San Juan Coal Co. v. International Union of Operating Engineers, Local 953

FILED
United States Court of Appeals
Tenth Circuit
PUBLISH
March 6, 2012
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT

SAN JUAN COAL COMPANY,

Plaintiff–Appellee,

v.
No. 11-2071
INTERNATIONAL UNION OF
OPERATING ENGINEERS, Local 953,

Defendant–Appellant.

Appeal from the United States District Court
for the District of New Mexico
(D.C. No. 1:10-cv-00099-MV-LFG)

Shane Youtz (Marianne Bowers with him on the briefs), Youtz & Valdez, P.C.,
Albuquerque, New Mexico, for Defendant-Appellant.

Patrick Richard Scully (Matthew M. Morrison with him on the briefs), Sherman &
Howard L.L.C., Denver, Colorado, for the Plaintiff-Appellee.

Before LUCERO, MCKAY, and TYMKOVICH, Circuit Judges.

LUCERO, Circuit Judge.
 An arbitrator’s interpretation of an agreement, even one that is flawed or based on

questionable findings of fact, is due the utmost judicial deference. It matters not that a

reviewing court might offer a more cogent reading of the agreement; the arbitrator’s

interpretation must be upheld wholly unless it is without any textual basis.

San Juan Coal Company (“San Juan”) and the International Union of Operating

Engineers, Local 953 entered into binding arbitration to determine whether union

members on a certain schedule were entitled to holdover pay. The arbitrator concluded

that the union members were entitled to the extra pay, but on review, the district court

overturned the arbitral award. Because the arbitrator’s interpretation was colorable, we

hold that the district court improperly substituted its interpretation of the agreement.

Exercising jurisdiction under 28 U.S.C. § 1291, we reverse.

I

San Juan operates an underground coal mine near Farmington, New Mexico.

Workers in the mine are unionized, and the terms of their employment are set forth in a

collective bargaining agreement (“CBA”). The CBA’s section on overtime pay provides

that “time worked beyond the scheduled hours for a particular day will be paid at one and

one-half times (1 ½) the normal rate of pay.” It also includes a “holdover pay” provision,

which states that “an employee . . . required to work for two (2) hours after the

completion of their shift . . . will be paid an additional one half hour at one and one-half

times (1½) the normal rate.”

In an effort to reduce operational costs, San Juan entered into negotiations with the
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union to establish reorganized worker schedules. The fruit of this bargaining was a two-

page Memorandum of Agreement (“MOA”).

The MOA set the terms of a new schedule that it defined as a “weekend shift.”

This new schedule provided workers with four days off followed by three consecutive

work days. The agreement dictated that although a “normal workday shall be no more

than ten (10) consecutive hours[,] . . . [t]he weekend shift will include an additional two

(2) hours of mandatory overtime.” A heading in the MOA described this schedule as

“3/10+2 OT Hours Weekend Shift.” Another provision stipulated that “Leave Bank for a

Weekend Shift (10 Hour Shift + 2 Hours OT) will be accounted for by 10 hours of Leave

Bank utilized.” Workers on the weekend schedule were thus required to work a total of

36 hours each week. The MOA stated that it does not affect any other provision of the

CBA and that all workers covered under the CBA “will continue as full time employees,

with no loss of benefits.”

Approximately one month after the parties executed the MOA, the union filed a

grievance arguing that the weekend shift workers were wrongfully denied holdover pay.

According to the union, the “shift” for the purposes of the holdover pay provision

consisted of ten hours of regular pay. Under this theory, the two hours of mandatory

overtime were “after completion of [the workers’] shift,” entitling them to an additional

half-hour of pay at one and a half times their base rate. San Juan disagreed, contending

that the weekend “shift” was the entire twelve-hour work period, meaning that holdover

pay was not required unless the workers stayed for two hours beyond their normal twelve
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hours. To settle their dispute, the parties entered into binding arbitration.

Following an arbitration hearing in which testimony and documentary evidence

were presented, the arbitrator sided with the union. In reaching his conclusion, the

arbitrator stated that the MOA “explicitly identifies the Weekend Shift as a ten (10) hour

shift.” To further support his conclusion, the arbitrator cited the MOA’s statement that

the “normal workday shall be no more than ten (10) consecutive hours of work,”

implicitly reasoning that “normal workday” and “shift” were synonymous. Additionally,

the arbitrator relied on the MOA’s guarantee of “full time” employment. Based on its

finding that “full time in the world of work is forty (40) hours per week,” the arbitrator

reasoned that San Juan’s interpretation would violate the MOA’s full-time guarantee

because workers would only be compensated for 39 hours of work.

