Court Opinion

ID: 9480550
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:51:15.344999+00
Date Added: 2024-06-11T17:47:45.437845
License: Public Domain

COWEN, Circuit Judge,
concurring.
I write separately to express my view of the proper treatment of the arbitrator’s award. By focusing exclusively on the last two sentences of the arbitrator’s opinion1 and dismissing entirely the reasons leading to those concluding sentences, the majority improperly allows the district court to ignore the arbitrator’s interpretation of the closure agreement and to substitute its own contrary interpretation. This practice is clearly proscribed by Supreme Court and Third Circuit precedent, which the majority fails to distinguish.
Nonetheless, I concur in the result. Correctly interpreted, the arbitrator’s award allows the vested pension rights of Bell and Bokunewicz to be altered without their consent. Such an interpretation is contrary to public policy and renders the arbitrator’s award unenforceable. Accordingly, I concur in the result reached by the majority that the arbitrator’s award is of no effect, but for an entirely different reason.
I.
Because the majority did not summarize the arbitrator’s opinion, I will do so. The arbitrator began by identifying the issues submitted to him: “(1) Are the grievances arbitrable? (2) If the grievances are arbi-trable, are the grievants entitled to disability retirement benefits? (3) If the grievants are entitled to disability retirement benefits, what shall be the remedy?” App. at 309.
After reciting the facts and summarizing the positions of Purolator and the union, the arbitrator identified the dispositive issue: whether the grievances are “arbitra-ble,” that is, whether the union and Purolator had agreed to arbitrate grievances like those arising from Bell’s and Bokunewicz’s claims for disability pension benefits.
The arbitrator observed that federal law generally favors arbitration of labor disputes unless there is clear and specific language that would exclude an issue from arbitration. In particular, the arbitrator noted the Supreme Court’s decision in Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery Workers Union, 430 U.S. 243, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977), which held that expiration of a collective agreement did not terminate an employer’s obligation to arbitrate disputes that arose after the agreement lapsed. The employer was required to arbitrate later-arising disputes if the disputes would have been arbi-trable had they arisen during the term of the agreement. The Court held that the presumptions favoring arbitrability of labor disputes were not overcome merely by termination of the agreement, but must be negated expressly or by clear implication. Nolde Bros., 430 U.S. at 255, 97 S.Ct. at 1074.
*1404The arbitrator proceeded to interpret the agreements between the union and Purolator in light of Nolde Bros. He examined first the 1983 collective bargaining agreement, which contains a clause requiring arbitration of “any difference” that arises between the union and Purolator concerning the meaning, application of or compliance with the provisions of the collective agreement.2 Since Bell and Bokunewicz claimed they were entitled to disability pension benefits under a provision of the 1983 collective agreement, the arbitrator concluded that the agreement would have required arbitration of Bell’s and Bokunew-icz’s grievances.
The arbitrator next examined the closure agreement to the extent that it terminated or modified any provisions of the collective agreement. In particular, he noted that paragraph 3 of the closure agreement changed the termination date of the 1983 collective agreement from May 27, 1986 to July 14, 1984. The dispute between Puro-lator and Bell and Bokunewicz arose after that date. The arbitrator remarked that had the closure agreement contained only this paragraph, the case would have been indistinguishable from Nolde Bros. The mere fact that the collective bargaining agreement terminated would not terminate the contractual duty to arbitrate disputes arising after the agreement was terminated, absent express provisions or clear implication precluding arbitration. See Nolde Bros., 430 U.S. at 255, 97 S.Ct. at 1074.
The arbitrator found such express provision in paragraphs 4 and 5 of the closure agreement.3 In these paragraphs, the arbitrator wrote, the union and its members recognized the closure agreement as “a final and complete disposition of all claims or disputes, known or unknown” and waived any future right “to initiate ... any charges, complaints, claims, legal actions or grievances against the Company.... ” App. at 328. The arbitrator noted the agreement excepted certain claims from this broad waiver, namely claims arising under Pennsylvania’s unemployment and workers’ compensation statutes, as well as claims based on certain computational errors,4 but found that no exception applied to Bell’s and Bokunewicz’s claims. The arbitrator concluded:
The closure agreement explicitly prevents grievants, or the union on behalf of the grievants, from processing a claim in any forum, including the grievance pro-cedure_ The results of the negotiations clearly waived their right to proceed with claims then in existence or to present claims thereafter. If a claim cannot be advanced in the grievance pro*1405cedure, it is beyond the scope of the arbitrator’s authority.
App. at 315.
