Lead Opinion
MOORE, J., delivered the opinion of the court, in which SUTTON, J., joined. KENNEDY, J. (p. 554), delivered a separate concurring opinion.
OPINION
In this case under § 301 of the Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185, Equitable Resources, Inc. (“Equitable”) challenges the district court’s order enforcing an arbitration award entered in favor of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AEL-CIO/CLC and its Local 8-512 (collectively, the “Union”). In early 2008, Equitable announced its plan to “integrate” the operations and employees of one of its wholly owned subsidiaries, Kentucky West Virginia Gas Company, L.L.C. (“Kentucky West”) into two other wholly owned 'subsidiaries operating in Kentucky. Following announcement of the integration, in June 2008 the Union filed suit in the United States District Court for the Eastern District of Kentucky to compel Equitable and Kentucky West to arbitrate successor-ship issues under the Union’s then-current collective bargaining agreement with Kentucky West (the “CBA”). The CBA included a successorship clause stating that Kentucky West agreed to make any “sale, lease, transfer, or assignment” of “the operations covered by this Agreement” conditional upon the successor entity assuming the CBA. The district court dismissed the Union’s action after Equitable and the Union agreed to arbitrate the successor-ship issues under the CBA. Equitable moved forward with its corporate restructuring plan, and, effective July 1, 2008, Kentucky West ceased to exist.
Equitable, purporting to represent Kentucky West’s interests, appeared at the arbitration. On July 21, 2008, the arbitrator entered an award in favor of the Union that required Equitable to abide by the CBA until it expired in October 2008 (the “Award”). The arbitrator concluded as a matter of contract interpretation that the restructuring triggered the CBA’s successorship clause and reasoned that Equitable could be liable under the clause for multiple reasons, including Equitable’s status as the entity that assumed Kentucky West’s legal obligations after it ceased to exist July 1st, as Kentucky West’s alter ego, and as the entity that received Kentucky West’s operations after July 1st. Equitable then filed the instant complaint under § 301 of the LMRA to vacate or modify the Award, alleging multiple defects in the Award. The Union counterclaimed for enforcement of the Award and filed a cross-motion for summary judgment. The district court granted summary judgment in favor of the Union, enforcing the Award.
On appeal, Equitable argues that the district court erred in enforcing the Award because the arbitrator exceeded his authority in ordering Equitable, a non-party to the CBA, to honor the CBA as the remedy for Kentucky West’s breach of the successorship clause, which resulted in
I. FACTS AND PROCEDURE
The Union entered into the CBA with Kentucky West — defined as “a Delaware limited liability company and subsidiary of Equitable Resources, Inc.” — effective October 16, 2003 through October 15, 2008. Doc. 8 (Answer), Ex. 1 (CBA at 1, 44). The CBA includes successorship language in Section 1 of Article II “RECOGNITION”:
The Company agrees that if during the life of this Agreement, it discontinues operations, sells, leases, transfers or assigns the operations covered by this Agreement, it shall inform the purchaser, lessee, transferee or assignees of the exact terms of this Agreement and shall make the sale, lease, transfer, or assignment conditional upon the purchaser, lessee, transferee, or assignee, assuming all the obligations of the Agreement until its expiration date and treating affected employees of the Bargaining Unit in accordance with the terms of this Agreement. The Company agrees to provide the Union with written notice when the transaction is complete and the Agreement is assumed.
Id. at 2. Article X “GRIEVANCE AND ARBITRATION” dictates the manner for resolving “any difference ... between the parties or between any one or more of the employees and the Company relating to the meaning, application, or violation of any provisions of this agreement.” Id. at 39. Article X further dictates the “Jurisdiction of [the] Arbitrator,” stating, “The arbitrator shall have jurisdiction and authority only to interpret, apply, or determine compliance with the provisions of this agreement, and will not have authority to add to or detract or alter any provisions of this agreement. The arbitrator’s decision will be final and binding on both parties.”Id. at 40.
