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United Steelworkers of America, AFL-CIO-CLC v. Lukens Steel Co.

filed: July 8, 1992; As Corrected September 15, 1992.

UNITED STEELWORKERS OF AMERICA, AFL-CIO-CLC UNITED STEELWORKERS OF AMERICA, LOCAL UNION NO. 1165, APPELLANTS
v.
LUKENS STEEL COMPANY, DIVISION OF LUKENS, INC.



On Appeal From the United States District Court for the Eastern District of Pennsylvania. (D.C. Civil Nos. 90-06052, 91-00989, 91-02116)

Before: Becker and Roth, Circuit Judges and McCUNE, District Judge*fn*

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

"Last chance agreements," a relatively recent development in labor-management relations, provide for the conditional reinstatement of an employee who faces discharge or serious disciplinary action for violating a work rule. In these agreements, an employer agrees to withdraw the threat of discipline in return for the employee's promise to refrain from further infractions and to waive certain procedural rules regarding the grievance and arbitration process in the event that the employee commits another infraction. See United States Dept of Air Force v Federal Labor Relations Authority, 949 F.2d 475, 478 (DC Cir 1991) (describing last chance agreements). These consolidated appeals require us to decide whether last chance agreements between defendant Lukens Steel Company ("Lukens" or "the Company"), three of its former employees, Earvin Smith, Theodore Tinsley, and James Meyer ("the employees"), and the employees' collective bargaining representatives, the United Steelworkers of America, AFL-CIO-CLC and the United Steelworkers of America, Local 1165 (collectively, the "Union"), bar arbitration of grievances filed by the Union on the employees' behalf.

The district court granted summary judgment for Lukens in each of three suits seeking to compel arbitration of the grievances. For the reasons that follow, we hold that the agreements do not bar arbitration. Accordingly, we will reverse the summary judgment entered in favor of Lukens in each case and direct the district court to enter summary judgment for the Union.

I. FACTS AND PROCEDURAL HISTORY

Smith, Tinsley, and Meyer were hourly employees covered by a collective bargaining agreement ("the Labor Agreement") between the Union and Lukens. The Labor Agreement permits the Company to suspend or discharge employees only for just cause and establishes grievance and arbitration procedures governing suspension and discharge. The Labor Agreement also provides that an employee shall be suspended for up to five days when Lukens suspects that his or her conduct warrants discharge. During the suspension period, the Disciplinary Committee, consisting entirely of the Company's representatives, holds a hearing at which "the facts concerning the case [are] made available to both parties." On the basis of that hearing, the Company then decides "whether the suspension shall be affirmed, modified, extended, revoked, or converted into a discharge."

The employee may challenge the Company's decision by filing a grievance. If the grievance is not resolved through meetings between the Company's representatives and the Union, either party may submit the case to arbitration before a member of a jointly-selected, eleven-member panel of arbitrators. Under the Labor Agreement, the arbitrator's decision is final and binding.

Smith, Tinsley, and Meyer each tested positive for drug use at least once, thereby violating Rule 12, a work rule that prohibits employees from having illegal drugs in their systems while at work. In lieu of discharge, each signed a conditional reinstatement agreement, denominated a "Last Chance Agreement." Each was later discharged for allegedly violating that Agreement. When the employees attempted to grieve their discharges, Lukens refused, claiming that the Last Chance Agreements precluded the employees from pursuing the grievance and arbitration procedures established in the Labor Agreement.

Pursuant to section 301 of the Labor Management Relations Act of 1947, 29 USC § 185 (1988), the Union filed a suit in the district court for the Eastern District of Pennsylvania on behalf of each employee to compel arbitration. The district court had subject-matter jurisdiction under 28 USC § 1337 (1988). On cross-motions for summary judgment, the district court held in each case that the Last Chance Agreement expressly excluded the dispute from the grievance and arbitration procedure. Accordingly, it granted summary judgment for Lukens. The three cases were consolidated for this appeal. Our jurisdiction is founded upon 28 USC § 1291 (1988). We exercise plenary review over the district court's construction of the Last Chance Agreements. United States on behalf of The Small Business Administration v Richardson, 889 F.2d 37, 40 (3d Cir 1989). Neither party disputes the material facts. We set forth the facts of each case separately.

