Court Opinion

ID: 3205099
Source: CourtListenerOpinion
Date Created: 2016-05-19 17:02:04.474506+00
Date Added: 2024-06-11T14:28:47.953828
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 SOUTHWEST REGIONAL                              No. 14-55250
 COUNCIL OF CARPENTERS,
          Plaintiff-Appellant,                    D.C. No.
                                           2:13-cv-05350-JAK-SP
                  v.

 DRYWALL DYNAMICS, INC.,                           OPINION
        Defendant-Appellee.

         Appeal from the United States District Court
            for the Central District of California
         John A. Kronstadt, District Judge, Presiding

           Argued and Submitted February 12, 2016
                    Pasadena, California

                        Filed May 19, 2016

   Before: Marsha S. Berzon and John B. Owens, Circuit
     Judges, and Algenon L. Marbley,* District Judge.

                     Opinion by Judge Berzon

   *
     The Honorable Algenon L. Marbley, District Judge for the U.S.
District Court for the Southern District of Ohio, sitting by designation.
2               SWRCC V. DRYWALL DYNAMICS

                           SUMMARY**

                    Arbitration / Labor Law

    The panel reversed the district court’s order vacating an
arbitration award in a labor law case.

    The arbitrator ruled that an employer was bound by a
memorandum of understanding extending the term of a labor
agreement. The district court vacated the arbitration award
on the grounds that the arbitrator’s interpretation of the
parties’ agreement was not plausible and was contrary to
public policy.

    The panel held that the district court’s decision exceeded
its narrow authority to determine whether the arbitrator’s
award was based on the parties’ contract and whether it
violated an explicit, well-defined, and dominant public
policy.

                             COUNSEL

Melissa R. Shimizu (argued) and Daniel M. Shanley, DeCarlo
& Shanley, Los Angeles, California, for Plaintiff-Appellant.

Rick J. Sutherland (argued), Jackson Lewis, Salt Lake City,
Utah, for Respondent-Appellee.

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
             SWRCC V. DRYWALL DYNAMICS                       3

                         OPINION

BERZON, Circuit Judge:

    This case requires us once more to clarify the limited role
played by courts in reviewing labor arbitration awards.
Respondent Drywall Dynamics, Inc. (“Drywall”) entered into
a labor agreement with petitioner Southwest Regional
Council of Carpenters (“SWRCC” or “the Union”) according
to which Drywall assigned to a contractors’ association
authority to bargain on its behalf. Some years later, having
grown dissatisfied with this arrangement, Drywall attempted
to terminate the agreement at what it thought was the
appropriate time, only to discover that the Union and the
association had executed a Memorandum of Understanding
extending the term of the agreement.

    An arbitrator held that Drywall was bound by the
Memorandum. But the district court vacated the arbitration
award, holding that the arbitrator’s interpretation of the
parties’ agreement was not “plausible” and was, moreover,
contrary to public policy. We conclude that the district
court’s decision exceeded its narrow authority to determine
whether the arbitrator’s award was based on the parties’
contract and whether it violated an “explicit, well-defined,
and dominant public policy,” E. Associated Coal Corp. v.
United Mine Workers of Am., Dist. 17, 531 U.S. 57, 63
(2000), and accordingly reverse.

  FACTUAL AND PROCEDURAL BACKGROUND

    Drywall is a Utah-based construction company; SWRCC
represents workers in the construction industry. On July 15,
2005, Drywall and SWRCC entered into a Memorandum
4             SWRCC V. DRYWALL DYNAMICS

Agreement according to which Drywall agreed to be bound
by a Master Labor Agreement (“MLA”) between the Union
and the Drywall/Lathing Conference of the Western Wall &
Ceiling Contractors Association (“WWCCA” or “the
Association”), as well as “any extensions, renewals or
subsequent Master Agreements.” Drywall waived “any right
that . . . it may have to terminate, abrogate, repudiate or
cancel this Agreement during its term or during the term of
any future modifications, changes, amendments, supplements,
extensions, or renewals of or to said Master Agreement.” The
Memorandum Agreement further provided that Drywall
“authorize[d] the Association to represent” it unless Drywall
gave notice of its desire to withdraw from the agreement “at
least sixty (60) days, but no earlier than ninety (90) days prior
to the termination date” of the then-effective MLA. The
MLA in place when the parties executed the Memorandum
Agreement was due to expire on June 30, 2006, but provided
that it would “continue to remain in full force and effect from
year to year thereafter without change or modification” unless
either party proposed such changes within 60 to 90 days of
the termination date.

