Peco Foods Inc v. Retail Wholesale and Department Store Union Mid-South Council

Filing 24

MEMORANDUM OF OPINION. Signed by Judge L Scott Coogler on 6/19/2017. (PSM)

FILED
2017 Jun-19 AM 11:31
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
PECO FOODS, INC.,
vs.

Plaintiff,

RETAIL WHOLESALE AND
DEPARTMENT STORE UNION
MID-SOUTH COUNCIL,
Defendant.

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7:16-cv-01345-LSC

MEMORANDUM OF OPINION
Before the Court are Plaintiff Peco Foods, Inc.’s (“Peco”) Motion for
Summary Judgment (Doc. 15), and Defendant Retail Wholesale and
Department Store Union Mid-South Council’s (“RWDSU” or “the Union”)
Motion for Summary Judgment (Doc. 17). This action arises out of the
termination of a Peco employee, and the subsequent arbitration
proceeding. Peco filed this action seeking the vacatur of the arbitrator’s
awards, and RWDSU has counterclaimed, seeking the enforcement of the
awards. For the reasons stated below, Plaintiff’s motion is due to be
denied. Defendant’s motion is due to be granted.
I.

Background

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Larry Richardson (“Richardson”) was employed by Peco and supervised
by Rodney Forte (“Forte”). On January 21, 2015, Forte held a safety
meeting, where he reminded the employees that throwing ice was
prohibited during work hours. (Doc. 17 at 2.) Richardson responded by
saying “I don’t throw ice, I throw lead.” (Id.) Recalling a recent
workplace shooting at another business, Forte reported the statement to
his supervisor. Stephen Johnston (“Johnston”), Peco’s Complex Human
Resources Director, launched an investigation, which included questioning
Richardson about the statement. Richardson did not provide an
explanation for his conduct, only stating “I know what other people think
I mean, but I don’t know what I mean.” (Pl. Ex. 1 at 11.) Johnston sent
Richardson home for the day, but he was paid as if he had finished his
workday. On January 22, 2015, Johnston contacted Steve Conley
(“Conley”),

the

Corporate

Human

Resource

Director,

with

a

recommendation that Richardson be terminated for making a threatening
comment. Conley approved the termination.
Richardson was a member of RWDSU, which had a collective
bargaining agreement (“CBA”) with Peco. The CBA gives Peco the right
“to manage its own business, including but not limited to the right . . . to
discipline and discharge employees for just cause.” (CBA at 2.) It also
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provides for a grievance and arbitration procedure as “the exclusive
means for the disposition of all grievances” arising out of a “dispute,
claim or complaint.” (Id. at 8.) According to the CBA, grievances are
“limited to matters of interpretation or application of express provisions
of [the CBA], and they shall be processed as promptly as possible in
accordance with the . . . steps, time limits and conditions” set out in the
agreement. (Id.)
The procedural requirements for grievances, as set forth in the CBA,
include a condition that RWDSU “shall give written notice to [Peco] of its
intent [to take a grievance to arbitration] within fifteen (15) calendar
days of the expiration of the time limit or the date of [Peco’s] answer” to
the grievance. (Id. at 9.) Next, “the parties shall . . . attempt to select
an impartial arbitrator.” (Id.) Further, the CBA states that “[t]he
grievance shall be considered settled if not appealed to a higher step
within an established time limit and shall not be the subject of any
further proceeding.” (Id.) However, that “provision may be waived in
specific instances by mutual written agreement of the parties.” (Id.) The
CBA goes on to define the power of the arbitrator, stating
The Jurisdiction and authority of the arbitrator and his opinion
and award shall be exclusively limited to the interpretation
and specific application of the written provisions of this
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agreement. The arbitrator shall have no power to add to,
subtract from, or modify the terms of this Agreement, or any
supplementary agreements, nor rule on any matter except on
grievances occurring while this Agreement is in full force and
effect between the parties. The arbitrator shall be bound by
the facts and arguments submitted to him and may not go
beyond the articles and sections of this Agreement, or
established past practices, in rendering his opinion and award.
(Id. at 10.) Lastly, “[t]he opinion and award of the arbitrator shall be
final and binding upon the parties when rendered upon a matter within
the authority to the arbitrator and within the scope of matters subject to
arbitration as provided in [the CBA].” (Id.)
In response to Richardson’s termination, RWDSU filed a grievance on
his behalf on January 30, 2015. Johnston denied the grievance on
February 23, 2015. Then, on March 23, 2015, RWDSU sent Peco a letter
requesting arbitration of the grievance. The Union submitted an
arbitration request to the Federal Mediation and Conciliation Service
(“FMCS”), and Peco received a list of possible arbitrators on March 25,
2015, and another one on February 25, 2016. Peco and RWDSU selected
an arbitrator on March 21, 2016. A hearing was held on May 17, 2016.
Both parties appeared at this proceeding and had the opportunity to
present evidence. Peco argued that the arbitrator did not have
jurisdiction to decide the grievance because “it did not demand

