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April 5, 2004.


The opinion of the court was delivered by: TIMOTHY SAVAGE, District Judge


In this action seeking to vacate a labor arbitration award, the plaintiff Osram Sylvania Products, Inc. ("Osram") contends that the arbitrator's reducing an employee's punishment for insubordination from termination to a five-day suspension exceeded her authority under the collective bargaining agreement ("CBA"). Specifically, it argues that the arbitrator's decision altered the express terms of the CBA, which gives Osram the sole right to determine whether an employee engaged in serious enough misconduct to warrant immediate discharge. In short, Osram maintains that the arbitrator's reinstatement of the insubordinate employee was in manifest disregard of the CBA's terms.*fn1

The International Brotherhood of Teamsters Local Union No. 773 ("Union") counters that the arbitrator acted within the scope of her authority because the award is based on her interpretation of the CBA and draws its essence from the contract. The Union asserts that under the CBA the arbitrator had the power to determine whether Osram had "just cause" to terminate the employee. It reasons that because the term "just cause" is not defined in the CBA, it was the arbitrator's responsibility to interpret the ambiguous contract provision.

  We conclude that the arbitration award deciding the issue submitted by the parties is based on a rational interpretation of the CBA and draws its essence from the CBA. Therefore, applying the deferential standard of review accorded a labor arbitration award, we shall confirm the arbitrator's decision.


  The arbitration award resulted from the grievance process initiated by the Union when member Richard Hammel, a 13 year Osram employee, was fired for insubordination. Decision in Grievance Involving Discharge of Rick Hammel ("Decision") at 1-3. Osram, hosting a Super Bowl party, extended the usual lunch period from one-half to a full paid hour for that day. Id. at 3. For payroll purposes, Osram directed the employees to punch back into work after lunch at noon instead of the usual 11:30 a.m. time. Osram's instructions were imparted to the employees through the shift supervisor, Joe Simpson, at a group meeting. Overhearing Hammell tell a co-worker to punch in at 11:30 a.m. despite his instructions, Simpson personally told Hammel that he had to punch in at noon like the other employees. Id. at 4. Hammel, according to Simpson, defiantly stated that he intended to punch in at 11:30 regardless of Simpson's directive. Id. at 4-5.

  Simpson reported the incident to Operations Manager Tom Loughran, who determined that Hammel had punched in at 11:27 a.m. Id. at 5. Loughran then met with Simpson, Hammel, and the union steward. Hammel initially claimed not to hear any instructions about punching in at noon. Simpson contradicted him, stating that he had specifically repeated the instruction to Hammel. Hammel did not dispute Simpson's statement to Loughran. Instead, he claimed that punching in at an irregular time would have affected his pay. Id. at 5-6.

  In light of the conflicting versions, Loughran interviewed five employees, four of whom confirmed that Simpson had instructed Hammel personally to punch in at noon. Loughran determined that Hammel had disobeyed a direct order and recommended dismissal. Id. at 6. Reviewing Hammel's personnel file, Osram's manager, Claude Mickle, learned that Hammel had been disciplined on two prior occasions for insubordination. Mickel concurred with Loughran and fired Hammel because he felt the progressive discipline procedure provided in the CBA had not worked in the past. Id. at 6-7.

  The Union lodged a grievance pursuant to the CBA. The process proceeded through the required steps to the arbitration hearing. Id. at 7-8. After a full hearing at which the parties presented evidence and were represented by counsel, the arbitrator issued her award. She found that Hammel had been insubordinate and was subject to discipline, but she reduced the punishment to a five-day suspension. Id. at 18.

  Judicial Review of Arbitration Awards

  Labor arbitration awards are presumed valid. Major League Umpires Ass'n v. Am. League of Prof'l Baseball Clubs, 357 F.3d 272, 280 (3d Cir. 2004). A court must confirm an arbitration award that draws its essence from the CBA because the parties bargained for a procedure in which the arbitrator and not a court would interpret the agreement. Nat'l Ass'n of Letter Carriers, AFL-CIO v. United States Postal Serv., 272 F.3d 182, 185 (3d Cir. 2001); United Parcel Serv., Inc. v. Int'l Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of Am., Local Union No. 430, 55 F.3d 138, 141 (3d Cir. 1995). An award draws its essence from the CBA "`if the interpretation can in any rational way be derived from the agreement, viewed in light of its language, its context and any other indicia of the parties' intention.'" Major League Umpires Ass'n, 357 F.3d at 280 (quoting United Transp. Union Local 1589 v. Suburban Transit Corp., 51 F.3d 376, 379-80 (3d Cir. 1995)). Thus, a district court must not tamper with an arbitration decision that draws its essence from the CBA even if another interpretation of the CBA makes more sense or if the court would have reached a different result. Major League Umpires Ass'n, 357 F.3d at 280, 283-84; United Transp. Union Local No. 1589, 51 F.3d at 380-81.

  Only if the arbitrator's decision demonstrates fraud, bias or manifest disregard for the CBA can it be vacated. United Parcel Senv., Inc., 55 F.3d at 141; United Transp. Union Local 1589, 51 F.3d at 379. Manifest disregard*fn2 is established when an arbitrator's decision is "`totally unsupported by principles of contract construction and the law of the shop.'" United Transp. Union Local 1589, 51 F.3d at 379 (quoting News Am. Publ'ns, Inc. v. Newark Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990)); see also Major League Umpires Ass'n, 357 F.3d at 280. Legal or factual error does not rise to the level of manifest disregard. Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001) (per curiam); Exxon Shipping Co. v. Exxon Seamen's Union, 73 F.3d 1287, 1295-96 (3d Cir. 1996). Alleged misinterpretation of the agreement does not permit judicial intervention. Garvey, 532 U.S. at 509. Nor does an ambiguity in the arbitrator's opinion allow a court to vacate the award. Roadway Package Sys., Inc. v. Kayser, 257 F.3d 287, 301 (3d Cir. 2001).

  In the final analysis, as long as the arbitrator was interpreting the CBA and was acting within the scope of her authority, we must confirm the award even in the ...

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