    On April 30, 2008, Drywall notified the Union “of its
intent to no longer be bound” by the MLA as of June 30,
2008. In fact, the Union and the Association had already
negotiated a successor five-year MLA, which would expire
on June 30, 2010. In response to Drywall’s notice, the Union
informed the company that its purported termination was
untimely, although the Union erroneously asserted that the
Agreement’s new end date was September 30, 2009. Drywall
opted not to dispute this point and continued complying with
the MLA.
                SWRCC V. DRYWALL DYNAMICS                                 5

    On April 15, 2009, Drywall again gave the Union notice
of its intent to terminate the Agreement, this time as of June
30, 2009. On May 6, the Union informed Drywall that its
proffered termination was untimely, asserting that the
Agreement remained in effect until June 30, 2010, as
provided by the successor MLA.

    In fact, before sending this communication, the Union
had, on April 16, 2009, executed a Memorandum of
Understanding (“MOU”) with the Association. The MOU
provided for an extension of the MLA until June 30, 2011, in
exchange for the Union’s agreement to defer a portion of a
negotiated pay raise. The MOU further provided that “only
WWCCA Drywall/Lathing Conference Members who
affirmatively agree to this Agreement will be bound to it” and
so permitted to pay the lower rate. Those members who did
not affirmatively agree to the MOU were to “pay the full . . .
increase previously agreed upon.”

    On April 13, 2010, Drywall attempted again to terminate
its agreement with the Union and the WWCCA, effective
June 30, 2010. The Union once more responded that the
termination was untimely, explaining—as was the case—that
the agreement had been extended until June 30, 2011.

    On July 6, 2010, the Union filed a grievance against
Drywall with the Southern California Drywall Joint
Adjustment Board (“Adjustment Board” or “Board”),
alleging six specific contractual violations.1 The grievance

 1
   The Union alleged that Drywall (1) “failed to have employees referred
to jobs through the hiring hall”; (2) “failed to secure a bond”; (3) “failed
to register jobs”; (4) “failed to pay wages and benefits per agreement”;
(5) “paid apprentice wages and benefits to individuals who were not
6              SWRCC V. DRYWALL DYNAMICS

came before an Adjustment Board arbitration panel for
hearing in August and September 2011. During the first day
of the hearing, on August 9, the Union asked the Board to
resolve, in addition to the six violations named in the initial
grievance, the question whether Drywall’s purported
termination of its agreement with the Union was effective.
Drywall objected, arguing that whether it had effectively
terminated its contract in 2010 was not relevant to any of the
grievances filed by SWRCC. Relying on a provision of the
MLA requiring grievances to be brought “within thirty (30)
days after the complaining party has actual knowledge of the
facts giving rise to the dispute,” Drywall moved to dismiss
the termination issue “based on . . . timeliness” and argued
that the Union’s contention was “procedurally barred.” In
response, the Adjustment Board issued an “Interim Award”
in which it indicated that it would decide the validity of
Drywall’s termination “because the issue is related to the
overall grievance,” but held that issue in abeyance “pending
. . . further review of the evidence.”

    Later, the Board issued “Interim Award II,” in which it
unanimously ruled that Drywall’s purported termination of
the MLA in 2010 was untimely because the 2009 MOU had
extended the Agreement until 2011. In support of that
conclusion, the Board noted that the Union and the
Association had each given consideration for the modification
of the Agreement, and that Drywall was “bound by the
negotiations and the agreements of those parties.” The parties
resolved the remaining grievance issues outside of arbitration.
Accordingly, on July 22, 2013, the Board issued its “Final

properly indentured apprentices”; and (6) “failed to provide Union with
requested information necessary to ensure contract compliance.”
             SWRCC V. DRYWALL DYNAMICS                       7

Award,” which restated its previous findings and confirmed
that there were no remaining issues.

    The Union filed a petition in the district court seeking to
confirm the arbitration award. After Drywall filed a petition
to vacate the award, the district court issued an order denying
the Union’s petition and granting Drywall’s.

