Court Opinion

ID: 2996521
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:29:28.341025+00
Date Added: 2024-06-11T11:38:55.667792
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                       ____________

No. 02-1952
BUTLER MANUFACTURING COMPANY,
                                           Plaintiff-Appellee,
                             v.

UNITED STEELWORKERS OF AMERICA,
AFL-CIO-CLC and LOCAL 2629,
UNITED STEELWORKERS OF AMERICA,
                                  Defendants-Appellants.
                       ____________
          Appeal from the United States District Court
                for the Central District of Illinois.
        No. 01-C-1149—Joe Billy McDade, Chief Judge.
                       ____________
    ARGUED OCTOBER 30, 2002—DECIDED JULY 17, 2003
                    ____________

 Before FLAUM, Chief Judge, and BAUER and DIANE P.
WOOD, Circuit Judges.
  DIANE P. WOOD, Circuit Judge. Agreements to arbitrate
disputes have been a common feature of collective bargain-
ing agreements for quite some time. They are entitled to a
hospitable reception in the courts, so that they can play
their role of reducing industrial strife and maintaining a
harmonious workplace. In this appeal, we must decide
whether the district court correctly concluded that a labor
arbitrator exceeded the scope of his contractual authority
when he resolved a dispute between Butler Manufacturing
Company and Michelle McMahill, who was a member of the
United Steelworkers of America, Local 2629 (the Union).
2                                               No. 02-1952

Butler claimed, and the district court agreed, that the arbi-
trator strayed too far beyond his powers when he applied
the Family and Medical Leave Act (FMLA), 29 U.S.C.
§ 2601 et seq., to help resolve the dispute, which concerned
possible excuses for some of McMahill’s absences. The court
therefore granted Butler’s motion for summary judgment in
its suit to vacate the arbitral award, which it brought under
Section 301 of the Labor Management Relations Act, 29
U.S.C. § 185. We conclude that the award should have been
enforced, both because it had an adequate basis in the par-
ties’ Collective Bargaining Agreement (CBA), and indepen-
dently because both parties agreed to allow the arbitrator
to take the FMLA into account in his decision. We therefore
reverse.

                             I
  Butler manufactures pre-engineered metal buildings in
its Galesburg, Illinois, plant. Shifts operate around the
clock, seven days per week. The Union represents various
Butler employees, including McMahill, who was hired in
August 1994 to work the midnight to 7:00 a.m. shift. Butler
and the Union were parties to a CBA that was in effect at
all times relevant to this appeal.
  In 1995, Butler and the Union jointly executed a Memo-
randum of Understanding (MOU) that set forth and incor-
porated into the CBA a detailed absenteeism policy. Based
on the absenteeism policy that had been in place for the pri-
or fifteen years, the 1995 MOU establishes a point system
pegged to the frequency and types of employee absences.
The policy assesses points for what are called “absence oc-
currences” attributable to personal or family member illness
or personal business. Failure to report an absence prior to
the start of a shift results in the imposition of absence
occurrence points. When an employee accumulates six or
more absence occurrence points within a six-month period,
she is subject to discipline. The MOU also sets forth the
No. 02-1952                                               3

various disciplinary steps, which build up from oral warn-
ings, written reprimands, suspension, to termination.
   The basic concept of the MOU absenteeism policy is that
“employees are expected to be at work every scheduled
workday and to be there on time. The reasons for absences
should be limited to those of a necessary and compelling
nature.” Butler defined an absence of a necessary and com-
pelling nature as one involving “an emergent situation that
required urgent action on the part of the employee, and
[that] was beyond the control of the employee and [for
which] a reasonable alternative to work absence did not ex-
ist.” In 1996, Butler tweaked the absenteeism policy after
it conducted a 20-month review of its employees’ medical
absences.
  Several years later, in October 1999, Butler notified
McMahill that she had three or more non-compelling ab-
sences during the preceding six months. She was told that
“until April 6, 2000 personal, non-occupational medical ab-
sences submitted by you for compelling reason absence
consideration will only be approved if they fall within the
sick leave provisions of the Agreement, or are qualified un-
der the FMLA, or are clearly of an emergency nature.”
  After McMahill received notice that she could not miss
any more work that did not qualify as personal sick leave,
an emergency, or under the FMLA, she missed three addi-
tional days. On November 4, 1999, she missed one complete
shift to remain at home with her husband, who had been
injured in a fight. Six days later, McMahill missed another
shift in order to stay home with her sick son. Then, on De-
cember 23, 1999, McMahill was absent again because her
other son was ill. McMahill asked Butler to find that each
of these absences was supported by a compelling reason,
but each time Butler refused and charged her with an addi-
tional absence occurrence. On January 6, 2000, McMahill
missed yet another shift. This time she sought and obtained
4                                                No. 02-1952

