RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 10a0304p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellant, -
EQUITABLE RESOURCES, INC.,
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No. 08-6444
v.
,
>
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RUBBER, MANUFACTURING, ENERGY, ALLIED -
UNITED STEEL, PAPER AND FORESTRY,
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INDUSTRIAL AND SERVICE WORKERS
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INTERNATIONAL UNION, AFL-CIO/CLC;
Defendants-Appellees. -
LOCAL 8-512,
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N
Appeal from the United States District Court
for the Eastern District of Kentucky at Pikeville.
No. 08-00151—Amul R. Thapar, District Judge.
Argued: March 11, 2010
Decided and Filed: September 16, 2010
Before: KENNEDY, MOORE, and SUTTON, Circuit Judges.
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COUNSEL
ARGUED: J. Richard Hammett, BAKER & McKENZIE LLP, Houston, Texas, for
Appellant. Daniel M. Kovalik, UNITED STEELWORKERS OF AMERICA,
Pittsburgh, Pennsylvania, for Appellees. ON BRIEF: J. Richard Hammett, BAKER &
McKENZIE LLP, Houston, Texas, Jaron P. Blandford, McBRAYER, McGINNIS,
LESLIE & KIRKLAND, PLLC, Lexington, Kentucky, for Appellant. Daniel M.
Kovalik, UNITED STEELWORKERS OF AMERICA, Pittsburgh, Pennsylvania,
Adrienne A. Berry, SEGAL, LINDSAY & JANES, PLLC, Louisville, Kentucky, for
Appellees.
MOORE, J., delivered the opinion of the court, in which SUTTON, J., joined.
KENNEDY, J. (p. 21), delivered a separate concurring opinion.
1
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OPINION
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KAREN NELSON MOORE, Circuit Judge. In this case under § 301 of the
Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185, Equitable
Resources, Inc. (“Equitable”) challenges the district court’s order enforcing an
arbitration award entered in favor of the United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers International Union,
AFL-CIO/CLC and its Local 8-512 (collectively, the “Union”). In early 2008, Equitable
announced its plan to “integrate” the operations and employees of one of its wholly
owned subsidiaries, Kentucky West Virginia Gas Company, L.L.C. (“Kentucky West”)
into two other wholly owned subsidiaries operating in Kentucky. Following
announcement of the integration, in June 2008 the Union filed suit in the United States
District Court for the Eastern District of Kentucky to compel Equitable and Kentucky
West to arbitrate successorship issues under the Union’s then-current collective
bargaining agreement with Kentucky West (the “CBA”). The CBA included a
successorship clause stating that Kentucky West agreed to make any “sale, lease,
transfer, or assignment” of “the operations covered by this Agreement” conditional upon
the successor entity assuming the CBA. The district court dismissed the Union’s action
after Equitable and the Union agreed to arbitrate the successorship issues under the
CBA. Equitable moved forward with its corporate restructuring plan, and, effective July
1, 2008, Kentucky West ceased to exist.
Equitable, purporting to represent Kentucky West’s interests, appeared at the
arbitration. On July 21, 2008, the arbitrator entered an award in favor of the Union that
required Equitable to abide by the CBA until it expired in October 2008 (the “Award”).
The arbitrator concluded as a matter of contract interpretation that the restructuring
triggered the CBA’s successorship clause and reasoned that Equitable could be liable
under the clause for multiple reasons, including Equitable’s status as the entity that
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assumed Kentucky West’s legal obligations after it ceased to exist July 1st, as Kentucky
West’s alter ego, and as the entity that received Kentucky West’s operations after July
1st. Equitable then filed the instant complaint under § 301 of the LMRA to vacate or
modify the Award, alleging multiple defects in the Award. The Union counterclaimed
for enforcement of the Award and filed a cross-motion for summary judgment. The
district court granted summary judgment in favor of the Union, enforcing the Award.
On appeal, Equitable argues that the district court erred in enforcing the Award
because the arbitrator exceeded his authority in ordering Equitable, a non-party to the
CBA, to honor the CBA as the remedy for Kentucky West’s breach of the successorship
clause, which resulted in multiple alleged defects in the Award. Guided by the highly
deferential standard of review for arbitration awards that interpret a collective bargaining
agreement outlined in Michigan Family Resources, Inc. v. Service Employees
International Union, 475 F.3d 746 (6th Cir.) (en banc), cert. denied, 551 U.S. 1132
(2007), we affirm the district court’s order enforcing the Award.
I. FACTS AND PROCEDURE
The Union entered into the CBA with Kentucky West—defined as “a Delaware
limited liability company and subsidiary of Equitable Resources, Inc.”—effective
October 16, 2003 through October 15, 2008. Doc. 8 (Answer), Ex. 1 (CBA at 1, 44).
The CBA includes successorship language in Section 1 of Article II “RECOGNITION”:
The Company agrees that if during the life of this Agreement, it
discontinues operations, sells, leases, transfers or assigns the operations
covered by this Agreement, it shall inform the purchaser, lessee,
transferee or assignees of the exact terms of this Agreement and shall
make the sale, lease, transfer, or assignment conditional upon the
purchaser, lessee, transferee, or assignee, assuming all the obligations of
the Agreement until its expiration date and treating affected employees
of the Bargaining Unit in accordance with the terms of this Agreement.
The Company agrees to provide the Union with written notice when the
transaction is complete and the Agreement is assumed.
