Court Opinion

ID: 9733304
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:02:14.255596+00
Date Added: 2024-06-11T18:26:40.329739
License: Public Domain

PETERSON, Justice
(dissenting).
I respectfully dissent. The majority opinion relies on concepts of “common law of the shop” and “past practice” which are completely inapplicable to the case at bar. *794By misconstruing the role of these principles in contract interpretation, the majority opinion gives the arbitrator the absolute authority to rewrite the unambiguous provisions of the contract in order to achieve a result contrary to that expressly bargained for by the parties to the collective bargaining agreement.
The issue in this case is, indeed, a narrow one: Whether the arbitrator, by his award, clearly exceeded the powers conferred upon him by the plain language of the parties’ collective bargaining agreement.
The majority opinion, setting the stage for a different result, frames the issue in these terms:
The sole issue before this court on appeal is: did the arbitrator exceed his powers within the meaning of Minn.Stat. § 572.10, subd. 1(3) (1980) in issuing an award based upon the past practice of the parties where the practice conflicts with the clear and unambiguous language of the parties’ written agreement?1
The trial court, in vacating the award of the arbitrator, noted that “[t]he expressed terms of the contract very clearly evidence the mutual intention of the parties” and that “the arbitrator was clearly beyond his power when he made the award in question.” The trial court observed, moreover, that “to hold otherwise would jeopardize the integrity of all future negotiations between the parties.” I fully agree with the trial court and would affirm.
The majority opinion, as did the arbitrator, acknowledges that “the contractual language at issue [is] clear and unequivocal on its face” but holds that “[t]he district court erroneously utilized conventional contract principles in finding that the best evidence of the parties’ intentions was manifested by the words which the parties themselves employed to express their intent.” The majority indulges in a dubious search for the “essence” of the contract, and, not recognizing the inappropriate use of past practice in this case, discards the “traditional view that past practice may not be considered when the contractual language is clear and unambiguous.” This rationalization of an extraordinary result is destructive of the collective bargaining process and contributes to distrust of the arbitration process as an alternative to the judicial process. While today this result inures to the benefit of a small segment of employees in the large collective bargaining unit, it is a precedent that tomorrow may operate to the detriment of employees unable to rely upon explicit provisions of their bargaining agreement.2
Both the majority opinion and this dissenting opinion must start at the same point: The language of the collective bargaining agreement which the statement of the grievance claims was violated. First, Article X provides for the vacation sched*795ule, the meaning of which is not in dispute.3 Second, Article 1, Section 1.2, provides that “all personnel policies provided by this contract, unless otherwise stated, should be applied uniformly across the entire bargaining unit” (emphasis supplied). Third, the arbitrator’s authority, in a dispute concerning vacation entitlement, is limited by the terms of section 15.4:
(a) The arbitrator shall have no right to amend, modify, nullify, ignore, add to, or subtract from the terms and conditions of the contract. The arbitrator shall consider and decide only the specific issue(s) submitted in writing by the County and the employee and the Union, and shall have no authority to make a decision on any other issue not so submitted.
(b) The arbitrator’s decision shall be submitted in writing within thirty (30) days following close of the hearing or the submission of briefs, by the parties, whichever be later, unless the parties agree to an extension. The decision shall be based solely on the arbitrator’s interpretation or application of the express terms of this Agreement and to the facts of the grievance presented.
(Emphasis added.) The majority opinion does not stop there, however, but holds that the arbitrator properly and authoritatively determined that the “essence” of the contract gave its explicit language contrary meaning and that the county’s administrative error was an interpretative past practice which carves out an exception for these six, only, of the Real Estate Appraisers III.
