United States Court of Appeals
Fifth Circuit
F I L E D
August 14, 2003
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
Clerk
FOR THE FIFTH CIRCUIT
No. 02-10467
AMERICAN EAGLE AIRLINES, INC.,
Plaintiff — Counter-Defendant —
Appellee — Cross-Appellant,
v,
AIRLINE PILOTS ASSOCIATION,
INTERNATIONAL,
Defendant — Counter-Claimant —
Appellant — Cross-Appellee.
--------------------
Appeals from the United States District Court
for the Northern District of Texas, Fort Worth
--------------------
Before WIENER, BENAVIDES, and DENNIS, Circuit Judges.
BENAVIDES, Circuit Judge:
Before this court is a labor-arbitration dispute between an airline company and a pilots’
association arising from an arbitration board’s hearing and the subsequent appeal to the district court.
While judicial review of an arbitration board’s determination is admittedly confined, this controversy
is one of the unwonted cases in which overturning an arbitrator’s award is proper. As such, we affirm
the judgment of the district court, which vacated the arbitrator’s award.
I.
The issues in this appeal concern a collective bargaining agreement (“CBA” or
“Agreement”) entered into in September 1997 by American Eagle Airlines, Inc. (“American
Eagle”), and Air Line Pilots Association, International (“ALPA”) to govern the working
conditions of pilots employed at American Eagle. Included within the Agreement were provisions
dictating the conditions for which a pilot may be terminated as well as the procedures to be
followed by American Eagle to secure a termination. The CBA permits American Eagle to
terminate pilots only for “just cause,” a term the Agreement fails to define.
Section 20 of the CBA elucidates the grievance process by which an employee may
challenge his termination. A pilot must request initiation of the grievance process within 14 days
of receiving written notice of the charges against him, or the employment decision of American
Eagle becomes final. If the process is timely invoked, “[a] first step hearing will be held at the
pilot’s domicile within 14 days of the date written request is received” by American Eagle. Within
14 days of the hearing, American Eagle must issue an opinion on the matter. If the decision is
unsatisfactory to the pilot, he may appeal within 30 days by furnishing written notice to the
System Board (the “Board”), which serves as a neutral arbitrator under the contract.
Section 20(G)(2) then notes:
If [American Eagle] fails to provide a written decision to the pilot... or hold a required
hearing within the time limits specified, the pilot and the Association may consider the
grievance denied.
Section 21 then details the duties and functions of the Board. Composed of three members, the
Board has “jurisdiction over grievances filed pursuant to the terms of this Agreement.” The CBA
also protects the Board’s right to “act in an independent manner” without consequences for its
2
relationship to American Eagle or ALPA.
On November 3, 1999, Captain Terry Balser, an American Eagle pilot, struck up a
discussion with Boris Walckhoff, a cleaning and catering employee of American Eagle, on board
the aircraft Balser piloted at the Los Angeles International Airport. Over the course of the
conversation, Balser discussed the ongoing war in Chechnya, and questioned why Walckhoff, an
immigrant of African, Russian, and German decent, was not fighting in it. Balser then displayed a
medal with a reverse swastika on it and mentioned his displeasure that government money was
being spent on African-Americans and Latinos. Walckhoff felt intimidated by this conversation
and filed a complaint with American Eagle.
In response to Walckhoff’s complaint, American Eagle conducted an investigation of
Balser, which included holding two investigative meetings in November 1999. These meetings
revealed that Balser regularly carried a dirk with a three and one-half-inch blade into secure areas
of the airport, as well as on board the aircraft he flew. Captain Balser also admitted to having
“nodded off” at times while on the clock.
On November 29, 1999, American Eagle issued a notice of termination to Balser, advising
him that he was being discharged for harassing Walckhoff, failing to observe security regulations
regarding weapons in secure areas, violating California penal law and Federal Aviation
Administration regulations by bringing weapons on board an aircraft, and violating company
policy against sleeping on board an aircraft. On December 9, 1999, 10 days after receiving the
notice of termination, ALPA grievance chair Mark Taylor wrote to American Eagle informing it
of Balser’s intention to invoke the grievance procedures outlined in the CBA. Taylor again wrote
American Eagle on February 4, 2000, noting that American Eagle had not scheduled a first-step
3
hearing. The letter referenced a conversation with Los Angeles Chief Pilot Janette McMurtrie on
January 22, 2000, in which McMurtrie indicated her desire to forego the first-step hearing, and
told Balser and ALPA to treat the grievance as denied by American Eagle. The matter was then
submitted to the Board by ALPA.
