Lead Opinion
Opinion by Judge McKEOWN; Dissent by Judge PREGERSON
ORDER
Judges Hawkins and McKeown vote to grant Appellee United Parcel Service, Inc.’s petition for rehearing. Judge Pre-gerson votes to deny the petition for rehearing. The opinion filed Sept. 6, 2000, amended Oct. 20, 2000 and reported at
OPINION
This case stems from a union grievance over the termination of an employee who was purportedly insubordinate and verbally abusive to co-workers. A labor arbitrator upheld the termination, and the district court denied a petition to vacate his award. The only issue before us is whether the arbitrator “ ‘even arguably constru[ed] or applied]’” the collective bargaining agreement that governed the employee’s relationship with his employer, or, rather, was dispensing his “ ‘own notions of industrial justice.’ ” E. Associated Coal Corp. v. United Mine Workers, Dist. 17,
I. BACKGROUND AND PROCEDURAL HISTORY
In September 1998, United Parcel Service, Inc. (“UPS”) fired employee Carlos Harris for “insubordination and abusive conduct toward superiors and co-employees in violation of house rules.” In response to a dispute over his paycheck, Harris became upset, vociferous, loud, and angry when conversing over the telephone with a payroll clerk. Because the clerk
Harris is represented by Hawaii Teamsters and Allied Workers, Local 996 (“Local 996”). Local 996’s collective bargaining relationship with UPS is governed by three agreements: (1) a National Master Agreement (“NMA”) between UPS and the International Brotherhood of Teamsters, the international union with which Local 996 is affiliated; (2) the Western 0Region Supplemental Agreement (“Western Supplement”) between UPS and the Western Conference of Teamsters; and (3) a Local Agreement between UPS and Local 996.
The Local Agreement provides that “[a]ny case pertaining to a discharge or suspension shall be handled in accordance with Article 28, Section 2 of the Western Region Supplemental Agreement.” Article 28, Section 2 of the Western Supplement regulates the conditions under which UPS may fire a bargaining unit employee:
Any case pertaining to a discharge or suspension shall be handled as follows:
No employee(s) shall suffer suspension or discharge without the employee(s) having been given a written warning notice wherein the facts forming the grounds for such warning notice are clearly set forth. The facts therein set forth must be of the same type as those upоn which such suspension or discharge is founded.
(A) In cases of: (1) dishonesty; (2) drinking of alcoholic beverages while on duty; (3) recklessness resulting in a serious accident while on duty; (4) the carrying of unauthorized passengers; (5) unprovoked assault on an employee or a supervisory employee while on duty; (6) selling, transporting or uses of illegal narcotics while in the employment of the Employer; or (7) willful, wanton or malicious damage to the Employer’s property, shall be dischargeable offenses without the necessity of a warning letter being in effect.
The seven speсified reasons have been referred to as “cardinal infractions” and colloquially as the “cardinal sins.” Section 2(B) of Article 28 permits the arbitrator to admit evidence of “any reason or reasons to substantiate unsatisfactory work performance arising out of circumstances which occurred during the nine (9) month period immediately preceding the date of discharge or suspension notice.” Finally, Article 7 of the NMA limits UPS’s power to fire summarily:
Except in cases involving cardinal infractions under the applicable Supplement, Rider or Addendum, an еmployee to be discharged or suspended shall be allowed to remain on the job, without loss of pay unless and until the dis*1180 charge or suspension is sustained under the grievance procedure.
The NMA, Article 8, also sets out the scope of the arbitrator’s authority:
The arbitrator shall have the authority to apply the provisions of this Agreement and to render a decision on any grievance coming before him/her but shall not have the authority to amend or modify this Agreement to establish new terms or conditions of employment.