The Uniform Arbitration Act, Minn.Stat. § 572.19, subd. 1 (1980), provides that “the court shall vacate an award where * * * (3) [t]he arbitrators exceeded their powers.”4 The scope of the arbitrator’s powers is a matter of contract to be determined from the reading of the parties’ arbitration agreement, Children’s Hospital, Inc. v. Minnesota Nurses Association, 265 N.W.2d 649, 652 (Minn.1978), and whether arbitral authority, circumscribed by the collective bargaining agreement, clearly has exceeded those bounds is a matter for judicial resolution.5 City of Bloomington v. Local No. 2828, AFSCME, 290 N.W.2d 598, 602 (Minn.1980). The arbitrator’s decision should not, thus, be considered as totally insulated from judicial review.
Although an arbitrator has considerable latitude in construing collective bargaining agreements, his powers should not be considered unlimited. He derives his authority from and is bound by the terms of the contract. The arbitrator’s role is restricted to that of contract reader; it does not give him a free hand to rewrite the parties’ agreement. St. Antoine, Judicial Review of Labor Arbitration Awards: A Second Look at Enterprise Wheel and its Progeny, 75 Mich.L.Rev. 1137, 1140 (1977); Kagel, Recent Supreme Court Decisions and the Arbitration Process in Arbitration and Public Policy (S. Pollard ed. 1961). An arbitrator exceeds the bounds of his authority when he attempts to modify the agreement to contradict what the parties have contemplated and consented to in the collective bargaining process.
*796The United States Supreme Court, like other federal appellate courts and our court, has recognized that arbitration is a preferred method for the resolution of disputes involving collective bargaining agreements, but that the arbitrator has no carte blanche to disregard the contractual limits on his authority. As Justice Douglas noted in United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960):
When an arbitrator is commissioned to interpret and apply the collective bargaining agreement, he is to bring his informed judgment to bear in order to reach a fair solution of a problem. This is especially true when it comes to formulating remedies. There the need is for flexibility in meeting a wide variety of situations. The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency. 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.
Id. at 597, 80 S.Ct. at 1361 (emphasis added). Consequently, an arbitrator’s award will not be upheld when it contravenes the express language of the labor contract. Mistletoe Express Service v. Motor Expressman’s Union, 566 F.2d 692, 695 (10th Cir. 1977).6
Further, courts should not enforce an award which binds the parties to the arbitrator’s concept of industrial common law without their consent. The agreement itself must be considered as the product of much of the common law of the industry or plant. Kagel, supra, at 7. Allowing the arbitrator to speculate as to what rules of the shop the parties possibly could have agreed to would destroy the policy of industrial stability underlying the bargaining process. The arbitrator is accordingly limited to administering the rule of law established by the collective bargaining agreement. Shulman, Reason, Contract, and Law in Labor Relations, 68 Harv.L.Rev. 999, 1016 (1955).
Even under the expansive view of arbitration advocated by Justice Douglas in the Steelworker’s trilogy, common law cannot be introduced when it is contrary to the plain words of the agreement.7 United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 579-80, 80 S.Ct. 1347, 1351, 4 L.Ed.2d 1409 (1960). To hold otherwise would elevate the arbitrator’s vague notion of an unwritten law of the shop above the definite set of rules which results from the parties’ efforts in the labor negotiations.
A federal court decision most nearly in point, factually, with the case at bar is Torrington Co. v. Metal Products Workers Union Local 1645, 362 F.2d 677 (2d Cir. 1966), which affirmed a trial court decision setting aside an arbitrator’s award based, as here, upon past practice pre-existing the negotiation of the collective bargaining agreement. The private employer had a 20-year policy of permitting employees time *797off to vote on election days, a policy that had been unilaterally instituted by the company. The employer, in negotiations, had declared that it would discontinue the policy, to which the union objected, but the contract was silent on the subject. The contract provided, as here, that “[t]he arbitrator shall be bound by and must comply with all the terms of this agreement and he shall have no power to add to, delete from, or modify, in any way, any of the provisions of this agreement.” Id. at 678 n. 2.
