Exxon Mobil Corporation v. United Steel Workers Local Union 11-470

Filing 39

ORDER ADDRESSING CROSS MOTIONS FOR SUMMARY JUDGMENT. 30 ExxonMobil's Motion for Summary Judgment is DENIED; 27 Union's Motion for Summary Judgment is GRANTED. Respecting the Union's request for attorney fees and costs, theUnion may file an appropriate motion on or before July 11, 2016. Signed by Magistrate Judge Carolyn S Ostby on 6/9/2016. (JDR, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
EXXONMOBIL CORPORATION,
d/b/a EXXONMOBIL BILLINGS
REFINERY,
Plaintiff,

CV 15-123-BLG-CSO

ORDER ADDRESSING CROSS
MOTIONS FOR
SUMMARY JUDGMENT

vs.
UNITED STEEL WORKERS
LOCAL UNION 11-470,
Defendant.

I.

Introduction
This is an arbitration award review action. Plaintiff ExxonMobil

Corporation, d/b/a ExxonMobil Billings Refinery (“ExxonMobil” or the
“Company”), seeks to vacate the award and Defendant United Steel
Workers Local Union 11-470 (the “Union”) seeks to enforce it. The
award concluded that ExxonMobil violated the parties’ collective
bargaining agreement by not filling a vacant janitor position with a
bargaining unit employee while instead transferring the position’s
duties to contract employees.

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This Court has jurisdiction under Section 301 of the Labor
Management Relations Act (“LMRA”), 29 U.S.C. § 185. By Notice filed
January 28, 2016, upon the parties’ written consent, this matter was
assigned to the undersigned for all proceedings. Notice of Assignment
(ECF No. 17).
Before the Court are the parties’ cross motions for summary
judgment. Union’s Mtn. (ECF No. 27) and ExxonMobil’s Mtn. (ECF No.
30). For the reasons discussed below, the Court grants the Union’s
motion and denies ExxonMobil’s motion.
II.

Background1
ExxonMobil operates a crude oil refinery in Billings, Montana. As

of August 26, 2015, the Union represented approximately 145 of the
refinery’s employees.
ExxonMobil and the Union have had a bargaining relationship
since 1945. Relevant to this action, ExxonMobil and the Union entered
into a collective bargaining agreement (the “Agreement”) (ECF No. 1-2)
effective February 1, 2012 through January 31, 2015. The Agreement
1

The background facts, taken from the parties Statement of
Stipulated Facts (ECF No. 20), are undisputed.
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covered employment terms and conditions of ExxonMobil employees at
the Billings Refinery, excluding technical, office, clerical, sales
employees, armed guards, and supervisors. The parties agree that the
Agreement must be interpreted as a whole, but for purposes of the
instant action further agree that the most relevant provisions are: (1)
Article XIV Arbitration; (2) Article XVI Miscellaneous; (3) Article XX
Contract Work; and (4) Article XXII Reservations of Management.
The parties negotiated the subcontracting rights provision
contained in Article XX during their 2012 negotiations. It contained
newly-agreed-upon language. In December 2012, after the Agreement’s
implementation, Vince Castro, ExxonMobil’s In-Plant Janitor at the
refinery, voluntarily decided to retire. Rather than fill Mr. Castro’s
position, ExxonMobil chose to contract out his duties to a third-party
janitorial service.
ExxonMobil’s decision to contract out the duties that Mr. Castro
previously performed did not result in the layoff of any bargaining unit
member. The decision did, however, result in the In-Plant Janitor
position no longer being filled by a member of the bargaining unit.

