American Eagle Airlines, Inc. v. Air Line Pilots Ass'n International

United States Court of Appeals

Fifth Circuit

F I L E D

August 14, 2003

IN THE UNITED STATES COURT OF APPEALS

Charles R. Fulbruge III

Clerk

FOR THE FIFTH CIRCUIT

No. 02-10467

AMERICAN EAGLE AIRLINES, INC.,

Plaintiff — Counter-Defendant —

Appellee — Cross-Appellant,

v,

AIRLINE PILOTS ASSOCIATION,

INTERNATIONAL,

Defendant — Counter-Claimant —

Appellant — Cross-Appellee.

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Appeals from the United States District Court

for the Northern District of Texas, Fort Worth

--------------------

Before WIENER, BENAVIDES, and DENNIS, Circuit Judges.

BENAVIDES, Circuit Judge:

Before this court is a labor-arbitration dispute between an airline company and a pilots’

association arising from an arbitration board’s hearing and the subsequent appeal to the district court.

While judicial review of an arbitration board’s determination is admittedly confined, this controversy

is one of the unwonted cases in which overturning an arbitrator’s award is proper. As such, we affirm

the judgment of the district court, which vacated the arbitrator’s award.

I.

The issues in this appeal concern a collective bargaining agreement (“CBA” or

“Agreement”) entered into in September 1997 by American Eagle Airlines, Inc. (“American

Eagle”), and Air Line Pilots Association, International (“ALPA”) to govern the working

conditions of pilots employed at American Eagle. Included within the Agreement were provisions

dictating the conditions for which a pilot may be terminated as well as the procedures to be

followed by American Eagle to secure a termination. The CBA permits American Eagle to

terminate pilots only for “just cause,” a term the Agreement fails to define.

Section 20 of the CBA elucidates the grievance process by which an employee may

challenge his termination. A pilot must request initiation of the grievance process within 14 days

of receiving written notice of the charges against him, or the employment decision of American

Eagle becomes final. If the process is timely invoked, “[a] first step hearing will be held at the

pilot’s domicile within 14 days of the date written request is received” by American Eagle. Within

14 days of the hearing, American Eagle must issue an opinion on the matter. If the decision is

unsatisfactory to the pilot, he may appeal within 30 days by furnishing written notice to the

System Board (the “Board”), which serves as a neutral arbitrator under the contract.

Section 20(G)(2) then notes:

If [American Eagle] fails to provide a written decision to the pilot... or hold a required

hearing within the time limits specified, the pilot and the Association may consider the

grievance denied.

Section 21 then details the duties and functions of the Board. Composed of three members, the

Board has “jurisdiction over grievances filed pursuant to the terms of this Agreement.” The CBA

also protects the Board’s right to “act in an independent manner” without consequences for its

2

relationship to American Eagle or ALPA.

On November 3, 1999, Captain Terry Balser, an American Eagle pilot, struck up a

discussion with Boris Walckhoff, a cleaning and catering employee of American Eagle, on board

the aircraft Balser piloted at the Los Angeles International Airport. Over the course of the

conversation, Balser discussed the ongoing war in Chechnya, and questioned why Walckhoff, an

immigrant of African, Russian, and German decent, was not fighting in it. Balser then displayed a

medal with a reverse swastika on it and mentioned his displeasure that government money was

being spent on African-Americans and Latinos. Walckhoff felt intimidated by this conversation

and filed a complaint with American Eagle.

In response to Walckhoff’s complaint, American Eagle conducted an investigation of

Balser, which included holding two investigative meetings in November 1999. These meetings

revealed that Balser regularly carried a dirk with a three and one-half-inch blade into secure areas

of the airport, as well as on board the aircraft he flew. Captain Balser also admitted to having

“nodded off” at times while on the clock.

On November 29, 1999, American Eagle issued a notice of termination to Balser, advising

him that he was being discharged for harassing Walckhoff, failing to observe security regulations

regarding weapons in secure areas, violating California penal law and Federal Aviation

Administration regulations by bringing weapons on board an aircraft, and violating company

policy against sleeping on board an aircraft. On December 9, 1999, 10 days after receiving the

notice of termination, ALPA grievance chair Mark Taylor wrote to American Eagle informing it

of Balser’s intention to invoke the grievance procedures outlined in the CBA. Taylor again wrote

American Eagle on February 4, 2000, noting that American Eagle had not scheduled a first-step

3

hearing. The letter referenced a conversation with Los Angeles Chief Pilot Janette McMurtrie on

January 22, 2000, in which McMurtrie indicated her desire to forego the first-step hearing, and

told Balser and ALPA to treat the grievance as denied by American Eagle. The matter was then

submitted to the Board by ALPA.

