NC-DSH, Inc. v. Service Employees International Union, Local 1107

FILED
NOT FOR PUBLICATION NOV 10 2011

MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S . CO U RT OF AP PE A LS

FOR THE NINTH CIRCUIT

NC-DSH, INC., dba Desert Springs No. 10-16769
Hospital Medical Center,
D.C. No. 2:10-cv-00124-GMN-
Plaintiff-counter-defendant - PAL
Appellee,
v.
MEMORANDUM *
SERVICE EMPLOYEES
INTERNATIONAL UNION, LOCAL
1107,

Defendant-counter-claimant -
Appellant.

Appeal from the United States District Court
for the District of Nevada
Gloria M. Navarro, District Judge, Presiding

Argued and Submitted October 26, 2011
San Francisco, California

Before: GRABER and IKUTA, Circuit Judges, and KAPLAN,** Senior District
Judge.

*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Lewis A. Kaplan, Senior United States District Judge for
the Southern District of New Yorµ, sitting by designation.
 Plaintiff, NC-DSH, Inc., dba Desert Springs Hospital Medical Center (þthe

Employerþ), entered into a Collective Bargaining Agreement (þCBAþ) with

Defendant, Service Employees International Union, Local 1107 (þthe Unionþ).

The parties agreed to arbitrate all disputes, or þgrievances,þ arising from the CBA.

The Union filed two separate grievances against the Employer on behalf of two

employees who had been disciplined; the Union argued that the Employer lacµed

þjust causeþ for the discipline. A different arbitrator resolved each grievance, both

in favor of the Union. The district court vacated both arbitrators' awards, and the

Union appeals.

The district court erred in vacating the arbitrators' awards. A court has þno

business weighing the merits of the grievance.þ United Paperworµers Int'l Union

v. Misco, Inc., 484 U.S. 29, 37 (1987) (internal quotation marµs omitted). To

successfully challenge an arbitrator's decision, one þmust clear a high hurdle. It is

not enough . . . to show that the [arbitrators] committed an error--or even a serious

error.þ Stolt-Nielsen N.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758, 1767

(2010). It must be manifest that the arbitrator imposed his or her personal view of

sound public policy or dispensed a personal brand of industrial justice, untethered

to the CBA. Id. at 1767-68. Nevertheless, an award will stand even þif it is based

on the arbitrator's understanding of industry practices. An arbitrator is 'not

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confined to the express terms of the contract' but may also consider the 'industrial

common law' which 'is equally a part of the collective bargaining agreement

although not expressed in it.'þ SFIC Props., Inc. v. Int'l Ass'n of Machinists &

Aerospace Worµers, Dist. Lodge 94, Local Lodge 311, 103 F.3d 923, 925 (9th Cir.

1996) (quoting Federated Dep't Stores v. United Food & Commercial Worµers

Union, Local 1442, 901 F.2d 1494, 1497 (9th Cir. 1990)).

Here, the underlying disciplinary grievances were classic examples of

arbitrable disputes. Even if the arbitrators were wrong in their reading or

application of the CBA, they did read and apply the CBA to the facts in front of

them, expressly reciting the relevant CBA provisions and attempting to harmonize

them. We see no reason to depart from the standard rule of deference, as nothing

in either arbitrator's decision suggests impropriety.

Because we reverse, we need not reach any other issue.

The judgment of the district court is REVERSED and the case is

REMANDED with instructions to affirm both arbitration awards and to enter

judgment in favor of the Union.

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 FILED
NC-DSH, Inc. v. Service Employees International Union, Local 1107, 10-1676910 2011
NOV
IKUTA, Circuit Judge, dissenting in part: MOLLY C. DWYER, CLERK
U.S . CO U RT OF AP PE A LS

Even arbitrators must be reversed when they turn a blind eye to the language

of a collective bargaining agreement (CBA). Here, the arbitrators had to construe

Article 19 of the agreement, which said: '[t]he arbitrator shall have no authority to

modify or alter the discipline or penalty imposed by the hospital unless it is

established by a preponderance of the evidence that there was not just cause for the

discipline.' Despite the Union's ingenious efforts to rewrite this section, there is

no getting around its plain meaning: unless someone establishes the absence of just

cause by a preponderance of evidence, the arbitrator has no authority to change the

hospital's decision on discipline. Obviously, the hospital did not establish 'that

there was not just cause'; to do so would be contrary to its position that it had

cause for the discipline. Nor did the Union show by a preponderance of the

evidence 'that there was not just cause.' As a result, under the plain language of

the CBA, the arbitrator has no power to change the discipline imposed by the

hospital.

To be sure, we cannot reverse an arbitrator's mistaµen interpretation of a

CBA if the arbitrator is 'even arguably construing or applying the contract and

acting within the scope of his authority.' United Paperworµers Int'l Union v.

Misco, Inc., 484 U.S. 29, 37 (1987). Thus, we must uphold the decision of the
arbitrator in the LeFave matter; she at least explained her wrongheaded

interpretation of Article 19. But the arbitrator in the Benedito matter plainly did

not do that. After quoting the language of Article 19, he ignored it in favor of his

own preferred approach, stating: 'The burden of proof is generally held to be on

the Employer to prove guilt of wrongdoing, and probably always so where the

agreement requires just cause for discipline.' In other words, rather than interpret

the CBA, the Benedito arbitrator 'dispense[d] his own brand of industrial justice.'

United Steelworµers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597

(1960).

When an arbitrator's award 'does not draw its essence from the collective

bargaining agreement and the arbitrator is dispensing his own brand of industrial

justice,' we are required to reverse it. S. Cal. Gas Co. v. Util. Worµers Union of

Am., Local 132, AFL-CIO, 265 F.3d 787, 792-93 (9th Cir. 2001). The majority's

suggestion that the arbitrator need only recite the contract terms and not actually

apply them, Maj. op. at 3, is contrary to the Supreme Court and our case law,

which require the arbitrator to 'constru[e] and apply[] the contract.' Misco, 484

U.S. at 38; S. Cal. Gas Co., 265 F.3d at 792. Although arbitrators may looµ for

guidance from the industrial common law when the CBA is silent on an issue,

SFIC Props., Inc. v. Int'l Ass'n of Machinists & Aerospace Worµers, Dist. Lodge

2
94, Local Lodge 311, 103 F.3d 923, 926 (9th Cir. 1996), '[w]hen the arbitrator's

words manifest an infidelity' to the plain language of the contract, 'courts have no

choice but to refuse enforcement of the award,' Enter. Wheel, 363 U.S. at 597.

Because the Benedito arbitrator did not misread the contract, but clearly and

openly ignored it, I would affirm the district court's vacatur in that matter. I

dissent from the majority's failure to do so.

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