ASARCO LLC, a limited liability corporation, Petitioner-Appellant,
v.
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, on behalf of itself and the other unions representing ASARCO LLC's bargaining unit employees, Respondent-Appellee.
Argued
and Submitted November 16, 2017 Pasadena, California
Appeal
from the United States District Court for the District of
Arizona D.C. No. 2:15-cv-00117-SMM Stephen M. McNamee, Senior
District Judge, Presiding
Rex S.
Heinke (argued), Akin Gump Strauss Hauer & Feld LLP, Los
Angeles, California; Lacy Lawrence and Marty L. Brimmage,
Akin Gump Strauss Hauer & Feld LLP, Dallas, Texas; for
Petitioner-Appellant.
Michael D. Weiner (argued) and Jay Smith, Gilbert &
Sackman, Los Angeles, California; Daniel M. Kovalik, United
Steelworkers, Pittsburgh, Pennsylvania; Gerald Barrett, Ward
Keenan & Barrett P.C., Phoenix, Arizona; for
Respondent-Appellee.
Before: Richard A. Paez and Sandra S. Ikuta, Circuit Judges,
and Robert W. Gettleman, [*] District Judge.
ORDER
AND OPINION
SUMMARY[**]
Labor
Law
The
panel filed (1) an order withdrawing its opinion and
dissenting opinion and denying as moot a petition for
rehearing en banc, and (2) a new opinion and new dissenting
opinion.
In its
new opinion, the panel affirmed the district court's
order affirming an arbitration award in favor of a union,
which sought relief concerning a bonus provision in the
parties' collective bargaining agreement.
The
employer asserted that the arbitrator reformed the collective
bargaining agreement in contravention of a no-add provision
in the agreement. The district court held that the arbitrator
was authorized to reform the agreement, despite the no-add
provision, based on a finding of mutual mistake.
The
panel held that the arbitration award drew its essence from
the collective bargaining agreement, and the arbitrator did
not exceed his authority in reforming the agreement. In
addition, the arbitrator's award did not violate public
policy.
Dissenting,
Judge Ikuta wrote that, in light of the no-add provision, the
arbitrator exceeded his authority under the collective
bargaining agreement.
ORDER
The
opinion and dissenting opinion filed June 19, 2018, and
appearing at 893 F.3d 621 (9th Cir. 2018), are withdrawn.
They may not be cited by or to this court or any district
court of the Ninth Circuit.
A new
opinion is filed simultaneously with the filing of this
order, along with a new dissenting opinion. Accordingly, the
Appellant's petition for rehearing en banc is
DENIED as moot. The parties may file
petitions for rehearing and petitions for rehearing en banc
in response to the new opinion, as allowed by the Federal
Rules of Appellate Procedure.
OPINION
GETTLEMAN, DISTRICT JUDGE
This
appeal involves the validity of an arbitration award. ASARCO
asserts that the award is invalid because the arbitrator
reformed the Basic Labor Agreement ("BLA") between
the Union and ASARCO in contravention of a no-add provision
in that agreement. The Union argues that the arbitrator did
not contravene the no-add provision because he was required
to reform the BLA upon finding that the parties were mutually
mistaken as to its terms when they agreed to it. The district
court affirmed the award, holding that ASARCO properly
preserved its objection to the arbitrator's jurisdiction,
but the arbitrator was authorized to reform the BLA, despite
the no-add provision, based on a finding of mutual mistake.
We affirm.
I.
BACKGROUND AND PROCEDURAL HISTORY
ASARCO
is a miner, smelter, and refiner of copper and other precious
metals with facilities in Arizona and Texas. ASARCO's
employees are represented by the Union. ASARCO and the Union
are parties to the BLA, which was originally effective
January 1, 2007, through June 30, 2010. The BLA was modified
and extended through two Memoranda of Agreement
("MOA") negotiated in 2010 and 2011. Article 9,
Section B of the BLA provides that a Copper Price Bonus
("Bonus") will be paid quarterly to employees who
participate in ASARCO's pension plan. The Bonus is
calculated based on the price of copper and is significant,
at times as much as $8, 000 annually per employee. The 2011
MOA modified Article 12, Section Q of the BLA to make
employees hired on or after July 1, 2011 ineligible for
ASARCO's pension plan, and thus ineligible for the Bonus.
