Opinion
Case No. CV 10-00679 DDP (AJWx).
March 30, 2010
Order Denying Plaintiff's Motion to Vacate Arbitration Decision (Dkt. No. 13) and Dismissing Case with Prejudice [Motion filed on February 26, 2010]
Presently before the Court is Defendant Overhill Farms, Inc. ("Defendant")'s Motion to Dismiss (Dkt. No. 5), and Plaintiff United Food and Commercial Workers, Local 770 ("Plaintiff")'s Motion to Vacate Arbitration Decision, (Dkt. No. 13). The motions present the same overarching legal questions. Because the core issues overlap, the Court analyzes both motions together in this Order.
For the reasons set forth below, the Court denies Plaintiff's Motion to Vacate. Because denying the Motion to Vacate resolves all of the issues presented in this case, the Court vacates Defendant's Motion to Dismiss as moot, and dismiss this case with prejudice.
I. Background
Defendant is a California-based manufacturer of frozen food products. Plaintiff is a labor union and the bargaining representative for Defendant's production and sanitation employees. The arbitration decision at issue in this case was governed by the parties' Collective Bargaining Agreement ("CBA"). The CBA establishes the salary, hours, and many other terms and conditions of employment for Overhill employees in the relevant bargaining unit.
The CBA at issue was effective March 21, 2005 through March 1, 2008, and then extended for an additional three years pursuant to a Memorandum of Agreement between the parties.
In January 2009, the United States Internal Revenue Service ("IRS") notified Defendant of potential penalties arising from invalid Social Security numbers that certain of Defendant's employees had reported on their tax withholding forms. The IRS also issued a document request related to 568 allegedly invalid Social Security numbers submitted in the 2006 tax year.
On April 6, 2009, Defendant notified affected employees, in writing, that the IRS had questioned the validity of the Social Security numbers they had reported. The written notice instructed each employee to correct the problem within thirty days or face termination.
On April 28, 2009, Plaintiff filed a written grievance protesting the intended termination of the affected employees. According to Plaintiff, the grievance concerned 237 Overhill employees. The grievance was signed by Dena Weston, Plaintiff's grievance officer.
In late May 2009, Defendant fired approximately 335 of its employees on the grounds that the employees either (1) did not have a valid Social Security number; (2) had presented a false Social Security number to Defendant in the past; or (3) had not responded to Defendant's requests for information concerning the discrepancies that the IRS had identified.
On June 10, 2009, Defendant sent a letter to Plaintiff responding to the April 28, 2009 written grievance. In the letter, Defendant contended that the grievance was invalid because it was not signed by each of the affected employees. Defendant relied on Article VIII of the CBA, entitled "Grievance and Arbitration Procedure," which provides that a written grievance must "be signed by the Employee and Union representative and delivered to Employer no later than 15 days after the grievance was brought orally to the attention of Employer and in all events no later than 25 days after the cause for the grievance occurred."
Plaintiff responded with a letter, dated June 11, 2009, restating its position that Defendant did not have just cause to suspend or terminate the affected employees. Defendant responded with another letter reiterating that the dispute was not arbitrable due to the CBA's procedural requirements.
On July 20, 2009 the parties selected an arbitrator to hear and decide their dispute. The parties briefed the matter, the arbitrator held a hearing, and on January 11, 2010, the arbitrator issued a three-page written decision granting Defendant's motion to dismiss. He reasoned that Plaintiff's written grievance was not arbitrable because none of the affected employees had signed it, in direct contravention of Article VIII, Section C of the CBA. The arbitrator rejected Plaintiff's contention that the grievance had been filed on behalf of "all affected" employees, and was thus a "Union grievance" rather than an individual grievance that would require the affected employee's signature.
On January 29, 2010, Plaintiff filed a Petition to Vacate Arbitration Decision. (Dkt. No. 1.) Soon after, Defendant filed a Motion to Dismiss. (Dkt. No. 5.) Plaintiff then filed a Motion to Vacate Arbitration Decision. (Dkt. No. 13.) Both motions have been fully briefed, and are ready for decision.