After arguments were presented, the Board made several determinations. First, the Board
found that American Eagle’s failure to schedule the first-step hearing constituted a breach of the
CBA, despite the language contained in Section 20(G)(2), which states that failure to schedule a
hearing may be considered tantamount to a denied grievance. Second, the Board found that
Balser seriously violated the CBA. Specifically, the Board noted that substantial evidence
supported American Eagle’s contention that Balser had harassed Walckhoff and that such conduct
was abhorrent, finding that “the Employer had not only a right, but a duty to rid the workplace of
such conduct.” The Board also concluded that Balser had violated American Eagle’s security
rules and California law by bringing his dirk on board his aircraft and into secure areas of the
airport. The Board found insufficient evidence to support a finding that Balser had slept while his
plane was airborne. The Board, however, concluded that American Eagle had “not only a right,
but a duty” to rid itself of Balser’s behavior. Finally, the Board concluded that because both
Balser and American Eagle had seriously violated the Agreement, both sides deserved a
substantial penalty. Accordingly, the Board imposed a ten-week unpaid suspension on Balser and
ordered his reinstatement with back pay due for the remaining period in which Balser was
suspended.
American Eagle appealed the Board’s decision to the United States District Court for the
Northern District of Texas, pursuant to the Railway Labor Act, 45 U.S.C. §§ 151-88, arguing in
4
its motion for summary judgment that the Board’s decision (i) failed to conform to the terms of
the CBA, (ii) was beyond the jurisdiction of the Board, and (iii) violated public policy. The
district court determined that implicit within the Board’s opinion was a finding that Balser was
fired for “just cause.” Once such a determination was made, the district court reasoned, the
Board lacked further authority to fashion an alternate remedy based on American Eagle’s alleged
procedural shortcoming of not holding the first-step hearing. Accordingly, the district court
vacated the Board’s arbitration award, holding that the Board should have upheld Balser’s
termination. The district court rejected ALPA’s argument that the Board had not found just
cause for Balser’s termination because American Eagle did not meet the procedural requirements
of the CBA, stating that ALPA introduced no authority for the proposition that such requirements
could be considered in arriving at the just cause determination. The district court, however, did
reject American Eagle’s argument that the arbitration award violated public policy. Shortly
thereafter, ALPA filed a timely notice of appeal and American Eagle cross-appealed on the public
policy issue.
II.
We review de novo a district court’s decision vacating an arbitration award as not
grounded in the agreement of the parties. E.I. DuPont de Nemours v. Local 900 of the Int’l
Chemical Workers Union, 968 F.2d 456, 458 (5th Cir. 1992). Summary judgment should be
granted where the record indicates no genuine issue of material fact, and that the moving party is
entitled to judgment as a matter of law. Rogers v. International Marine Terminals, 87 F.3d 755,
758 (5th Cir. 1996). In considering summary judgment, we must view the evidence in the light
most favorable to the nonmoving party. See Matsushita Elect. Indus. Co. v. Zenith Radio Corp.,
5
475 U.S. 574, 587-88 (1986). Yet, “the nonmoving party must set forth specific facts showing
the existence of a ‘genuine’ issue concerning every essential component of its case.” Morris v.
Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).
Judicial review of a labor-arbitration decision by this Court, or by the district court, is
extremely limited. Where the 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 that decision.” Eastern Associated Coal Corp. v. United Mine
Workers of America, 531 U.S. 57, 62 (2000) (internal quotations omitted). Thus, if there is
ambiguity as to whether an arbitrator is acting within the scope of his authority, that ambiguity
must be resolved in favor of the arbitrator, as the mere “inference” of ultra vires action is an
insufficient “reason for refusing to enforce the award.” United Steelworkers of America v.
Enterprise Wheel & Car Co., 363 U.S. 593, 598 (1960).
We will not uphold an arbitrator’s decision, however, when it dispenses its own “brand of
industrial justice” outside the scope of an arbitration agreement. United Paperworkers Intern.
Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987). Rather, we are free to scrutinize an
arbitrator’s award “to ensure that the arbitrator acted in conformity with the jurisdictional
prerequisites of the collective bargaining agreement.” Delta Queen Steamboat Co. v. District 2
Marine Engineers Beneficial Ass’n, AFL-CIO, 889 F.2d 599, 602 (5th Cir. 1989) (citing
Container Prods., Inc. v. United Steelworkers of Am., 873 F.2d 818, 820 (5th Cir. 1989)). And,
“[w]here an arbitrator exceeds his contractual authority, vacation or modification of the award is
an appropriate remedy.” Delta Queen, 889 F.2d at 602 (citing Container Prods., 873 F.2d at
820). See also Houston Lighting & Power Co. v. International Broth. of Elec. Workers, Local
6
Union No. 66, 71 F.3d 179, 184 (5th Cir. 1995) (If the language of the applicable collective
bargaining agreement is “clear and unequivocal, an arbitrator is not free to change its meaning.”).
In short, an “arbitrator may not ignore the plain language of the contract.” Misco, 484 U.S. at 38.