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Before Mr. Castro’s retirement, ExxonMobil already contracted out the
majority of its janitorial work. ExxonMobil’s reliance on third-party
contractors to perform the majority of its janitorial work predated the
parties commencing 2012 contract negotiations. There are
approximately 80-100 contractors who perform work for ExxonMobil at
its Billings refinery on a day-to-day basis. ExxonMobil’s ongoing
relationship with these third-party contractors has not caused an
overall decrease in the size of the Union’s bargaining unit.
On December 13, 2012, the Union filed a grievance (the
“Grievance”) (ECF No. 11-1) relating to ExxonMobil’s decision to
contract out the work that Mr. Castro previously performed. The
parties were unable to resolve the matter through the lower levels of the
grievance procedure, as set forth in Article XIV of the Agreement, and
the Union requested arbitration of the Grievance.
The parties were unable to agree on the issue presented to
Arbitrator James A. Lundberg (“Arbitrator Lundberg”). ExxonMobil
proposed the issue as: “Did the Company violate the Articles of
Agreement by contracting out the In-Plant Janitor position, after the

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incumbent In-Plant Janitor retired? If so, what shall the remedy be?”
The Union proposed the issue as: “Did the Company violate the Articles
of Agreement by not filling the In-Plant Janitor position, after the
incumbent In-Plant Janitor retired? If so, what shall the remedy be?”
Arbitrator Lundberg, therefore, was tasked with deciding whether
ExxonMobil’s decision to contract out the work or not fill the position
formerly performed by Mr. Castro violated the Agreement.
On July 15, 2015, a hearing was held before Arbitrator Lundberg.
On August 26, 2015, following the hearing and submission of posthearing briefs by the parties, Arbitrator Lundberg issued a Grievance
Arbitration Opinion and Award (the “Award”) (ECF No. 1-1) sustaining
the Grievance and finding that ExxonMobil’s decision to contract out
these duties constituted an erosion of the bargaining unit, in violation of
Article XVI of the Agreement.
On November 24, 2015, ExxonMobil filed this action seeking to
vacate the Award. On January 8, 2016, the Union filed an Answer and
Counterclaim seeking, inter alia, to dismiss ExxonMobil’s Complaint
and to enforce the Award.

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III. Summary of the Parties’ Arguments
A.

The Union

The Union argues as follows:
The Court should enforce the Award under well-established Ninth
Circuit authority. Arbitrator Lundberg acted within his authority in
rationally resolving the dispute. And, the Award properly draws its
essence from the Agreement. Union’s Opening Br. (ECF No. 28) at 9.
More specifically, the Award is enforceable because: (1) the parties
agreed that their dispute was properly before Arbitrator Lundberg
pursuant to the Agreement, id. at 11; (2) Arbitrator Lundberg: (a)
correctly cited all relevant Agreement provisions; (b) accurately
summarized both parties’ positions; ©) correctly noted that the parties
focused on different provisions of the Agreement; (d) properly
interpreted Article XX’s contracting-out language as less than absolute
to give effect to Article XVI’s bargaining unit-erosion language; and (e)
properly distinguished an earlier arbitration award in which – unlike
the situation here – there was no net loss of bargaining unit positions
when certain lab analysts work was contracted out, id. at 11-13; (3) the

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arbitrator’s consideration of arbitration awards that predate the 2012
Agreement was not improper because it put in context the “law of the
shop” and was not beyond the arbitrator’s authority to consider them,
id. at 14; and (4) if the arbitrator was “even arguably” construing or
applying the Agreement, the Court is not permitted to overrule him
under well-established authority, id. at 15.
B.

ExxonMobil’s Arguments

ExxonMobil argues as follows:
The Court must vacate the Award as null, void, and of no effect.
ExxonMobil’s Opening Br. (ECF No. 31) at 2. The Award falls within a
class of arbitration awards that the law of the Ninth Circuit allows to be
vacated. Arbitrator Lundberg impermissibly ignored Agreement
language. He tried to force ExxonMobil and the Union into unscheduled
negotiations to construct what he deemed a fair outcome, and thus
dispensed his own form of industrial justice. Id. at 7. In doing so, he
fashioned an award that does not draw its essence from the Agreement.
Id.
First, even though judicial review of arbitration awards is limited,

