Teamsters Local No. 5 v. Formosa Plastics Corp.

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
For the Fifth Circuit March 11, 2004

Charles R. Fulbruge III
Clerk
No. 03-30572

TEAMSTERS LOCAL NO. 5,

Plaintiff-Appellee,

VERSUS

FORMOSA PLASTICS CORP., BATON ROUGE, LOUISIANA,

Defendant-Appellant.

Appeal from the United States District Court
for the Middle District of Louisiana

Before JOLLY, HIGGINBOTHAM, and DeMOSS, Circuit Judges.
DeMoss, Circuit Judge:

This case arises out of a suit by Teamsters Local No. 5 to

vacate the decision of an arbitrator interpreting its collective

bargaining agreement with Formosa Plastics Corporation. The

arbitrator had ruled that the collective bargaining agreement

demonstrated that the parties intended for grievances to be filed

within a reasonable time, and that the grievance at issue was

untimely. The parties filed cross-motions for summary judgment,

and the district court ordered vacatur of the arbitrator’s

decision.
BACKGROUND

Teamsters Local No. 5 (“Local 5") filed a grievance (the

“Grievance”) under its then-existing collective bargaining

agreement (the “CBA”) with Formosa Plastics Corporation

(“Formosa”). It contended that eleven employees, who were

transferred from unskilled “loader” classifications to skilled

“operations” qualifications, were entitled to greater pay than they

received after the transfers. The transfers occurred between March

8, 1999, and March 26, 2001, but Local 5 did not learn of facts it

believed to warrant a grievance until September 13, 2001.

The CBA grievance procedure did not contain a specific time

limit for filing grievances, although it did contain a strict

mechanism and time frame for the processing of grievances. CBA

§§ 40-41. It is undisputed that Local 5 does not receive, in the

regular course of business, documents concerning wage payments, and

discovered the information relating to the Grievance while

investigating another matter. Local 5 filed its Grievance within

five days after receiving sufficient information to do so.

The arbitrator, Elvis C. Stephens (the “Arbitrator”), who had

jurisdiction under the CBA, rendered a written decision that

concluded: (1) the language of the CBA demonstrated that the

parties intended for grievances to be filed within a reasonable

time; and (2) the instant Grievance was untimely because it was

filed six months after the last employee changed classifications.

2
The Arbitrator did not reach the merits of the Grievance.

Local 5 filed this lawsuit to vacate the Arbitrator’s

decision, and both parties then filed cross-motions for summary

judgment. The district court held that, while the parties intended

for grievances to be filed within a reasonable time, this

limitations period only begins to run from the time Local 5 or an

employee has knowledge of the alleged CBA violation. The court

thus granted Local 5's motion, vacated the Arbitrator’s award, and

remanded the case back to the Arbitrator for further proceedings.

Formosa timely filed a notice of appeal.

While the parties diverge in their articulation of the

question(s) presented, they do not dispute the district court’s

acceptance of the Arbitrator’s interpretation of the CBA as

requiring grievances to be filed within a reasonable time. The

only issue before this Court, therefore, is whether the district

court should be reversed for setting aside the Arbitrator’s

decision that the timeliness of the filing should be evaluated from

the time of the alleged violation, rather than its discovery.

Local 5 argues that no “grievance” existed until there was an

“expressed difference, dispute or controversy,” between an employee

(or Local 5) and Formosa. CBA § 40. Thus, according to Local 5,

the Arbitrator ignored the plain language of the CBA in finding

that the imputed limitations period began when the alleged

violation occurred, rather than when Local 5 could express its

grievance and initiate dispute resolution proceedings.

3
Formosa counters that, however wrong or unreasonable the

Arbitrator’s determination may have been (Formosa argues, of

course, that it was neither), it drew its “essence” from the CBA,

and did not go against any clear language in that contract.

Formosa points out that though courts vacate awards wholly

inconsistent with contractual language, courts are precluded from

reviewing arbitrators’ fact-finding. Formosa notes that Local 5's

argument is basically that the Arbitrator improperly considered

certain facts, notably the CBA language (which is silent as to

limitations) and Local 5's lack of notice. According to Formosa,

given the extreme deference owed arbitrators, there is no way that

the application of a properly imputed limitations period could have

“left the CBA behind.” Moreover, while the CBA did not have a

specific time limit for filing grievances, the parties clearly

contemplated that grievances would be resolved promptly -- within

a “reasonable time” as stated by the Arbitrator. It is “rationally

inferrable” from this contemplation, Formosa contends, that the

limitations period would commence upon the occurrence of the

violation, rather than at any other particular time. Formosa

concludes in the absence of specific contractual terms, therefore,

the district court impermissibly substituted its own discernment of

the parties’ intent -- and its own evaluation of the equities

involved -- for that of the Arbitrator.

