EXXON SHIPPING COMPANY, A Delaware Corporation, Appellee, v. EXXON SEAMEN‘S UNION, Appellant.
No. 92-5489.
United States Court of Appeals, Third Circuit.
Argued May 19, 1993. Decided Dec. 8, 1993.
Sur Petition for Rehearing March 9, 1994.
11 F.3d 1189
Before: STAPLETON, ALITO and SEITZ, Circuit Judges.
Furthermore, because we do not share the Commissioner‘s perception that this is an easy case, we cannot accept the contention that the Lazores were negligent in pressing their claim of exemption from the income tax. The Lazores’ assertion of a treaty-based exemption, while ultimately unsuccessful, was made in good faith and was not barred by precedent. Their position has been supported by cogent legal analysis and respected academic opinion. We cannot hold that this was negligence, and therefore we hold that the application of the negligence penalty in this case was improper.
VII.
For the foregoing reasons, the decision of the Tax Court holding that the Lazores are not exempted from the federal income tax based on the Treaty of Canandaigua will be affirmed, and the Tax Court‘s decision upholding the application of the penalty for negligence will be reversed.
Schneider, Goldberger, Cohen, Finn, Solomon, Miceli, Leder & Montalbano, A Professional Corporation, Howard A. Goldberger (argued and on the brief), Cranford, NJ, for appellant.
OPINION OF THE COURT
ALITO, Circuit Judge:
The Exxon Seamen‘s Union has appealed from a district court order vacating an arbitration award that required the Exxon Shipping Company to reinstate an able bodied seaman on an oil tanker who was found to be highly intoxicated while on duty. 801 F.Supp. 1379. The district court held that this arbitration award was contrary to the well defined and dominant public policy against having intoxicated persons participate in the operation of commercial vessels. After the district court entered the order at issue here, we upheld a similar district court order vacating an arbitration award that required the reinstatement of an able bodied seaman on another oil tanker who had failed a company drug test. Exxon Shipping Co. v. Exxon Seamen‘s Union, 993 F.2d 357 (3d Cir. 1993) (“Exxon Shipping Co. I“). In light of that decision, we affirm the order now before us.
I.
In 1985, the Exxon Shipping Company and the Exxon Seamen‘s Union entered into a collective bargaining agreement that required the arbitration of grievances and provided that the decision of an arbitration panel would be final and binding. In April 1988, after bargaining to an impasse, Exxon Shipping announced that it was implementing certain modifications of this agreement, including a new policy on employee alcohol and drug use. This policy stated that “[b]eing unfit for work because of use of drugs, or alcohol is strictly prohibited and is grounds for termination of employment.” The policy also provided that Exxon Shipping had the “right to require employees to submit to medical evaluation or alcohol and drug testing where cause exists to suspect alcohol or drug misuse.”1
In September 1988, Exxon Shipping sent a letter to all of its oceangoing employees further explaining its alcohol and drug policy. This letter stated that it served as “another official notice that violation of the Company Alcohol and Drug Use Policy, or regulations governing alcohol or drug use in the work place will result in immediate termination from the vessel.” The letter added: “While we must continue to thoroughly investigate the facts of each individual case and make a final determination on a case-by-case basis, termination of employment is the penalty for violation of these standards.”
Approximately one year later, on September 5, 1989, Exxon Shipping and the union entered into a Memorandum of Understanding modifying the collective bargaining agreement. This Memorandum provided:
A breathalyzer test may be given “for cause” by a supervisor trained to conduct such tests to anyone suspected of intoxication. A .04 or above Blood Alcohol Content (BAC) is considered intoxication and may result in discharge from the vessel and subject the employee to further discipline up to and including termination.2
On September 13, 1989, shortly after this memorandum was signed, the Exxon Long Beach, a 987-foot oil tanker used to transport crude oil from Alaska to California, was anchored at San Francisco. One of the able bodied seamen assigned to this ship was Randall Fris. Able bodied seamen have duties that are related to the safe operation of the ship. See
The union filed a grievance protesting Fris‘s discharge, and eventually the dispute was submitted to a three-member arbitration panel consisting of a neutral arbitrator and representatives of the company and the union. Over the dissent of the company representative, the panel concluded that Fris‘s discharge had not been for good cause. The majority agreed that Fris had been intoxicated when he boarded the Exxon Long Beach, but it concluded that the Memorandum of Understanding and the company‘s alcohol policy, while permitting discharge for such conduct, did not require that result. Relying on Fris‘s good record during his eight years of employment by Exxon Shipping, the majority concluded that discharge was not the appropriate remedy. The majority stated that “[s]uch an employee should have been given an opportunity to demonstrate that the events on September 13, 1989 were an aberration, and that they would not occur again.” App. at 50. The majority determined that the appropriate penalty was a 90-day suspension and directed Exxon Shipping to reinstate Fris to his prior position with back pay. The award did not require Fris to undergo any type of rehabilitation, treatment, or counselling.