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such awards can be vacated when an award ignores plain contract
language. Id. When Arbitrator Lundberg ignored the Agreement’s
language, the Award he issued failed to draw its essence from the
Agreement. Id. at 8. He disregarded applicable subcontracting
language in the Agreement that the parties’ negotiated in 2012 to form
the Agreement and instead relied on Agreement language that does not
cover subcontracting. Rather, the language relied upon applies only to
situations in which ExxonMobil transfers work to Company employees
excluded from the bargaining unit – a situation not present here. Thus,
the Award does not draw its essence from the Agreement. Id. at 9-10.
Second, Arbitrator Lundberg impermissibly tried to force the
parties to negotiate new contract language rather than apply the
existing Agreement language. Id. at 10. In doing so, he improperly
“based his decision on supposition, economic impact, and his subjective
belief that the [p]arties should return to the bargaining table.” Id. at 11
(emphasis omitted). Such conduct is an example of an arbitrator’s
dispensing his or her own “brand of industrial justice” that requires
vacating an arbitration award. Id.

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Third, Arbitrator Lundberg exceeded the scope of his authority
under the parties’ Agreement. Id. at 11-13. Specifically, he: (1)
improperly relied on pre-2012 Agreement awards; and (2) impermissibly
modified Agreement language to force ExxonMobil to the bargaining
table by changing Article XVI Section 6 from a provision applicable only
to transfer of work among Company employees to one also applicable to
the transfer of work to third-party non-employee subcontractors,
effectively rewriting the Agreement and exceeding the scope of his
authority, id. at 13.
IV.

Applicable Law
A.

Summary Judgment Standard

“The court shall grant summary judgment 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
party seeking summary judgment always bears the initial responsibility
of informing the court of the basis for its motion, and identifying those
portions of the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, which it believes

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demonstrate the absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Material facts are those which may affect the outcome of the case.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as
to a material fact is genuine if there is sufficient evidence for a
reasonable fact-finder to return a verdict for the nonmoving party. Id.
If the moving party meets its initial responsibility, the burden then
shifts to the opposing party to establish that a genuine issue of fact
exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986).
When parties file cross-motions for summary judgment, as here,
the Court must consider each motion on its own merits. Fair Housing
Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1136
(9th Cir. 2001). The fact that both parties have moved for summary
judgment does not vitiate the Court’s responsibility to determine
whether disputed issues of material fact are present. Id.
B.

Court Review of Arbitration Awards

The Ninth Circuit very recently explained that, “[b]ecause of the

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centrality of the arbitration process to stable collective bargaining
relationships, courts reviewing labor arbitration awards afford a ‘nearly
unparalleled degree of deference’ to the arbitrator’s decision.”
Southwest Regional Council of Carpenters v. Drywall Dynamics, Inc.,
___ F.3d ___, 2016 WL 2909241, *3 (9th Cir., May 19, 2016) (“Drywall
Dynamics”) (quoting Stead Motors of Walnut Creek v. Auto. Machinists
Lodge No. 1173, Int’l Ass’n of Machinists & Aerospace Workers, 886 F.2d
1200, 1204-05 (9th Cir. 1989) (en banc). Courts reviewing arbitration
awards are to apply this heightened deference “both to the arbitrator’s
interpretation of the parties’ agreement and to his findings of fact.” Id.
(citing Stead Motors, 886 F.2d at 1207).
Respecting contractual interpretation in this context, the Supreme
Court has admonished that “the parties hav[e] authorized the arbitrator
to give meaning to the language of the agreement, [so] a court should
not reject an award on the ground that the arbitrator misread the
contract.” Id. (quoting United Paperworkers Int’l Union, AFL–CIO v.
Misco, Inc., 484 U.S. 29, 38 (1987)). The Ninth Circuit embraces this
admonition explaining that “even if we were convinced that the