In early 2008, Equitable announced that it was undertaking a “corporate restructuring” for efficiency purposes that would eliminate Kentucky West and move its operations and employees to two wholly owned non-union subsidiaries of Equitable, Equitable Midstream and Equitable Productions (both of which had undergone operations changes prior to January 1, 2008). Under this plan, Kentucky West would cease to exist effective July 1, 2008. The Union filed a grievance with Kentucky West on March 7, 2008, and then an amended grievance on May 16. On May 23, 2008, Equitable responded to the Union, stating that the grievance was nonarbitrable. The Union then filed suit in the district court under § 301 of the LMRA, requesting a preliminary injunction to stay the restructuring and compel arbitration with Kentucky West so that the Union would be able to arbitrate with Kentucky West or Equitable without either party being able to argue that arbitration was no longer available under the CBA. After telephonic conference calls with the district court, the parties agreed to settle by submitting the case to arbitration, and the Union withdrew its suit.
Arbitration was held on July 8, 2008. As stated in the Award, the question presented to the arbitrator was: “Did the Company [Kentucky West] violate the collective bargaining agreement when it refused to secure an assurance from its parent company, Equitable Resources, Inc.[,]
The arbitrator found that “[i]t is of some significance that while [Kentucky West] is referenced in the preamble as the ‘Company’ it is also identified as a ‘subsidiary of Equitable Resources, Inc.’ ” Id. at 12. The arbitrator found that
What was clear was that Equitable representatives sat at the negotiating table, participated in the negotiations actively and in fact were in reality the ones making most if not all of the decisions regarding the substantive terms of the labor agreement in the bargaining leading up to the current labor agreement.
What is also clear, and this too was not controverted by the Company at the hearing, is that at least for purposes of these negotiations, the two Companies acted very much as though they were one. Certainly as a factual determination, it was quite clekr that Equitable knew and agreed to the terms of the labor agreement and it was based on that expression of agreement that the Union signed the current labor agreement.
Id. at 18-19 (citation omitted). The arbitrator reviewed and distinguished prior arbitrations between Kentucky West and the Union and concluded that none dictated the outcome here because none had dealt with a similar situation that fell squarely within Article II, Section 1 as a transfer of the entire operations of Kentucky West to another entity. Id. at 12-18.
The arbitrator supported his ability to arbitrate the dispute after Kentucky West ceased to exist under John Wiley & Sons, Inc. v. Livingston,
The arbitrator ultimately concluded that The terms [of Article II, Section 1] apply to any transferee, such as a subsidiary of Equitable and it frankly makes no difference what entity the assets are sold to or merged with. The contract is hereby interpreted to apply as a condition precedent to any such transfer including one to another Equitable subsidiary.
The only logical reading of the language of Article II section 1 is that even if the parent made the decision to require [Kentucky West] to transfer it[s] assets, either inside or outside of the Equitable stable of companies, the conditions precedent to such a transfer would be for [Kentucky West] to assure that the terms of the agreement were honored .... This again is a matter of contract and the clear terms requiring such assurance prior to the transfer.
Accordingly, for the reasons stated herein, it is determined that the plain and unambiguous terms of the agreement at Article II section 1 required Equitable, as the successor employer to [Kentucky West], to honor all of the terms and conditions of the labor agreement between [Kentucky West] and the Union herein until its expiration on October 15, 2008 for the former [Kentucky West] employees covered under that agreement.
Id. at 34-35.
Equitable filed the instant suit in the district court on August 1, 2008, seeking to vacate the Award. The Union counterclaimed for enforcement and filed a motion for summary judgment; Equitable filed a cross-motion for summary judgment. The district court granted summary judgment to the Union and affirmed the Award “[f]or the reasons stated on the record and for those provided by the [Union] in their briefs.” Doc. 25 at 1 (Dist. Ct. Minute Entry & Order). Equitable timely appeals from the district court’s summary-judgment order.
