United States Court of Appeals
Fifth Circuit
FILED
November 15, 2004
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-20136
CONTINENTAL AIRLINES, INC.,
Plaintiff - Counter Defendant - Appellant
v.
INTERNATIONAL BROTHERHOOD OF TEAMSTERS,
Defendant - Counter Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Texas
Before BARKSDALE, Circuit Judge, PICKERING, Circuit Judge, and
LYNN, District Judge.*
LYNN, District Judge:
Continental Airlines, Inc. (“Continental”) appeals the
district court’s grant of summary judgment in favor of Appellee
International Brotherhood of Teamsters on Continental’s action to
vacate an arbitration award under the Railway Labor Act (“RLA”),
45 U.S.C. § 151 et seq., which reinstated an employee who was
terminated for allegedly violating a “last chance agreement”
after testing positive for alcohol. For the reasons stated
*
District Judge for the Northern District of Texas, sitting by
designation.
1
below, the court REVERSES the district court and RENDERS judgment
in favor of Continental.
I. FACTS AND PRIOR PROCEEDINGS
The facts relevant to this appeal are as follows.
Continental hired Mark Johnson in 1991 as an aircraft mechanic.
In August 2000, Johnson reported to work and was subjected to a
random alcohol breath test as required by the Department of
Transportation. The test established that Johnson had a blood
alcohol content (“BAC”) of .115, which is above the legal limit
for intoxication in Texas. As a result, Johnson was discharged.
He subsequently filed a grievance contesting his discharge. To
resolve the dispute, Johnson, with the assistance of the
International Brotherhood of Teamsters (“IBT”), entered into a
“last chance agreement” (“LCA”) with Continental. Under the LCA,
Johnson was permitted to return to work, provided he satisfied
the terms of the agreement. The LCA required that Johnson:
1) submit to an evaluation by Continental’s Employee
Assistance Program (“EAP”) director;1
2) complete a course of rehabilitation, if recommended by
the EAP director;
3) submit a letter of resignation to the EAP director to
be used to terminate his employment should he fail to
1
Continental notes that its EAP director serves as the company’s
Substance Abuse Professional (“SAP”) for purposes of federal
regulations governing transportation employee rehabilitation
programs. See 49 C.F.R. § 40 (explaining requirements and role
of SAP).
2
satisfy the terms of the agreement or the recommended
rehabilitation program;
4) agree he would be terminated if he subsequently failed
any drug or alcohol test (test positive for a BAC of
.04 or greater);
5) agree to be subject to random no-notice testing for a
set period of time;
6) complete a return to work alcohol test after release by
the EAP director.
Pursuant to the terms of the LCA, Johnson met with the EAP
director for an evaluation, at which time he was diagnosed with
alcohol dependency. He was thus required to complete an out-
patient alcohol treatment program, which he did. Prior to
returning to work, Johnson entered into an EAP rehabilitation
agreement (“EAP agreement”) with Continental, which set forth
specific terms for his continued employment. The EAP agreement
included the following relevant provisions:
1) During the 1-year rehabilitation period/contract,
commencing with the date of this Agreement, any use of
alcohol or illicit drugs will be considered a violation
of this Agreement. This includes mouthwash or other
medications/substances which may contain alcohol. If
your doctor prescribes medication which contains
alcohol/narcotic drugs, you are required to inform the
EAP staff of such medication.
2) You are subject to no-notice testing during the
rehabilitation period for not less than 1 year or more
than 5 years. The no-notice test screens for 10 drugs,
plus alcohol. Failure to report for a test will result
in your termination. . . .
4) You are responsible for maintaining contact with the
EAP Manager on at least a monthly basis for the purpose
of monitoring your progress. . . .
3
At the time of the EAP agreement, the EAP director orally
instructed Johnson to avoid drugs and alcohol, including over-
the-counter medications that may contain alcohol.
Prior to returning to work, Johnson was given, and passed,
an alcohol test.
On March 20, 2001, Johnson left the EAP director a voicemail
stating that he was taking over-the-counter cough medicine.
Although the EAP director received the message, he never
contacted Johnson about it. On March 22, 2001, Continental
tested Johnson for alcohol. Johnson tested positive, apparently
due to his ingestion of cough medicine. His BAC was .04 at 12:40
p.m. His confirmation test, taken at 1:05 p.m., showed a BAC of
.029.
Continental terminated Johnson for consuming alcohol.
Johnson filed a grievance protesting his termination. The
arbitrators, known as The System Board (the “Board”), consisted
of representatives of IBT and Continental and a neutral
chairperson. The Board held an evidentiary hearing on Johnson’s
grievance. A majority of the Board issued an opinion holding
that the LCA and the EAP agreement were valid and binding, and
that the Board had jurisdiction to determine whether Johnson
4
violated the agreements.2 The Board concluded that Johnson had
not violated the LCA or the EAP agreement and ordered Johnson
reinstated.
