Lead Opinion
The court delivered a PER CURIAM opinion.
SUTTON, J. (pp. 658 - 663), delivered a separate concurring opinion.
OPINION
Local 517M of the Service Employees International Union challenges the decision of the district court to vacate an arbitration award in its favor. Because the award does not draw its essence from the collective bargaining agreement, we affirm.
I.
Michigan Family Resources (MFR) runs the federal Headstart Program that serves Kent County, which lies in western Michigan. Local 517M of the Service Employees International Union represents some of MFR’s employees. On behalf of its members, the union negotiated a collective bargaining agreement with MFR that entitled its members to annual wage increases. For our purposes, the agreement contains four pertinent provisions.
Article 35(1) of the agreement provides: Bargaining unit members will receive the same cost of living increases paid to other MFR employees pursuant to the directive of MFR’s funding source. The parties understand that the timing and amount of any such increase is entirely dictated by the funding source.
JA 43. The “funding source” mentioned in this provision, the parties agree, refers to the federal government.
Article 35(2) provides:
During the fall semester of each program year, bargaining unit members*655 will be reviewed and will be considered for a merit increase.... MFR will guarantee at least that for each bargaining unit employee the sum of any [cost-of-living increase] paid during the year and the merit increase will be as follows: 2002 — 4%; 2003 — 2.5%; 2004 — 3.5%. For example, if the [cost-of-living] increase for 2004 is 2.5%, effective on September 1, 2004 bargaining unit members will receive at least an additional 1.0%.
JA 43-44.
Article 5(c) requires the parties to arbitrate any disputes that they cannot resolve on their own. The arbitrator, it says, “shall have full authority to render a decision which shall be final and binding upon both parties and the employees, except that the arbitrator shall not have authority to change, alter, amend, or deviate from the terms of this collective bargaining agreement in any respect.” JA 27. This article further provides that “[i]f the Union requests arbitration, the parties shall choose an arbitrator by selecting from the following list through the alternating strike method:” Mario Chiesa, Mark Glazer, William Daniel, George Roumell, and Lamont Stallworth. Id.
And Article 34 provides that the agreement “expresses the understanding of the parties and it will not be changed, modified, or varied, except by written instrument signed by duly authorized agents of the party hereto,” and that “[t]here are no past practices which are binding upon the parties.” JA 43.
In May 2003, MFR notified the union employees that they would receive a 2.5% increase for 2003 — 1.5% from the “funding source” (i.e., the federal government), 1% from MFR — while non-union employees would receive a 4% increase for the year. While the 2003 pay increase for union employees satisfied the collective bargaining agreement’s minimum requirement for that year (2.5%), the union claimed that the agreement required parity between union and non-union employees in the payment of cost-of-living increases. The union accordingly filed a grievance against MFR. In accordance with the agreement, the parties engaged an arbitrator, Mark Glazer, to resolve the dispute.
On December 10, 2003, the arbitrator issued a written decision in favor of the union. As he saw the matter, the question was “whether Article 35 requires MFR to provide parity in [cost-of-living] payments for its [union] employees when non-Union employees receive higher [] payments.” Arb. Op. at 2. On this point, the arbitrator reasoned, Article 35 was not entirely clear. While it required union members to “receive the same payments from the federal funding source as other employees,” it did not directly address “the cost of living increases from other sources, such as from the Employer.” Id. at 7. The arbitrator then noted that before and after the adoption of the collective bargaining agreement, MFR granted the same cost-of-living increase to all employees, regardless of union affiliation. Id. at 8. MFR never held merit reviews, he added, and in a 2002 memo (dealing with pay increases for the first year of the collective bargaining agreement) it characterized the entire wage increase to union employees as a cost-of-living increase. “I am persuaded,” the arbitrator then concluded, “that [Article 35] becomes ambiguous because of the Employer’s prior decision to characterize both its individual payment and its payment from the federal funding source as [cost of living].” Id. at 8. Having identified this ambiguity, he resolved it in light of the employer’s practice of granting identical cost-of-living increases to all employees and therefore awarded union members an equivalent 4% cost-of-living increase.
II.
