International Association Of Machinists and Aerospace Workers, District Lodge No. 24, Local 1005 v. Freightliner, LLC/Daimler Trucks North America LLC

Filing 24

Findings & Recommendation - The Union's motion 12 for summary judgment should be DENIED. Freightliner's motion 14 for summary judgment should be GRANTED. This matter should be REMANDED to the arbitrator for further proceedings consistent with this decision. This Findings and Recommendation will be REFERRED to a United States District Judge for review. Objections, if any, are due no later than 8/19/09. If no objections are filed, review of the Findings and Recommendation will go under advisement on that date. If objections are filed, any party may file a response within fourteen days after the date the objections are filed. Review of the Findings and Recommendation will go under advisement when the response is due or filed, whichever date is earlier. Signed on 8/5/09 by Magistrate Judge John V. Acosta. (peg)

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF OREGON

INTERNATIONAL ASSOCIATION OF MACHINISTS AND A E R O S P A C E WORKERS, DISTRICT L O D G E NO. 24, LOCAL 1005, Plaintiff,

Civ No. 08-CV-1327-AC

FINDINGS A N D R E C O M M E N D A T I O N S

v.
FREIGHTLINER, L L C / D A I M L E R T R U C K S N O R T H A M E R I C A , LLC, Defendant.

A C O S T A , M a g i s t r a t e Judge: International Association o f Machinists and Aerospace Workers, District Lodge No. 24, Local I 005 seeks to enforce an arbitration award reinstating Ryan Schulenberg to employment with F r e i g h t l i n e r , L L C / D a i m l e r T r u c k s N o r t h A m e r i c a , LLC. F r e i g h t l i n e r t e r m i n a t e d S c h u l e n b e r g ' s e m p l o y m e n t i n 2 0 0 6 f o r v i o l a t i n g F r e i g h t l i n e r ' s p o l i c y p r o h i b i t i n g sexual harassment. Freightliner contends that the c o u r t should not enforce the arbitrator's reinstatement award because it violates I - FINDINGS AND RECOMMENDATIONS

the public policy embodied in Title VII, and because the basis for the arbitrator's ruling does not "draw its essence" from the parties' collective bargaining agreement ( " C B A " o r "contract"). Both the Union and Freightliner have filed motions for summary judgment t o obtain relief on their respective p o s i t i o n s . Based o n the record the parties submitted and applying the controlling scope o f review, the court concludes that the arbitrator's award did not draw its essence from the parties' collective bargaining agreement. Specifically, in reaching his decision, the arbitrator did not consider the final and binding disciplinary action Freightliner imposed against Schulenberg in 1999 for violating its sexual harassment policy. The arbitrator, without authority drawn from the CBA, reevaluated and effectively nullified this prior final disciplinary action between the parties. In doing so, he also directly contravened the C B A ' s explicit time limits for grieving disciplinary action. Therefore, the arbitrator's award should be vacated. However, the case should be remanded to the arbitrator. Specifically, remand is necessary here, and not futile, because the arbitrator must determine whether Freightliner had j u s t cause to terminate Schulenberg in 2006, when considering Schulenberg's 1999 discipline and the final warning. Accordingly, Freightliner's motion for summary judgment should be granted and the U n i o n ' s motion for summary judgment should be denied, and the case should be remanded to the arbitrator for further proceedings.

Background
The parties stipulate to or do not dispute the following material facts. A. Relevant Contract and Policy Provisions. The parties' CBA contains provisions relevant to employee discipline generally and to the 2 - FINDINGS AND R E C O M M E N D A n O N S

resolution o f this specific case. Article XIX, entitled "Grievance Procedure," provides in relevant part: Section 2. Any employee or Union grievance must be submitted in writing and properly signed by the employee or Union official claiming to be aggrieved within ten ( l 0 ) working days o f the date upon which the event or events alleged to constitute the grievance were first known o r should have been known to the employee or Union official; except that any grievance alleging unjustified termination or misapplication o f l a y o f f must be submitted within three (3) working days. Section 3. In the event that the parties shall be unable to adjust any grievance or dispute arising under the terms o f this Contract, the following steps shall be taken:

Step 3. In the event the Union wishes to proceed with Step 3, the U n i o n s h a l l m a k e t h e i r r e q u e s t i n w r i t i n g , w i t h a copy o f t h e grievance to the Plant Manager, for arbitration by a third party. The arbitrator shall be chosen mutually by the Employer and the Union. The decision o f the arbitrator shall be final and binding upon both parties.

The decision o f the arbitrator shall be final and binding upon both parties, b u t the arbitrator shall have no power to render a decision which adds to, subtracts from, or modifies this Agreement. . . .

Section 4. I t is understood that the Union will be the moving party in each step o f the grievance procedure. Grievances not advanced to the next step w i t h i n the time limits o f this Article shall be considered withdrawn. Time limits in this Article may be extended upon mutual agreement in writing between the Company and the Union. (Stipulated Joint Statement o f Facts ("Stipulation"), Ex. A at 39-42. 1) Article XVIII, entitled

Each exhibit attached to the Stipulation bears a letter designation assigned in connection with the Stipulation but the exhibits are not separately paginated. Therefore, page citations to these exhibits are to their original page numbers or, i f there are no original page numbers, to the p a g e ' s position in the order o f pages o f the cited exhibit.
1

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"Miscellaneous Provisions," Section 9, states: The Company will make a consistent effort to issue warnings or discipline, including attendance, within 15 days o f the alleged infraction . . . . Warning letters unrelated to attendance problems will be reviewed by the Employer at the request o f an employee after six (6) months from the date o f issue and may be subj ect to the grievance procedure." (Stipulation, Ex. A at 38.) Article XXIII, entitled "Management Rights," provides that "[a]1I management rights not expressly curtailed or surrendered by this Agreement are reserved to the E m p l o y e r . " ( S t i p u l a t i o n , E x . A at 44.) T h e C B A i n c o r p o r a t e s F r e i g h t l i n e r ' s p o l i c i e s p r o h i b i t i n g d i s c r i m i n a t i o n and h a r a s s m e n t . Article VI, entitled "Non-Discrimination," states:
I t is the continuing policy o f the Employer and the Union that the provisions o f this Agreement shall be applied to all persons without regard to race, color, religion, national origin, sex, age o r disability.

All employees are encouraged to report discrimination and harassment o f any nature without fear o f retaliation. All employees should refer to the posted Company P o l i c y for f u r t h e r c l a r i f i c a t i o n . (Stipulation, Ex. A at 21.) Freightliner's Anti-Harassment Policy provides in relevant part:

II. POLICY
Harassment o f employees in the workplace does not contribute to good working relations, productivity, o r morale and will not be condoned o r tolerated. Any harassment, whether o r not it constitutes illegal discrimination, is strictly prohibited. Any employee who engages in harassment will be disciplined up to and including discharge.

