Shaw Environmental was a government contractor on a military facility. The cba between Shaw and the Wiregrass Metal Trades Council called for the termination of an employee for "Possessing ... Government property without authorization."
A bargaining unit employee was dismissed after he gave a plasma cutter to an auto parts store in payment of a bill. The employee claimed that the equipment had been left with him for temporary storage by an individual who failed to retrieve it after several requests to do so. While there was some dispute about how the employee had acquired the plasma cutter his employment was terminated when it was established that the equipment was government property. The termination was grieved, and the dispute was submitted to Arbitrator Carol M. Hoffman for resolution.
Grievant claimed that he was not aware that the equipment was government property. Shaw maintained that proof of actual knowledge was irrelevant, that the offense occurred upon "possession" without authorization without regard to actual knowledge of ownership.
Arbitrator Hoffman sustained the grievance (here). She accepted grievant's testimony that he was not aware that the property in issue was government owned. She concluded:
...grievant's demeanor at the hearing evidenced an unawareness of the fact that the plasma cutter was stolen or that it was property belonging to the government at the time Justin Griffin brought it to grievant's home. Grievant cannot be said to have violated a policy prohibiting possession of government property when he did not know the property belonged to the government or that it had been stolen.
Separately, Arbitrator Hoffman faulted the Company for failing to conduct its own investigation, relying instead on the investigation performed by the military police.
Shaw sought to vacate the award. It claimed that the arbitrator had exceeded her authority by improperly adding a "knowledge" element to the offense. The District Court (here) agreed with Shaw and vacated the award. It found:
While the parties expressly bargained for an arbitrator to be given the authority to interpret and apply the CBA and ultimately issue final and binding determinations, they did so with the understanding that the arbitrator would not “change, alter, amend, modify” or add to the other provisions bargained for in the CBA. And as the Magistrate Judge properly recognized, “[i]t is an unobjectionable principle that an employer can bargain to have included in a collective bargaining agreement a provision to the effect that certain identified types of employee conduct always provide just cause for discharge.” ... Here, the CBA contained just such a provision, whereby both parties agreed that the “possessing, taking, removing, using, destroying, or tampering with Company or Government property without proper authority” would constitute just cause for termination. ... Wiregrass could have negotiated “knowingly” possessing into the contract, but did not. The arbitrator exceeded her authority by adding it to the CBA.
The Metal Trades Council appealed, and the Eleventh Circuit has now reversed (here), effectively confirming the award. The Court noted two principles defining the scope of an arbitrator's authority. The first is that the court must defer "entirely" to the arbitrator's interpretation of the contract, no matter how wrong it may believe that interpretation to be. The second is that an arbitrator may not ignore the plain language of the contract. The issue, therefore, is whether the arbitrator interpreted the contract or, instead, modified it by ignoring relevant language.
In this case, it was undisputed that the policy in issue was silent on the question of whether an employee must know that the property in question was government owned to be subject to termination. The parties disagreed, however, on the effect of that silence. The Court summarized the conflicting positions:
Shaw contends that the policy's silence renders it unambiguous and impervious to interpretation. According to Shaw, the policy's failure to say anything about a knowledge requirement definitively shows that the parties did not intend any such requirement, but instead intended for the possession of government property without proper authority to be a strict liability offense. The Union, on the other hand, contends that the policy's silence renders it open to interpretation, allowing the arbitrator to read into it (or infer from it) a knowledge requirement.
The Court noted that the language would have been clearer if it had provided that the possession of government property without authorization was a terminable offense whether or not the employee had knowledge that the property belonged to the government, or, in contrast, if it provided that an employee would be in violation of the policy only if he "knowingly possessed government property without authorization." Since it did neither, however, the language used was subject to interpretation
The next question, according to the Court, was whether the arbitrator had in fact interpreted the language. To resolve that question an analysis of the arbitrator's reasoning is called for. Here, however, the arbitrator failed to expressly articulate a rationale from which that analysis could be performed. According to the Court:...
... there is no indication that her imposition of the knowledge requirement resulted from interpretation of the agreement instead of her own view of right and wrong. She did not characterize her task as one of interpretation. She did not describe the plain meaning of the terms in the policy. She did not invoke canons of construction. She did not look to extrinsic aids to find the parties' intent. She did not explicitly do any of the things that we ordinarily associate with an interpretive effort. But that does not mean that she failed to do some of them implicitly — in her head instead of on the page.
Given that the state of the record could support either alternative, i.e interpretation or modification, the Court concluded that, "unlike Buridan's ass" it could make a decision between the two equally plausible choices. Relying on the Supreme Court's decision in United Steelworkers of America v. Enterprise Wheel & Car Corp., the Court held that unless it was "apparent" that the arbitrator had exceeded her authority the award should be confirmed. This rule, observed the Court, reflected the strong, although not irrebuttable, presumption that the arbitrator interpreted the agreement rather than modifying it. The Court noted:
The Enterprise Wheel presumption, which we apply today, helps keep the promise of arbitration. By presuming, in the absence of evidence to the contrary, that an arbitrator's award rested on an interpretation and not a modification of an agreement, we discourage parties from trying to snatch court victories from the jaws of arbitration defeats.
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