Although the standard for reviewing arbitration awards is “one of the narrowest standards of judicial review in all of American jurisprudence,” Tenn. Valley Auth. v. Tenn. Valley Trades & Labor Council,
Applying these standards, the district court determined that the arbitrator’s award did not draw its essence from the collective bargaining agreement. We agree.
By its terms, Article 35(1) of the agreement addresses the requirements for government-funded cost-of-living increases, providing that “[bargaining unit members will receive the same cost of living increases paid to other MFR employees pursuant to the directive of MFR’s funding source.” Wdiatever cost-of-living increase that “MFR’s funding source” (the federal government) provides in a given year, in other words, must be provided equally to union and non-union members alike. But the agreement does not spell out any requirements for employer-funded cost-of-living increases. And Article 35(2) addresses merit increases and guarantees a minimum raise for all union employees and yet says nothing about parity between union and non-union members. Each fall, it says, “bargaining unit members will be reviewed and will be considered for a merit increase.” JA 43. It then “guarantee^] at least that for each bargaining unit employee the sum of any [cost-of-living increase] paid during the year and the merit increase will be as follows: 2002—4%;
The terms of the two provisions, it seems to us, admit of one proper interpretation. While the agreement requires parity in government-funded cost-of-living increases, it does not require parity in employer-funded cost-of-living increases or in merit increases (an odd concept at any rate) and therefore does not require parity in the sum of the cost-of-living and merit increases. The parties- reached agreement on the minimum amounts owed to union employees, but they tied that agreement to set percentages, not to what MFR happened to pay non-union employees in a given year. See Article 35(2), JA 43-44. Faced with an agreement that gives union employees the same government-funded cost-of-living increases as non-union employees and that assures union employees a minimum salary increase for each of the three years of the agreement, the arbitrator had no authority to impose an additional term on the employer, namely that any cost-of-living increase provided to non-union employees, no matter how funded, must be provided to union employees. When the arbitrator required parity in employer-funded salary increases, he thus imposed an “additional requirement! ] not expressly provided for in the agreement,” one that “conflict[ed] with express terms of the agreement,” Sterling China Co.,
Given this clarity in the agreement, the arbitrator also had no basis for consulting evidence of the-parties’ custom of wage increases and no basis for invoking that custom as a source in construing the agreement. “[P]ast practice or custom should not be used to interpret or give meaning to a provision or clause of the collective bargaining agreement that is clear and unambiguous.” Beacon Journal Publ’g Co.,
In reaching this conclusion, we are not unmindful of appellant’s argument that an arbitration award should not be vacated merely because the arbitrator commits a legal error in construing the collective bargaining .agreement. As the concurrence points out, the argument is a compelling one and Supreme Court precedent provides some suppprt for it. But as the concurrence also points out, this circuit’s four-part. test — resting in part on these same Supreme Court precedents — has been in place for 20 years and binds us here. See Cement Divs., Nat'l Gypsum Co. v. United Steelworkers, Local 135,
For these reasons, we affirm.
Concurrence Opinion
concurring.
