Court Opinion

ID: 9472155
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:51:33.350407+00
Date Added: 2024-06-11T17:42:46.803348
License: Public Domain

BECKER, Circuit Judge,
dissenting:
I agree that our scope of review of a labor arbitrator’s decision is extremely narrow. But that does not mean that there are no circumstances under which an arbitrator’s decision may be set aside. If an examination of the record before the arbitrator reveals no support whatever for his determination, his award must be vacated. NF & M Corp. v. United Steelworkers of America, 524 F.2d 756 (3d Cir.1975); Swift Industries, Inc. v. Botany Industries, Inc., 466 F.2d 1125, 1131 (3d Cir.1972) (an arbitrator’s award “may not stand if it does not meet the test of fundamental rationality”); Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123 (3d Cir.1969). I believe that this is a case where no reasonable person could conclude that there is no contract between the parties, and that therefore the arbitrator’s award does not meet the test of fundamental rationality.
In his decision, the arbitrator made three findings in response to the union’s three alternative theories that a contract existed: (1) there was no 1980-83 collective bargaining agreement (“CBA”), because there was never a meeting of the minds between the parties,1 and because the employer refused to sign the union’s draft 1980-83 CBA; (2) although the October 24, 1980 Memorandum of Agreement (“MOA”), was signed by both parties and expressly incorporated the terms of the 1977-80 CBA, it was not a contract because the parties did not “intend” it “to be a final, complete contract document”; and (3) although by its express terms the 1977-80 CBA remained in force pending agreement on a new CBA, the employees rejected it on September 23, 1980, when they voted to accept the “agreement in principle” between the union and the employer (which agreement became the MOA the next day), and therefore the 1977-80 CBA was not in force after September 23, 1980. If we hold that any one of these findings is completely unsupported by the record, we must reverse. I believe that the second and third findings are indefensible on the record of this case.
First, as to the MOA, I see absolutely no reason why this document is not a binding and enforceable contract. The MOA is handwritten by one of the employer’s representatives to the negotiations, and it is signed on behalf of the employer by Harry Boyle, the company’s “Area Director of Labor Relations.” (Jack Draper, President of Local 590, signed on behalf of the union.) The MOA contains 25 provisions dealing with everything from wages to job security. In addition, the MOA expressly incorporates the 1977-80 CBA except as it has been modified by the written provisions of the MOA. See Preface to MOA and paragraph 25, Appendix at 23a & 31a. Since it is a well-settled principle of labor law that where the actions of the parties indicate that an agreement has been reached, then the courts will find that a contract exists,2 I cannot comprehend how the MOA can be deemed not to be a contract. Yet, that is exactly what the arbitrator in this case held:
*459The MOA was not intended to be a final, complete contract document and both Parties anticipated that their “bargain” would have to be moulded into a more formal and complete instrument that would be approved and executed by the properly authorized officials representing the Parties.
Appendix at 19a. This theory that the MOA was not a binding contract is totally unexplained and unsupported.3
The parties in this case are sophisticated entities with experienced lawyers. No one signs a memorandum of agreement containing 25 contract provisions and incorporating a prior CBA between the parties without believing he has signed a binding contract. It is undoubtedly true, as the arbitrator says, that the parties expected to “mold” their agreement into a more “formal” (read “typed”) agreement in the future. And it would be naive to think that disputes concerning the meaning of various provisions of the MOA would not arise during the contract period.4 But that does not mean that the MOA was not a binding contract. It is a fact of life that parties to a labor contract will seek concessions from each other both during the negotiation stage and during the period of the contract. Indeed, the employer and union often agree to place provisions in the CBA that are deliberately ambiguous, choosing to fight for their position during an arbitration proceeding rather than risk the economic consequences of a strike. My point is simply this: what more could the union and the employer have done to make the MOA a binding contract? My answer is that they did everything the law requires to make the MOA a binding contract, and therefore, being sophisticated parties, they obviously intended to have a binding contract. The arbitrator’s conclusionary sentence to the contrary is capricious. Therefore, I would reverse.
In my view, the arbitrator was also capricious in his finding that, assuming that there was no 1980-83 CBA and that the MOA was non-binding, the 1977-80 CBA was not in force after September 23, 1980. The 1977-80 CBA contained the following provision:

