Asarco, LLC v. United Steel, Paper and Forest, 893 F.3d 621

Background

ASARCO and United Steelworkers (the Union) were parties to a Basic Labor Agreement (BLA) with a no-add provision barring arbitrators from adding to or altering the agreement.
A 2011 Memorandum of Agreement (MOA) made employees hired on/after July 1, 2011 ineligible for ASARCO’s pension; Article 9 tied the Copper Price Bonus to pension-plan participation.
The Union, unaware the MOA would affect bonus eligibility, grieved ASARCO’s refusal to pay the Bonus to post-2011 hires; parties submitted the dispute to arbitration and stipulated arbitrability at the hearing outset.
The arbitrator found a mutual mistake (both parties failed to appreciate the pension–bonus linkage) and reformed the BLA so new hires remained eligible for the Copper Price Bonus despite pension ineligibility.
ASARCO petitioned to vacate in district court, arguing the arbitrator violated the no-add provision; the district court confirmed the award. The Ninth Circuit affirmed but concluded ASARCO had waived its right to contest arbitrator jurisdiction.

Issues

Issue	ASARCO’s Argument	Union’s Argument	Held
Waiver of jurisdiction / arbitrability	ASARCO argued it preserved jurisdictional objection and can challenge arbitrator’s authority in court	Union argued ASARCO conceded arbitrability at arbitration and thus waived judicial review of jurisdiction	Court: ASARCO waived judicial review by stipulating arbitrability and arguing the jurisdictional question to the arbitrator rather than reserving it or refusing arbitration
Arbitrator authority vs. no-add provision	Arbitrator lacked power to reform or add to BLA because no-add clause prohibits altering agreement	Arbitrator could reform the contract to correct mutual mistake despite no-add clause because parties submitted the issue to arbitration	Court: Even with no-add clause, arbitrator’s reformation was within his authority where he construed the BLA, found mutual mistake, and parties had delegated arbitrability to him
Whether award draws its essence from BLA	Award violates BLA’s explicit limitation and thus dispenses own industrial justice	Award drew its essence from the BLA because arbitrator construed contract, treated no-add clause, and applied contract law (mutual mistake)	Court: Award drew its essence from the BLA; arbitrator construed the contract and applied recognized contract law remedies (reformation) — defer to arbitrator
Public-policy challenge	Vacatur needed because award undermines collective-bargaining process and public policy against altering CBAs	No public-policy violation: reformation corrected a mistaken bargain and thus preserved, not distorted, collective-bargaining product	Court: Public-policy exception not met; reformation remedied a mutual mistake and did not contravene explicit dominant public policy

Key Cases Cited

Hawaii Teamsters & Allied Workers Union, Local 996 v. United Parcel Serv., 241 F.3d 1177 (9th Cir. 2001) (deference to arbitrator’s contract interpretation in labor context)
United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (U.S. 1987) (arbitrator must not dispense own brand of industrial justice)
United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (U.S. 1960) (award must draw its essence from the CBA)
Stead Motors of Walnut Creek v. Automotive Machinists Lodge No. 1173, 886 F.2d 1200 (9th Cir. 1989) (arbitrator fills gaps in skeletal CBAs; wide remedial latitude)
W.R. Grace & Co. v. Local Union 759, 461 U.S. 757 (U.S. 1983) (courts must enforce arbitrator’s award where grounded in contract interpretation)
Sw. Reg’l Council of Carpenters v. Drywall Dynamics, Inc., 823 F.3d 524 (9th Cir. 2016) (limits of judicial review: did arbitrator construe the contract?)
W. Coast Tel. Co. v. Local Union No. 77, 431 F.2d 1219 (9th Cir. 1970) (no-add provision can bar arbitrability of contract reformation claim)
Ficek v. Southern Pacific Co., 338 F.2d 655 (9th Cir. 1964) (parties may impliedly submit arbitrability by conduct; waiver principles)