The arbitrator supported his interpretation of the closure agreement in two ways. First, he observed that an earlier draft agreement had preserved “individual claims” from waiver, but this provision did not appear in the final closure agreement. He conjectured this language would have preserved claims like Bell’s and Bokunew-icz’s. He found the absence of this provision from the final agreement suggested a deliberate effort to waive claims like Bell’s and Bokunewicz’s.
Second, the arbitrator noted the broad waiver was a logical and sensible part of the deal Purolator struck with the union. Under the closure agreement, Purolator agreed to fund retirement pensions with surplus assets in the pension fund. After that funding was complete, Purolator would have no additional money with which to satisfy claims that arose later, like Bell’s and Bokunewicz’s. In return for their promise to fund retirement pensions, the Company, quite sensibly in the arbitrator’s eyes, requested and obtained a release from all other claims for pension benefits.
In this context, the arbitrator concluded that the grievances were not arbitrable and that he had no authority to resolve the merits of Bell’s and Bokunewicz’s claims.
II.
Contrary to the majority, I believe the district court erred in disregarding the arbitrator’s interpretation of paragraphs 4 and 5 of the closure agreement, to wit: that Purolator and the union, on behalf of Bell and Bokunewicz, intended by the closure agreement to waive and release claims for disability pension benefits.
The majority characterizes the arbitrator’s interpretation of the closure agreement as dictum. It should be clear from the summary above that it was anything but dictum; it was essential to the award. The arbitrator indicated that the agreements should be interpreted to require arbitration unless arbitration were precluded by express provision or clear implication. In the arbitrator’s view, the grievances were not arbitrable solely because paragraphs 4 and 5 of the closure agreement expressly precluded arbitration of Bell’s and Bokunewicz’s claims. In reaching this interpretation, the arbitrator necessarily rejected the union’s arguments and determined that paragraphs 4 and 5 of the closure agreement were intended to waive Bell’s and Bokunewicz’s claims.
The district court was not free to disregard the arbitrator’s interpretation of the closure agreement. Instead of deferring to the arbitrator’s interpretation, the district court permitted Bell and Bokunewicz to submit evidence and arguments to the show that paragraphs 4 and 5 were never meant to apply to claims like Bell’s and Bokunewicz’s. These are the very arguments that were made to the arbitrator and rejected.
The district court, in effect, reviewed the arbitrator’s interpretation of the closure agreement and substituted its own. It was simply without power to do so. The reasons for insulating arbitral decisions from judicial review are grounded in the federal statutes regulating labor-management relations. In particular, section 203(d) of the Labor Management Relations Act, 29 U.S.C. § 173(d) provides, “Final adjustment by a method agreed upon by the parties is hereby declared to be the desirable method for settlement of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement.” See also Steelworkers v. American Mfg. Co., 363 U.S. 564, 566, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960). The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of an award. Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1960). “[S]o 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 than his.” Enterprise Wheel, 363 U.S. at 599, 80 S.Ct. at 1362, 4 L.Ed.2d 1424 (1960); W.R. Grace & Co. v. Rubber Workers, 461 U.S. 757, 764, 103 *1406S.Ct. 2177, 2182, 76 L.Ed.2d 298 (1983). By developing its own interpretation of the closure agreement, the district court contradicted long-standing federal labor policy and precedent.
The majority’s observation that the question of arbitrability is ordinarily for the courts makes little difference in this case. The Supreme Court has written, “Unless the parties clearly and unmistakably provide otherwise, the question of the whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” AT & T Technologies v. Communications Workers, 475 U.S. 643, 647, 106 S.Ct. 1415, 1417, 89 L.Ed.2d 648 (1986); see also Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 583 n. 7, 80 S.Ct. 1347, 1353 n. 7, 4 L.Ed.2d 1409 (1960). In particular, we have held that a union does not exceed its authority by submitting the issue of arbitrability to voluntary arbitration instead of demanding resolution by a court. Johnson v. United Food & Commercial Workers, 828 F.2d 961, 966 (3d Cir.1987). Further, we have held that individual union members like Bell and Bokunewicz are bound by the outcome of such arbitration. Id. Here, the union and Purolator specifically agreed to have an arbitrator, and not a court, determine whether Bell’s and Bo-kunewicz’s grievances were arbitrable. That being so, the district court had no power to review the merits of the arbitrator’s award and substitute its own interpretation of the closure agreement.