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Id. at 2. Article X “GRIEVANCE AND ARBITRATION” dictates the manner for
resolving “any difference . . . between the parties or between any one or more of the
employees and the Company relating to the meaning, application, or violation of any
provisions of this agreement.” Id. at 39. Article X further dictates the “Jurisdiction of
[the] Arbitrator,” stating, “The arbitrator shall have jurisdiction and authority only to
interpret, apply, or determine compliance with the provisions of this agreement, and will
not have authority to add to or detract or alter any provisions of this agreement. The
arbitrator’s decision will be final and binding on both parties.” Id. at 40.
In early 2008, Equitable announced that it was undertaking a “corporate
restructuring” for efficiency purposes that would eliminate Kentucky West and move its
operations and employees to two wholly owned non-union subsidiaries of Equitable,
Equitable Midstream and Equitable Productions (both of which had undergone
operations changes prior to January 1, 2008). Under this plan, Kentucky West would
cease to exist effective July 1, 2008. The Union filed a grievance with Kentucky West
on March 7, 2008, and then an amended grievance on May 16. On May 23, 2008,
Equitable responded to the Union, stating that the grievance was non-arbitrable. The
Union then filed suit in the district court under § 301 of the LMRA, requesting a
preliminary injunction to stay the restructuring and compel arbitration with Kentucky
West so that the Union would be able to arbitrate with Kentucky West or Equitable
without either party being able to argue that arbitration was no longer available under
the CBA. After telephonic conference calls with the district court, the parties agreed to
settle by submitting the case to arbitration, and the Union withdrew its suit.
Arbitration was held on July 8, 2008. As stated in the Award, the question
presented to the arbitrator was: “Did the Company [Kentucky West] violate the
collective bargaining agreement when it refused to secure an assurance from its parent
company, Equitable Resources, Inc.[,] that the agreement would be honored after the
Company’s assets were transferred to a new entity? If so what shall the remedy be?”
Doc. 8 (Answer), Ex. 5 (Award at 2). The arbitrator found that the predecessor language
to Article II, Section 1 that was included following negotiations in 2000 made it “clear
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and unambiguous on its face [that it] . . . applies to any such wholesale transfer of work”
and that “[o]n its face this applies to both external and internal transfers.” Id. at 11. The
arbitrator concluded that “it was clear that insofar as this contract was concerned, the
prospect of th[is] very sort of internal transfer was contemplated by the terms of Article
II. The clear understanding was that this was a condition precedent to this transfer and
that Equitable understood and agreed to this as well.” Id. at 19.
The arbitrator found that “[i]t is of some significance that while [Kentucky West]
is referenced in the preamble as the ‘Company’ it is also identified as a ‘subsidiary of
Equitable Resources, Inc.’” Id. at 12. The arbitrator found that
What was clear was that Equitable representatives sat at the
negotiating table, participated in the negotiations actively and in fact
were in reality the ones making most if not all of the decisions regarding
the substantive terms of the labor agreement in the bargaining leading up
to the current labor agreement.
What is also clear, and this too was not controverted by the
Company at the hearing, is that at least for purposes of these
negotiations, the two Companies acted very much as though they were
one. Certainly as a factual determination, it was quite clear that
Equitable knew and agreed to the terms of the labor agreement and it was
based on that expression of agreement that the Union signed the current
labor agreement.
Id. at 18–19 (citation omitted). The arbitrator reviewed and distinguished prior
arbitrations between Kentucky West and the Union and concluded that none dictated the
outcome here because none had dealt with a similar situation that fell squarely within
Article II, Section 1 as a transfer of the entire operations of Kentucky West to another
entity. Id. at 12–18.
The arbitrator supported his ability to arbitrate the dispute after Kentucky West
ceased to exist under John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964), NLRB
v. Burns International Security Services, Inc., 406 U.S. 272 (1972), and Howard Johnson
v. Detroit Joint Executive Board HERE, 417 U.S. 249 (1974). Id. at 20–25. In his
discussion, the arbitrator in part premised his ability to bind Equitable to the CBA on the
theory that Equitable was the successor entity and had agreed to be bound by the CBA
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during its negotiations—“Here it was clear that Equitable directed and was responsible
for the merger with [Kentucky West] and that its representatives sat at the bargaining
table and negotiated the successorship clause which by its very terms purports to bind
Equitable as a condition precedent to the merger.” Id. at 22, 35 (referring to Equitable
“as the successor employer to [Kentucky West]”). The arbitrator also found that
Equitable was Kentucky West’s alter ego—“it is determined that even though the two
corporations are legally separate, Equitable was in fact, for purposes of the negotiations
leading to the CBA and for this determination the alter ego of [Kentucky West] and was
therefore expressly bound by the terms of the successorship clause found at Article II,
section 1 of the parties’ labor agreement.” Id. at 29. The arbitrator found “fairly
transparent” Equitable’s “argument that the ‘parent’ company really did this is [sic] and
therefore cannot be bound by the agreements its wholly owned subsidiary agreed to in
good faith at the bargaining table.” Id. at 35.
The arbitrator ultimately concluded that
The terms [of Article II, Section 1] apply to any transferee, such as a
subsidiary of Equitable and it frankly makes no difference what entity the
assets are sold to or merged with. The contract is hereby interpreted to
apply as a condition precedent to any such transfer including one to
another Equitable subsidiary.
....
The only logical reading of the language of Article II section 1 is that
even if the parent made the decision to require [Kentucky West] to
transfer it[s] assets, either inside or outside of the Equitable stable of
companies, the conditions precedent to such a transfer would be for
[Kentucky West] to assure that the terms of the agreement were honored.