III.
The two predominant questions presented in this appeal are (i) whether the district court
properly determined that the Board found that Balser’s conduct constituted “just cause” for his
termination and (ii) whether the arbitrator exceeded its jurisdiction by improperly interpreting the
terms of the CBA, specifically whether the Board erred in determining that American Eagle’s
failure to provide Balser with a first-step hearing constituted a serious violation of the Agreement
and warranted voiding Balser’s termination. As the Board determined that any violation of
American Eagle’s rules and policies committed by Balser was mitigated by American Eagle’s
failure to grant him a first-step hearing, the two issues are inextricably linked and it is therefore
appropriate to discuss them together.
A.
We begin our analysis by addressing whether American Eagle’s failure to provide a first-
step hearing constituted a violation of the CBA. In doing so, we consider the relevant language
of the Agreement. Section 20(C) of the CBA provides that “[a] first step hearing will be held at
the pilot’s domicile within fourteen (14) days of the date written request is received” by American
Eagle. It is undisputed that this so-called first-step hearing never took place. Section 20(G)(2)
provides further that if American Eagle fails to hold a required hearing, including, inter alia, a
first-step hearing, the pilot “may consider the grievance denied.” Section 21 of the CBA then
provides for establishing the Board “for the purpose of adjusting disputes or grievances arising
7
under” the Agreement. The Board determined that by failing to schedule the first-step hearing,
American Eagle breached the CBA. American Eagle disagrees with this assessment, arguing that
although it did not provide the first-step hearing, it did not breach the CBA because ALPA chose
to treat the failure to hold the first-step hearing as a denied grievance when it submitted the matter
to arbitration.
Although we are not unmindful of the high degree of deference the federal courts
generally afford arbitrators, see, e.g., Eastern Associated Coal, 531 U.S. at 62, an arbitrator may
not ignore the plain language of a collective bargaining agreement. Misco, 484 U.S. at 38. And,
the clear language of the CBA precludes determining that American Eagle’s failure to schedule a
first-step hearing is a procedural default if ALPA chooses to treat such failure as a denied
grievance and proceed to arbitration. Put differently, although the Agreement specifically
provides for a first-step hearing when a pilot files a grievance, Section 20(G)(2) establishes that
the failure to conduct such a hearing should be treated no differently than a first-step hearing at
which the pilot’s plea for relief is unsuccessful, provided that the pilot chooses to treat the lack of
the hearing as a denied grievance and proceed to arbitration.
Here, ALPA and Balser did choose to treat American Eagle’s failure to provide a first-
step hearing as a denied grievance and elected to proceed to arbitration.1 When American Eagle
failed to provide the first-step hearing, ALPA did not insist that such a hearing be held. Rather,
ALPA elected to arbitrate, thereby treating the lack of the hearing as a denied grievance.
Furthermore, while ALPA argued before the arbitrator that the lack of the first-step hearing
1
This decision is consistent with previous disputes between American Eagle and ALPA,
where there were no first-step hearings and ALPA and its associated pilots, without protest,
simply proceeded to arbitration.
8
denied Balser due process, it was never asserted that the appropriate remedy for such an alleged
violation would be to compel American Eagle to conduct the hearing. ALPA grieved the
termination, not the post-termination first-step hearing, the absence of which ALPA treated as a
denial allowing it to proceed to arbitration. By invoking arbitration, ALPA implicitly considered
the grievance denied and waived any other alternative it may have had concerning American
Eagle’s failure timely to conduct a first-step hearing. This comports with the district court’s
interpretation of the CBA; specifically, that if a first-step hearing does not occur and ALPA
invokes arbitration, it has considered the grievance denied within the meaning of Section 20(G)(2)
and has waived any claim it might have had based on American Eagle’s putative procedural
default. Accordingly, American Eagle has committed no default of the CBA.
B.
Having determined that American Eagle’s failure to schedule a first-step hearing did not
constitute a procedural default of the CBA—or, even if it could have, that such a default was
cured by waiver when ALPA proceeded to invoke arbitration—it is now necessary to determine
whether there was just cause to terminate Balser. While the Board never used the phrase “just
cause,” it did hold that Balser’s conduct was egregious and, therefore, must be removed from the
workplace.2 Citing DuPont, the district court held that the Board implicitly found just cause for
Balser’s termination. 968 F.2d at 458 (holding that just cause for termination may determined
implicitly by an arbitrator). Once just cause existed, the district court reasoned, there was no
jurisdiction for the Board to permit any outcome other than Balser’s termination, even if a
2
Of course, the Board determined that American Eagle’s alleged procedural default,
which we have now concluded was not a default, prevented Balser’s termination.
9
procedural default occurred. In support of this conclusion, the district court noted that the CBA
required only just cause for dismissal, rather than just cause plus scheduling a first-step hearing.