II. Discussion
Section 301 of the Labor Management Relations Act ("LMRA"), provides that
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.29 U.S.C. § 185(a). The parties agree that this case arises under § 301 of the LMRA.
Judicial review of an arbitrator's decision pursuant to a labor-management agreement is "very limited." Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001).
A clear line of Supreme Court authority dictates that "[i]f an arbitrator is even arguably construing or applying [a] 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." Id. (internal quotation marks and citations omitted). Thus, "[c]ourts are not authorized to review [an] arbitrator's decision on the merits despite allegations that the decision rests on factual errors or misinterprets the parties' agreement." Id.
"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." Id. (quoting Steelworkers v. Enterprise Wheel Car Corp., 363 U.S. 593, 597 (1960) (alteration in original)). Put somewhat differently, an arbitration award will be set aside only in those instances where the arbitrator's decision "fails to draw its essence from" the underlying CBA. Sprewell v. Golden State Warriors, 231 F.3d 520, 526 (9th Cir. 2000); see also Hawaii Teamsters Allied Workers Union, Local 996 v. United Parcel Serv., 241 F.3d 1177, 1178 (explaining that a reviewing court's "task is to determine whether the arbitrator interpreted the collective bargaining agreement, not whether he did so correctly").
The crux of the parties' dispute is whether the arbitrator based his decision on an interpretation of the CBA. Plaintiff contends that the arbitrator's decision reflects that he ignored certain relevant provisions of the CBA, and thus, that he did not render an interpretation at all, instead basing his decision on nothing more than caprice. In the absence of any interpretation, Plaintiff argues, there is nothing for the Court to defer to, and the arbitrator's decision must be set aside as an ultra vires act.
Defendant, for its part, contends that the arbitrator clearly rested his decision on a plausible interpretation of the CBA. Defendant points out that the arbitrator's written decision explicitly referenced all of the CBA provisions at issue in this case, and came to a conclusion rooted in the language of those provisions. In essence, Defendant contends, Plaintiff asks the Court to adopt the interpretation of the CBA that Plaintiff prefers, despite clear precedent forbidding reviewing courts from second-guessing an arbitrator's construction of a labor agreement.
The Court is persuaded that the arbitrator's decision "draw[s] its essence from" the CBA, Sprewell, 231 F.3d at 526, and therefore, that Plaintiff's Motion to Vacate must be denied.
The arbitrator confronted an ambiguity or tension in the language of the CBA. It defines a "grievance" as a complaint brought on behalf of an individual or the union itself. It defines the grievance procedure, however, as requiring the signature of any grieving employee. The arbitrator's written decision discusses this tension, and ultimately concludes that a grievance must be signed by an employee in order to be arbitrable.
For convenience, the Court reproduces the relevant provisions of Article VIII of the CBA (entitled "Grievance and Arbitration Procedure") below:
B. Definition of Grievance. For the purposes of this Agreement the term "grievance" is defined as any dispute between Employer and either Union or any Employee concerning the interpretation, application, or enforcement of this Agreement.
C. Procedure.
Step 1. No later than 10 days after the cause for a grievance occurs, the grievance shall be brought to the attention of Employer's representative by Union's representative.
Step 2. If the answer is not satisfactory, or if the grievance is rejected it shall (a) be reduced to writing; (b) set forth the facts, the reasons, and the portion of this Agreement on which the grievance is bases; (c) be signed by the Employee and Union representative and delivered to Employer no later than 15 days after the grievance was brought orally to the attention of Employer and in all events no later than 25 days after the cause for the grievance occurred.
Step 3. The written grievance shall then be discussed by the designated Employer and Union Representatives.
Step 4. If there is no satisfactory settlement within 15 days after the written grievance has been submitted in step 2, either Union or Employer may submit such grievance to arbitration under paragraph D [the section describing arbitration procedures] hereof no later than 25 days from the date the grievance was submitted in step 2.