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arbitrator misread the contract or erred in interpreting it, such a
conviction would not be a permissible ground for vacating the award.”
Id. (quoting Virginia Mason Hosp. v. Washington State Nurses Assn, 511
F.3d 908, 913-14 (9th Cir. 2007) (footnote omitted)). “Indeed, ‘[s]ince the
labor arbitrator is designed to function in essence as the parties’
surrogate, he cannot “misinterpret” a collective bargaining agreement.’”
Id. (quoting Stead Motors, 886 F.2d at 1205). “[A]s long as the
arbitrator is even arguably construing or applying the contract and
acting within the scope of his authority,” a court must uphold the
award. Id. (quoting Misco, 484 U.S. at 38). Thus, “[a] court may
intervene only when an arbitrator’s award fails to ‘draw[ ] its essence
from the collective bargaining agreement,’ such that the arbitrator is
merely ‘dispens[ing] his own brand of industrial justice.’” Id. (quoting
United Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363 U.S.
593, 597 (1960)).
And, respecting fact finding in this context, “[t]he parties did not
bargain for the facts to be found by a court, but by an arbitrator chosen
by them.” Id. at *4 (quoting Misco, 484 U.S. at 45). Thus, “improvident,

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even silly, factfinding ... is hardly a sufficient basis for disregarding
what the agent appointed by the parties determined to be the historical
facts.” Id. (quoting Misco, 484 U.S. at 39). Consequently, a court cannot
disregard the arbitrator’s factual findings nor supplement them with its
own findings. Id. (citing Stead Motors, 886 F.2d at 1207).
Only under “limited circumstances” is “the vacatur of a labor
arbitration award . . . justified.” Id. The Ninth Circuit has recognized
only four such circumstances: “(1) when the award does not draw its
essence from the collective bargaining agreement and the arbitrator is
dispensing his own brand of industrial justice; (2) where the arbitrator
exceeds the boundaries of the issues submitted to him; (3) when the
award is contrary to public policy; or (4) when the award is procured by
fraud.” Id. (quoting Southern Cal. Gas Co. v. Utility Workers Union of
Am., Local 132, AFL-CIO, 265 F.3d 787, 792-93 (9th Cir. 2001)).
V.

Discussion
Here, ExxonMobil relies on the first circumstance listed above in

seeking vacatur of the Award. The Court is not persuaded.
Arbitrator Lundberg’s Award clearly was grounded in his

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consideration of the parties’ Agreement. First, he set forth, verbatim,
the relevant Agreement provisions. ECF No. 1-1 at 2-3. He noted that
ExxonMobil relied on Article XX to support its position that “the
assignment of work to a contractor did not cause a lay off of any
bargaining unit employee, since the bargaining unit employee who
previously filled the position retired.” Id. at 10. And, he noted, the
Union relied on Article XVI (6) to support its position that ExxonMobil
is prohibited from eroding the bargaining unit. Id.
Arbitrator Lundberg further observed that “there is no question
that the 2012 collective bargaining agreement includes a bargaining
unit classification of In-Plant Janitor” while also noting that “a proposal
to eliminate the In-Plant Janitor position from the bargaining unit was
not agreed upon during negotiations over the 2012 contract.” Id. at 11.
He then quoted from arbitration hearing testimony concerning the InPlant Janitor position in the 2012 Agreement negotiations. Id. at 11-12.
From the Award’s language, it is readily apparent that Arbitrator
Lundberg looked at and, at the very least, arguably construed and
applied the Agreement. He noted that the parties focused on different

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Agreement provisions. He quoted those provisions. And, he noted “the
interrelationship and tension between the contracting out provision [at]
Article XX and the bargaining union erosion provision at Article XVI, (6)
of the [Agreement].” ECF No. 1-1 at 14. Ultimately, he determined
that:
[T]here is a net loss of one bargaining unit position. The loss
of the position was not the result of the parties agreeing to
eliminate the In-Plant Janitor classification in negotiations.
Instead, the bargaining unit position is lost by leaving the InPlant Janitor position unfilled and transferring the work to a
contractor, as there has been no “lay off.” However, leaving
the job classification unfilled does result in bargaining unit
erosion based upon the interpretations of the erosion
language made by Arbitrators in 1978 and in 2014.
*

