FILED
United States Court of Appeals
Tenth Circuit
June 3, 2010
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
CP KELCO US, INC.,
Plaintiff-Appellee,
No. 09-7041
v.
(D.C. No. 6:08-CV-00068-SPS)
(E.D. Okla.)
INTERNATIONAL UNION OF
OPERATING ENGINEERS, LOCAL
NO. 627, AFL-CIO,
Defendant-Appellant.
ORDER AND JUDGMENT *
Before MURPHY, HOLMES, Circuit Judges, and ARMIJO, ** District Judge.
This is an appeal from the district court’s grant of summary judgment in
favor of Plaintiff-Appellee CP Kelco US, Inc. (“CP Kelco”). CP Kelco brought
this action under the National Labor Relations Act, 29 U.S.C. §§ 151–169
(“NLRA”), in an attempt to set aside an arbitrator’s award in favor of Defendant-
Appellant International Union of Operating Engineers, Local No. 627, AFL-CIO
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Federal Rule of Appellate
Procedure 32.1 and 10th Circuit Rule 32.1.
**
The Honorable M. Christina Armijo, District Judge, United States District
Court for the District of New Mexico, sitting by designation.
(“the Union”). The arbitrator had determined that CP Kelco had violated the
terms of a collective bargaining agreement (“CBA”) between the Union and CP
Kelco. The district court held that the arbitrator’s decision did not draw its
essence from the CBA and that the arbitrator had exceeded his authority under the
CBA. The court therefore vacated the arbitrator’s decision and granted summary
judgment in favor of CP Kelco. Exercising jurisdiction under 28 U.S.C. § 1291,
we AFFIRM.
I. Factual Background
CP Kelco operates a plant in Okmulgee, Oklahoma that manufactures
xanthan gum and welan gum for use in the food, oil, and printing industries. The
plant operates twenty-four hours a day. The Union represents nearly 100
employees at the plant, including the maintenance mechanics. From December 1,
2002 to November 30, 2007, CP Kelco and the Union were parties to a CBA.
This dispute began when CP Kelco notified the Union of a new maintenance
department call-in policy (“2007 Call-In Policy”) on January 5, 2007. The 2007
Call-In Policy required all maintenance department day mechanics to wear pagers
outside of their normal working hours on a rotating basis. “‘Failure to respond to
a page [would] be considered insubordination and [could] result in a written
warning, (second step progressive discipline).’” Aplt. App. at 22 (Arbitration
Decision, dated Dec. 18, 2007) (quoting 2007 Call-In Policy); see id. at 171 (2007
Call-In Policy, filed Mar. 21, 2008). The on-call mechanics were required to call
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back within thirty minutes of receiving a page and then to “proceed to the plant
within a reasonable time.” Id. at 22, 171.
The Union filed a grievance under the CBA alleging that CP Kelco’s
implementation of the 2007 Call-In Policy violated the CBA. 1 An arbitrator heard
the grievance and issued a decision that made various factual findings and
conclusions. Both parties presented the issue to the arbitrator slightly differently,
and he ultimately framed the issue as: “Did the Company violate the CBA by its
unilateral implementation of the 2007 Maintenance Department Call-In Policy
effective January 16, 2007? If so, what is the appropriate remedy?” 2 Id. at 34.
1
In a January 17, 2009 grievance letter to CP Kelco’s Human
Resources Manager, the Union stated:
This is to notify the Company that the maintenance mechanics
do not agree with the Company’s decision to require them to
participate, effective January 15, 2007, in a rotation of wearing
pagers outside their normal work hours.
We also believe the company has violated Article IX,
Management Rights, Paragraph D and Article XXII Hours of
Work and Compensation, Call Back Pay and any other articles
in the Collective Bargaining Agreement that may apply.
In order to remedy this improper action by the company we
request the company rescind the pager policy, and we request
that each employee required to wear a pager be paid a fair
compensation for the time required.