Nearly a half-century ago, the Supreme Court issued three watershed opinions designed to end the federal courts’ hostility to labor-arbitration awards. See United Steelworkers v. Am. Mfg. Co.,
When an employer and union agree to submit questions of contract interpretation to an arbitrator, our “limited” function thus is to “ascertain[] whether the party seeking arbitration is making a claim which on its face is governed by the contract.” Am. Mfg. Co.,
This near-absolute deference to the decision of the arbitrator respects the mutual benefit of the parties’ bargain. “It is the arbitrator’s construction,” not the federal courts’ construction, after all, that “was bargained for; and so far as the arbitrator’s decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.” Id. at 599,
While we have called this standard of review “one of the narrowest standards of judicial review in all of American jurisprudence,” see, e.g., Way Bakery v. Truck Drivers Local No. 164,
If we are to take seriously what the Supreme Court has said in this area and what it has done (to my knowledge it has not authorized the vacation of a labor-arbitration award since 1960), I do not understand how we can alter the parties’ delegation of decision-making authority in this case merely because one of those parties (the employer) now thinks that the arbitrator botched the interpretation of the contract. At most, the employer has shown that the arbitrator misapprehended the meaning of the contract and misapprehended the rules for construing contracts. As the district court rightly reasoned and as our per curiam opinion correctly agrees, the collective bargaining agreement required parity only as to cost-of-living increases from the federal government, said nothing about employer-funded cost-of-living increases and established the minimum increases that union employees could expect in a given year, increases tied in no way to the increases given to non-union employees. Read together, the provision of limited parity requirements and the provision of express minimum-salary require
But that of course is not the point. An arbitrator selected by the parties, not a federal district court judge, interpreted this contract, and that makes all the difference. We have here none of the tell-tale signs for vacating an award: bias by the arbitrator, a conflict of interest, a transparent effort to “dispense his own brand of industrial justice,” or a dispute that is not arbitrable. Instead we have an arbitrator who certainly was “arguably construing” the contract and who just as certainly made a “serious error” in construing the contract, a confluence of circumstances that does not invest us with authority to “overturn [the] decision.” Garvey,
What makes this case difficult is not figuring out what the contract means and it is not applying the Supreme Court’s directives in this area; it is faithfully applying our circuit’s four-part test for determining whether to vacate an arbitration award. Twenty years ago, the court attempted to summarize the four settings in which the circuit had vacated an award because it failed to “draw[] its essence” (Enter. Wheel,
An award fails to derive its essence from the agreement when (1) an award conflicts with express terms of the collective bargaining agreement, see, e.g., Grand Rapids Die Casting Corp. v. Local Union No. 159, U.A.W.,684 F.2d 413 (6th Cir.1982); (2) an award imposes additional requirements that are not expressly provided in the agreement, see, e.g., Sears, Roebuck & Co. v. Teamsters Local Union No. 243,683 F.2d 154 (6th Cir.1982) ...; (3) an award is without rational support or cannot be rationally derived from the terms of the agreement, see, e.g., Timken Co. v. United Steelworkers of America,482 F.2d 1012 (6th Cir.1973); and (4) an award is based on general considerations of fairness and equity instead of the precise terms of the agreement, see, e.g., Local 342, United Auto Workers v. T.R.W., Inc.,402 F.2d 727 (6th Cir.1968).
Cement Divs., Nat’l Gypsum Co. v. United Steelworkers, Local 135,
This formulation, I respectfully believe, has made it easier to vacate an arbitration award on the merits than the Supreme Court meant it to be. The Supreme Court itself has told us when an arbitration award “draws its essence” from a contract. The same Court decision that gave us the “draws its essence” language, Enter. Wheel,
Nor is it clear to me how the first two parts of our test — (1) whether the award conflicts with “express terms” of the agreement or (2) whether the award “imposes additional requirements that are not expressly provided in the agreement” — can be reconciled with Supreme Court precedent. Whether an award conflicts with the “express terms” of the contract or “imposes additional requirements” not provided in the contract, to begin with, are two sides of the same coin. And both sides of that coin seem to be in tension with Garvey’s directive that a “serious error” in interpreting a contract does not provide an independent ground for vacating an arbitration award so long as the arbitrator was “arguably construing” the contract.
What started as a rule requiring the courts to “refuse to review the merits of an arbitration award” and to tolerate “serious” legal errors as long as the arbitrator is “arguably construing” the contract became a rule focused only on whether an award in the abstract “draws its essence from the collective bargaining agreement” and turned into a rule that an award may be vacated if it conflicts with the “express terms” of the agreement. Not unlike the children’s game of “telephone,” the current message differs from the original message — and indeed may well convey the opposite message. One cannot, in short, respect the requirement that we vacate arbitration awards that do not follow the “express terms” of the agreement without slighting the requirement that we tolerate “serious” legal errors in arbitration awards.