permission to take a personal leave of absence. By the end
of McMahill’s leave there was some confusion over her em-
ployment status in light of a conversation that she had with
one of her superiors while on leave. Nevertheless, McMahill
returned to work on February 3, 2000. This was several
days after the expiration of her leave of absence, and she
had not obtained the Company’s approval to extend her
leave. The Company held a disciplinary hearing on Febru-
ary 7, 2000, after which it terminated her for excessive ab-
senteeism.
  The Union contested McMahill’s termination. When the
parties were unable to reach an agreement, they submitted
the dispute to arbitration. A full hearing was held before an
arbitrator selected by both parties. At the hearing, the arbi-
trator heard testimony from two Butler employees, one Un-
ion officer, and McMahill herself. Following the hearing,
each side filed a brief for the arbitrator’s consideration. In
its brief, Butler argued that McMahill lacked justification
for missing an entire shift to look after her injured hus-
band. It specifically invited the arbitrator to look to the
FMLA in resolving the question of justification, by arguing
that “[t]he documentation provided for this absence prior to
the grievant’s termination clearly showed that it was not
qualified under FMLA.” Likewise, Butler’s brief asserted
that McMahill’s second absence related to her son’s illness
was not covered by the FMLA.
  After considering the parties’ oral and written presenta-
tions, the arbitrator ruled that McMahill’s absences on No-
vember 4 and 10, 1999, and on December 23, 1999, were
each qualified absences under the FMLA. Accordingly, he
found her termination unsupported by just cause and or-
dered her reinstated with half back-pay.
  Unhappy with the outcome in arbitration, Butler filed
this § 301 action in federal court, seeking an order vacating
the arbitrator’s award. On cross-motions for summary judg-
No. 02-1952                                                  5

ment, the district court found that the arbitrator acted
outside of his contractual authority when he turned to the
FMLA to assess the propriety of Butler’s termination of
McMahill. It found that the parties had not incorporated
the FMLA into their agreement, and therefore that the
arbitrator was not free to rely on that law in considering
McMahill’s termination.

                              II
  A court’s role in reviewing an arbitral award is quite
limited. Apart from the general reasons for setting aside
any arbitral award found in the Federal Arbitration Act, 9
U.S.C. § 10, the court may consider only whether an arbi-
trator exceeded the scope of the authority conferred upon
her by the parties’ actions and agreements. Northern
Indiana Pub. Serv. Co. v. United Steel Workers of Am., 243
F.3d 345, 346-47 (7th Cir. 2001). With few exceptions, as
long as the arbitrator does not exceed this delegated au-
thority, her award will be enforced. This is true even if the
arbitrator’s award contains a serious error of law or fact.
Major League Baseball Players Assoc. v. Garvey, 532 U.S.
504, 509 (2001) (per curiam); Nat’l Wrecking Co. v. Int’l
Bhd. of Teamsters, Local 731, 990 F.2d 957, 960 (7th Cir.
1993). Otherwise, as we have pointed out in the past,
arbitration would just be the first of a series of steps that
always culminated in court litigation, and it would lose its
raison d’être. See Flexible Mfg. Sys. Pty. Ltd. v. Super Prods.
Corp., 86 F.3d 96, 100 (7th Cir. 1996). We review the
district court’s decision to grant Butler summary judgment
and vacate the arbitrator’s award de novo. Amax Coal Co.
v. United Mine Workers of Am., Int’l Union, 92 F.3d 571,
574 (7th Cir. 1996).
   In order to assess whether the arbitrator exceeded his
contractual authority to resolve the parties’ dispute, we look
first at the specific provisions of the CBA and the agree-
ment to arbitrate it contains. In addition, we may also
6                                                  No. 02-1952