In addition to condoning the district court’s erroneous review of the arbitrator’s award, the majority gives a misleading impression of Johnson v. United Food & Commercial Workers, 828 F.2d 961 (3d Cir.1987). In Johnson, former employees of the Great Atlantic & Pacific Tea Company (“A & P”) brought suit seeking severance pay under a collective agreement between labor and management. The district court dismissed the suit and we affirmed on appeal because an earlier arbitration award had conclusively determined that no such collective agreement existed. In the earlier proceeding, the union moved to arbitrate several grievances that arose when A & P shifted workers from full-time to part-time positions. A & P initially refused to arbitrate on the ground that no agreement was then in force, but finally agreed to arbitrate the issue of whether a collective agreement had existed during the grievance period. The arbitrator found that the union and A & P allowed their former collective bargaining agreement to expire without reaching agreement on a new one. The arbitrator concluded that the grievances before him were not arbitrable because no valid labor agreement existed under which the propriety of A & P’s actions could be measured.5
It is not accurate to suggest, as the majority does, that the Johnson arbitrator found he “had jurisdiction” whereas the arbitrator here did not. Both arbitrators determined that the grievances before them were “not arbitrable,” or that they lacked jurisdiction to resolve the grievances. Both arbitrators had the authority to decide the issue of arbitrability, however, since the parties in each case agreed to submit that issue. It is this determination that deserves the respect of the courts. The majority’s attempt to distinguish Johnson on this basis is therefore incorrect.
Indeed, the similarity between Johnson and this case reinforces my argument here. In Johnson, as in the present case, the parties agreed to submit an issue to the arbitrator that ordinarily is for the courts to decide, to wit: whether a collective *1407agreement existed. In deciding the grievances were not arbitrable, the arbitrator in Johnson necessarily determined that no collective agreement existed. The district court refused to review the merits of that determination and properly dismissed the suit. Similarly, the arbitrator’s determination in our case that paragraphs 4 and 5 of the closure agreement waive and release Bell’s and Bokunewicz’s claims was essential to his decision; the district court should have refused to review the merits of that determination.
III.
I nonetheless concur in the result the majority reaches. I agree that Bell’s and Bokunewicz’s rights to disability pensions were vested under the collective agreement. Once vested, those pension rights could not be altered without their consent. See Allied Chem. & Alkali Workers, Local No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 181 n. 20, 92 S.Ct. 383, 398 n. 20, 30 L.Ed.2d 341 (1971). The arbitrator’s interpretation of the closure agreement directly contradicts this principle and so is unenforceable as against public policy. See United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 108 S.Ct. 364, 373, 98 L.Ed.2d 286 (1987).
In my view, the district court had no power to overrule the arbitrator’s interpretation of the closure agreement simply because the district court thought its own interpretation was better. Enterprise Wheel, 363 U.S. at 596, 80 S.Ct. at 1360. In limited circumstances, however, a court may refuse to enforce an arbitrator’s interpretation of a collective bargaining agreement that is illegal or contrary to public policy. W.R. Grace & Co. v. Local Union 759, Int’l Union of Rubber Workers, 461 U.S. 757, 766, 103 S.Ct. 2177, 2183, 76 L.Ed.2d 298 (1983); United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 108 S.Ct. 364, 373, 98 L.Ed.2d 286 (1987). This principle is nothing more than a specific application of the more general doctrine,' rooted in common law, that a court may refuse to enforce contracts that violate law or public policy. The Supreme Court wrote:
[A] court’s refusal to enforce an arbitrator’s interpretation of such contracts is limited to situations where the contract as interpreted would violate “some explicit public policy” that is “well-defined and dominant, and is to be ascertained ‘by reference to the laws and legal precedents and not from some general considerations of supposed public interests.’ ”
Misco, 108 S.Ct. at 373.
Under established contract principles, vested pension rights may not be altered without the pensioner’s consent. Allied Chem. & Alkali Workers, Local No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 181 n. 20, 92 S.Ct. 383, 398, 30 L.Ed.2d 341 (1971); see also Weimer v. Kurz-Kasch, Inc., 773 F.2d 669, 673 (6th Cir.1985); Bowen v. Bunker Hill Co., 725 F.2d 1221, 1223 (9th Cir.1984); cf. Elgin, Joliet & Eastern Ry. Co. v. Burley, 325 U.S. 711, 744, 65 S.Ct. 1282, 1299, 89 L.Ed. 1886 (1945) (under the Railway Labor Act, union may only bargain for prospective benefits for members and has no power to make collective agreements that deprive employees of their individual rights). The arbitrator’s interpretation of the closure agreement violates these clear precedents by allowing the union and Purolator to bargain away in the closure agreement vested rights of Bell and Bokunewicz in their disability pensions in exchange for increased pension benefits to other union members.
Accordingly, I would hold that the arbitrator’s award, insofar as it allows Bell’s and Bokunewicz’s vested disability pension rights to be altered without their consent, is unenforceable as against public policy. As a consequence, the district court properly refused to give the arbitrator’s award conclusive, or binding, effect. As to the remaining issues on appeal, I am in agreement with the majority that the district court did not err.

