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United States District Court, E.D. Pennsylvania

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 face of serious error. Garvey, 532 U.S. at 509.

  Arbitral Authority

  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. 1996).

  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 2(B)(2)).

  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 for termination?

  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 GRANTED.

  2. The plaintiff's cross motion for summary judgment (Docket No. 7) is DENIED.

  3. JUDGMENT is entered in favor of the defendant and against the plaintiff, and the arbitration award is CONFIRMED.

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