Not surprisingly, the parties maintain disparate views regarding the determination of the
district court. American Eagle agrees with the district court’s assessment that the Board
implicitly found just cause and then exceeded its jurisdiction by improperly considering the lack of
the first-step hearing so as to save Balser’s job. On the other hand, ALPA denies that the Board
ever found just cause for Balser’s termination. Furthermore, ALPA asserts that the failure to
schedule the first-step hearing was a component used to determine whether just cause for
termination existed at all. If a supposed procedural default—here, the lack of the first-step
hearing—necessarily precludes a finding of just cause, ALPA argues, there is no ground for
Balser’s termination. Thus, while American Eagle argues that the Board did find just cause but
did not uphold Balser’s termination because of the supposed procedural default, ALPA believes
that the Board never found just cause, in part because of the lack of the initial hearing. We now
address these competing theories, analyzing them in light of our determination that American
Eagle’s failure to schedule the first-step hearing did not constitute a procedural default of the
CBA.
At issue, then, is whether the Board could properly consider any supposed procedural
violation by American Eagle in its “just cause” analysis and, alternatively, whether an alleged
procedural failing could prevent termination of an employee who had already been discharged for
just cause. First, as noted, supra, American Eagle committed no procedural violation of the CBA.
This reason alone is sufficient to conclude that the Board erred if it considered such conduct
either in its just cause calculus or to mitigate a finding of just cause.
10
Second, and alternatively, even if the failure to hold the first-step hearing were a
procedural default, it would be improper to consider this failure in the just cause analysis or to
prevent the termination of an employee who had already been discharged for just cause. Indeed,
the procedural violation alleged by ALPA—i.e., failure to conduct a first-step hearing—occurred
after Balser committed the acts cited by American Eagle and the district court as constituting
grounds for termination, and after Balser was terminated on those grounds. Thus, this putative
procedural default could not have been properly considered in determining whether Balser’s
actions constituted just cause for his termination. ALPA, however, attempts to argue that there is
authority for the proposition that contractual procedural requirements can be considered by
arbitrators in determining whether cause for dismissal exists. While no circuit authority
specifically permits a procedural default to affect the just cause calculus, ALPA cites to
Chauffeurs, Teamsters and Helpers Local Union 878 v. Coca Cola Bottling Co., 613 F.2d 716
(8th Cir. 1980), in which the Eighth Circuit held that an arbitrator could consider a company’s
failure to abide by a bargaining agreement’s procedural requirements in determining whether
cause existed for dismissal. In Chauffeurs, the employer’s alleged procedural default was that the
employee “was not afforded an opportunity to tell his side of the story prior to termination.” 613
F.2d at 717. Importantly, Chauffeurs and similar cases3 concern only a company’s pre-
termination procedural failings within the just cause determination. At issue here, however, is
American Eagle’s post-discharge behavior, which is a different matter entirely, as this circuit and
3
Other courts outside this circuit have approved the rule in Chauffeurs. See, e.g.,
Anaconda Co. v. District Lodge No. 27 of the Int’l Assn. of Machinists and Aerospace Workers,
693 F.2d 35, 37 (6th Cir. 1982); Safeway Stores v. United Food and Commercial Workers Union,
621 F. Supp. 1233, 1237-38 (D.D.C. 1985).
11
the Supreme Court have recognized. See Misco, 484 U.S. at 40 n.8; Gulf Coast, 991 F.2d at 247.
In Misco, the Supreme Court held that “[l]abor arbitrators have stated that the correctness of a
discharge must stand or fall upon the reason given at the time of discharge.” 484 U.S. at 40 n.8.
Furthermore, in Gulf Coast, an employee was terminated for violating his employer’s substance
abuse policy, but the arbitrator reinstated the employee with rehabilitation conditions based on his
finding that the employee’s post-termination conduct indicated he was a prime rehabilitative
candidate. 991 F.2d at 247. We vacated the arbitration award, ruling that the arbitrator acted
outside the authority of the relevant collective bargaining agreement when it considered the
employee’s post-termination conduct. Id. at 255 (“[A]n arbitrator [is] to look only at the
evidence before the employer at the time of the discharge.”). Accordingly, it was inappropriate if
the Board considered American Eagle’s post-termination conduct in determining whether Balser
was terminated for cause. Thus, American Eagle’s alleged procedural default cannot be used in
the just cause analysis.
Furthermore, a procedural default may not be used to offset a finding of just cause for
termination. Assuming Balser’s actions constituted just cause for his termination, the Board had
no jurisdiction not to terminate him, regardless of any alleged default committed by American
Eagle, given that Section 20(A)(2) of the CBA notes that only just cause is necessary for
termination. As the Agreement does not require just cause plus the absence of any alleged
procedural deficiencies by American Eagle to support termination, the Board cannot impose this
requirement, as the district court properly recognized. Thus, the Board erred when it considered
the failure to hold the first-step hearing in its just cause analysis or as a mitigating factor after
determining that there was just cause for Balser’s discharge, because the failure to hold the first-
12
step hearing (i) did not breach the CBA and, in any event, (ii) can neither preclude nor mitigate
just cause.