I l l . DEFINITION
Harassment is behavior (words, gestures, actions) whieh annoys, alarms o r abuses a n o t h e r employee a n d w h i c h u n d e r m i n e s t h e i n t e g r i t y o f t h e e m p l o y m e n t r e l a t i o n s h i p by interfering with a n employee's work performance, o r o f creating an intimidating, hostile, o r o f f e n s i v e w o r k i n g environment.

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(Stipulation, Ex. B at I . ) Freightliner's "Corporate Policy Fair Employment Practices" provides in relevant part:

I t is Freightliner's policy to provide a n environment that is free from unlawful harassment. Therefore, all forms o f harassment related to an employee's race, color, r e l i g i o n , s e x , g e n d e r , age, n a t i o n a l o r i g i n , d i s a b i l i t y o r v e t e r a n s t a t u s c o n s t i t u t e violations o f this policy. In furtherance o f this policy, Frcightliner LLC will not tolerate the use o f racial, religious, sexual gender-based, age-related, ethnic, or disability-related epithets, innuendos, slurs, o r j o k e s within its facilities. In addition, all forms o f verbal, non-verbal, and physical harassment based on the above categories are p r o h i b i t e d . . . .
With regard t o sexual harassment in particular, unwelcome sexual advances, requests for sexual favors and other verbal o r physical conduct o f a sexual nature are considered instances o f sexual harassment when: Such conduct has the purpose o r effect o f unreasonably interfering with an employee's work performance or creates an intimidating, hostile, or offensive work environment. . . .

I t is important to remember that behavior which one individual considers innocent or harmless may be regarded as sexual harassment by another person . . . . Frcightliner LLC will not tolerate sexual harassment o f its employees by anyone, including F r e i g h t l i n e r L L C o f f i c i a l s , o t h e r e m p l o y e e s or i n d i v i d u a l s c o n d u c t i n g b u s i n e s s w i t h Freightliner. Any employee who violates this harassment policy . . . will be subject to disciplinary action, u p to and including termination o f employment.

The company will immediately thoroughly investigate all incidents a n d will take prompt and effective remedial action that stops the harassment. T h e remedial action m a y i n c l u d e oral w a r n i n g s , w r i t t e n w a r n i n g s , t r a n s f e r s , a n d o t h e r d i s c i p l i n e o r a c t i o n , including termination, that stops the harassment. . . . (Stipulation, Ex. C a t 1-2.) In addition to containing substantially the same language as appears in the "Corporate Policy F a i r E m p l o y m e n t P r a c t i c e s , " F r e i g h t l i n e r ' s " D i s c r i m i n a t i o n , E q u a l E m p l o y m e n t O p p o r t u n i t y and H a r a s s m e n t C o m p l a i n t P r o c e d u r e s " a l s o provides t h a t " [ w ] h e r e i n v e s t i g a t i o n d i s c l o s e s h a r a s s m e n t , Freightliner LLC will take p r o m p t and effective remedial action which may include termination o f 5 - FINDINGS AND RECOMMENDATIONS

the harasser." (Stipulation, Ex. D a t 4.) The CBA contains no memoranda o f understanding modifying the C B A ' s provisions or changing the applicability o f F r e i g h t l i n e r ' s anti-discrimination policies to Union employees. Neither party cited, and the record contains no reference to, any past practice, practices o f the industry, or plant customs relevant to application o f the contractual deadlines for filing grievances, challenging t e r m i n a t i o n , o r s e e k i n g r e v i e w o f p a s t discipline. B. Schulenberg's 1999 Discipline. On July 28, 1999, following an investigation o f alleged sexual harassment, Freightliner issued a "final warning" letter to Schulenberg for violating Freightliner's sexual harassment policy by engaging in verbal conduct toward a female co-worker. Schulenberg: In general, the investigation revealed that many employees, male and female, have engaged in a variety o f sexually oriented activities that are prohibited by the F r e i g h t l i n e r policies. In the letter, Freightliner told

You, specifically, have been identified as an individual who has participated in one or more prohibited activities. You are put on final notice that any future engagement by you in this type o f prohibited behavior will be cause for more severe discipline up to an [sic] including discharge . . . . (Declaration o f Daniel R. Barnhart ("Barnhart Decl."), Ex. U-7.) The sexual harassment allegations that prompted Freightliner's investigation appeared in a June 17, 1999, complaint filed with the O r e g o n B u r e a u o f L a b o r a n d Industries ( " B a L I " ) . Regarding Schulenberg specifically, the

complaint alleged that he said to the complainant "Nice tongue ring, are you going to start sucking a lot o f peter?" (Barnhart Dec!., Ex. U-6 at 3.) 6 - FINDINGS AND R E C O M M E N D A T I O N S

, T h e 1999 f i n a l w a r n i n g l e t t e r c o n s t i t u t e d d i s c i p l i n a r y a c t i o n a g a i n s t S c h u l e n b e r g , b u t n e i t h e r he nor the Union filed a grievance challenging it. (Stipulation, Ex, G at 5,) Furthermore, the record does not disclose that at a n y t i m e following imposition o f t h e 1999 final warning, Schulenberg ever requested that Freightliner, i n accordance with the CBA, " r e v i e w " the 1999 discipline and place it into the grievance process, Freightliner relied o n the 1999 final warning letter and the conduct upon which it was based, as that conduct was described in the BOLI complaint, in deciding to terminate S c h u l e n b e r g in 2 0 0 6 . B o t h the 1999 final warning letter and the BOLI complaint w e r e admitted into evidence at the 2 0 0 6 arbitration. (Stipulation, Ex. G at 2.) In t h a t proceeding, neither the Union n o r

Schulenberg disputed that Schulenberg had received the 1999 final warning letter o r that the final warning had been based o n the allegation i n the BOLI complaint. A t oral argument on the parties' cross-motions for s u m m m y j u d g m e n t , the Union acknowledged that the 1999 final warning had not b e e n grieved, had not b e e n removed from S c h u l e n b e r g ' s personnel record, was final between the parties, and had to be t a k e n " w i t h i n its four corners." C. S c h u l e n b e r g ' s 2 0 0 6 Termination. In late June 2006, Freightliner hired t w o 20-year old female college students, JB and CB, to w o r k o n its truck a s s e m b l y line as p a r t o f its summer intern program. (Stipulation, Ex. G at 6.) Schulenberg, age 31 at the time, t h o u g h t JB was " f u n and pretty," and o n t w o separate occasions he invited her to go rafting with him, which invitations she declined.
(lei.)