The Union, unaware of the link between the pension plan and
the Bonus, [1] filed a grievance disputing ASARCO's
refusal to pay the Bonus to employees hired after July 1,
2011. The case proceeded to arbitration.[2]
At the
beginning of the arbitration hearing the parties stipulated
that the matter was properly before the arbitrator and that
the arbitrator had jurisdiction to decide the grievance. The
Union claimed there was a mutual mistake in the 2011 MOA: the
parties failed to recognize that Article 9, Section C of the
BLA tied eligibility for the Bonus to participation in the
pension plan, and both parties intended for all employees to
remain eligible for the Bonus when they negotiated the 2011
MOA. Accordingly, the Union argued that reformation of the
BLA was the appropriate remedy. ASARCO offered no evidence to
the contrary, but argued that the arbitrator lacked authority
to reform the BLA because Article 5, Section I(6)(c)
contained the following no-add provision: "The
arbitrator shall not have jurisdiction or authority to add
to, detract from or alter in any way the provisions of this
Agreement." After hearing six days of evidence the
arbitrator concluded that neither party anticipated that the
2011 MOA modification would impact new hires' eligibility
for the Bonus. Because he found that the parties were
mutually mistaken as to the terms of the 2011 MOA, the
arbitrator ordered that the BLA be reformed to provide that
new hires, though ineligible for ASARCO's pension plan,
remain eligible for the Bonus.
ASARCO
filed a Petition to Vacate Arbitration Award in the United
States District Court for the District of Arizona. ASARCO did
not challenge the arbitrator's findings of fact or
conclusions of law, but argued that the no-add provision
deprived the arbitrator of authority to reform the BLA. The
district court confirmed the arbitration award, but rejected
the Union's argument that ASARCO had waived any argument
regarding the limits of the arbitrator's jurisdiction. In
confirming the award, the district court noted the degree of
deference due to the arbitrator's decision and concluded
that the arbitrator did not violate the no-add provision
because the reformation corrected a defect in the BLA, which
was the product of mutual mistake, to reflect the terms the
parties had agreed upon. ASARCO timely appeals.
II.
STANDARD OF REVIEW
Our
review of a district court's decision confirming an
arbitration award is de novo. Hawaii Teamsters &
Allied Workers Union, Local 996 v. United Parcel Serv.,
241 F.3d 1177, 1180 (9th Cir. 2001). "Our review of
labor arbitration awards is, however, extremely deferential
because 'courts do not sit to hear claims of factual or
legal error by an arbitrator as an appellate court does in
reviewing decisions of lower courts.'" Id.
(quoting United Paperworkers Int'l Union, AFL-CIO v.
Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 98 L.Ed.2d
286 (1987)) (internal alterations omitted). Unless the
arbitrator has "'dispensed his own brand of
industrial justice' by making an award that does not
'draw its essence from the collective bargaining
agreement, '" we must confirm the award.
Id. at 1181 (quoting United Steelworkers v.
Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80
S.Ct. 1358, 4 L.Ed.2d 1424 (1960)) (internal alterations
omitted).
The
context of collective bargaining warrants this extremely
limited scope of review because the parties have agreed to
have their disputes decided by an arbitrator chosen by them:
"[I]t is the arbitrator's view of the facts and of
the meaning of the contract that they have agreed to
accept." Id. "Indeed, the mandatory and
prearranged arbitration of grievances is a critical aspect of
the parties' bargain, the means through which they agree
'to handle the anticipated unanticipated omissions of the
collective bargaining agreement.'" Stead Motors
of Walnut Creek v. Auto. Machinists Lodge No. 1173, Int'l
Ass'n of Machinists & Aerospace Workers, 886
F.2d 1200, 1205 (9th Cir. 1989) (en banc) (quoting
St. Antoine, Judicial Review of Labor Arbitration Awards:
A Second Look at Enterprise Wheel and Its Progeny, 75
Mich.L.Rev. 1137, 1140 (1977)) ("Judicial
Review") (internal alterations omitted). Such
omissions occur because "[u]nlike the commercial
contract, which is designed to be a comprehensive
distillation of the parties' bargain, the collective
bargaining agreement is a skeletal, interstitial
document." Id.
Consequently,
"[t]he labor arbitrator is the person the parties
designate to fill in the gaps; for the vast array of
circumstances they have not considered or reduced to writing,
the arbitrator will state the parties' bargain."
Id. He is "'their joint alter ego
for the purpose of striking whatever supplementary bargain is
necessary' to handle matters omitted from the
agreement." Id. (quoting Judicial
Review, 75 Mich.L.Rev. at 1140). Because of this role,
the arbitrator "cannot 'misinterpret' a
collective bargaining agreement," id., and
"even if we 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." Va. Mason Hosp. v. Wash. State Nurses
Ass'n, 511 F.3d 908, 913‒14 (9th Cir. 2007)
(footnote omitted). This deference applies "'even if
the basis for the arbitrator's decision is ambiguous and
notwithstanding the erroneousness of any factual findings or
legal conclusions.'" Federated Dep't Stores
v. United Foods & Commercial Workers Union, Local
1442, 901 F.2d 1494, 1496 (9th Cir. 1990) (quoting
Stead Motors, 886 F.2d at 1209).