C.
Given that the Board could not have considered any alleged post-termination procedural
violation by American Eagle in its determination of just cause and that such a determination turns
solely on the pilot’s conduct, we turn now to the Board’s opinion to determine whether the
district court properly held that the Board issued an implied finding of just cause. In this circuit,
we have long recognized that where an arbitrator implicitly finds that just cause exists, it need not
recite the operative phrase “just cause.” See DuPont, 968 F.2d at 458-59 (citing Delta Queen,
889 F.2d at 602). Indeed, the phrase “just cause” “carries no talismanic significance in labor
jurisprudence.” Delta Queen, 889 F.2d at 602. Rather, “[i]t is simply a term of art that defines
the many unrelated, independent acts that serve as grounds for employee discipline under” a
collective bargaining agreement.” Id. In Delta Queen, for instance, we held that an explicit
finding by the arbitrator of “gross carelessness” satisfied the collective bargaining agreement’s
requirement that individuals may be disciplined only upon a showing of “proper cause.” Id. at
604. Thus, we have long held that implicit findings of just cause for termination warrant the same
significance and carry the same force as explicit findings.4
The district court did not err in determining that Balser’s actions constituted just cause for
his termination. Indeed, the Board determined that Balser’s “violation” of American Eagle’s
“anti-harassment policy” provided American Eagle with “not only a right, but a duty to rid the
workplace” of Balser’s conduct. The Board also addressed the seriousness of Balser’s bringing
4
See DuPont, 968 F.2d at 458-59; Delta Queen, 889 F.2d at 602.
13
his dirk onboard the aircraft he flew, noting that doing so clearly violated American Eagle rules.
Thus, the district court was correct to conclude that there was an implicit finding of just cause
because the Board’s opinion concludes that Balser’s conduct clearly justified his firing. As the
CBA authorizes discharge only for just cause, the Board, by necessary implication, determined
that just cause existed for Balser’s termination.5
ALPA argues that the well-settled rule of DuPont and Delta Queen—i.e., that an
arbitrator’s finding of “just cause” may be implicit—is limited to the facts of those cases and
should not be applied here. This argument fails for at least two reasons. First, there is simply
nothing in the language of DuPont or Delta Queen to suggest that these holdings were unique to
their respective facts. On the contrary, our citing Delta Queen in the DuPont opinion indicates
our intention that just cause may be found implicitly. See DuPont, 968 F.2d at 458-49.
Second, any reliance on our holding in Weber Aircraft Inc. v. General Warehousemen and
Helpers Union Local 767, 253 F.3d 821 (5th Cir. 2001), for the proposition that DuPont and
Delta Queen are inapplicable to this case is misguided. In Weber, we considered whether an
arbitrator’s finding that a worker committed a violation of a certain offense category (there,
“Category 1”) that contemplated a variety of penalties—including termination—compelled the
conclusion that there was just cause for termination. 253 F.3d at 824. The Weber holding noted
only that it was improper to infer a finding of just cause for termination based only upon the
5
In this case, the reasoning by implication is as follows: (1) to constitute grounds for
termination under the CBA, the act or acts in question must constitute just cause, i.e., an
employee can be terminated for any act or acts that constitute just cause; (2) the Board found that
Balser seriously violated his obligations and that American Eagle had a duty to rid the workplace
of Balser’s conduct; (3) thus, the Board must have found that American Eagle had just cause to
terminate Balser.
14
arbitrator’s determination that the employee in question had committed a violation of Category 1,
because Category 1 contemplated penalties short of discharge. Id. at 825. Because workers who
ran afoul Category 1 could be punished in a variety of ways, a violation of Category 1 was not
tantamount to termination. Id. Thus, our holding in Weber did nothing to undercut the rule of
DuPont and Delta Queen that a finding of just cause may be implicit. In fact, it was noted that
neither case was applicable to the precise issues presented in Weber. Id. The district court,
therefore, did not err in holding that there had been an implicit finding of just cause, which is
tantamount to an explicit finding of the same, in the Board’s arbitration opinion.
D.
Having determined that the district court correctly held that the Board implicitly found just
cause for Balser’s termination, the next question is whether the district court was correct to set
aside the arbitration award, given that the Board was without jurisdiction to fashion a remedy
beyond what was contemplated in the CBA, namely that an employee can be terminated only for
just cause. The district court’s analysis is correct: if the relevant bargaining agreement requires
just cause for dismissal, an arbitrator acts beyond its jurisdiction by fashioning an alternate remedy
once it has concluded—implicitly or otherwise—that an employee’s conduct constitutes just cause
for dismissal, as the Board did here. DuPont, 968 F.2d at 459; Delta Queen, 889 F.2d at 604.