After arguments were presented, the Board made several determinations. First, the Board

found that American Eagle’s failure to schedule the first-step hearing constituted a breach of the

CBA, despite the language contained in Section 20(G)(2), which states that failure to schedule a

hearing may be considered tantamount to a denied grievance. Second, the Board found that

Balser seriously violated the CBA. Specifically, the Board noted that substantial evidence

supported American Eagle’s contention that Balser had harassed Walckhoff and that such conduct

was abhorrent, finding that “the Employer had not only a right, but a duty to rid the workplace of

such conduct.” The Board also concluded that Balser had violated American Eagle’s security

rules and California law by bringing his dirk on board his aircraft and into secure areas of the

airport. The Board found insufficient evidence to support a finding that Balser had slept while his

plane was airborne. The Board, however, concluded that American Eagle had “not only a right,

but a duty” to rid itself of Balser’s behavior. Finally, the Board concluded that because both

Balser and American Eagle had seriously violated the Agreement, both sides deserved a

substantial penalty. Accordingly, the Board imposed a ten-week unpaid suspension on Balser and

ordered his reinstatement with back pay due for the remaining period in which Balser was

suspended.

American Eagle appealed the Board’s decision to the United States District Court for the

Northern District of Texas, pursuant to the Railway Labor Act, 45 U.S.C. §§ 151-88, arguing in

4

its motion for summary judgment that the Board’s decision (i) failed to conform to the terms of

the CBA, (ii) was beyond the jurisdiction of the Board, and (iii) violated public policy. The

district court determined that implicit within the Board’s opinion was a finding that Balser was

fired for “just cause.” Once such a determination was made, the district court reasoned, the

Board lacked further authority to fashion an alternate remedy based on American Eagle’s alleged

procedural shortcoming of not holding the first-step hearing. Accordingly, the district court

vacated the Board’s arbitration award, holding that the Board should have upheld Balser’s

termination. The district court rejected ALPA’s argument that the Board had not found just

cause for Balser’s termination because American Eagle did not meet the procedural requirements

of the CBA, stating that ALPA introduced no authority for the proposition that such requirements

could be considered in arriving at the just cause determination. The district court, however, did

reject American Eagle’s argument that the arbitration award violated public policy. Shortly

thereafter, ALPA filed a timely notice of appeal and American Eagle cross-appealed on the public

policy issue.

II.

We review de novo a district court’s decision vacating an arbitration award as not

grounded in the agreement of the parties. E.I. DuPont de Nemours v. Local 900 of the Int’l

Chemical Workers Union, 968 F.2d 456, 458 (5th Cir. 1992). Summary judgment should be

granted where the record indicates no genuine issue of material fact, and that the moving party is

entitled to judgment as a matter of law. Rogers v. International Marine Terminals, 87 F.3d 755,

758 (5th Cir. 1996). In considering summary judgment, we must view the evidence in the light

most favorable to the nonmoving party. See Matsushita Elect. Indus. Co. v. Zenith Radio Corp.,

5

475 U.S. 574, 587-88 (1986). Yet, “the nonmoving party must set forth specific facts showing

the existence of a ‘genuine’ issue concerning every essential component of its case.” Morris v.

Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).

Judicial review of a labor-arbitration decision by this Court, or by the district court, is

extremely limited. Where the arbitrator is “even arguably construing or applying the contract and

acting within the scope of his authority the fact that a court is convinced he committed serious

error does not suffice to overturn that decision.” Eastern Associated Coal Corp. v. United Mine

Workers of America, 531 U.S. 57, 62 (2000) (internal quotations omitted). Thus, if there is

ambiguity as to whether an arbitrator is acting within the scope of his authority, that ambiguity

must be resolved in favor of the arbitrator, as the mere “inference” of ultra vires action is an

insufficient “reason for refusing to enforce the award.” United Steelworkers of America v.

Enterprise Wheel & Car Co., 363 U.S. 593, 598 (1960).

We will not uphold an arbitrator’s decision, however, when it dispenses its own “brand of

industrial justice” outside the scope of an arbitration agreement. United Paperworkers Intern.

Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987). Rather, we are free to scrutinize an

arbitrator’s award “to ensure that the arbitrator acted in conformity with the jurisdictional

prerequisites of the collective bargaining agreement.” Delta Queen Steamboat Co. v. District 2

Marine Engineers Beneficial Ass’n, AFL-CIO, 889 F.2d 599, 602 (5th Cir. 1989) (citing

Container Prods., Inc. v. United Steelworkers of Am., 873 F.2d 818, 820 (5th Cir. 1989)). And,

“[w]here an arbitrator exceeds his contractual authority, vacation or modification of the award is

an appropriate remedy.” Delta Queen, 889 F.2d at 602 (citing Container Prods., 873 F.2d at

820). See also Houston Lighting & Power Co. v. International Broth. of Elec. Workers, Local

6

Union No. 66, 71 F.3d 179, 184 (5th Cir. 1995) (If the language of the applicable collective

bargaining agreement is “clear and unequivocal, an arbitrator is not free to change its meaning.”).

