon was the board’s
neutral member and chairman. The Board, over the dissent of the DM&IR member,
ruled in favor of the Union:

      It is the opinion of the Board that regardless of the past operation of the
      locally negotiated Rule 7, it was clearly modified by the nationally
      negotiated Article IV. The Parties bought into national handling, and they
      agreed that language agreed to there controlled all related prior
      agreements. The relevant portion of the agreement in this regard read as
      follows:

      “APPENDIX “A,” 1986 NATIONAL AGREEMENT

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      “Section “NINETEENTH”

      “NINETEENTH: This Agreement (together with Exhibits A, B, C, D,
      and E affixed hereto) embodies the entire agreement and understanding
      between the parties and supersedes all prior agreements and
      understandings relevant to the subject matter hereof. No amendments,
      waivers, or -modifications [sic] to this Agreement are to be effective
      unless executed by the parties [sic] duly accredited representatives in a
      writing referring to this Agreement.

(Appellant’s Add. at 3 (emphasis added).) The Board awarded the individual
engineers the sum of $73,631.52, concluding DM&IR had breached the 1986
agreement.

       The Union now concedes that there is no “Section Nineteenth” in the 1986
agreement, and DM&IR argues that the arbitration award should be set aside for this
reason. Nevertheless, in January of 1998, DM&IR and the Union reached an
agreement under which DM&IR paid the individual engineers the sum of $73,631.52,
but has refused to pay those engineers pursuant to the award for future overtime miles.
Instead, it moved to vacate the award on the grounds that the award exceeded the scope
of the arbitrator’s jurisdiction because its validity depended on the nonexistent Section
Nineteenth.

      The magistrate to whom the matter was referred agreed that the Vernon Award
should be set aside for the reasons advanced by DM&IR:

      Indisputably, the Award of PLB 5764 makes clear that, in the view of the
      neutral Arbitrator, and of the BLE representative, Section NINETEENTH
      was the applicable provision of the 1986 National Agreement, and its
      provision dispositively determined that Rule 7 was clearly modified by
      the nationally negotiated Article IV.
      ...

                                          -3-
      The Award’s commentary, on the uniform application of a National
      Agreement, is directly derived from the Board’s erroneous belief that the
      1986 National Agreement contained a provision--Section NINETEENTH-
      -in which the parties agreed that the language agreed to there controlled
      all related prior agreements.
      ...

      [The Award] is so diminished, by reliance upon a contractual provision
      which is unquestionably inapposite, [that] the Award may not properly
      stand.

(Magistrate’s Report and Recommendation at 18, 22, 23-24 (internal quotations
omitted).)

     The district court adopted the magistrate’s recommendation and entered
judgment vacating and setting aside the arbitration award. This appeal followed.

II. DISCUSSION

      Judicial review of a labor-arbitration decision . . . is very limited. Courts
      are not authorized to review the arbitrator’s decision on the merits despite
      allegations that the decision rests on factual errors or misinterprets the
      parties’ agreement. . . . [T]he fact that “a court is convinced [the
      arbitrator] committed serious error does not suffice to overturn [the
      arbitrator’s] decision.”

Major League Baseball Players Ass’n v. Garvey, 121 S. Ct. 1724, 1728 (2001) (per
curiam) (quoting Eastern Associated Coal Corp. v. United Mine Workers, 531 U.S. 57,
62 (2000); see Air Line Pilots Ass’n, Int’l v. United Air Lines Corp., 874 F.2d 439, 443
(8th Cir. 1989) (noting “excruciatingly narrow” scope of review). DM&IR argues that
the award does not draw its essence from the parties labor agreements because it was
based on Section Nineteenth. The Union counters that the arbitrator’s decision was not
dependent on the nonexistent provision and drew its essence from the agreement and

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that the award should be upheld. It also argues that because the settlement agreement
between the parties carried out the arbitration award the issue as to whether it should
be enforced in the future is moot. We agree with DM&IR that the dispute is not moot
– the parties simply agreed to the dollar amount DM&IR had to pay to comply with the
Vernon Award and paid that sum. Its compliance, however, did not moot its action
contesting the future application of the award. See Tungseth v. Mutual of Omaha Ins.
Co., 43 F.3d 406, 409 (8th Cir. 1994).

        It is quite clear that DM&IR benefitted from the 1986 National Agreement, as
the wage rates for its employees were reduced. On the other hand, the Union gained
by the new overtime system prescribed in the 1986 National Agreement. Moreover,
when we read the arbitration agreement in its entirety, we are unable to discern whether
the arbitrator would have reached the same result had he not erroneously concluded
that Section Nineteenth was a part of the 1986 National Agreement. That task must be
left to the arbitrator.

