Court Opinion

ID: 9859662
Source: CourtListenerOpinion
Date Created: 2023-09-24 22:17:29.956574+00
Date Added: 2024-06-11T11:12:02.986125
License: Public Domain

McCORMICK, Justice.
We granted further review of a court of appeals decision reversing a district court judgment upholding the award of an arbitrator in a teacher grievance proceeding. Plaintiff Iowa City Community School District and defendant Iowa City Education Association provided in their collective bargaining agreement for final and binding arbitration of teacher grievances. Applying the standard of judicial review adopted in Sergeant Bluff-Luton Education Association v. Sergeant Bluff-Luton Community School District, 282 N.W.2d 144, 147-48 (Iowa 1979), we find that the issue was arbitrable and that the arbitrator’s decision drew its essence from the parties’ contract. In addition, we reject the district’s contention that enforcement of the award should be denied on public policy grounds. Therefore we vacate the decision of the court of appeals and affirm the district court.
The collective bargaining agreement for the 1979-80 school year contained grievance procedures culminating in arbitration for complaints “of an alleged violation, misinterpretation, or misapplication of ... specific provisions” of the contract. A teacher salary schedule was among the specific contract provisions. The schedule was based on years of teaching and educational achievement. Teachers were entitled to step increases upon completion of each additional year of service, “subject to the right of the district to withhold salary increases for unsatisfactory performance.” An across-the-board.salary increase was superimposed on the schedule in the 1980-81 contact, which otherwise contained the same relevant terms.
The present problem arose in March 1980 when the district notified Richard D. Bristol, a social studies teacher, that his 1980-81 salary would be frozen at the 1979-80 level of $19,205 because of “unsatisfactory service.” The effect of the district action was to deny Bristol the benefit of the across-the-board increase that would have raised his salary to $21,236.
The association pursued grievance procedures in Bristol’s behalf, resulting in a favorable arbitration decision. Besides sustaining the grievance, the arbitrator ordered the district to make retroactive payment of the salary increase. The district filed a district court petition asking that the arbitrator’s order be vacated and its *141enforcement enjoined. The association resisted and requested enforcement. After hearing, the district court rejected the district’s attack and ordered enforcement of the award. Upon appeal, the court of appeals reversed, and we granted further review.
The questions are whether the issue of unsatisfactory performance was arbitrable, whether the award drew its essence from the collective bargaining agreement, and whether enforcement should be denied on public policy grounds.
I. Arbitrability. In Sergeant Bluff-Luton this court said: “The threshold question in reviewing an arbitrator’s award is to determine whether the issue in dispute is one which the parties had agreed to settle by arbitration.” 282 N.W.2d at 147. The district does not challenge the arbitra-bility of teacher grievances under the contract. It does contend, however, that the contract does not give an arbitrator the authority to say what constitutes “unsatisfactory performance.” The district asserts that the issue is reserved to management and is thus not arbitrable.
Arbitrability is a legal issue that is to be determined by interpretation and construction of the parties’ contract. Hawkins/Korshoj v. State Board of Regents, 255 N.W.2d 124, 127 (Iowa 1977). Because arbitration is favored as a means of settling civil disputes without the expense, and delay of litigation, arbitrability will be recognized “unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.” Sergeant Bluff-Luton, 282 N.W.2d at 147-48, quoting United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409, 1417-18 (1960).
In the present ease, the district contends it had the exclusive right to determine what constitutes “unsatisfactory performance.” The district argues this result is dictated by this court’s decisions giving a narrow interpretation to the list of mandatory bargaining topics in Iowa Code section 20.9 (1983). See, e.g., Charles City Community School District v. PERB, 275 N.W.2d 766, 773 (Iowa 1979). This argument overlooks the concomitant favorable legislative view of arbitration as a means of resolving grievances noted by this court in Sergeant Bluff-Luton. See 282 N.W.2d at 147. Moreover, the restrictive interpretation of mandatory bargaining topics does not inhibit voluntary bargaining and agreement on permissive topics.
The district’s reliance on the statutory delineation of employer rights in Code section 20.7 is similarly misplaced. This court recognized the right of parties to agree on submission of teacher termination issues to arbitration in Shenandoah Education Association v. Shenandoah Community School District, 337 N.W.2d 477, 480-81 (Iowa 1983). No difference in principle exists in the present situation.