. . . This again is a matter of contract and the clear terms requiring such
assurance prior to the transfer.
Accordingly, for the reasons stated herein, it is determined that
the plain and unambiguous terms of the agreement at Article II section
1 required Equitable, as the successor employer to [Kentucky West], to
honor all of the terms and conditions of the labor agreement between
[Kentucky West] and the Union herein until its expiration on October 15,
2008 for the former [Kentucky West] employees covered under that
agreement.
Id. at 34–35.
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Equitable filed the instant suit in the district court on August 1, 2008, seeking to
vacate the Award. The Union counterclaimed for enforcement and filed a motion for
summary judgment; Equitable filed a cross-motion for summary judgment. The district
court granted summary judgment to the Union and affirmed the Award “[f]or the reasons
stated on the record and for those provided by the [Union] in their briefs.” Doc. 25 at
1 (Dist. Ct. Minute Entry & Order). Equitable timely appeals from the district court’s
summary-judgment order.1
II. ANALYSIS
Equitable claims that the Award is defective for four separate reasons. First,
Equitable asserts that the arbitrator acted outside of his authority by imposing the CBA
on non-parties. Second, Equitable asserts that the arbitrator necessarily resolved a labor
representation dispute not committed to arbitration. Third, Equitable argues that the
remedy the Award dictates will violate public policy in implementation. And finally,
Equitable contends that the arbitrator “dispensed his own brand of industrial justice.”
We will address, and reject, each of Equitable’s contentions in turn.
A. Standard of Review
“This [c]ourt reviews a district court’s grant of summary judgment in a labor
arbitration dispute de novo,” applying the same standard of review that we employ in
other summary judgment cases. Totes Isotoner Corp. v. Int’l Chem. Workers Union
Council/UFCW Local 664C, 532 F.3d 405, 410 (6th Cir. 2008). However, we afford
great deference to the arbitrator’s decision:
In an appeal from an arbitrator’s decision interpreting a collective
bargaining agreement, our review is confined to ascertaining whether the
arbitrator erred. In doing so, we apply the highly deferential standard of
1
The district court entered a subsequent order remanding the matter to the arbitrator for
clarification of the CBA’s expiration date pursuant to the Union’s timely Rule 59(e) motion. The district
court then ruled that its summary-judgment order was a final and appealable order not displaced by this
later remand order, and Equitable filed its notice of appeal from the summary-judgment order. (The
propriety of the remand order is not before us on appeal.) We have jurisdiction to review the summary-
judgment order. M & C Corp. v. Erwin Behr GmbH & Co., KG, 326 F.3d 772, 779–81 (6th Cir. 2003).
No. 08-6444 Equitable Resources v. United Steel, Paper Page 8
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Michigan Family Resources and uphold the arbitrator’s decision so long
as she was “arguably construing or applying the contract” and was not
disqualified by fraud or a conflict of interest.
Nance v. Goodyear Tire & Rubber Co., 527 F.3d 539, 551 (6th Cir. 2008) (quoting
Mich. Family Res., Inc. v. Serv. Employees Int’l Union, 475 F.3d 746, 753 (6th Cir.) (en
banc), cert. denied, 551 U.S. 1132 (2007)), cert. denied, 129 S. Ct. 1319 (2009). We
must affirm the arbitrator’s decision even if we believe that “‘the arbitrator made
“serious,” “improvident” or “silly” errors in resolving the merits of the dispute,’” which
“allow[s us] to vacate ‘only the most egregious [arbitral] awards.’” Id. at 552 (quoting
Mich. Family Res., 475 F.3d at 753) (second alteration in original). For disputes
required to be arbitrated under a collective bargaining agreement, “the underlying
‘question of contract interpretation [is] for the arbitrator.’” Mich. Family Res., 475 F.3d
at 750 (quoting United Steelworkers v. Am. Mfg. Co., 363 U.S. 564, 568 (1960)).
Keeping in mind our very “‘limited role’ when the losing party to an arbitration seeks
judicial intervention,’” id. at 752 (quoting United Paperworkers Int’l Union v. Misco,
Inc., 484 U.S. 29, 36 (1987)), our scope of review is confined to answering three
questions related to “procedural aberration”:
Did the arbitrator act “outside his authority” by resolving a dispute not
committed to arbitration? Did the arbitrator commit fraud, have a
conflict of interest or otherwise act dishonestly in issuing the award?
And in resolving any legal or factual disputes in the case, was the
arbitrator “arguably construing or applying the contract”?
Id. at 753. “[W]here it is contemplated that the arbitrator will determine remedies for
contract violations that he finds, courts have no authority to disagree with his honest
judgment in that respect.” Misco, 484 U.S. at 38.
B. The Arbitrator Did Not Exceed His Authority by Creating Parties to the CBA
“An arbitrator does not exceed his authority every time he makes an interpretive
error; he exceeds that authority only when the collective bargaining agreement does not
commit the dispute to arbitration.” Mich. Family Res., 475 F.3d at 756. This approach
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“‘severely curtail[s] the scope of authority concept’” such that an award should not be
vacated unless “an arbitrator reaches a question not committed to him by the parties.”
Totes Isotoner, 532 F.3d at 414–15 (quoting Truck Drivers Local No. 164 v. Allied
Waste Sys., 512 F.3d 211, 217 (6th Cir. 2008) (internal quotation marks omitted)).