The arbitrator ruled that the benefit of paid time off to vote was a firmly established practice of the company and that it therefore had the burden of changing this policy by negotiating with the union since such a provision was implied by the prior practice of the parties. Chief Judge Lum-bard, writing for the majority of the court, said:
[Wjhile courts should be wary of rejecting the arbitrator’s interpretation of the implications of the parties’ prior practice, the mandate that the arbitrator stay within the confines of the collective bargaining agreement * * * requires a reviewing court to pass upon whether the agreement authorizes the arbitrator to expand its express terms on the basis of the parties’ prior practice.
sfc * ⅝: ⅝; * ¡⅛
Far from having the disruptive effect upon the finality of labor arbitration which results when courts review the “merits” of a particular remedy devised by an arbitrator, we think that the limited review exercised here will stimulate voluntary resort to labor arbitration and thereby strengthen this important aspect of labor-management relations by guaranteeing to the parties to a collective bargaining agreement that they will find in the arbitrator not a “philosopher king” but one who will resolve their disputes within the framework of the agreement which they negotiated.
362 F.2d at 680, 682.
The gist of the majority opinion’s rationale is that “past practice” affords meaning to the contract, notwithstanding the plain meaning of its words — not generally, but as to six employees. I submit two responses to this rationale. First, a “practice” is not, as here, mere inadvertence, an administrative mistake promptly corrected when discovered. Second, “past practice” is properly utilized only to construe provisions of an agreement that may be rationally considered ambiguous; it cannot be applied to this contract, in which the language is unambiguous.
For a “past practice” to exist, two basic elements are required: (1) a prior course of conduct; and (2) an understanding by the parties that such conduct is the proper response to the circumstances. Treeee, Past Practice and its Relationship to Specific Contract Language in the Arbitration of Grievance Disputes, 40 U.Colo.L.Rev. 358, 363, 365 (1968); Mittenthal, Past Practice and the Administration of Collective Bargaining Agreements, in Arbitration and Public Policy, 31 (S. Pollard ed. 1961). Not only must it be demonstrated that clear and consistent conduct has been developed over a period of time, but it must also be shown that the conduct was known and mutually accepted by the parties. Treeee, supra, at 365; Mittenthal, supra, at 32. This requirement of mutuality is a crucial standard since past practice should prevail only if the proof indicates that there was mutual agreement. Treeee, supra, at 365; Mitten-thal, supra, at 32; Hogan, Discussion in Arbitration and Public Policy, 64 (S. Pollard ed. 1961).
Past practice only exists in a situation in which both parties can be deemed to have assented to the practice. Nickles Bakery, Inc., 33 Lab.Arb. 564, 566 (1959). If the conduct was initially a mistake, there can be no mutually established rule. Treeee, supra, at 365. Further, the failure to enforce a contractual provision destroys neither the contract right nor the right to enforce it. Hogan, supra, at 65-68. The right still controls despite the fact that the company has not chosen to enforce rigidly the contractual provisions. Id. Consequently, a party cannot unilaterally modify the collective bargaining agreement nor can *798it take advantage of the failure to enforce the contractual obligation.
No evidence was introduced in this case indicating that the county had actual knowledge of the practice of the six employees other than the possible claim that such knowledge should be inferred from the continuing violation of the agreement. Although there may have originally been mutual acceptance of the employees’ vacation practice, there was no mutual agreement to continue informally the past vacation policy under the new contract. The county did not acquiesce in the continuance of the practice nor did it “ignore” the conduct. Once the county had notice of the practice, it responded promptly.
As the majority opinion notes: “[i]t is true that no evidentiary significance should be accorded a prior course of conduct unless the parties knew of its existence.” There surely is no common law of the shop when it is not recognized as such by the parties. The majority opinion is in effect holding that it is impossible to correct a manifest mistake.8