consult the parties’ submissions in arbitration to see if
there was a post-dispute agreement to submit additional
questions to the arbitrator.
  Looking first at the pre-dispute agreement to arbitrate
contained in the CBA, we find that it is a broad one, that
commits the parties to arbitrate any “differences as to the
meaning and application of this Agreement, other than with
respect to the right of the Company to contract or sub-
contract work.” Article 10, paragraph 91. As long as the
arbitrator’s award draws its essence from the parties’ CBA,
it must be enforced. United Paperworkers Int’l Union v.
Misco, Inc., 484 U.S. 29, 36 (1987) (quoting United Steel-
workers of Am. v. Enterprise Wheel & Car Corp., 363 U.S.
593, 597 (1960)); Dean v. Sullivan, 118 F.3d 1170, 1171 (7th
Cir. 1997). In deciding whether an award draws its essence
from the parties’ agreement, the reviewing court must do no
more than assure itself that “the arbitrator’s interpretation
can in some rational manner be derived from the collective
bargaining agreement.” Dean, 118 F.3d at 1171 (quoting
Nat’l Wrecking, 990 F.2d at 960).
  Several provisions of the CBA are relevant to the question
of what law the arbitrator was authorized to apply. Two
paragraphs in Article 2 of the CBA address issues of
workplace discrimination and employment opportunities.
They are as follows:
    12. Section 5. The Company and Union agree that
    neither will discriminate against any employee because
    of race, color, religion, sex, age, national origin, disabil-
    ity or Vietnam Era Veteran status.
    13. Butler Manufacturing Company offers equal oppor-
    tunity for employment, advancement in employment,
    and continuation of employment to all qualified individ-
    uals in accordance with the provisions of law and in
    accordance with the provisions of this Agreement for
    the represented employees covered by it.
No. 02-1952                                                 7

  The Union argued that these provisions gave ample
authority for the arbitrator to take the FMLA into account,
as he interpreted the absenteeism policy and the question
whether some or all of McMahill’s absences were justified.
The district court disagreed. It labeled the language of Arti-
cle 2, paragraph 13, as nothing but boilerplate anti-discrim-
ination commitments that did not necessarily pull the
FMLA into the agreement. If there were some kind of “clear
statement” rule that applied to CBAs, and to the match be-
tween a CBA and an arbitrator’s authority, perhaps this
would have been right. But there is no such rule. Instead,
as we noted above, the standard asks only whether the ar-
bitrator’s interpretation can rationally be linked to the
CBA. Here, a broader look at the two provisions above dem-
onstrates that the arbitrator’s award did draw its essence
from the parties’ agreement. Article 13, for example, does
not say only that there will be “equal opportunity for em-
ployment . . . in accordance with the provisions of this
Agreement. . .,” which is the portion the district court
quoted. In the ellipsis between the word “employment” and
the last phrase comes the phrase “in accordance with the
provisions of law.” We have no reason to think that this
reference to external law is either surplusage or “mere
boilerplate.” (We note, incidentally, that we have no hesi-
tation in holding parties to the “boilerplate” in their con-
tracts, equally with more obviously negotiated terms. Riss-
man v. Rissman, 213 F.3d 381, 385 (7th Cir. 2000).) We find
that Article 2, paragraph 13 conferred on the arbitrator the
authority to consider the FMLA. For this reason, there is no
need to consider whether the savings provision contained in
Article 13, paragraph 131, provided additional authoriza-
tion for the arbitrator to consider external law, as the
Union urges.
   Indeed, a contrary holding would be quite troublesome, in
light of the Supreme Court’s green light for the arbitration
8                                                No. 02-1952