Aplt. App. at 21 (quoting Joint Grievance Letter) (internal quotation marks
omitted); see id. at 169 (Joint Grievance Letter, filed Apr. 21, 2008).
2
In its January 5, 2007 notification to the Union, CP Kelco explained
(continued...)
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In his decision, the arbitrator found that the following CBA provisions were
applicable to this dispute: Article IV, Union Management Cooperation; Article
IX, Management Rights; Article XIII, Grievance and Arbitration Procedure; and
Article XXII, Hours of Work and Compensation. Under the CBA’s Management
Rights Article, CP Kelco
retain[ed] all rights of Management it had prior to the
certification of the Union, including, . . . the right to:
...
C. establish and to enforce standards of production, policies,
regulations and safety rules not inconsistent with this
Agreement;
D. establish and to alter from time to time reasonable work
and shop rules and regulations to be observed and complied
with by employees, which rules shall not be inconsistent with
the provisions of this Agreement. The Union shall be advised
of such rules and regulations . . . .
Id. at 24 (emphasis added) (internal quotation marks omitted); see id. at 45–46
(CBA, filed Apr. 21, 2008). The CBA’s Grievance and Arbitration Procedure
states in relevant part:
The arbitration hearing shall be held as promptly as possible
and the arbitration award shall be final and binding upon all
(...continued)
that the 2007 Call-In Policy would become effective on January 15, 2007;
however, due to a holiday, the arbitrator found that the policy did not actually
come into effect until the next day, January 16, 2007. Aplt. App. at 21, 28, 34.
Adding to the confusion, in his decision, the arbitrator sometimes identified
January 17, 2007 as the effective date. See id. at 22, 28. This difference
ultimately is inconsequential.
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parties, provided it does not exceed the authority of the
arbitrator. The arbitrator’s authority shall be limited to the
application of this Agreement, and he/she shall have no
authority to render an award which amends, alters, or
modifies any provision of this Agreement.
Id. at 24 (emphasis added) (internal quotation marks omitted); see id. at 50. The
CBA’s Hours of Work and Compensation Article addressing call-in pay provides
in relevant part:
Occasionally, hourly personnel may be asked to return to work
after they have left the premises for the day. Once on site,
he/she may be required to perform more than one job,
however, pay will be based solely on the total number of hours
worked. If an employee is called in, he/she will be guaranteed
a minimum of four (4) hours pay 1X his/her base rate.
Id. at 25 (emphasis added) (internal quotation marks omitted); see id. at 60.
The arbitrator found that “[a]t the time the CBA became effective the
Company had a call in policy which consisted of calling mechanics when needed
on a rotational basis” starting with the mechanic who had the lowest hours. Id. at
26. Under this system, mechanics could decline to return and there was no
discipline for not responding. However, the arbitrator found that in 2003, out of a
desire to improve the call-in response, the Plant Engineer instituted a new policy
so that the plant could have better maintenance coverage of break-downs at the
plant. This new policy (“2003 Call-In Policy”) increased pay for certain hours to
“2X,” liberalized hours of work for mechanics who had to report during certain
hours, and allowed for the payment of one-half the mechanic’s hourly rate for
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travel time when he/she responded to a call in a timely manner. Id. The
document outlining these new procedures explained that CP Kelco was “applying
this policy on a non-precedent setting basis” and it “w[ould] be reviewed as
warranted by the Union/Management Committee.” Id.
Despite the institution of the 2003 Call-In Policy, the arbitrator found that,
in late 2005, the new Plant Engineer believed that the mechanics’ response to
call-ins was not what it should be and that they had responded inadequately to
two fires at the plant in December 2005. The Plant Engineer also noted that only
two mechanics were taking a majority of the call-ins under the voluntary system
and he was concerned that there could be break-downs to which no one would
respond.