Unbeknownst to

Schulenberg, other co-workers had shared with,TB rumors about S c h u l e n b e r g ' s sexual practices and had advised JB to " s t a y away" from Schulenberg. (lei.) S c h u l e n b e r g s u b s e q u e n t l y l e a r n e d t h a t a n o t h e r e m p l o y e e h a d t o l d JB " s o m e t h i n g a b o u t

7 - FINDINGS AND R E C O M M E N D A T I O N S

[Schulenberg's] sexual activities." (Id.) Concerned that this information would lower J B ' s opinion o f him, Schulenberg asked to meet w i t h her to explain the gossip about his personal sex life. (Id. at 6-7.) JB at first refused to meet with Schulenberg but then agreed to meet, and she told him that CB would aecompany her w h e n they mel. (Id. at 7. ) The three met o n Freightliner premises in a n area near the employee break room, during a work break. (Id.) Sehulenberg began by asking both JB and CB whether they were virgins, then told them that "whoever ' t o o k their virginity away from t h e m ' would be a very lueky person." (Id.) He also stated that they would understand more about sexuality when they were sexually active. Id. Next, after asking JB what she had heard about him, Schulenberg proeeeded to "explicitly deseribe to [JB and CB] his sexual exploits and preferenees including the fact that he enjoyed it when his girlfriend urinated o n h i m during s e x , " as well as describing o t h e r sexual activities whieh eould be viewed " b y a reasonable person as violating sexual taboos." (Id. a t 7 , 14.) Although uncomfortable, disgusted, and upset by S c h u l e n b e r g ' s statements, JB and CB did not report the eonversation to Freightliner as sexual harassment, partly because they did not v i e w it as sexual harassment and partly from fear that they could lose their relatively well-paying summer jobs. (Id. at 7.) Co-workers learned o f the conversation, however, and o n July 13 or 14 Freightliner began an investigation o f the matter. (Id. at 7.) Sehulenberg, who had recently participated in Freightliner's sexual harassment training, stated when interviewed a f e w days later that he " d i d not think that his conversation with [IB and CB] involved anything wrong[.]" (Id. at 8.) O n July 18, 2006, Freightliner "terminated [Schulenberg] for violating [Freightliner's] antiharassment poliey." (Id. at 8.) Freightliner based its termination decision o n Schulenberg's 1999 final warning for violating the c o m p a n y ' s sexual harassment policy, the prior warning that any future

8 - FINDINGS A N D R E C O M M E N D A T I O N S

violations o f the c o m p a n y ' s sexual harassment policy would lead to termination, Schulenberg's participation i n sexual harassment training several months before the June 2006 incident, and o n the f a c t t h a t S c h u l e n b e r g h a d d i r e c t e d h i s c o n d u c t a t two y o u n g s u m m e r i n t e r n s w h o s e e m p l o y m e n t h a d j u s t begun. ( l d . ) D. T h e Arbitration D e c i s i o n o n S c h u l e n b e r g ' s 2006 Termination. The Union filed a grievance o n July 19, 2006, challenging S c h u l e n b e r g ' s termination as unjust. (ld. at 8.) N e i t h e r Schulenberg nor the Union denied that Schulenberg engaged in the reporled verbal conduct t o w a r d JB and CB. However, they v i g o r o u s l y c o n t e s t e d that his verbal conduct constituted sexual harassment or warranted the severest form o f discipline, termination. The grievance proceeded to arbitration, and i n April and June 2008 an arbitrator heard the grievance to decide: I ) whether Freightliner h a d j u s t cause to discharge Schulenberg; and 2) i f not, the appropriate remedy to impose. (Jd. at 1.) In his October 2008 decision, the arbitrator ordered Freightliner to reinstate Schulenberg with b a c k pay, less a four-week suspension. (Stipulation, Ex. G at 18.) In reaching this decision, the a r b i t r a t o r found Freightliner proved in July 2006 that Schulenberg created an offensive work environment for the two female co-workers, in violation o f Freightliner's policies Cid. at 14); t h a t S c h u l e n b e r g ' s actions i n July 2006 did not rise to the level o f conduct warranting an immediate termination, absent "progressive discipline" (id. at 16); and that Schulenberg was n o t a " r e p e a t offender" such that reinstating h i m to employment would violate public policy (id. at 18). To reach his finding that Schulenberg was n o t a " r e p e a t offender," the arbitrator d i d not consider S c h u l e n b e r g ' s 1999 final warning letter. In his decision, the arbitrator described the context f o r t h e 1999 final warning letter and explained his reasons for not considering this disciplinary action

9 - FINDINGS A N D R E C O M M E N D A T I O N S

in connection with Schulenberg's 2006 termination: 1999 "final notice " to G r ie v a n tfo r engaging in s e x u a l harassment. In 1999, three female employees o f Employer filed complaints and lawsuits against the Employer alleging sexual harassment by Grievant and three other male employees (EL, TS and RL). The lawsuit alleged that Grievant had stated to one female: "Nice tongue ring. Are you going to start sucking a lot o f peter?" The suit also alleged that the Employer knew or should have known about the male employees' conduct but did not take prompt corrective action to eliminate the hostile work environment. Employer investigated and on July 28, 1999 issued a letter to Grievant. The letter stated, in part: In general, the investigation revealed that many employees, male and female, have engaged in a variety o f sexually oriented activities that are prohibited by [the Employer's] policies. Conduct that is prohibited by the company policies include unwelcome sexual advances, requests for sexual favor, and other v e r b a l o r p h y s i c a l c o n d u c t o f a s e x u a l n a t u r e w h e n s u c h c o n d u c t has the purpose or effect o f . . . creating an intimidating, hostile or o f f e n s i v e w o r k i n g environment. [D]iscussions o r comments r e g a r d i n g m a l e a n d f e m a l e anatomy or sexual language that is unwelcome by other employees are among the prohibited activities. You, specifically, have been identified as an individual who has participated in one o r more prohibited activities. You are put o n l i n a l n o t i c e that anyfitture engagement by y o u in this type o f p r o h i b i t e d behavior will be cause f o r //lore severe discipline up to an [sic] including discharge.

Very importantly, the Employer's 1999 "final notice" to Grievant does not contain any description o f his misconduct in that incident, and the Employer presented no witness or other evidence that explained what Grievant did. The record does include a copy o f a lawsuit filed by three women employed by Employer; they alleged that Grievant had stated to one female: "Nice tongue ring. Are you going to start sucking a lot o f peter?" That comment, i f made by Grievant, would clearly be offensive. However, I do not consider an allegation in that lawsuit as p r o o f i n this labor grievance arbitration. Without any evidence about Grievant's 1999 conduct, it is not possible to determine the significance o f that conduct to the level o f discipline the Employer imposed for Grievant's 2006 conduct. As a result, I do not consider the 1999 final notice. 10 - FINDINGS AND RECOMMENDATIONS

(Stipulation, Ex. G a t 5, 15 (italics in original).) M o v i n g to the c o n d u c t giving rise to S c h u l e n b e r g ' s termination, the arbitrator reviewed arbitration decisions t h a t o b s e r v e d that progressive discipline for m i s c o n d u c t is the general rule, with exception for m i s c o n d u c t that is "particularly severe." (Jd. at 15.) T h e a r b i t r a t o r found

S c h u l e n b e r g ' s 2006 c o n d u c t to b e " t o w a r d t h e less serious end o f t h e c o n t i n u u m , " and that although " o f f e n s i v e and clearly unacceptable[,] was not so severe o r heinous as to w a r r a n t a n exception t o the progressive discipline c o m p o n e n t o f the j u s t cause standard." (Jd. at 16.) T h e arbitrator then stated: T h e E m p l o y e r notes that arbitrators generally have f o u n d that discharge is the appropriate p e n a l t y w h e n a n e m p l o y e e ' s violation o f the harassment policy is a r e p e a t o f f e n s e . . . . H o w e v e r , the E m p l o y e r d i d n o t e s t a b l i s h i n t h i s c a s e t h a t Grievant is a repeat offender: as noted above, the E m p l o y e r did not p r o v i d e any evidence a b o u t G r i e v a n t ' s m i s c o n d u c t that resulted in the 1999 "final n o t i c e . " (Stipulation, Ex. G a t 17 (italics in original).) I-laving concluded that S c h u l e n b e r g was not a repeat offender a n d that the 2 0 0 6 c o n d u c t was a n "isolated incident" (id. a t 14) not sufficient to warrant discharge, the arbitrator o r d e r e d Freightliner to reinstate Schulenberg w i t h a four-week suspension.

