Opinion
Case Number 02-10235-BC, Case Number 02-10237-BC
April 28, 2003
On March 8, 2001, Diana Noyes, a member of Local 12075 of the United Steel Workers union, was fired from her job at the MidMichigan Regional Medical Center where she had worked as a housekeeper since 1978, after she had accumulated four work-rule violations within a twelve-month period. Her union local filed a grievance challenging the discharge, which was submitted to an arbitrator in accordance with the collective bargaining agreement.
The arbitrator determined that the violations in fact occurred, but also found mitigating circumstances and ordered Noyes reinstated without back pay under a "last chance" opportunity.
Both the union and the employer have filed lawsuits under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a), to confirm and vacate the arbitral award, respectively, and the parties have presented cross-motions for summary judgment in the consolidated cases based on stipulated facts. The Court finds that the arbitrator did not exceed his authority in rendering the award, which "draws its essence" from the parties' agreement, and will therefore grant the union's motion for summary judgment to confirm the award and deny MidMichigan's motion to vacate the award.
I.
Ms. Noyes' job at the MidMichigan medical center for the past seven to eight years was to clean the radiology area during the night shift, which lasted from 5:00 p.m. through 1:30 a.m. Before December 2000, she had received one disciplinary notice in her twenty-three years of service to her employer, but she was disciplined twice during that month for not cleaning her area as well as required by her employer's work guidelines. She received a third disciplinary notice on February 6, 2001 for absenteeism.
Ms. Noyes was suspended on March 8, 2001 after her fourth disciplinary notice, which resulted from the failure to satisfactorily clean areas of the radiology department on March 5 and 6. The ensuing investigation during the suspension concluded with Ms. Noyes' termination.
Local 12075 filed two grievances on behalf of Noyes: one alleged that her termination was "unwarranted" because just cause was not established, and sought reinstatement with back pay and restoration of seniority; and the other complained about management's failure to allow a union representative to be present during an investigative interview in December 2000 and requested that the written disciplinary notice be removed from Noyes' personnel file. The arbitrator conducted hearings on the grievances on three separate days in January, March, and April 2002 and received several exhibits and testimony from multiple witnesses. The arbitrator issued a 42-page award on June 18, 2002 sustaining the grievance in part. He found no merit to the grievance challenging denial of union representation, a finding not contested in this case. He further concluded that although just cause for discipline was demonstrated, the choice of discipline — termination — was too severe under all the circumstances. Accordingly, the arbitrator reduced the termination to a disciplinary suspension that ended two weeks post-award, and ordered the employer to return Noyes to work in her classification as housekeeper and change her personnel file to reflect the modification of the discipline. He did not order back pay or benefits.
The arbitration was authorized by the terms of a collective bargaining agreement between the parties that included a four-step grievance procedure culminating in arbitration. However, MidMichigan contends that the collective bargaining agreement reserved to the employer the sole prerogative to establish work rules, which included a progressive discipline policy that could lead to termination, and that the arbitrator was thereby divested of discretion to modify the discipline imposed once a violation of the work rules was established. The labor agreement at issue in this case is the collective bargaining agreement which became effective on October 7, 2000 and remains in effect through October 6, 2003. Article III of the collective bargaining agreement states:
The Medical Center retains the right to exclusively and solely manage, operate, and direct the Medical Center facilities, activities, endeavors, working force and all other affairs and interests of the Medical Center, and to exercise its own discretion on all of the following matters, subject only to such limitations as are expressly set forth in this Agreement. These rights include but are not limited to the following:
1. Hiring, testing, employing, promoting, demoting, transferring, suspending, assigning, recalling, relieving, correcting, laying off, and disciplining employees.
2. Maintaining efficiency, orderliness, and proper conduct.
3. Releasing employees for due cause, lack of work or other legitimate reasons.
. . .
5. Deciding the nature and extent of the work, number of jobs, and operations to be performed, job content and structure, assignment of work and staffing ratio(s), number and qualification of employees, and time and duration of work and of operational schedules.
6. Making, amending and enforcing any reasonable and sensible rules, regulations, and policies necessary to maintain order, safety, propriety, proper action and behavior, and effectiveness in the Medical Center operations.
