Ameren Illinois Co. v. International Brotherhood of Electrical Workers, No. 18-1591 (7th Cir. 2018)
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The employer sought review by the federal district court and obtained a judicial order vacating an award on the ground that the arbitrator improperly applied external law to contradict the terms of the collective bargaining agreement (CBA). The Seventh Circuit reversed the judgment of the district court and upheld the arbitrator's award, holding that the text of the CBA permitted the arbitrator to look to external law in interpreting the agreement. The court held that the language contained in the preamble of the CBA suspended any part of the CBA that either the company or union believed to conflict with state law. In this case, while the court would have preferred that the arbitrator cite to that language before applying the Concealed Carry Act to reinstate the employee, the extraordinarily deferential standard of review compelled the court to uphold the award.
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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 18 1591 AMEREN ILLINOIS COMPANY, Plaintiff Appellee, v. INTERNATIONAL BROTHERHOOD LOCAL UNION 51, OF ELECTRICAL WORKERS, Defendant Appellant. ____________________ Appeal from the United States District Court for the Central District of Illinois. No. 3:17 cv 03163 — Sue E. Myerscough, Judge. ____________________ ARGUED SEPTEMBER 5, 2018 — DECIDED OCTOBER 12, 2018 ____________________ Before KANNE, SYKES, and ST. EVE, Circuit Judges. KANNE, Circuit Judge. Brian Knox got into a heated argu ment with his supervisor at work. He allegedly made threat ening remarks and was known to carry a concealed weapon either on his person or in his personal vehicle, which was parked in the company parking lot. In response, his employer terminated him for violating its Workplace Violence Policy. 2 No. 18 1591 Through his union, Knox brought a grievance under the col lective bargaining agreement (“CBA”) then in force, and the parties opted for binding arbitration. The arbitrator deter mined that although Knox had technically violated the policy, the employer could not enforce the rule because it violated an Illinois statute. The arbitrator ordered Knox’s reinstatement, and the employer sought review by the federal district court and obtained a judicial order vacating the award on the ground that the arbitrator improperly applied external law to contradict the terms of the CBA. Because we believe that the text of the CBA permitted the arbitrator to look to external law in interpreting the agreement, we reverse the judgment of the district court and uphold the arbitrator’s award. I. BACKGROUND Ameren Illinois Company operates a facility in Galesburg, Illinois. Ameren employed Knox at the facility beginning in 1998 and made him a crew leader in 2015. On June 3, 2016, Knox had a series of heated arguments with his supervisor Gabriel Jones over the scheduling of work. Other employees later indicated to Jones that Knox owned several firearms and was known to carry concealed weapons on a regular basis. On June 6, representatives of the company confronted Knox in the presence of a union representative and a deputy sheri . They requested Knox’s consent to search both his person and his vehicle for weapons. He consented, and the search uncov ered a firearm in Knox’s truck (then parked in the company’s parking lot). On June 27, Ameren notified Knox of his termination for violations of the company’s Workplace Violence Policy, which expressly prohibits threatening or intimidating an No. 18 1591 3 other employee and “the possession of unauthorized weap ons by any employee … on Company parking lots.” (R. 1 3 at 2–3.) The following day, the union filed a grievance on Knox’s behalf to protest his termination. After the parties failed to re solve the dispute among themselves, they submitted the case to binding arbitration. The parties certified the following question to the arbitrator: “Was the termination of the Grievant on or about June 27, 2016 for just cause; and if not, what is the appropriate remedy?” (R. 1 3 at 1.) According to the CBA, “[t]he arbitrator’s decision [is] final and binding on all parties.” (R. 1 1 at 6.) But the agreement also adds a juris dictional caveat: “In considering any dispute under this pro vision, the arbitrator [has] no authority to amend, delete from or add to this agreement.” Id. Arbitrator George R. Fleischli