(Id. at 18.)
Freightliner refused to reinstate Schulenberg. On N o v e m b e r 12, 2008, the Union filed suit against Freightliner s e e k i n g t o enforce the October 3, 2008, arbitration award. Freightliner filed a n a n s w e r o n D e c e m b e r 4, 2008, w i t h a counterclaim to vacate the arbitration award. On February 17, 2009, the parties filed cro s s -m o t i o n s for s u m m a r y j u d g m e n t a n d filed a stipulation to all o f the m a t e r i a l facts.

Standards
A. S u m m a r y J u d g m e n t u n d e r Federal R u l e o f Civil Procedure 56. S u m m a r y j u d g m e n t is appropriate o n l y w h e n the record s h o w s that " t h e r e is no genuine issue I I - FINDINGS A N D R E C O M M E N D A T I O N S

as to any material fact and that the moving party is entitled to judgment as a matter o f law." FED. R. CIV. P. 56(c); Celotex Call). v. Catrell, 477 U.S. 317, 323 (1986). On their cross-motions for summary judgment the parties have stipulated to the material facts underlying their dispute and to the evidence supporting those facts. With the factual record n o t in dispute, the court's analysis centers o n the law applicable to judicial enforcement o f labor arbitration awards. The standard which governs the c o u r t ' s analysis follows below. B. Scope o f Review in Actions to Enforce Labor Arbitration Awards. Labor unions representing employees in an industry affecting commerce may bring lawsuits in federal court when they believe an employer has violated the labor contract. 29 U.S.C. § 185(a). A n employer violates the contract when it refuses to implement an arbitration award made in accordance with the parties' contractual grievance process. In such lawsuits, the courts' review o f an arbitrator's award is narrow and limited. The Supreme Court announced a strong public policy in favor o f resolving labor disputes through arbitration in the cases known as the "Steelworkers Trilogy." See United Steelworkers v.
American Manufacturing Co., 363 U.S. 564 (1960); United Steelworkers v. Warrior and G u ( f Navigation Co., 363 U.S. 574 (1960); and United Steelworkers v. Enterprise Wheel & Car Corp.,

363 U.S. 593 (1960) ("The federal policy o f settling labor disputes by arbitration would be undermined i f courts had the final say on the merits o f the awards."). See also Hawaii Teamsters
a n d A l l i e d Workers Union, L o c a l 996 v. United Parcel Service, 241 F.3d 1177, 1181 (9th Cir. 200 I )

("Our task is, in essence, to review the procedural soundness o f the arbitral decision, not its substantive merit."). Accordingly, "the courts play only a limited role when asked to review the decision o f an arbitrator." United Paperworkers Int '1 Union v. Misco, Inc., 484 U.S. 29, 36 (1987).

12 - FINDINGS AND RECOMMENDATIONS

The Ninth Circuit strictly follows these principles. United F o o d & C o m m e r c i a l Workers Int '! Union,
L o c a l 5 8 8 v . F o s t e r POllltl)1 F a r m s , 74 F.3d 169, 173 (9th Cir. 1995) ("In this circuit, because fedcral

l a b o r p o l i c y s t r o n g l y favors t h e r e s o l u t i o n o f l a b o r d i s p u t e s t h r o u g h a r b i t r a t i o n , ' [ j ] u d i c i a l scrutiny o f an arbitrator's decision is e x t r e m e l y limited.' ") (italics in original, citations omitted). Courts are not authorized to reconsider the merits o f an award, as doing so would undermine the federal policy o f settling labor disputes by arbitration. Id. An arbitration award must be upheld "as long as the arbitrator's award 'draws its essence tl"Omthe collective bargaining agreement,' and is not merely ' h i s o w n brand o f industrial j u s t i c e . ' Id., citing E n l e i p r i s e Wheel, 363 U.S. at 597. As long as the award represents a "plausible interpretation o f the contract" the court is bound to enforce it. United F o o d & C o m m e r c i a l Workers Union, L o c a l 1119, A F L - C I O v. United lvlarkets, 784 F.2d 1413, 1415 (1986) (internal citations omitted). A c c o r d Van Waters & Rogers, Inc. v. I n t ' l
B r o t h e r h o o d o / T e a m s t e r s , 56 F . 3 d 1132, 1136 (9th Cir. 1995) ( " A n arbitration award must be

confinl1ed ' [ a ] s long as the arbitrator is even a r g l l a b l y e o n s t r u i n g o r applying the contract and acting within the scope o f his authority.") (italics in original). The c o u r t ' s task " i s to determine w h e t h e r the arbitrator interpreted the collective bargaining agreement, n o t whether he did so correctly."
H a w a i i Teamsters, 241 F.3d at 1178 (italics in original).

However, an arbitrator is not completely without constraints in deciding disputes submitted pursuant to a collective bargaining agreement. There are three exceptions to this deferential review standard. First, the court will not defer to the arbitrator's award i f the award does not "draw its essence" from the collective bargaining agreement. E n t e l p r i s e 'Wheel, 363 U.S. at 597. "An award draws its essence from the [collective bargaining agreement] w h e n it is based on language in the CBA." S F I C Props. v. I n t ' ! A s s ' n o / M a c h i n i s t s & A e r o s p a c e Workers, Dist. L o d g e 9 4 , 1 0 3 F.3d

13 - FINDINGS AND RECOMMENDATIONS

923, 925 (9th Cir. 1996). As the Supreme Court observed: [A]n arbitrator is confined to interpretation and application o f thc collectivc bargaining agrecment; he does not sit to dispense his own brand o f industrial justice. He may o f course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement o f the award.
Enterprise Wheel, 363 U.S. at 597. 2 Thus, an award does not d r a w its essence from the contract

when it "ignores the plain language o f the contract and 'manifestly disregards' the contours o f the agreement." S t e a d Motors a / W a l n u t C r e e k v . Automotive Machinists Lodge 1173, 886 F.2d 1200, 1205 n.6 (9th Cir. 1989), cert. denied, 495 U.S. 946 (1990). See also Fredrick Meiswinkel, Inc. v.
L a b o r e r ' s Union L o c a l 2 6 1 , 7 4 4 F.2d 1374, 1376 (9th Cir. 19 8 4 ) ( " A n award that conflicts directly

with the contract cannot be a 'plausible interpretation.'" (citation omitted)); United lvfarkets, 784 F.2d at 1415, 1416 ( i f the a r b i t r a t o r ' s interpretation violates o r is " i n direct conflict with" the terms o f the agreement, the interpretation is implausible and the court cannot enforce the award). In short, " a n arbitrator's award is not bulletproof;" he is not free to " f o l l o w his own whims and biases" and "dispense his own brand o f industrial justice." Hawaii Teamsters, 241 F .3d at 1181, 1182, citing
Garvey v. Roberts, 203 F . 3 d 5 8 0 , 588-89 (9th Cir.2000), and Entel7Jrise Wheel, 363 U.S. at 597.