Equitable does not argue that the arbitrator exceeded his authority in finding that
Kentucky West breached the CBA, and indeed conceded this at the summary judgment
hearing. Doc. 27 (Summ. J. Tr. at 14–15). Instead, Equitable argues that the arbitrator
exceeded his authority in ordering Equitable to honor the CBA as the remedy for
Kentucky West’s breach because Equitable is not a party to the CBA. Id. at 61. The
district court rejected this argument, concluding that “[e]ven if wrong in determining the
terms or parties to the contract, that is a legal error” that the court could not fix. Id. at
89. The district court further found that the arbitrator’s factual finding that Equitable
agreed to step into the shoes of Kentucky West for purposes of the arbitration and any
remedy was supported,2 and that this finding of fact was made as part of the arbitrator’s
contract interpretation. Id. at 89–92. The district court concluded that Equitable put the
question of whether it was bound by the CBA “clearly, squarely before the arbitrator and
he rejected [Equitable’s argument].” Id. at 92.
The Award states the question presented to the arbitrator as: “Did the Company
[Kentucky West] violate the collective bargaining agreement when it refused to secure
an assurance from its parent company, Equitable Resources, Inc.[,] that the agreement
would be honored after the Company’s assets were transferred to a new entity? If so
what shall the remedy be?” Doc. 8 (Answer), Ex. 5 (Award at 2). In its complaint,
Equitable stated that
The primary issues at the arbitration were: (1) whether the core issues
of representation raised by the Union’s grievance render it unarbitrable;
2
Before the district court, Equitable maintained that Kentucky West was the entity that was
arbitrating with the Union because Equitable had sent representatives on behalf of Kentucky West, which
ceased to exist as a legal entity after July 1, so that Kentucky West could “fulfill[] its obligation” as the
party to the CBA. Doc. 27 (Summ. J. Tr. at 4–5) (“Equitable was there on behalf of its former subsidiary,
because any contractual, any legal obligations that Kentucky West had under the collective bargaining
agreement, Equitable was standing in the shoes of Kentucky West for that purposes [sic], but it was not
expanding the collective bargaining agreement to cover anyone other than Kentucky West.”).
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(2) whether Kentucky West breached Article II Section 1 of the . . . CBA
when Equitable imposed a corporate-wide restructuring; and (3) if a
breach is found, whether there are any monetary damages for the time
period from July 1, 2008 through October 15, 2008.
Doc. 1 (Compl. at 3). The Union stated in its motion for summary judgment that the
parties effectively submitted four questions to the arbitrator:
(1) Whether the dispute was arbitrable? (2) Whether the [CBA] or its
successorship provisions bound the parent company, Equitable and/or its
other non-union subsidiaries, as well as its subsidiary [Kentucky West]?
(3) [W]hether the [CBA] was violated by the transaction at issue? and
(4) [I]f Equitable or [Kentucky West] had violated their obligations under
the agreement, what should the remedy be?
Doc. 14 (Union Summ. J. Mot. at 4–5 (citations omitted)). These statements reflect the
issue statements each party submitted to the arbitrator in their pre-hearing briefs.
We conclude that the arbitrator’s determination that Equitable could be held
liable under the terms of the CBA was a question of contract interpretation that the
parties submitted to the arbitrator. The errors that Equitable alleges the arbitrator made
are errors of law based on findings of fact—that the arbitrator could not have entered the
Award if he had correctly interpreted the contract under precedent. However, the
arbitrator repeatedly stated that his conclusions were grounded in his interpretation of
the contract. See, e.g., Doc. 8 (Answer), Ex. 5 (Award at 26) (“[T]his matter is one
which remains a matter of contract: did Equitable agree to be bound by the terms of the
existing labor agreement between the Union and [Kentucky West].”). The Award “has
all the hallmarks of interpretation[;] [h]e refers to, quotes from and analyzes the pertinent
provisions of the agreement, and at no point does he say anything indicating that he was
doing anything other than trying to reach a good-faith interpretation of the contract.”
Mich. Family Res., 475 F.3d at 754. The arbitrator reasoned that Equitable could be
liable under Article II, Section 1 for multiple reasons, including as the entity that
assumed Kentucky West’s legal obligations after it ceased to exist July 1st, as Kentucky
West’s alter ego, and as the entity that received Kentucky West’s operations after July
1st. Contrary to Equitable’s contention, the arbitrator’s interpretation of the CBA did
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not actually make Equitable or others a “party” to the CBA; the arbitrator determined in
his interpretation of the CBA that the parties intended Article II, Section 1 to be
triggered by the instant transaction and that Equitable, through Kentucky West, was
bound by these terms.
First, the arbitrator interpreted Article II, Section 1 to manifest clearly the intent
of the parties—the Union, Kentucky West, and Equitable, as a participant in the CBA
negotiations and prior negotiations—that any internal or external transfer of Kentucky
West’s operations would require Kentucky West to secure compliance with Article II,
Section 1 as a condition precedent, regardless of who or what was the “successor” entity.