conducted a hearing on March 24, 2017, and delivered his award on July 8. Finding that the company did not have just cause to terminate Knox, he reversed the company’s action on two separate grounds. First, he disagreed with the company’s allegations that Knox’s remarks to Jones rose to the level of threats or intimidation and instead found that the statements were merely “a clear a ront to [Jones’] authority.” (R. 1 3 at 40–41.) While serious enough to warrant discipline, Fleischli did not believe that the comments violated the policy or merited termination. Second, and most notable for the case before us today, Fleischli found that Knox had, in fact, violated the policy by storing a firearm in his personal vehicle. However, he deter mined that the policy was unenforceable because Knox pos sessed a valid license to carry the weapon under the Illinois 4 No. 18 1591 Concealed Carry Act, 430 ILCS 66/1 et seq. That statute ex pressly permitted Knox to store his firearm in his vehicle on private property unless the owner posted a sign “indicating that firearms are prohibited on the property.” Id. at § 65(a 10). Because the company had no such sign posted, the arbitrator found that the law “serve[d] to prohibit the Employer from enforcing its rule in the Grievant’s case, because he [was] in possession of a concealed carry license.” (R. 1 3 at 44.) Ameren immediately brought suit to vacate Fleischli’s award. The district court, finding that the arbitrator improp erly applied external public law to contradict the bargain be tween the parties, granted summary judgment to Ameren and vacated the award. See Ameren Ill. Co. v. Int’l Bhd. of Elec. Work ers, Local Union No. 51, No. 3:17 cv 03163, 2018 WL 1244149 (C.D. Ill. Mar. 9, 2018). II. ANALYSIS We review the district court’s decision to grant summary judgment and vacate the arbitrator’s award de novo. See Amax Coal Co. v. United Mine Workers of Am., Int’l Union, 92 F.3d 571, 574 (7th Cir. 1996). A court’s role in reviewing a labor arbitration award is “very limited.” United Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564, 567 (1960). “The courts … have no business weighing the merits of the grievance, considering whether there is eq uity in a particular claim, or determining whether there is par ticular language in the written instrument which will support the claim.” Id. at 568. “As long as the arbitrator’s award ‘draws its essence from the [CBA],’ and is not merely ‘his own brand of industrial justice,’ the award is legitimate.” United Paperworkers Int’l Union, AFL CIO v. Misco, Inc., 484 U.S. 29, 36 No. 18 1591 5 (1987) (quoting United Steelworkers of Am. v. Enterprise Wheel and Car Corp., 363 U.S. 593, 597 (1960)). “When an arbitrator resolves disputes regarding the application of a contract, and no dishonesty is alleged, the arbitrator’s ‘improvident, even silly factfinding’ does not provide a basis for a reviewing court to refuse to enforce the award.’” Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001) (quoting Misco, 484 U.S. at 39). “Courts thus do not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of lower courts.” Misco, 484 U.S. at 38. This extraordinarily deferential standard of review is grounded in courts’ respect for the role of the labor arbitrator in administering “a system of industrial self government.” United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 580 (1960). This analogy, which the Supreme Court adopted in its seminal Steelworkers Trilogy of cases in 1960, conceives of the CBA as more akin to a private constitution than a mere contract. Id. at 580–582. In that system, the arbi trator “is not a public tribunal imposed upon the parties by superior authority,” but is instead “usually chosen because of the parties’ confidence in his knowledge of the common law of the shop and their trust in his personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment.” Id. at 581–82. “The parties expect that his judgment of a particular grievance will reflect not only what the contract says but, insofar as the collective bar gaining agreement permits, such factors as the e ect upon productivity of a particular result, its consequence to the mo rale of the shop, [and] his judgment whether tensions will be heightened or diminished.” Id. at 582. “The ablest judge can not be expected to bring the same experience and competence 6 No. 18 1591 to bear upon the determination of a grievance, because he can not be similarly informed.” Id. To find otherwise