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Teamsters Union Local No. 115 v. Desoto Inc.

decided as amended january 25 1984.: January 19, 1984.

TEAMSTERS UNION LOCAL NO. 115, OF PHILADELPHIA, PENNSYLVANIA, AFFILIATED WITH THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, APPELLEE
v.
DESOTO, INC., PENNSAUKEN, NEW JERSEY, APPELLANT; TEAMSTERS UNION LOCAL NO. 115, OF PHILADELPHIA, PENNSYLVANIA AFFILIATED WITH THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, APPELLANT V. DESOTO, INC., PENNSAUKEN, NEW JERSEY, APPELLEE



On Appeal from the United States District Court for the District of New Jersey.

Hunter, Garth, and Van Dusen, Circuit Judges.

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge:

Teamsters Union Local No. 115 ("Union") and DeSoto, Inc. ("DeSoto") each appeal from an order of the district court enforcing in part a modified arbitrator's award rendered under a collective bargaining agreement. We affirm the district court's judgment but for reasons which differ from those of the district court.*fn1 In doing so we do not disturb the modified arbitrator's award.

I.

DeSoto, a nationwide manufacturer of paint and industrial coatings, operated a plant in Pennsauken, New Jersey. The Union represents the production and maintenance employees at the plant. DeSoto and the Union entered into a collective bargaining agreement (CBA), which was in effect from January 15, 1980 to January 15, 1983. Among other provisions, the CBA provided that: (1) DeSoto was required to obtain the good faith consent of the Union for any decision to move the plant; (2) DeSoto could subcontract out work that in certain circumstances (allocation of products among plants) could result in layoffs; and (3) DeSoto was required to bargain about unilateral changes in working conditions. The CBA also provided for binding arbitration to settle grievances, including objections to unilateral changes.

On February 4, 1982, DeSoto closed its Pennsauken plant. It did not seek or obtain the Union's consent. The Union filed a complaint in the district court contending that the plant closing violated the CBA, and sought a mandatory injunction requiring DeSoto to reopen the plant pending arbitration. On March 31, 1982, the court enjoined DeSoto from disposing of the plant's physical assets and the property, pending arbitration, and ordered arbitration to be completed within 60 days. This injunction is still in effect.

On April 9, 1982 the Union filed an unfair labor practice charge regarding the decision to close the plant, asserting violations of sections 8(a)(1), (3) & (5) of the National Labor Relations Act (NLRA), 29 U.S.C. §§ 158(a)(1), (3), & (5) (1976).

The arbitrator conducted a hearing on May 14, 1982. At the hearing the Union contended the closing violated the plant relocation provision. DeSoto argued that relocation was permitted under the subcontracting clause. The Union requested that the arbitrator order the plant to be reopened. The arbitrator was hospitalized soon after the hearing, and as a result did not issue his award until August 16, 1982. On that date, he issued an opinion finding that the closing violated the CBA, and he ordered the plant reopened and the workers recalled, and awarded back pay from the date of the closing to the date each employee was recalled.

DeSoto did not comply, and filed a motion to vacate the award with the district court; the Union filed a cross-motion to enforce. The district court, after a hearing, remanded to the arbitrator for "reformulation" of the arbitrator's remedy. The court held that the arbitrator's interpretation of the CBA was reasonable, but the reopening remedy was "irrational." In its opinion, the court stated that it was vacating that portion of the award requiring DeSoto to reopen the plant, and that it was remanding to the arbitrator to reassess the circumstances and fashion a fair and economical remedy. The order remanded to the arbitrator to reformulate the award consistent with the opinion.

The district court's order was entered on November 10, 1982. The arbitrator thereupon amended his award on November 24, 1982. The amendment consisted of deleting so much of his original award as required DeSoto to "restore its plant in Pennsauken, New Jersey to substantially the same manufacturing condition in which it was operating on February 4, 1982; recall to work all employees employed on that date; and resume its prior operation." The district court ordered DeSoto to comply with the modified award by an order dated December 6, 1982. On December 21, 1982, an amended order was entered by the district court which clarified the fact that back pay was to be provided only for production and maintenance employees covered by the CBA. The district court thereafter entered a certification pursuant to Fed. R. Civ. P. 54(b).*fn2 These appeals, timely filed, followed.*fn3

While these proceedings were pending, the NLRB, on March 4, 1983, issued an unfair labor practice complaint against DeSoto for the plant closing. The complaint charged violations of NLRA §§ 8(a)(1), (3) & (5). After the hearing, the ALJ on June 23, 1983, found DeSoto had acted illegally only in failing to bargain with the Union over the effects of the closing, and that DeSoto had no obligation to bargain over the decision to close because that action was not a mandatory bargaining subject; the ALJ also found, inter alia, that the closing was not an unlawful mid-term modification of the CBA.*fn4

II.

A.

DeSoto appeals from that part of the district court's order affirming the arbitrator's ruling that DeSoto violated the CBA by closing the plant. Federal courts have a very limited scope of review when passing on the validity of a labor arbitration award. The arbitrator's award must be enforced "so long as it draws its essence from the collective bargaining agreement." United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960). Thus a court may only set aside an arbitrator's award interpreting a CBA when the interpretation cannot be said to be in any rational way derived from the agreement.

[A] labor arbitrator's award does "draw its essence from the collective bargaining agreement" if the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and any other indicia of the parties' intention; only where there is a manifest disregard of the agreement, totally unsupported by ...


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