    In so ruling, the district court acknowledged that
arbitration awards are “entitled to substantial deference from
the district court,” but nonetheless held the award
unenforceable, on two bases. First, the court ruled that the
arbitration panel’s interpretation of the contracts was not
“plausible.” The 2009 MOU provided that it would apply
only to those members of the Association who affirmatively
agreed to it, but “[n]o evidence was presented to the Panel
that Drywall” did so, “nor did the Panel make a finding of
fact that Drywall consented to the extension of the
2006–2010 MLA.” Absent such a finding, the court
concluded, “it was not plausible for the Panel to find that the
extension of the MLA was binding on Drywall.” Second,
relying on the Supreme Court’s decision in Charles D.
Bonanno Linen Service, Inc. v. NLRB, 454 U.S. 404 (1982),
the court held that the arbitration award violated “a clear
public policy in favor of voluntary relationships among
employers and multi-employer bargaining units” because
“[a]s interpreted by the Panel, the agreements gave WWCCA
absolute authority to negotiate on Drywall’s behalf and
perpetually bind it to extensions of the MLA without further
consent by Drywall.”

   This appeal followed.
8             SWRCC V. DRYWALL DYNAMICS

                       DISCUSSION

    Beginning with the Supreme Court’s Steelworkers
Trilogy, the unique and critical role played by arbitration in
the context of a collective bargaining agreement has been a
bedrock of national labor policy. See United Steelworkers of
Am. v. Am. Mfg. Co., 363 U.S. 564 (1960); United
Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S.
574 (1960); United Steelworkers of Am. v. Enterprise Wheel
& Car Corp., 363 U.S. 593 (1960). As Warrior & Gulf
explained, “the grievance machinery under a collective
bargaining agreement is at the very heart of the system of
industrial self-government.” 363 U.S. at 581. Indeed,
arbitration in the labor context is more than a mechanism for
resolving disputes. Instead, the “processing of disputes
through the grievance machinery is actually a vehicle by
which meaning and content are given to the collective
bargaining agreement.” Id.

    Because of the centrality of the arbitration process to
stable collective bargaining relationships, courts reviewing
labor arbitration awards afford a “nearly unparalleled degree
of deference” to the arbitrator’s decision. Stead Motors of
Walnut Creek v. Auto. Machinists Lodge No. 1173, Int’l Ass’n
of Machinists & Aerospace Workers, 886 F.2d 1200, 1204–05
(9th Cir. 1989) (en banc). This deference applies both to the
arbitrator’s interpretation of the parties’ agreement and to his
findings of fact. Id. at 1207.

    With regard to contractual interpretation, as the Supreme
Court has admonished, “the parties hav[e] authorized the
arbitrator to give meaning to the language of the agreement,
[so] a court should not reject an award on the ground that the
arbitrator misread the contract.” United Paperworkers Int’l
              SWRCC V. DRYWALL DYNAMICS                           9

Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987). We
have taken this instruction to heart, explaining that “even if
we were convinced that the arbitrator misread the contract or
erred in interpreting it, such a conviction would not be a
permissible ground for vacating the award.” Va. Mason
Hosp. v. Wash. State Nurses Ass’n, 511 F.3d 908, 913–14
(9th Cir. 2007) (footnote omitted). Indeed, “[s]ince the labor
arbitrator is designed to function in essence as the parties’
surrogate, he cannot ‘misinterpret’ a collective bargaining
agreement.” Stead Motors, 886 F.2d at 1205. In this sense,
“his award is their contract.” Id. (quoting Theodore J. St.
Antoine, Judicial Review of Labor Arbitration Awards,
75 Mich. L. Rev. 1137, 1140 (1977)). Thus, “as long as the
arbitrator is even arguably construing or applying the contract
and acting within the scope of his authority,” his award must
be upheld. Misco, 484 U.S. at 38. A court may intervene
only when an arbitrator’s award fails to “draw[] its essence
from the collective bargaining agreement,” such that the
arbitrator is merely “dispens[ing] his own brand of industrial
justice.” Enterprise Wheel, 363 U.S. at 597.

       Similarly, “[t]he parties did not bargain for the facts to be
found by a court, but by an arbitrator chosen by them.”
Misco, 484 U.S. at 45. “[I]mprovident, even silly, factfinding
. . . is hardly a sufficient basis for disregarding what the agent
appointed by the parties determined to be the historical facts.”
Id. at 39. Because of this precept, “a court is barred from
disregarding the arbitrator’s factual determinations, let alone
supplementing them with its own.” Stead Motors, 886 F.2d
at 1207.

