Chevron Mining Inc. v. United Mine Workers of America

Filing

[9893103] Affirmed. Terminated on the merits after oral hearing. Written, signed, published. Judges Kelly, authoring; Baldock; and Lucero. Mandate to issue.

FILED
Appellate Case: 10-8074

Document: 01018693258

United States Court of Appeals
Date Filed: 08/12/2011 Page: 1
Tenth Circuit

August 12, 2011
PUBLISH

Elisabeth A. Shumaker
Clerk of Court

UNITED STATES COURT OF APPEALS
TENTH CIRCUIT

CHEVRON MINING INC., f/k/a The
Pittsburg & Midway Coal Mining Co.,
Plaintiff-Counter-DefendantAppellant,

No. 10-8074

v.
UNITED MINE WORKERS OF
AMERICA LOCAL 1307,
Defendant-Counter-ClaimantAppellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
(D.C. No. 09-CV-00277-NDF)

Bradley T. Cave, P.C. of Holland & Hart, L.L.P., Cheyenne, Wyoming, for
Plaintiff-Counter-Defendant-Appellant.
Arthur R. Traynor III of United Mine Workers of America, Triangle, Virginia, for
Defendant-Counter-Claimant-Appellee.

Before KELLY, BALDOCK, and LUCERO, Circuit Judges.

KELLY, Circuit Judge.

Plaintiff-Appellant Chevron Mining, Inc. (“CMI”) appeals from the district

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court’s denial of its motion to vacate an arbitration award reinstating CMI
employee John Weston following his termination for just cause by CMI. CMI
argues that the arbitrator’s decision to reverse CMI’s just cause determination
based upon “forgivable” rule violations cannot be said to “draw its essence” from
the governing collective bargaining agreement and that the award imposed
contradicts and modifies the terms of the collective bargaining agreement. We
affirm.

Background
Mr. Weston was terminated when he failed to follow company rules
requiring him to supervise refilling of his fuel truck and he was not forthcoming
about the ensuing consequences. The parties do not dispute the relevant facts.
Prior to the incident involved here, Mr. Weston received three oral warnings for
unexcused absences or failure to report, and a written warning and three-day
suspension for horseplay. Aplt. App. 276, 278, 280, 282. On October 8, 2009,
Mr. Weston proceeded to refill a 5000-gallon diesel fuel tank truck at the end of
his swing shift. Id. at 8. He started the refueling then sat in the cab of the truck
where he was joined by his ride-share partner, Tom Higgens. They were
discussing elk hunting when they heard what they described as a bang or pop.
Mr. Weston got out of the cab and shut off the supply pump, but the tank was
already overfilled.
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Mr. Weston did not report the spill. Instead, he attempted to wash off the
quantity of fuel that had accumulated on top of the tank. He asked his partner not
to discuss the incident. Id. at 8-10. He then dropped off the truck, telling the BShift Greaser that he had simply overfilled the truck and that it may need to be
washed off. The tanker was used to fuel four pieces of equipment before it was
discovered that there was water in the diesel fuel, causing the engines to
malfunction. Id. at 8. This led CMI to conduct an investigation into the source of
the contamination. During the course of its investigation, CMI sought statements
from Mr. Weston and Mr. Higgens. Neither recounted a spill in his statement.
Id. at 9. Nevertheless, CMI suspended Mr. Weston with intent to discharge
effective October 13, 2009. Id. at 9, 266. CMI then scheduled managementunion joint interrogations with both men, during the course of which each
admitted to the spill and the concocted stories about it. Id. at 9-10.
CMI and the Union are parties to the Western Coal Wage Agreement of
2006 between the Pittsburg & Midway Coal Mining Co. and the International
Union United Mine Workers of America (the “Collective Bargaining Agreement”
or “CBA”). The CBA requires CMI to establish “just cause” for discipline and
discharge of employees. Id. at 237 (“No Employee covered by this Agreement
may be disciplined or discharged except for just cause. The burden shall be on
the Employer to establish grounds for discharge in all proceedings under this
Agreement.”). It does not, however, define “just cause.”
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Mr. Weston’s decision to sit in the cab during refueling was contrary to
company training and posted notices. See id. at 301-07. Mr. Weston also
violated CMI’s formal Rules, Work Practices, Regulations and Instructions. The
CBA provides that “[r]easonable rules and regulations of the Employer, not
inconsistent with federal and state laws, for the protection of the persons of the
Employees and the preservation of property shall be complied with.” Id. at 193.
Upon his hiring in June 2006, Mr. Weston received and signed a certification that
he had read CMI’s Rules, Work Practices, Regulations and Instructions. Id. at
299. The certification provided that “[v]iolation of rules or work practices will
subject employee to corrective action up to and including discharge.” Id. These
Rules state: “Signs posted throughout the mine property are messages to warn of
danger, or instruction on what to do or not to do. Read and comply with all
warning signs.” Id. at 290. They also prohibit “[g]iving false or misleading
information, or withholding relevant information, in any matter affecting your
employment or the Interests of the Company,” “[i]nattention to your job,” and
“[k]nowing violation of, or disregard for, environmental, health or safety rules,
practices or legal requirements.” Id. at 295-96.
The procedure for discharge is as follows: (1) If CMI concludes that certain
conduct warrants discharge, “the Employee shall be suspended with intent to
discharge and shall be given written notice stating the reason”; (2) the employee
may meet with the mine superintendent or manager in the presence of a union
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representative; (3) if CMI continues to intend to discharge the employee, the
employee remains on suspension with intent to discharge for a period of time
necessary to permit the employee to file a grievance and have the grievance
arbitrated. Id. at 237. The CBA provides that if the arbitrator determines that the
employer has “failed to establish just cause for the Employee’s discharge, the
Employee shall be immediately reinstated to his job.” Id.
Mr. Weston challenged his discharge on the ground that CMI lacked just
cause. CMI asserted discharge was appropriate because, given that Mr. Weston
had been disciplined four times during his three years of employment, no
mitigating factors were present to justify a lesser penalty than discharge. Id. at
17. The arbitrator deemed the issue to be: “Did the company have just cause
when it discharged the Grievant? If not, what is the remedy?” Id. at 8.
The award portion of the arbitrator’s decision states,

