Alcan Packaging Co., Petitioner - Appellee, v. Graphic Communication Conference, International Brotherhood of Teamsters & Local Union No. 77-P; Graphic Communications Conference, International Brotherhood of Teamsters & Local Union No. 727-S, Respondents - Appellants.
No. 12-3272
United States Court of Appeals For the Eighth Circuit
Submitted: June 10, 2013 Filed: September 5, 2013 (Corrected: October 30, 2013)
Before COLLOTON, GRUENDER, and BENTON, Circuit Judges.
Teamsters Local Unions 727-S and 77-P (“the Unions“) appeal from the district court‘s order vacating an arbitrator‘s award of severance pay. Because the arbitrator was at least arguably construing or applying the collective bargaining agreement, a federal court must defer to the arbitrator‘s interpretation, and we therefore reverse.
In 2009, Rio Tinto PLC agreed to sell to Bemis Company, Inc., three packaging plants operated by Rio Tinto‘s subsidiary, Alcan Packaging Company. The sale closed on March 1, 2010. The Unions represent the workers at the plants and were parties to a collective bargaining agreement with Alcan. After the sale was announced, Bemis informed the Unions that it would not adopt the terms of the agreement. Bemis and the Unions entered into negotiations. Bemis eventually hired all of the Alcan workers who applied to work for Bemis, though under less favorable tеrms of employment than the workers had enjoyed under their agreement with Alcan.
After the sale closed, the Unions filed a grievance against Alcan, claiming that Alcan violated the agreement. As relevant to this appeal, the Unions claimed that eligible workers at the three plants were entitled to severance pay. Alcan denied the grievance, and the agreement required the рarties to submit the dispute to an arbitrator.
The relevant portion of the agreement, Appendix D, provides: “If the Company shall close a plant completely and permanently, employees whose employment shall be terminated as a result thereof and [who are eligible] shall be entitled to a Severance . . . .” Because the Unions and Bemis successfully completed their negоtiations before the sale closed, there was a seamless transition on the day that Bemis took over, and operations at the plants never ceased. Alcan argued to the arbitrator, therefore, that it never closed the plants, so severance pay was not due under Appendix D. The Unions maintained that Alcan completely and permanently closed the plants—as far аs the company was concerned—by selling them to Bemis, even though business at the plants continued uninterrupted following the sale.
The arbitrator ruled for the Unions. Alcan then filed this action in the district court, seeking to vacate the arbitrator‘s award of severance pay. The district court
II.
Alcan‘s action to vacate the arbitrator‘s award arises under
When Alcan and the Unions contracted to resolve their disputes via arbitration, they agreed to be bound by the аrbitrator‘s interpretation of the agreement. We may not vacate an award merely because our construction of the agreement differs from the arbitrator‘s. United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 599 (1960). If the arbitrator was “even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision.” Misco, 484 U.S. at 38 (emphasis addеd). Only when an arbitrator issues an award that does not “draw its essence from the contract,” because it reflects instead the arbitrator‘s “own notions of industrial justice,” may a court vacate an arbitrator‘s decision. Id.
Alcan suggests that the Federal Arbitration Act,
So we evaluate the arbitrator‘s decision under the deferential standard that long has governed § 301 cases. The arbitrator here began his analysis by quoting Appendix D and focusing on the issues as the parties had framed them. He recognized that Alcan was liable for severance pay only if two conditions were satisfied: Alcan must have closed the plants completely and permanently, and eligible employees must have been terminated as a result of the closures. The main question facing the arbitrator was whether the seamless transition meant that Alcan had not closed the plants.
After consulting the text of Appendix D and arbitral decisions interpreting similar agreements, the arbitrator concluded that Alcan completely and permanently closed the plants by selling them. Then, after analyzing the text and analogous arbitral precedents, the arbitrator concluded that the employees had been terminated as a result of the closures. In sum, the arbitrator‘s award has the hallmarks of an honest judgment that drew its essence from the agreement: he analyzed the text of the contract, consulted decisions interpreting similar contracts, and squarely addressed the parties’ arguments.
This challenge to the award is insufficient to justify vacatur. For one thing, it is not so clear that the arbitrator‘s decision is contrary to the plain language of the contract. Alcan concedes that because the contract refers to whether “the Company” has closed the plant completely and permanently, the prospect of closure must be viewed from Alcan‘s point of view. If another company reopens the plant after Alcan closes it, even if the closure is for only a day or even an hour, then the reopening by another party does not vitiate a complete and permanent closure by Alcan. So the company is reduced to arguing that while a brief pause between Alcan‘s closure and Bemis‘s reopening would result in a complete and permanent closure by Alcan, there was no closure here because the transition was seamless. The arbitrator thought there was no meaningful distinction between the two scenarios under the contract. In his view, that a purchaser might reopen a plant, or even seamlessly continue operations, does not mean that the seller did not close it.
