Court Opinion

ID: 9471397
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:31:26.647185+00
Date Added: 2024-06-11T17:42:23.537673
License: Public Domain

SPROUSE, Circuit Judge,
concurring:
I concur in the result because I agree that the arbitrator’s award should have been set aside as a decision that did not “draw its essence” from the contract. I would affirm the district court’s judgment, however, solely because the arbitrator, by refusing to recognize the “cause or result in” qualification of article IA(h)(2) of the collective bargaining agreement, fashioned a brand of industrial justice completely alien to the agreement of the parties.
I
The collective bargaining agreement in controversy was executed in 1981; it prohibits Clinchfield from “licensing out” coal operations that would “cause or result in *1371the layoff of employees.” Article IA(h)(2), the clause in question, states:
Licensing out of coal mining operations on coal lands owned or held under lease or sublease by any signatory operator hereto shall not be permitted unless the licensing out does not cause or result in the layoff of employees of the Employer.
The union presented no evidence that Clinchfield closed the Camp Branch No. 1 mine and later licensed out coal operations to independent contractors. The evidence was to the contrary. The Camp Branch No. 1 mine closed in 1982, while Clinchfield had not executed any new licenses to independent contractors since 1980. Approximately 50% of Clinchfield’s active coal properties are mined by independent contractors. Some of these arrangements were made as long as twenty years before the controversy we review. Not only have Clinchfield and the union executed a number of collective bargaining agreements free of union objections to the independent contractor’s operations, but the union has executed collective bargaining agreements with each of the independent contractors. The union conceded during the arbitration hearing that it had never objected to Clinchfield’s practice of licensing out these small areas of coal lands for independent coal contractors to mine. It also conceded that it could not point to any individual licensed operation causing or resulting in the layoff of Branch Creek No. 1 miners that created this dispute. The union’s claim during arbitration was simple: The cumulative effect of continuing production from all sixty licensed operations lessened the demand for production from Clinchfield-operated mines, permitting Clinchfield to close the less productive Camp Branch No. 1 mine. It reasons that in allowing all of these licensed-out operations to continue producing coal, Clinchfield violated article IA(h)(2). The arbitration award reflects the arbitrator’s acceptance of that claim.
The arbitrator interpreted the “cause or result” language to mean that sanctions can be applied now or in the future against Clinchfield for its past actions in executing agreements that were valid when made, and to which the union at least acquiesced. He accomplished this by concluding that general rules of contract law placed upon Clinchfield the burden of proving that licensing out did not cause the layoff of the Branch Creek No. 1 miners. Although the logic of the arbitrator’s reasoning in this respect is questionable, I find it unnecessary to determine who has the burden of proving the facts crucial to this decision. Under any view of the arbitration evidence, Clinchfield did not violate article IA(h)(2) of the agreement. By the language of that article, the parties agreed that Clinchfield “shall” not license out unless that action “does not cause or result in the layoff of employees of the Employer” (emphasis added). The licensing out arrangements of the heart of this dispute were executed in 1980. Not only does the language of article IA(h)(2) itself contemplate proximate cause and effect, but the agreement, which was executed in 1981, should be applied prospectively only. The meaning of the “cause or result in” language in the context of article IA(h)(2) is plain, unambiguous, and compelling. Moreover, it has been interpreted in numerous arbitration disputes to mean “proximate cause or result” — that is, there must be some evidence that layoffs flowed from or were proximately caused by the licensing agreements. Although the decisions of arbitrators in previous cases are not stare decisis in this dispute, both Clinchfield and the union knew of decisions interpreting article IA(h)(2) when they renegotiated their various contracts. The previous interpretations properly can be considered part of the common law of the mining industry, which the parties could have modified or eliminated through negotiation. It is not necessary to refer to the industrial common law to derive the meaning of article IA(h)(2), but that reference validates my position that “cause or result in” can only mean “proximate cause or result.”
The arbitrator’s obligation in applying article IA(h)(2) was to give effect to the parties’ intentions existing when they agreed on that provision. In light of the date of the collectively bargained agreement, the *1372precise wording of article IA(h)(2), and the past history of the phrase “cause or result in,” Clinchfield and the union can only have intended to preclude future licensing out operations that proximately caused or resulted in layoffs. In ruling that proximate causation was not inherent in article IA(h)(2)’s language, the arbitrator recast the parties’ intent. The only proper way to accomplish this is at the bargaining table-an alternative then and still available to the parties. The arbitrator, by usurping the function of the bargaining process, has indeed fashioned an individual brand of industrial justice.
I am cognizant, of course, of the dilemma posed to federal courts by the requirement that we simultaneously must decide whether a particular arbitral decision is drawn from the essence of the collectively bargained agreement yet refrain from reviewing the merits of that decision. I think we need not, however, resort to the semantic shadings so frequently employed in an effort to circumvent that dilemma. Justice Douglas’s “essence of the contract” is no less precise a phrase than most of the language that attempts to give content to it. The contract involved in this appeal requires a showing of proximate cause or result. Not only does the arbitrator ignore that plain meaning, but the evidence presented to him fails utterly to establish proximate cause. The arbitrator’s decision, then, cannot draw its essence from the agreement.