The Company did not have just and sufficient cause to
discharge John Weston. However, he was guilty of negligence and
providing false information during an investigation. He is to be
suspended for thirty (30) working days starting October 8, 2009 and
returned to work without back-pay but without loss of seniority or
benefits, followed by a probationary period of 180 days during which
any violation of the Health & Safety Rules and/or negligence
pertaining to his job duties will constitute just cause for immediate
discharge.
Id. at 20. In the Discussion portion of the decision, the arbitrator laid out his
rationale for imposing probation:

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Yes, this is dishonest and deserves punishment. But we must
consider motive and here we find it was not for personal gain but to
prevent loss of his reputation, seniority, and benefits. Is this not far
more forgivable than if he had done it for personal gain? I believe it
is and that John is entitled to a last chance agreement such has been
done with other employees.
Id.

Discussion
We review a district court’s order vacating or enforcing an arbitration
award de novo. U.S. Energy Corp. v. Nukem, Inc., 400 F.3d 822, 830 (10th Cir.
2005) (citation omitted). In doing so, however, we give “great deference” to an
arbitrator’s decision. Id. An arbitral award should be reversed only if based on a
“manifest disregard” of the law, defined as “willful inattentiveness to the
governing law.” Id. (quoting Litvak Packing Co. v. United Food & Commercial
Workers, 886 F.2d 275, 276 (10th Cir. 1989); Jenkins v. Prudential-Bache Sec.,
Inc., 847 F.2d 631, 634 (10th Cir. 1988)). If the decision “draws its essence from
the collective bargaining agreement” then it must be upheld. LB&B Assocs., Inc.
v. Int’l Bhd. of Elec. Workers, Local No. 113, 461 F.3d 1195, 1197 (10th Cir.
2006) (internal quotation marks and citation omitted). We explained in Denver &
Rio Grande Western Railroad Co. v. Union Pacific Railroad Co.:
Errors in either the arbitrator’s factual findings or his interpretation
of the law (unless that interpretation shows a manifest disregard of
controlling law) do not justify review or reversal on the merits of the
controversy. Because of the courts’ limited ability to review
arbitration awards, their powers of review have been described as
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“among the narrowest known to the law.”
119 F.3d 847, 849 (10th Cir. 1997) (citations omitted).
CMI argues that the arbitrator, despite the language of the decision
indicating otherwise, implicitly found that CMI had just cause to terminate the
employee, especially by finding that the employee was “guilty as charged.” Aplt.
Br. 20. Even assuming the arbitrator found CMI lacked just cause for
termination, CMI argues that by determining the employee’s conduct was
“forgivable,” the arbitrator relied on his own sense of justice rather than an
interpretation of the CBA. Id. at 5. CMI also argues that by imposing a
probationary period, or last chance agreement, the arbitrator exceeded the scope
of his authority, and that once the arbitrator determined there was an absence of
just cause, the only permissible action was for CMI to reinstate Mr. Weston
unconditionally to his position. Id. at 5-6; Aplt. Reply Br. 9.
A.