would mean that “arbitration would just be the first of a series of steps that always culminate[s] in court litigation, and it would lose its raison d’être.” Butler Mfg. Co. v. United Steelworkers of Am., AFL CIO CLC, 336 F.3d 629, 632 (7th Cir. 2003). But that does not mean that courts have no role in review ing the results of labor arbitration. Section 301 of the Labor Management Relations Act, codified at 29 U.S.C. § 185, grants to federal courts jurisdiction to determine, among other ques tions, whether the arbitrator “exceeded the scope of his sub mission.” Enterprise Wheel, 363 U.S. at 597. [A]n arbitrator is confined to interpretation and ap plication of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bar gaining agreement. When the arbitrator’s words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award. Id. The Supreme Court elaborated on that guidance in Alex ander v. Gardner Denver Co., 415 U.S. 36 (1974). It held that the arbitration of a grievant’s claim of racial discrimination against his employer did not preclude a separate suit in fed eral court under Title VII. To that end, the Court observed that “the arbitrator has authority to resolve only questions of con tractual rights.” Id. at 53–54. It reiterated that “the arbitrator’s task is to e ectuate the intent of the parties.” Id. at 53. “His No. 18 1591 7 source of authority is the [CBA],” and he “has no general au thority to invoke public laws that conflict with the bargain be tween the parties.” Id. Thus, “[i]f an arbitral decision is based ‘solely upon the arbitrator’s view of the requirements of en acted legislation,’ rather than on the interpretation of the [CBA], the arbitrator has ‘exceeded the scope of the submis sion.’” Id. (quoting Enterprise Wheel, 363 U.S. at 597). In other words, “[i]t is only when the arbitrator must have based his award on some body of thought, or feeling, or policy, or law that is outside the contract … that the award can be said not to ‘draw its essence from the [CBA].’” Arch of Illinois, Div. of Apogee Coal Corp. v. District 12, United Mine Workers of Am., 85 F.3d 1289, 1292 (7th Cir. 1996) (quoting Ethyl Corp. v. United Steelworkers of Am., AFL CIO CLC, 768 F.2d 180, 184–85 (7th Cir. 1985)). We interpreted the language from Gardner–Denver in Road master Corp. v. Prod. and Maint. Emp. Local 504, Laborers’ Int’l Union of N. Am., AFL CIO, 851 F.2d 886 (7th Cir. 1988). In Road master, a labor arbitrator declined to enforce a straightforward provision of the CBA because he believed that it contradicted § 8(d)(2) of the National Labor Relations Act. We invalidated the award, establishing a bright line rule for the future labor arbitration and the consideration of contrary positive law: “When a contract … specifically limits an arbitrator’s subject matter jurisdiction, the arbitrator should restrict his consider ation to the contract, even if such a decision conflicts with … statutory law.” Id. at 889. But in other cases, we have found that references to exter nal law were not so clear as to defeat the deference we have traditionally accorded to labor arbitrators. In Butler, an arbi trator determined that some of the grievant’s unauthorized 8 No. 18 1591 absences had been protected under the Family and Medical Leave Act of 1993 (FMLA), 29 U.S.C. § 2601 et seq., and were therefore not properly the subject of disciplinary procedures against her. 336 F.3d at 629. The company challenged the ap plication of external law, but we upheld the arbitrator’s award. We determined that language in the CBA guarantee ing “equal opportunity for employment, advancement in em ployment, and continuation of employment to all qualified in dividuals in accordance with the provisions of law” was su cient to incorporate the FMLA into the agreement and therefore within the scope of the arbitrator’s task. Id. at 633 (emphasis added). Roadmaster and Butler are not in conflict with one another. They both recognize the di cult tasks that courts face when wading into the field of labor arbitration. “[J]udicial interven tion is ill suited to the special characteristics of the arbitration process in labor disputes.” Textile Workers Union of Am. v. Lin coln Mills of Ala., 353 U.S. 448, 463 (1957) (Frankfurter, J., dis senting). [A]rbitration is an integral part of the system of [in dustrial] self government. … It is only when the sys tem breaks down completely that the courts’ aid in these respects is invoked. But the courts cannot, by occasional