In short, an “arbitrator may not ignore the plain language of the contract.” Misco, 484 U.S. at 38.

III.

The two predominant questions presented in this appeal are (i) whether the district court

properly determined that the Board found that Balser’s conduct constituted “just cause” for his

termination and (ii) whether the arbitrator exceeded its jurisdiction by improperly interpreting the

terms of the CBA, specifically whether the Board erred in determining that American Eagle’s

failure to provide Balser with a first-step hearing constituted a serious violation of the Agreement

and warranted voiding Balser’s termination. As the Board determined that any violation of

American Eagle’s rules and policies committed by Balser was mitigated by American Eagle’s

failure to grant him a first-step hearing, the two issues are inextricably linked and it is therefore

appropriate to discuss them together.

A.

We begin our analysis by addressing whether American Eagle’s failure to provide a first-

step hearing constituted a violation of the CBA. In doing so, we consider the relevant language

of the Agreement. Section 20(C) of the CBA provides that “[a] first step hearing will be held at

the pilot’s domicile within fourteen (14) days of the date written request is received” by American

Eagle. It is undisputed that this so-called first-step hearing never took place. Section 20(G)(2)

provides further that if American Eagle fails to hold a required hearing, including, inter alia, a

first-step hearing, the pilot “may consider the grievance denied.” Section 21 of the CBA then

provides for establishing the Board “for the purpose of adjusting disputes or grievances arising

7

under” the Agreement. The Board determined that by failing to schedule the first-step hearing,

American Eagle breached the CBA. American Eagle disagrees with this assessment, arguing that

although it did not provide the first-step hearing, it did not breach the CBA because ALPA chose

to treat the failure to hold the first-step hearing as a denied grievance when it submitted the matter

to arbitration.

Although we are not unmindful of the high degree of deference the federal courts

generally afford arbitrators, see, e.g., Eastern Associated Coal, 531 U.S. at 62, an arbitrator may

not ignore the plain language of a collective bargaining agreement. Misco, 484 U.S. at 38. And,

the clear language of the CBA precludes determining that American Eagle’s failure to schedule a

first-step hearing is a procedural default if ALPA chooses to treat such failure as a denied

grievance and proceed to arbitration. Put differently, although the Agreement specifically

provides for a first-step hearing when a pilot files a grievance, Section 20(G)(2) establishes that

the failure to conduct such a hearing should be treated no differently than a first-step hearing at

which the pilot’s plea for relief is unsuccessful, provided that the pilot chooses to treat the lack of

the hearing as a denied grievance and proceed to arbitration.

Here, ALPA and Balser did choose to treat American Eagle’s failure to provide a first-

step hearing as a denied grievance and elected to proceed to arbitration.1 When American Eagle

failed to provide the first-step hearing, ALPA did not insist that such a hearing be held. Rather,

ALPA elected to arbitrate, thereby treating the lack of the hearing as a denied grievance.

Furthermore, while ALPA argued before the arbitrator that the lack of the first-step hearing

1

This decision is consistent with previous disputes between American Eagle and ALPA,

where there were no first-step hearings and ALPA and its associated pilots, without protest,

simply proceeded to arbitration.

8

denied Balser due process, it was never asserted that the appropriate remedy for such an alleged

violation would be to compel American Eagle to conduct the hearing. ALPA grieved the

termination, not the post-termination first-step hearing, the absence of which ALPA treated as a

denial allowing it to proceed to arbitration. By invoking arbitration, ALPA implicitly considered

the grievance denied and waived any other alternative it may have had concerning American

Eagle’s failure timely to conduct a first-step hearing. This comports with the district court’s

interpretation of the CBA; specifically, that if a first-step hearing does not occur and ALPA

invokes arbitration, it has considered the grievance denied within the meaning of Section 20(G)(2)

and has waived any claim it might have had based on American Eagle’s putative procedural

default. Accordingly, American Eagle has committed no default of the CBA.

B.

Having determined that American Eagle’s failure to schedule a first-step hearing did not

constitute a procedural default of the CBA—or, even if it could have, that such a default was

cured by waiver when ALPA proceeded to invoke arbitration—it is now necessary to determine

whether there was just cause to terminate Balser. While the Board never used the phrase “just

cause,” it did hold that Balser’s conduct was egregious and, therefore, must be removed from the

workplace.2 Citing DuPont, the district court held that the Board implicitly found just cause for

Balser’s termination. 968 F.2d at 458 (holding that just cause for termination may determined

implicitly by an arbitrator). Once just cause existed, the district court reasoned, there was no

jurisdiction for the Board to permit any outcome other than Balser’s termination, even if a

2

Of course, the Board determined that American Eagle’s alleged procedural default,

which we have now concluded was not a default, prevented Balser’s termination.

