Court Opinion

ID: 1013139
Source: CourtListenerOpinion
Date Created: 2013-07-04 20:55:56.932876+00
Date Added: 2024-06-11T09:39:32.645840
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

KENNAMETAL, INCORPORATED,              
                 Plaintiff-Appellee,
                 v.
UNITED STEELWORKERS OF AMERICA,                  No. 03-1775
AFL-CIO CLC; UNITED
STEELWORKERS OF AMERICA, LOCAL
15094-2,
            Defendants-Appellants.
                                       
            Appeal from the United States District Court
         for the Western District of Virginia, at Abingdon.
                  James P. Jones, District Judge.
                          (CA-02-175-1)

                      Argued: February 26, 2004

                       Decided: April 19, 2004

         Before WILKINS, Chief Judge, and MOTZ and
                  TRAXLER, Circuit Judges.

Affirmed by unpublished per curiam opinion.

                             COUNSEL

ARGUED: Daniel Martin Kovalik, UNITED STEELWORKERS OF
AMERICA, Pittsburgh, Pennsylvania, for Appellants. Charles Preyer
Roberts, III, CONSTANGY, BROOKS & SMITH, L.L.C., Winston-
Salem, North Carolina, for Appellee.
2            KENNAMETAL, INC. v. UNITED STEELWORKERS
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   This case arises from the arbitration of a grievance filed by the
United Steelworkers of America, AFL-CIO/CLC, and United Steel-
workers of America Local 15094-2 (collectively the "Union") chal-
lenging Kennametal, Inc.’s decision to cease matching 401(k)
contributions for employees represented by the Union under a collec-
tive bargaining agreement ("CBA") between the parties. The arbitra-
tor held that Kennametal’s action violated the CBA, but the district
court vacated the decision because the arbitrator refused to consider
pertinent terms of the benefit plan which had been incorporated into
the CBA. See Kennametal, Inc. v. United Steelworkers of America,
AFL-CIO, 262 F. Supp. 2d 663 (W.D.Va. 2003). We affirm.

                                  I.

   In October 1997, Kennametal acquired the parent company of the
American Mine Tool Division of Rogers Tool Works, Inc., which was
a party to a CBA recognizing the Union as the exclusive bargaining
representative of the production and maintenance employees at a
manufacturing facility located in Virginia. Kennametal honored the
existing CBA, but began negotiations for a new CBA in part because
Kennametal wanted its benefit plans to be consistent for all Kenna-
metal employees.

   In November 1998, after extensive negotiations, Kennametal and
the Union agreed upon a new CBA. Article 17 of the CBA governs
the settlement of grievances and the arbitration procedure. Section
17.4 provides that "[t]he Arbitrator shall have jurisdiction only to
determine issues, based upon the interpretation of application of this
agreement, and he shall be limited to deciding each case on its own
merits. No decision shall add to, subtract from, or alter the terms of
this agreement." J.A. 56. Section 17.6 provides that:
              KENNAMETAL, INC. v. UNITED STEELWORKERS                  3
    Matters relating to the Company’s Group Insurance Plans,
    Retirement Plan, and all other employee benefit programs
    shall be subject to the grievance or arbitration procedure on
    benefit levels only. Matters pertaining to benefits adminis-
    tration such as claim processing or payment, selection of
    insurance carriers or administrators, eligibility for coverage,
    etc., will not be subject to the grievance or arbitration proce-
    dures. The parties agree to meet prior to any proposed bene-
    fit change to discuss the change. The Company agrees to
    ensure that any change will result in a benefit that provides
    a comparable benefit structure to the benefit being replaced.

J.A. 57.

   As part of the new CBA, the parties agreed that all employees
would be placed under Kennametal’s Retirement Plan. Section 20.2
provides that "[t]he retirement savings program, ‘Kennametal Thrift
Plan,’ is a part of the ‘Agreement’ and will be extended to all eligible
employees in the bargaining unit." J.A. 59. Article XI of Kennamet-
al’s Thrift Plan document, in turn, provides that Kennametal "reserves
the right . . . to amend, modify, suspend or terminate the Plan" and,
pursuant to Section 11.020 of that Article, that Kennametal may "dis-
continue its contributions under the Plan for any reason at any time."
J.A. 229.

   Effective January 1, 2002, Kennametal amended the Thrift Plan to
temporarily cease matching 401(k) contributions for employees and
notified its employees of this change. The Union filed a grievance,
claiming that the unilateral change violated Section 17.6 of the CBA
because Kennametal did not meet with the Union to discuss the pro-
posed benefit change or ensure that the suspension of the matching
contribution was replaced with a comparable benefit. In response,
Kennametal claimed that the dispute was not arbitrable and that, in
any event, it was entitled to make the change under Article XI, Sec-
tion 11.020 of the Thrift Plan, which was specifically incorporated
into and made a part of the CBA.

