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Smurfit Newsprint v. Assoc. of Western Pulp Paper Workers

United States District Court, D. Oregon
Aug 14, 2001
Civil No. 01-953-AS (D. Or. Aug. 14, 2001)

Opinion

Civil No. 01-953-AS

August 14, 2001


O R D E R


Smurfit Newsprint Corp., an Oregon corporation ("Smurfit"), filed this action to vacate the Final Arbitration Award dated June 5, 2001 (the "Award"), which required Smurfit to pay its former employees $3,514,658.80 in benefits pursuant to the terms of a collective bargaining agreement entered into between Smurfit and the Association of Western Pulp and Paper Workers, Local 60 (the "Union") effective April 1, 1995 (the "Agreement"). The Union responded with a motion to confirm the award. Both motions are presently before the court.

BACKGROUND

On November 10, 1999, Smurfit sold the Newberg Mill to Southeast Paper Manufacturing Company ("SP"). On that same date, Smurfit notified all of its Newberg Mill employees that they were terminated as of that date. Additionally, the termination notice advised the employees that they would be treated as terminated with regard to a wide range of benefits, such as "[g]roup insurance for medical, dental, life and accidental death and dismemberment, disability coverage, medical and dental insurance, supplemental life insurance, pension, and retiree group medical and life insurance."

Prior to the closing of the sale, SP advised the Union that, while it intended to staff the Newberg Mill with Smurfit employees, it would not keep the present work force intact. All Newberg Mill employees were required to submit applications to SP to be considered for employment at the Newberg Mill. All but five employees who applied for jobs with SP were hired, but not all in the same position as they previously held with Smurfit. Smurfit paid severance benefits to the five employees not hired by SP.

Shortly after the closing of the sale and after SP adopted the Agreement, SP announced that it was not going to give its Newberg Mill employees credit for any service with Smurfit. This effectively reduced the employees pensions, as well as extended the time for retirement, over what the employees would have been entitled to had they remained employed by Smurfit. The Union filed a grievance against Smurfit asserting, in part, that the Newberg Mill employees were entitled to termination benefits due under the Agreement upon Smurfit's closing of the Newberg Mill. Section 39 of the Agreement provided that "in the event the company [Smurfit] should decide to close permanently the Newberg Mill or one of the major departments of the mill, the following benefits will be available to those employees whose termination is directly caused by the mill or department closure."

Smurfit argued that it had not closed the Newberg Mill but had merely had sold it to SP who continued to run the Newberg Mill without interruption. Additionally, Smurfit asserted that the Newberg Mill employees were not terminated in that they continued to work at the Newberg Mill under the new ownership.

The arbitrator found as follows:

Here Smurfit decided to permanently close the Newberg Mill insofar as its operations of the Mill was concerned. It no longer would operate a facility at the Newberg premises. Southeast operates the physical Mill but it was closed as far as Smurfit is concerned it [sic] has no further interest in the operation.
It also terminated all of its Bargaining Unit employees. It had no more jobs for them. It notified each employee on November 10 that they were terminated giving that date as their "Termination Date". That notice not only described those receiving it as terminated but substantively treated them as terminated for a myriad of benefits as listed: Group insurance for medical, dental life and accidental death and dismemberment, disability coverage, medical and dental insurance, supplement life insurance, pension, and retiree group medical and life insurance. * * *
With Smurfit permanently closing its Mill and terminating its employees, Article 39 benefits are due.

The Agreement provides that the arbitrators decision shall be final and binding upon the parties but then limited the arbitrators authority with the following language:

The arbitrator shall not have the authority to modify, add to, alter or detract form the provisions of this Agreement, or to impose any obligation on the Local Union or the Signatory Company not expressly agreed to by the terms of this Agreement.

Smurfit argues that "[b]y imposing on Smurfit the obligation to make section 39 termination payments despite the fact that (a) it did not "close permanently" the mill and (b) no terminations of employment were "directly caused by [a] mill closure," the arbitrator improperly disregarded the plain language of the [Agreement] and exceeded the express contractual limitations on his authority.

LEGAL STANDARD

The United States Supreme Court recently discussed, in detail, the obligations of a court in reviewing an arbitration award involving a collective bargaining agreement. Major League Baseball Players Association v. Garvey, ___ U.S. ___, 121 S.Ct. 1724 (2001).

Judicial review of a labor-arbitration decision pursuant to such an agreement is very limited. Courts are not authorized to review the arbitrator's decision on the merits despite allegations that the decision rests on factual errors or misinterprets the parties' agreement. We recently reiterated that if 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.'" It is only when the arbitrator strays from interpretation and application of the agreement and effectively "dispense[s] his own brand of industrial justice" that his decision may be unenforceable. When an arbitrator resolves disputes regarding the application of a contract, and no dishonestly is alleged, the arbitrator's "improvident, even silly, factfinding" does not provide a basis for a reviewing court to refuse to enforce the award.

Id. at 1728 (citations omitted).

DISCUSSION

The court finds, based on the language of the Agreement, the specific facts at hand, the nearly unparalleled degree of deference the arbitrator's decision is entitled to, and the cases that have interpreted similar situations in a variety of ways, that the arbitrator's interpretation of the agreement was reasonable and must be confirmed.

CONCLUSION

The Union's motion to confirm the arbitration award is GRANTED and Smurfit's motion (#1) to vacate the arbitration award is DENIED.


Summaries of

Smurfit Newsprint v. Assoc. of Western Pulp Paper Workers

United States District Court, D. Oregon
Aug 14, 2001
Civil No. 01-953-AS (D. Or. Aug. 14, 2001)
Case details for

Smurfit Newsprint v. Assoc. of Western Pulp Paper Workers

Case Details

Full title:SMURFIT NEWSPRINT CORPORATION, Plaintiff, v. ASSOCIATION OF WESTERN PULP…

Court:United States District Court, D. Oregon

Date published: Aug 14, 2001

Citations

Civil No. 01-953-AS (D. Or. Aug. 14, 2001)

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