Second, an award will n o t be upheld i f the arbitrator cxceeded the boundaries o f the issues presented in making the award. P a c k Concrete, Inc. v. Cunningham, 866 F.2d 283, 285 (9th Cir. 1989). The arbitrator's determination o f the scope o f the review before him is entitled to the same level o f deference as is the interpretation o f the collective bargaining agreement itself.
Id.

Although an arbitrator may also look at industrial common law - the practices o f the industry and the shop, and p l a n t customs which are part o f the collective bargaining agreement although not expressed in it, Virginia lo(/ason Hospital v. Washington State Nurses A s s 'n, 511 F 3 d 9 0 8 , 915 (9th Cir. 2007) - neither party asserts that additional practices or customs are relevant o r should have been considered by the arbitrator, and the arbitrator cited none in his decision.
2

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Nonetheless, the contract limits an arbitrator's authority and the arbitrator " c a n bind the parties only on those issues that they have agreed to submit to him." Fredrick Meisll'inkel, 744 F.2d at 1377. Third, the court cannot uphold an arbitrator's award i f the implementation o f that award would violate public policy. lvlisco, 484 U.S. at 43. " A c o u r t ' s refusal to cnforcc an arbitrator's award under a collective-bargaining agreement because it is contrary to public policy is a specific application o f the more general doctrine, rootcd in the common law, that a court may refuse to enforcc contracts that violatc law o r public policy." }/lisco, 484 U.S. at 373. The court must find that an explicit and well-defined public policy exists, and that the policy specifically precludes thc rclief the arbitrator awarded. Foster Poultl)' Farms, 74 F.3d at 174. " I f a court relies on public policy to vacate an arbitral award reinstating an employee, it must be a policy that bars reinstatemcnt. Courts cannot determine merely that there is a 'public policy' against a particular sort o f behavior in socicty gcncrally . . . . " United Transp. Union v. Burlington N. R.R. Co., 864 F. Supp. 138, 141 (D. Or. 1994). Discussion Summarized, the p a r t i e s ' arguments are these. The Union contends that the Court should affirm the October 3, 2008, arbitration award, and that it may not vacate the award because o f the narrow scope o f judicial review and the deference due an arbitrator's determination. Freightliner contends that the arbitration award should be vacated because it does not d r a w its esscnec from the CBA, and because reinstating Sehulcnberg to the workplace would violate thc public policy against sexual harassment. A. Whcther the Award Draws Its Esscnee from the Contract. Freightliner's contention on this point focuses on the arbitrator's decision not to consider Schulenberg's 1999 final warning for violating Freightliner's sexual harassment policy; without it, 15 - FINDINGS AND RECOMMENDATIONS

the arbitrator found that Schulenberg was not a "repeat offender" and, thus, that j u s t cause did not exist for termination bascd only on the 2006 misconduct. Freightliner further argues that the arbitrator's award violates the C B A ' s management rights clause because it strips Freightliner o f its right to enforce its sexual harassment policy, and because it nullifies the C B A ' s grievance procedures by effectively vacating prior final discipline long after the contractual time limits for the Union o r Schulenberg t o challenge that discipline had expired. (Defendant's Memorandum in Support o f S u m m a r y J u d g m e n t ( " F r e i g h t l i n e r S u p p o r t M e m o " ) 16-18.) The Union contends that the C B A ' s management rights clause does not superccde the arbitrator's authority to determinc whether j u s t cause exists for disciplinary action. The Union also argues that the arbitrator properly found that Freightliner failed to prove the misconduct upon which the 1999 final warning was based because the final warning did n o t contain a description o f the misconduct; thus, Freightliner "failed to prove what Grievant did in 1999." (Plaintiff U n i o n ' s Memorandum in Opposition to D e f e n d a n t ' s Motion for Summary Judgmcnt ("Union Opp. Memo") 6, 10.) On this point, the Union asserts that Freightliner asks the court to "second-guess" the arbitrator's evidentiary ruling, which action would be outside the applicable standard for the c o u r t ' s review. (lei. at 12.) O f the material facts stipulated to by the parties, two require specific discussion here. First, the arbitrator found that Freightliner issued the 1999 final warning to Schulenberg based on the allegation against Schulenberg contained in the B a L I complaint. T h e arbitrator found that

Freightliner had issued the 1999 final warning to Schulenberg for a valid business reason: to inform Schulenberg that Frcightliner was scrious about prohibiting harassment in the workplacc as was alleged in the complaint. (Stipulation, Ex. G at 5.) In reaching that conclusion, the arbitrator first

16 - FINDINGS AND RECOMMENDATIONS

described the 1999 B O L l complaint filed by three female employees, and he quoted the specific allegation that Schulenberg sexually harassed one o f them by saying " N i c e tongue ring. Are you going to start sucking a lot o f peter?" (Stipulation, Ex. G a t 5.) The arbitrator also noted that the "Employer investigated and . . . issued a letter to Grievant" based on this allegation. (Id.) Both the 1999 final warning letter and the B O L l complaint were received as evidence at the 2006 hearing. (Barnhart Dec!.
,r~

1 , 2 , 3 ; Stipulation, Ex. G a t 5 , 1 5 . )

Second, neither Schulenberg nor the Union grieved the 1999 final w a n u n g letter. (Stipulation ~ 14.) The arbitrator expressly acknowledged this fact. (Stipulation, Ex. G a t 5.) The parties further stipulated that Schulenberg never asked for a post-six month review o f the warning letter, as was his right under the terms o f the CBA. (Stipulation,r 14.) Thus, prior to the 2006 arbitration o f Schulenberg's termination, Schulenberg's 1999 final warning had been issued pursuant to, and become final discipline under, the terms o f the CBA. The time within which the Uniou o r Schulenberg could have grieved the 1999 discipline had expired and Schulenberg had never exercised his contractual right to ask Freightliner to review the discipline. Given these undisputed facts, the relevant inquiry for the court is whether the arbitrator had authority under the CBA to reconsider the factual basis for the 1999 final warning; more precisely, whether he had the authority to find that for purposes o f the 2006 termination arbitration the factual basis for the 1999 final warning h a d not been proved in 1999. The court concludes that he did not have that authority. By disregarding Schulenberg's 1999 final warning for violating Freightliner's sexual harassment policy, the arbitrator did not rely on or interpret any term in the CBA. Instead, the arbitrator acted outside o f and contrary to the C B A by effectively giving Schulenberg and the Union the ability to challenge final disciplinary action beyond the time limits expressly specified in the

17 - FINDINGS AND RECOMMENDATIONS

CBA, which action "ignored the plain language o f the contract." S t e a d Motors, 886 F.2d at 1205.