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arbitration of Peco’s decision within the proscribed time period of the
[CBA].” (Pl. Ex. 1 at 9.) It also argued that it “was within its broad right .
. . to terminate Richardson for cause,” because, even if the comment was
a joke, it violated Peco’s “no horseplay and practical jokes rule.” (Id. at
9, 12.) Lastly, Peco argued that “Richardson [was] not entitled to any
back pay because he did not mitigate his damages by making a good faith
effort to obtain replacement employment and the Union did not
prosecute the request for a hearing in an efficient and reasonable
manner.” (Id. at 9.)
In contrast, RWDSU argued that the arbitrator did have jurisdiction
to decide the grievance, claiming that Peco waived the timeliness
requirement because despite multiple discussions about resolution over a
fifteen-month period, Peco “waited until its opening statements at the
hearing to raise a challenge to the Grievance’s procedural arbitrability.”
(Id. at 25) RWDSU also claimed that Peco did not have just cause for
terminating Richardson, because his comment was not threatening, and
did not violate any of Peco’s policies.
In his award, the arbitrator decided that Peco “accepted the
Grievance and waive[d] its challenge to the Grievance[‘s] procedural
arbitrability.” (Id. at 36.) The arbitrator held that the grievance was
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therefore arbitrable, and that he had jurisdiction over the merits. He also
found that Richardson’s statement was not a threat and that Peco’s
argument that he had violated a rule against horseplay was untimely,
because it was not raised before the arbitration hearing. Therefore, Peco
did not have just cause for terminating Richardson.

Based on

Richardson’s testimony that “he received unemployment compensation
for a period of time and worked for an American Thrift store,” the
arbitrator found that Richardson was entitled to back pay for “the
difference between (1) his unemployment compensation for the period of
time he received it and his usual pay at Peco and (2) his pay at the thrift
shop and what he would have earned had he not been terminated.” (Id.
at 44.)
However, he left it up to the parties to decide if Richardson was
entitled to back pay for the period of time during which he did not
receive unemployment compensation or work at the thrift store. Peco
was ordered to “reinstate Larry Richardson to his former job, restore his
seniority, and make him whole for his losses.” (Id. at 44-45.) The
arbitrator retained jurisdiction over the matter for sixty days after his
decision, in order to resolve any remaining disputes. On September 12,
2016, RWDSU invoked the arbitrator’s jurisdiction in order to resolve the
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remaining issue—whether Richardson was entitled for back pay for the
periods when he did not work for the thrift store or receive
unemployment compensation. In a supplemental arbitration award on
September 12, 2016, the arbitrator held that “Richardson failed to make
a ‘reasonable good faith effort of seeking other employment’ during
these other periods [when he was not working for the thrift store and did
not receive unemployment compensation] and is not entitled to any
additional compensation.” (Doc. 19-5 at 2.) Peco filed this action on
August 18, 2016, seeking to vacate the arbitrator’s award. On September
13, 2016, RWDSU counterclaimed, seeking enforcement of the award.
II.

Standard of Review
Summary judgment is appropriate “if the movant shows that there is

no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material”
if it “might affect the outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). There is a
“genuine dispute” as to a material fact “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Id. The
trial judge should not weigh the evidence but must simply determine
whether there are any genuine issues that should be resolved at trial. Id.
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at 249.
In considering a motion for summary judgment, trial courts must
give deference to the nonmoving party by “considering all of the
evidence and the inferences it may yield in the light most favorable to
the nonmoving party.” McGee v. Sentinel Offender Servs., LLC, 719 F.3d
1236, 1242 (11th Cir. 2013) (citations omitted). In making a motion for
summary judgment, “the moving party has the burden of either negating
an essential element of the nonmoving party’s case or showing that there
is no evidence to prove a fact necessary to the nonmoving party’s case.”
Id. Although the trial courts must use caution when granting motions for
summary judgment, “[s]ummary judgment procedure is properly regarded
not as a disfavored procedural shortcut, but rather as an integral part of
the Federal Rules as a whole.” Celotex Corp. v. Catrett, 477 U.S. 317,
327 (1986).
III.