MidMichigan had promulgated "Disciplinary Procedure Rules of Conduct," which the parties have referred to as a Corrective Action Policy (CAP), pursuant to its authority to establish work rules. The CAP was first established on October 30, 1983 and last revised on March 20, 1998. According to the parties' stipulation, the CAP was in effect at the time of Diana Noyes' discharge, and the CAP is not inconsistent with the collective bargaining agreement. Stip. ¶ 1. Paragraph 6 of the procedures sets forth the stages of progressive discipline:
6. Action steps:
a. Formal Counseling: An oral explanation of the incident to the employee. Such action must be documented and placed in the employee's personnel file.
b. Written Warning: A complete written record of the disciplinary offense which is shown and explained to the employee and placed in his/her personnel file.
c. Suspension and/or Probation: A period of probation for 30 to 90 days and/or a suspension not to exceed three days as a means of emphasizing to an employee the seriousness of continued rule violation[s], improper conduct, etc. A written report of the incident(s) shall be maintained in the employee's personnel file. Any violation of a work rule, policy, procedure or written expectation during a probationary period may subject the employee to immediate discharge.
d. Discharge: The most serious form of disciplinary action involving the termination of the employee — this action is taken for a very serious offense or for repeated minor offenses over a short period of time.
The CAP lists substandard job performance and absenteeism in a category of violations referred to as "Group I Rules." With respect to Group I Rules, the CAP states:
For the commission of any of the following offenses an employee shall receive a formal counseling notice. Any further violation of the same act or a different act within the recognized time period will subject the employee to a written warning. If an employee receives three disciplinary actions (verbal or written for the same or different offenses) within a period of 12 consecutive months, such employee will be subject to suspension or probationary status. If an employee receives four disciplinary actions (for the same or different offense) within a period of 12 consecutive months, the employee will be subject to discharge.
The parties agree that the discipline that Diana Noyes received on December 13, 2000 was the first step (Formal Counseling) under the CAP. Stip. ¶ 2. The discipline that Diana Noyes received on December 27, 2000 was the second step (Written Warning) under the CAP. Stip. ¶ 3. The discipline that Diana Noyes received on February 6, 2001 was the third step (Suspension and/or Probation) under the CAP. Stip. ¶ 4. The suspension and termination that Diana Noyes received on or about March 8, 2001 was the fourth step under the CAP. Stip. ¶ 5. In addition to the language in Article III of the collective bargaining agreement that subjects the employer's discretion in employment decisions to the "limitations . . . expressly set forth in this Agreement" and permits the release of an employee only "for due cause, lack of work or other legitimate reasons," the union calls the Court's attention to other provisions of the collective bargaining agreement that, it contends, have a bearing on the issue before the Court. Article VIII states that employees do not lose seniority and their names may not be removed from employment rolls unless they quit or are "[d]ischarge[d] for proper cause." Article XI, Section 7 requires a two-week notice for layoffs and terminations of employment unless "there is just cause for immediate termination." Article XIX, Section 7(A) confirms the primacy of the collective bargaining agreement in governing employer-employee relations. It states:
It is the intent of the parties hereto that the provisions of this Agreement shall supersede all prior Agreements and understandings oral or written, express or implied, between the parties and shall govern their entire relationship. This Agreement is the sole source of any and all rights or claims which may be asserted hereunder or otherwise.
Finally, Article IX, Section 3 does contain a provision limiting the authority of an arbitrator to change the employer's choice of discipline, but only in certain situations. It states:
Step 4 — Arbitration
A. The arbitrator shall limit his/her decision strictly to the interpretation, application or enforcement of the provisions of this Agreement and shall be without power and authority to make any decision:
1. Contrary to, or inconsistent with or modifying or varying in any way, the terms of this Agreement.
2. Concerning the discipline or discharge of employees for engaging in an illegal strike, slowdown or stoppage of work.
MidMichigan insists that the collective bargaining agreement, read in light of the CAP, did not confer authority on the arbitrator to modify the discipline and order the claimant back to work, once the arbitrator determined that the claimant committed at least four work rule violations within twelve months.
MidMichigan contends that the CAP, issued in conformity with the collective bargaining agreement, reserved to it the exclusive authority to determine the nature and extent of employee discipline, and that the arbitrator's award usurped that authority. Local 12075 maintains that the arbitrator had authority under the collective bargaining agreement to harmonize its provisions with the CAP, which is all that the arbitrator did in fashioning the award in this case. The union therefore resists MidMichigan's motion to vacate the arbitral award and urges its confirmation. The parties' stipulation and cross-motions for summary judgment present these issues for decision.
II.