Doc. 8 (Answer), Ex. 5 (Award at 11–12). With this interpretation, the arbitrator
determined that Kentucky West violated the provision when Equitable’s restructuring
took place. The arbitrator then had to determine who was liable for this violation. The
arbitrator addressed and distinguished all of the prior arbitration awards and NLRB
rulings that Equitable cites on appeal. Id. at 12–18 (“It is significant that in none of the
prior awards was the complete and total loss of the unit involved. . . . Here the question
is whether the terms of the agreement must be honored by the successor entity as a
precondition of the sale. As discussed herein, there is no limitation on whether the
successor entity is internal or external[;] the integration cannot occur without the
provisions of Article II being triggered.”); id. at 30–31. Distinguishing “a true arms
length transaction,” the arbitrator specifically found that Equitable “knew and agreed to
the terms of the [CBA],” that the contract contemplated the type of internal transfer at
issue, and that “[t]he clear understanding was that [Article II, Section 1] was a condition
precedent to this transfer and that Equitable understood and agreed to this as well.” Id.
at 19. The arbitrator rejected Equitable’s argument that representational issues precluded
arbitrability, finding support under Supreme Court precedents to arbitrate the dispute
after Kentucky West ceased to exist. Id. at 20–25.
We acknowledge that the arbitrator was influenced by the facts and
circumstances here—“that the successor through its actions and express statements made
by its authorized representatives at the bargaining table in fact did agree to b[e] bound
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by the terms of the predecessor’s labor agreement and did in fact assume those
responsibilities.” Id. at 21, 23–24. But, as the arbitrator concluded,
this case is not governed necessarily by operation of law or by NLRB
precedent, although those considerations are relevant, it is governed by
the terms of the contract agreed to by the parties. The one fact that
comes through this case like a bolt of lightening [sic] is that the parties
negotiated for this very scenario and agreed, with Equitable
representatives a part of that[] agreement, that the terms of the CBA
would be honored. The bottom line on this entire case is that the
collective bargaining agreement survived the merger between [Kentucky
West] and Equitable because the parties, including Equitable, agreed that
it would.
Id. at 25 (first emphasis added). Further, the arbitrator found that
the essential facts in this case demonstrate a very clear intent that
Equitable as the parent company of [Kentucky West] in the first place
and the surviving company for all the [Kentucky West] operations and
all of its employees intended through the operation of the successorship
clause to be bound by it[s] terms for the former [Kentucky West]
employees. This does make it a matter of contractual interpretation and
thus appears to invoke the Courts’ authority to order arbitration under the
contract.
Id. at 27. Even with his finding that Equitable was liable as the parent and legal
successor, the arbitrator proceeded to find that Equitable had both an express and
implied obligation to honor the terms of the prior agreement as the successor based on
the “clear contractual terms” and “the facts” of the negotiations. Id. at 32. Although
Equitable is correct that the arbitrator did point to evidence from the 2000 negotiations,
the arbitrator prefaced his reference to this evidence with language showing that he
understood its limited evidentiary value, stating that it merely supported his earlier
findings interpreting the CBA.3 Id. at 33–34.
3
We note that this is consistent with the Second Circuit’s recognition that a non-signatory to an
agreement to arbitrate may be bound by an arbitral award if the signatory can “‘establish at least one of
the five theories described in Thomson-CSF[, S.A. v. American Arbitration Association, 64 F.3d 773, 776
(2d Cir. 1995)]:’ ‘1) incorporation by reference; 2) assumption; 3) agency; 4) veil-piercing/alter ego; and
5) estoppel.’” Local Union No. 38, Sheet Metal Workers’ Int’l Ass’n v. Custom Air Sys., Inc., 357 F.3d
266, 268 (2d Cir. 2004) (quoting Merrill Lynch Inv. Managers v. Optibase, 337 F.3d 125, 131, 129 (2d
Cir. 2003) (internal quotation marks and alteration omitted)) (vacating and remanding for threshold
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From our review of the Award, we conclude that the arbitrator was “arguably
construing or applying the contract” in the manner he deemed required to resolve the
dispute the parties placed before him. See Mich. Family Res., 475 F.3d at 753 (internal
quotation marks omitted). Any legal or factual errors that the arbitrator may have
committed related to “alter ego” status or “successor” terminology4 were related to his
contract interpretation and application attempts and did not exceed his authority.
“[W]hen ‘an arbitrator resolves disputes regarding the application of a contract, and no
dishonesty 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 752
(quoting Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001)
(internal quotation marks omitted)).
Without considering the concessions that the Union has urged us to accept
regarding Equitable’s representation of Kentucky West before the district court and the
arbitrator, we conclude that the arbitrator did not exceed the scope of his authority in
determining whether Equitable was liable for Kentucky West’s breach under the CBA
once he determined that a breach of the CBA did occur. “[W]hen a contract is
scrutinized for evidence of an intention to arbitrate a particular kind of dispute, national
labor policy requires, within reason, that an interpretation that covers the asserted
dispute be favored.” John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 550 n.4
(1964) (internal quotation marks omitted); id. at 554 (finding that specific arbitration
issues can raise a broader question of the effect of a merger). Further, “[t]he
extraordinary deference given to an arbitrator’s ultimate decision on the merits applies
determination of whether non-signatory was alter ego).
4
Even if we could review the arbitrator’s legal conclusion, we would do so under the “‘more
relaxed, less exacting’ application of the alter ego doctrine [used] ‘[i]n order to effectuate federal labor
policies.’” Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571, 587, 586–89 (6th Cir.) (quoting NLRB v.