sporadic decision, restore the parties’ continuing relationship; and their intervention in such cases may seriously a ect the going systems of self government. Id. (quoting Harry Shulman, Reason, Contract, and Law in Labor Relations, 68 Harv. L. Rev. 999, 1024 (1955)). No. 18 1591 9 For that reason, courts hesitate to set aside an arbitrator’s award so long as it “draws its essence from the collective bar gaining agreement.” Enterprise Wheel, 363 U.S. at 597. An ar bitrator who decides disputes on the basis of statute rather than “the industrial common law of the shop” merely substi tutes himself for courts. Id. In that case, a judge has no reason to defer to the arbitrator’s specialized knowledge of industry because a judge is better suited to interpreting and applying public law. The trouble arises, however, when the arbitrator’s reason ing is unclear. As we noted in Butler, “[a]rbitrators are nor mally not required to write any opinion at all, and it is worth reiterating that a court’s review of an arbitral award does not proceed under the sample principles that would apply if it were reviewing a decision of the Social Security Administra tion or a bankruptcy court.” 336 F.3d at 636 (citing Sullivan v. Lemoncello, 36 F.3d 676, 683 (7th Cir. 1994)). “Using whatever materials are available, the court must enforce the arbitral award ‘[s]o long as the [arbitrator’s] interpretation can in some rational manner be derived from the agreement, viewed in the light of its language, its context, and other indicia of the parties’ intention.” Id. (quoting Amoco Oil Co. v. Oil, Chem. & Atomic Workers Int’l Union, Local 7–1, Inc., 548 F.2d 1288, 1294 (7th Cir. 1977)). Both Roadmaster and Butler applied these same principles to two di erent sets of facts. In Roadmaster, the arbitrator ex plicitly recognized the conflict between the CBA and the stat ute and opted to apply the law over the contract. That contract “specifically limit[ed] [the] arbitrator’s subject matter jurisdic tion,” so we held that he “should restrict his consideration to the contract, even if such a decision conflicts with … statutory 10 No. 18 1591 law.” 851 F.2d at 889. In contrast, in Butler we found language in the agreement designed to incorporate external law. Be cause the parties had bargained for such an arrangement, we determined that application of the law “lay well within the arbitrator’s authority despite the fact that the arbitrator’s opinion did not spell this out.” 336 F.3d at 636. Since our decision in Roadmaster, it seems that unions and employers have begun to incorporate external law into their CBAs more frequently. See, e.g., Martin H. Malin, The Evolving Schizophrenic Nature of Labor Arbitration, 2010 J. Disp. Resol. 57, 63–64 (describing the increase in government regulation of in dustry and the changing interaction between arbitration and public law). When that is the case, we will respect the parties’ decision ex ante to allow the arbitrator to apply external law, as we did in Butler. A. The Arbitrator’s Analysis was Incomplete In this case, the arbitrator issued a lengthy, reasoned award that directly engaged with the tensions between the CBA and the public statute.1 (R. 6 3 at 42–44) In fact, Arbitra tor Fleischli cited to an academic article he wrote in 1989 com menting on our decision in Roadmaster and placing it in the context of a long running academic debate on the topic. See id. 1 The parties disagree about whether the Workplace Violence Policy arises out of the CBA. The company, citing to a long string of NRLB deci sions holding that workplace safety rules are a mandatory subject of bar gaining, argues that the policy comes within the broad bargaining envi ronment and is therefore part of the CBA for the purposes of applying the rule in Roadmaster. The union contends that the company unilaterally is sued the policy and that it is not entitled to deference as part of the CBA. We need not reach the issue, however, because we find that the CBA in corporates external law sufficiently to uphold the arbitration award. No. 18 1591 11 at 43 (citing George R. Fleischli, When Can a Grievance Arbitra tor Apply Outside Law?, 18 J. L. & Educ. 505 (1989)). He also attempted to distinguish his own award from Roadmaster: The Union is not asking the Arbitrator to ignore a provision of the Agreement, which would arguably violate the contractual limits on his authority. Fur ther, it is not asking the Arbitrator to nullify the Company rule … . It is asking