Unpublished Disposition, 843 F.2d 502 (9th Cir. 1986)

No. 87-1536.

United States Court of Appeals, Ninth Circuit.

Before GOODWIN and FLETCHER, Circuit Judges, and SAMUEL P. KING,^**  District Judge.

MEMORANDUM^* 

Safeway appeals a district court's confirmation of an arbitrator's finding that Safeway had violated its collective bargaining agreement by employing lower-paid "general merchandise clerks" ("GMCs") instead of food clerks in the service delicatessen department of its Novato, California store. We affirm.

BACKGROUND

Local 1119 (the Union) and Safeway are parties to a collective bargaining agreement (CBA), last renegotiated in 1983, that authorizes Safeway to institute non-food or general merchandise departments in its stores and to staff them with lower-paid general merchandise clerks (GMCs). The agreement defines non-food or general merchandise as "service delicatessen, health food, floral and bakery merchandise." The term "service delicatessen merchandise" is not defined in the CBA.

In December 1984 Safeway opened a new delicatessen department at its store No. 979 in Novato, California, and staffed it with six GMCs. The deli contained one enclosed refrigerated case of merchandise obtainable only by direct service from a clerk--e.g., bulk meats and cheeses sliced to order--and three refrigerated cases of merchandise directly accessible by the customers. The arbitrator found that approximately 80 to 85 percent of the twelve delicatessen employees' work consists of "production" work, such as slicing, cutting, wrapping, stocking, cooking, and pricing, rather than direct service to customers.

The Union grieved Safeway's use of GMCs in the department, arguing that the new deli did not qualify for GMCs under the terms of the CBA. The Union's position was that the term "service delicatessen" meant that the "predominant method of merchandising" was service to customers, as opposed to customer self-service. Safeway argued that "service delicatessen" meant simply a department stocked with "service delicatessen merchandise" as that term was generally understood by the industry.

The arbitrator, after examining the CBA itself, visiting some supermarket delis, reviewing the history of the bargaining negotiations, and considering four prior arbitrations interpreting the same CBA provision (three of which adopted the "predominant method of merchandising" test), found Safeway in violation of the CBA and awarded back pay with interest to the GMCs in the deli department. Safeway brought suit in district court to vacate the arbitration award. The district court granted summary judgment for the Union, and Safeway appealed to us.

STANDARD OF REVIEW

We review de novo a district court's grant of summary judgment confirming or vacating an arbitration award. New Meiji Market v. United Food & Commercial Workers Local 905, 789 F.2d 1334, 1335 (9th Cir. 1986).

The scope of both our and the district court's review of an arbitrator's decision, however, is extremely narrow. Sunshine Mining Co. v. United Steelworkers of America, 823 F.2d 1289, 1293 (9th Cir. 1987). As long as the arbitrator's award "draws its essence" from the collective bargaining agreement, it must be enforced:

When the parties include an arbitration clause in their collective-bargaining agreement, they choose to have disputes concerning constructions of the contract resolved by an arbitrator. Unless the arbitral decision does not "dra [w] its essence from the collective bargaining agreement," id., at 597, a court is bound to enforce the award and is not entitled to review the merits of the contract dispute.

W.R. Grace & Co. v. Local 759, Intl. Union of United Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 764 (1983) (citing United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960)). Stated another way, "if on its face, the award represents a plausible interpretation of the contact, judicial inquiry ceases and the award must be enforced." George Day Constr. Co. v. United Bhd. of Carpenters, 722 F.2d 1471, 1477 (9th Cir. 1984).

DISCUSSION

The central question before the arbitrator was the parties' intended meaning of the term "service delicatessen merchandise." He determined that it required GMCs to spend over half their time directly serving customers (adopting the "predominant method of merchandising" interpretation).

Safeway contends that the arbitrator exceeded his authority by ignoring the clear language of the CBA, and by impermissibly adding a new term to the contract in violation of CBA Sec. 18.6.¹  Contrary to Safeway's contention, the meaning of "service delicatessen merchandise" is not clear, as demonstrated by three arbitration awards finding comparable employer violations of the provision, and one award in Safeway's favor (which nevertheless conceded that "the term 'service delicatessen' is unclear and ambiguous").

When faced with ambiguous contract terms, the arbitrator may turn for guidance to the CBA's negotiating history and its relationship to past and existing practices. The arbitrator for this dispute heard testimony on the bargaining history and reviewed the transcript of the first arbitration of the disputed CBA provisions, an arbitration in which Safeway was represented by the same counsel that negotiated the CBA for it. The bargaining history of the CBA reveals that the term "service delicatessen merchandise" was included as a compromise between the Union and Safeway over the Union's proposal to limit the lower wage scale to "full service" delicatessens. Thus, "service delicatessen merchandise" was not intended to refer simply to the kind of merchandise sold in delicatessens. Rather, the parties to the CBA negotiations intended the GMC wage rate to apply only if the "predominant method of merchandising" was direct service to customers (although some self-service features were permissible in the deli department).