Unhappy with this outcome, San Juan sought to overturn the arbitration award

pursuant to § 301 of the Labor Management Relations Act, 29 U.S.C. § 185. Both parties

moved for summary judgment. The district court granted San Juan’s motion and vacated

the arbitrator’s decision. Although the court acknowledged that its power to review the

arbitral decision was limited, it concluded that the arbitrator lost sight of the plain

language of the MOA and CBA. Specifically, it rejected the arbitrator’s assertion that the

MOA “identifies the Weekend Shift as a ten (10) hour shift,” instead concluding that “the

MOA clearly and repeatedly identifies the entire twelve-hour work period at issue as a

‘weekend shift.’” The court also reasoned that the arbitrator’s attempts to define “normal

workday,” “shift,” and “full time” had no basis in the text of the agreements. Although
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the court acknowledged that the MOA contained some inconsistencies, it nevertheless

concluded that the arbitrator’s decision was indefensible.

II

We review a grant of summary judgment in a labor arbitration case de novo.

Kennecott Utah Copper Corp. v. Becker, 186 F.3d 1261, 1266 (10th Cir. 1999). Judicial

review of an arbitral award, however, “is among the narrowest known to law.”

Champion Boxed Beef Co. v. Local No. 7 United Food & Commercial Workers Int’l

Union, 24 F.3d 86, 87 (10th Cir. 1994) (quotation omitted). An arbitrator’s factual

findings are beyond review, as is her interpretation of the contract as long as it does not

ignore the plain language of the collective bargaining agreement. Id. at 87.

The Supreme Court has emphasized that vacating an arbitral award is warranted

only in extraordinary circumstances. If an “arbitrator is even arguably construing or

applying the contract and acting within the scope of his authority,” the arbitral award

should be upheld. Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509

(2001) (per curiam) (quotation omitted). An arbitral award may be vacated only if the

arbitrator “strays from interpretation and application of the agreement and effectively

dispenses his own brand of industrial justice.” Id. (quotation and alteration omitted). To

show less deference would risk “improperly substitut[ing] a judicial determination for the

arbitrator’s decision that the parties bargained for.” Id. at 510 (quotation omitted).

III

After reviewing the CBA and MOA, we conclude that the arbitrator’s decision had
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at least some foundation in the text of the controlling agreements and must be upheld.

This is not to say that the district court’s interpretation of the agreements was in any way

flawed or illogical. But a court’s review of an arbitral award is far removed from the

usual de novo standard of review. Thus, although the MOA refers to the entire twelve-

hour period as a “shift” in some places, the fact that the leave bank provision contains the

phrase “10 Hour shift” provides a sufficient textual basis to sustain the arbitrator’s

interpretation. Moreover, the arbitrator’s determinations that “normal workday” and

“shift” were synonymous and that “full time” meant 40 hours per week, while not

explicitly dictated by the text of the MOA, were nonetheless defensible constructions of

the agreement. See Champion Boxed Beef, 24 F.3d at 88-89 (“[A]n arbitrator may

consider and rely upon extrinsic evidence, including negotiating and contractual history

of the parties, evidence of past practices, and the common law of the shop, when

interpreting ambiguous provisions.”).

The district court correctly recited the narrow standard at the outset of its opinion,

but its analysis strayed from the highly deferential review mandated by our jurisprudence.

Specifically, the court acknowledged at least one inconsistency in the MOA’s definition

of “shift,” but nonetheless overturned the arbitrator’s interpretation of that term. That

constitutes error. As long as the arbitrator’s conclusion has some textual basis, the fact

that “a court is convinced he committed serious error does not suffice to overturn his

decision.” Major League Baseball, 532 U.S. at 509 (quotation omitted).

In looking to extrinsic evidence of the parties’ intent, the court further erred.
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Although such evidence is well within an arbitrator’s purview, Champion Boxed Beef, 24

F.3d at 88-89, a court must limit itself to the narrow question of whether the arbitrator’s

decision lacked any basis in the contractual text. To go beyond that “usurps a function

which . . . is entrusted to the arbitration tribunal.” Major League Baseball, 532 U.S. at

510 (quotation omitted).

IV

The order of the district court vacating the arbitral award is REVERSED, and the

case is REMANDED with instructions to enter an order of enforcement.

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