The parties each have moved for summary judgment under Federal Rule of Civil Procedure 56, which allows such relief when the pleadings, products of discovery, proper documentary evidence, and affidavits on file demonstrate the absence of genuine issues of material fact. Fed.R.Civ.P. 56(c). The parties have filed a stipulation of facts that, when taken together with the pleadings, the collective bargaining agreement, work rules, and the record before the arbitrator, establishes the absence of a material fact dispute and allows the Court to render judgment as a matter of law.
However, review of an arbitrator's award is governed by "one of the narrowest standards of judicial review in all of American jurisprudence." Lattimer-Stevens Co. v. United Steelworkers of Am., 913 F.2d 1166, 1169 (6th Cir. 1990). See also Beacon Journal Publ'g Co. v. Akron Newspaper Guild, Local No. 7, 114 F.3d 596, 599 (6th Cir. 1997) ("The Supreme Court has made clear . . . that courts must accord an arbitrator's decision substantial deference because it is the arbitrator's construction of the agreement, not the court's construction, to which the parties have agreed."). "The Supreme Court has tightly circumscribed the authority of federal courts to overturn arbitration awards, and has consistently held that they may not do so as long as the arbitrator's award draws its essence from the collective bargaining agreement, and is not merely his own brand of industrial justice." Eisenmann Corp. v. Sheet Metal Workers Int'l Assoc. Local No. 24, AFL-CIO, 323 F.3d 375, 380 (6th Cir. 2003) (internal quotations omitted) ( quoting United Paperworkers Int'l Union v. MISCO, Inc., 484 U.S. 29, 36 (1987)). "[I]f an arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, the fact that a court is convinced he committed serious error does not suffice to overturn his decision." Ibid (quoting Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001)). The Sixth Circuit lists four instances in which an arbitral award fails to draw its essence from a labor agreement, and it will vacate an award when "(1) it conflicts with express terms of the agreement; (2) it imposes additional requirements not expressly provided for in the agreement; (3) it is not rationally supported by or derived from the agreement; or (4) it is based on general considerations of fairness and equity instead of the exact terms of the agreement." Int'l Union, UAW v. Dana Corp., 278 F.3d 548, 554 (6th Cir. 2002) (quoting MidMichigan Reg'l Med. Ctr.-Clare v. Prof'l Employees Div. of Local 79, 183 F.3d 497, 502 (6th Cir. 1999)). MidMichigan believes that the award in this case conflicts with the contractual terms reserving discretion as to the manner of discipline to the employer, and that the arbitrator's modification of the discipline was based on considerations of fairness and equity rather than any authority conferred on him by the terms of the agreement. MidMichigan states that the provision in its work rules that renders an employee who violates Group I Rules four times within twelve months "subject to discharge" trenches upon the just cause language in the collective bargaining agreement, and gives the arbitrator no choice but to accept the discipline chosen by the employer once just cause for discipline has been established.
Because the collective bargaining agreement gives the employer the right to establish and enforce work rules, MidMichigan argues in essence that the work rules are on an equal footing with the contract terms and the arbitrator must adhere to them, rather than fashion his own remedy for violations.
When an arbitrator is called in to resolve a dispute, "he is to bring his informed judgment to bear in order to reach a fair solution of a problem. This is especially true when it comes to formulating remedies. There the need is for flexibility in meeting a wide variety of situations. The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency." United Steelworkers of Am. v. Enterprise Wheel Car Corp., 363 U.S. 593, 597 (1960). The arbitrator is not required to account to the courts for his reasoning, and the mere possibility that his opinion was based on impermissible considerations is not a ground for vacating an award. Id. at 598.
The arbitrator's power to review the employer's chosen remedy can be restricted by the collective bargaining agreement. MISCO, 484 U.S. at 41. However, "[i]f the language of the arbitrable contract is not explicit enough to bar the arbitrator's chosen remedy, the arbitrator's judgment will be respected on review." AK Steel Corp. v. United Steelworkers of Am., 163 F.3d 403, 409 (6th Cir. 1998).