9

procedural default occurred. In support of this conclusion, the district court noted that the CBA

required only just cause for dismissal, rather than just cause plus scheduling a first-step hearing.

Not surprisingly, the parties maintain disparate views regarding the determination of the

district court. American Eagle agrees with the district court’s assessment that the Board

implicitly found just cause and then exceeded its jurisdiction by improperly considering the lack of

the first-step hearing so as to save Balser’s job. On the other hand, ALPA denies that the Board

ever found just cause for Balser’s termination. Furthermore, ALPA asserts that the failure to

schedule the first-step hearing was a component used to determine whether just cause for

termination existed at all. If a supposed procedural default—here, the lack of the first-step

hearing—necessarily precludes a finding of just cause, ALPA argues, there is no ground for

Balser’s termination. Thus, while American Eagle argues that the Board did find just cause but

did not uphold Balser’s termination because of the supposed procedural default, ALPA believes

that the Board never found just cause, in part because of the lack of the initial hearing. We now

address these competing theories, analyzing them in light of our determination that American

Eagle’s failure to schedule the first-step hearing did not constitute a procedural default of the

CBA.

At issue, then, is whether the Board could properly consider any supposed procedural

violation by American Eagle in its “just cause” analysis and, alternatively, whether an alleged

procedural failing could prevent termination of an employee who had already been discharged for

just cause. First, as noted, supra, American Eagle committed no procedural violation of the CBA.

This reason alone is sufficient to conclude that the Board erred if it considered such conduct

either in its just cause calculus or to mitigate a finding of just cause.

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Second, and alternatively, even if the failure to hold the first-step hearing were a

procedural default, it would be improper to consider this failure in the just cause analysis or to

prevent the termination of an employee who had already been discharged for just cause. Indeed,

the procedural violation alleged by ALPA—i.e., failure to conduct a first-step hearing—occurred

after Balser committed the acts cited by American Eagle and the district court as constituting

grounds for termination, and after Balser was terminated on those grounds. Thus, this putative

procedural default could not have been properly considered in determining whether Balser’s

actions constituted just cause for his termination. ALPA, however, attempts to argue that there is

authority for the proposition that contractual procedural requirements can be considered by

arbitrators in determining whether cause for dismissal exists. While no circuit authority

specifically permits a procedural default to affect the just cause calculus, ALPA cites to

Chauffeurs, Teamsters and Helpers Local Union 878 v. Coca Cola Bottling Co., 613 F.2d 716

(8th Cir. 1980), in which the Eighth Circuit held that an arbitrator could consider a company’s

failure to abide by a bargaining agreement’s procedural requirements in determining whether

cause existed for dismissal. In Chauffeurs, the employer’s alleged procedural default was that the

employee “was not afforded an opportunity to tell his side of the story prior to termination.” 613

F.2d at 717. Importantly, Chauffeurs and similar cases3 concern only a company’s pre-

termination procedural failings within the just cause determination. At issue here, however, is

American Eagle’s post-discharge behavior, which is a different matter entirely, as this circuit and

3

Other courts outside this circuit have approved the rule in Chauffeurs. See, e.g.,

Anaconda Co. v. District Lodge No. 27 of the Int’l Assn. of Machinists and Aerospace Workers,

693 F.2d 35, 37 (6th Cir. 1982); Safeway Stores v. United Food and Commercial Workers Union,

621 F. Supp. 1233, 1237-38 (D.D.C. 1985).

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the Supreme Court have recognized. See Misco, 484 U.S. at 40 n.8; Gulf Coast, 991 F.2d at 247.

In Misco, the Supreme Court held that “[l]abor arbitrators have stated that the correctness of a

discharge must stand or fall upon the reason given at the time of discharge.” 484 U.S. at 40 n.8.

Furthermore, in Gulf Coast, an employee was terminated for violating his employer’s substance

abuse policy, but the arbitrator reinstated the employee with rehabilitation conditions based on his

finding that the employee’s post-termination conduct indicated he was a prime rehabilitative

candidate. 991 F.2d at 247. We vacated the arbitration award, ruling that the arbitrator acted

outside the authority of the relevant collective bargaining agreement when it considered the

employee’s post-termination conduct. Id. at 255 (“[A]n arbitrator [is] to look only at the

evidence before the employer at the time of the discharge.”). Accordingly, it was inappropriate if

the Board considered American Eagle’s post-termination conduct in determining whether Balser

was terminated for cause. Thus, American Eagle’s alleged procedural default cannot be used in

the just cause analysis.