*

*

The replacement of the In-Plant Janitor position with
contract employees violated the Article XVI, (6) bargaining
unit erosion provision, as it has been interpreted for roughly
thirty-seven (37) years.
Id. at 15-16.
Applying the foregoing authority, the Court is not permitted to
evaluate his interpretation to determine whether it satisfies “some
judicial standard of acceptability as a construction of a contract.”
Drywall Dynamics, supra, at *5 (noting that if an arbitrator “made any
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interpretation or application of the agreement at all . . . the court’s
inquiry ends.”). And, even if the Court were “convinced that the
arbitrator misread the contract or erred in interpreting it, such a
conviction would not be a permissible ground for vacating the award.”
Id. (quoting Virginia Mason Hosp., 511 F.3d at 913-14). Thus, the Court
cannot – and will not – disturb Arbitrator Lundberg’s award based on
ExxonMobil’s contention that he “ignored” or otherwise misapplied or
misapprehended Agreement language.
Similarly, the Court is not permitted to second guess the
arbitrator’s factual findings. As noted, ExxonMobil argues that
Arbitrator Lundberg misinterpreted the parties’ Agreement, in part,
because he concluded that ExxonMobil transferred the janitor duties to
company employees excluded from the bargaining unit when it actually
transferred the duties to contract employees. The argument is
unavailing. As discussed, “improvident, even silly, factfinding” cannot
support a decision to reject an arbitrator’s determination of the facts.
Id. at *4 (quoting Misco, 484 U.S. at 39)
The Court also finds unpersuasive ExxonMobil’s argument that

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Arbitrator Lundberg’s discussion of earlier arbitration awards
concerning the bargaining unit erosion provision at Article XVI caused
him to fashion an award that does not draw its essence from the 2012
Agreement. ECF No. 31 at 7. In Drywall Dynamics, the arbitration
board that rendered the award in that case interpreted the parties’
agreements “in light of the past practices of the parties.” Drywall
Dynamics, supra, at *6. The Ninth Circuit approved of the arbitration
board’s use of the parties’ past practices as informing its interpretation
of the current agreements, noting that “[t]he Supreme Court has
explained that ‘the industrial common law – the practices of the
industry and the shop – is equally a part of a collective bargaining
agreement although not expressed in it.’” Id. (quoting United Steel
Workers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 581-82
(1960)). And, the court concluded, the arbitration board “based its
decision on the parties’ agreements, both as written and as informed by
past practice[ ]” so that the district court that first reviewed the
arbitration award “should have deferred to the [arbitration board’s]
interpretation rather than inquiring into its substantive merit.” Id.

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The same analysis is appropriate here. As noted, Arbitrator
Lundberg looked at and at least arguably construed and applied the
Agreement. That he also considered the parties’ past practice, informed
by and reflected in previous arbitration awards construing the same
bargaining unit erosion provision as that contained in the 2012
Agreement, was not error and did not render his Award one that did not
derive its essence from the Agreement. Thus, it cannot reasonably be
argued that Arbitrator Lundberg simply dispensed his own brand of
industrial justice.
Finally, the Court rejects ExxonMobil’s argument that Arbitrator
Lundberg impermissibly tried to force the parties to negotiate new
contract language rather than apply the existing Agreement language.
In his Opinion and Award, the arbitrator noted that the parties “were
unable to resolve the grievance through negotiations and the matter
was brought to arbitration for a final and binding determination.” ECF
No. 1-1 at 5. He did not order the parties to negotiate; he issued a final
and binding award.

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VI.

Conclusion
For the foregoing reasons, IT IS ORDERED that the Union’s

motion for summary judgment (ECF No. 27) is GRANTED and
ExxonMobil’s motion for summary judgment (ECF No. 30) is DENIED.
Respecting the Union’s request for attorney fees and costs, the
Union may file an appropriate motion on or before July 11, 2016.
Briefing respecting any such motion will be governed by the Local
Rules.
DATED this 9th day of June, 2016.

/s/ Carolyn S. Ostby
United States Magistrate Judge

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