Accordingly, the Board was without jurisdiction to craft a remedy based upon American Eagle’s
supposed post-termination violation of the CBA. Furthermore, and alternatively, even if it were
proper to allow an employer’s violation of a collective bargaining agreement in these
circumstances to offset a for-cause termination, it could not be done here as the employer,
15
American Eagle, did not violate the CBA.6
IV.
Accordingly, we the affirm the district court’s grant of summary judgment vacating the
arbitration award.
ENDRECORD
6
As the foregoing analysis is sufficient to affirm the judgment of the district court, it is
unnecessary for us to address the remaining issue on appeal, i.e., whether the district court erred
in determining that the Board’s decision to reinstate Balser did not violate public policy.
16
DENNIS, Circuit Judge, dissenting:
Our review of arbitration awards is under a highly deferential
standard that requires us to enforce arbitration judgments that
even “arguably construe or apply” a contract, even when we believe
that construction reflects “serious error.” Eastern Associated
Coal Corp. v. United Mine Workers of America, 531 U.S. 57, 62
(2000). Because I believe the majority does not adhere to this
standard, I respectfully dissent.
The majority begins its analysis by taking aim at the
arbitrator’s finding that American Eagle violated the plain terms
of the collective bargaining agreement by failing to timely
schedule a first-step hearing. Section 20(C) of the agreement says
such a hearing “will be held at the pilot’s domicile within
fourteen days” (emphasis added) of receipt of a timely request for
a hearing. The arbitrator reasoned that because the Airline Pilots
Association (ALPA) and Balser made a timely hearing request, the
airline’s failure to schedule the hearing constituted a breach of
Section 20(C).
The majority contends that the arbitrator erred in finding a
contract violation because ALPA and Balser waived their right to a
first-step hearing when they “elected to proceed to arbitration”
-17-
under Section 20(G)(2).7 The arbitrator expressly rejected this
contract interpretation in reaching its decision. The arbitrator
explained that Section 20(G)(2) addressed the union’s procedural
quandary of where to go when the employer failed to provide the
required hearing, and did not address what the remedy would be for
the airline’s failure to provide the required hearing. Using that
procedure merely “facilitate[d] [ALPA’s] attempt to get to the next
hearing level,” and did not waive any remedies for the airline’s
violation of the contract.
If the arbitrator was “even arguably construing or applying
the contract and acting within the scope of [its] authority,” in
reaching this result, “the fact that a court is convinced he
committed serious error does not suffice to overturn that
decision.” Eastern Associated Coal 531 U.S. at 62. Here, there is
no question that the arbitrator was “arguably construing or
applying the contract” in finding that American Eagle violated the
collective bargaining agreement. Section 20(C) expresses the
first-step hearing requirement in mandatory terms, and American
Eagle did not abide by that section. While the scope of the remedy
provided by Section 20(G) is susceptible to alternative
interpretations, the majority is incorrect in finding that the
arbitrator’s view of that section as procedural is not even an
7
Section 20(G)(2) states: “If the Company fails to...hold a
required hearing within the time limits specified, the pilot and
the Association may consider the grievance denied.”
-18-
“arguable” construction. And because the arbitrator was arguably
applying the contract, the majority should not have disturbed that
interpretation on review. “[A] court should not reject an award on
the ground that the arbitrator misread the contract.” United
Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 36 (1987).
Thus, the central question here is whether the arbitrator
exceeded his authority in considering American Eagle’s breach of
the collective bargaining agreement in determining whether the
airline could terminate Balser. “Collective bargaining agreements
often say little or nothing about the arbitrator’s remedial powers;
yet it cannot be that he has none...[rather] the agreement must
implicitly grant him remedial powers where there is no explicit
grant.” Miller Brewing v. Brewery Workers Local 9, 739 F.2d 1159,
1163 (7th Cir. 1984). In the context of evaluating terminations of
employees, arbitrators have used this broad remedial power to
reduce or reverse the discipline meted out to employees where an
employer has not abided by the labor agreement’s prescribed
grievance process. See 9 TIM BORNSTEIN ET AL.,LABOR AND EMPLOYMENT LAW §
11.09 (2003) (explaining the wide discretion arbitrators have in
altering employee discipline based on employer violations of
grievance procedures).
For example, in Teamsters Local Union No. 284 v. Maremont
Corp., 515 F.Supp. 168 (S.D. Ohio 1980), employees of Maremont
engaged in an illegal wildcat strike that ordinarily may have been
-19-
grounds for terminating the employees. However, the company did
not abide by the collective bargaining agreement’s requirement that
it give written reasons for termination and conduct a hearing
within 72 hours of termination. Id. at 170. The arbitrator
concluded that the employees had been denied “contractual due
process,” and thus ordered the employees reinstated with backpay.