. "The grievances are not arbitrable. The substantive issues presented in the grievance are therefore beyond the authority of the arbitrator." App. at 317.

. Specifically, paragraph 36 of the collective agreement provides:
Should any difference arise between the Company and the Union or its members employed by the Company as to the meaning and application of, or compliance with, the provisions of this Agreement, an earnest effort will be made to settle such difference immediately in the following manner....
App. at 343. The agreement then lists a four step process, culminating in arbitration.

. Paragraphs 4 and 5 of the agreement provide:
4.The Union and individuals who were members of the bargaining unit at the Company’s Ringtown, Pennsylvania facility (hereinafter referred to as “Individuals") acknowledge that this Agreement represents a final and complete disposition of all claims or disputes, known or unknown, which the Union or Individuals had, has or may have with the Company except claims arising under the Pennsylvania Unemployment Compensation Act and claims arising under the Pennsylvania Workers’ Compensation Act;
5. The Union and Individuals agree to withdraw any and all charges, complaints, grievances or claims now pending, and further agree not to initiate, maintain or participate in any charges, complaints, claims, legal actions or grievances against the Company except claims arising under the Pennsylvania Unemployment Compensation Act and claims arising under the Pennsylvania Workers’ Compensation Act;
App. at 328.

. Paragraph 6 of the Closure Agreement provides:
6. Notwithstanding the above, the Union and Individuals retain the right to pursue through appropriate channels the correction of mechanical, arithmetic or computational errors which might arise in connection with the Company’s fulfillment of its termination obligations in individual cases.
App. at 328.

. The arbitrator’s award at issue in Johnson is quoted in the earlier case, United Food & Commercial Workers v. Great Atlantic & Pacific Tea Co., 734 F.2d 455 (3d Cir.1984):
There was never a valid Collective Bargaining Agreement in effect between the Company and the Union ... for the period from September 29, 1980 to October 1, 1983. The 1977-80 Agreement temporarily was extended during negotiations, but terminated on October 23, 1980. Any grievances that are predicated either, upon the draft of the proposed 1980-83 Labor Agreement or on the 1977-80 Labor Agreement, concerning events that occurred after October 23, 1980, are not arbitra-ble because no valid Labor Agreement exists under which the propriety of the Company’s actions can be measured.
United Food & Commercial Workers, 734 F.2d at 457 n. 2 (emphasis added).