Finally, nothing in the contract provides a positive assurance that the dispute is not arbitrable. The district’s right to withhold a salary increase depends on the teacher’s “unsatisfactory performance.” The contract does not define the term. Ar-bitrable grievances include any complaint of “alleged ... misinterpretation, or misapplication of ... specific provisions” of the agreement. Bristol’s grievance was based on a complaint that the district misinterpreted and misapplied the salary freeze provision. The contract contains no express limitation on arbitrability of the issue. This is so despite an express contractual provision limiting arbitrability of other issues including just cause for termination. The absence of an express exclusion supports finding exclusion was not intended. See Carey v. General Electric Co., 315 F.2d 499, 506 (2d Cir.1963), cert. denied, 377 U.S. 908, 84 S.Ct. 1162, 12 L.Ed.2d 179 (1964).
The district alleges an express prohibition is manifested in a contract provision that the arbitrator “shall not amend, modify, nullify, ignore, or add to the provisions of the Agreement.” This provision mirrors *142the statutory provision in Code section 20.-18. The statutory provision also states: “Negotiated procedures may provide for binding arbitration of public employee grievances and of disputes over the interpretation and application of existing agreements.” We have consistently recognized the distinction between ascertaining the proper legal meaning of an agreement and changing its legal meaning. See generally Hamilton v. Wosepka, 261 Iowa 299, 154 N.W.2d 164 (1967). The present grievance required the arbitrator to interpret and apply the agreement, but it did not require a change or addition to it. Arbitrability is not precluded in these circumstances. See West Jefferson Hills School District v. Jefferson Federation of Teachers, 61 Pa. Commw. 374, 378, 433 A.2d 643, 645 (1981); Civil Service Employees Association v. Lombard, 50 A.D.2d 708, 709, 374 N.Y.S.2d 894, 896-97 (1975).
We hold that the collective bargaining agreement made the issue of unsatisfactory teacher performance arbitrable. This includes authority of the arbitrator, pursuant to Code section 20.18, to interpret and apply the relevant contract provision.
II. Authority for the award. In Sergeant Bluff-Luton, this court said: “Once arbitrability of [an] issue is established, the sole question ... is whether the arbitrator’s award ‘drew its essence’ from the collective bargaining agreement.” 282 N.W.2d at 148. The district seeks to upset the arbitrator’s award on the ground it did not “draw its essence” from the agreement.
We relied on relevant federal authority in adopting a narrow scope of judicial review of arbitration decisions in Sergeant Bluff-Luton: “It is not the function of the court to determine whether the arbitrator has resolved the grievance correctly.” 282 N.W.2d at 148. This court also said:
The “essence” of a collective bargaining agreement is an extremely broad concept. It requires a casting aside of traditional views of contract law in favor of a multitude of other considerations, including not only the written and unwritten agreements, themselves, but also the practices of the parties or the industry in general.
Id. at 150. The court quoted with approval the following from Warrior & Gulf Navigation Co., 363 U.S. at 581-82, 80 S.Ct. at 1352, 4 L.Ed.2d at 1417:
The labor arbitrator’s source of law is not confined to the express provisions of the contract, as the industrial common law — the practices of the industry and the shop — is equally a part of the collective bargaining agreement although not expressed in it. The labor arbitrator is usually chosen because of the parties’ confidence in his knowledge of the common law of the shop and their trust in his personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment.
282 N.W.2d at 150, This court added:
The essence of the agreement even draws upon other vaguely defined concepts of the particular industry having their roots in considerations of fairness, reasonableness and practicality.
Id. As a consequence the court held in Sergeant Bluff-Luton that an arbitrator did not depart from his authority in resolving a salary schedule grievance by asserting an inability to interpret the parties’ contract and relying on implied management rights and responsibilities as shown by the practices of the district in applying the salary schedule to other teachers. Id.
The role of an arbitrator has been authoritatively described as follows:
Put most simply, the arbitrator is the parties’ officially designated “reader” of the contract. He (or she) is their joint alter ego for the purpose of striking whatever supplementary bargain is necessary to handle the anticipated unanticipated omissions of the initial agreement. Thus, a “misinterpretation” or “gross mistake” by the arbitrator becomes a contradiction in terms. In the absence of fraud or an overreaching of authority on the part of the arbitrator, he is speaking for the parties, and his award is their contract. That is what the “final and *143binding’ language of the arbitration clause says. In sum, the arbitrator’s award should be treated as though it were a written stipulation by the parties setting forth their own definitive construction of the labor contract, (emphasis in original).
St. Antoine, Judicial Review of Labor Arbitration Awards: A Second Look at Enterprise Wheel and Its Progeny, 75 Mich. L.Rev. 1137, 1140 (1977).