Local 996 grieved Harris’s termination before the Labor-Management Committee for the Western Region. When internal grievance procedures failed to resolve the dispute, Local 996 and UPS agreed to submit the case to binding arbitration. During the two-day arbitration hearing, Local 996 argued that (1) Harris’s termination was prohibited by the CBA; and (2) even if Harris’s termination was not prohibited by the CBA, UPS improperly terminated him prior to an arbitration decision on the matter. The arbitrator upheld Harris’s discharge. After finding that Harris did not commit one of the seven cardinal infractions listed in Article 28, Section 2(A) of the Western Supрlement, the arbitrator interpreted the CBA as permitting summary discharge without prior warning even if the employee did not commit one of the specified cardinal sins:
While the arbitrator is unable to find that this language used in that context rose to the level of an assault, it does rise to such insubordination and disrespect as to fall within industrially and socially disapproved conduct such as to authorize immediate dismissal without warning under Article 28. He holds that there are other cardinal sins perhaps not specifically named in this CBA article, which fall within the broad scope оf insubordination and for which forthwith termination - without benefit of warning, may legitimately be imposed.
The arbitrator concluded that Harris’s conduct warranted summary dismissal without prior warning because his conduct violated industrial norms.
Local 996 filed an action in district court seeking to vacate the arbitral award. UPS opposed Local 996’s motion to vacate and filed a motion to confirm the award. Finding that a plausible interpretation of the CBA supported the arbitral award, the district court confirmed the award:
The Court finds Article 28, Section 2 of the Western Region Supplemental Agreement is ambiguous. Article 28, Section 2 does not specify whether the list of offenses which may result in immediate dismissal is exclusive. The clause, for example, could specify “only if’ the employee commits one of the following cardinal sins may the employer summarily terminate an employee.... The Court determines in reaching this decision, [the] Arbitrator interpreted the contract between the parties.
The Court finds [the] Arbitrator’s interpretation of the list as non-exclusive is a “plausible” interpretation of the contract. The interpretation comports with decisions rendered by other arbitrators. Two arbitrators interpreted the identical contract as a non-exclusive list for termination offenses.... Several arbitrators have interpreted comparable lists of “cardinal sins” in nearly identical contracts as non-exclusive.
In this appeal, Local 996 challenges the confirmation of the award.
II. STANDARD OF REVIEW
The outcome of this case rests on the limited scope of our review of an arbitral award. Therefore we think it useful to set out the standard of review in some detail.
We review de nоvo a district court’s decision confirming an arbitration award. See SFIC Props., Inc. v. Int’l Ass’n of Machinists & Aerospace Workers, Dist. Lodge 94,
Our task is, in essence, to review the procedural soundness of the arbitral decision, not its substantive merit. See Coal, 531 U.S. at-,
These strong admonitions steering us away from the merits and circumscribing our review do not mean that an arbitrator may “ignoref ] the plain language of the contract,” Stead Motors,
Similarly, an arbitrator has no authority to ignore the plain language of a collective bargaining agreement that limits the scope of his authority. Ordinarily, “[a]n arbitrator is ‘not confined to the express terms of the contract’ but may also consider the ‘industrial common law’ which ‘is equally a part of the collective bargaining agreement although not expressed in it.’ ” SFIC,
III. Analysis
Fundamental to an understanding of our task here is the fact that we are to view an award not as a potentially erroneous result of the arbitrator’s contract interpretation, but rather as the contract itself. The en banc court in Stead Motors
Since the labor arbitrator is designed to function in essence as the parties’ surrogate, he cannot “misinterpret” a collective bargaining agreement. As Professor St. Antdine observes, “[i]n the absence of fraud or an overreaching of authority on the part of the arbitrator, he is speaking for the parties, and his award is their contract.” [St. Antoine, supra, at 1140]. Thus, what courts do when they review an arbitrator’s award is more akin to the review of a contract than of the decision of an inferior tribunal: the award, just as a contract, is the expression of the parties’ will and must be enforced as expressed unless illegal or otherwise void. Judicial “reinterрretation,” no less than judicial reformation of a contract against the wishes of all the parties to it, is ordinarily an invalid exercise of our power.
Thrоughout the litigation in federal court, Local 996 has consistently argued that the arbitrator erred in interpreting the relevant provisions of the CBA by concluding that the list of cardinal offenses contained in Article 28, Section 2(A) is not an exclusive list of the infractions for which summary discharge without prior warning may be imposed. There is much to be said, as a matter of contract interpretation, for Local 996’s view of the arbitrator’s decision. When read together, NMA Article 7 and the second clause of Western Supplement Article 28, Section 2 can arguably be construеd as prohibiting UPS from discharging an employee for a reason that is not one of the seven cardinal infractions unless the employee has received a warning notice and until the discharge has been sustained in arbitration.