In response to these perceived deficiencies, the Plant Engineer asked the
Team Leader to meet with the Union to discuss these problems and to work out a
“‘win-win’ solution to improve call-in responses.” Id. at 27. The arbitrator found
that the Team Leader and the Plant Engineer had discussions during 2006 with
one of the union stewards concerning a new call-in policy and sought input from
the mechanics. However, several meetings with the mechanics revealed that there
was “little interest” among them in revising the call-in policy. Id. Nonetheless,
the Union offered a proposal to the Plant Engineer in August 2006 and the Plant
Engineer indicated that he would have to take the proposal to the Human
Resources Manager. The Human Resources Manager, in either late November or
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early December 2006, told the Union Steward that the proposal was “a no-go”
because CP Kelco would not guarantee six hours of pay when a mechanic was
called in because that would exceed the amount of pay allowed for in the CBA’s
Hours of Work and Compensation Article addressing call-back pay. Id. (internal
quotation marks omitted). The Plant Engineer then published the 2007 Call-In
Policy, distributing it to the mechanics on January 5, 2007, and faxing it to the
Union office. As it was being distributed to the mechanics, one mechanic asked if
they would be receiving pay for carrying the pager outside of work hours and the
Plant Engineer said “no.” Id. at 28 (internal quotation marks omitted).
The arbitrator found that there was “nothing in the CBA which specifically
addresses ‘call-in policy’ procedures.” Id. at 35. He further found that while the
2003 Call-In Policy had been implemented without Union agreement, it had been
followed by the parties for four years without complaint, creating a “past
practice” that could not be changed unilaterally. Id. at 35. He also found that the
parties had “engaged in ‘bargaining’” over the 2003 Call-In Policy, but not over
the 2007 Call-In Policy. Id. at 36. He determined that “the language of Article
IX [Management Rights] does not provide the Company with the coverage it
seeks in defending its position on the 2007 Call-In Policy.” Id. at 35. Finally, the
arbitrator concluded that “the Company unilaterally implemented the 2007 Call-In
Policy in violation of its duty to bargain to revise its past practice. This, in
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general, would be a violation of the Management Rights Article of the CBA.” Id.
at 36.
In fashioning a remedy, the arbitrator suspended the 2007 Call-In Policy
and ordered the parties to follow the 2003 Call-In Policy, “subject to the parties
returning to the bargaining table to negotiate” any further changes. Id. at 37. He
also ordered CP Kelco to pay any employees who had been “‘paged’” and
“‘reported for duty’” under the 2007 Call-In Policy “as if ‘on the clock’ from the
time the page was received until they reported for duty.” Id. The arbitrator
ordered that “[t]his payment would be in addition to the contract provisions that
would be applicable for work performed thereafter.” Id.
Following the arbitrator’s decision, CP Kelco brought suit in the United
States District Court for the Eastern District of Oklahoma in an effort to vacate
the award, arguing that the arbitrator exceeded his authority under the CBA and
that his decision did not draw its essence from the CBA. In response, the Union
filed a motion to dismiss CP Kelco’s complaint in which it argued that courts are
not authorized to review the merits of labor-arbitration decisions. CP Kelco
responded that judicial review of arbitration decisions, while narrow, is permitted
and proper under federal law. Subsequently, CP Kelco moved for summary
judgment. Instead of filing a response to the summary judgment motion
addressing the arguments raised by CP Kelco, the Union filed a document styled,
“Defendant’s Motion to Summarily Dismiss Plaintiff’s Motion for Summary
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Judgment,” in which the Union reiterated its arguments regarding the scope of
judicial review of labor-arbitration decisions.
The district court decided to treat these pending motions as cross motions
for summary judgment. The court granted CP Kelco’s motion and denied the
Union’s motion. In its ruling, the district court acknowledged the narrow scope
of the available judicial review. However, the district court also explained that,
despite the Union’s protests to the contrary, “an arbitrator’s decision is not
entirely beyond the reach of the courts” because “his award is legitimate only so
long as it draws its essence from the collective bargaining agreement. When the
arbitrator’s words manifest an infidelity to this obligation, courts have no choice
but to refuse enforcement of the award.” Id. at 11 (Op. & Order Granting Summ.