Fullerton Transfer & Storage Ltd., Inc., 910 F.2d 331, 336 (6th Cir. 1990)) (second alteration in original),
cert. denied, 549 U.S. 1019 (2006). “To determine alter ego status in this situation, courts ask ‘whether
the two enterprises have substantially identical management, business, purpose, operation, equipment,
customers, supervision and ownership.’” Id. at 587 (quoting Fullerton Transfer & Storage Ltd., 910 F.2d
at 336). In Yolton, we noted that “even when a reorganization is supported by legitimate reasons, the
employer may be prevented from avoiding its prior labor obligations.” Id. at 587 n.14; see also Southward
v. S. Cent. Ready Mix Supply Corp., 7 F.3d 487, 493–97 (6th Cir. 1993) (discussing cases regarding alter
ego and successorship).
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equally to an arbitrator’s threshold decision that the parties have indeed submitted a
particular issue for arbitration.” Int’l Ass’n of Machinists & Aerospace Workers v. Tenn.
Valley Auth., 155 F.3d 767, 772 (6th Cir. 1998) (internal quotation marks omitted).
Because it is not “clear” that the arbitrator exceeded the scope of the issue
submitted in determining whether Equitable could be liable for the breach, we cannot
overturn the Award on this basis. Id. This dispute is not one that is without any basis
in the CBA. See Mich. Family Res., 475 F.3d at 753; Dobson Indus., Inc. v. Iron
Workers Local Union No. 25, 237 F. App’x 39, 47 (6th Cir. 2007) (unpublished opinion)
(upholding arbitration award because making the contested determination was “a
reasonable way to determine whether that party is violating that clause” and is “arguably
construing” the contract); Peterbilt Motors Co. v. UAW Int’l Union, 219 F. App’x 434,
436–38 (6th Cir. 2007) (unpublished opinion). The Award represents the arbitrator’s
legal and factual findings under the CBA—“an arbitrator’s award may only be deemed
to have not drawn its essence from the collective bargaining agreement when it conflicts
with express terms of the agreement, imposes additional requirements that are not
expressly provided in the agreement, or cannot be rationally derived from the terms of
the agreement.” Int’l Ass’n, 155 F.3d at 771 (internal quotation marks omitted). Any
ambiguity in the collective bargaining agreement “permitted, indeed required, the
arbitrator to engage in construction of the agreement, which is all we are asked to
determine.” Mich. Family Res., 475 F.3d at 755. Even if we concluded “[t]hat he chose
the wrong path in justifying the award” that would “not give us a warrant to vacate it.”
Id. Therefore we conclude that the arbitrator did not exceed the scope of his authority
by interpreting the CBA in a way that allowed Equitable to be found liable for the
breach.
C. The Arbitrator Did Not Exceed His Authority to Resolve Representational
Questions
Although the arbitrator rejected Equitable’s argument that representational issues
precluded arbitrability, Equitable asserts that the arbitrator necessarily had to decide
representational issues to create the specific-performance remedy, and that
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representation issues are outside of an arbitrator’s authority and thus were not within the
scope of the issue presented. “Although the federal courts without question indulge in
a presumption in favor of arbitration, the arbitrator, in determining arbitrability, is
constrained by the principle that a party may not be forced to arbitrate any dispute that
it has not, by contract, obligated itself to arbitrate.” Peterbilt Motors Co., 219 F. App’x
at 436 (citing Mich. Family Res., 475 F.3d at 750–51; United Steelworkers v. Mead
Corp., 21 F.3d 128, 131 (6th Cir. 1994)). The arbitrator is not “free to invent contract
provisions that will support a finding of arbitrability.” Id. at 437.
The district court found that the arbitrator made a legal decision to treat the issue
of whether Equitable was bound as a successor as a contract interpretation issue and not
as a representational issue under labor law. Doc. 27 (Summ. J. Tr. at 92–93). Indeed,
the arbitrator repeatedly stated that he was dealing with a question of contract
interpretation—“this matter is one which remains a matter of contract: did Equitable
agree to be bound by the terms of the existing labor agreement between the Union and
[Kentucky West].” Doc. 8 (Answer), Ex. 5 (Award at 26). We agree with the
arbitrator’s conclusion that he did not necessarily have to decide the representation
issues Equitable raised in order to interpret the CBA and impose a remedy because the
arbitrator imposed specific performance on Equitable as the stand-in for Kentucky West.
Contrary to Equitable’s contention, our unpublished opinion in Dobson Industrial, Inc.
v. Iron Workers Local Union No. 25 does not require the opposite conclusion. In
construing the contract in Dobson, the arbitrator determined that it must also determine
whether an alter ego relationship existed, which the company asserted raised an
impermissible representation issue that the arbitrator decided against the company.
Dobson Indus., 237 F. App’x at 44–46. However, because the potential representation
issue arose within the contract interpretation, we concluded in Dobson that the
arbitrator’s decision “drew its essence from the contract” and, in light of a broad
arbitration clause similar to the one in the CBA here, the issue could be decided in
arbitration. Id. at 46. The same reasoning applies here. As the district court found, the
arbitrator only ordered Equitable to honor the CBA, and “[i]t’s for the company to figure
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out in that scenario how to do it legally” without running afoul of majority status or unit
appropriateness issues. Doc. 27 (Summ. J. Tr. at 55).