The problem, moreover, is not simply one of language. Repeated incantations of our test seem to have led us to vacate a surprising number of arbitration awards. While the Supreme Court to my knowledge has not vacated a single labor-arbitration award since 1960, my chambers’ survey of published Sixth Circuit decisions since 1986 reveals that we have vacated 29% (10 out of 34) of labor-arbitration awards that we have reviewed on merits-based grounds. See Appendix. The pattern does not change when one looks at unpublished opinions, as we have vacated 25% of those awards (19 out of 75) on similar grounds. See id. And all of this has happened at the same time that the Supreme Court has said that “courts will set aside the arbitrator’s interpretation of what their agreement means only in rare instances.” E. Associated Coal Corp. v. United Mine Workers, Dist. 17,
These statistics have not escaped the notice of arbitration scholars. Referring to our Cement Divisions test, one author commented that “the Sixth Circuit’s ... variant of the essence construct sweeps away all pretense of judicial deference to the contract interpretation and application decisions of the arbitrator.” Stephen L. Hayford, Unification of the Law of Labor Arbitration and Commercial Arbitration: An Idea Whose Time Has Come, 52 Baylor L.Rev. 781, 821 (2000). Another scholar discussed the test, then noted that “the courts which follow the rule of the First, Fifth, and Sixth Circuits are saying that it is for the court, not the arbitrator, to decide what the express terms mean.” David E. Feller, Taft and Hartley Vindicated: The Curious History of Review of Labor Arbitration Awards, 19 Berkeley J. Emp. & Lab. L. 296, 303 (1998). Still another discussed the test, then concluded that “the Sixth Circuit serves as an example of the circuits’ attempted end run around the Supreme Court’s rulings.” Anna Knull, Recent Developments, American Eagle Airlines, Inc. v. Air Line Pilots Ass’n, Int’l: The Fifth Circuit Dispenses Its Own Brand of Justice in Reviewing a Labor Arbitration Award, 78 Tul. L.Rev. 2305, 2308 (2004). See also Feller, Taft and Hartley Vindicated, 19 Berkeley J. Emp. & Lab. L. at 302 (“One man’s es
At some point, it seems to me, the full court should reconsider the Supreme Court’s directives in this area or at least explain how our four-part test respects them. That seems particularly imperative since we have many cases that spell out the four-part test, then proceed to recite and follow the Supreme Court’s more deferential language. See, e.g., Way Bakery,
APPENDIX
Published Opinions/Upholding Awards
Int’l Bhd. of Elec. Workers, Local 1812 v. Cincinnati Elecs. Corp.,
Eberhard Foods, Inc. v. Handy,
Hawks v. City of Pontiac,
Local 120, Int’l Molders & Allied Workers Union v. Brooks Foundry, Inc.,
Dixie Warehouse & Cartage Co. v. Gen. Drivers, Local Union No. 89,
Vic Wertz Distrib. Co. v. Teamsters Local 1088,
Interstate Brands Corp. v. Chauffeurs Local Union No. 135,
Lattimer-Stevens Co. v. United Steelworkers, Sub-Dist. 5,
Dallas & Mavis Forwarding Co. v. Gen. Drivers, Local Union No. 89,
Action Distrib. Co. v. Int’l Bhd. of Teamsters Local 1038,
Monroe Auto Equip. Co. v. Int’l Union, UAW, Monroe Equip. Co., Unit of Local 878,