J. in Favor of the Pl., filed Mar. 30, 2009) (internal quotation marks omitted).
Under that limited review, the district court held that “[t]he Court is satisfied that
the arbitrator’s decision in this case did not draw its essence from the collective
bargaining agreement between the parties.” Id. at 13. Instead, the district court
determined that the arbitration decision “drew its essence from the 2003 Call-In
Policy, which the arbitrator found was an enforceable past practice that CP Kelco
could not unilaterally alter or amend.” Id. The court emphasized that the
arbitrator was not using the 2003 Call-In Policy “as an aid to resolving
ambiguity” in the CBA; instead, the arbitrator’s decision “dr[ew] its essence
from the 2003 Call-In Policy.” Id. at 16, 17. The court therefore held that “the
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arbitrator exceeded his authority under the collective bargaining agreement and
rendered a decision inconsistent therewith.” Id. at 17. Consequently, the district
court vacated the arbitrator’s award and granted CP Kelco’s summary judgment
motion. The Union timely filed this appeal.
II. Discussion
The district court found that the arbitrator did not draw the essence of its
decision from the CBA. Instead, the district court held that the arbitrator’s
decision drew its essence from the 2003 Call-In Policy, considering it to be an
enforceable past practice that CP Kelco could not alter or amend unilaterally.
And the court reasoned that, by doing this, the arbitrator exceeded his authority
and impermissibly altered a provision of the CBA, namely, the Management
Rights Article. The court therefore vacated the arbitrator’s decision. We agree
with the district court’s conclusions and affirm.
We review a district court’s grant of summary judgment in labor-arbitration
cases de novo. Local No. 7 United Food & Commercial Workers Int’l Union v.
King Soopers, Inc., 222 F.3d 1223, 1226 (10th Cir. 2000); Kennecott Utah Copper
Corp. v. Becker, 195 F.3d 1201, 1204 (10th Cir. 1999). However, as the district
court acknowledged, judicial review of labor-arbitration awards is “among the
narrowest known to the law.” Champion Boxed Beef Co. v. Local No. 7 United
Food & Commercial Workers Int’l Union, 24 F.3d 86, 87 (10th Cir. 1994)
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(internal quotation marks omitted); see also Becker, 195 F.3d at 1204. This
limited review is
mandated by a strong Congressional policy of encouraging the
peaceful resolution of labor disputes by means of binding
arbitration . . . . [C]ourts decline to review the merits of
arbitration awards so that both employers and unions can be
confident in obtaining the decision of the arbitrator for which
they have bargained.
NCR Corp., E.M.-Wichita v. Int’l Assoc. of Machinists & Aerospace Workers, 906
F.2d 1499, 1504 (10th Cir. 1990) (citation omitted) (internal quotation marks
omitted). Under this narrow standard, “[t]he arbitrator’s factual findings are
beyond review, and, so long as the arbitrator does not ignore the plain language of
the collective bargaining agreement, so is his interpretation of the contract.”
Champion Boxed Beef Co., 24 F.3d at 87. An arbitrator’s factual findings are
beyond review even if “an arbitrator’s express factual finding[s] may have
ignored or contradicted some or even all of the evidence.” Kennecott Utah
Copper Corp. v. Becker, 186 F.3d 1261, 1269 (10th Cir. 1999). “[E]ven ‘serious
error’ on the arbitrator’s part does not justify overturning his decision, where . . .
he is construing a contract and acting within the scope of his authority.” Major
League Baseball Players Ass’n. v. Garvey, 532 U.S. 504, 510 (2001) (quoting
United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38 (1987)). In
saying that the merits of the arbitrator’s decision are not “open to review,” we
have explained that “[t]he merits [not open to review] embrace not only asserted
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errors in determining the credibility of witnesses, the weight to be given their
testimony, and the determination of factual issues, but also the construction and
application of the collective bargaining agreement.” Sterling Colo. Beef Co. v.
