PSC Custom, LP v. United Steel, etc.

Filing

OPINION FILED - THE COURT: William Jay Riley, James B. Loken and Kermit E. Bye AUTHORING JUDGE:James B. Loken (PUBLISHED) [4169186] [13-1943]

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 13-1943
___________________________
PSC Custom, LP, doing business as Polar Tank Trailers
lllllllllllllllllllll Plaintiff - Appellant
v.
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union, Local No. 11-770
lllllllllllllllllllll Defendant - Appellee
____________
Appeal from United States District Court
for the Western District of Missouri - Springfield
____________
Submitted: February 13, 2014
Filed: June 26, 2014
____________
Before RILEY, Chief Judge, LOKEN and BYE, Circuit Judges.
____________
LOKEN, Circuit Judge.
PSC Custom, LP, doing business as Polar Tank Trailers (“Polar Tank”),
manufactures tank trailers at its Springfield, Missouri facility. At the time in
question, employees were governed by a Collective Bargaining Agreement (“CBA”)
between Polar Tank and United Steelworkers Local No. 11-770 (the “Union”). In
June 2011, Polar Tank discharged maintenance technician Bonita Symons for failing

Appellate Case: 13-1943

Page: 1

Date Filed: 06/26/2014 Entry ID: 4169186

to safely complete repair of an overhead crane. The Union grieved the discharge, and
the unresolved grievance was submitted to arbitration. The arbitrator partially upheld
the grievance, reducing Symons’s discipline to a thirty-day unpaid suspension. Polar
Tank sued to vacate the arbitration award. The Union counterclaimed to enforce it.
The district court1 granted summary judgment enforcing the award. Polar Tank
appeals, arguing the arbitrator’s ruling was contrary to unambiguous provisions of the
CBA that mandated discharge and is therefore unenforceable. The arbitrator’s
findings of fact are not at issue. Reviewing the district court’s decision de novo and
the arbitrator’s award under the deferential standard of review mandated by the
Supreme Court, we affirm.
I.
Polar Tank’s facility uses a ceiling-based crane system that runs the length of
the production area. The cranes are mounted on twin rails, more than twenty feet
above the floor. A set of gears are used in moving cranes along each rail. Both sets
of gears must be in good working order or the crane will not move smoothly along
the rails. On June 10, 2011, the manufacturing engineering manager learned that one
crane was not running smoothly and instructed Symons to investigate and repair the
problem, using a “scissors lift” to access the gears. Near the end of her shift, Symons
reported that she had repaired the north-rail side of the crane by installing a new gear,
because the old gear had dislodged entirely, and that she had checked the south-rail
side of the crane and found it tight and in good working condition. Symons also told
Keith Fowler, a maintenance technician on the next shift, that she had not found the
lost north-rail gear, a serious safety issue because a lost gear could fall from the rail
and injure someone or, worse yet, cause the crane to derail. Fowler shut down the

1

The Honorable Matt J. Whitworth, United States Magistrate Judge for the
Western District of Missouri, presiding with consent of the parties pursuant to 28
U.S.C. § 636(c)(1).
-2-

Appellate Case: 13-1943

Page: 2

Date Filed: 06/26/2014 Entry ID: 4169186

crane to look for the gear. Technician John Brannon went up in the scissors lift and
quickly found the lost gear in plain sight on the rail frame less than twenty feet from
where Symons had performed the north-side repair. Brannon also checked the southrail side and found the gear “finger loose.” The Allen key sockets were packed with
grease, suggesting that Symons had not accessed the gear to check if it was loose.
After interviewing Symons and those involved in the incident (along with the
Union’s president), Polar Tank’s Human Relations Manager, Larry LaForge,
discharged Symons on June 21 based on the crane repair incident. LaForge’s
Discipline Report listed as the reasons for discharge:
1. Clear failure [to] properly do an inspection that could have resulted
in serious, possibly fatal, accident.
2. Clear disregard for doing the job. By not locating the loose gear
lying on the track a serious accident could have happened if it would
have been thrown off, or the crane derailed.
3. Passive attitude about avoiding assignments by any means available.
Wasting time, not asking for direction.
Article 21 of the CBA provided: “No employee shall be discharged, demoted,
or otherwise disciplined without good and sufficient cause.” “Should there be any
dispute between the Company and the Union concerning the existence of good and
sufficient cause for discharge . . . such dispute shall be adjusted in accordance with
the Grievance and Arbitration provisions.” The Union grieved Symons’s discharge
under the grievance and arbitration provisions in Article 6 of the CBA. When the
grievance could not be resolved, the parties submitted the dispute to arbitration. As
is typical, Article 6 provided that arbitration awards are “final and binding on the
Company, the Union and the employee(s),” and it limited the arbitrator’s authority by
prohibiting him from adding to, disregarding, or altering the terms of the CBA. The