Furthermore, a procedural default may not be used to offset a finding of just cause for

termination. Assuming Balser’s actions constituted just cause for his termination, the Board had

no jurisdiction not to terminate him, regardless of any alleged default committed by American

Eagle, given that Section 20(A)(2) of the CBA notes that only just cause is necessary for

termination. As the Agreement does not require just cause plus the absence of any alleged

procedural deficiencies by American Eagle to support termination, the Board cannot impose this

requirement, as the district court properly recognized. Thus, the Board erred when it considered

the failure to hold the first-step hearing in its just cause analysis or as a mitigating factor after

determining that there was just cause for Balser’s discharge, because the failure to hold the first-

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step hearing (i) did not breach the CBA and, in any event, (ii) can neither preclude nor mitigate

just cause.

C.

Given that the Board could not have considered any alleged post-termination procedural

violation by American Eagle in its determination of just cause and that such a determination turns

solely on the pilot’s conduct, we turn now to the Board’s opinion to determine whether the

district court properly held that the Board issued an implied finding of just cause. In this circuit,

we have long recognized that where an arbitrator implicitly finds that just cause exists, it need not

recite the operative phrase “just cause.” See DuPont, 968 F.2d at 458-59 (citing Delta Queen,

889 F.2d at 602). Indeed, the phrase “just cause” “carries no talismanic significance in labor

jurisprudence.” Delta Queen, 889 F.2d at 602. Rather, “[i]t is simply a term of art that defines

the many unrelated, independent acts that serve as grounds for employee discipline under” a

collective bargaining agreement.” Id. In Delta Queen, for instance, we held that an explicit

finding by the arbitrator of “gross carelessness” satisfied the collective bargaining agreement’s

requirement that individuals may be disciplined only upon a showing of “proper cause.” Id. at

604. Thus, we have long held that implicit findings of just cause for termination warrant the same

significance and carry the same force as explicit findings.4

The district court did not err in determining that Balser’s actions constituted just cause for

his termination. Indeed, the Board determined that Balser’s “violation” of American Eagle’s

“anti-harassment policy” provided American Eagle with “not only a right, but a duty to rid the

workplace” of Balser’s conduct. The Board also addressed the seriousness of Balser’s bringing

4

See DuPont, 968 F.2d at 458-59; Delta Queen, 889 F.2d at 602.

13

his dirk onboard the aircraft he flew, noting that doing so clearly violated American Eagle rules.

Thus, the district court was correct to conclude that there was an implicit finding of just cause

because the Board’s opinion concludes that Balser’s conduct clearly justified his firing. As the

CBA authorizes discharge only for just cause, the Board, by necessary implication, determined

that just cause existed for Balser’s termination.5

ALPA argues that the well-settled rule of DuPont and Delta Queen—i.e., that an

arbitrator’s finding of “just cause” may be implicit—is limited to the facts of those cases and

should not be applied here. This argument fails for at least two reasons. First, there is simply

nothing in the language of DuPont or Delta Queen to suggest that these holdings were unique to

their respective facts. On the contrary, our citing Delta Queen in the DuPont opinion indicates

our intention that just cause may be found implicitly. See DuPont, 968 F.2d at 458-49.

Second, any reliance on our holding in Weber Aircraft Inc. v. General Warehousemen and

Helpers Union Local 767, 253 F.3d 821 (5th Cir. 2001), for the proposition that DuPont and

Delta Queen are inapplicable to this case is misguided. In Weber, we considered whether an

arbitrator’s finding that a worker committed a violation of a certain offense category (there,

“Category 1”) that contemplated a variety of penalties—including termination—compelled the

conclusion that there was just cause for termination. 253 F.3d at 824. The Weber holding noted

only that it was improper to infer a finding of just cause for termination based only upon the

5

In this case, the reasoning by implication is as follows: (1) to constitute grounds for

termination under the CBA, the act or acts in question must constitute just cause, i.e., an

employee can be terminated for any act or acts that constitute just cause; (2) the Board found that

Balser seriously violated his obligations and that American Eagle had a duty to rid the workplace

of Balser’s conduct; (3) thus, the Board must have found that American Eagle had just cause to

terminate Balser.

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arbitrator’s determination that the employee in question had committed a violation of Category 1,

because Category 1 contemplated penalties short of discharge. Id. at 825. Because workers who

ran afoul Category 1 could be punished in a variety of ways, a violation of Category 1 was not

tantamount to termination. Id. Thus, our holding in Weber did nothing to undercut the rule of

DuPont and Delta Queen that a finding of just cause may be implicit. In fact, it was noted that

neither case was applicable to the precise issues presented in Weber. Id. The district court,

therefore, did not err in holding that there had been an implicit finding of just cause, which is

tantamount to an explicit finding of the same, in the Board’s arbitration opinion.

D.