United Food & Commercial Workers, Local Union No. 7, 767 F.2d 718, 720 (10th
Cir. 1985) (internal quotation marks omitted).
Despite these extensive limitations, the district court correctly noted that an
arbitrator’s decision is not wholly beyond the reach of judicial review. “[A]n
arbitrator’s discretion, though entitled to ‘profound deference,’ is not unlimited.”
LB & B Assocs., Inc. v. Int’l Bhd. of Elec. Workers, Local No. 113, 461 F.3d
1195, 1197 (10th Cir. 2006) (citation omitted). The Supreme Court has stated
that
an arbitrator is confined to interpretation and application of the
collective bargaining agreement; he does not sit to dispense his
own brand of industrial justice. He may of course look for
guidance from many sources, yet his award is legitimate only
so long as it draws its essence from the collective bargaining
agreement. When the arbitrator’s words manifest an infidelity
to this obligation, courts have no choice but to refuse
enforcement of the award.
United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597
(1960). An award does not draw its essence from the collective bargaining
agreement if
it is contrary to the express language of the contract or is so
unfounded in reason and fact, so unconnected with the working
and purpose of the agreement as to manifest an infidelity to the
obligation of the arbitrator or if viewed in the light of its
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language, its context, and any other indicia of the parties’
intention, it is without factual support.
LB & B Assocs., 461 F.3d at 1197–98 (internal quotation marks omitted).
On appeal, CP Kelco convincingly argues that the arbitrator’s decision
conflicts with and improperly amends the CBA by considering and enforcing the
2003 Call-In Policy without first finding an aspect of the CBA to be ambiguous.
Although an arbitrator may resolve ambiguities that the arbitrator finds in the
collective bargaining agreement by considering extrinsic evidence like past
practices or the “law of the shop,” the arbitrator cannot use such evidence to alter
or rewrite an unambiguous provision in the collective bargaining agreement. See,
e.g., Champion Boxed Beef Co., 24 F.3d at 88–89 (“It is a well-recognized
principle that, except where expressly limited by a labor agreement, an arbitrator
may consider and rely upon extrinsic evidence, including negotiating and
contractual history of the parties, evidence of past practices, and the common law
of the shop, when interpreting ambiguous provisions.” (emphasis added)); see
also Star Tribune Co. v. Minn. Newspaper Guild Typographical Union, 450 F.3d
345, 348 (8th Cir. 2006) (holding that an arbitration decision may be vacated “if
the arbitrator ignored or disregarded the plain language of an unambiguous
contract or nullified a provision of the contract”). Therefore, the arbitrator in this
case could only rely upon the 2003 Call-In Policy as an interpretative aid if he
first found some provision of the CBA to be ambiguous. He did not do so.
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Rather, the arbitrator apparently believed he could resort to past practices as an
interpretive aid, even if such practices were inconsistent with the unambiguous
language of the CBA. See Aplt. App. at 34 (“The Company argued that this
arbitrator should be guided by the ‘Plain Meaning’ Rule thereby precluding any
consideration of evidence contrary to the literal language of the CBA. This
arbitrator cannot accept such a simple solution to labor disputes . . . .”). Although
the arbitrator acknowledged that “[t]here is nothing in the CBA which specifically
addresses ‘call-in policy’ procedures,” id. at 35, the arbitrator failed to recognize
that CP Kelco had reserved expressly the right to outline unilaterally such
procedures in the CBA’s Management Rights Article. For example, the
Management Rights Article granted CP Kelco the right to “establish and enforce
. . . policies . . . not inconsistent with this Agreement” and the right to “establish
and to alter from time to time reasonable work and shop rules and regulations.”
Id. at 24, 46. The arbitrator erroneously imposed a new condition on these rights
when he determined that CP Kelco was required to negotiate to an impasse over
the implementation of the 2007 Call-In Policy. By imposing this new condition
on unilateral management rights, the arbitrator created a conflict with, and
improperly amended, an unambiguous provision of the CBA—that is, the
Management Rights Article.
