Nuclear Fuel Services, Inc. v. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union et al (PLR1)
Filing
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MEMORANDUM OPINION. Signed by District Judge Pamela L Reeves on 4/25/18. (JBR)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
NUCLEAR FUEL SERVICES, INC.,
Plaintiff,
v.
UNITED STEEL, PAPER and FORESTRY
RUBBER, MANUFACTURING, ENERGY,
ALLIED-INDUSTRIAL and SERVICE
WORKERS INTERNATIONAL UNION, et al.,
Defendants.
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) No. 2:16-cv-00315
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REEVES/CORKER
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MEMORANDUM OPINION
Gary Smalling worked for Nuclear Fuel Services (the Company) at its facility in
Erwin, Tennessee. Smalling was terminated after he violated safety rules at the facility.
The Union defendants submitted a grievance and the parties participated in arbitration
pursuant to their Collective Bargaining Agreement (CBA). The arbitrator issued an award
reinstating Smalling to active duty.
The Company filed the instant action asserting that the arbitration award should be
vacated because the arbitrator exceeded his authority and his award is not supported by or
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derived from the parties’ CBA and is based on the Arbitrator’s subjective considerations
of fairness and equity. The Union, on the other hand, asks the court to affirm the
Arbitrator’s award reinstating Smalling to active duty. The parties have filed crossmotions for summary judgment. For the reasons that follow, the Union’s motion for
summary judgment is granted and the award of the Arbitrator is affirmed.
I. Background
The Company operates a nuclear fuel facility in Erwin. Tennessee that processes
highly enriched uranium into nuclear fuel. The Company is the sole provider of nuclear
fuel for the United States Navy’s fleet of nuclear-powered aircraft carriers and submarines.
The Union and the Company are parties to a CBA that covers all production and
maintenance employees, laboratory technicians, plant clerical employees, surveillance
technicians, radiation technicians, yard, and material handlers. The CBA in Article 14,
provides for submission to an arbitrator of “any grievance concerning the interpretation or
application of any provision” of the CBA. The parties further contracted that a “decision
in writing of the arbitrator . . . shall be final and binding on the employee or employees
concerned, the Union, and the Company.”
Article 3 of the CBA, “Management
Functions,” provides that the Company “retains the right to reprimand, suspend, discharge
or otherwise discipline employees for proper cause.”
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Smalling, a thirteen-year employee at the Company, was terminated on April 1,
2015. The Union filed a grievance challenging his termination on April 8, 2015. The
parties selected Arbitrator Joe M. Harris to resolve the grievance, and a hearing was held
on January 21, 2016. Both parties submitted post-hearing briefs. The Arbitrator issued
an Opinion and Award on July 11, 2016. The Arbitrator framed the issue submitted to
him as “whether termination of an employee with 13 years of service was too severe” for
the conduct in question. The Arbitrator concluded that the Company failed to show that
it acted in accordance with the CBA when it discharged Smalling, and ordered him
reinstated with half back pay.
The Arbitrator found that Smalling’s discharge was based on an incident that
occurred on February 27, 2015. On that day, a supervisor asked Smalling to dispose of
mop heads containing highly enriched uranium. Smalling testified that he packaged eight
mop heads into a five gallon liner, sealed it, put a transportation and waste sticker on it
attesting that there was no visible contamination and no visible liquids in the bag, and
placed it at the top of the ramp. The problem with disposing of multiple mop heads in a
single plastic bag is that if the mop heads were used improperly or the user did not realize
he or she had picked up enough uranium during use, the combined presence of uranium on
the mop heads could set off a nuclear reaction. Smalling testified that he did not know the
procedure regarding mop heads, but found out after the fact that he “messed up” and made
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a mistake. The Arbitrator found that Smalling had violated a written procedure that
required that only one mop head be placed in a single container. The Arbitrator considered
testimony that the amount of nuclear material in the container for the eight mop heads was
2 grams and that it takes a minimum of 820 grams of material to create a nuclear reaction.
The Arbitrator also reviewed two additional incidents involving Smalling. First,
the Arbitrator noted that Smalling had received a five-day suspension in October of 2014,
for an alleged violation of a work rule prohibiting the movement of nuclear material during
a “stop movement” order.
Second, the Arbitrator considered an incident for which
Smalling received a verbal warning on March 13, 2014. Because the Company “Rules on
Reprimand, Suspension and Discharge” provide that when an employee worked for a
period of 12 months without a reprimand, “he shall revert to Step 1,” the Arbitrator
concluded he was barred from considering the 2014 verbal warning as part of the
progressive discipline leading up to the April 2015 termination.