of employment disputes of all kinds in its recent decision in
Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001). The
Court has made it clear that arbitrators are capable of han-
dling statutory claims, and that parties may make effective
agreements that commit such claims to an arbitral process.
If one were to turn around and find that the parties were
compelled to arbitrate a labor dispute, but that statutory
claims had to be the subject of separate litigation, the end
result would be wasteful duplication of proceedings, at best,
and an undermining of arbitral tribunals, at worst. We
note, however, that this case does not require us to confront
a different issue that the Supreme Court has reserved:
namely, whether a union can waive an employee’s right to
judicial review of statutory claims. See, e.g., Wright v. Uni-
versal Maritime Serv. Corp., 525 U.S. 70, 79-82 (1998).
McMahill prevailed in the arbitration, and so she has no
quarrel with the fact that the arbitrator resolved her
statutory claim, and Butler waived any right it might have
had to keep statutory claims out of the arbitration by its
submissions to the arbitrator, to which we now turn.
  Even if the CBA had been vaguer about the relevance of
statutory protections to the parties’ agreement, in this case
there is a second reason for finding that the arbitrator
stayed well within his authorized powers. As we noted
briefly above, during the course of the arbitration, it became
clear that both sides were willing to allow the arbitrator to
consider the FMLA. Once again, at a very broad level the
Supreme Court has acknowledged that agreements to
arbitrate might be reached before any dispute has arisen
(as in the CBA here), or they might be reached after the
dispute. See generally Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 633 (1985). The only
task, as in the case of a pre-dispute agreement, is to make
sure that the parties really have entered into an agreement
to resolve the post-agreement dispute through arbitration.
No. 02-1952                                                9

In cases where the parties expand the scope of arbitral
authority through their submissions to the arbitrator, it is
important to look both at the contract’s arbitration provi-
sions and the parties’ submissions to determine first what
authority the arbitrator was given, and second whether that
authority was exceeded. See Am. Postal Workers Union v.
Runyon, 185 F.3d 832, 835-36 (7th Cir. 1999); cf. General
Motors Corp. v. Pamela Equities Corp., 146 F.3d 242, 246
(5th Cir. 1998); John Sorrell & Co. v. Local Union 304A of
the United Food & Commercial Workers, 913 F.2d 544, 560
(8th Cir. 1990); United Food & Commercial Workers, Local
Union No. 7R v. Safeway Stores, Inc., 889 F.2d 940, 946
(10th Cir. 1989); Mobil Oil Corp. v. Indep. Oil Workers
Union, 679 F.2d 299, 302 (3d Cir. 1982). In the case of
submissions (as opposed to a clear post-dispute agreement
to arbitration), the court must also make sure that the
arbitrator’s consideration of the new issue would not violate
any other provision of the agreement, see Safeway Stores,
Inc., 889 F.2d at 946, assuming that the parties did not
observe whatever formalities were required to modify the
underlying agreement itself.
  During the arbitration hearing, witnesses who testified on
Butler’s behalf explained that McMahill received a letter
informing her that for the next six months, only FMLA-
approved absences or absences due to an emergency would
be approved; all other absences would result in the accrual
of additional absence occurrence points. In order to resolve
the dispute that the parties submitted, the arbitrator had
no choice but to consider whether the three absences that
Butler relied on to justify terminating McMahill were
FMLA-approved or of an emergency nature. If he had not
done so, he would have failed to discharge the duty dele-
gated to him by the parties to resolve their dispute.
  Likewise, the post-hearing brief that Butler filed with the
arbitrator contained explicit references to the FMLA.
10                                               No. 02-1952