III. CONCLUSION

       We remand the matter to the district court with directions to it to remand the case
for further arbitration proceedings without reference to Section Nineteenth. See 45
U.S.C. § 153(q); Major League Baseball Players Ass’n, 121 S. Ct. at 1728; Union Pac.
R.R. Co. v. United Transp. Union, 3 F.3d 255, 263 (8th Cir. 1993); United
Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 36 (1987); American Fed’n Of
State, County & Mun. Employees, Local Lodge No. 1803 v. Walker County Med. Ctr.,
715 F.2d 1517, 1519 (11th Cir. 1983) (per curiam).

                                           -5-
BEAM, Circuit Judge, dissenting.

       Let me begin with the lesser of two concerns–what I consider to be the proper
outcome of this appeal. The question before us is whether the arbitrator confined
himself to matters within his jurisdiction. 45 U.S.C. § 153, First (q). The arbitrator
had jurisdiction only to consider the parties' agreement, and was charged with issuing
a decision drawing its essence therefrom. Walsh v. Union Pac. R.R. Co., 803 F.2d
412, 414-15 (8th Cir. 1986); Brotherhood of Ry, Airline and Steamship Clerks v.
Kansas City Terminal Ry. Co., 587 F.2d 903, 906-07 (8th Cir. 1978). It seems to me
that a decision turning largely on a phantom provision, not actually within the parties'
agreement, can hardly be said to have hewed to the specifications of the contract. The
district court was justified in vacating the award.

       Given that the arbitrator exceeded his jurisdiction, the RLA gives us discretion
as to the proper course of action. 45 U.S.C. § 153, First (q) (reviewing court has
"jurisdiction to affirm the order of the division or to set it aside, in whole or in part, or
it may remand the proceeding to the division for such further action as it may direct").
The court cites authorities supporting the proposition that in the rare case warranting
reversal a remand might be appropriate, and chooses to do so in this instance. See,
e.g., Union Pacific R.R. Co. v. United Transp. Union, 3 F.3d 255, 264 (8th Cir. 1993).
The equities, however, weigh heavily against the Union, for it was the Union which
introduced the phantom provision and which cited it several times in its written
submission to the arbitrator. The district court determined the evidence did not support
a finding of fraud, a finding I respect. But the Union's mistake, even if honest, ought
to run against it. It should not be given a second bite at the proverbial apple.

      The above, however, is but a quibble with the court over the proper disposition
of the equities of this matter, something which ought not cause arbitration-law

                                            -6-
specialists much loss of sleep. The court's opinion, however, innocuous as it seems,
actually contains a much more worrisome problem. Specifically, the court fails to
decide that which it is charged with deciding. The only basis for reversal implicated
in this appeal is whether the arbitrator exceeded his jurisdiction. Rather than answer
that question, the court simply ducks the issue, remanding the dispute on the grounds
that the court is "unable to discern whether the arbitrator would have reached the same
result" had he not relied on the phantom provision. However, we are not asked to
discern what the arbitrator might have done under a different set of circumstances, but
rather what the arbitrator did do under the facts presented.

        I am uncertain as to where the court draws its authority to order a remand in the
face of its stated uncertainty. Certainly it does not do so from the RLA. That statute
does permit remands, granting courts "jurisdiction to affirm the order of the division or
to set it aside, in whole or in part, or . . . remand the proceeding to the division for such
further action as it may direct." 45 U.S.C. § 153, First (q). However, the statute then
cabins that grant with the following language:

       On such review, the findings and order of the division shall be conclusive
       on the parties, except that the order of the division may be set aside, in
       whole or in part, or remanded to the division, for failure of the division to
       comply with the requirements of this chapter, for failure of the order to
       conform, or confine itself, to matters within the scope of the division's
       jurisdiction, or for fraud or corruption by a member of the division making
       the order.

45 U.S.C. § 153, First (q). Thus, a remand may occur only after a court has "set aside,
in whole or in part," the arbitrator's decision, which in turn may occur only upon the
statutory bases or upon such other bases as we have judicially created. See, e.g., Union
Pacific R.R., 3 F.3d at 261-62 (setting award aside on basis of "well-defined and

                                            -7-
dominant" public policy). Here, the court punts the predicate question, whether the
arbitrator's award exceeded its jurisdiction, and reverses the district court's conclusion
to that effect. Having done so, the court lacks authority to remand under the RLA.

       My major concern with the court's course of action is that, despite using citations
to language limiting our review, in the hands of future litigators the court's decision may
prove a precedential crowbar used to pry open judicial review of RLA awards. By
declining to determine whether or not the arbitrator exceeded its jurisdiction, the court
creates a third way for us to review arbitration rulings. In future cases we may simply
recite the Supreme Court's directives narrowing our review, but then send back
arbitration decisions with which we disagree, on the grounds that we don't understand
what the arbitrator did, in order to give them another chance to "get it right." If the
court had vacated the arbitrator's decision, as I think it should, then my disagreement
with the court would simply be a dispute over the equities of the remand, a substantially
less worrisome debate. As the opinion stands, however, I think it an imprudent and
dangerous precedent.

      Accordingly, I dissent.

      A true copy.

             Attest:

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

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