On March 6, 2003, Continental filed an action against IBT in
the Southern District of Texas, seeking to vacate the Board’s
award. Both parties moved for summary judgment. On January 8,
2004, the district court issued a memorandum opinion and order
denying Continental’s motion and granting IBT’s motion, and
upholding the award. On February 9, 2004, the district court
stayed the enforcement of the award, pending appeal.
Continental appeals the district court’s ruling and seeks
vacatur of the Board’s award on the grounds that (1) the district
court applied the wrong standard of review under the RLA; (2) the
district court erred in upholding the award because the Board
exceeded its authority, by ignoring the plain language of the
agreements and by substituting its judgment for that of the EAP
director; and, (3) even if the award were otherwise proper, the
district court should have vacated it as violative of public
policy.
2
Continental’s Board representative did not sign the opinion.
However, the parties do not dispute that the opinion is
nevertheless binding on the parties.
5
II. ANALYSIS
This court reviews de novo a district court’s grant and
denial of summary judgment. Int’l Union of Operating Eng’rs,
Local 351 v. Cooper Natural Res., Inc., 163 F.3d 916, 918 (5th
Cir. 1999).
A. Standard of Review
This court must first determine whether the district court
applied the appropriate standard of review in reviewing the
Board’s award. The RLA governs disputes between airline carriers
and their employees, with the stated purpose of avoiding
interruptions to commerce that might result from such disputes.
45 U.S.C. § 152. The RLA establishes mandatory procedures for
the resolution of both major and minor disputes. See Consol.
Rail Corp. v. Ry. Labor Exec. Ass’n, 491 U.S. 299, 302-03 (1989).
A “major” dispute involves the formation of collective bargaining
agreements (“CBAs”)–-agreements governing rates of pay, rules, or
working conditions of employees, as a class. Id. at 302. These
disputes arise when it is alleged that a CBA is not in place, or
when a party seeks to change the terms of an existing agreement;
therefore, “‘the issue is not whether an existing agreement
controls the controversy.’” Id. (quoting Elgin, J. & E.R. Co. v.
Burley, 325 U.S. 711, 723 (1945)). A “minor” dispute arises “out
6
of grievances or out of the interpretation or application of
agreements covering rates of pay, rules, or working conditions.”
Id. at 303. Thus, a minor dispute arises out of the enforcement
of an existing CBA. Id. Under the RLA, minor disputes must be
resolved through binding arbitration before an adjustment board
established by the union and the employer. Id. Continental and
IBT agree that the underlying dispute is a minor dispute under
the RLA.
Generally, arbitration awards arising from minor disputes
are reviewable by a district court on narrow grounds.
Specifically, judicial review is limited to (1) whether the Board
failed to comply with the RLA; (2) whether the Board failed to
conform or confine itself to matters within the scope of its
jurisdiction; and (3) whether the Board’s decision was the result
of fraud or corruption. 45 U.S.C. § 153(q)(2004). Normally, an
award is deemed to be within the Board’s jurisdiction when it is
grounded in the CBA. See Delta Queen Steamboat Co. v. Dist. 2
Marine Eng’rs Beneficial Ass’n, 889 F.2d 599, 602 (5th Cir.
1989). Absent one of these grounds, an award is binding upon the
parties and the findings are conclusive. Eastern Air Lines, Inc.
v. Transport Workers Union, 580 F.2d 169, 172 (5th Cir. 1978).
Unless a court concludes that the Board’s interpretation of the
contract is “wholly baseless and completely without reason,” the
7
Board’s interpretation must stand. Id. (quoting Gunther v. San
Diego & Ariz. Eastern Ry. Co., 382 U.S. 257, 261 (1965)). The
Supreme Court has explained that in reviewing a Board’s
interpretation of a contract,
a court should not reject an award on the ground that
the arbitrator misread the contract . . . . [T]he
arbitrator’s award settling a dispute with respect to
the interpretation or application of a labor agreement
must draw its essence from the contract and cannot
simply reflect the arbitrator’s own notions of
industrial justice. But as long as the arbitrator is
even arguably construing or applying the contract and
acting within the scope of his authority, that a court
is convinced he committed serious error does not
suffice to overturn his decision.
United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38
(1987).3 The district court employed this highly deferential
standard in reviewing the Board’s award.
Continental argues that because this dispute involved an LCA
and because the Board ignored an express term of the agreement,
the district court should have reviewed the award under a “no
deference” standard, pursuant to this court’s decision in Cooper
Natural Resources.4 IBT contends that the holding of Cooper
3
While Misco dealt with the review of an arbitration award under
the Labor Management Relations Act, this court has cited Misco
with approval when setting out the standard of review governing
awards under the RLA. See American Eagle Airlines, Inc. v. Air
Line Pilots Ass’n, Int’l, 343 F.3d 401, 406 (5th Cir. 2003).