-3-

Appellate Case: 13-1943

Page: 3

Date Filed: 06/26/2014 Entry ID: 4169186

parties submitted the following issues to the arbitrator: “1. Did the Company have
good and sufficient cause or just cause to discharge [Symons] on June 21, 2011? 2.
If not, what shall the remedy be?”
At the lengthy arbitration hearing, LaForge explained his discharge decision,
testifying that Symons’s misconduct in failing to properly repair the crane violated
five standards of employee behavior enumerated in Part B of the Standards of
Conduct Polar Tank had adopted and publicized prior to the effective date of the CBA
-- insubordination, careless or poor workmanship, continued unsatisfactory
performance of work duties, violation of safety rules, and providing false information
to the company. Part B provides that violation of its standards “is considered
grievous and will result in immediate termination.” On cross examination, LaForge
admitted that he did not refer to these violations in the termination “paperwork.”
The arbitrator issued a written decision upholding the grievance in part. Citing
due process concerns, the arbitrator limited his consideration of just cause to the
grounds for discipline stated at the time Symons was disciplined, which did not
include a reference to the Standards of Conduct. The arbitrator accepted Polar Tank’s
version of the facts underlying the crane repair incident and ruled that Symons had
“engage[d] in negligence involving safety issues [that put] her Company job and
potentially her fellow employees in serious jeopardy.” However, the arbitrator
concluded, Symons’s conduct did not rise to the level of insubordination because it
amounted to simple negligence rather than “willful or deliberate defiance of
supervisory authority.” In the arbitrator’s view, “a disciplinary suspension for thirty
work days . . . constitutes a legitimate balance between the importance of proper
performance of those duties and the . . . non-showing of insubordination involved
here.” Accordingly, Polar Tank did not have just cause to discharge Symons. The
award ordered her reinstated with back pay “minus pay for the thirty work day
disciplinary suspension ordered here.” This lawsuit followed.

-4-

Appellate Case: 13-1943

Page: 4

Date Filed: 06/26/2014 Entry ID: 4169186

II.
Labor arbitration awards are entitled to substantial but not unlimited judicial
deference. Although an arbitrator “may not ignore the plain language of the contract”
or impose his own “notions of industrial justice,” we are bound to enforce an award
if the arbitrator “is even arguably construing or applying the contract and acting
within the scope of his authority.” United Paperworkers Int’l Union v. Misco, Inc.,
484 U.S. 29, 38 (1987); see Major League Baseball Players Ass’n v. Garvey, 532 U.S.
504, 509 (2001). As has often been said, a labor arbitration award is legitimate “‘so
long as it draws its essence from the collective bargaining agreement.’” Boehringer
Ingelheim Vetmedica, Inc. v. United Food & Commercial Workers, Dist. Union Local
Two, 739 F.3d 1136, 1140 (8th Cir. 2014), quoting United Steelworkers of Am. v.
Enter. Wheel & Car Corp., 363 U.S. 593, 597 (1960). Applying this standard, the
district court concluded that the award at issue drew its essence from the CBA and
must be enforced. We agree.
Polar Tank argues that the district court erred, and the arbitration award may
not be enforced, because the arbitrator disregarded unambiguous provisions of the
CBA and therefore the award reflects “the arbitrator’s own notions of industrial
justice.” The principle is sound, but it is rarely breached by experienced labor
arbitrators. (Here, Article 6 of the CBA required the parties to obtain a list of seven
qualified arbitrators from the Federal Mediation and Conciliation Service. The
arbitrator selected by the parties, Ronald Hoh, has been an arbitrator since 1980 and
has multiple professional affiliations.)
Polar Tank argues the arbitrator disregarded two provisions of the CBA that
unambiguously mandated that Symons be discharged for the misconduct the arbitrator
found she had committed. First, Article 29 of the CBA declared that “[a]ll rules of
the Company now in force shall be observed by all employees.” The arbitrator failed
to obey Article 29, Polar Tank asserts, because it prescribed the disciplinary penalties
-5-