Having determined that the district court correctly held that the Board implicitly found just

cause for Balser’s termination, the next question is whether the district court was correct to set

aside the arbitration award, given that the Board was without jurisdiction to fashion a remedy

beyond what was contemplated in the CBA, namely that an employee can be terminated only for

just cause. The district court’s analysis is correct: if the relevant bargaining agreement requires

just cause for dismissal, an arbitrator acts beyond its jurisdiction by fashioning an alternate remedy

once it has concluded—implicitly or otherwise—that an employee’s conduct constitutes just cause

for dismissal, as the Board did here. DuPont, 968 F.2d at 459; Delta Queen, 889 F.2d at 604.

Accordingly, the Board was without jurisdiction to craft a remedy based upon American Eagle’s

supposed post-termination violation of the CBA. Furthermore, and alternatively, even if it were

proper to allow an employer’s violation of a collective bargaining agreement in these

circumstances to offset a for-cause termination, it could not be done here as the employer,

15

American Eagle, did not violate the CBA.6

IV.

Accordingly, we the affirm the district court’s grant of summary judgment vacating the

arbitration award.

ENDRECORD

6

As the foregoing analysis is sufficient to affirm the judgment of the district court, it is

unnecessary for us to address the remaining issue on appeal, i.e., whether the district court erred

in determining that the Board’s decision to reinstate Balser did not violate public policy.

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DENNIS, Circuit Judge, dissenting:

Our review of arbitration awards is under a highly deferential

standard that requires us to enforce arbitration judgments that

even “arguably construe or apply” a contract, even when we believe

that construction reflects “serious error.” Eastern Associated

Coal Corp. v. United Mine Workers of America, 531 U.S. 57, 62

(2000). Because I believe the majority does not adhere to this

standard, I respectfully dissent.

The majority begins its analysis by taking aim at the

arbitrator’s finding that American Eagle violated the plain terms

of the collective bargaining agreement by failing to timely

schedule a first-step hearing. Section 20(C) of the agreement says

such a hearing “will be held at the pilot’s domicile within

fourteen days” (emphasis added) of receipt of a timely request for

a hearing. The arbitrator reasoned that because the Airline Pilots

Association (ALPA) and Balser made a timely hearing request, the

airline’s failure to schedule the hearing constituted a breach of

Section 20(C).

The majority contends that the arbitrator erred in finding a

contract violation because ALPA and Balser waived their right to a

first-step hearing when they “elected to proceed to arbitration”

-17-

under Section 20(G)(2).7 The arbitrator expressly rejected this

contract interpretation in reaching its decision. The arbitrator

explained that Section 20(G)(2) addressed the union’s procedural

quandary of where to go when the employer failed to provide the

required hearing, and did not address what the remedy would be for

the airline’s failure to provide the required hearing. Using that

procedure merely “facilitate[d] [ALPA’s] attempt to get to the next

hearing level,” and did not waive any remedies for the airline’s

violation of the contract.

If the arbitrator was “even arguably construing or applying

the contract and acting within the scope of [its] authority,” in

reaching this result, “the fact that a court is convinced he

committed serious error does not suffice to overturn that

decision.” Eastern Associated Coal 531 U.S. at 62. Here, there is

no question that the arbitrator was “arguably construing or

applying the contract” in finding that American Eagle violated the

collective bargaining agreement. Section 20(C) expresses the

first-step hearing requirement in mandatory terms, and American

Eagle did not abide by that section. While the scope of the remedy

provided by Section 20(G) is susceptible to alternative

interpretations, the majority is incorrect in finding that the

arbitrator’s view of that section as procedural is not even an

7

Section 20(G)(2) states: “If the Company fails to...hold a

required hearing within the time limits specified, the pilot and

the Association may consider the grievance denied.”

-18-

“arguable” construction. And because the arbitrator was arguably

applying the contract, the majority should not have disturbed that

interpretation on review. “[A] court should not reject an award on

the ground that the arbitrator misread the contract.” United

Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 36 (1987).

Thus, the central question here is whether the arbitrator

exceeded his authority in considering American Eagle’s breach of

the collective bargaining agreement in determining whether the

airline could terminate Balser. “Collective bargaining agreements

often say little or nothing about the arbitrator’s remedial powers;

yet it cannot be that he has none...[rather] the agreement must

implicitly grant him remedial powers where there is no explicit

grant.” Miller Brewing v. Brewery Workers Local 9, 739 F.2d 1159,

1163 (7th Cir. 1984). In the context of evaluating terminations of

employees, arbitrators have used this broad remedial power to

reduce or reverse the discipline meted out to employees where an

employer has not abided by the labor agreement’s prescribed

grievance process. See 9 TIM BORNSTEIN ET AL.,LABOR AND EMPLOYMENT LAW §

11.09 (2003) (explaining the wide discretion arbitrators have in

altering employee discipline based on employer violations of

grievance procedures).