Id. The district court upheld the arbitrator’s award explaining
that the arbitrator had interpreted the contract’s procedural
requirements as a mandatory obligation to which there had been no
waiver. Id. at 173. Because this was a contract interpretation
the court concluded it lacked the power to disturb it even though
it would likely not have made the same interpretation itself. Id.
Courts have allowed arbitrators to go even further and read
procedural guarantees into just cause even where they are not found
in the contract. In Chauffeurs, Teamsters and Helpers Local Union
878 v. Coca Cola Bottling Co., 613 F.2d 716 (8th Cir. 1980), it was
undisputed that the employee to be terminated engaged in dishonest
behavior that would be sufficient grounds to fire that employee
under the labor agreement. The arbitrator reinstated the employee,
however, because Coca Cola failed to provide all the reasons for
firing the employee prior to his grievance hearing, thus depriving
the employee of an adequate opportunity to rebut the charges. Id.
at 717. The Eighth Circuit upheld the arbitrator’s decision,
finding that the arbitrator had interpreted the just cause
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provision as including procedural rights for the employee and that
because this was an “arguable” contract interpretation the court
lacked the power to disturb it. Id. at 721. Other courts to have
considered the issue have followed the Eighth Circuit and allowed
arbitrators to include procedural requirements as components of
just cause, even when those requirements are not spelled out in the
contract. Anaconda Co. v. District Lodge No. 27 of the Int’l Assn.
of Machinists and Aerospace Workers, 693 F.2d 35, 37 (6th Cir.
1982); Safeway Stores v. United Food and Commercial Workers Union,
621 F.Supp. 1233 (D. D.C. 1985).
Our case is akin to Maremont and even easier than Chauffeurs.
The arbitrator made the contract interpretation that the grievance
procedures spelled out in the contract were mandatory, and that
because American Eagle did not abide by those requirements it did
not have just cause to terminate Balser. This was an “arguable”
contract interpretation, and therefore one that we are not
empowered to upset here. Eastern Associated Coal 531 U.S. at 62.
See also ELKOURI & ELKOURI: HOW ARBITRATION WORKS 919 (Marlin M. Volz &
Edward P. Goggin eds., 2nd ed. 1991) (“Arbitrators will, in many
cases, refuse to uphold management’s action where it failed to
fulfill some procedural requirement specified by the agreement.”)
The majority attempts to avoid this straightforward analysis
by asserting that the arbitrator lacked the authority to consider
American Eagle’s post-termination procedural violations in deciding
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whether the airline had just cause to fire Balser. If any such
limitation exists on the arbitrator’s authority, it must be found
in the collective bargaining agreement.8 Misco, 484 U.S. at 39-40.
The majority argues that Section 20(A)(2) is that limitation
because it “does not require just cause plus the absence of any
alleged procedural deficiencies by American Eagle to support
termination.”
Section 20(A)(2) states, “[a] pilot who has completed his
probationary period will not be discharged or disciplined without
just cause.” While this section does not require more than just
cause to terminate an employee, it does not define what that term
means. Based on the mandatory language of Section 20(C), the
arbitrator has concluded that the contract intended just cause to
include the requirement that the employer hew to the prescribed
grievance procedures. This was an “arguable” contract
interpretation not in conflict with the contract’s plain language,
and therefore not subject to judicial reversal. Eastern Associated
Coal 531 U.S. at 62. Consequently, the majority’s substitution of
8
In Misco the Court reversed the Fifth Circuit’s decision
refusing to enforce an arbitrator’s award because the arbitrator
had failed to consider all the evidence available to him in
making his decision. The Court explained that barring fraud or
gross misconduct the only limitation on an arbitrator’s
evidentiary determinations dwell in the contract. Misco, 484
U.S. at 39. The only such limitation in Misco was a ban on
hearsay evidence, which the arbitrator did not transgress. Id.
Because fraud or gross misconduct did not motivate the
arbitrator, the reviewing court was powerless to impose
additional evidentiary requirements on the arbitrator. Id. at
40.
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its own interpretation of Section 20(A)(2) of the contract was
legally erroneous.
The majority also suggests that there may be a federal common
law prohibition on an arbitrator’s consideration of an employer’s
post-termination behavior in determining just cause. Assertion of
such a prohibition is contrary to Misco, which explained that
“procedural questions which grow out of the dispute and bear on its
[just cause determination] are to be left to the arbitrator,”
except where fraud or gross misconduct are alleged. Misco, 484
U.S. at 40.