II. ANALYSIS
Equitable claims that the Award is defective for four separate reasons. First, Equitable asserts that the arbitrator acted outside of his authority by imposing the CBA on non-parties. Second, Equitable asserts that the arbitrator necessarily resolved a labor representation dispute not committed to arbitration. Third, Equitable argues that the remedy the Award dictates will violate public policy in implementation. And finally, Equitable contends that the arbitrator “dispensed his own brand of industrial justice.” We will address, and reject, each of Equitable’s contentions in turn.
A. Standard of Review
“This [c]ourt reviews a district court’s grant of summary judgment in a labor arbitration dispute de novo,” apply
In an appeal from an arbitrator’s decision interpreting a collective bargaining agreement, our review is confined to ascertaining whether the arbitrator erred. In doing so, we apply the highly deferential standard of Michigan Family Resources and uphold the arbitrator’s decision so long as she was “arguably construing or applying the contract” and was not disqualified by fraud or a conflict of interest.
Nance v. Goodyear Tire & Rubber Co.,
Did the arbitrator act “outside his authority” by resolving a dispute not committed to arbitration? Did the arbitrator commit fraud, have a conflict of interest or otherwise act dishonestly in issuing the award? And in resolving any legal or factual disputes in the case, was the arbitrator “arguably construing or applying the contract”?
Id. at 753. “[W]here it is contemplated that the arbitrator will determine remedies for contract violations that he finds, courts have no authority to disagree with his honest judgment in that respect.” Misco,
B. The Arbitrator Did Not Exceed His Authority by Creating Parties to the CBA
“An arbitrator does not exceed his authority every time he makes an interpretive error; he exceeds that authority only when the collective bargaining agreement does not commit the dispute to arbitration.” Mich. Family Res.,
The Award states the question presented to the arbitrator as: “Did the Company [Kentucky West] violate the collective bargaining agreement when it refused to secure an assurance from its parent company, Equitable Resources, Ine.[,] that the agreement would be honored after the Company’s assets were transferred to a new entity? If so what shall the remedy be?” Doc. 8 (Answer), Ex. 5 (Award at 2). In its complaint, Equitable stated that
The primary issues at the arbitration were: (1) whether the core issues of representation raised by the Union’s grievance render it unarbitrable; (2) whether Kentucky West breached Article II Section 1 of the ... CBA when Equitable imposed a corporate-wide restructuring; and (3) if a breach is found, whether there are any monetary damages for the time period from July 1, 2008 through October 15, 2008.
Doc. 1 (Compl. at 3). The Union stated in its motion for summary judgment that the parties effectively submitted four questions to the arbitrator:
(1) Whether the dispute was arbitrable? (2) Whether the [CBA] or its successor-ship provisions bound the parent company, Equitable and/or its other non-union subsidiaries, as well as its subsidiary [Kentucky West]? (3) [W]hether the [CBA] was violated by the transaction at issue? and (4) [I]f Equitable or [Kentucky West] had violated their obligations under the agreement, what should the remedy be?
Doc. 14 (Union Summ. J. Mot. at 4-5 (citations omitted)). These statements reflect the issue statements each party submitted to the arbitrator in their pre-hearing briefs.