Unless the parties limit their submission, the arbitrator becomes the final judge of the facts and law:
In agreeing to resolve disputes by arbitration, parties choose to substitute a private solution for litigation in courts of law. Since the appointment and authority of the arbitrator are under the control of the parties, they can by the submission agreement expressly regulate (but do not often do so) the extent to which he is to consider applicable law. Thus, for instance, they may expressly direct him to decide the case consistent with applicable law, or they may restrict his authority to interpret the law....
Unless the parties specifically limit the powers of the arbitrator in deciding various aspects of the issue submitted to him, it is often presumed that they intend to make him the final judge on any questions which arise in the disposition of the issue, including not only questions of fact but also questions of contract interpretation, rules of interpretation, and questions, if any, with respect to substantive law.
P. Elkouri & E. Elkouri, How Arbitration Works 321 (3d ed. 1973). Mistakes of either fact or law are among the contingencies the parties assume when they submit a dispute to arbitration. 5 Am.Jur.2d Arbitration and Award § 167, at 644 (1962). The United States Supreme Court has summarized the role of courts in reviewing arbitration awards:
Arbitrators are judges chosen by the parties to decide the matters submitted to them, finally and without appeal. As a mode of settling disputes, it should receive every encouragement from courts of equity. If the award is within the submission, and contains the honest decision of the arbitrators, after a full and fair hearing of the parties, a court of equity will not set it aside for error, either in law or fact. A contrary course would be a substitution of the judgment of the chancellor in place of the judges chosen by the parties, and would make an award the commencement, not the end, of litigation.
Burchell v. Marsh, 58 U.S. (17 How.) 344, 349, 15 L.Ed. 96, 99 (1855). The collective bargain agreement' made the arbitrator’s award “final and binding” in this case. The agreement did not limit his authority to weigh the evidence or decide the law.
Despite the breadth of the arbitrator’s authority, the district contends he was not faithful to the submission. It asserts he ignored his obligation and dispensed “his own brand of industrial justice.” The district relies on the limitation stated by the Supreme Court in United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424, 1428 (1960):
Nevertheless, an arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator’s words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.
See Sergeant Bluff-Luton, 282 N.W.2d at 149.
The district then proceeds to dissect the arbitrator’s opinion in an effort to show he violated this precept. In doing so the district reads the arbitrator’s decision as if the arbitrator found Bristol’s performance unsatisfactory within the meaning of the agreement but nevertheless held in his favor. We disagree with the district’s reading of the decision. The arbitrator did not *144find that Bristol’s performance was unsatisfactory. Rather, the arbitrator merely noted that if the district were correct in its contention that the district had exclusive authority to decide what constitutes unsatisfactory performance he could not say the district’s actions were “arbitrary and unjustified” and “this matter ends there.” The arbitrator rejected this limitation on his substantive authority, and his position is consistent with our holding in division I of this opinion.
The district also quarrels with the meaning given the concept of unsatisfactory performance by the arbitrator. It accuses the arbitrator of saying a finding of unsatisfactory performance had to be based on averaging Bristol’s performance over his entire tenure rather than on evaluations in the period immediately preceding the decision to freeze his salary. Assuming, without deciding, this was the arbitrator’s interpretation, the agreement gave the arbitrator the task of defining the concept. That the arbitrator made a mistake, even a mistake of law, in arriving at his interpretation is not a basis for upsetting his decision. The district’s disagreement with the arbitrator’s view of the facts is similarly unavailing. We note that no record was kept of the testimony before the arbitrator. The record relied on by the district consists entirely of its documentary exhibits. Even if the district were relying on the whole record, however, it has misconceived the scope of judicial review.
Courts do not presume that an arbitrator has exceeded his authority merely because they disagree with the arbitrator’s reasoning:
An arbitrator’s award does “draw its essence from the collective bargaining agreement” so long as the interpretation can in some rational manner be derived from the agreement, “viewed in the light of its language, its context, and any other indicia of the parties’ intention; only where there is a manifest disregard of the agreement, totally unsupported by principle of contract construction and the law of the shop, may a reviewing court disturb the award.” [citations omitted]. Neither the correctness of the arbitrator’s conclusion nor the propriety of his reasoning is relevant to a reviewing court, so long as his award complies with the aforementioned standards to be applied by the reviewing court in exercising its limited function, [citation omitted].
Amoco Oil Co. v. Oil, Chemical & Atomic Workers International Union, Local 7-1, 548 F.2d 1288, 1294 (7th Cir.), cert. denied, 431 U.S. 905, 97 S.Ct. 1697, 52 L.Ed.2d 389 (1977).