DISCUSSION

4
Whether the district court erred in vacating the Arbitrator’s
decision on the ground that the limitations period for the instant
grievance only began to run when Local 5 or an employee learned of
the potential CBA violation.

In an appeal from a grant of summary judgment in an action to

vacate an arbitration award, we review the district court’s ruling

de novo. Weber Aircraft Inc. v. General Warehousemen & Helpers

Union Local 767, 253 F.3d 821, 824 (5th Cir. 2001). A court must

affirm an arbitral award if the arbitrator is “arguably construing

or applying the contract and acting within the scope of his

authority.” United Paperworkers Int’l Union v. Misco, Inc.,

484 U.S. 29, 38 (1987). If the arbitrator has not exceeded his

authority, “the fact that a court is convinced he committed serious

error does not suffice to overturn his decision.” Major League

Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001)

(internal quotes and citation omitted).

Further, this Court has made clear that, a district court’s

review of an arbitrator decision is “extremely deferential.” Nat’l

Gypsum Co. v. Oil, Chem. & Atomic Workers Int’l Union, 147 F.3d

399, 401 (5th Cir. 1998). When reviewing an arbitration award

under the Labor-Management Relations Act, a district court is

particularly constrained: “As long as the arbitrator’s decision

‘draws its essence from the collective bargaining agreement’ and

the arbitrator is not fashioning ‘his own brand of industrial

justice,’ the award cannot be set aside.” Weber, 253 F.3d at 824

5
(citing Misco, 484 U.S. at 36).1

Here, the Arbitrator interpreted CBA §§ 40-41, the sections

that discuss grievance procedures, and inferred the parties’

intention was that grievances be filed, processed, and resolved

within a reasonable time. The Arbitrator was construing the CBA

and acting within the scope of his authority. The Arbitrator’s

determination that the Grievance was not timely filed does not

violate or change any of the language in CBA §§ 40-41. See Houston

Lighting & Power Co. v. Int’l Bhd. of Elec. Workers, Local Union

No. 66, 71 F.3d 179, 184 (5th Cir. 1995) (“If the language of the

agreement is clear and unequivocal, an arbitrator is not free to

change its meaning.”). Likewise, although there is not language in

CBA §§ 40-41 requiring that the Arbitrator find that any

limitations period for filing a grievance begin to run when the

grievance occurs and therefore this Grievance was not timely, this

finding is inferrable from CBA §§ 40-41 which outlines the

procedures for timely and prompt resolution of grievances. See

1
Both Weber and Misco are grounded in the Supreme Court’s
well-settled standard for judicial review of arbitration awards,
first established in the “Steelworker Trilogy” in 1960. United
Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S.
593 (1960); United Steelworkers of America v. Warrior & Gulf
Navigation Co., 363 U.S. 574 (1960); United Steelworkers of
America v. American Mfg. Co., 363 U.S. 564 (1960). The essence
of the Steelworker Trilogy is that, when the parties have agreed
to submit all questions of contract interpretation to the
arbitrator, courts are not to review the merits of the resulting
award (or the equities of a claim), but must merely “ascertain[]
whether the party seeking arbitration is making a claim which on
its face is governed by the contract.” American Mfg. Co., 363
U.S. at 568.

6
Nat’l Gypsum, 147 F.3d at 402 (“Although the arbitrator’s

construction of the contractual provision may not be the only

possible construction or even a correct one, it must nevertheless

be upheld unless [it] . . . is not ‘rationally inferrable’ from

the letter (or even the purpose) of the [CBA].”) (citations

omitted). Accordingly, the Arbitrator’s interpretation of the CBA

was not a radical departure from the terms of that document --

going so far beyond serious error -- as to warrant vacatur by the

district court. Therefore, the decision of the district court must

be reversed and the award reinstated.

CONCLUSION

Having carefully reviewed the record in this case, the

parties’ respective briefing and arguments, for the reasons set

forth above, we reverse the district court and reinstate the

Arbitrator’s award.

REVERSED AND RENDERED.