A. Earvin Smith

In November 1986, Smith violated Rule 12 and was suspended "with intent to discharge," the first step in the process of dismissing an hourly employee under the terms of the Labor Agreement. Shortly thereafter, Lukens reached an oral agreement with the Union and Smith to reinstate Smith on a "last-chance basis." On September 25, 1989, a urine sample that Smith had provided at work in connection with a routine medical examination tested positive for marijuana. Accordingly, on October 2, 1989, Lukens again placed Smith on suspension with intent to discharge.

At an internal disciplinary hearing held on October 4, 1989, Smith claimed that the seeds and herbs that he consumes as part of his vegetarian diet caused the positive test result. Rejecting this explanation, the Company affirmed the suspension, but agreed to reinstate Smith contingent upon a written Last Chance Agreement.

That Agreement provided that Smith would be subject to random testing for alcohol and controlled illegal substances, and that he would be suspended with intent to discharge if he had alcohol or illegal controlled substances in his system while at work, violated any Company rule relating to drugs or alcohol, or violated any other Company rule ordinarily punishable by a "time off suspension." Article 4 of the Last Chance Agreement, the provision crucial to this case, stated that if Smith were suspended for violating one of these conditions,

he will be afforded an opportunity to plead his case before the Disciplinary Committee. The Disposition of the Disciplinary Committee shall be final. Neither Mr. Smith nor the Union shall have recourse through the arbitration/grievance procedure to protest the suspension or Disposition invoked by the Disciplinary Committee.*fn2

On March 8, 1990, Smith again tested positive for marijuana use. In response, Lukens placed Smith on five-day suspension with intent to discharge. At the March 19, 1990 meeting of the Disciplinary Committee, Smith repeated his claim that the positive test result was caused by his diet. The Disciplinary Committee refused to credit this explanation, however, and Lukens converted his suspension to a discharge. The Union attempted to grieve Smith's suspension and his discharge, but Lukens refused to accept the grievances for processing because, in its view, Article 4 of the Last Chance Agreement precluded Smith from pursuing the grievance and arbitration procedure.

B. Theodore Tinsley

Tinsley had a history of violating Rule 12 and had twice been suspended for intoxication at work. On November 9, 1989, Tinsley provided a urine sample in connection with a routine medical examination. When the sample tested positive for a by-product of cocaine, Lukens placed Tinsley on a five-day suspension with intent to discharge. After signing a Last Chance Agreement, Tinsley returned to work on November 17, 1989.

The Agreement Tinsley signed is substantially similar to the Agreement Smith signed. Like the Smith Agreement, it provided that Tinsley would be subject to random drug testing, and it prohibited him from having alcohol or illegal drugs in his system while at work and from violating any Company rule relating to drugs or alcohol. Most importantly, Article 3 of the Tinsley Agreement contained the same crucial language as Article 4 of the Smith Agreement. The only substantive difference between the two Agreements is that the Tinsley Agreement did not provide that violation of any other Company rule punishable by a "time off suspension" would also constitute a violation of the Agreement. See Article 3 of the Smith Agreement, set forth in note 1.

On August 3, 1990, Lukens asked Tinsley to provide a urine sample for drug testing. Tinsley refused, explained that illness prevented him from providing a sample, and requested to see the company doctor, who was not on duty at the time. Treating Tinsley's refusal to provide a urine specimen as a violation of the Last Chance Agreement, Lukens placed Tinsley on five-day suspension subject to discharge.

At the August 16, 1990 meeting of the Disciplinary Committee, Tinsley repeated his explanation of his inability to provide a urine sample, but the Committee declined to accept his explanation and Lukens converted the suspension to a discharge. When the Union attempted to grieve Tinsley's suspension and discharge, Lukens refused to accept the grievances, claiming that the Last Chance Agreement precluded Tinsley from recourse to the grievance and arbitration procedure.*fn3

C. James Meyer

On May 7, 1990, Lukens suspended Meyer with intent to discharge after his urine tested positive for a by-product of marijuana. He returned to work after signing a Last Chance Agreement that contained the same language as Article 4 of the Smith Agreement and ...


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