Moreover, that an arbitrator may have “implicitly” decided a representational
issue does not necessarily mean that he exceeded his authority because collateral
representational issues may remain outside the NLRB’s exclusive jurisdiction. “When
a dispute is ‘primarily representational’ under § 7 or § 8 of the National Labor Relations
Act, ‘simply referring to the claim as a “breach of contract” [is] insufficient for the
purposes of § 301 federal courts’ jurisdiction,’ but ‘matter[s] primarily of contract
interpretation, whi[ch] potentially implicat[e] representational issues,’ remain within the
federal courts’ § 301 jurisdiction.” Int’l Bhd. of Elec. Workers, Local 71 v. Trafftech,
Inc., 461 F.3d 690, 694–95 (6th Cir. 2006) (quoting Paper, Allied-Industrial, Chem. &
Energy Workers Int’l Union v. Air Prods. & Chems., Inc., 300 F.3d 667, 672, 675 (6th
Cir. 2002)) (alterations in original). There are “two types of situations in which a
dispute will be treated as primarily representational: where the Board has already
exercised jurisdiction over a matter and is either considering it or has already decided
the matter, or where the issue is an initial decision in the representation area.” Id. at 695
(internal citations, quotation marks, and alteration omitted). As in Trafftech, in the
instant case “the arbit[rato]r need not resolve the representational dispute to determine
whether [the company] has violated its collective bargaining agreement.” Id. at 695–96.
The Union does not question whether it may represent the non-union employees of the
other subsidiaries, and it did not ask the arbitrator to decide whether this was possible
or to require Equitable to bargain with the Union for ongoing representation.5 The issue
was whether Equitable could be liable for Kentucky West’s violation of the existing
CBA and not whether future representation was possible. See Air Prods. & Chems., 300
F.3d at 675–76, 677–78; see also John Wiley & Sons, 376 U.S. at 551 & n.5 (holding
that a union without majority status in the newly merged company could still represent
employees in arbitration under former agreement). The fact that Equitable sees potential
5
At oral argument, the Union confirmed that it was not seeking to assert or determine its rights
to represent other employees in the future beyond the scope of the CBA at issue in this litigation.
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representation issues in the remedy does not preclude the remedy, and Equitable may
still present such issues to the NLRB. See Trafftech, 461 F.3d at 694, 697.
Therefore we conclude that the arbitrator did not exceed the scope of his
authority to decide a representational issue in this case because the arbitrator’s successor
decision was permissible in furtherance of his interpretation of the CBA.
D. The Award’s Remedy Does Not Violate Public Policy
Equitable next contends that the specific-performance remedy ordered in the
Award violates public policy by requiring recognition of a minority bargaining unit by
a non-party, in violation of the public policy in the National Labor Relations Act
(“NLRA”), specifically 29 U.S.C. § 159 (§ 9 of the NLRA). The “narrow” public policy
exception makes an arbitration award unenforceable if it is contrary to an “‘explicit,’
‘well defined,’ and ‘dominant’” public policy that is “‘ascertained by reference to the
laws and legal precedents and not from general considerations of supposed public
interests.’” E. Associated Coal Corp. v. United Mine Workers, Dist. 17, 531 U.S. 57,
62–63 (2000) (quoting W.R. Grace & Co. v. Local Union 759, Int’l Union of United
Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 766 (1983) (internal
quotation marks omitted)). The question is whether the actual arbitration award—the
enforcement of the interpretation of the CBA—violates public policy, not whether the
breach of the labor agreement or the potential actions that could be taken in response to
the award violate public policy. Id.; Shelby County Health Care Corp. v. Am. Fed. State,
County & Mun. Employees, Local 1733, 967 F.2d 1091, 1096 (6th Cir. 1992); see also
Columbia Gas of Ohio, Inc. v. Util. Workers Union, 329 F. App’x 1, 4–5 (6th Cir. 2009)
(unpublished opinion). We “tak[e] the facts as found by the arbitrator” in “determin[ing]
whether the arbitrator’s interpretation of the contract jeopardizes a well-defined and
dominant public policy.” Int’l Union, UAW v. Dana Corp., 278 F.3d 548, 558 (6th Cir.
2002) (internal quotation marks omitted).
As we stated above, the Award clearly “‘draws its essence from the contract.’”
Mich. Family Res., 475 F.3d at 752 (quoting Misco, 484 U.S. at 38). The arbitrator
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found that the Union and Kentucky West included successorship language in the CBA
that would require Kentucky West to condition any transaction such as the one at issue
here on the continuation of the CBA. The Award merely requires Equitable, as the
stand-in for Kentucky West, to honor this mandate and be liable for its breach. Equitable
does not argue that Article II, Section 1 is unenforceable as a violation of public policy,
or that there is no legal way to fulfill its mandate or the award. See W.R. Grace & Co.,
461 U.S. at 769 n.13 (recognizing that specific performance of collective bargaining
agreement term would violate public policy because in violation of federal
discrimination laws, but upholding arbitration award of damages for breach of contract).
We conclude, as did the district court,6 that the arbitrator “was acting well within the
bounds” of the CBA. See Shelby County Health Care, 967 F.2d at 1096–97 (finding
award that followed mandate of company’s agreement with union did not violate public
policy). The Award does not grant the Union any rights to future representation,
bargaining status, or other such rights attendant to the NLRA. Indeed, it might be
against public policy not to enforce the successorship clause.7 See NLRB v. Burns Int’l
Sec. Servs., Inc., 406 U.S. 272, 282–83 (1972) (“‘[T]he essence of collective bargaining
is that either party shall be free to decide whether proposals made to it are satisfactory.’”
6
The district court rejected this argument because Equitable had agreed, prior to arbitration, that
it would step into Kentucky West’s shoes for purposes of the Union’s potential remedy. Doc. 27 (Summ.
