United States District Court, E.D. Pennsylvania
April 5, 2004.
OSRAM SYLVANIA PRODUCTS, INC.
INTERNATIONAL BROTHERHOOD OF TEAMSTERS LOCAL UNION NO. 773
The opinion of the court was delivered by: TIMOTHY SAVAGE, District Judge
MEMORANDUM AND ORDER
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
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.
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 face of serious error. Garvey, 532 U.S. at 509.
An arbitrator's authority is defined by both the terms of the CBA and
the scope of the issues presented by the parties. Major League Umpires
Ass'n, 357 F.3d at 279; United Parcel Serv., Inc., 55 F.3d at 141.
Consequently, the arbitrator must construe the scope of the parties'
submissions. Mattison v. Ryder Sys. Inc., 99 F.3d 108, 112 (3d Cir.
In this case, the contract granted the arbitrator the authority to
interpret the provisions at issue. However, she could not modify, amend
or revise the CBA. Decision at 2 (quoting CBA Article VI Section
Both parties submitted the question of whether there was "just cause"
for discharge. Osram presented the question as, "The company submits that
[the conduct of Hammel] is sufficient cause for discharge under the
contract." Appendix of Record Evidence, Ex. C (Hearing Transcript) at 9
(emphasis added). The Union framed the issue as follows, "[I]t wasn't
insubordination and cannot be considered just cause. . . . It certainly
was not serious enough for the employer to take it outside of the
bargained-for progressive discipline policy." App. Ex. C at 58. Thus, as
directed by the parties, the arbitrator stated the question as "whether
or not the Company had just cause to discharge the Grievant, and if not, what shall the remedy be?" Decision at 1.
The Arbitrator's Decision
The arbitrator's decision recites the issues submitted by the parties,
the facts of the case, the respective positions of the parties, the
relevant portions of the CBA, and her conclusions. Applying the facts to
the CBA as interpreted by her, she determined that the discharge lacked
just cause as defined by the CBA and, consequently, reduced the
punishment to a five-day suspension.
The arbitrator drew upon the three sections of the CBA cited by the
parties. These provisions cover management's right to discharge employees
for just cause,*fn3 the grievance process and the arbitrator's
powers,*fn4 and the disciplinary scheme. Section 2 of Article VII
establishes a progressive discipline process, using increasing punishment
levels for disciplining employees for misconduct.*fn5 Under Section 1 of
Article VII, management is not required to use progressive discipline when an employee commits a
serious offense. Even when a serious offense is committed, management's
decision to terminate an employee is subject to a just cause standard.*fn6
The arbitrator agreed with Osram that Hammel had been insubordinate
when he had willfully refused to carry out an explicit, reasonable,
clearly communicated order despite his awareness of the consequences. She
considered the infraction serious. Decision at 14-16. She then turned to
the issue that spawned this dispute "was the penalty appropriate for
the offense committed?" Id. at 16. In other words, was there just cause
The arbitrator noted that Osram "emphasized" that Hammel had already
been disciplined twice for insubordination under the progressive
discipline scheme set forth in Article VII. Id. at 16-17. Osram claimed
that these prior two incidents coupled with the "seriousness" of this
third offense justified moving directly to discharge under Section 1 of Article VII, skipping the next step in the progressive discipline
plan established in Section 2. Id. at 17.
As the arbitrator saw it, the parties had submitted for her
determination whether the company had just cause to terminate Hammel's
employment. Although the arbitrator agreed with Osram that Hammel's
insubordination was serious, she found that it was not serious enough to
justify firing him. She determined that "[a]lthough any incident
involving disregard of a directive from a supervisor is serious, the
Grievant's actions in this case were not sufficiently egregious to
warrant bypassing the next step in progressive discipline and proceeding
directly to discharge." Id. at 17. Thus, drawing on her interpretation of
the CBA, she concluded that "just cause" as defined in the context of the
CBA allows the employer to discharge an employee only for misconduct that
is so grievous as to amount to egregious. Id.*fn7
Finally, she noted that Osram did not comply with industrial due
process by refusing the Union's information requests to prepare for the
grievance proceedings. The Union agent testified that during the initial
grievance review, Osram had refused to provide the punch cards and the
list of witnesses interviewed. Instead, it had only provided Loughran's
notes with the witnesses' names redacted. The arbitrator concluded that
Osram had violated industrial due process by hampering the grievance
process when it had withheld the punch cards and the witness list. Her
finding of a violation of industrial due process, however, was not determinative of her reinstatement decision. Therefore,
our confirmation of the award rests solely on the arbitrator's findings
and conclusions based on the interpretation of the CBA.
The arbitrator did what the parties had bargained for her to do. She
applied the provisions of the CBA as she interpreted them to the facts as
she found them. Therefore, we shall confirm the award. ORDER
AND NOW, this 5th day of April, 2004, upon consideration of the
defendant's Motion for Summary Judgment (Docket No. 4), the Plaintiff's
Opposition to Defendant's Motion for Summary Judgment and Cross Motion for
Summary Judgment (Docket No. 7), the defendant's Brief in Opposition to
Plaintiff's Cross-Motion for Summary Judgment and in Reply to Plaintiff's
Opposition to Defendant's Motion for Summary Judgment and in Reply to
Plaintiff's Opposition to Defendant's Motion for Rule 11 Sanctions
(Docket No. 11), and Plaintiff's Reply to Defendant's Opposition to
Plaintiff's Cross Motion for Summary Judgment (Docket No. 13), and after
oral argument, it is ORDERED as follows:
1. The defendant's motion for summary judgment (Docket No. 4) is
2. The plaintiff's cross motion for summary judgment (Docket No. 7) is
3. JUDGMENT is entered in favor of the defendant and against the
plaintiff, and the arbitration award is CONFIRMED.