Discussion
When parties submit a case for arbitration pursuant to a CBA, the

award “is treated as a contractual obligation that can be enforced
through a [29 U.S.C. § 185] suit.” United Steel, Paper, & Forestry,
Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union Local 320
v. Wise Alloys, LLC, 642 F.3d 1344, 1349 (11th Cir. 2011). However, in
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order for a Court to enforce an arbitration award, “the arbitrator’s
interpretation of the [CBA] must be derived from the language of the
agreement.” Id. at 1351. An arbitrator’s “award is legitimate only so long
as it draws its essence from the [CBA].” Id. (quoting United Steelworkers
of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597 (1960)). In order
to determine if the award “draws its essence from the [CBA],” the Court
considers whether “the interpretation can in any rational way be derived
from the agreement, viewed in the light of its language, its context, and
any other indicia of the parties’ intention.” Id. (quoting Int’l Union of
Dist. 50, UMWA v. Bowman Transp., Inc., 421 F.2d 934, 936 (5th Cir.
1970)).
A. Jurisdiction
Peco moves to vacate the arbitration award, claiming that the
arbitrator did not have jurisdiction to hear the grievance, because RWDSU
did not meet the fifteen-day deadline for requesting arbitration after
Richardson’s grievance was denied. It is undisputed that RWDSU did not
request arbitration until thirteen days after the deadline for such a
request had passed. RWDSU, however, reiterates the arbitrator’s decision
that Peco waived this timeliness challenge by failing to bring it up until
the arbitration hearing.
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Peco alleges that the arbitrator’s holding that the grievance was
arbitrable does not draw its essence from the CBA, because the CBA
states that “[t]he grievance shall be considered settled if not appealed to
a higher step within an established time limit and shall not be the subject
of any further proceeding.” (CBA at 9.) Further, Peco asserts that the
arbitrator’s holding is contrary to the CBA, because the CBA does not
require that arbitrability issues be raised prior to an arbitration hearing.
The parties agree that the arbitrability of this grievance was a
question for the arbitrator. However, Peco asserts that this means that
the issue was properly raised for the first time at the hearing before the
arbitrator—because “[t]he Arbitrator did not require the preliminary
consideration of jurisdictional defenses before the hearing date.” (Doc.
16 at 11.) Thus, Peco argues, the arbitrator’s award is contrary to the
language in the CBA, and should be vacated. Yet “it is not the function of
the Court to second guess the arbitrator on matters that were within his
power to decide.” Shopmen’s Local 539 of Int’l Ass’n of Bridge,
Structural, & Ornamental Iron Workers v. Mosher Steel Co., 796 F.2d
1361, 1365 (11th Cir. 1986).
In Mosher, an arbitrator held that a timeliness requirement, similar
to the one at issue in this action, had been waived by the employer’s
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failure to raise it before the arbitration hearing. The employer filed an
action in federal district court, seeking to vacate the arbitration award
and have the grievance declared unarbitrable. The District Court ruled in
the employer’s favor. However, the Eleventh Circuit reversed this
decision, holding that the finding of waiver was “premised on the
arbitrator’s construction of the contract and his understanding of the
intent of the parties.” Id. at 1366 (quoting Drummond Coal Co. v. UMWA,
Dist. 20, 748 F.2d 1495, 1497 (11th Cir. 1984)). The Mosher court based
its decision on Drummond, holding that Drummond “answered all of the
issues raised” in Mosher.
In Drummond, the court held that “[t]he arbitrator’s decision not to
resolve the dispute on the basis of the language in the [CBA] requiring
[compliance with a time limit] does not . . . require this court to vacate
the arbitral award,” because “[a]rbitrators have frequently recognized
that parties may waive or otherwise be estopped from asserting rights
granted under the [CBA].” Drummond, 748 F.2d at 1498. Further, it held
that an arbitrator’s award of waiver is not “within the province of the
courts . . . to review,” because it “is based upon the arbitrator’s factual
assessment of the actions and intentions of the parties; it rests upon a
determination of the merits of the case.” Id.
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As illustrated by Mosher and Drummond, a finding of waiver may be