    To be sure, there are limited circumstances in which the
vacatur of a labor arbitration award is justified. We have
recognized four such circumstances:
10           SWRCC V. DRYWALL DYNAMICS

       (1) when the award does not draw its essence
       from the collective bargaining agreement and
       the arbitrator is dispensing his own brand of
       industrial justice; (2) where the arbitrator
       exceeds the boundaries of the issues submitted
       to him; (3) when the award is contrary to
       public policy; or (4) when the award is
       procured by fraud.

S. Cal. Gas Co. v. Util. Workers Union of Am., Local 132,
AFL-CIO, 265 F.3d 787, 792–93 (9th Cir. 2001). The district
court concluded that the first and third of these circumstances
obtain in the present case. Drywall further urges that the
arbitrator’s decision “excced[ed] the boundaries of the issues
submitted to him.” We discuss each proffered basis for
vacatur in turn.

I. The Scope of the Grievance

    We address as an initial matter whether the Adjustment
Board’s decision to consider the termination issue, even
though it was not one of the issues initially articulated,
provides grounds to vacate the Board’s determination on that
issue. We agree with the district court that it does not.

    Once a matter is submitted to arbitration, “‘procedural
questions which grow out of the dispute and bear on its final
disposition’ are presumptively not for the judge, but for an
arbitrator, to decide.” Howsam v. Dean Witter Reynolds, Inc.,
537 U.S. 79, 84 (2002) (quoting John Wiley & Sons, Inc. v.
Livingston, 376 U.S. 543, 557 (1964). “So, too, the
presumption is that the arbitrator should decide ‘allegation[s]
of waiver, delay, or a like defense to arbitrability.’” Id.
              SWRCC V. DRYWALL DYNAMICS                       11

(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24–25 (1983)).

    In this case, in response to the Union’s request on the first
day of arbitration hearings that the Board decide whether
Drywall’s contract with the union was still in existence or had
terminated, Drywall moved to dismiss the termination issue
“based on . . . timeliness” and argued that the Union’s
contention was “procedurally barred.” The Board, in its first
Interim Award, noted Drywall’s objection but ruled that the
termination issue “will be decided by the panel because the
issue is related to the overall grievance and because the
contractor presented evidence and argument on this issue.”
The Board’s rejection of Drywall’s timeliness argument was
a quintessentially procedural decision to which the district
court was required to—and properly did—defer.

II. The District Court’s “Plausibility” Ruling

    The 2009 MOU between the Union and the Association
provided that it would apply to “WWCCA Drywall/Lathing
Conference Members who affirmatively agree to this
Agreement.” The district court concluded that it was
“implausible” for the arbitration panel to interpret this
agreement as applying to Drywall, for two reasons: first,
evidence before the district court indicated that Drywall was
not a member of the Association at the time of the MOU;
second, no evidence was presented to the Adjustment Board
indicating that Drywall affirmatively agreed to be bound by
the extension.

    The district court erred in two respects in making its
“plausibility” ruling.    Most fundamentally, the court
conducted the wrong inquiry. Under controlling Supreme
12            SWRCC V. DRYWALL DYNAMICS

Court precedent, a court may not evaluate an arbitrator’s
interpretation of an agreement to determine whether it meets
some judicial standard of acceptability as a construction of
the contract. Rather, “as long as the arbitrator is even
arguably construing or applying the contract and acting
within the scope of his authority, that a court is convinced he
committed serious error does not suffice to overturn his
decision.” Misco, 484 U.S. at 38. “It is only when the
arbitrator strays from interpretation and application of the
agreement and effectively ‘dispense[s] his own brand of
industrial justice’ that his decision may be unenforceable.”
Major League Baseball Players Ass’n v. Garvey, 532 U.S.
504, 509 (2001) (quoting Enterprise Wheel, 363 U.S. at 597).
The question is not, therefore, whether the arbitrator’s
interpretation of the agreement was “plausible,” in the sense
of one a court might render, but instead whether he made any
interpretation or application of the agreement at all. If so, the
court’s inquiry ends.