We conclude that the arbitrator’s determination that Equitable could be held liable under the terms of the CBA was a question of contract interpretation that the parties submitted to the arbitrator. The errors that Equitable alleges the arbitrator made are errors of law based on findings of fact — that the arbitrator could not have entered the Award if he had correctly interpreted the contract under precedent. However, the arbitrator repeatedly stated that his conclusions were grounded in his interpretation of the contract. See, e.g., Doc. 8 (Answer), Ex. 5 (Award at 26) (“[T]his matter is one which remains a matter of contract: did Equitable agree to
First, the arbitrator interpreted Article II, Section 1 to manifest clearly the intent of the parties — the Union, Kentucky West, and Equitable, as a participant in the CBA negotiations and prior negotiations — that any internal or external transfer of Kentucky West’s operations would require Kentucky West to secure compliance with Article II, Section 1 as a condition precedent, regardless of who or what was the “successor” entity. Doc. 8 (Answer), Ex. 5 (Award at 11-12). With this interpretation, the arbitrator determined that Kentucky West violated the provision when Equitable’s restructuring took place. The arbitrator then had to determine who was liable for this violation. The arbitrator addressed and distinguished all of the pri- or arbitration awards and NLRB rulings that Equitable cites on appeal. Id. at 12-18 (“It is significant that in none of the prior awards was the complete and total loss of the unit involved.... Here the question is whether the terms of the agreement must be honored by the successor entity as a precondition of the sale. As discussed herein, there is no limitation on whether the successor entity is internal or external;] the integration cannot occur without the provisions of Article II being triggered.”); id. at 30-31. Distinguishing “a true arms length transaction,” the arbitrator specifically found that Equitable “knew and agreed to the terms of the [CBA],” that the contract contemplated the type of internal transfer at issue, and that “[t]he clear understanding was that [Article II, Section 1] was a condition precedent to this transfer and that Equitable understood and agreed to this as well.” Id. at 19. The arbitrator rejected Equitable’s argument that representational issues precluded arbitrability, finding support under Supreme Court precedents to arbitrate the dispute after Kentucky West ceased to exist. Id. at 20-25.
We acknowledge that the arbitrator was influenced by the facts and circumstances here — “that the successor through its actions and express statements made by its authorized representatives at the bargaining table in fact did agree to b[e] bound by the terms of the predecessor’s labor agreement and did in fact assume those responsibilities.” Id. at 21, 23-24. But, as the arbitrator concluded,
this case is not governed necessarily by operation of law or by NLRB precedent, although those considerations are relevant, it is governed by the terms of the contract agreed to by the parties. The one fact that comes through this case like a bolt of lightening [sic] is that the parties negotiated for this very scenario and agreed, with Equitable representatives a part of that[] agreement, that*548 the terms of the CBA would be honored. The bottom line on this entire case is that the collective bargaining agreement survived the merger between [Kentucky-West] and Equitable because the parties, including Equitable, agreed that it would.
Id. at 25 (first emphasis added). Further, the arbitrator found that
the essential facts in this case demonstrate a very clear intent that Equitable as the parent company of [Kentucky West] in the first place and the surviving company for all the [Kentucky West] operations and all of its employees intended through the operation of the successorship clause to be bound by it[s] terms for the former [Kentucky West] employees. This does make it a matter of contractual interpretation and thus appears to invoke the Courts’ authority to order arbitration under the contract.
Id. at 27. Even with his finding that Equitable was liable as the parent and legal successor, the arbitrator proceeded to find that Equitable had both an express and implied obligation to honor the terms of the prior agreement as the successor based on the “clear contractual terms” and “the facts” of the negotiations. Id. at 32. Although Equitable is correct that the arbitrator did point to evidence from the 2000 negotiations, the arbitrator prefaced his reference to this evidence with language showing that he understood its limited evidentiary value, stating that it merely supported his earlier findings interpreting the CBA.
From our review of the Award, we conclude that the arbitrator was “arguably construing or applying the contract” in the manner he deemed required to resolve the dispute the parties placed before him. See Mich. Family Res.,
Without considering the concessions that the Union has urged us to accept regarding Equitable’s representation of Kentucky West before the district court and the arbitrator, we conclude that the arbitrator did not exceed the scope of his authority in determining whether Equitable was liable for Kentucky West’s breach under the CBA once he determined that a breach of the CBA did occur. “[W]hen a contract is scrutinized for evidence of an intention to arbitrate a particular kind of dispute, national labor policy requires, within reason, that an interpretation that covers the asserted dispute be favored.” John Wiley & Sons, Inc. v. Livingston,
Because it is not “clear” that the arbitrator exceeded the scope of the issue submitted in determining whether Equitable could be liable for the breach, we cannot overturn the Award on this basis. Id. This dispute is not one that is without any basis in the CBA. See Mich. Family Res.,
C. The Arbitrator Did Not Exceed His Authority to Resolve Representational Questions
Although the arbitrator rejected Equitable’s argument that representational issues precluded arbitrability, Equitable asserts that the arbitrator necessarily had to decide representational issues to create the specific-performance remedy, and that representation issues are outside of an arbitrator’s authority and thus were not within the scope of the issue presented.