See also Hawaii Teamsters, 241 F.3d at 1181 ("the arbitrator has no discretion to 'ignore the plain
language o f t h e ' CBA"). This action also violated the e x p r e s s p r o v i s i o n in the CBA that "the arbitrator shall have no p o w e r to render a decision which adds to, subtracts from, o r modifies this Agrecment." (Stipulation, Ex. A, at 41.) The arbitrator did not merely d r a w inferences from the evidence, as the Union argues, o r make an evidentiary ruling that, the U n i o n urges, is beyond the c o u r t ' s scope o f review. First, and contrary to the U n i o n ' s contention, the arbitrator's decision makes clear that the arbitrator in fact did know what "Grievant did in 1999." As he acknowledged in his decision, the arbitratorreceived into evidence both the 1999 final discipline letter and the B O L l complaint that contained the description o f the sexually charged c o m m e n t Schulenberg made to a female coworker. Indeed, the arbitrator quoted, verbatim, the comment for which Mr. Schulenberg was disciplined. (Stipulation, Ex. G a t 5, 15.) Thus, it is indisputable that the arbitrator knew what conduct gave rise to thc 1999 final warning Freightliner issued to Schulenberg. Sccond, the U n i o n ' s other argument and the premise o f the arbitrator's decision to disregard the 1999 final warning - that Frcightliner was required to "prove" in a 2006 arbitration challenging S c h u l e n b e r g ' s termination the conduct upon which the 1999 final warning was based - finds no support in the CBA and, in fact, is directly contrmy to the c o n t r a c t ' s e x p r e s s provisions. Notably, the Union cites no provision o f the CBA giving the arbitrator the authority to reject o r reconsider the propriety o f o r factual merit for p r i o r disciplinary actions which are not the subject o f the discipline that the parties hired the arbitrator to decide. N o r does the Union cite any CI3A provision that allows it or a bargaining-unit employee to challenge final discipline beyond the time limits established in the CBA, or to collaterally challenge it w h e n grieving another disciplinary action based on scparate 18 - FINDINGS AND RE CO MME N DATION S

conduct. F o r his part, the arbitrator cited no specific provision o f the CBA, made no reference to the CBA generally, and cited to no supporting precedent in determining that he could determine whether the factual basis for the 1999 final warning was sufficient. See, e.g., Hawaii Teamsters, 241 F.3d at 1184-85 (listing "as part o f w h a t is known as the federal labor law" other arbitration awards interpreting the same provision at issue, statutes, case decisions, principles o f contract law, practices, assumptions, understandings, the "common law o f the shop," and " t h e industrial common law"). The arbitrator cited no history o f the parties agreeing to extend the C B A ' s time lines for grieving disciplinary action o r their agreement, here or in prior arbitrations, to allow arbitrators to review prior disciplinary action not the subject o f the instant grievance. N o r did the arbitrator draw from any precedent o f industry custom recognizing an arbitrator's authority to reexamine previously decided disciplinary action. Instead, he rejected the 1999 final warning solely because he did "not consider an allegation in lawsuit to b e p r o o f i n this labor grievance arbitration," and from there declared that he would " n o t consider the 1999 final notice." Thus, the a r b i t r a t o r was not interpreting the CBA, " e v e n arguably," when he rejected as insufficient the factual basis for the 1999 disciplinary action, as no provision in the CBA gave him the power to determine whether prior disciplinary action had been based on sufficient facts. Rather, he ignored "the plain language" o f the C B A ' s bargained-for grievance process and governing time limitations for challenging discipline, choosing instead to import into the parties' contractual relationship a subjective criterion for which they had not bargained and to which they had not stipulated. In so doing, the arbitrator "followed his own whims and biases" and "dispense[ d] his own brand o f industrial j u s t i c e . " T o b e sure, the c o u r t ' s review o f arbitration awards is "extremely limited," Major League Baseball Players Ass 'n v. Garvey, 532 U.S. 504, 509 (2001), but the decisions are equally clear that the courts act within that narrow scope when they decline to enforce 19 - FINDINGS AND RECOMMENDATIONS

or they vacate and remand a n arbitration award that does not draw its essence from the contract, o r that ignores the c o n t r a c t ' s plain language, and which reflects the arbitrator's " o w n personal, subjective notions o f f a i r n e s s i n collective bargaining." Anheuser-Busch, Inc. v. Local 74 4 , 2 8 0 F.3d 1133, 1141 n.4 (7th Cir. 2002) ("Thus, it is evident that the arbitrator rejected the plain language o f the contract, without ever claiming to be 'interpreting' any provision o f it and in doing so rewrote

the contract and inscribed his own language upon the contract; something that he was not authorized to do.") (italics in original). See also ,vlountaineer Gas Company v. Oil, Chemical & Atomic Workers Int 'I Union, et. al., 76 F.3d 606, 610 (4th Cir. 1 9 9 6 ) (district court properly vacated
arbitrator's award where arbitrator cxpressed "great difficulty" accepting policy providing for mandatory termination for positive drug tests; arbitrator "fashion[ed] an cntire new remedy and infus[ed] his personal feelings and scnse o f fairness into the award[.]"); Freightliner, LLC v.

Teamsters Local 305, 336 F. Supp. 2d 1118, 1125-26 (D. Or. 2004) (vacating arbitrator's
reinstatement award because it '''ignore[d] thc plain language o f the contract'" where arbitrator d i s r e g a r d i n g thc C B A ' s d e f i n i t i o n o f " u n d e r the i n f l u e n c e " a n d i n s t e a d r e l i e d u p o n a s t a t u t o r y definition that the parties had not incorporated into thc contract) (citation omitted). Further on this key issue, the facts o f the 1999 final warning were established once the time for challenging that discipline expired. Undcr the CBA, thc Union or Schulenberg had thc right to challenge the 1999 final warning within thirty days o f its implementation. Within that time period they could have challenged the severity o f the discipline o r the facts upon which it was based. They did neither. Thus, the final warning and its factual basis became established between the parties; as the Union acknowledged at oral argument, the 1999 disciplinary action was final between the parties and had to be taken "within its four corners" in this matter. This conclusion finds support from the existence o f explicit time limits and stated methods for grieving or challenging discipline in the CBA. In his decision, the arbitrator explicitly observed 20 - FINDINGS AND RECOMMENDATIONS