For example, in Teamsters Local Union No. 284 v. Maremont

Corp., 515 F.Supp. 168 (S.D. Ohio 1980), employees of Maremont

engaged in an illegal wildcat strike that ordinarily may have been

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grounds for terminating the employees. However, the company did

not abide by the collective bargaining agreement’s requirement that

it give written reasons for termination and conduct a hearing

within 72 hours of termination. Id. at 170. The arbitrator

concluded that the employees had been denied “contractual due

process,” and thus ordered the employees reinstated with backpay.

Id. The district court upheld the arbitrator’s award explaining

that the arbitrator had interpreted the contract’s procedural

requirements as a mandatory obligation to which there had been no

waiver. Id. at 173. Because this was a contract interpretation

the court concluded it lacked the power to disturb it even though

it would likely not have made the same interpretation itself. Id.

Courts have allowed arbitrators to go even further and read

procedural guarantees into just cause even where they are not found

in the contract. In Chauffeurs, Teamsters and Helpers Local Union

878 v. Coca Cola Bottling Co., 613 F.2d 716 (8th Cir. 1980), it was

undisputed that the employee to be terminated engaged in dishonest

behavior that would be sufficient grounds to fire that employee

under the labor agreement. The arbitrator reinstated the employee,

however, because Coca Cola failed to provide all the reasons for

firing the employee prior to his grievance hearing, thus depriving

the employee of an adequate opportunity to rebut the charges. Id.

at 717. The Eighth Circuit upheld the arbitrator’s decision,

finding that the arbitrator had interpreted the just cause

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provision as including procedural rights for the employee and that

because this was an “arguable” contract interpretation the court

lacked the power to disturb it. Id. at 721. Other courts to have

considered the issue have followed the Eighth Circuit and allowed

arbitrators to include procedural requirements as components of

just cause, even when those requirements are not spelled out in the

contract. Anaconda Co. v. District Lodge No. 27 of the Int’l Assn.

of Machinists and Aerospace Workers, 693 F.2d 35, 37 (6th Cir.

1982); Safeway Stores v. United Food and Commercial Workers Union,

621 F.Supp. 1233 (D. D.C. 1985).

Our case is akin to Maremont and even easier than Chauffeurs.

The arbitrator made the contract interpretation that the grievance

procedures spelled out in the contract were mandatory, and that

because American Eagle did not abide by those requirements it did

not have just cause to terminate Balser. This was an “arguable”

contract interpretation, and therefore one that we are not

empowered to upset here. Eastern Associated Coal 531 U.S. at 62.

See also ELKOURI & ELKOURI: HOW ARBITRATION WORKS 919 (Marlin M. Volz &

Edward P. Goggin eds., 2nd ed. 1991) (“Arbitrators will, in many

cases, refuse to uphold management’s action where it failed to

fulfill some procedural requirement specified by the agreement.”)

The majority attempts to avoid this straightforward analysis

by asserting that the arbitrator lacked the authority to consider

American Eagle’s post-termination procedural violations in deciding

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whether the airline had just cause to fire Balser. If any such

limitation exists on the arbitrator’s authority, it must be found

in the collective bargaining agreement.8 Misco, 484 U.S. at 39-40.

The majority argues that Section 20(A)(2) is that limitation

because it “does not require just cause plus the absence of any

alleged procedural deficiencies by American Eagle to support

termination.”

Section 20(A)(2) states, “[a] pilot who has completed his

probationary period will not be discharged or disciplined without

just cause.” While this section does not require more than just

cause to terminate an employee, it does not define what that term

means. Based on the mandatory language of Section 20(C), the

arbitrator has concluded that the contract intended just cause to

include the requirement that the employer hew to the prescribed

grievance procedures. This was an “arguable” contract

interpretation not in conflict with the contract’s plain language,

and therefore not subject to judicial reversal. Eastern Associated

Coal 531 U.S. at 62. Consequently, the majority’s substitution of

8

In Misco the Court reversed the Fifth Circuit’s decision

refusing to enforce an arbitrator’s award because the arbitrator

had failed to consider all the evidence available to him in

making his decision. The Court explained that barring fraud or

gross misconduct the only limitation on an arbitrator’s

evidentiary determinations dwell in the contract. Misco, 484

U.S. at 39. The only such limitation in Misco was a ban on

hearsay evidence, which the arbitrator did not transgress. Id.

Because fraud or gross misconduct did not motivate the

arbitrator, the reviewing court was powerless to impose

additional evidentiary requirements on the arbitrator. Id. at

40.

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its own interpretation of Section 20(A)(2) of the contract was

legally erroneous.

The majority also suggests that there may be a federal common

law prohibition on an arbitrator’s consideration of an employer’s

post-termination behavior in determining just cause. Assertion of

such a prohibition is contrary to Misco, which explained that

“procedural questions which grow out of the dispute and bear on its

[just cause determination] are to be left to the arbitrator,”

except where fraud or gross misconduct are alleged. Misco, 484

U.S. at 40.