The district court found that the arbitrator made a legal decision to treat the issue of whether Equitable was bound as a successor as a contract interpretation issue and not as a representational issue under labor law. Doc. 27 (Summ. J. Tr. at 92-93). Indeed, the arbitrator repeatedly stated that he was dealing with a question of contract interpretation — “this matter is one which remains a matter of contract: did Equitable agree to be bound by the terms of the existing labor agreement between the Union and [Kentucky West].” Doc. 8 (Answer), Ex. 5 (Award at 26). We agree with the arbitrator’s conclusion that he did not necessarily have to decide the representation issues Equitable raised in order to interpret the CBA and impose a remedy because the arbitrator imposed specific performance on Equitable as the stand-in for Kentucky West. Contrary to Equitable’s contention, our unpublished opinion in Dobson Industrial, Inc. v. Iron Workers Local Union No. 25 does not require the opposite conclusion. In construing the contract in Dobson, the arbitrator determined that it must also determine whether an alter ego relationship existed, which the company asserted raised an impermissible representation issue that the arbitrator decided against the company. Dobson Indus.,
Moreover, that an arbitrator may have “implicitly” decided a representational issue does not necessarily mean that he exceeded his authority because collateral representational issues may remain outside the NLRB’s exclusive jurisdiction. “When a dispute is ‘primarily representational’ under § 7 or § 8 of the National Labor Relations Act, ‘simply referring to the claim as a “breach of contract” [is] insufficient for the purposes of § 301 federal courts’ jurisdiction,’ but ‘matter[s] primarily of contract interpretation, whi[ch] potentially implicate] representational issues,’ remain within the federal courts’ § 301 jurisdiction.” Int’l Bhd. of Elec. Workers, Local 71 v. Trafftech, Inc.,
Therefore we conclude that the arbitrator did not exceed the scope of his authority to decide a representational issue in this case because the arbitrator’s successor decision was permissible in furtherance of his interpretation of the CBA.
D. The Award’s Remedy Does Not Violate Public Policy
Equitable next contends that the specific-performance remedy ordered in the Award violates public policy by requiring recognition of a minority bargaining unit by a non-party, in violation of the public policy in the National Labor Relations Act (“NLRA”), specifically 29 U.S.C. § 159 (§ 9 of the NLRA). The “narrow” public policy exception makes an arbitration award unenforceable if it is contrary to an “ ‘explicit,’ ‘well defined,’ and ‘dominant’ ” public policy that is “ ‘ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests.’ ” E. Associated Coal Corp. v. United Mine Workers, Dist. 17,
As we stated above, the Award clearly “ ‘draws its essence from the contract.’ ” Mich. Family Res.,
E. The Arbitrator Did Not “Dispens[e] His Own Brand of Industrial Justice”
For many of the same reasons stated above, we cannot agree with Equitable’s contention that the arbitrator’s decision is tainted by a “results-driven” approach that makes the Award unenforceable. “ ‘[0]nly when the arbitrator strays from interpretation and application,’ ... does he enter the forbidden world of ‘effectively dispensing] his own brand of industrial justice,’ making the arbitrator’s decision ‘unenforceable.’ ” Mich. Family Res.,
As stated above, we conclude that the arbitrator’s decision is supported by his interpretation of the contract.
That the deciphering of this contract required implications and inferences suffices by itself to show that the arbitrator was permissibly engaged in interpretation .... It was the “arbitrator’s construction,” not three layers of federal judicial review, that the parties “bargained for, ” and that delegation of decision-making authority must be respected even when time and further review show that the parties in the end have bargained for nothing more than error.