III.
ANALYSIS
Although
judicial review of arbitration awards is extremely limited,
the Supreme Court and this Circuit have articulated three
exceptions to the general rule of deference to an
arbitrator's decision: "(1) when the
arbitrator's award does not draw its essence from the
collective bargaining agreement and the arbitrator is
dispensing his own brand of industrial justice; (2) when the
arbitrator exceeds the boundaries of the issues submitted to
him; and (3) when the award is contrary to public
policy." Id. (internal quotation marks
omitted).
Given
the great deference due to arbitrator's decisions, ASARCO
wisely does not challenge the arbitrator's findings of
fact or conclusions of law, but instead argues that the
arbitrator's award does not warrant deference based on
all three exceptions. The first two exceptions are
interrelated, and we will address them simultaneously before
turning to the third exception. ASARCO argues that the no-add
provision in the BLA deprived the arbitrator of authority to
reform the BLA, and the arbitrator's award does not draw
its essence from the BLA because it ignores this provision.
In
deciding whether the arbitrator's award draws its essence
from the BLA, "the quality - that is the degree of
substantive validity - of [his] interpretation is, and always
has been, beside the point." Sw. Reg'l Council
of Carpenters v. Drywall Dynamics, Inc., 823 F.3d 524,
532 (9th Cir. 2016), cert. denied, 137 S.Ct. 829,
197 L.Ed.2d 68 (2017). "Instead, the appropriate
question for a court to ask when determining whether to
enforce a labor arbitration award interpreting a collective
bargaining agreement is a simple binary one: Did the
arbitrator look to and construe the contract, or did he
not?" Id. This is because "'[i]t 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
unenforceable.'" Id. at 531 (quoting
Major League Baseball Players Ass 'n v. Garvey,
532 U.S. 504, 509, 121 S.Ct. 1724, 149 L.Ed.2d 740 (2001))
(internal alterations omitted). Accordingly, "the
court's inquiry ends" if the arbitrator "made
any interpretation or application of the agreement at
all." Id. at 531‒32. We therefore
"must limit [our] review to whether the arbitrator's
solution can be rationally derived from some
plausible[3] theory of the general framework or intent
of the agreement." United Food & Commercial
Workers Int'l Union, Local 588 v. Foster Poultry
Farms, 74 F.3d 169, 173 (9th Cir. 1995), opinion
amended on denial of reh'g, (9th Cir. Jan. 30,
1996).
We have
no doubt that the arbitrator's decision was grounded in
his reading of the BLA. The arbitrator acknowledged that new
hires were not entitled to the Bonus under the plain language
of the BLA and that he could not find for the Union based
solely on the language contained in the BLA. He also
recognized that arbitrators do not generally have the
authority to rewrite CBAs or ignore their provisions. He
noted, however, that arbitrators can reform a contract to
correct an obvious mutual mistake. Citing a substantial
amount of evidence that he heard over six days, the
arbitrator concluded that the parties presented precisely
this scenario: in negotiating the 2011 MOA, they never
discussed or even acknowledged that if the BLA were amended
to make new hires ineligible for the pension plan, they would
also be ineligible for the Bonus. Although he did not
specifically cite the no-add provision when explaining the
basis of his award, the arbitrator did quote it directly as
relevant language of the BLA and noted that, absent a finding
of mutual mistake, he would not have the authority to reform
the BLA.[4]
Given
the arbitrator's extensive treatment of the BLA and
acknowledgment of the no-add provision, we agree with the
district court that the arbitrator's decision was
grounded in his reading of the BLA, and are "bound to
enforce the award" even if "the basis for the
arbitrator's decision may be ambiguous." W.R.
Grace & Co. v. Local Union 759, Int'l Union of United
Rubber, Cork, Linoleum & Plastic Workers of Am., 461
U.S. 757, 764, 103 S.Ct. 2177, 2182, 76 L.Ed.2d 298 (1983);
see also Drywall Dynamics, 823 F.3d at
533("'[A]rbitrators have no obligation to give their
reasons for an award at all, '" and a court may not
"'infer the non-existence of a particular reason
merely from the award's silence on a given
issue.'") (quoting Stead Motors, 886 F.2d
at 1208, 1213); Stead Motors, 886 F.2d at 1208
("'[M]ere ambiguity in the opinion accompanying an
award, which ...