    The district court’s error is perhaps understandable in
light of language from a long line of Ninth Circuit cases
articulating Enterprise Wheel’s admonition that an
arbitrator’s decision must “draw its essence” from the
agreement as requiring a “plausible interpretation of the
contract.” Sheet Metal Workers’ Int’l Ass’n Local Union No.
359 v. Madison Indus., Inc. of Ariz., 84 F.3d 1186, 1190 (9th
Cir. 1996); see also, e.g., Ass’n of W. Pulp & Paper Workers,
Local 78 v. Rexam Graphic, Inc., 221 F.3d 1085, 1090 (9th
Cir. 2000); United Food & Commercial Workers Union,
Local 1119, AFL-CIO v. United Markets, Inc., 784 F.2d 1413,
1415 (9th Cir. 1986); Holly Sugar Corp. v. Distillery,
Rectifying, Wine & Allied Workers Int’l Union, AFL-CIO,
412 F.2d 899, 903 (9th Cir. 1969). As we have carefully
explained, however, “the ‘plausibility’ inquiry does not
             SWRCC V. DRYWALL DYNAMICS                      13

represent an independent avenue for a merits-based attack on
an arbitral award. Rather, it is nothing more than another
way of formulating the old rule of Enterprise Wheel that an
arbitrator may not ‘dispense his own brand of industrial
justice.’” Haw. Teamsters & Allied Workers Union, Local
996 v. United Parcel Serv., 241 F.3d 1177, 1183 (9th Cir.
2001). Hawaii Teamsters reiterated that the relevant inquiry
is simply whether “the arbitrator’s decision concerns
construction of the contract,” not an evaluation of the merits
of that construction. Id. (quoting Enterprise Wheel, 363 U.S.
at 599) (emphasis added in Hawaii Teamsters).

    As a description of the appropriate standard for evaluating
a labor arbitration award, the word “plausible” is thus
somewhat misleading. It could suggest some inquiry into the
quality of the arbitrator’s interpretation. The likelihood of
such a misunderstanding, we fear, has been exacerbated in
recent years. In the wake of the Supreme Court’s decision in
Ashcroft v. Iqbal, 556 U.S. 662 (2009), the term “plausible”
has taken on additional coloration in legal parlance. Iqbal
described the “plausibility” determination it requires at the
motion-to-dismiss stage of litigation as “a context-specific
task that requires the reviewing court to draw on its judicial
experience and common sense” in determining the legal
sufficiency of a federal court complaint. Id. at 679. Such an
active, substantive judicial role is in sharp contrast to the
judicial “hands off” approach long required in labor
arbitration cases, as long as the arbitrator engages with the
interpretive task.

    We conclude that it is time for us to retire the use of
“plausibility” as a term to describe the courts’ role in
reviewing labor arbitration awards. We do not, of course,
propose any substantive change to the settled law in this area,
14            SWRCC V. DRYWALL DYNAMICS

nor could we. We merely reiterate, and emphasize, the
fundamental concept Hawaii Teamsters articulated, drawing
on decades of Supreme Court jurisprudence: the quality—that
is, the degree of substantive validity—of an arbitrator’s
interpretation is, and always has been, beside the point.
Instead, the appropriate question for a court to ask when
determining whether to enforce a labor arbitration award
interpreting a collective bargaining agreement is a simple
binary one: Did the arbitrator look at and construe the
contract, or did he not?

    Here, there can be little doubt that the Adjustment
Board’s decision was grounded in its reading of the parties’
agreements. There are three paragraphs in the Board’s
second Interim Award that directly address its understanding
of the contract, including why it regarded Drywall as bound
by the 2009 MOU extending the term of the agreement. The
Board looked to the provisions of the MOU in determining
that both the Union and the Association had given
consideration for the agreement, and it read the Memorandum
Agreement between the Union and Drywall as binding
Drywall to future negotiations between the Union and the
Association, unless and until Drywall timely terminated.

    The Adjustment Board also interpreted the agreements in
light of the past practices of the parties. Drywall had acceded
to the extension of the initial MLA until June 2010, despite
the fact that it had not affirmatively agreed to that extension.
The Board concluded that “in light of the fact that the
contractor had been bound” by those prior negotiations, it was
also bound by the extension of the contract until June 2011.
The Supreme Court has explained that “the industrial
common law—the practices of the industry and the shop—is
equally a part of the collective bargaining agreement although
              SWRCC V. DRYWALL DYNAMICS                      15

not expressed in it.” Warrior & Gulf, 363 U.S. at 581–82.
The Adjustment Board based its decisions on the parties’
agreements, both as written and as informed by past practice.
The district court should have deferred to the panel’s
interpretation rather than inquiring into its substantive merit.

