Court Opinion

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Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

9-25-2008

Veeder Root Co v. Local 6521 United
Precedential or Non-Precedential: Non-Precedential

Docket No. 07-3781

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                                                               NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT

                                    No. 07-3781
.

                            VEEDER ROOT COMPANY,
                         a Subsidiary of Danaher Corporation

                                         vs.

           LOCAL 6521 UNITED STEEL, PAPER AND FORESTRY,
        RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL
            AND SERVICE WORKERS INTERNATIONAL UNION,
                                         Appellant

            APPEAL FROM THE UNITED STATES DISTRICT COURT
             FOR THE WESTERN DISTRICT OF PENNSYLVANIA
                          (D.C. Civ. No. 05-cv-00409J)
                 District Judge: The Honorable Kim R. Gibson
                                 ____________

                    Submitted Under Third Circuit L.A.R. 34.1(a)
                               September 12, 2008
                 Before: McKEE, SMITH, and WEIS, Circuit Judges.

                                 (Filed: September 25, 2008)
                                   ____________

                                     OPINION

WEIS, Circuit Judge.

             Local 6521 United Steel, Paper and Forestry, Rubber, Manufacturing,

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Energy, Allied Industrial and Service Workers International (“Union”) appeals an order

of the District Court vacating an arbitration award. We will reverse.

              Plaintiff/appellee Veeder-Root Company (“Veeder-Root”) is a private

company with a plant located in Altoona, Pennsylvania, where it manufactures products

including magnetostrictive probes used in underground storage tanks. The probes are

produced by bargaining unit employees represented by the Union under the terms of a

collective bargaining agreement.

              The CBA grants Veeder-Root the right to “establish production quality

standards for employee performance, including allowances, under any accepted method or

procedure in industrial engineering practices, and to make, at any time, motion, time or

methods studies required for the efficient operation of its business.” Moreover, the

company may establish “new or revised standards” to adapt to various changed

circumstances. New or revised standards “shall be subject to the grievance and

arbitration procedures of this Agreement . . ..”

              The CBA also provides:

              “Direct labor production standards shall be arbitrated by the
              submission of the disputed standard by the parties to an
              impartial arbitrator qualified in industrial engineering
              practices. Such arbitrator shall, without formal hearing,
              establish a fair and equitable standard based upon the
              provisions of the Agreement, relevant and material standards
              data made available to him, and his observation of the job,

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              and the parties shall be bound by his decision.”

              In 1998, Veeder-Root established a rate of 3.5 pieces per hour for

assembling the magnetostrictive probes. Based upon the results of time studies, the

company increased the production rate in April 2004 to 5.0 pieces per hour.

              After the union protested the new rate, the dispute went to arbitration. The

parties stipulated that the issue to be determined by the arbitrator was “whether or not the

standard established and set by the Company is fair and reasonable or whether it is not

reasonable in accordance with the provisions of the Labor Agreement.”

              The arbitrator sustained the union’s grievances, finding that the 5.0 pieces

per hour standard is not fair and reasonable and is not reasonable in accordance with the

CBA. The arbitrator reviewed testimony and documentary evidence, but did not observe

the assembly of the probes or establish a new standard rate of production.

              Veeder-Root then appealed to the District Court, which vacated the

arbitration award because the arbitrator failed to “establish a fair and equitable standard”

as required by Paragraph 11.06 of the CBA and did not observe the job in question. The

Union now appeals.

              We have a very limited role in an appeal from “the decision of an arbitrator

appointed pursuant to a collective bargaining agreement.” Citgo Asphalt Ref. Co. v.

Paper, Allied-Indus., Chem. and Energy Workers Int’l Union Local No. 2-991, 385 F.3d

809, 815 (3d Cir. 2004).

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              We do not review an arbitrator’s decision for legal error, id., and will

uphold an award “so long as it draws its essence from the collective bargaining

agreement” and is not the arbitrator’s “own brand of industrial justice.” USWA v.

Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960).

“[O]nly where there is a manifest disregard of the agreement, totally unsupported by

principles of contract construction and the law of the shop, may a reviewing court disturb

the award.” Exxon Shipping Co. v. Exxon Seamen’s Union, 73 F.3d 1287, 1295 (3d Cir.

1996) (quoting Super Tire Eng’g Co. v. Teamsters Local Union No. 676, 721 F.2d 121,

124 (3d Cir. 1983)).

              Parties to a collective bargaining agreement “may . . . agree to allow an

arbitrator to go beyond the express terms of the collective bargaining agreement. . . . by

agreeing, separately, to submit specific issues to arbitration.” High Concrete Structures,

Inc. of N.J. v. United Elec., Radio and Mach. Workers Local 166, 879 F.2d 1215, 1218

(3d Cir. 1989). In High Concrete Structures, we rejected an employer’s argument that an

arbitrator violated an anti-revision clause in a CBA and upheld an award because the

question the parties submitted was broad enough to grant the arbitrator the authority to

revise the agreement and the alteration was rationally related to the issue submitted. Id. at

1216-19.

              We explained that since “[a]n agreement to arbitrate is itself merely a

contract . . . the court must look not only at the text of the collective bargaining agreement

                                              4
but also at the agreed submission.” Id. at 1219. We also determined that the arbitrator’s

interpretation of the question submitted should be granted the same broad deference given

to the interpretation of the agreement. Id. Thus, “the terms of the submission may

empower an arbitrator to resolve disputes that go beyond the four corners of a collective

bargaining agreement.” Id.; see also Larocque v. R.W.F., Inc., 8 F.3d 95, 98 (1st Cir.

1993).

              Here, the submission of the parties asked the arbitrator to determine

“whether or not the standard established and set by the Company is fair and reasonable or

whether it is not reasonable in accordance with the provisions of the Labor Agreement.”

The arbitrator apparently concluded that the submission limited his assignment to

answering the question submitted by the parties and therefore he did not “establish a fair

and equitable standard” as required by the CBA.

              The arbitrator’s authority was controlled by both the terms of the

submission and the CBA. See High Concrete Structures, 879 F.2d at 1219.

In carrying out his duties the arbitrator did not base his determination on his “own brand

of industrial justice.” Enterprise Wheel & Car, 363 U.S. at 597. Instead, he expressly

relied on the standards set out in the CBA, which required new performance standards to

be capable of being met at a performance level of 100, the equivalent to daywork pace at

100%. The arbitrator noted that “[t]he parties to the Labor Agreement recognized the

principle and theory of using normal pace in the development of standards when they

                                             5
adopted [the CBA].” He ultimately determined that the employer’s new production rate

did not satisfy that standard because it was based on inadequate time studies.

              The arbitrator reached his well-reasoned decision after considering

testimony and documentary evidence and evaluating it in light of his extensive experience

as an industrial engineer and knowledge of time study standards. His failure to observe

the job does not affect the integrity of the award because the employer agreed to the

limited submission.

              The award was within the terms of the submission and drew its essence

from the terms of the CBA. The arbitrator’s decision properly reflected the realities of

the collective bargaining process. See United Paperworkers Int’l Union v. Misco, Inc.,

484 U.S. 29, 38 (1987) (In reviewing an arbitration, “it must be remembered that

grievance and arbitration procedures are part and parcel of the ongoing process of

collective bargaining.”).

              We will reverse the District Court’s order vacating the arbitrator’s award

and enter judgment for the Union.

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