Exxon Shipping then filed this action in the United States District Court for the District of New Jersey, seeking to have the arbitration award vacated. The district court granted summary judgment for Exxon Shipping, concluding that the award was contrary to “a well defined and dominant public policy against having intoxicated persons operate commercial vessels.” Dist.Ct.Op. at 25. The court relied on a Coast Guard regulation prohibiting the operation of a vessel while intoxicated, as well as “a myriad of regulations from various Government agencies concerning alcohol and drug use in the workplace.” Id. at 26. Noting that Fris “was not a desk-bound employee” but had “significant responsibilities for the operation of a large, ocean-going oil tanker,” the court stated: “With an excess of three to four times the blood alcohol permitted by Exxon and the Coast Guard, Fris would be hard pressed to exercise the judgment and discretion required even on a moored oil tanker.” Id. at 34-35. The court added that if Fris were involved in an accident while intoxicated, “Exxon would be hard put to explain or justify his employment.” Id. at 35. The court observed that “[t]here is no margin for error in the operation of an oil tanker.” Id. at 36. The court continued: “A mistake is usually catastrophic in terms of loss of life, damage to the environment, or destruction of property. A mistake caused by or clouded by an excessive level of alcohol in the system of a worker is simply unacceptable.” Id.
After the district court entered its order vacating the arbitration award, the union took this appeal.
II.
A. In W.R. Grace & Co. v. Local Union 759, International Union of the United Rubber Workers of America, 461 U.S. 757, 766, 103 S.Ct. 2177, 2183, 76 L.Ed.2d 298 (1983), the Supreme Court stated that “[a]s with any contract, ... a court may not enforce a collective-bargaining agreement that is contrary to public policy.” The Court cautioned, however, that “[s]uch a public policy ... must be well defined and dominant, and is to be ascertained ‘by reference to the laws and legal precedents and not from general considerations of supposed public interests.‘” Id. (quoting Muschany v. United States, 324 U.S. 49, 66, 65 S.Ct. 442, 451, 89 L.Ed. 744 (1945)).
Several years later, in United Paperworkers International v. Misco, Inc., 484 U.S. 29, 36, 108 S.Ct. 364, 369-70, 98 L.Ed.2d 286 (1987), a union argued that “an arbitral award may not be set aside on public policy
Misco involved an employee who operated a machine that used sharp blades to cut rolls of paper. The employee was found in the backseat of a car in the company parking lot “with marijuana smoke in the air and a lighted marijuana cigarette in the frontseat ashtray.” Id. at 33. In addition, marijuana gleanings were discovered in the employee‘s car, and marijuana was found in his home. Id. After learning these facts, the company discharged him, but an arbitrator ordered his reinstatement. The district court, however, refused to enforce the award, and the court of appeals affirmed, holding that reinstatement would violate the public policy “against the operation of dangerous machinery by persons under the influence of drugs or alcohol.” 768 F.2d 739, 743 (5th Cir. 1985). The Supreme Court reversed, stating that the court of appeals had “made no attempt to review existing laws and legal precedents in order to demonstrate that they establish a ‘well-defined and dominant’ policy against the operation of dangerous machinery while under the influence of drugs.” Misco, 484 U.S. at 44. The Court also stated that even if the court of appeals’ formulation of public policy were accepted, “no violation of that policy [had been] clearly shown” in that case because there was insufficient evidence that the employee would have operated his machine under the influence of drugs. Id.
While Misco left open the question whether an arbitration award may be set aside on public policy grounds only when enforcement of the award would violate positive law, two recent decisions of our court have explicitly or implicitly rejected that argument. In Stroehmann Bakeries v. Local 776, International Brotherhood of Teamsters, 969 F.2d 1436 (3d Cir.), cert. denied, 506 U.S. 1022, 113 S.Ct. 660, 121 L.Ed.2d 585 (1992), the employer discharged a deliveryman after determining that he had sexually harassed a customer‘s employee, but an arbitrator ordered the deliveryman‘s reinstatement. The arbitrator did not decide whether sexual harassment had actually occurred, but the arbitrator concluded that the employer had not made an adequate investigation. The district court vacated the award, and we affirmed. Looking to Title VII of the Civil Rights Act of 1964,
Even more recently, in Exxon Shipping Co. I, we expressly rejected this argument. We noted that the District of Columbia Circuit had accepted this argument but that the First, Sixth, Seventh, and Eighth Circuits had “taken a broader approach, ruling that arbitration awards reinstating employees may be vacated if the awards are ‘inconsistent with some significant public policy.‘” 993 F.2d at 363 (citation omitted). We concluded that “[t]he broader test adopted by the First, Sixth, Seventh, and Eighth Circuits appears to be the sounder approach.” Id. Moreover, we upheld a district court order vacating an arbitration award that did not require conduct that violated any statute, regulation, or other manifestation of positive law.