J. Tr. at 94–95). During the summary judgment hearing, the district court disagreed with Equitable’s
argument that the remedy effectively ordered Equitable to act in violation of federal labor law to recognize
a minority bargaining unit, finding that the arbitrator had only ordered Equitable to honor the CBA and
“[i]t’s for the company to figure out in that scenario how to do it legally.” Id. at 55. The district court
found that the arbitrator interpreted the contract to determine whether a breach occurred under its terms,
and then imposed a remedy of specific performance on Equitable as the successor entity who had agreed
to stand in the shoes of Kentucky West. Id. at 32–35, 52–53, 58.
7
Although Equitable argues that it would be against public policy to require a new employer to
follow a predecessor’s collective bargaining agreement if the requisite majority status and unit
appropriateness are lost, even if the new employer voluntarily assumed the agreement, see Burns Int’l Sec.
Servs., 406 U.S. at 278–85, here the arbitrator based the Award on the fact that Equitable was acting as
Kentucky West for purposes of the arbitration and the remedy, not merely the new employer. See
Eisenmann Corp. v. Sheet Metal Workers Int’l Ass’n Local No. 24, 323 F.3d 375, 381–85 (6th Cir. 2003)
(holding that arbitration award that enforced terms of company’s agreement with union did not violate
public policy by extending agreement to non-union workers); see also John Wiley & Sons, 376 U.S. at 551
& n.5 (holding that a union without majority status in the newly merged company could still represent
employees in arbitration under former agreement even though “[p]roblems might be created by an arbitral
award which required [the new company] to give special treatment to the former [company’s] employees
because of rights found to have accrued to them under the [union] contract,” because such hypothetical
problems could be avoided by a solution “within the flexible procedures of arbitration”). Equitable has
not cited any binding precedent to support its position on this issue.
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(quoting S. Rep. No. 74-573, at 12 (1935))); id. (“‘The theory of the Act is that free
opportunity for negotiation with accredited representatives of employees is likely to
promote industrial peace and may bring about the adjustments and agreements which the
Act in itself does not attempt to compel.’” (quoting NLRB v. Jones & Laughlin Steel
Corp., 301 U.S. 1, 45 (1937))); see also W.R. Grace & Co., 461 U.S. at 771 (recognizing
“the federal labor policy that parties to a collective bargaining agreement must have
reasonable assurance that their contract will be honored”). Under the circumstances, we
cannot agree that the Award’s remedy violates public policy.
E. The Arbitrator Did Not “Dispens[e] His Own Brand of Industrial Justice”
For many of the same reasons stated above, we cannot agree with Equitable’s
contention that the arbitrator’s decision is tainted by a “results-driven” approach that
makes the Award unenforceable. “‘[O]nly when the arbitrator strays from interpretation
and application,’ . . . does he enter the forbidden world of ‘effectively dispens[ing] his
own brand of industrial justice,’ making the arbitrator’s decision ‘unenforceable.’”
Mich. Family Res., 475 F.3d at 752 (quoting Garvey, 532 U.S. at 509 (internal quotation
marks omitted)) (alterations in original). The danger of imposing “industrial justice”
may arise if “the arbitrator’s decision on the merits was so untethered from the
agreement that it casts doubt on whether he was engaged in interpretation.” Id. at 754.
As stated above, we conclude that the arbitrator’s decision is supported by his
interpretation of the contract.
That the deciphering of this contract required implications and inferences
suffices by itself to show that the arbitrator was permissibly engaged in
interpretation. . . . It was the “arbitrator’s construction,” not three
layers of federal judicial review, that the parties “bargained for,” and
that delegation of decision-making authority must be respected even
when time and further review show that the parties in the end have
bargained for nothing more than error.
Id. at 756 (emphasis added). Here, the arbitrator repeatedly stated that he was dealing
with a question of contract interpretation, and the arbitrator’s remedy is related to his
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interpretation of the CBA and necessarily flows from his finding that a requirement to
honor the CBA was a condition precedent to the transaction. Because the transaction
had occurred without the condition precedent, the arbitrator ordered specific
performance of the CBA to place the Union in the position it would have been had
Article II, Section 1 been honored prior to the transaction.
We are also unpersuaded by Equitable’s argument that the Award dispensed the
arbitrator’s own brand of industrial justice by ignoring arbitral precedent. We decline
to employ the strict application of arbitral res judicata that Equitable urges because our
precedent instructs “that absent a contractual provision to the contrary, the preclusive
effect of an earlier arbitration award is to be determined by the arbitrator.” Dana, 278
F.3d at 557. The arbitrator here followed our suggestion to “[a]s a practical matter, . . .
take into consideration prior arbitration decisions involving the same provision of the
collective bargaining agreement.” Id. So long as the current arbitrator’s interpretation
draws its essence from the contract, the arbitrator may disagree with a prior arbitral
decision. Id. Here, the arbitrator discussed each prior arbitral decision at length and
distinguished both the issues and factual scenarios involved from the current case. Thus,
we also reject Equitable’s final argument for vacating the Award.
III. CONCLUSION
We conclude that the district court did not err in granting summary judgment to
the Union and enforcing the Award here, in light of the great deference afforded to
determinations made by arbitrators. For the foregoing reasons, we AFFIRM the
judgment of the district court.
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_______________________
CONCURRENCE
_______________________
CORNELIA G. KENNEDY, Circuit Judge, concurring. I concur with the
majority opinion. I write separately to note that we are not deciding that there are
ongoing equitable obligations on Equitable.