4
The parties treat the EAP agreement as though it were a part of
or an addendum to the LCA, which it is. Thus, we treat the EAP
and LCA as a part of the same agreement.
8
Natural Resources does not require that awards involving LCAs
receive more searching judicial review; i.e., less deference,
than awards involving collective bargaining agreements.
In Cooper Natural Resources, this court upheld the district
court’s vacatur of an arbitrator’s award, in part because the
arbitrator ignored the LCA. The court held that when parties
enter into an LCA, “[t]he LCA must be thought of as a supplement
to the CBA” which constitutes “the parties’ chosen means of
dispute resolution,” and which is binding on the arbitrator. Id.
at 919. The court did not state, however, that an arbitrator’s
decision interpreting an LCA is entitled to any less deference
than is one interpreting a CBA, as Continental contends.
Continental relies heavily on the statement in Cooper Natural
Resources that “an arbitrator ignoring the explicit terms of a
last chance agreement is owed no deference, and his award must be
closely scrutinized”. Id. However, we conclude that the panel
in Cooper was not mandating a more stringent standard of review
for arbitration awards arising from LCAs than from reviews of CBA
determinations.
In Cooper Natural Resources, the arbitrator ignored the LCA,
relying solely on the CBA. The court in that case was not faced
with an issue like that in the present case, where the arbitrator
interpreted a provision of the LCA and a party challenged the
9
arbitrator’s interpretation. Thus, Cooper Natural Resources does
not support Continental’s position that a more searching review
of an arbitrator’s interpretation of an LCA is mandated.
Second, none of the authorities relied upon by the court in
Cooper Natural Resources support a “no deference” standard of
review for awards arising from LCAs. In Tootsie Rolls Indus.,
Inc. v. Local Union No. 1, Bakery, Confectionary & Tobacco
Workers Int’l Union, 832 F.2d 81 (7th Cir. 1987) (holding that an
arbitrator’s award should have been vacated), the court applied
the same standard of review to an award involving an LCA as it
typically applied to awards involving CBAs. Noting that an award
under a CBA should be upheld as long as it “draws its essence”
from the CBA, the court determined that by basing the award on a
company policy outside the applicable LCA, the arbitrator’s award
did not “draw its essence” from the LCA, and was thus improper.
Id. at 83-84.
Similarly, in Coca-Cola Bottling Company of St. Louis v.
Teamsters Local Union No. 688, 959 F.2d 1438 (8th Cir. 1992)
(reviewing an arbitrator’s award involving an LCA), the court
cited the same standard of review identified in Misco, for a CBA,
as applicable to awards under LCAs. Id. at 1440.
The pre-Misco case of Bakers Union Factory #326 v. ITT
Continental Baking Co., 749 F.2d 350 (6th Cir. 1984), which the
10
Sixth Circuit reaffirmed in Ohio Edison Co. v. Ohio Edison Joint
Council, 947 F.2d 786 (6th Cir. 1991), is less explicit than
Coca-Cola Bottling; however, the Sixth Circuit appears to
recognize that the same deferential standard of review applies to
review of an arbitrator’s interpretation of an LCA as applies to
review of the interpretation of a CBA. In Bakers Union, the
court addressed the question of whether an arbitrator’s award,
ignoring the LCA, was properly upheld. The district court cited
the general rule that the decision of an arbitrator will not be
overturned as long as it derives its authority from the CBA.
Concluding that it did so derive its authority, the district
court upheld the award. On appeal, the Sixth Circuit held that
while the general rule was as described, the scope of review was
broader when the parties entered into an LCA. Id. at 353-54.
That is what Continental argues for here. While the Bakers Union
decision speaks of narrow review and broad review, its discussion
focuses on the situation where an arbitrator ignores an LCA, as
the arbitrator did in Cooper Natural Resources. The court was
not faced with a situation where an arbitrator’s interpretation
of an LCA was being challenged. In that situation, the court
seemed to recognize that a deferential standard of review would
apply: “[A]n arbitrator may determine whether the settlement
agreement has, in fact, been breached . . . . Th[is]
11
determination[ ] retain[s] the benefit of a deferential standard
of review.” Bakers Union, 749 F.2d at 356. In light of the
facts and holding of Cooper Natural Resources and the authority
relied upon in it, we hold that the standard of review applicable
here is the deferential standard of review articulated by the
Supreme Court in Misco and employed by the district court below.
Therefore, the court rejects Continental’s argument that this
court is to give no deference to the arbitrator’s award.