The parties agree, as they did before the arbitrator, that no affected Overhill employee signed the written grievance at issue in accordance with Section C. The arbitrator concluded that, under the CBA, a written signature is a procedural precondition to arbitrability.
Plaintiff argues, as it did before the arbitrator, that the CBA's definition of a grievance clearly contemplates "Union grievances," i.e., grievances brought on behalf of the union writ large, not any specific employee. The arbitrator did not, however, ignore this argument as Plaintiff now contends.
The arbitrator's written decision stated the following: The clear and unambiguous language of Article VIII, Section C of the [CBA] requires that when a grievance is reduced to writing, it must be signed by ". . . the Employee and Union representative . . ." There is no dispute that no employee ever signed the grievance at issue. Therefore, it is apparent that on its face the grievance did not meet one of the requirements agreed to by the parties in the CBA.
(Pet. to Vacate, Ex. J.)
The arbitrator then turned to Plaintiff's argument that the grievance at issue was a "Union grievance" filed on behalf of all affected union members. He observed that "the Union cited the language of Article VIII, Section B which defines a grievance as `. . . any dispute between Employer and either Union or any Employee . . .'" (Id.) In rejecting Plaintiff's argument, the arbitrator stated that
the language relied on by the Union is contained in the section of the article entitled "Definition of Grievance." This section merely defines what is a grievance. It does not, however, use the term "Union Grievance" nor provide for the separate processing of such grievances. Instead, the only language dealing with the processing of grievances is found under Section C entitled "Procedure." It is in that section that the parties agreed to require that a grievance be signed by an employee in order to be valid. The language of Section C does not contain any exception for a grievance arising out of disputes between the Employer and the Union. Clearly if the parties had intended to permit an exception to the requirement that a grievance be signed by an employee, the parties could have stated such an exception. The absence of such a clear exception, combined with the clear requirement that a grievance must be signed by an employee, means that the Arbitrator cannot ignore the clear procedural language of Section C and assume that the parties intended to create an exception for disputes between the Employer and the Union. In essence, the Union is asking the Arbitrator to ignore the very specific language of Section C dealing with the required procedure for processing a grievance to arbitration, in favor of the very general definitional language of Section B. The Arbitrator is convinced that to do so would exceed his authority and would violate the clear working of the CBA with regard to the requirements for processing grievances and their arbitrability. This especially true since outside of the definition of a grievance there is apparently no language in the CBA that makes reference to "Union grievances."
(Id.)
Finally, the arbitrator offered an alternative basis for rejecting Plaintiff's proposed construction of the CBA. He reasoned that even if, under some circumstances, the CBA provided for the arbitration of a "Union grievance," the grievance at issue in this case involved the termination of individual employees, and thus, the "clear requirement for the employee to sign the grievance" could not be ignored.
As the above excerpts reveal, the arbitrator's decision arose out of an attempt to interpret and reconcile the plain language of Article VIII of the CBA. Because the Court's "task is to determine whether the arbitrator interpreted the collective bargaining agreement, not whether he did so correctly," Hawaii Teamsters, 241 F.3d at 1178, it need not inquire into the merits of the arbitrator's contractual analysis. Indeed, the Court expresses no view on the underlying merits — the CBA is ambiguous and doubtless susceptible of more than one interpretation, whether the arbitrator adopted the best construction of the contract is not the relevant question. See, e.g., United Steelworkers v. Enterprise Wheel Car Corp., 363 U.S. 593, 596 (1960) ("[C]ourts have no business overruling [the arbitrator] because their interpretation of the contract is different from his.") The Court is satisfied that the arbitrator's decision draws its essence from the plain language of the CBA, and not from the arbitrator's own whims. Accordingly, Plaintiff's Motion to Vacate must be denied.
III. Conclusion
For the reasons set forth above, the Court DENIES Plaintiff's Motion to Vacate Arbitration Decision, vacates Defendant's Motion to Dismiss as moot, and dismisses this case with prejudice.
IT IS SO ORDERED.
Dated: March 30, 2010