Bruce Hardwood Floors v. S. Council of Indus. Workers,
Mercy Mem’l Hosp. Corp. v. Hosp. Employees’ Div. of Local 79,
Kuhlman Elec. Corp. v. Int’l Union, UAW,
Int’l Ass’n of Machinists & Aerospace Workers v. Tenn. Valley Auth.,
AK Steel Corp. v. United Steelworkers,
Tenn. Valley Auth. v. Tenn. Valley Trades & Labor Council,
Gen. Truck Drivers, Local No. 957 v. Dayton Newspapers, Inc.,
DBM Techs., Inc. v. Local 227, United Food & Commercial Workers Int’l Union,
Int’l Bhd. of Teamsters, Local Union No. 1221 v. ABX Air, Inc.,
Detroit Typographical Union, Local 18 v. Detroit Newspaper Agency,
Int’l Bhd. of Teamsters, Local 519 v. United Parcel Serv., Inc.,
Sterling China Co. v. Glass Workers Local 21,
Published Opinions/Vacating Awards
Dobbs, Inc. v. Local No. 614, Int’l Bhd. of Teamsters,
Int’l Bhd. of Elec. Workers, Local 429 v. Toshiba Am., Inc.,
AP Parts Co. v. Int’l Union, UAW,
Ohio Edison Co. v. Ohio Edison Joint Council,
Int’l Ass’n of Machinists & Aerospace Workers, Local Lodge No. 2770 v. Lourdes Hosp., Inc.,
Ficks Reed Co. v. Local Union 112 of the Int’l Union,
Beacon Journal Publ’g Co. v. Akron Newspaper Guild, Local No. 7,
Int’l Bhd. of Elec. Workers, Local 175 v. Thomas & Betts Corp.,
Wyandot, Inc. v. Local 227, United Food & Commercial Workers Union,
Appalachian Reg’l Healthcare, Inc. v. United Steelworkers, Local 14398,
Unpublished Opinions/Upholding Awards
Premium Bldg. Prods. Co. v. United Steelworkers, Local Union No. 8869, No. 85-3749,
S. Labor Union, Local 295 v. Gatliff Coal Co., Nos. 86-5136, 86-5173,
Mastrobuono v. Local Union No. 673, Int’l Bhd. of Elec. Workers, No. 86-3674,
United Food & Commercial Workers Local No. 1099 v. Kroger Co., No. 87-3242,
Armco, Inc. v. Armco Employees Indep. Fed’n, Inc., No. 87-3311,
Gen. Foods Corp. v. United Cereal Workers, Local 374, No. 87-1649,
Adamo v. Hotel Workers Union Local 21p, No. 87-2213,
Joseph & Feiss Co. v. Amalgamated Clothing & Textile Workers Union, No. 87-3832,
Borman’s Inc. v. United Food & Commercial Workers Int’l Union, Local 876, Nos. 87-1909, 87-1948,
Agipcoal USA, Inc. v. Int’l Union, UMWA, No. 88-6122,
Dist. 30, United Mine Workers v. Agipcoal USA Inc., No. 88-6416,
Monsanto Co. v. Local Union No. 229, Nos. 89-1230, 89-1231,
Int’l Union, UAW Local No. 12 v. Sharon Mfg. Co., No. 89-3521,
Gen. Drivers, Local Union No. 89 v. Peyton’s, No. 89-6496,
Worthams v. Bd. of Educ. of Memphis City Sch., No. 90-5936,
Grimm v. Copperweld Steel Co., No. 91-3657,
Freeman Constr. Co. v. Structural Iron Workers’ Local No. 17, No. 91-3455,
Louisville Graphic Commc’ns, Local N-619 v. Standard Gravure Corp., No. 91-5976,
Local 3-689 Oil Workers Int’l Union v. Martin Marietta Energy Sys., Inc., No. 91-3598,
Anderson v. UAW Local 36, Nos. 91-2099, 91-1973,
Bruno v. United Steelworkers, No. 92-3342,
Quaker Oats Co. v. Int’l Chem. Workers Union, No. 92-5070,
Kar Nut Prods. Co. v. Int’l Bhd. of Teamsters, Local 337, No. 92-2084,
Ginn v. WR Southfield Assocs., No. 92-2251,
Detroit Newspaper Agency v. Newspaper Drivers & Handlers, Teamsters Local No. 372, No. 93-2036,
Int’l Bhd. of Teamster v. Executive Jet Aviation, Inc., No. 94-3402,
Int’l Union of Operating Eng’rs, Local 369 v. Office & Prof'l Employees Union, Local 367, No. 94-5786,