     The district court further erred when it both faulted the
Adjustment Board for failing to make any finding regarding
Drywall’s agreement to the MOU and improperly made its
own findings on that point. Courts “do not require labor
arbitrators to make the sorts of explicit or exhaustive
‘findings of fact’ we demand of district courts; likewise, the
reasons for arbitral rulings need not be spelled out in detail.
Indeed, ‘[a]rbitrators have no obligation . . . to give their
reasons for an award’ at all.” Stead Motors, 886 F.2d at 1206
(quoting Enterprise Wheel, 363 U.S. at 598). That the
Adjustment Board made no explicit factual findings
concerning Drywall’s consent to the MOU was not, therefore,
a proper basis for vacating the award. As long as the panel
was applying the agreement, the district court could not fault
it for “improvident, even silly, factfinding.” Misco, 484 U.S.
at 39. Nor may a court “infer the non-existence of a
particular reason merely from the award’s silence on a given
issue.” Stead Motors, 886 F.2d at 1213; see also Aramark
Facility Servs. v. Serv. Emps. Int’l Union, Local 1877, AFL
CIO, 530 F.3d 817, 830 (9th Cir. 2008) (explaining that it
was “improper” for a district court to “disturb[] the
arbitrator’s implicit conclusion”).

   Finally, compounding the error, the district court
explicitly made its own findings—“Drywall was not a
member of the WWCAA” and“[n]o . . . consent was given”
by Drywall. The law requires deference to an arbitrator’s
decision even where a court “believe[s] that the decision finds
16              SWRCC V. DRYWALL DYNAMICS

the facts . . . erroneously.” Stead Motors, 886 F.2d at 1204.
Because “[t]he parties did not bargain for the facts to be
found by a court, but by an arbitrator chosen by them,”
Misco, 484 U.S. at 45, the district court erred in vacating the
award on this basis.

III.     The Public Policy Exception

    The labor arbitration case law has long recognized a very
limited “public policy exception” to the stringent rule
ordinarily requiring courts’ enforcement of arbitrators’
decisions interpreting and applying collective bargaining
agreements. See W.R. Grace & Co. v. Local Union 759, Int’l
Union of United Rubber, Cork, Linoleum & Plastic Workers
of Am., 461 U.S. 757, 766 (1983); Stead Motors, 886 F.2d at
1209–10. This exception is “a specific application of the
more general doctrine, rooted in the common law, that a court
may refuse to enforce contracts that violate law or public
policy.” Misco, 484 U.S. at 42.

    “[T]he public policy exception is narrow,” E. Associated
Coal, 531 U.S. at 63, and “courts should be reluctant to
vacate arbitral awards on public policy grounds,” Ariz. Elec.
Power Co-op., Inc. v. Berkeley, 59 F.3d 988, 992 (9th Cir.
1995). Specifically, a court may vacate an arbitration award
that “run[s] contrary to an explicit, well-defined, and
dominant public policy, as ascertained by reference to
positive law and not from general considerations of supposed
public interests.” E. Associated Coal, 531 U.S. at 63 (citing
Misco, 484 U.S. at 43).2

 2
   As Eastern Associated Coal noted, “in principle, . . . courts’ authority
to invoke the public policy exception is not limited solely to instances
where the arbitration award itself violates positive law.” 531 U.S. at 63.
                 SWRCC V. DRYWALL DYNAMICS                                17

    In this case, the district court determined that the
arbitrator’s award violated “a clear public policy in favor of
voluntary relationships among employers and multi-employer
bargaining units.” The court pointed to two sources for this
policy: the Supreme Court’s decision in Bonanno, 454 U.S.
404, and the Eighth Circuit’s decision in Action Electric, Inc.
v. Local Union No. 292, International Brotherhood of
Electrical Workers, 856 F.2d 1062 (8th Cir. 1988). Neither
case relied upon by the district court establishes an “explicit,
well-defined, and dominant public policy” sufficient to justify
vacating the arbitration award here.