SECTION 33 DURATION OF AGREEMENT

33.1 This Agreement shall be effective commencing 12.01 a.m., October 2, 1977 *460and shall remain in force until and including September 27, 1980 and from year to year thereafter, with the right of either party to reopen upon written notice not less than sixty (60) days prior to September 27, 1980 or the 27th day of September of any subsequent year thereafter, of a desire either to change or terminate this Agreement. In the event either party serves notice, it is agreed that the Employer and the Union without undue delay, shall begin negotiations on the proposed modifications and that, pending the results of such renegotiations, neither party shall change the conditions existing at the time under the Agreement.
The obvious intent of this provision was that the 1977-80 CBA would continue in effect until a new contract was agreed to, or until negotiations broke off. The arbitrator apparently agreed; he concluded, however, that, when the employees voted to accept the terms of the MOA and the employer implemented those terms, those actions were in fact a rejection of the 1977-80 CBA.5 With all respect to the arbitrator, this makes no sense. The arbitrator’s decision placed the employees in a situation that only Lewis Carroll could appreciate: because they accepted the MOA the 1977-80 CBA was terminated, but because the MOA was not binding on A & P, there was no contract. I believe the only logical interpretation of the employees’ decision to approve the terms of the MOA is that they did so conditionally on the MOA being a binding contract. Ineluctably, if the MOA was not a binding contract (as the arbitrator held) the 1977-80 CBA by its own terms remained in effect.6
For the foregoing reasons, I respectfully dissent.

. According to the arbitrator there was no agreement on at least three essential provisions: (1) retention of the available-hours clause; (2) absence of a 32-hour cap on part-time employees; and (3) the COLA roll-in. Appendix at 16a.

. See Capitol-Husting Co., Inc. v. NLRB, 671 F.2d 237, 242 (7th Cir.1982) (“In the context of labor disputes ... the technical question of whether the contract was accepted in the traditional sense is perhaps less vital than it otherwise *459would be. Rather, a more crucial inquiry is whether the two sides have reached an ‘agreement’, even though that ‘agreement’ might fall short of the technical requirements of an accepted contract.”) quoting NLRB v. Donkin’s Inn, Inc., 532 F.2d 138, 141 (9th Cir.), cert. denied, 429 U.S. 895, 97 S.Ct. 257, 50 L.Ed.2d 179 (1976); NLRB v. Haberman Construction Co., 641 F.2d 351, 355-56 (5th Cir.1981) (en banc) ("It is well settled that a union and employer’s adoption of a labor contract is not dependent on the reduction to writing of their intention to be bound.... Instead what is required is conduct manifesting an intention to abide by the terms of an agreement.”) (footnote omitted; emphasis added); Wilkes Barre Printing Pressmen & Assistants' Union, No. 137 I.P.P. & A.E. v. Great Northern Press, 522 F.Supp. 106, 111 (M.D.Pa.1981) (”[L]abor agreements are governed by the ‘objective theory’ of contracts. In other words, the central inquiry for the court is whether the actual conduct of [employer and union] would have manifested offer and acceptance to a reasonable observer, regardless of the subjective intent of the negotiators.”)

. The majority does not dispute the fact that the arbitrator offered no explanation for his conclusion. But see Virgin Islands Nursing Assoc.’s Bargaining Unit v. Schneider, 668 F.2d 221, 223-24 (3d Cir.1981) (declining to impose a requirement that arbitrators state reasons for their decisions). However, the majority does state that “[i]n any event, the Memorandum of Agreement was fatally ambiguous on certain vital points, primary among them the available hours clause at issue in the grievance proceedings.” The arbitrator never so stated, and there is no support in the record for the majority's conclusion on this point.

. Indeed, as the majority essentially concedes, the real reason that A & P refused to sign the 1980-83 CBA was that "[b]etween the negotiation of the Memorandum of Agreement in October, 1980, and the company’s refusal to execute the proposed 1980-83 agreement, A & P’s economic condition had continued to worsen.”

. The arbitrator stated:
In the Union's Post-Hearing Brief, it argues in the alternative, that if there is no valid 1980-83 Agreement, the 1977-80 Agreement has remained in full force and effect. We have carefully studied the language in Section 33 of the 1977-80 Agreement and evaluated the actions of the Parties, during and after their negotiating sessions. Numerous changes in the 1977-80 Contract were finally agreed upon including increased wage rates. The Union’s version of the "agreement in principle” was submitted to the membership and approval was voted of this package. However ambiguous these activities appear in retrospect, they indicate that both Parties considered the 1977-80 Contract ended.

. The arbitrator also appears to have been troubled by the prospect of applying the 1977-80 CBA to the employer-employee relationship in 1981 because the employer had made a substantial number of changes, including increasing wages, on the basis of the MOA. I do not doubt that application of the 1977-80 CBA to the post-MOA work relationship between the employer and employees would be difficult, but that does not mean that the 1977-80 CBA is invalid. It is the arbitrator’s duty to make difficult decisions, and this one is no different from any other.