Cleo Inc. v. United Paperworkers Int’l Union, Local Union 1766, No. 94-6441,
Newspaper Drivers & Handlers’ Local Union No. 372 v. Detroit Newspaper Agency, No. 95-2025,
Hoover Co. v. Local 1985, Int’l Bhd. of Elec. Workers, No. 95-4125,
GTE North, Inc. v. Int’l Bhd. Elec. Workers, Local 986, No. 96-3471,
AK Steel Corp. v. United Steelworkers, No. 96-6727,
Smith v. Westlake PVC Corp., No. 96-6550,
Local 2352 Amalgamated Clothing & Textile Workers Union v. Findlay Indus., Inc., Nos. 96-4377, 97-3229, 97-3402,
Gen. Teamsters Sales & Serv. & Indus. Union Local No. 654 v. Active Transp. Co., No. 97-4010,
Dayton Newspapers, Inc. v. Int’l Bhd. of Teamsters, Local 957, No. 98-3682,
Witco Corp. v. Oil Workers Int’l Union, No. 98-5652,
Paulstra CRC Corp. v. United Steel Workers, Local 19, No. 98-1688,
Mead Corp. v. United Paperworkers Int’l Union, No. 98-4242,
Ormet Primary Aluminum Corp. v. United Steel Workers, Local 5724, No. 99-3388,
Allied Mech. Servs., Inc. v. Local 337 of the United Ass’n of Journeymen & Apprentices of the Plumbing & Pipefitting Indus., No. 99-1494,
Serv. Welding v. Int’l Bhd. Boilermakers, No. 99-5534,
Great Lakes Reg’l Indus. Council of Carpenters v. Overhead Door Corp., No. 99-3467,
Eaton Corp. v. Paper Workers Int’l Union, Local 5-331,
Pace Local Union 1967 v. Champion Int’l Corp.,
Hoover Co. v. Local 1985, Int’l Bhd. of Elec. Workers,
United Paperworkers Int’l Union, Local 1737 v. Inland Paperboard & Packaging, Inc.,
Dixie Warehouse & Cartage Co. v. Gen. Drivers, Local Union No. 89,
Ohio Valley Coal Co. v. Pleasant Ridge Synfuels, LLC,
Highway & Local Motor Freight Employees Local Union No. 667 v. Wells Lamont Corp.,
Mains v. LTV Steel Co.,
Int’l Chem. Workers Union Council v. RJF Int’l Corp.,
Highland Mining Co. v. United Mine Workers, Dist. 12,
Bixby Med. Ctr., Inc. v. Mich. Nurses Ass’n,
DEI, Inc. v. Ohio & Vicinity Reg’l Council of Carpenters,
Unpublished Opinions/Vacating Awards
Westvaco Corp. v. United Paperworkers’ Int’l Union, Local No. 680, No. 85-5777,
United Paperworkers Int’l Union, Local No. 943 v. Wheaton Indus., No. 85-6090,
Magic Chef, Inc. v. Int’l Molders & Allied Workers Union, No. 87-5046,
United Textile Workers, Local 815 v. BASF Corp.-Fibers, No. 89-5721,
Tenn. Valley Auth. v. Salary Policy Employee Panel, No. 89-6397,
Mor-Flo Indus., Inc., Chattanooga Div. v. Int’l Bhd. of Elec. Workers, No. 90-5605,
Browning-Ferris Indus. of Tenn., Inc. v. Teamsters Local Union No. 981, No. 90-5933,
Wrap v. United Paper Workers Int’l Union, Local Union 1766, Nos. 92-5031, 92-5032,
Voss Steel Employees Union v. Voss Steel Corp., Nos. 92-2068, 92-2309, 1994 WL
Hamilton-Stevens Group, Inc. v. Int'l Union, UAW, Local 1688, No. 93-3472,
Marathon Oil Co. v. Cylinder Gas Drivers Employees-Local Union No. 283, No. 97-1780,
United Food & Commercial Workers Union, Local No. 1099 v. Kroger Co., No. 98-3423,
Gen. Drivers, Local 89 v. Willamette Indus., Inc., No. 98-5476,
Omnisource Corp. v. United Steelworkers, Local 9130, No. 98-3603,
Int’l Union of Elec. Workers v. Hurd Corp.,
Paper Workers, Local Union No. 5-998 v. LWD, Inc.,
Alken-Ziegler, Inc. v. UAW Local Union 985,
Sterling Fluid Sys. (USA), Inc. v. Chauffeurs Local Union # 7,
Armco Employees Indep. Fed’n Inc. v. AK Steel Corp.,