   After unsuccessfully attempting to resolve the matter with Kenna-
metal, the Union demanded arbitration. On August 26, 2002, the arbi-
trator ruled that the dispute was arbitrable and that Kennametal had
4             KENNAMETAL, INC. v. UNITED STEELWORKERS
violated the CBA by unilaterally ceasing the matching of 401(k) con-
tributions without complying with section 17.6’s requirement of a
meeting and comparable benefit. Kennametal filed suit in the district
court seeking an order vacating the arbitrator’s award, and the Union
counterclaimed to enforce the award and for attorney’s fees and costs.
After both parties moved for summary judgment, the district court
ruled that the arbitrator had expressly declined to consider the provi-
sions of the Thrift Plan which had been directly incorporated by refer-
ence into the CBA. The district court vacated the award, and directed
the parties to submit the grievance to arbitration de novo before a dif-
ferent arbitrator. The Union’s subsequent motion for reconsideration
was denied and the Union appealed.*

                                   II.

   It is well-settled that our review of an arbitration award "is among
the narrowest known to the law." United States Postal Service v.
American Postal Workers Union, AFL-CIO, 204 F.3d 523, 527 (4th
Cir. 2000) (internal quotation marks omitted). "A court sits to ‘deter-
mine only whether the arbitrator did his job — not whether he did it
well, correctly, or reasonably, but simply whether he did it.’" Id.
(quoting Mountaineer Gas Co. v. Oil, Chem. & Atomic Workers Int’l
Union, 76 F.3d 606, 608 (4th Cir. 1996)). "[A]s long as the arbitrator
is even arguably construing or applying the contract and acting within
the scope of his authority, that a court is convinced he committed seri-
ous error does not suffice to overturn his decision." United Paper-
workers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987).

   Nonetheless, an arbitration award "must draw its essence from the
contract and cannot simply reflect the arbitrator’s own notions of
industrial justice." Id.; see also Mountaineer Gas Co., 76 F.3d at 608;
Island Creek Coal Co. v. District 28, 29 F.3d 126, 129 (4th Cir.
1994). The arbitrator, therefore, is limited to interpretation and appli-
cation of the agreement:

   *In January 2003, Kennametal reinstated matching contributions for
all employees. Kennametal chose not to appeal the district court’s deter-
mination that the dispute was arbitrable.
               KENNAMETAL, INC. v. UNITED STEELWORKERS                    5
     [The] award is legitimate only so long as it draws its essence
     from the collective bargaining agreement. When the arbitra-
     tor’s words manifest an infidelity to this obligation, courts
     have no choice but to refuse enforcement of the award. The
     requirement that the award "draw its essence" from the par-
     ties’ agreement means that the arbitrator may not ignore the
     plain language of the contract. When the arbitrator ignores
     the unambiguous language chosen by the parties, the arbitra-
     tor simply fails to do his job.

See United States Postal Serv., 204 F.3d at 527 (internal citations,
quotation marks, and alterations omitted). We review the question of
whether the arbitrator exceeded the scope of his authority de novo.
See Mountaineer Gas Co., 76 F.3d at 608.

   Here, the arbitrator found, as a factual matter, that the Union had
not received a copy of the Thrift Plan until after the CBA was agreed-
upon and ratified by the members. From this, the arbitrator concluded
that "it could not be found that the Union had agreed to the docu-
ment" and "that for arbitrability purposes, the Union was not bound
by the Thrift Plan provisions, which gave the Company discretion to
terminate or modify participation in the plan." J.A. 23. Consequently,
the arbitrator ruled, the provisions of Article XI, Section 11.020 of the
Thrift Plan "d[id] not bear on the disposition of the merits of the
Grievance." J.A. 23.

  Kennametal contends that the arbitrator exceeded his authority by
rewriting the CBA to exclude the terms of the Thrift Plan, despite the
Thrift Plan explicitly being made "part of the ‘Agreement’". J.A. 59.
Thus, Kennametal argues that the district court properly vacated the
award because the award did not "draw its essence" from the contract.

   The district court held that the arbitrator’s refusal to even consider
the language of the Thrift Plan required that the award be set aside.
Specifically, the district court held that the arbitrator was not at liberty
to conclude that Kennametal’s unilateral cessation of matching contri-
butions violated certain terms of the CBA by ignoring other terms of
the agreement simply because he found, as a fact, that the Union rep-
resentative did not obtain or read the Thrift Plan. "The Thrift Plan was
expressly made part of the CBA," the district court noted, "and by
6             KENNAMETAL, INC. v. UNITED STEELWORKERS
ignoring its contents the arbitrator simply failed to do his job." Ken-
nametal, 262 F. Supp. 2d at 671 (internal quotation marks and alter-
ations omitted).

   We agree. Although the circumstances under which a court can
vacate an arbitrator’s decision are extremely limited, they are present
in this case. "Underlying judicial deference to arbitral awards is the
principle that the terms of the parties’ agreement are controlling. This
same principle requires courts to vacate awards when an arbitrator
exceeds his authority under a collective bargaining agreement."
United States Postal Serv., 204 F.3d at 527. Although "courts have no
business overruling [an arbitrator] because their interpretation of the
contract is different from his," id. (internal quotation marks omitted),
the courts must likewise refuse enforcement of an award arrived at
after the arbitrator has expressly declined to consider a portion of the
agreement in deciding whether the employer has violated its terms.
Here, the arbitrator’s words reveal that he intentionally ignored perti-
nent portions of the CBA as incorporated and agreed-to by the parties.
Although we express no opinion as to what weight this portion might
have, under the unique circumstances of this case, we believe the
award must be vacated and the matter submitted to arbitration anew.

                                  III.

   For the foregoing reasons, the decision of the district court is
affirmed.

                                                           AFFIRMED