Moreover, the case cited by the majority for this federal
common law limitation on arbitrator discretion in fact reiterates
the foundational rule that the limits on an arbitrator’s discretion
are only found in the collective bargaining agreement itself. In
Gulf Coast Industrial Workers Union v. Exxon Co., 991 F.2d 244 (5th
Cir. 1993), the labor agreement in question stated that Exxon
“shall have the right to discipline and discharge employees for
just cause.” Id. at 247. The contract further specified that drug
use constituted just cause, and rendered an employee “liable to
discharge on the first offense.” Id. This contract language
imposed the relevant restriction on the arbitrator: once an
arbitrator found that drug use had occurred, termination had to be
upheld. Thus, we refused to enforce the arbitrator’s award where
he reinstated an employee who had been found using drugs because
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the contract limited the arbitrator’s discretion once just cause
was found. Id. at 256. See also Delta Queen Steamboat Co. v.
District 2 Marine Engineers Beneficial Association, 889 F.2d 599,
604 (5th Cir. 1989) (finding that because contract defined “proper
cause” for termination as including “carelessness,” once that
finding was made no further inquiry was appropriate). Here there
is no such contractual definition of just cause limiting the
arbitrator’s discretion. Absent such a restriction, the arbitrator
was free to consider the contractual due process as a component of
just cause. Chauffeurs, 613 F.2d at 721; Maremont Corp., 515
F.Supp. at 173. Cf. Weber Aircraft v. General Warehousemen &
Helpers Local Union, 253 F.3d 821, 824-25 (5th Cir. 2001)
(explaining that where contract did not strictly define just cause,
nor limit the arbitrator’s discretion in deciding penalties,
arbitrator was free to fashion a lesser remedy than discharge for
less aggravated infractions).
Finally, the majority holds that the arbitrator implicitly
found just cause here, and therefore that it exceeded its authority
in then considering American Eagle’s contract violations in
reducing Balser’s punishment. In reaching this conclusion the
majority misinterprets the import of our decisions in Delta Queen
and E.I. DuPont de Nemours v. Local 900 of the Int’l Chemical
Workers Union (“Dupont”), 968 F.2d 456 (5th Cir. 1992) , and fails
to follow United Steelworkers of America v. Enterprise Wheel & Car
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Co., 363 U.S. 593 (1960).
In Delta Queen we explained that the phrase just cause
“carries no talismanic significance in labor jurisprudence.” Delta
Queen, 889 F.2d at 604. “If a collective bargaining agreement
defines ‘proper cause’ to include a nonexhaustive list of offenses,
an arbitrator cannot ignore the natural consequence of his finding
that a listed offense was committed.” Id. Thus, in Delta Queen
because “proper cause” was defined to include carelessness, and the
arbitrator found carelessness, he implicitly found “proper cause”
even if he never used those words. Id. We then applied this rule
to similar circumstances in DuPont, holding that where the
arbitrator found the use of drugs on company premises was “a
discharge offense,” and then found that conduct occurred, a just
cause finding was implicit. DuPont, 968 F.2d at 458-59.
In contrast to Delta Queen, here there is no contractual list
of offenses that constitute just cause, the finding of which
terminated the arbitrator’s discretion. And unlike DuPont the
arbitrator here never stated that the offenses that he found Balser
guilty of were offenses that themselves constituted just cause.
The majority argues that the arbitrator’s statement that “[t]he
Employer has not only the right, but a duty to rid the workplace of
such conduct,” (referring to harassment) was such a statement. But
the arbitrator’s statement that the airline had the right to rid
the workplace of harassment is not the same as finding just cause
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to terminate Balser. Many steps short of termination would
severely punish Balser for engaging in unacceptable conduct and
deter the conduct from recurring, thereby “ridding” the workplace
of that behavior. Likewise, while the arbitrator did find that
Balser had violated company rules by arming himself with a dirk on
board an aircraft, it never suggested that this rule violation was
itself a ground for discharge. Contrary to the majority’s
suggestion, then, there is nothing in the arbitrator’s opinion
which mandates the inference that the arbitrator found just cause.
Absent such a necessary logical implication, as in Delta Queen
and DuPont, we lack the authority to imply just cause, where, as
here, it results in a finding that the arbitrator exceeded his
untrammeled authority to interpret and determine just cause. If
there is ambiguity as to whether an arbitrator is acting within the
scope of his authority, that ambiguity must be resolved in favor of
the arbitrator, as a mere “inference” of ultra vires action is
insufficient “reason for refusing to enforce the award.” United
Steelworkers, 363 U.S. at 598.
Thus, I believe that the arbitrator was acting within the
scope of his contractual authority by interpreting the contract to
authorize it to consider the airline’s violation of Section 20(C)’s
first-step hearing in determining just cause. I would, therefore,
reverse the judgment of the district court and enforce the
arbitration award.
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