    To be sure, each case recognizes in general terms that
“the voluntary nature of multiemployer bargaining” is a
significant interest that merits consideration. But each case
also emphasizes that an employer’s right to withdraw from a
multiemployer unit is one of two competing interests. The
other is “the stability of multiemployer units,” which must, in
each generic circumstance, be weighed against the
voluntariness value. Bonanno, 454 U.S. at 410; see also
Action Elec., 856 F.2d at 1065 (recognizing “two key
legitimate interests underlying multi-employer bargaining:
the voluntary nature of the association and the need for
stability of the multi-employer unit”). Indeed, in Bonanno,
the ultimate balance tipped in favor of the stability interest,
with the Court upholding an unfair labor practice charge

Justice Scalia observed in a concurring opinion, however, that “[t]here is
not a single decision, since this Court washed its hands of general
common-lawmaking authority, in which we have refused to enforce on
‘public policy’ grounds an agreement that did not violate, or provide for
the violation of, some positive law.” Id. at 68 (Scalia, J., concurring in the
judgment) (citation omitted). “Positive law typically consists of enacted
law — the codes, statutes, and regulations that are applied and enforced
in the courts.” Black’s Law Dictionary (10th ed. 2014).
18           SWRCC V. DRYWALL DYNAMICS

against an employer who withdrew from a multiemployer
association during a bargaining impasse.

    Where, as here, there are two competing policies
applicable with regard to a single matter, neither can be a
“dominant” policy, and therefore neither can drive a public
policy refusal to enforce an arbitration award. This
conclusion reflects the Supreme Court’s approach in Eastern
Associated Coal, which indicated that it is improper to vacate
an arbitrator’s decision on public policy grounds where there
are countervailing policy considerations. See 531 U.S. at
65–66. In Eastern Associated Coal, an arbitrator ordered
reinstatement of a worker who had been discharged after
testing positive for marijuana. Id. at 59. The employer sued,
seeking to have the award vacated on the ground that it
“contravened a public policy against the operation of
dangerous machinery by workers who test positive for
drugs.” Id. at 61. The employer argued that this policy could
be discerned in a number of statutory provisions requiring
suspension of workers who have operated commercial
vehicles while under the influence of drugs. Id. at 63–64.
The Court concluded, however, that when read in context,
“these expressions of positive law embody several relevant
policies.” Id. (emphasis added). In addition to safety
concerns, the statutes included a “policy favoring
rehabilitation of employees who use drugs.” Id. Moreover,
“the relevant statutory and regulatory provisions must be read
in light of background labor law policy that favors
determination of disciplinary questions through arbitration
when chosen as a result of labor-management negotiation.”
Id. As a result, the arbitrator’s award was “not contrary to
these several policies, taken together.” Id. (emphasis added).
             SWRCC V. DRYWALL DYNAMICS                      19

    Similarly, even if, in this case, the arbitrator’s decision
disserved a policy favoring voluntary relationships between
employers and multi-employer bargaining units, the decision
promoted the policy favoring stability of the multi-employer
unit. And in any case, as in Eastern Associated Coal, these
policies must be read in light of the background labor law
policy, which “reflect[s] a decided preference for private
settlement of labor disputes without the intervention of
government.” Misco, 484 U.S. at 37; see also 29 U.S.C.
§ 173(d) (“Final adjustment by a method agreed upon by the
parties is declared to be the desirable method for settlement
of grievance disputes arising over the application or
interpretation of an existing collective-bargaining
agreement.”). We therefore conclude that the district court
erred in vacating the panel’s award on this basis.

    Drywall urges us alternatively to affirm the district
court’s decision on the basis of a separate public policy in
favor of employee free choice in union representation.
According to the company, the panel’s award effectively
locked Drywall’s employees into ongoing union
representation without the support of a majority of the
bargaining unit.

     Drywall’s argument on this point hinges on its claim that
its relationship with the Union is governed by § 8(f) of the
National Labor Relations Act (“NLRA”), 29 U.S.C. § 158(f),
rather than § 9(a), 29 U.S.C. § 159(a). Normally, under
§ 9(a) of the NLRA, a union becomes the exclusive
bargaining representative for a group of employees when it is
“designated or selected” for that purpose “by the majority of
the employees in a [bargaining unit].” 29 U.S.C. § 159(a).
By contrast, § 8(f) “allows construction industry employers
and unions to enter into agreements setting the terms and
20              SWRCC V. DRYWALL DYNAMICS

conditions of employment for the workers hired by the
signatory employer without the union’s majority status first
having been established in the manner provided for under § 9
of the Act.” Jim McNeff, Inc. v. Todd, 461 U.S. 260, 266
(1983). A § 8(f) “prehire agreement” is “voidable and does
not have the same stature as a collective-bargaining contract
entered into with a union actually representing a majority of
the employees and recognized as such by the employer.”
NLRB v. Local Union No. 103, Int’l Ass’n of Bridge,
Structural & Ornamental Iron Workers, AFL-CIO, 434 U.S.
335, 341 (1978).3