Moreover, the case cited by the majority for this federal

common law limitation on arbitrator discretion in fact reiterates

the foundational rule that the limits on an arbitrator’s discretion

are only found in the collective bargaining agreement itself. In

Gulf Coast Industrial Workers Union v. Exxon Co., 991 F.2d 244 (5th

Cir. 1993), the labor agreement in question stated that Exxon

“shall have the right to discipline and discharge employees for

just cause.” Id. at 247. The contract further specified that drug

use constituted just cause, and rendered an employee “liable to

discharge on the first offense.” Id. This contract language

imposed the relevant restriction on the arbitrator: once an

arbitrator found that drug use had occurred, termination had to be

upheld. Thus, we refused to enforce the arbitrator’s award where

he reinstated an employee who had been found using drugs because

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the contract limited the arbitrator’s discretion once just cause

was found. Id. at 256. See also Delta Queen Steamboat Co. v.

District 2 Marine Engineers Beneficial Association, 889 F.2d 599,

604 (5th Cir. 1989) (finding that because contract defined “proper

cause” for termination as including “carelessness,” once that

finding was made no further inquiry was appropriate). Here there

is no such contractual definition of just cause limiting the

arbitrator’s discretion. Absent such a restriction, the arbitrator

was free to consider the contractual due process as a component of

just cause. Chauffeurs, 613 F.2d at 721; Maremont Corp., 515

F.Supp. at 173. Cf. Weber Aircraft v. General Warehousemen &

Helpers Local Union, 253 F.3d 821, 824-25 (5th Cir. 2001)

(explaining that where contract did not strictly define just cause,

nor limit the arbitrator’s discretion in deciding penalties,

arbitrator was free to fashion a lesser remedy than discharge for

less aggravated infractions).

Finally, the majority holds that the arbitrator implicitly

found just cause here, and therefore that it exceeded its authority

in then considering American Eagle’s contract violations in

reducing Balser’s punishment. In reaching this conclusion the

majority misinterprets the import of our decisions in Delta Queen

and E.I. DuPont de Nemours v. Local 900 of the Int’l Chemical

Workers Union (“Dupont”), 968 F.2d 456 (5th Cir. 1992) , and fails

to follow United Steelworkers of America v. Enterprise Wheel & Car

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Co., 363 U.S. 593 (1960).

In Delta Queen we explained that the phrase just cause

“carries no talismanic significance in labor jurisprudence.” Delta

Queen, 889 F.2d at 604. “If a collective bargaining agreement

defines ‘proper cause’ to include a nonexhaustive list of offenses,

an arbitrator cannot ignore the natural consequence of his finding

that a listed offense was committed.” Id. Thus, in Delta Queen

because “proper cause” was defined to include carelessness, and the

arbitrator found carelessness, he implicitly found “proper cause”

even if he never used those words. Id. We then applied this rule

to similar circumstances in DuPont, holding that where the

arbitrator found the use of drugs on company premises was “a

discharge offense,” and then found that conduct occurred, a just

cause finding was implicit. DuPont, 968 F.2d at 458-59.

In contrast to Delta Queen, here there is no contractual list

of offenses that constitute just cause, the finding of which

terminated the arbitrator’s discretion. And unlike DuPont the

arbitrator here never stated that the offenses that he found Balser

guilty of were offenses that themselves constituted just cause.

The majority argues that the arbitrator’s statement that “[t]he

Employer has not only the right, but a duty to rid the workplace of

such conduct,” (referring to harassment) was such a statement. But

the arbitrator’s statement that the airline had the right to rid

the workplace of harassment is not the same as finding just cause

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to terminate Balser. Many steps short of termination would

severely punish Balser for engaging in unacceptable conduct and

deter the conduct from recurring, thereby “ridding” the workplace

of that behavior. Likewise, while the arbitrator did find that

Balser had violated company rules by arming himself with a dirk on

board an aircraft, it never suggested that this rule violation was

itself a ground for discharge. Contrary to the majority’s

suggestion, then, there is nothing in the arbitrator’s opinion

which mandates the inference that the arbitrator found just cause.

Absent such a necessary logical implication, as in Delta Queen

and DuPont, we lack the authority to imply just cause, where, as

here, it results in a finding that the arbitrator exceeded his

untrammeled authority to interpret and determine just cause. If

there is ambiguity as to whether an arbitrator is acting within the

scope of his authority, that ambiguity must be resolved in favor of

the arbitrator, as a mere “inference” of ultra vires action is

insufficient “reason for refusing to enforce the award.” United

Steelworkers, 363 U.S. at 598.

Thus, I believe that the arbitrator was acting within the

scope of his contractual authority by interpreting the contract to

authorize it to consider the airline’s violation of Section 20(C)’s

first-step hearing in determining just cause. I would, therefore,

reverse the judgment of the district court and enforce the

arbitration award.

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