Given this history, and our deferential standard of review, we find that the arbitrator's interpretation of the CBA plausibly "draws its essence" from the agreement. His requirement that clerks in "service delicatessens" spend more than half their time serving customers in order to qualify for the GMC rate is a logical application of the parties' understanding that serving customers would be the predominant method of merchandising in a service deli.

Indignant objection to unfavorable arbitration awards might profitably be checked by calm consideration of the policies underlying arbitration. "The refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards." Enterprise Wheel, 363 U.S. at 596. "Because arbitration is an alternative to the judicial resolution of disputes, this extremely low standard of review is necessary to prevent the 'judicialization' of the arbitration process." Sunshine Mining, 823 F.2d at 1293 (citing E.I. DuPont de Nemours & Co. v. Grasselli Employees Indep. Ass'n of East Chicago, Inc., 790 F.2d 611, 614 (7th Cir.), cert. denied, 107 S. Ct. 186 (1986)). This case, with its resolution hinging upon interpreting precise terms whose inclusion in the CBA was negotiated by these parties, is the quintessential dispute best resolved by arbitration. As the Supreme Court recently reminded us, "grievance and arbitration are part and parcel of the ongoing process of collective bargaining." United Paperworkers Int'l Union v. Misco, Inc., 108 S. Ct. 364, 371 (1987). Safeway's dissatisfaction with the CBA's terms can be addressed at the bargaining table the next time the agreement is negotiated.

B. Arbitrator's Authority to Determine Remedy

Safeway contends that the arbitrator exceeded his authority by ruling upon the issue of remedy when it had not agreed to submit that issue to him. While Safeway is correct in asserting that "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit," United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960), it errs in contending that it did not agree to submit the remedy issue to arbitration.

When the parties could not agree upon a stipulated statement of the issue to be arbitrated, they each agreed to submit a statement to the arbitrator at the hearing and allow him to choose between the two. The Union's statement read:

Did the Company violate the collective Bargaining Agreement by assigning non-food or general merchandise clerks to work in the so-called Deli Department of Safeway Store No. 979? If so, what is the appropriate remedy?

Safeway's statement read:

Has Safeway Store violated the Collective Bargaining Agreement between the parties by paying its employees who handle or sell service deli merchandise the GMC rate of pay?

The hearing transcript shows that Safeway made no contemporaneous objection to the inclusion of a remedy question in the Union's statement, which the arbitrator then selected. We find that Safeway, by agreeing to let the arbitrator choose from the two statements of the issue, one of which raised the issue of remedy, waived any right to object to the arbitrator's choice of a remedy.

Safeway claims that the arbitrator's reissuance of his order with the added specification that interest on the back pay be awarded was an impermissible modification of his decision. We disagree.

On March 27, 1986 the arbitrator issued the following award:

"The Company must reclassify such employees as food clerks and reimburse them the wages they would have earned in the delicatessen department were they to have been originally classified as food clerks, in keeping with the applicable provisions of the 1983 Agreement."

After the award was issued, the Union requested that the arbitrator amend it to include interest, as provided for in Section 18.7 of the CBA.²  The arbitrator complied, reissuing the following order:

The remedy naturally resulting from this finding is that the Company must reclassify such employees as food clerks and reimburse them the wages they would have earned in the delicatessen department were they to have been originally classified as food clerks, in keeping with the applicable provisions of the 1983 Agreement, including the interest payments specified therein." (emphasis added).

Safeway cites McClatchy Newspapers v. Central Valley Typographical Union No. 46, 686 F.2d 731 (9th Cir.), cert. denied, 459 U.S. 1071 (1982), for "the fundamental common law principle that once an arbitrator has made and published a final award his authority is exhausted and he is functus officio and can do nothing more in regard to the subject matter of the arbitration." 686 F.2d at 734 (quoting La Vale Plaza, Inc. v. R.S. Noonan, Inc., 378 F.2d 569, 572 (3d Cir. 1967).

This arbitrator's modification, however, falls under a functus officio exception recognized by McClatchy: "an arbitrator can correct a mistake which is apparent on the face of his award, complete an arbitration if the award is not complete, and clarify an ambiguity in the award. " Id. at 734 n. 1 (emphasis added). As the district court noted, the arbitrator, when issuing the modification, said he "hesitate [d] to even refer to it as a correction, for ... I already contemplated ... the payment of any contractual interest associated with reimbursement.... Obviously, Section 18.7 of the 1983 Agreement mandates the payment of interest and, thus, clearly falls within my more generally phrased remedial statement."

We see no reason to doubt the arbitrator's statement that he originally intended his award to include interest. Accordingly, we find that the arbitrator did not exceed his authority by amending his award to specify the payment of seven percent interest on back wages, since his amendment was simply a clarification of what the CBA itself mandated, and not an alteration.

CONCLUSION

The district court's confirmation of the arbitrator's award in favor of Local 1119 is AFFIRMED.