Even if the conduct of the six employees could be considered a past practice, evidence of such practice could not be introduced to contradict the express terms of the collective bargaining agreement. It is generally acknowledged that past practice may be utilized in construing provisions of the agreement that may rationally be considered ambiguous, Boise Cascade v. United Steelworkers, Local Union No. 7001, 588 F.2d 127 (5th Cir.), cert. denied, 444 U.S. 830, 100 S.Ct. 57, 62 L.Ed.2d 38 (1979), or in filling “gaps” in the contract, United Steelworkers v. Warrior & Gulf Navigation Co., supra, at 580, 80 S.Ct. at 1351. However, past practice may not be used to vary or contradict unambiguous provisions of the contract. See, e. g., Sun Rubber Co., 28 Lab.Arb. 362, 368 (1957); Price-Pfister Brass Mfg. Co., 25 Lab.Arb. 398, 404 (1955); Bethlehem Steel Co., 21 Lab.Arb. 579, 582 (1953); Treece, supra, at 369-79, 372; Hogan, supra, at 64. If the language of the agreement is clear, precise, and not subject to various interpretations, past conduct is not relevant in determining the meaning of the agreement. Schmutz Mfg. Co., Inc., 31 Lab.Arb. 701, 704 (1958).
When the past practice of a party conflicts with the language of the contract, the latter should prevail. Id. See Mittenthal, supra, at 40. As Dean Harry Shulman observed in a decision he made as umpire:
A contrary holding would place past practice on a par with written agreement and create the anomaly that, while the parties expend great energy and time in negotiating the details of the Agreement, they unknowingly and unintentionally commit themselves to unstated and perhaps more important matters which in the future may be found to have been past practice.
Ford Motor Co., 19 Lab.Arb. 237, 242 (1952). Thus, the arbitrator, whose authority is restricted to interpretation and application of the terms of a contract, exceeds those limits when he issues a decision based upon a recognition of a practice at variance with the specific language of the agreement. Ohio Steel Foundry Co., 36 Lab.Arb. 1088 (1961). See Reynolds Metals Co., 39 Lab. Arb. 730, 733 (1962).
The majority opinion notes that this well-established rule has been criticized by some commentators who believe that past practice should be utilized by the arbitrator even when the provisions of the contract are clear. Those critics, however, also reject the use of past practice if the contract is totally unambiguous and complete and if there was no mutual agreement by the par*799ties to the practice. See Treece, supra, at 377.9
Arbitrator Richard Mittenthal, who advocates a broad use of past practice, concedes that there must be some uncertainty as to meaning or intention before prior conduct may be utilized to interpret a contract.10 Mittenthal, supra, at 55. See Hogan, supra, at 64. He decided in Wyandotte Chemical Corp., 39 Lab.Arb. 65 (1962), that a past management policy concerning work assignments was not a “past practice” which could be enforced since it was unsupported by mutual agreement. It was his conclusion that:
To treat all practices as binding conditions * * * would be to place past practice on an equal footing with the written Agreement * * *. The arbitrator certainly has no authority to write a “past practice” clause into the Agreement under the guise of contract interpretation.
Id. at 67.
Further, in Dana Corp., 41 Lab.Arb. 100 (1963), Mittenthal recognized that once parties have commented on the general subject of the past practice in the agreement, the implication of that practice can no longer be drawn. Applying that reasoning to the case at bar, it is clear that past practice should not have been used in reaching a decision since the agreement specifically dealt with the subject matter of the practice, vacation time and overtime payments.
Notwithstanding the explicit terms of the vacation provisions of the labor agreement, notwithstanding the explicit provision that “all personnel policies provided by this contract, unless otherwise stated, shall be applied uniformly across the entire bargaining unit,” and notwithstanding the detailed contractual provisions proscribing it, the arbitrator modified the collective bargaining agreement to provide that it did not apply to these six employees and that their vacation entitlement would be on terms different from all other employees in the unit. Granting a special vacation entitlement exclusionary for these six employees, superior to that provided for all other employees in the unit — including other employees in the same classification of Real Estate Appraiser III — will hardly contribute to the “morale of the shop.”
I respectfully dissent of my colleagues and would affirm the decision of the trial court.