Appellate Case: 13-1943

Page: 5

Date Filed: 06/26/2014 Entry ID: 4169186

for five enumerated violations, including, as relevant here, “Insubordination such as
refusal to work on the job assigned . . . (penalty-discharge).” This contention is
contrary to controlling Supreme Court decisions. The arbitrator did not ignore the
“insubordination” mandate in Article 29. He carefully considered Symons’s poor
performance and concluded that it constituted negligence but not the type of
“insubordination” for which Article 29 mandated discharge. We are bound to enforce
that decision “arguably construing or applying” Article 29 under Misco, Garvey, and
other Supreme Court cases. An arbitrator “may not ignore the plain language of the
contract; but . . . a court should not reject an award on the ground that the arbitrator
misread the contract.” Misco, 484 U.S. at 38. We add, though it is not necessary to
our decision, that the need for this type of analysis in a just cause proceeding is hardly
surprising given the ambiguity inherent in the term “insubordination.”2
Second, Polar Tank argues that the arbitrator improperly ignored LaForge’s
testimony that Symons violated five behavior standards for which discharge was
mandated by Part B of Polar Tank’s Standards of Conduct. Polar Tank contends the
arbitrator was wrong to disregard these Standards on the ground that they “were
2

Polar Tank relies on two prior Eighth Circuit decisions we conclude are
distinguishable. In St. Louis Theatrical Co. v. St. Louis Theatrical Bhd. Local 6, the
grievant violated a “No Strikes - No Lock Outs” CBA provision that declared: “Any
employee violating this provision may be disciplined or discharged and shall have no
recourse to any other provisions of this Agreement except as to the fact of
participation.” Because of this limitation, we concluded that “the arbitrator has no
authority to evaluate the propriety of the Company’s discipline.” 715 F.2d 405, 408
(8th Cir. 1983). Article 29 of this CBA had no comparable limitation. In Northern
States Power Co. v. I.B.E.W., Local 160, we vacated an award because the
arbitrator’s finding that the company had “‘demonstrated justification’ for its decision
to terminate” was a finding of “just cause” that precluded the arbitrator from ordering
a different remedy. 711 F.3d 900, 903 (8th Cir. 2013). Here, the arbitrator found that
Symons’s conduct was not insubordination that was governed by Article 29,
proceeded to determine whether there was nonetheless just cause to discharge
Symons, and explicitly found no just cause.
-6-

Appellate Case: 13-1943

Page: 6

Date Filed: 06/26/2014 Entry ID: 4169186

implemented unilaterally by the Company without agreement of the Union.” The
Management Rights clause of the CBA, to which the Union agreed after the
Standards were adopted, expressly gave Polar Tank the right to “make reasonable
rules and regulations” and to suspend or discharge employees “for violation of such
rules or other proper and just cause.” This contention has two fatal flaws. First, the
reason the arbitrator gave for disregarding the Standards of Conduct was that “none
of them was included or cited in grievant’s termination letter or in any other
notification to the grievant.” Polar Tank asserts this statement was “contrary to the
Record,” but it was based on the uncontroverted testimony of decision-maker
LaForge. Polar Tank does not argue the arbitrator’s “due process” ruling was error
that precludes enforcing the award, and rightly so. Even if we disagreed with the
arbitrator’s notion of due process, “arbitrators have long been applying notions of
‘industrial due process’ to ‘just cause’ discharge cases.” Chauffeurs Local Union No.
878 v. Coca-Cola Bottling Co., 613 F.2d 716, 719 (8th Cir.), cert. denied, 446 U.S.
988 (1980); see Misco, 484 U.S. at 39-40 & n.8.
Second, and more importantly, Polar Tank’s reliance on the Management
Rights clause is contrary to controlling Eighth Circuit precedent that “differentiates
between explicit contractual language and rules or policies promulgated under a
general management rights clause.” Boehringer, 739 F.3d at 1141, citing Trailmobile
Trailer LLC v. Int’l Union of Elec. Workers, 223 F.3d 744, 748 (8th Cir. 2000).
“Only when the union has unambiguously agreed to an exception to the just cause
limitation, either in the CBA or in an agreement resolving a particular disciplinary
situation, will the arbitrator be precluded from conducting the collectively bargained
just cause analysis.” Id. Thus, even though the CBA acknowledged Polar Tank’s
right to adopt work rules, and the employees’ duty to observe those rules, “that does
not include the right to renege on the collectively bargained agreement that the
employer will only discharge an employee ‘for [good and sufficient] cause.’” Id.
Here, when Polar Tank submitted the issue of just cause to the arbitrator, “[i]t was for
the arbitrator to harmonize any discordant provisions within the contract relating to
-7-

Appellate Case: 13-1943

Page: 7

Date Filed: 06/26/2014 Entry ID: 4169186

the discretionary authority granted management and the just-cause requirements
limiting that authority.” Trailmobile, 223 F.3d at 747. The arbitrator’s resolution of
that often-difficult issue is what the parties agreed to in the CBA and therefore drew
its essence from the CBA.
For the foregoing reasons, the judgment of the district court enforcing the
arbitration award is affirmed.
______________________________

-8-

Appellate Case: 13-1943

Page: 8

Date Filed: 06/26/2014 Entry ID: 4169186