The Arbitrator proceeded to consider whether Smalling’s discharge was for “proper
cause.” The Arbitrator found: “When the Grievant’s entire work record is considered as
a whole, the two mistakes work out to about one mistake every six and ½ years. In that
context, even conceding the obvious danger of handling fissile materials, two mistakes over
an otherwise flawless 13 year career leading straight to an employee’s termination is just
too harsh, and therefore unjust.” The Arbitrator further found that Smalley did not
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“dispose of mop heads every day; in fact his testimony that he had ‘never’ disposed of
mops was uncontradicted . . . . When the Grievant said he wasn’t familiar with the
particular rule he violated, the Company’s response was that he should have been.” The
Arbitrator concluded “it would not be fair to characterize what the Grievant did as
‘misconduct.’ He was discharged for allegedly making two mistakes over a period of
about 13 years and he has never denied or tried to hide anything he did.” Thus, the
Arbitrator sustained the grievance and reinstated Smalling to active duty, but only awarded
him one-half of his lost wages.
II. Standard of Review
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper if the
pleadings, deposition, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986).
Judicial review of an arbitration decision is “very limited.” Tenn. Valley Auth. v.
Tenn. Valley Trades & Labor Council, 184 F.3d, 510, 514-15 (6th Cir. 1999) (Review of
an arbitration award is “one of the narrowest standards of judicial review in all of American
jurisprudence”). Courts are not authorized to review an arbitrator’s decision on the merits
despite allegations that the decision rests on factual errors or misinterprets the parties’
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agreement. Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001).
If an arbitrator “is evenly arguably construing or applying the contract and acting within
the scope of his authority, the fact that a court is convinced he committed serious error does
not suffice to overturn his decision.” Id.
This approach reflects “a decided preference for private settlement of labor disputes
without the intervention of government.” United Paperworkers Int’l Union v. Misco, Inc.,
484 U.S. 29, 37 (1987). Because the parties contracted to have disputes settled by an
arbitrator chosen by them rather than by a judge, “it is the arbitrator’s view of the facts and
the meaning of the contract that they have agreed to accept.” Id. at 37-38. Accordingly,
it is only when the arbitrator strays from interpretation and application of the agreement
and effectively dispenses “his own brand of industrial justice” that his decision may be
vacated. Id.
The court’s scope of review is limited to three questions: (1) did the arbitrator act
outside his authority by resolving a dispute not committed to arbitration; (2) did the
arbitrator commit fraud, have a conflict of interest or otherwise act dishonestly in issuing
the award; and (3) in resolving any legal or factual disputes in the case, was the arbitrator
“arguably construing or apply the contract?” Mich. Family Resources., Inc. v. SEIU Local
517, 475 F.3d 746, 753 (6th Cir. 2007). So long as the arbitrator does not offend any of
these requirements, the request for judicial intervention should be resisted even if the
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arbitrator made “serious, improvident or silly errors in resolving the merits of the dispute.”
Id.
III. Discussion
The Company does not allege that the Arbitrator committed fraud or other
misconduct. Instead, the Company argues the Arbitrator acted outside the scope of his
authority by improperly modifying the CBA and failing to construe the contract, thereby
imposing his own brand of industrial justice. Specifically, the Company argues that the
Arbitrator failed to consider Article 10 of the CBA and applied his own interpretation of
what constituted “proper cause” for termination. The Company avers that once the
Arbitrator determined that Smalling did not comply with the Company’s policies, rules and
practices, then Article 10 vests total discretion in the Company to impose discipline
including discharge.
Article 3 of the CBA states that the Company “retains the right to reprimand,
suspend, discharge or otherwise discipline employees for proper cause.” Article 10 of the
CBA defines one type of “proper cause,” stating “Failure to comply with established
policies, rules and practices shall be proper cause for suspension and discharge of
employees.” No definition of “proper cause” appears anywhere other than Article 10.
The Union responds that the Company waived any argument regarding
interpretation of Article 10 by not presenting that argument to the Arbitrator. Generally,
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“arguments not presented to an arbitrator are deemed waived and cannot be raised for the
first time in an enforcement action in district court.” Armco Employees Independent
Fed’n, Inc. v. ARK Steel Corp., 149 Fed. Appx. 347, 352 (6th Cir. 2005). Here, the
Company’s post-hearing brief framed the issue submitted for the Arbitrator’s
consideration: “Was Grievant’s Discharge in Accordance with the CBA? If not, What
shall be the Remedy?” The Company failed to argue that Article 10 or any other provision
of the CBA restricts the Arbitrator’s authority to craft an appropriate remedy. The Union
argues that by explicitly granting the Arbitrator authority to decide the remedy for a
discharge that violates the CBA, the Company waived its right to argue to this court that
the Arbitrator had no authority to modify the discipline. The court agrees. In Container
Corp. of Am. v. United Paperworkers Int’l Union, the district court held that the employer
waived the right to challenge the scope of the arbitrator’s power because “having instructed
the arbitrator to determine the appropriate remedy,” the employer “may not challenge the
arbitrator’s power simply because it disagrees with the result.” Id. 1994 WL 803270 at *6
(C.D.Cal. Mar. 31, 1994). Such is the case here. Accordingly, the court finds the
Company waived any argument under Article 10 of the CBA.