B. Applying our holding in Exxon Shipping Co. I, we agree with the district court that the award in question in this case violates a public policy that is both well defined and dominant, viz., that an owner or operator of an oil tanker should not be compelled to reinstate to a “safety-sensitive” position an individual who has been found to be intoxicated while on duty on that vessel.
Congress has expressly declared that it is “the policy of the United States that there should be no discharges of oil” into waters under federal jurisdiction.
Not only has Congress enacted measures designed to prevent and deter oil spills, but Congress has also focused specifically on the risk that such spills may be caused by oil tanker personnel who are under the influence of alcohol or drugs. The Senate Report on the Oil Pollution Act of 1990 stated:
The captain of the Exxon Valdez had a blood alcohol level of .06 when tested nine hours after the vessel ran aground. This is in excess of the current Coast Guard regulations which prohibit the operation of a vessel with a blood alcohol content greater than .04.
Sen. Rep. No. 99, 101st Cong., 2d Sess. 10 (1990), reprinted in 1990 U.S.C.C.A.N. 722, 750, 758. Referring to a “serious and pervasive problem in the maritime industry,” the report concluded:
The Committee believes that it is beyond dispute that the public has an overriding interest in assuring that oil tanker personnel performing duties which directly affect the safety of a vessel‘s navigation or operations do so free of the influence of alcohol.
Id. at 10, 1990 U.S.C.C.A.N. at 758-59. The report added: “The Committee believes strongly that serving in safety sensitive positions on oil tankers while impaired by alcohol is wholly incompatible with the need to ensure safe operations.” Id.
Consistent with these views, the Coast Guard has promulgated regulations permitting a marine employer to require crew members on commercial vessels to undergo a chemical test for alcohol or drugs when the
While we are aware of no statute or regulation that directly prohibits the owner or operator of an oil tanker from continuing to employ a crew member who is found to be intoxicated on duty, there can be no doubt that the statutes and regulations we have noted convey the unequivocal message that such an owner or operator should take every practicable step to ensure that an intoxicated crew member does not cause or contribute to an oil spill. In addition to the possibility of liability for removal costs, civil damages, and penalties, an owner or operator might face additional sanctions if an accident is caused by the continued employment of a crew member with a history of intoxication while on duty. For example, if the employer‘s continued employment of the crew member were found to constitute gross negligence, it could be argued that the otherwise applicable limitations on liability would not apply. Moreover, the continued employment of the crew member could be advanced as a ground for criminal liability. It is noteworthy that two of the criminal offenses for which Exxon and Exxon Shipping were indicted following the grounding of the Exxon Valdez were based on the employment of crew members who were allegedly “incompetent” or “physically or mentally incapable” of performing their duties.10
If the owner or operator of an oil tanker employed an able bodied seaman whose merchant mariner‘s document had been suspended or revoked based on intoxication while on duty or some other form of alcohol-related misconduct, the owner or operator would violate
Accordingly, based on our prior decision in Exxon Shipping Co. I and on the statutes, regulations, and expressions of congressional policy previously noted, we conclude that there is a well defined and dominant policy that owners and operators of oil tankers should be permitted to discharge crew members who are found to be intoxicated while on duty. An intoxicated crew member on such a vessel can cause loss of life and catastrophic environmental and economic injury. Some of this injury may not be reparable by money damages. Moreover, because of the limitations on liability under the Clean Water Act and the Oil Pollution Act,15 it is entirely possible that much of the cost resulting from a major oil spill may fall on taxpayers and those who are injured by the accident. While the federal labor laws undoubtedly embody a strong policy favoring the settlement of labor disputes by arbitration, that policy must yield in the present context to the public policy favoring measures designed to avert potentially catastrophic oil spills.16 In Exxon Shipping I, we held that this policy precluded the reinstatement of a seaman who tested positive for marijuana. Consistency with this precedent dictates a similar result here.17
III.