In addition, the parties themselves incorporated limits to the arbitrator’s
authority within the CBA’s Grievance Procedures Article. As the arbitrator
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found, the CBA expressly limits the arbitrator’s authority “to the application of
this Agreement, and he/she shall have no authority to render an award which
amends, alters, or modifies any provision of this Agreement.” 3 Id. at 24, 50. As
the CBA expressly recognizes, the arbitrator had no authority to amend the
Management Rights Article to require CP Kelco to bargain to an impasse with the
Union before issuing a policy or work rule. 4 Therefore, the arbitrator exceeded
3
The Union does not address this contractual limit despite the fact that
CP Kelco relied upon that language in part in its motion to vacate.
4
For the first time on appeal, the Union argues that the 2007 Call-In
Policy was not a work or shop rule. However, we do not consider arguments
raised for the first time on appeal absent extraordinary circumstances. Turner v.
Pub. Serv. Co. of Colo., 563 F.3d 1136, 1143 (10th Cir. 2009). The Union has
demonstrated no extraordinary circumstances.
The Union also attempts to raise other arguments on appeal for the first
time. In particular, the Union attempts to expand its challenge to the district
court’s decision beyond its previous reliance on the narrow scope of judicial
review as the sole basis for its challenge. The Union now argues that: (1) the
arbitrator relied on past practices to fashion its remedy and did not rely on past
practices in reaching its conclusion on the merits; (2) the CBA was ambiguous
and so the arbitrator properly interpreted it through application of statutory-
interpretation principles; and (3) there is an alternative interpretation of the
“essence” test that the district court should have considered. However, our
independent review of the record confirms CP Kelco’s contention that the Union
failed to raise any of these arguments below. In fact, in response to questioning
at oral argument, the Union admitted that it had not made at least one of these
arguments before the district court—viz., its statutory-interpretation argument.
As previously suggested above, it is well-settled that we generally will not
consider arguments or issues raised for the first time on appeal. See, e.g., id. at
1143 (“Absent extraordinary circumstances, we will not consider arguments
raised for the first time on appeal.”); Utah Envtl. Congress v. Russell, 518 F.3d
817, 828–29 (10th Cir. 2008) (“Generally, we do not consider issues not
presented to, considered and decided by the trial court because an appellant’s new
(continued...)
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his authority in imposing this additional requirement and it was proper for the
district court to vacate the arbitration award. 5
III. Conclusion
Because the arbitrator exceeded his authority by not drawing his decision
from the essence of the CBA and by impermissibly amending the Management
Rights Article, we AFFIRM the district court’s vacation of the arbitrator’s award
and its grant of summary judgment in favor of CP Kelco.
ENTERED FOR THE COURT
Jerome A. Holmes
Circuit Judge
(...continued)
argument gives rise to a host of new issues, and [Appellee] had no opportunity to
present evidence it may have thought relevant to these issues.” (alteration in
original) (citation omitted) (internal quotation marks omitted)); McDonald v.
Kinder-Morgan, Inc., 287 F.3d 992, 999 (10th Cir. 2002) (“[W]e will not consider
arguments raised for the first time on appeal. This is true whether an appellant is
attempting to raise a bald-faced new issue or a new theory on appeal that falls
under the same general category as an argument presented at trial.” (citation
omitted) (internal quotation marks omitted)). The Union has not convinced us
that extraordinary circumstances exist that would overcome our reluctance to
reach these additional arguments.
5
Because we have determined that the arbitrator exceeded his
authority, we need not address CP Kelco’s assertion that the arbitrator erred in
finding that CP Kelco had engaged in negotiations over the 2003 Call-In Policy,
but not over the 2007 Call-In Policy, given the arbitrator’s allegedly similar
description of the events leading up to the development of both policies.
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CP Kelco US, Inc. v. International Union of Operating Engineers
Court: Court of Appeals for the Tenth Circuit
Date filed: 2010-06-03
Citations: 381 F. App'x 808
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