Under this standard we cannot say the arbitrator ignored the agreement and dispensed “his own brand of industrial justice.” The present situation is not one where an arbitrator has recognized his award is contrary to express terms in a collective bargaining agreement but nevertheless disregards or modifies those terms in making his award. See, e.g., Sears, Roebuck and Co. v. Teamsters Local Union No. 243, 683 F.2d 154, 155-56 (6th Cir.1982), cert. denied, — U.S. —, 103 S.Ct. 1274, 75 L.Ed.2d 495 (1983); Mistletoe Express Service v. Motor Expressmen’s Union, 566 F.2d 692, 695 (10th Cir.1977); Litvak Packing Co. v. Amalgamated Butcher Workmen, Local No. 641, 455 F.Supp. 1180, 1182 (D.Colo.1978); Caribou Board of Education v. Caribou Teachers Association, 404 A.2d 212, 215 (Me.1979); Simpson v. North Collins Central School District, 56 A.D.2d 166, 171-72, 392 N.Y.S.2d 107, 110 (1977), aff'd, 43 N.Y.2d 976, 375 N.E.2d 776, 404 N.Y.S.2d 596 (1978); County of Allegheny v. Allegheny County Prison Employees Independent Union, 476 Pa. 27, 38-39, 381 A.2d 849, 855 (1977). The comment of this court in an earlier case is equally applicable here:
As is typical in an action arising from an arbitration decision, the complaining party urges the arbitrator exceeded his authority and altered terms of the employment contract. However, we believe it is clear the arbitrator merely interpreted the contract in a way the school district would not and in a manner we might *145not. But this does not render the arbitrator’s interpretation an alteration.
West Des Moines Community School District v. West Des Moines Educational Support Personnel, 265 N.W.2d 625, 626 (Iowa 1978).
The arbitrator obviously did not believe Bristol’s performance was unsatisfactory within the meaning of the agreement. This was the conclusion of the district court, and it is supported by the conclusions of the arbitrator:
The Grievant’s deficiencies, even taking at its flood the contentions advanced by the District, plainly are matters of degree and not of substance. The District is to be commended for its striving to have top teaching performance according to the lights of its supervisors and administrators at the time. However, the principles of teacher tenure would be illusory indeed if these were based solely upon whims, preferences and prejudices of the moment without regard to the long-term standards of performance, especially in connection with a teacher whose attitudes and sincere endeavor are not put in question.
We may disagree with the arbitrator. We may believe adequate past performance or long tenure should not prevent freezing the salary of a teacher whose evaluations are poor for three consecutive years. The issue, however, is not for the court to decide. It inheres in the dispute concerning unsatisfactory performance that was submitted to final and binding arbitration.
The arbitrator’s decision in this case was well within the principles applied in upholding arbitration awards in analogous situations. See, e.g., Mooge v. District 8, International Association of Machinists, 454 F.2d 510, 513 (7th Cir.1971); United Food & Commercial Workers International, Local Union No. 634, v. Gold Star Sausage Co., 487 F.Supp. 596, 598 (D.Colo.1980), aff'd, 109 L.R.R.M. (BNA) 2779 (10th Cir. July 13,1981). Board of Education of Norwood-Norfolk Central School District v. Hess, 49 N.Y.2d 145, 151-52, 400 N.E.2d 329, 331-32, 424 N.Y.S.2d 389, 391 (1979).
The decision cannot be upset without disregarding our limited scope of review. It would be necessary to rely on ambiguity in the arbitrator’s decision to infer that he exceeded his authority. But the presumption runs the other way, and we are obliged when in doubt to presume the arbitrator did his duty. The parties entrusted the task of interpretation and application of the unsatisfactory performance standard to the arbitrator, and it cannot fairly be said his decision was not rationally derived from the collective bargaining agreement.
III. Public policy. The district asserts that permitting an arbitrator to decide what constitutes unsatisfactory teacher performance is contrary to Iowa public policy. The state’s public policy is manifested in its statutes. See Miner v. Lovilia Independent School District, 212 Iowa 973, 977, 234 N.W. 817, 819 (1931). This court found no public policy impediment to arbitration of teacher termination decisions in Shenandoah Education Association. See 337 N.W.2d at 480-81. We find no public policy reason to reach a contrary conclusion here.
In Sergeant Bluff-Luton, the court said the General Assembly’s favorable view of arbitration is evident in the Public Employment Relations Act. See 282 N.W.2d at 147. Section 20.18 authorizes parties to agree on binding arbitration of disputes concerning the interpretation and application of collective bargaining agreements. No exception was made for issues of teacher performance.
We hold that the district court was correct. We vacate the court of appeals decision and affirm the district court.
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT AFFIRMED.
All Justices concur except REYNOLD-SON, C.J., and UHLENHOPP, McGIVE-RIN and SCHULTZ, JJ., who dissent.