Monday, January 7, 2013

Fifth Circuit limits "implied finding" of just cause

In a recent decision, Albemarle Corp. v. United Steelworkers, the Fifth Circuit has reversed a District Court decision setting aside an arbitrator's award reinstating two employees. The arbitrator had concluded that while the employees had violated the employer's safety rules, termination was too severe a penalty and instead converted the discipline to a suspension and ordered the employees reinstated without back pay.

The employer argued, and the District Court agreed, that once the arbitrator had made the factual determination that the employees had violated the safety rule he was without authority to modify the penalty. The employer relied on a prior Fifth Circuit decision, E.I. DuPont de Nemours and Co. v. Local 900 of the International Chemical Workers Union, which had concluded that  "where an arbitrator implicitly finds that just cause exists, he need not recite the operative phrase 'just cause'."
The Albemarle court found this decision inapplicable.  Unlike its prior decisions, which had held that "when authority to impose a lesser sanction cannot be arguably inferred from a CBA, the arbitrator may not exceed the scope of the CBA to fashion one", the court noted that the contract here did not define just cause, and did not contain a schedule of offenses which would result in termination.

Rejecting the effort to set aside the award, the court concluded:

The arbitrator, having been given the matter to arbitrate, made no implicit or explicit finding that Albemarle had entertained cause enough to discharge the Grievants; rather, he explicitly concluded the opposite, that "discharge was not appropriate," and that there was instead "cause for the Employer to issue discipline." We cannot say that he erred in so concluding, let alone that he was not "even arguably construing or applying the contract and acting within the scope of his authority."  ***
Albemarle's position is also in tension with our precedent stating that explicating broad CBA terms like "cause," when left undefined by contract, is the arbitrator's charge. Amalgamated Meat Cutters & Butcher Workmen of N. Am., Dist. Local No. 540 v. Neuhoff Bros. Packers, Inc., 481 F.2d 817, 820 (5th Cir. 1973) ("Rather, by using only the general words `proper cause,' [the agreement] leaves the question of what is a good reason for discharge—the ultimate disciplinary measure—for subsequent interpretation."). Had the Company wished to remove doubt as to whether safety violations like the Grievants' met the criteria for cause to terminate, it had only "to bargain for a specific list of violations that will be considered sufficient grounds for discharge" in the CBA.
The Court also rejected the employers argument that enforcing the award would violate public policy, finding "Albemarle does not articulate how the CBA, if read by the arbitrator to permit reinstating the Grievants after sanctioning them fourteen months lost wages, violates public policy."

Update: The day after issuing the decision in Albemarle, another panel of the Fifth Circuit, including two of the three judges who decided Albemarle, issued a decision in Horton Automatics v. The Industrial Division of the CWA , affirming the lower court's decision setting aside an arbitrator's award which it determined had "implicitly, found that Horton had cause to discharge" the grievant. The cba in issue provided that "In determining whether the Company had cause to impose the aggrieved disciplinary action, the Arbitrator shall be limited to deciding whether a published rule or regulation which formed the discipline was in fact reasonable and violated by the employee. ...[A]ny departure or deviation by the arbitrator from the expressed terms , or requirements, set forth in this Article shall render the Arbitrators award null and void and of no effect." The Arbitrator had found that grievant had violated a reasonable safety rule, but concluded that evidence of disparate treatment rendered the termination unjust. Relying on the contract language, and its prior decisions, the Circuit concluded that arbitrator exceeded his authority by modifying the penalty imposed.

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