Id. at 756 (emphasis added). Here, the arbitrator repeatedly stated that he was dealing with a question of contract interpretation, and the arbitrator’s remedy is related to his interpretation of the CBA and necessarily flows from his finding that a requirement to honor the CBA was a condition precedent to the transaction. Because the transaction had occurred without the condition precedent, the arbitrator ordered specific performance of the CBA to place the Union in the position it would have been had Article II, Section 1 been honored prior to the transaction.
We are also unpersuaded by Equitable’s argument that the Award dispensed the arbitrator’s own brand of industrial justice by ignoring arbitral precedent. We decline to employ the strict application of arbitral res judicata that Equitable urges because our precedent instructs “that absent a contractual provision to the contrary, the preclusive effect of an earlier arbitration award is to be determined by the arbitrator.” Dana,
III. CONCLUSION
We conclude that the district court did not err in granting summary judgment to the Union and enforcing the Award here, in light of the great deference afforded to
Notes
. The district court entered a subsequent order remanding the matter to the arbitrator for clarification of the CBA’s expiration date pursuant to the Union’s timely Rule 59(e) motion. The district court then ruled that its summary-judgment order was a final and appeal-able order not displaced by this later remand order, and Equitable filed its notice of appeal from the summary-judgment order. (The propriety of the remand order is not before us on appeal.) We have jurisdiction to review the summary-judgment order. M & C Corp. v. Emin Behr GmbH & Co., KG, 326 F.3d 772, 779-81 (6th Cir.2003).
. Before the district court, Equitable maintained that Kentucky West was the entity that was arbitrating with the Union because Equitable had sent representatives on behalf of Kentucky West, which ceased to exist as a legal entity after July 1, so that Kentucky West could "fulfilin its obligation” as the party to the CBA. Doc. 27 (Summ. J. Tr. at 4-5) ("Equitable was there on behalf of its former subsidiary, because any contractual, any legal obligations that Kentucky West had under the collective bargaining agreement, Equitable was standing in the shoes of Kentucky West for that purposes [sic], but it was not expanding the collective bargaining agreement to cover anyone other than Kentucky West.”).
. We note that this is consistent with the Second Circuit's recognition that a non-signatory to an agreement to arbitrate may be bound by an arbitral award if the signatory can “ 'establish at least one of the five theories described in Thomson-CSF[, S.A. v. American Arbitration Association,
. Even if we could review the arbitrator's legal conclusion, we would do so under the " 'more relaxed, less exacting' application of the alter ego doctrine [used] ‘[i]n order to effectuate federal labor policies.' ” Yolton v. El Paso Tenn. Pipeline Co.,
. At oral argument, the Union confirmed that it was not seeking to assert or determine its rights to represent other employees in the future beyond the scope of the CBA at issue in this litigation.
. The district court rejected this argument because Equitable had agreed, prior to arbitration, that it would step into Kentucky West's shoes for purposes of the Union’s potential remedy. Doc. 27 (Summ. J. Tr. at 94-95). During the summary judgment hearing, the district court disagreed with Equitable's argument that the remedy effectively ordered Equitable to act in violation of federal labor law to recognize a minority bargaining unit, finding that the arbitrator had only ordered Equitable to honor the CBA and "[ijt’s'for the company to figure out in that scenario how to do it legally.” Id. at 55. The district court found that the arbitrator interpreted the contract to determine whether a breach occurred under its terms, and then imposed a remedy of specific performance on Equitable as the successor entity who had agreed to stand in the shoes of Kentucky West. Id. at 32-35, 52-53, 58.
. Although Equitable argues that it would be against public policy to require a new employer to follow a predecessor's collective bargaining agreement if the requisite majority status and unit appropriateness are lost, even if the new employer voluntarily assumed the agreement, see Burns Int’l Sec. Servs.,
Concurrence Opinion
concurring.
I concur with the majority opinion. I write separately to note that we are not deciding that there are ongoing equitable obligations on Equitable.