As argued by the parties before the Arbitrator, Article 3 of the CBA, “Management
Functions” provides that the Company retains the right to discharge or otherwise discipline
employees for “proper cause.” Article 3 does not define “proper cause,” and the arbitrator
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interpreted Article 3 to give him the authority to modify the discipline imposed. The
Arbitrator’s interpretation of the contract is accorded deference by the court. It is “the
language of the CBA and the arbitrator’s own construction thereof, which determines the
scope of the arbitrator’s authority.” Eberhard Foods, Inc. v. Handy, 868 F.2d 890, 892
(6th Cir. 1989). An arbitration award my not be overturned unless it is “clear” the
Arbitrator “exceeded the scope of the submission.” Int’l Ass’n of Machinists & Aero
Workers v. Tenn. Valley Auth., 155 F.3d 767, 772 (6th Cir. 1998).
Here, the Arbitrator construed the CBA to give him authority to review and modify
the discipline. In the absence of a contractual provision that expressly limited or removed
that question from the Arbitrator, the Arbitrator did not exceed his authority. Dixie
Warehouse & Cartage Co. v. Gen. Drivers, Warehousemen & Helpers, 898 F.2d 507, 511
(6th Cir. 1990). The CBA does not address whether an arbitrator has authority to evaluate
the degree of discipline, thus, the contract is susceptible to more than one interpretation.
Courts resolve doubts over arbitrability in favor of coverage. Masco Corp. v. Zurich Am.
Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004).
Therefore, the court will defer to the
arbitrator’s interpretation of the CBA as extending to the severity of the discipline imposed
for the violation.
In any event, regardless of whether the Company waived any argument, Article 10
does not mandate discharge as the sole penalty for Smalling’s conduct. The law in the
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Sixth Circuit is clear that when a contract does not “clearly” prescribe that the sole issue
for arbitration is whether a violation of the work rules has occurred or that the arbitrator
cannot modify the discipline imposed by the employer, the arbitrator retains authority to
find that a particular discipline is too severe, and may modify it accordingly. Oakwood
Healthcare, Inc. v. Oakwood Hosp. Employees Local 2568, 615 Fed. Appx. 302, 306 (6th
Cir. 2015); Dixie, 898 F.2d at 508; Eberhard, 868 F.2d at 892.
In his award, the Arbitrator discussed evidence that not all violations of safety rules
resulted in discharge and sometimes violations did not result in discipline. The Arbitrator
found, contrary to the position taken by the Company that any violation of a safety rule
merits termination, the actual practice of the employer is to recognize “degrees of danger”
within the safety rules and to apply discipline accordingly. The Arbitrator further found
that it was regularly Company practice to issue suspension for violations of safety rules.
In fact, Smalling was issued a 5-day suspension for violation of the “stop movement” order
in October 2014. The evidence presented to the Arbitrator showed that violations of safety
rules resulted in a range of discipline, not automatic termination. Therefore, it was within
the Arbitrator’s authority to review and modify the discipline imposed on Smalling.
Nothing in the CBA provides that violation of a safety rule automatically constitutes proper
cause for immediate termination. Article 10 references “suspension” and “discharge,” and
the Company Rules provide for “suspension subject to discharge.” It either case, it is clear
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that discharge in not the only available penalty. Accordingly, the court finds that the
Arbitrator was arguably construing or applying the CBA and acted within his authority by
modifying the discipline and reinstating Smalling.
Next, contrary to the Company’s position, the Arbitrator’s award does not violate
public policy. The Company does not cite to a specific and explicit public policy barring
Smalling’s reinstatement, but argues in general that the Arbitrator’s award violates public
policy favoring strict application of safety rules in the nuclear industry. In rare instances,
a court may vacate an arbitration award that violates public policy. In order to vacate an
award on public policy grounds, the public policy at issue must be explicit, “well defined,”
and “dominant.” It must be ascertained by reference to laws and legal precedents and not
from general considerations of supposed public interests. Shelby Cnty Health Care Corp.
v. Am. Fed. State, Cnty & Municipal Empl. 967 F.2d 1091, 1095 (6th Cir. 1992); see also
Tenn. Valley Auth., 184 F.3d at 520 (public policy did not bar reinstatement of employee
terminated because of the employer’s safety concerns).
Lastly, the Union asks for an award of attorney’s fees and costs because the
Company’s attempt to vacate the Arbitrator’s award demonstrates “bad faith in the
instigation or conduct of litigation.” Although the court does not agree with the arguments
presented by the Company, the court does not find that its arguments were brought in bad
faith. Accordingly, the Union’s motion for an award of attorney’s fees and costs is denied.
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IV. Conclusion
Nuclear Fuel’s motion for summary judgment [R. 17] is DENIED; the Union’s
motion for summary judgment [R. 20] is GRANTED in part and DENIED in part: the
decision of the arbitrator is AFFIRMED, but the request for attorney’s fees and costs is
DENIED.
ORDER TO FOLLOW.
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UNITED STATES DISTRICT JUDGE
UNITED STATES DISTRICT
A S S
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