    The Memorandum Agreement between Drywall and the
Union provides that Drywall has recognized the Union as the
majority representative of its employees; “the Union has
provided, or has offered to provide, evidence of its status as
the majority representative” of Drywall’s employees; and
“the parties intend to and are establishing a collective
bargaining relationship under Section 9” of the NLRA.
Drywall, however, asserts that notwithstanding these
provisions, the Union never made an affirmative showing of
majority support. Given that “bargaining relationships in the
construction industry are presumed to be covered by section
8(f),” Allied Mech. Servs., Inc. v. NLRB, 668 F.3d 758, 766

  3
     Following the National Labor Relations Board’s decision in John
Deklewa & Sons, 282 NLRB No. 184, 1385 (1987), enforced sub nom.
Int’l Ass’n of Bridge, Structural & Ornamental Iron Workers, Local 3 v.
NLRB, 843 F.2d 770 (3d Cir. 1988), however, a § 8(f) agreement cannot
be unilaterally repudiated during the term of the agreement. “[U]pon the
contract’s expiration, the signatory union will enjoy no majority
presumption and either party may repudiate the 8(f) relationship.” Id. at
1386; see also Mesa Verde Constr. Co. v. N. Cal. Dist. Council of
Laborers, 861 F.2d 1124, 1125–26 (9th Cir. 1988) (en banc) (adopting the
Deklewa rule).
             SWRCC V. DRYWALL DYNAMICS                      21

(D.C. Cir. 2012), Drywall argues, absent a showing of
majority support, contractual language alone is insufficient to
establish a § 9(a) relationship. Compare In re Staunton Fuel
& Material, Inc., 335 NLRB No. 59 (2001) (holding that a
written agreement alone can establish a § 9(a) relationship if
certain conditions are met), with Nova Plumbing, Inc. v.
NLRB, 330 F.3d 531, 536–37 (D.C. Cir. 2003) (holding that
contractual language alone cannot establish a § 9(a)
relationship where the union actually lacks majority support),
and Madison Indus., Inc. & Dist. Council of Iron Workers of
the State of Cal. & Vicinity, 349 NLRB No. 114, 1308 n.9
(2007) (noting that Nova Plumbing had “called the viability
of Staunton Fuel into question”).

    We need not resolve whether the agreement between
Drywall and the Union was a § 9(a) or a § 8(f) agreement.
For present purposes, it is sufficient that there is nothing in
the record to indicate one way or another whether the
employees did or did not want union representation. Drywall
submitted no evidence to the arbitration panel to substantiate
its claim that the Union lacked majority status, nor did it
introduce any evidence pertaining to whether its relationship
with the Union was governed by § 9(a) or § 8(f). As
explained above, neither we nor the district court may engage
in independent factfinding on these issues.

    Moreover, Drywall fails to recognize that, if its
relationship with the Union were governed by § 8(f), the
employees, if dissatisfied with their union representation,
could call for an election at any time, see Deklewa,
282 NLRB at 1377, belying Drywall’s contention that the
extension of the agreement locked unwilling employees into
union representation. Even if Drywall’s factual claims were
established, therefore, they would not indicate a violation of
22           SWRCC V. DRYWALL DYNAMICS

a public policy in favor of employee free choice as to union
representation. The district court correctly rejected this
argument.

                      CONCLUSION

    Over 25 years ago, an en banc panel of this court
recognized that when courts review the decisions of
arbitrators in the context of collective bargaining agreements,
“there may be a tendency for judges, often with the most
unobjectionable intentions, to exceed the permissible scope
of review and to reform awards in our own image of the
equities or the law.” Stead Motors, 886 F.2d at 1204. The
persistence of the “plausibility” language in this area of our
circuit’s law has unwittingly exacerbated this tendency, as the
present case demonstrates. As in Stead Motors, therefore, we
once again “reemphasize the unique character of an
arbitrator’s function and the nearly unparalleled degree of
deference we afford his decisions,” id. at 1205, and reverse
the decision of the district court.

     REVERSED.