The Sixth Circuit has repeatedly recognized that the resolution of ambiguities created by the interplay of work rules and collective bargaining agreements fall within the ken of arbitrators, informed by their judgment and special knowledge of the workplace. In the leading case, Eberhard Foods Inc. v. Handy, 868 F.2d 890 (6th Cir. 1989), an arbitrator awarded reinstatement without back pay of an employee who had been discharged for fighting. The bargaining agreement in effect provided that "the right to discharge for cause is within the sole discretion of the employer." Id. at 892. The company's work rules, which were not even referenced by the collective bargaining agreement, provided that fighting would "subject" the offender to discharge after the first offense. Ibid. Nonetheless, the agreement also stated "that the employer may not discharge a non-probationary employee without `just cause.'" Ibid. The Sixth Circuit noted the ambiguity that resulted:
This combination of provisions could mean that the sanction imposed by the employer is unreviewable by the arbitrator or that the arbitrator can decide whether there is "just cause" for the particular sanction imposed. This lack of clarity is magnified by the fact that the work rules are not even mentioned in the CBA.Ibid. Because the collective bargaining agreement did not prohibit the arbitrator from reviewing the form of discipline the employer had imposed, and because the appropriate remedy was not dictated by the agreement and work rules, the Sixth Circuit found that the arbitrator "did not act unreasonably or capriciously in construing the agreement to authorize review of the sanction imposed." Id. at 893. The fact that the arbitrator also imported broad concerns of fairness and equity was not fatal to his determination, as the contract's specification of "just cause" for any discharge without any corresponding limitation upon or definition of that term left ample room for such considerations.
The court upheld the award.
Several cases from other circuits follow the same rationale. See First Nat'l Supermarkets, Inc. v. Retail, Wholesale Chain Store Food Employees, 118 F.3d 892, 896-97 (2d Cir. 1997); Acro-Polymers, Inc. v. Local 8-74, 671 F.2d 752, 756 (3d Cir. 1982); Midwest Coca-Cola Bottling Co. v. Allien Sales Drivers, 89 F.3d 514, 517-18 (8th Cir. 1996). See generally Toledo Blank, Inc. v. Teamsters Local 20, 227 F. Supp.2d 761 (N.D.Ohio. 2002) (providing overview of the evolution of standard of review in arbitration cases, and following Eberhard).
Similar facts were brought before the Sixth Circuit in Dixie Warehouse Cartage Co. v. General Drivers, Warehousemen Helpers, Local Union No. 89, 898 F.2d 507 (6th Cir. 1990). There, the grievant was accused of drinking alcoholic beverages while on duty. The collective bargaining agreement provided that the arbitrator "may only interpret" the agreement, "and shall not add to, subtract from, or otherwise change or modify it." Id. at 508.
The agreement also stated that "[t]he Employer shall not discharge or suspend any employee without just cause," but reiterated that the "discharge of employees for proper cause was the sole prerogative of the employer except to the extent it was specifically limited by the agreement." Id. Finding the facts materially indistinguishable from those in Eberhard, the Sixth Circuit concluded that the arbitrator's award of reinstatement had to be affirmed. "In the absence of a contractual provision that expressly limits or removes the arbitrator's authority to review and modify the penalty, the Eberhard precedent requires us to conclude that the arbitrator in the present case did not exceed his authority." Id. at 511. See also Bruce Harwood Floors v. S. Council of Indus. Workers, 8 F.3d 1104, 1108 (6th Cir. 1993) (finding ambiguity between agreement provisions that provided an employee "may" be discharged for committing certain offenses and another section stating that the employer had the right "to discipline and discharge employees for just cause").
Dixie Warehouse also addressed a competing precedent, International Brotherhood of Firemen and Oilers v. Nestle Co., 630 F.2d 474 (6th Cir. 1980), relied upon by MidMichigan in this case. In Nestle, the Sixth Circuit found that an arbitrator had exceeded his authority in awarding reinstatement without back pay of an employee who had been terminated by the employer for insubordination. The bargaining agreement provided that "the right to hire and discharge employees" "is vested exclusively in Management, except as otherwise provided in this Agreement." Id. at 475. The agreement further provided that insubordination, among other things, "shall constitute cause for the dismissal of any employee from the service of the Company." Ibid. The arbitrator found that the employee was guilty of insubordination, but found the evidence of guilt marginal, stating that "I am going to give the grievant some relief." Id. at 476. The Sixth Circuit responded by noting that the bargaining agreement "uses the word `shall,' rather than `may,'" and found the arbitrator's decision to be an abuse of his authority under the "clear and unambiguous" terms of the contract. Id. at 476-77.