the Arbitrator to con clude that the rule is illegal and unenforceable, as applied to an employee, holding a concealed carry license. Id. at 43–44. We find his attempt less than satisfying. While he acknowledged the rule in Roadmaster, he then went on to find a company rule “illegal and unenforceable” based on a lengthy analysis of the text and legislative history of the Con cealed Carry Act. Id. His distinction was without a di erence. The district court in this case took the arbitrator at his word. It analyzed the reasoning contained in the award and, relying primarily on our decision in Roadmaster, concluded that Arbitrator Fleischli went outside the scope of his charge to determine whether there was just cause to terminate Knox. B. But Other Language in the CBA Incorporates External Law In Arch, we reiterated that “before we reject an award be cause of language in the arbitrator’s opinion, the opinion must unambiguously reflect that the arbitrator based his de cision on noncontractual grounds.” 85 F.3d at 1293. In that case, as here, we had to determine whether the arbitrator’s in terpretation of the “just cause” language in the CBA violated the scope of his authority. We observed that “[j]ust cause is a 12 No. 18 1591 flexible concept, embodying notions of equity and fairness, and is certainly open to interpretation by the arbitrator.” Id. at 1294. Given that we only “set aside an arbitration award if ‘there is no possible interpretive route to the award[] so [that] a noncontractual basis can be inferred,’” we had little trouble discerning the interpretive route and holding that the arbitra tor’s reasoning was “not so far fetched as to lead us to deduce that the arbitrator relied on a noncontractual basis for the award.” Id. at 1293–94 (quoting E.I. DuPont de Nemours & Co. v. Grasselli Empl. Ind. Ass’n of East Chicago, Inc., 790 F.2d 611, 614–15 (7th Cir. 1986), abrogated on other grounds by Misco, 484 U.S. 29). This was the same path we followed in Butler. In that case, there was language in the CBA that “allowed the arbitrator to consider external law[,] and the parties framed the arbitration proceedings to force consideration of [that law].” 336 F.3d at 636. Although “the arbitrator did not include any explanation of this point in his written award, that fact [did] not mean that there [was] no ‘justifiable basis’ for the arbitrator’s decision.” Id. We find this case to be more akin to the facts of Butler than those at issue in Roadmaster. The CBA contains the following language in its preamble: Any provisions of this Agreement found by either party to be in conflict with State or Federal statutes shall be suspended when such conflict occurs and shall immediately thereafter be reopened for amendment to remove such conflict. (R. 1 1 at 4) This provision is arguably clearer than the language that we found su cient in Butler. Although both the arbitrator and No. 18 1591 13 the district court overlooked the provision, we believe that it firmly establishes the intent of the parties to bring external law such as the Concealed Carry Act within the scope of the bargain.2 Further, both parties framed their arguments to the arbitrator in terms of the statute. Because that is the case, the courts have no further role to play in reviewing the terms of the award or whether the arbitrator correctly applied the law. III. CONCLUSION “[T]his arbitral award should be enforced because it is supported by the terms of the parties’ agreement and thus lay well within the arbitrator’s authority despite the fact that the arbitrator’s opinion did not spell this out.” Butler, 336 F.3d at 636. Language contained in the preamble of the collective bar gaining agreement suspends any part of the CBA that either the company or union believes to conflict with state law. While we would have preferred that the arbitrator cite to that language before applying the Concealed Carry Act to rein state Knox, the extraordinarily deferential standard of review compels us to uphold the award. For those reasons, we VACATE the district court’s order and ENFORCE the arbitral award. 2 We stress that although the original dispute involved rules regulat ing the carrying of firearms, today’s dispute deals solely with the law of labor arbitration. Neither party has raised any claim under the Second Amendment, and we express no opinion regarding the Concealed Carry Act or internal corporate policies regarding weapons.
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