II
Were it not for the arbitrator’s refusal to honor the meaning of article IA(h)(2), however, his award should have survived appellate review. I do not agree with the district court or the majority that the arbitrator’s award should be set aside because he “ignored or overlooked and failed to interpret the words ‘coal mining operations’ ” or because he disregarded improperly Clinch-field’s evidence of an economic cause for the layoffs.
The arbitrator reached the wrong result by eviscerating a term of the contract and his award may be set aside on that basis. In my view, however, the district court’s response to the poorly considered arbitration award inappropriately extended into the merits of the arbitrator’s decision. The parties to the collective bargaining agreement — not the courts — must shoulder the responsibility for the quality of their arbitrators. The arbitrator of the dispute now before us received evidence from which he could resolve the factual question of whether the transfers involved in the dispute constituted “licensing out of coal mining operations .... ” It is not relevant to our decision today that the arbitrator reached a different result than we would have reached applying this contract to these facts; our authority extends only to determining whether the arbitrator had the right to decide the issue and whether he decided it within the framework or “essence” of the contract.
There can be. no question that Clinchfield exercises extensive control over the “leased” or “licensed” coal operations conducted by independent contractors. It provides both exclusive engineering services that the operator is contractually bound to accept and follow-through implementation of the engineering plan selected by Clinch-field. It controls the operator’s production by retaining legal title to all coal mined and maintaining exclusive purchase rights. It often constructs the haulage and access roads, faces up the mine to expose the coal seam for the operator, runs the power lines and supplies power for the operator, and opens up the mine. Clinchfield sets the price to be paid to the operator for delivery of the coal and restricts it from mining and delivering “in excess of such amounts as owner shall indicate to contractor from time to time.” Clinchfield reserves the right to audit the operator’s books and records and the operator is required to give Clinchfield written notice of any change in ownership within forty-eight hours after it occurs. Clinchfield has exclusive rights to take all depletion allowances for any coal mined by the operator and pays all royalties for that coal to the Health and Retirement *1373Funds of the United Mine Workers of America. Clinchfield may cancel the operator’s right to continue to produce coal at any time by giving fifteen days’ written notice. The operator must remove its equipment within that time period or the equipment may become Clinchfield’s property.
The evidence of Clinchfield’s retained controls, together with the history of the transfers and economic considerations, form a sufficient basis for an arbitrator to conclude that each transfer was the licensing out of a coal mining operation. The facts presented to him influenced his interpretation of the disputed contractual provision, and to set aside the award on any grounds other than those set out in part I of this concurrence is simply to disagree with his view on the dispute’s merits. While it is true that the arbitrator failed explicitly to justify critical portions of his award, the Supreme Court has said he may do precisely that. “Arbitrators have no obligation to the court to give their reasons for an award.” Enterprise, supra, 363 U.S. at 598, 80 S.Ct. at 1361.
The majority opinion questions the “reasonableness” of the arbitrator’s legal interpretations and decries his failure to discuss critical terminology, and on page 8 supra, the majority states:
The district court found that Arbitrator Abies neither discussed nor decided the issue of whether “coal mining operations” or “coal lands” were licensed. The district court also reasoned that the terms had special legal meanings to the parties and that “the contracting parties were aware of the literal distinction between naked coal lands and mining operations.” The district court further found that Clinchfield had not licensed out any ongoing coal mining operations; rather Clinchfield licensed coal lands that, with one exception, had not been previously mined, to independent contractors who had to initiate their own coal mining operations. Since there was no license of coal mining operations, the district court concluded that the award did not draw its essence from the Agreement.
I can devise no better language to express my disagreement with this view than that used by Justice Douglas in Enterprise, applied at a different time to different facts.
Respondent’s major argument seems to be that by applying correct principles of law to the interpretation of the collective bargaining agreement it can be determined that the agreement did not so provide, and that therefore the arbitrator’s decision was not based upon the contract. The acceptance of this view would require courts, even under the standard arbitration clause, to review the merits of every construction of the contract. This plenary review by a court of the merits would make meaningless the provisions that the arbitrator’s decision is final, for in reality it would almost never be final. This underlines the fundamental error which we have alluded to in United Steelworkers of America v. American Manufacturing Co. [363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (I960)]. As we there emphasized, the question of interpretation of the collective bargaining agreement, is a question for the arbitrator. It is the arbitrator's construction which was bargained for; and so far as the arbitrator’s decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.
Enterprise, supra, 363 U.S. at 598-99, 80 S.Ct. at 1361-62. The majority opinion includes a line of reasoning fundamentally at odds with Justice Douglas’s caveat, and for this reason I cannot join in that opinion.