Local 996’s straightjacket approach to contract interpretation would not, however, take into account other cognizable sources of federal labor law, such as the law of the shop, the industrial common law, and the like, nor would it appropriately recognize the role and decision of the skilled labor arbitrator. For, even if we were to disagree with the arbitrator’s approach, it is not our task to intrude into the arbitration process and substitute our judgment for his. See Enterprise Wheel,
To be sure, an arbitrator’s award is not bulletproof. In Garvey, we summarized the rare circumstances where we may upset an arbitrator’s award:
The general rule [of refusal to review the merits of an arbitral award], the [Supreme] Court noted, is inapplicable when an arbitrator “dispense^] his own brand of industrial justice.” [Enterprise Wheel,]363 U.S. at 597 [,80 S.Ct. 1358 ]. In those instances — instances in which, by definition, an arbitrator’s award draws no legitimacy from the collective bаrgaining agreement — a court has no choice but to refuse enforcement of the award. Over the years, we have formu*1183 lated this exception in various ways. See, e.g., SFIC Properties, Inc. v. Int’l Assn. of Machinists & Aerospace Workers, Dist. Lodge 9U,103 F.3d 923 , 925 (9th Cir.1996) (stating that the exception applies “when the award does not ‘draw its essence from the collective bargaining agreement’ ”); Sheet Metal Workers v. Arizona Mechanical & Stainless, Inc.,863 F.2d 647 , 653 (9th Cir.1988) (suggesting that the exception applies where the award does not “represent[ ] a plausible interpretation of the contract”).
Local 996 attempts to rely on language in some of our cases suggesting that a court may vacate an arbitral award upon a determination that it does not stem from a “plausible” reading of the CBA. See, e.g., Sheet Metal Workers Int’l Assoc. v. Arizona Mech. & Stainless, Inc.,
Although the formulations have been various, the underlying rule has remained unchanged. We overturn an arbitrator’s award only when it is clear from the arbitral opinion or award that the arbitrator did not base his decision on an interpretation of the collective bargaining agreement or that he disregarded what the parties put before him ,and instead followed his own whims or biases.
The conclusion that the arbitrator in the instant case was not acting on whim, but was seeking to give effect to the CBA, is further supported by reference to other arbitration awards interpreting the list of cardinal infractions as nonexclusive.
All of these components — statutes, case decisions, principles of contract law, practices, assumptions, understandings, the common law of the shop and “the industrial common law” — are part of what is known as the federal labor law. Moreover, it is the general understanding, indeed it is the keystone of the national labor policy announced in the Steelworkers trilogy, that skilled labor arbitrators, rather than judges, are better positioned and equipped to identify and to apply the common law of the shop.
(footnote omitted).
In sum, Local 996’s disagreement with the arbitrator’s decision is fundamentally a dispute about the merits; it is not about the award’s bаsic procedural fairness. We cannot conclude in this case that the arbitrator acted on a whim or that he was out on a limb meting out his own version of industrial justice. Because the arbitrator drew the essence of his award from the collective bargaining agreement, as he was required to do, we have no grounds to upset his conclusions.
We decline to opine whether the arbitrator “misinterpreted” the CBA; that is simply not our role. Recognizing the extreme deference owed to a labor arbitrator’s decision, we affirm the district court’s order confirming his award.
AFFIRMED.
Notes
. We refer to these three documents collective!}' as the “collective bargaining agreement” or "CBA.”
. The arbitrator made specific reference to another arbitrator's conclusion that the cardinal sin listing is not exclusive or exhaustive. See Teamsters Local 597 v. United Parcel Serv., Inc., slip op. at 12 (1998) (Cochran, Arb.) (Grievance of Boise). In addition, the district court noted the decisions of two other arbitrators who interpreted the identical contract and reached the same decision. Finally, UPS argues that "two decades of arbitral decisions
We reject the dissent’s suggestion that we have crafted a per se rule that "the presence of conflicting arbitral awards will always insulate any given award from judicial review.” See Dissent at 2877. We have done nothing more than restate the well-established rule that a labor arbitrator's interpretation of a CBA may be informed by referеnce to the law of the shop.