Nestle did not control the Dixie Warehouse court's decision because, unlike the contract in Nestle, the agreement in Dixie Warehouse provided that suspension was an alternative punishment to discharge for violation of work rules. More importantly, the Dixie Warehouse court noted that Nestle predates MISCO and Eberhard, and that these cases make clear that the arbitrator is presumed to have the authority to review penalties imposed unless the contract provides otherwise. 898 F.2d at 511. Because Nestle appeared to operate under the opposite assumption — that a provision granting "sole discretion" over discipline to the employer includes the right to be the sole authority as to the proper penalty — it was no longer good law in that regard. As Eberhard and its progeny make clear, the parties may restrict the arbitrator's authority to alter the employer's choice of discipline. An obvious way to achieve that result is to provide in the collective bargaining agreement that the employer's choice of discipline may not be second-guessed by the arbitrator. See Int'l Bro. of Elec. Workers, Local 429 v. Toshiba Am., Inc., 879 F.2d 208, 210 (6th Cir. 1989) (affirming lower court's order vacating arbitrator's award of reinstatement where the bargaining agreement stated that "[a]ny disciplinary action, including discharge taken as a result of a violation . . . shall not be altered or amended in the grievance and arbitration procedures"); Kar Nut Prods Co. v. Int'l Bro. of Teamsters, No. 92-2084, 1993 WL 304467, at *3 (6th Cir. Aug. 10, 1993) (unpublished opinion) (noting that "a party is free to limit the arbitrator's authority to fashion a remedy by careful drafting of the collective bargaining agreement"); Highway Local Motor Freight Employees Local Union No. 667 v. Wells Lamont Corp., 170 F. Supp.2d 796, 799 (W.D.Tenn. 2001) (affirming arbitration finding that satisfactory cause had been shown for termination of employment, and noting that a "just cause" provision limiting the discretion of arbitrator had existed in a previous bargaining agreement between the parties, but not the agreement at issue in the case).
Another method is to make clear that an employer may discharge an employee for either good cause or a violation of work rules the employer promulgates. See General Drivers, Warehousemen Helpers, Local 89 v. Willamette Indus., Inc., No. 98-5476, 1999 WL 503465 (6th Cir. July 6, 1999) (unpublished opinion) (finding that the arbitrator overstepped his authority in ordering reinstatement on the basis that proper cause was not shown in light of the employee's overall record of employment). There is no such limiting language in the collective bargaining agreement that applies to the employee in this case.
Rather than allowing the work rules to trump the contract language, the collective bargaining agreement makes the work rules subject to it. Thus, the collective bargaining agreement permits the employer unilaterally to fashion work rules that define violations, create disciplinary procedures, and even prescribe an at-will relationship for its employees in general, but when the rules are applied to union employees covered by the collective bargaining agreement, those rules are subject "to such limitations as are expressly set forth in this Agreement." Those limitations include a restriction that covered employees may be immediately discharged only for "just cause," "proper cause," "due cause," or "other legitimate reasons." The collective bargaining agreement does not define these terms, nor does it incorporate the work rules or provide that a violation of work rules satisfies those definitions. To the contrary, the collective bargaining agreement specifically states that it "is the sole source of any and all rights or claims which may be asserted hereunder or otherwise." The collective bargaining agreement, however, does require disputes to be submitted to arbitration, and there is no limitation on the arbitrator's authority to harmonize the employer's application of its progressive discipline policy with the just cause requirements of the contract, except in situations involving "an illegal strike, slowdown or stoppage of work," none of which occurred in this case.
Given the contractual language in this case, the Court cannot find that the arbitrator's decision conflicts with express terms of the collective bargaining agreement, imposes additional requirements not expressly provided for in that agreement, fails to derive support from the agreement, or is based on general considerations of fairness and equity instead of the exact terms of the agreement. This conclusion is fortified by the presumption under MISCO and Eberhard that the arbitrator has the right to alter the employer's remedy unless the collective bargaining agreement explicitly provides otherwise. The arbitrator was well within his authority to detect a potential ambiguity between the "just cause" provisions of the collective bargaining agreement and the "subject to discharge" language in the work rules, and resolve it in a manner that permitted him to convert the discharge order made by MidMichigan into a suspension.
III.
The Court finds that the arbitrator acted within his authority, and that the award derived its essence from the collective bargaining agreement. The extreme deference to labor arbitration results prescribed by the decisional authorities will not permit this Court to upset the arbitration award in this case. Accordingly, it is ORDERED that the motion for summary judgment by MidMichigan Regional Medical Center seeking vacation of the arbitration award [dkt #9] is DENIED. It is further ORDERED that the motion for summary judgment by the United Steel Workers of America, Local 12075 seeking confirmation of the arbitration award [dkt #10] is GRANTED. It is further ORDERED that the arbitration award dated June 18, 2002 by Arbitrator Patrick A. McDonald in Grievance No. DB-50-01 is CONFIRMED and may be enforced according to its terms.