B. Did the District Court Nonetheless Err in Upholding the Award?
The court must next determine whether, under a deferential
standard of review, the district court nonetheless erred in
upholding the award. Continental makes two arguments that the
award should be vacated, because the Board exceeded the scope of
its jurisdiction. First, it argues that the Board ignored the
plain terms of the LCA and EAP. Second, it argues that the Board
exceeded its authority by substituting its judgment for that of
Continental’s EAP director.
In order to be within the Board’s authority, the award must
“draw its essence” from the LCA and EAP. See Misco, 484 U.S. at
38. The Board made the following findings and conclusions about
Johnson’s violations of the LCA and EAP agreement:
12
• While Johnson did not visit his physician and receive a
written prescription, his doctor’s office approved for
use over-the-counter cough medicine until he could be
seen by his physician.
• Johnson left the EAP director a voicemail informing him
that he was taking cough medicine. The director never
returned Johnson’s call.
• His doctor’s approval, while not qualifying as a formal
written prescription, “met the letter and spirit” of
the EAP agreement. He obtained approval of the
medication and promptly notified the EAP director.
• It would have been reasonable for the EAP director to
warn Johnson that the use of the cough medicine could
potentially violate the agreement.
• The EAP director failed to provide an adequate
explanation for his failure to warn Johnson.
• Johnson did not violate the LCA’s requirement that
Johnson not test positive for the presence of drugs or
alcohol in a volume equal to or greater than .04%. The
confirmation test taken in March 2001 provided a
reading of .029%–well below .04% and insufficient to
constitute a violation of the LCA.
• Johnson nonetheless has demonstrated a “pathetic lack
of knowledge of and commitment to what it takes to live
a life of sobriety” because he could not recall his
sobriety date or the first steps of the AA twelve-step
program.
• In light of the above, Johnson should be reinstated to
his former position and made whole for lost wages and
benefits.
Continental argues that these findings reflect that the
Board ignored the plain terms of the contract because it (1)
ignored the language “doctor’s prescription” when it held that
the approval of the use of cough medicine containing alcohol by a
member of a doctor’s staff satisfied the requirements of the EAP
agreement, which was incorporated into the LCA agreement, for a
doctor’s prescription for any medication containing alcohol and
13
(2) it added a “last chance warning” requirement to the EAP
agreement and the LCA by determining that the EAP director should
have contacted Johnson regarding his voicemail. IBT argues that
the award should be upheld because the Board interpreted the LCA
and EAP when it made its determination. IBT also argues that the
Board’s determination that Johnson should have been warned was
irrelevant to its award since the Board separately determined
that Johnson had not violated the LCA or EAP.
Under Misco, an arbitrator’s award is to be upheld as long
as the arbitrator “is even arguably construing or applying the
contract.” Misco, 484 U.S. at 38. Here, the Board concluded
that Johnson was in compliance with the LCA and EAP because he
spoke with someone on his doctor’s staff and obtained approval
from that person to take over-the-counter cough medicine. He
then informed the EAP Director via voicemail that he was taking
such medication. The record establishes that Johnson contacted
his doctor’s office to schedule an appointment, that he spoke
with a member of the doctor’s staff, and that the staff member
informed Johnson that the doctor could not prescribe medicine
without an appointment, but approved his taking over-the-counter
cough medicine until his appointment date. There is no evidence
of any kind that Johnson or a member of the doctor’s staff spoke
with the doctor regarding Johnson’s situation, or that the
14
doctor, either directly to Johnson, or indirectly to his staff,
instructed Johnson to take over-the-counter cough medicine which
contained alcohol. Thus, the uncontested evidence is that
Johnson’s doctor never approved the use of the cough medicine he
took, either orally or by a formal prescription. Because
Johnson’s doctor did not prescribe him medicine containing
alcohol, his notification to the EAP director, and that person’s
not calling him back, is irrelevant. The LCA and EAP do not
require a call back to Johnson. By failing to require proof of a
doctor’s order, the Board’s interpretation effectively reads
“doctor” out of the EAP agreement. Such an interpretation is not
an arguable construction of the agreements; thus, the Board
exceeded the scope of its jurisdiction in fashioning its award.
Accordingly, we hold that the district court erred in upholding
the award, and that the award should be vacated.
Because we conclude that the Board’s interpretation failed
to arguably construe the agreements, we need not address two
other issues raised by Continental as grounds to vacate the
award; i.e., whether the Board otherwise exceeded its authority
or whether the award should be vacated on public policy grounds.
The judgment of the district court is REVERSED and RENDERED.
III. CONCLUSION
15
For the foregoing reasons, we REVERSE the district court’s
decision granting summary judgment for IBT and upholding the
arbitration award, and RENDER summary judgment in favor of
Continental, vacating the arbitration award and reinstating
Continental’s discharge of Mark Johnson.
REVERSED AND RENDERED
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