Butler’s brief stepped through the three absences in order
to demonstrate that none were FMLA qualified. Not only
did Butler present its position on why these absences were
not FMLA qualified to the arbitrator, it also shored up this
analysis with citations to federal court decisions construing
the FMLA. As Butler put it, “[t]o construe the FMLA to in-
clude conditions which, although minor in their initial
stages, could evolve into serious illnesses would bring into
the statute virtually every common malady, and that is in
direct conflict with Congress’ intent.” In making this argu-
ment, Butler invited the arbitrator to find that McMahill’s
absences because of her husband’s injuries or her children’s
sicknesses were insignificant maladies not covered by the
FMLA. Only after the arbitrator disagreed with Butler’s
application of the FMLA to these particular absences did
the company argue that he lacked authority to consider this
issue in the first place.
   Butler cannot have it both ways. Principles of estoppel
prevent a party to arbitration from taking a position before
the arbitrator that invites consideration of external law,
losing in arbitration, and then seeking relief from the un-
favorable arbitral award in federal court by arguing that
the arbitrator lacked authority to consider the law in the
first instance. AGCO Corp. v. Anglin, 216 F.3d 589, 593
Cir. 2000) (“If a party willingly and without reserva-
tion allows an issue to be submitted to arbitration, he can-
not await the outcome and then later argue that the arbi-
trator lacked authority to decide the matter.”). Without a
reservation of rights, Butler took the position in arbitration
that McMahill’s absences were not FMLA qualified. Its
failure to reserve the question of the applicability of the
FMLA means that it has waived that argument. Dean, 118
F.3d at 1172-73. We would undermine the concept of
finality in arbitration if we allowed Butler to prevail on its
claim that the arbitrator lacked authority to consider the
FMLA after Butler not only failed to reserve this question
No. 02-1952                                                11

in arbitration, but actually placed the FMLA at the center
of the parties’ dispute.
   Perhaps anticipating that we might reach this conclusion,
Butler asks that we affirm the district court’s opinion
vacating the arbitral award because the arbitrator’s order
failed to make explicit how the parties’ agreement or sub-
missions authorized him to consider the FMLA. The district
court was persuaded that the arbitrator’s failure to refer to
the CBA or to offer any other explanation for the source of
his authority to consider the FMLA meant that the arbitra-
tor’s “decision does not draw its essence from the contract,
but instead reflects his own notions of industrial justice in
light of the rights given employees under the FMLA.”
  While we acknowledge that the arbitrator did not include
any explanation of this point in his written award, that fact
does not mean that there is no “justifiable basis” for the
arbitrator’s decision. Arbitrators are normally not required
to write any opinion at all, see Enterprise Wheel, 363 U.S.
at 598; Sullivan v. Lemoncello, 36 F.3d 676, 683 (7th Cir.
1994), and it is worth reiterating that a court’s review of an
arbitral award does not proceed under the same principles
that would apply if it were reviewing a decision of the Social
Security Administration or a bankruptcy court. Using
whatever materials are available, the court must enforce
the arbitral award “[s]o long as the [arbitrator’s] inter-
pretation can in some rational manner be derived from the
agreement, viewed in the light of its language, its context,
and other indicia of the parties’ intention.” Amoco Oil Co. v.
Oil, Chem. & Atomic Workers Int’l Union, Local 7-1, Inc.,
548 F.2d 1288, 1294 (7th Cir. 1977); see also Dean, 118 F.3d
at 1171; Mobil Oil Corp., 679 F.2d at 302. As we have
already explained, Article 2, paragraph 13 of the CBA al-
lowed the arbitrator to consider external law and the par-
ties framed the arbitration proceedings to force consider-
ation of the FMLA. In short, this arbitral award should be
enforced because it is supported by the terms of the parties’
agreement and thus lay well within the arbitrator’s author-
12                                                No. 02-1952

ity despite the fact that the arbitrator’s opinion did not spell
this out.
  Finally, Butler makes a last ditch effort to save the
district court’s order vacating the arbitral award by arguing
that the arbitrator’s decision so grossly misapplied the
FMLA that it constitutes a manifest disregard of law. We
rejected a similar argument in George Watts & Son, Inc. v.
Tiffany & Co., 248 F.3d 577 (7th Cir. 2001), which recently
clarified that an arbitral decision is in manifest disregard
of the law only when the arbitrator’s award actually orders
the parties to violate the law. Id. at 580. That the arbitrator
in this case may have misunderstood the FMLA is simply
not relevant. Id. at 579. Butler agreed to resolve this dis-
pute in arbitration and cannot now complain that the bar-
gained-for result—an arbitrator’s resolution of the dis-
pute—is not what it would have obtained in court.

                              III
  For these reasons, we VACATE the district court’s order
and ENFORCE the arbitral award.

A true Copy:
       Teste:

                         ________________________________
                         Clerk of the United States Court of
                           Appeals for the Seventh Circuit

                    USCA-02-C-0072—7-17-03