based on circumstances and facts outside the language of the CBA,
because it “necessarily requires the arbitrator to look beyond the
contract language to the actions of the parties.” Id. The parties in this
action have agreed that its arbitrability was within the arbitrator’s power
to decide, and it is clear that any review this Court would undertake
would have to be of the merits of the arbitrator’s construction. Because
“[j]udicial review of an arbitral award is . . . limited to a determination
of whether the arbitrator, in making the award, was functioning within
his authority” Id. at 1497, and the facts of Mosher and Drummond make it
clear that the arbitrator was acting within his authority in this action, the
arbitrator’s finding of waiver must stand. The Court will not vacate the
arbitrator’s finding of arbitrability.
B. Just Cause
Peco argues that the Court should vacate the arbitration award finding
that Peco did not have just cause to terminate Richardson because
dangerous or threatening conduct such as Richardson’s qualifies as just
cause for termination under the CBA. Thus, Peco claims, the arbitrator’s
finding did not draw its essence from the CBA. RWDSU does not dispute
that dangerous or threatening conduct constitutes just cause for
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termination under the CBA, but asserts that this Court must defer to the
arbitrator’s finding that Richardson did not engage in threatening
conduct. “The courts are not to engage in a review of the merits of the
arbitrator’s decision.” Drummond, 796 F.2d at 1497. Here, the arbitrator
made a factual finding that Richardson’s behavior was not threatening;
therefore, his decision about the existence of just cause is based on
“factual assessments” that cannot be second-guessed by this Court. Id. at
1498. The arbitrator’s interpretation of the threatening conduct that
constitutes just cause under the CBA is “final and binding on the parties
because it is this interpretation that is bargained for by the parties.” Id.
at 1497. Thus, the Court cannot vacate the arbitrator’s award finding
that Peco did not have just cause for terminating Richardson.
C. Public Policy
Peco also argues that the arbitration award should be vacated because
it conflicts with “public policy against violence and threatening behavior
in the workplace.” (Doc. 16 at 13.) As evidence of this “public policy,”
Peco points to 29 U.S.C. § 654(a), which requires employers to “furnish to
each of [their] employees employment and a place of employment which
are free from recognized hazards that are causing or are likely to cause
death or serious physical harm to [their] employees.” Peco also asserts
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that “employers can face liability under negligence theories and workers’
compensation laws for their failure to prevent workplace violence.” (Doc.
16 at 15.)
The Supreme Court has made it clear that, when analyzing a claim
that an arbitration award mandating reinstatement under a CBA violates
public policy, the Court “must assume that the [CBA] itself calls for . . .
reinstatement.” E. Associated Coal Corp. v. UMWA, Dist. 17, 531 U.S. 57,
61 (2000). Therefore, the question becomes “whether a contractual
reinstatement requirement would fall within the legal exception that
makes unenforceable ‘a collective-bargaining agreement that is contrary
to public policy.’” Id. at 62 (quoting W.R. Grace & Co. v. Local Union
United Rubber, Cork, Linoleum & Plastic Workers of Am., 461 U.S. 757,
766 (1983)). Thus, it is the “agreement to reinstate” which must be
contrary to public policy, not the misconduct itself. Id. at 62-63.
To fall under this exception, a public policy must be “explicit, well
defined, and dominant.” Id. at 62 (internal quotations omitted). It must
also be found in “the laws and legal precedents and not from general
considerations of supposed public interests.” Id. (internal quotations
omitted). Thus, in this action, the proper question is whether
Richardson’s reinstatement runs contrary to the requirement to “furnish .
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. . a place of employment . . . free from recognized hazards that are
causing or are likely to cause death or serious physical harm to his
employees.” 29 U.S.C. § 654(a). Peco claims that Richardson’s reemployment posed a “hazard that [was] . . . likely to cause death or
serious physical harm” because Richardson threatened to discharge a
firearm

in

the

workplace.