Even if the arbitrator was incorrect about that point, such a mistake is not sufficient reason to set aside the award. “[T]he parties having authorized the arbitrator to give meaning to the language of the agreement, a court should not reject an award on the ground that the arbitrator misread the contract.” Misco, 484 U.S. at 38. This is not a situation in which the arbitrator ignored the plain language of the contract, such as by applying the wrong agreement, see Coca-Cola Bottling Co. of St. Louis v. Teamsters Local Union No. 688, 959 F.2d 1438, 1440-41 (8th Cir. 1992), or by
This is a case, rather, in which the arbitrator at least arguably construed the relevant provision of the contract, but the company contends that he misread the agreement and committed serious error in his interpretation. In that situation, the arbitrator‘s decision must stand. Misco, 484 U.S. at 38. Erroneous textual analysis, like “improvident, even silly, factfinding,”
Alcan seeks support in Smullin v. Mity Enterprises, Inc., 420 F.3d 836 (8th Cir. 2005), which applied the definition of “plant closing” in the Worker Adjustment and Retraining Notification Act (“WARN Act“),
This case, of course, is not governed by the WARN Act, but by a contract under which the triggering event occurs “[i]f the Company shall close a plant completely and permanently.” Even Alcan does not contend that this definition is facility-specific: the Company closes a plant “completely and permanеntly” even if a different company reopens the facility at a later time—otherwise, how would the parties ever know that a closure was “permanent“? If the arbitrator had decided this dispute based on the definition of “plant closing” in the WARN Act rather than by reference to the contract between the parties, then he truly would have dispensed his own brand of industrial justice.
* * *
For the foregoing reasоns, we reverse the judgment of the district court and remand the case with directions to confirm the arbitration award. We deny the request of the Unions for an award of attorneys’ fees. Alcan acted promptly to seek an order vacating the arbitration award, and the company did not act dishonestly or in bad faith.
GRUENDER, Circuit Judge, dissenting.
I agree with the district court that this is the rare case in which we should vacate an arbitrator‘s award. The arbitrator here ignored the plain language of the collective bargaining agreement. When three plants are sold to another party and continue operating seamlessly with the same employees during and after that sale, the plants cannot have closed completely and permanently such that the seller must then pay
Courts must give considerable deference to arbitration awards. On this point, the court and I agree. In a labor dispute such as this, the parties have “agreed to submit all questions of contract interpretation to the arbitrator.” Misco, 484 U.S. at 36-37 (quoting United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 567-68 (1960)). “[I]t is the arbitrator‘s view of the facts and of the meaning of the contraсt that [the parties] have agreed to accept.” Id. at 37-38. As a result, “[a] reviewing court cannot overturn an arbitrator‘s award even if the court is convinced the arbitrator committed serious error so long as the arbitrator was arguably construing or applying the contract.” Excel Corp., 102 F.3d at 1467. But an arbitrator‘s authority to issue an award is not unlimited. As the court recognizes, ante at 3, if an arbitration award does not “draw[ ] its essenсe from the collective bargaining agreement” because it reflects the arbitrator‘s “own brand of industrial justice,” then the court should vacate that award. Enter. Wheel, 363 U.S. at 597. That is to say, “[t]he arbitrator may not ignore the plain language of the contract,” Misco, 484 U.S. at 38, or “interpret[ ] unambiguous language in any way different from its plain meaning.” Inter-City, 845 F.2d at 187 (quoting Teter Tool & Die, 630 F. Supp. at 736). In so doing, the arbitrator “amends or alters the agreement and acts without authority.” Id. Thus, where thе arbitrator departs from the unambiguous language of the contract in granting an award, the court should vacate that award.
Here, the severance provision of the collective bargaining agreement is unambiguous. It states:
If the Company shall close a plant completely and permanently, employees whose employment shall be terminated as a result thereof and who at the time shall have a length of continuous service with the
Company of five (5) years or more, shall be entitled to a Severance allowance as follows . . . .
By operation of this provision, qualifying employees are entitled to severance benefits only if (1) “the Company shall close a plant completely and permanently” and (2) that closure results in the termination of their employment. Althоugh the collective bargaining agreement does not itself define the term “close,” the term is commonly understood, and is defined, as meaning “[t]o conclude; to bring to an end.” Black‘s Law Dictionary 271 (8th ed. 2004). As the district court correctly reasoned: “The word ‘closed’ is meant to distinguish it from ‘open.’ The word ‘completely’ is meant to distinguish it from ‘partially.’ The reference to ‘permanently’ is meant to distinguish it from ‘tempоrarily.‘” This unambiguous language should have made this an easy case. Cf. Smullin, 420 F.3d at 838 (concluding, in the context of the WARN Act, that “[i]t is obvious” that a plant does not close when employees at the plant “did not miss even a day of operation” (emphasis added)). Under questioning at the arbitration hearing, Mark Cooper, a witness for the Unions, conceded:
Q: [D]o you have any information that would indicate that the [three рlants] were ever closed even for a minute? I‘m not asking about ownership, I‘m just saying did they shut the places down?
A: No.
Furthermore, as the court notes, ante at 2, Bemis hired all of the Alcan workers who applied to work for Bemis. Accordingly, since the plants at issue did not “close“—much less “close . . . completely and permanently“—and since the employees were not terminated as a result thereof, the severance provision was not triggеred.
The arbitrator‘s attempt to introduce ambiguity into the severance provision falls flat.1 According to the arbitrator, plant closure is employer-specific as opposed to facility-specific. That is to say, when Alcan sold its plants to Bemis, the plants were permanently and completely closed as between Alcan and its employees. That closure is unambiguously facility-specific becomes obvious when the severance provision is viewed in the larger context of the collective bargaining agreement, as
The arbitrator here ignored the unambiguous language of the severance provision. In awarding severance benefits, the arbitrator was “not construing an ambiguous contract term, but rather was imposing a new obligation.” Keebler Co. v. Milk Drivers & Dairy Employees, Local No. 471, 80 F.3d 284, 288 (8th Cir. 1996). I therefore respectfully dissent.