For the reasons explained, therefore, we affirm the order of the district court.
SEITZ, Circuit Judge, dissenting.
In the context of the application of the same public policy issue here presented, this court said in Kane Gas Light & Heating v. International Brotherhood of Firemen, Local 112, 687 F.2d 673, 682 (3d Cir. 1982), cert. denied, 460 U.S. 1011, 103 S.Ct. 1251, 75 L.Ed.2d 480 (1983):
Consideration of [General Teamsters, Local Union 249 v. Consolidated Freightways, 464 F.Supp. 346 (1979)] [International Assoc. of Machinists v. Campbell Soup Co., 406 F.2d 1223 (1969)] and [International Union of Electrical, Radio & Machine Workers v. Otis Elevator Co., 314 F.2d 25 (2d Cir. 1963)] convinces us that only if upholding an award would amount to “judicial condonation” of illegal acts, should the award be vacated on grounds of inconsistency with public policy.
While agreeing that illegal acts are not involved here, the majority say that the quoted ruling is distinguishable, permitting it to promulgate a different controlling legal rule. Given the quoted ruling in Kane Gas Light, I submit that it is not distinguishable. If the explicit rule in that case is to be rejected, it is for an en banc court to do so. Otherwise, our Internal Operating Procedure, making reported opinions binding on subsequent panels, IOP 9.1, will be deprived of its stabilizing value.
March 9, 1994.
Present: SLOVITER, Chief Judge, BECKER, STAPLETON, MANSMANN, GREENBERG, HUTCHINSON, SCIRICA, COWEN, NYGAARD, ALITO, ROTH, LEWIS and SEITZ *, Circuit Judges.**
The petition for rehearing filed by Appellant in the above entitled case having been submitted to the judges who participated in the decision of this court and to all the other available circuit judges of the circuit in regular active service, and no judge who concurred in the decision having asked for rehearing, and a majority of the circuit judges of the circuit in regular active service not having voted for rehearing by the court in banc, the petition for rehearing is denied.
* Senior Judge Seitz as to panel rehearing only.
** Chief Judge Sloviter, and Judges Becker, Nygaard and Roth would grant rehearing in banc.
Alexander GARBER, Appellant, v. Paul E. LEGO, David T. McLaughlin, Richard R. Pivirotto, Theodore Stern, Robert W. Campbell, John B. Carter, Rene C. McPherson, Richard M. Morrow, Frank C. Carlucci, Barbara Hackman Franklin, Hays T. Watkins and Westinghouse Electric Corporation, Appellees.
No. 92-3620.
United States Court of Appeals, Third Circuit.
Argued May 13, 1993. Decided Dec. 16, 1993.
Notes
In Kane Gas Light & Heating v. International Brotherhood of Firemen, Local 112, 687 F.2d 673, 681 (3d Cir. 1982) (in banc), cert. denied, 460 U.S. 1011, 103 S.Ct. 1251, 75 L.Ed.2d 480 (1983) (footnote omitted), we stated that an award should be vacated “only where [it] conflicts directly with federal or state law.” We do not believe, however, that this statement, when read in context, was meant to embrace the view that an award may be vacated only when it orders conduct that positive law forbids. First, the statement was offered as an interpretation of the earlier statement in Honold. See id. Second, the opinion subsequently approved the broader view that an award may be vacated if “upholding [it] would amount to ‘judicial condonation’ of illegal acts.” Id. at 682. Applying this test, we refused to vacate the arbitration award, which required reinstatement of a discharged employee, because we concluded that reinstatement would not amount to such condonation. Id. In the present case, by contrast, the district court observed, and we agree, that the arbitration award requiring Fris‘s reinstatement “sen[t] an undesirable signal to other employees that alcohol abuse in a safety-sensitive job and industry would not be severely punished.” Dist.Ct.Op. at 30; cf. Newsday v. Long Island Typographical Union, No. 915, 915 F.2d 840, 845 (2d Cir. 1990), cert. denied, 499 U.S. 922, 111 S.Ct. 1314, 113 L.Ed.2d 247 (1991) (reinstatement of employee found to have sexually harassed co-worker would “condone” this behavior). Third, our subsequent decisions have not interpreted Kane Gas Light & Heating as adopting the view that an award may be vacated only if it requires illegal conduct. See Exxon Shipping Co. I, 993 F.2d at 363 n.6; Super Tire Engineering v. Teamsters Local Union No. 676, 721 F.2d 121, 125 n.6 (3d Cir. 1983), cert. denied, 469 U.S. 817, 105 S.Ct. 83, 83 L.Ed.2d 31 (1984).