. The issue is even more narrow than those stated above, for there is really no issue as to whether the six employees should be entitled to the claimed vacation time for the period prior to March 1979 (at which time the county discovered its administrative clerical error), for the county appears to concede, and I would hold, that an arbitrator could find the county estopped from depriving the employees of the claimed vacation time up to that point. These employees had, because of the county’s error, been precluded from putting in for overtime as authorized under the collective bargaining agreement in lieu of the prior accrual of vacation time without overtime. The arbitrator went further, however, and “grandfathered” them permanently under the prior administration’s vacation plan, notwithstanding that the new collective bargaining agreement, by its terms, plainly applied to all employees. Protecting the employees from the adverse result of the employer’s own error is distinctly different from treating it as a permanent exception to the collective bargaining agreement, as if it were a past practice determinative of the intent of the collective bargaining itself.

. The arbitrator noted but did not decide a claim of the bargaining representative that at the time of making the agreement the parties had agreed to “grandfather” these six employees. Had the arbitrator found that as a fact, of course, there would be no issue, for that would itself constitute an express term of the collective bargaining agreement. The arbitrator understandably did not make a finding of fact on that point, however, quite probably because the county employer denied any such oral agreement and because it would be unusual not to reduce such an agreement to writing.

. It differed from the pre-contract vacation agreement by providing fewer days of vacation than formerly but granting overtime compensation at a rate of time and one-half for all work performed in excess of the normal workday or workweek (the former plan having limited overtime to a straight time basis and only when authorized).

. We held in State v. Berthiaume, 259 N.W.2d 904 (Minn. 1977), that the Act applies to public sector collective bargaining agreements containing an arbitration clause.

. This is especially true in labor disputes in the public sector which involve state, county, and municipal employees. As Justice Weisberger commented in his dissent in Jacinto v. Egan, R.I.,391 A.2d 1173, 1181 (1978):
If this court should choose to abdicate from any meaningful function in the review of such determinations, the practical enforcement of a large body of public law would be left to the untrammeled and unreviewable discretion of arbitrators. I think that the interest of the people of this state in the enforcement and application of laws ... is far too compelling in nature to warrant such abstention on our part.

. See also Fabricut, Inc. v. Tulsa Gen. Drivers, Warehousemen and Helpers, Local 523, 597 F.2d 227 (10th Cir. 1979); Detroit Coil Co. v. Int’l Ass’n of Machinists Lodge 82, 594 F.2d 575 (6th Cir.), cert. denied, 444 U.S. 840, 100 S.Ct. 79, 62 L.Ed.2d 52 (1979); Amanda Bent Bolt Co. v. U. A. W. Local 1549, 451 F.2d 1277 (6th Cir. 1971); Local 342, United Auto., Aerospace & Agricultural Implement Workers v. T. R. W., Inc., 402 F.2d 727 (6th Cir. 1968), cert. denied, 395 U.S. 910, 89 S.Ct. 1742, 23 L.Ed.2d 223 (1969); Torrington Co. v. Metal Products Workers Union Local 1645, 362 F.2d 677 (2d Cir. 1966).

. Dean Theodore St. Antoine has commented that;
Labor arbitration as we know it is not the product of the intellectualizing of the National Academy, nor even of the mythologizing of Justice Douglas. It is the product of contract — or, more precisely, the product of the particular contracts of particular parties.
St. Antoine, supra, at 1139 (footnote omitted).

. The arbitrator’s opinion, unlike the majority opinion, did not rely on a theory of shop common law, the arbitrator resting exclusively on the theory of past practice. The arbitrator concluded with these words: “Finally, it does not stand to reason that the Grievants should now, in essence, be penalized for the ‘oversight’ which the County admitted ‘could have been discovered by central personnel.’ ” To deprive them of benefits previously accrued by the six employees, as noted in footnote 1, may be a penalty — but to apply the contract in the future obviously is not.

. Arbitrator Lawrence W. Treece has commented that no critic has decided to what degree past practice should be relied on when contract terms are ambiguous. Treece; supra, at 378. In Treece’s opinion, the evidence that should be given more relative weight is that which reflects the parties’ mutual intention. Id. at 374. Even under this approach, the conduct of the six employees would not be considered since it did not reflect a practice mutually agreed to by the parties.

. Mittenthal admits that even those who are willing to use past practice in all decisions are apprehensive of the breadth of the implication. Mittenthal, supra, at 52. He also acknowledges that what may seem correct from a theoretical point of view does not always make sense from a practical point of view. Id.