that neither "the Union nor [Schulenberg] grieved the warning" (Stipulation, Ex. G at 5), an acknowledgment by the arbitrator o f that the 1999 discipline had not been challenged under the C B A ' s g o v e r n i n g p r o v i s i o n s . T h o s e c o n t r a c t u a l p r o v i s i o n s c a n h a v e m e a n i n g o n l y i f they a n d t h e final results reached in accordance with them are respected. 3 In addition, as noted above, the arbitrator considered and decided an issue not submitted to him by the parties: whether a sufficient factual basis existed for Schulenberg's 1999 final warning.
See Fredrick lVfeisll'inkel, 744 F.2d at 1377 (the contract limits an arbitrator's authority and the

arbitrator " c a n bind the parties only on those issues that they have agreed to submit to him"). There is no dispute that the sole issuc for the arbitrator to decide was whether Fl'cightlincl' had terminated Schulenberg in 2006 for j u s t cause; indced, the arbitrator states this as the precise issue for him to determine. (See Stipulation, Ex. G at I . ) The propriety o f Schulenberg's 1999 final warning had not bcen submitted to thc arbitrator and was not before him, and the U n i o n cites no authority or support for the proposition that the arbitrator was free to reconsider the merits o f the 1999 disciplinary action. Thus, that dctermination was not his task at the 2006 arbitration, and by making it he decided an issue the parties never submitted to him for resolution. Although thc parties bargained for an arbitrator to find facts o n the dispute for which they retained him, Schulcnberg's 2006 tcrmination, nothing in the contract n o r the record demonstrates that they retaincd him to revisit facts prcviously e s t a b l i s h e d b c t w e e n t h e m r e g a r d i n g a p r c v i o u s d i s c i p l i n a r y action. As also mentioned above, the arbitrator violated the C B A ' s cxpress prohibition o f "render[ing] a decision w h i c h adds to, subtracts from, or modifies this Agreement." (Stipulation, Ex. A at 41.) Specifically, the arbitrator effectively gave t h e Union and Schulenberg two rights

Thus, a n arbitrator would act equally outside the contract i f he revisited and decided to consider for purposes o f progressive discipline a prior disciplinary action that had becn withdrawn by thc employer o r overturned during thc grievance process, bccause he determined that the facts upon w h i c h the discipline had been bascd in fact supported the disciplinary action.
3

21 - FINDINGS AND RECOMMENDATIONS

which the CBA did not grant. First, the arbitrator allowed the Union and Schulenberg to grieve disciplinary action after the C B A time limits for doing so had expired, when he reexamined and disregarded as not " p r o v e d " Schulenberg's 1999 discipline for sexual harassment. Second, he allowed the Union and Schulenberg to nullifY a step in Schulenberg's progressive disciplinc process by eliminating f i u m c o n s i d e r a t i o n the 1999 final warning, which discipline Freightliner had issucd for Schulenberg's violation o f the same policy for which Schulenberg's subsequent termination had been implemented. N o provision o f the CBA granted either remedy to the Union o r a union employee, b u t t h e arbitrator's ruling here created both. See U n i t e d }"larke/s, 784 F.2d at 1416 (court o f appeals affirmed district c o u r t ' s refusal to enforce the arbitrator's award as not drawing its essence from the contract, in part because the arbitrator ruled that c o n t r a c t ' s penalties would not be invoked until the employer committed three violations o f the provision at issue instead o f the two violations explicitly specified in the contract, thus giving the employer a "fi'ee bite"). In sum, the arbitrator did not interpret the contract, disregarded what the parties had put before him, added to the parties' CBA, and followed his own " w h i m s o r biases" in disregarding Schulenberg's 1999 final warning. As such, his decision did not " d r a w its essence" from the parties' contract. Accordingly, his award should be vacated.
B.

Whether Reinstatement Would Violate Public Policy. Freightliner also argues that reinstating Schulenberg to its employment would violate the

public policy underlying Title V I I ' s prohibition against sexual harassment in the workplace. Freightliner argues that w h e n Schulenberg's 1999 tinal warning for violating its sexual harassment policy is considered, he knowingly engaged in sexually harassment conduct even after he received a final warning that put him o n notice that his employment would be terminated i f he violated the policy again. Restoring such a n employee to the workplace, Freightliner concludes, would

perpetuate a hostile and offensive work environment and interfere with an employer's duty to 22 - FINDINGS AND RECOMMENDATIONS

maintain a workplace free o f that environment, i n contravention o f well-established public policy. ( F r e i g h t l i n e r S u p p o r t M e m o 8-14.) T h e court has found that the arbitrator's decision did n o t d r a w it essence from the CBA. Having so concluded, the c o u r t need not reach the public policy issue. See Freighlliner L L C v.

Teamslers Local 305, 336 F. Supp. 2d at 1122 ("[T]he court finds t h a t the decision failed to draw
its e s s e n c e from the CBA; thus, the court need not decide whether the award violates public policy."). Furthermore, the court does not reach the public policy issue because, for the rcasons explained below, this m a t t e r should be remanded to the arbitrator for further proceedings. C. Remand. "[C]ourts have p o w e r to remand cases to an arbitration panel i n certain circumstances under the Federal A r b i t r a t i o n A c t , 9 U.S.C. §§ 10(e), I I , as well as under the federal common law governing labor arbitrations." Dogherra v. Sq(eway Siores, 679 F . 2 d 1293, 1297 (9th Cir. 1982). However, the Ninth Circuit considers remand unnecessary i f i t would " s e r v e no purpose," id., or i f the remand would be futile. See Am. Poslal Workers v. Uniled Siaies Poslal Service, 682 F . 2 d I 2 8 0 , 1285 (9th Cir. 1982) (stating that " r e m a n d would be futile" because the c o u r t " c o u l d not accord j u d i c i a l deference to any o t h e r conclusion by the arbitrator"). The a r b i t r a t o r ' s d e c i s i o n n o t to consider S c h u l e n b e r g ' s 1999 final warning ultimately scrved as the foundation o f his determination to vacatc S c h u l e n b e r g ' s termination and his decision that a 3 0 - d a y s u s p e n s i o n w a s t h e a p p r o p r i a t c d i s c i p l i n a r y action. T h e a r b i t r a t o r c o n c l u d e d that

S c h u l e n b e r g ' s 2006 c o n d u c t was not, by itself, sufficient to warrant termination o f employment; instead, he concluded t h a t S c h u l e n b e r g ' s "conversation was an isolated incident. Aside from the 1999 warning letter . . . the employer presented no evidence that Grievant previously engaged in sexual harassment." (Stipulation, Ex. A at 14.) After dismissing the 1999 final warning and stating that he would n o t consider it in determining whether Schulenberg had been terminated f o r j u s t cause, 23 - FINDINGS A N D R E C O M M E N D A T I O N S

thc arbitrator observed that arbitral discharge decisions "providc that ' j u s t cause' reqUIres progressive discipline, which includes an exception that grants thc Employer authority to discharge an employee, without prior discipline, for particularly severe misconduct." ld. at 15. The arbitrator t h e n c o n c l u d e d that "[wlithin the range o f conduct that is offensive in the workplace, Grcivant's 2006 conduct was toward the less serious end o f the continuum. I conclude that Gricvant's c o n d u c t - while o f f e n s i v e a n d c l e a r l y u n a c c e p t a b l e - w a s n o t s o s c v c r c 0 1 ' h e i n o u s as to warrant an exception to the progressivc disciplinc componcnt o f t h e j u s t cause standard.