However,

the

arbitrator

found

that

Richardson’s comment was not a threat, and “courts are not authorized
to reconsider the merits of an award even though the parties may allege
that the award rests on errors of fact.” United Paperworkers Int’l Union,
AFL-CIO v. Misco, Inc., 484 U.S. 29, 36 (1987). Further, “[t]o resolve
disputes about the application of a [CBA], an arbitrator must find facts
and a court may not reject those findings simply because it disagrees with
them.” Id. at 37-38. “[T]he fact that it is inquiring into a possible
violation of public policy [does not] excuse a court for doing the
arbitrator’s task.” Id. at 45.
Here, assuming arguendo that Peco has established a public policy
sufficient to vacate an arbitration award, “no violation of that policy was
clearly shown.” Id. at 44. In Misco, the Supreme Court found that the
presence of drugs in an employee’s car in the workplace parking lot was
not enough to establish that an employee would be on drugs while
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working because “[a] refusal to enforce an award must rest on more than
speculation or assumption.” Id. Here, Peco has provided no other
evidence that Richardson would engage in dangerous or threatening
behavior than his comment about “throwing lead”—which the arbitrator
found was not a threat of violence. Even if Peco had provided such
evidence, the Court cannot interfere with the arbitrator’s factual
findings, because “[t]he parties did not bargain for the facts to be found
by a court, but by an arbitrator chosen by them.” Id. at 45. Therefore,
Peco has failed to show that re-employing Richardson would violate any
public policy against exposing employees to unsafe workplaces. The
arbitrator’s award will not be vacated as in violation of public policy.
D. Back Pay
Peco argues that the arbitrator exceeded his authority because he
ordered Peco to pay Richardson backpay “despite Richardson’s failure to
mitigate his damages.” (Doc. 16 at 16.) It also claims that the award
“does not draw its essence from the CBA because it makes Richardson
more than whole” by granting him back pay without a showing of proper
mitigation. (Id.) Peco bases these arguments on its assertion that “[t]he
Arbitrator . . . acknowledged the fact that [RWDSU] failed to present
evidence of Richardson’s’ efforts to mitigate damages.” (Id. at 17.)
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However, this assertion is inconsistent with the arbitration award, which
finds, based on Richardson’s testimony, that he received unemployment
for a period of time, and worked for a thrift shop for another duration.
(Pl. Ex. 1 at 44.) The arbitrator found that this was sufficient evidence of
mitigation, and held that Richardson was entitled to back pay for those
periods. 1 While Peco may disagree with the arbitrator’s decisions about
the sufficiency of the evidence and the resulting back pay award, as
explained above, these are not sufficient grounds for a court to vacate an
arbitrator’s award. The Court cannot second guess the arbitrator’s
factual finding of mitigation, and therefore, will not vacate the
arbitration award.
E. Vagueness
Peco also argues that the back pay award is “ambiguous, arbitrary,
and capricious because it is not self-executing and requires the parties to
calculate Richardson’s damages using evidence that was not introduced
during the arbitration and that has not been authenticated or sworn.”
(Doc. 21 at 21.) However, the arbitrator clearly delineated how the back
pay

award

was

to

be

calculated—by

1

subtracting

Richardson’s

In a supplemental award, the arbitrator held that Richardson was not entitled to
backpay for the periods when he was not working for the thrift store and did not
receive unemployment compensation. However, that award is not challenged by the
parties.
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unemployment compensation and thrift store pay from his pay rate at
Peco—and “an arbitration award requiring reinstatement and backpay,
but leaving the calculation of the amount of backpay to the parties, is
considered final and enforceable.” Aluminum Brick & Glass Workers Int’l
Union v. AAA Plumbing Pottery Corp., 991 F.2d 1545, 1549 (11th Cir.
1993). If any disputes should arise about the interpretation of the award,
they are to be properly resolved by the arbitrator, and not by this Court.
Id. (“the normal course of action is to treat the award as ambiguous or
incomplete and remand the dispute to the original arbitrator to clarify
the award.”). However, Peco has not shown that it has attempted to
calculate the amount of back pay, or even that the dispute is about the
alleged quantity of the award. Instead, Peco simply disagrees with the
arbitrator’s basis for the award, which is an evidentiary matter that this
Court cannot second-guess. See Misco, 484 U.S. at 45. Therefore, the
Court cannot vacate the arbitration award on this basis.
IV.

Conclusion
For the reasons stated above, summary judgment is due to be granted

in RWDSU’s favor. The Court finds that the arbitration award is due to be
enforced. A separate order consistent with this opinion will be entered.

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DONE and ORDERED this 19th day of June 2017.

_____________________________
L. Scott Coogler
United States District Judge

186291

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