Just Cause
CMI’s argument that a finding of just cause may be inferred from the

arbitrator’s decision in this case or that the arbitrator ruled in contradictions is not
persuasive given the express and unequivocal finding that CMI lacked just cause.
CMI does not dispute that the arbitrator stated expressly that CMI lacked just
cause despite his prior statement that “Weston was guilty as charged.” See Aplt.
App. 20. And there is no dispute that Mr. Weston committed the conduct in
question and violated work rules, which is the conclusion more properly evinced
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by the statement that “Weston was guilty as charged.”
In any event, under our precedent, findings that Mr. Weston committed the
conduct in question and that CMI lacked just cause are not mutually exclusive;
instead where a rule could be interpreted either as articulating examples of
conduct all of which would amount to just cause for termination or as proscribing
certain conduct that may or may not amount to just cause, we give deference to an
arbitrator’s just cause determination. See Local No. 7 United Food &
Commercial Workers Int’l Union v. King Soopers, Inc., 222 F.3d 1223, 1227
(10th Cir. 2000); Local No. 113, 461 F.3d at 1198.
As in Local No. 7 and in Local No. 113, a finding of just cause in this case
does not necessarily follow from a finding of Rules violations. Because CMI’s
Rules simply provide that violations may be grounds for termination, one can
contemplate circumstances where noncompliance with the Rules, “subject[ing]
employee to corrective action up to and including discharge,” would nevertheless
fall short of the just cause required for termination by the CBA. We need not
comment on whether this is the best construction of the CBA; but we do conclude
the arbitrator’s decision was drawn “from the essence” of its terms.
B.

“Forgivable” Rules Violations
We also must conclude that the arbitrator’s conclusion that Mr. Weston’s

conduct was “forgivable” in this case is not indicative of inattentiveness to the
CBA and governing law. In Kennecott Utah Copper Corp. v. Becker, we made it
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clear that “[i]n determining whether or not the arbitration award ‘draws its
essence’ from the CBA, a reviewing court looks to the award itself and not at
every phrase contained in the arbitrator’s opinion.” 195 F.3d 1201, 1204 (10th
Cir. 1999) (quoting United Steelworkers v. Enter. Wheel & Car Corp., 363 U.S.
593, 598 (1960) (internal quotation marks omitted)). Therefore, in that case, use
of words such as “believe” did not compel the conclusion that the arbitrator was
dispensing his own brand of justice rather than interpreting the contract. Id. We
noted that focusing on the language of an arbitration decision rather than its
outcome–in this case reinstatement–“may lead arbitrators to play it safe by
writing no supporting opinions. This would be undesirable for a well-reasoned
opinion tends to engender confidence in the integrity of the process and aids in
clarifying the underlying agreement.” Id.
In Kennecott an employer sought to vacate an arbitration award requiring
the employer to reinstate an employee even though he tested positive for
marijuana after an accident. The collective bargaining agreement stated, “No
employee shall be disciplined or discharged without just cause,” but did not
define “just cause.” Id. at 1203. Employees were also subject to a “Drug and
Alcohol Abuse Policy” proscribing use of drugs in the workplace and which
stated, “Compliance with this Policy is a condition of employment. The Company
intends to take disciplinary action, up to and including termination, against any
employee who violates this Policy.” Id. The arbitrator found that Kennecott was
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justified under the CBA in testing the employee for drugs but that just cause
required more than a positive drug test–in the manner of evidence showing onthe-job impairment, possession, or use. Id. The arbitrator ordered reinstatement
but denied back pay because the grievant had initially lied about his drug use. Id.
In upholding the arbitration award we reasoned that “[t]he interpretation of just
cause to require a prerequisite, such as on-the-job impairment, before termination
is allowed draws its essence from the CBA and must be upheld.” Id. at 1205
(citing Exxon Corp. v. Esso Workers’ Union, Inc., 118 F.3d 841, 845-46 (1st Cir.
1997)). The same principle applies here.
C.

“Last Chance Agreement”
Finally, the arbitrator’s imposition of discipline was not inconsistent with

the award of reinstatement; it was within the arbitrator’s discretion to fashion an
appropriate remedy given the circumstances. Enterprise Wheel & Car, 363 U.S.
at 597 (“When an arbitrator is commissioned to interpret and apply the collective
bargaining agreement, he is to bring his informed judgment to bear in order to
reach a fair solution of a problem. This is especially true when it comes to
formulating remedies.”); Mistletoe Express Serv. v. Motor Expressmen’s Union,
566 F.2d 692, 695 (10th Cir. 1977) (“In a proper case an arbitrator, in reliance on
custom or usage in an industry, may construe a ‘just cause’ provision of a labor
contract to include a progressive discipline requirement and may determine that
certain conduct is ‘just cause’ for discipline but not for discharge.”); e.g., Local
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No. 7, 222 F.3d at 1229.
AFFIRMED.

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