ld. at 16. The arbitrator expressly rejected Freightliner's argument that Schulenberg's dischargc was
appropriate becausc Schulenbcrg's violation was a "repeat offense," noting, as he had previously, that Freightliner had not "provide[ d] any evidence about Greivant's misconduct that resulted in the 1999 'final n o t i c e . ' " ld. at 17. The arbitrator's reliance on both the isolated nature o f Schulenberg's 2006 conduct and the absence o f e v i d e n c e t h a t S c h u l e n b c r g was a r c p e a t o f f e n d e r i n r c a c h i n g h i s d c t c r m i n a t i o n underscores the necessity for remanding this matter to the arbitrator. Specifically, the arbitrator must dctcrmine whether j u s t cause existed for Schulcnberg's tcrmination, taking into consideration Schulenberg's 1999 final warning. Because this prior discipline must be considered, thc arbitrator must reach the questions o f whether Schulenberg's 2006 conduct no longer is an isolated incident, whethcr Schulenberg is a repeat offender, and what effect the answers to those questions has on Freightliner's decision to terminate Schulcnbcrg's cmployment. Rcmand for this purpose is consistent with the Supreme C o u r t ' s guidance in this area. As the Court observed in Garvey, a c o u r t ' s role remains limited even in those instances in which it finds that an arbitrator's decision did n o t draw its cssencc from the contract:

24 - FINDINGS AND RECOMMENDATrONS

Consistent with this limited role, we said in "(lisco that "[ c]ven in the very rare instances when an arbitrator's procedural abcrrations rise to the level o f affirmative misconduct, as a rulc the court must not foreclose further proceedings by settling the merits according to its own judgment o f the appropriate result." 484 U.S., at 40-41, n . l 0, 108 S. Ct. 364. That step, we explained, " w o u l d impropcrly substitute a judicial determination for the arbitrator's decision that the parties bargained for" in their agrcement. Ibid. Instead, the court should "simply vacate thc award, thus I c a v i n g o p e n the p o s s i b i l i t y o f f u r t h e r p r o c e e d i n g s i f they a r e p e r m i t t c d u n d e r the terms o f the agreement." Ibid.
Garvey, 532 U.S. at 510. Here, the case should be remanded to the arbitrator to determine whether,

when considering Schulenberg's 1999 final warning, Freightliner terminated him for j u s t cause in accordance with the CBA. That dctcrmination is what the partics bargained for in the first instance.
See E n f e l p r i s e Wheel, 363 U.S. at 599 ( " I t is the arbitrator's construction [ o f the agreement] which

was bargained for[.]"). Thus, the arbitrator, not the court, should be the one to determine whether, in light o f all the relevant evidence and circumstanccs, including the 1999 final warning and the conduct upon which it was based, and thc considerations bearing o n thc j u s t cause factors, Schulenberg's termination should or should not stand. For this reason, remand would serve a legitimate purpose and not be futile. Remand also makes premature the c o u r t ' s consideration o f Freightliner's public policy argument. The arbitrator rejected Freightliner's public policy argument but did so on the premise that Schulenberg was not a "repeat offender" and that the 2006 conduct was an isolated instancc. I f upon rcmand the arbitrator finds that j u s t cause existed for Schulenberg's termination, then the issue o f whether reinstating Schulenberg would violate public policy argument is moot. A l t e r n a t i v e l y , i f t h e a r b i t r a t o r d e t e r m i n c s t h a t t h e r c w a s n o t j u s t c a u s e for S c h u l e n b e r g ' s t e r m i n a t i o n and that hc should be reinstated, then the arbitrator should address and rule on Frcightlincr's public policy argument in light o f all the evidence, including the 1999 final warning and the conduct upon which i t w a s based. Accordingly, the court should not consider Freightliner's public policy argument

25 - FINDINGS AND RECOMMENDATIONS

at this time. D. T h e U n i o n ' s R e q u e s t f o r A t t o r n e y Fees. The Union argues that it is entitled to attorney fees to defend this case becausc Freightliner's position here is "frivolous." P l a i n t i f f U n i o n ' s Memorandum i n Support o f Motion for Summary Judgment 18. Nothing in the C B A provides for an award o f attorney fees to the prevailing party in either a grievance arbitration or a subsequent lawsuit to enforce a n arbitration award. (See

Stipulation, Ex. A a t 39-41.) Thus, the U n i o n ' s fee request is analyzed under the bad faith exception to the "American Rule"; that, absent statute or enforceable contract, litigants p a y their own attorneys' fees. Phoenix Newspapers Inc. v. Phoenix iliailers Union L o c a l 752, Intem. Broth. o f Teamsters, 989 F.2d 1 0 7 7 , 1 0 8 4 (9th Cir. 1993). See also Sheet Metal Workers' I n t ' ! A s s ' n Local Union No. 3 5 9 v. Madison Industries, Inc. o fArizona, 84 F.3d 1186, 1192 (9th Cir. 1996) ("[A]n unjustified refusal to abide by an arbitrator's award may equate an act taken in bad faith, vexatiously or for oppressive reasons. "). The U n i o n ' s request for attorney fees should be denied. Freightliner's position in this case was not taken in bad faith. Indeed, the court found meritorious Freightliner's challenge to the arbitrator's award. Furthermore, there is nothing in the record to suggest that Freightliner refused t o i m p l e m e n t the a r b i t r a t o r ' s a w a r d f o r v e x a t i o u s or o p p r e s s i v e r e a s o n s . A g a i n , the c o u r t f o u n d Freightliner's position meritorious and the arguments Freightliner offered wcre based on facially legitimate reasons that included the goal o f avoiding reinstating to the workplace an employee it believed had twice knowingly violated the company's sexual harassment policy. Accordingly, the U n i o n ' s request for attorney fees should be denied. Conclusion F o r the reasons stated above, the U n i o n ' s motion for summary judgment (II 12) should be DENIED, Freightliner's motion for summary judgment (II 14) should be GRANTED, and this matter 2 6 - FINDINGS A N D R E C O M M E N D A T I O N S

should be REMANDED to the arbitrator for further proceedings consistent with this decision. The above Findings and Recommendation will be referred to a United States District Judge for review. Objections, i f any, are due no later than A u g u s t 19, 2009. I f no objections are filed, review o f the Findings and Recommendation will go under advisement o n that date. I f objections are filed, any party m a y file a response within fourteen days after the date the objections are filed. Review o f the Findings and Recommendation will go under advisement when the response is due o r filed, whichever date is earlier. Dated this 5th day o f August, 2009.

1m V. Acosta U n i t e d tates M a g i s t r a t e J u d g e

27 - FINDINGS AND RECOMMENDATIONS