Dissenting Opinion
dissenting:
The only issue in this ease is whether the arbitrator’s award in favor of UPS is based on a plausible interpretation of the collective bargaining agreement. The parties agree that Harris did not commit one of the seven cardinal infractions listed in Article 28, Section 2(A) of the Western Supplement. They also agree that Harris did not receive a warning notice in the nine-month period preceding his dismissal. Thus, the issue is whether the CBA may be plausibly interpreted as permitting UPS to discharge an employee who has not committed onе of the seven specified cardinal infractions (1) if the employee has not received a warning in the preceding nine months and (2) before the discharge has been sustained under the grievance procedure. Because I believe that no plausible interpretation of the CBA permits UPS to do so, I respectfully dissent.
I agree with the majority that our review of labor arbitration awards is extremely deferential. “Courts ... do not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions оf lower courts.” United Paperworkers Int’l Union v. Misco,
In cases such as this one which concern the interpretation of a collective bargaining agreement, “courts have no business overruling [the arbitrator] because their interpretation of the contract is different frоm his.” Id. at 599,
Similarly, an arbitrator has no authority to ignore the plain language of a collective bargaining agreement that limits the scope of his authority. As the majority notes, “[a]n arbitrator [ordinarily] is ‘not confined to the express terms of the contract’ but may also consider the ‘industrial common law’ which ‘is equally a part of the collective bargaining agreement although not expressed in it.’ ” SFIC,
In this case, the arbitrator ruled that Article 28, § 2(A) is not an exclusive list of cardinal infractions for which summary discharge without prior warning may be imposed. The flaw in this interpretation is that it ignores the other relevant CBA provisions. Cf. United States Postаl Svc. v. American Postal Workers Union,
The National Master Agreement Article 7 and the second clause of Western Supplement Article 28, Section 2 set out categorical and mandatory rules. Article 28, Section 2 states: “No employee(s) shall suffer ... discharge without the employ-eels) having been given a written warning^ notice_” (emphasis added). NMA Article 7 states that “Except in cases involving cardinal infractions under the applicable Supplement ..., an employee to be discharged ... shall be allowed to remain on the job, without loss of pay unless and until the discharge or suspension is sustained under the grievance procedure.” (emphasis added). Section 2(A) carves out exceptions to these categorical restrictions on management prerogative. Read together, these provisions unambiguously prohibit UPS from discharging an employee for a reason that is not one of the seven cardinal infractions unless the employee has received a warning notice and until the discharge has been sustained in arbitration. If an arbitrator were freе to find other cardinal infractions based on standards of “just cause,” the rigidly prohibitive language of Article 28 and Article 7 would serve no purpose.
The only plausible reading of the CBA is that, in an arbitration challenging a summary discharge, the arbitrator is limited to deciding the factual questions whether the employee (1) committed an enumerated cardinal infraction; and (2) received a
The majority gives weight to UPS’s ability to point to other arbitration awards interpreting the CBA’s list of cardinal infractions as nonexclusive. However, there is an equally impressive record of arbitration awards interpreting the list as exclusive. The existence of some arbitration awards interpreting Article 28, § 2(A)’s list as nonexclusive should not render plausible an otherwise implausible interpretation of the CBA.
Moreover, under the majority’s reasoning, the presence of conflicting arbitral awards will always insulate any given award from judicial review. While the presence of conflicting arbitral awards should be relevant to whether a given award is based on a plausible interpretation of a collective bargaining agreement, I reject the suggestion implicit in the majority opinion that we adopt a per se rule that a court may never vacate an arbitral award wherе the arbitrator’s interpretation of the collective bargaining agreement is supported by a prior award.
Because I believe that the arbitrator’s award is not based on a plausible interpretation of the CBA, I respectfully dissent.
. This is a rigorous, but not impossible, standard. See United Markets,
