Monongahela Valley Hospital v. United Steel Paper and Forestr

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 19-2182

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MONONGAHELA VALLEY HOSPITAL

INCORPORATED

v.

UNITED STEEL PAPER AND FORESTRY

RUBBER MANUFACTURING

ALLIED INDUSTRIAL AND SERVICE WORKERS

INTERNATIONAL UNION AFL-CIO CLC,

Appellant

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Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. No. 2:18-cv-00371)

District Judge: Honorable David S. Cercone

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Argued November 13, 2019

Before: AMBRO, KRAUSE, and BIBAS, Circuit Judges

(Opinion filed: December 30, 2019)

Anthony P. Resnick (Argued)

United Steelworkers International Union

60 Boulevard of the Allies, Room 807

Pittsburgh, PA 15222

Counsel for Appellant

Hayes C. Stover (Argued)

K&L Gates

210 Sixth Avenue

Pittsburgh, PA 15222

Counsel for Appellee

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OPINION OF THE COURT

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AMBRO, Circuit Judge

We have the rare situation where not even our heavy

degree of deference to arbitrators can save an arbitration

decision and award. Monongahela Valley Hospital, Inc.

sought to vacate an arbitration decision and award in favor of

United Steel, Paper and Forestry, Rubber, Manufacturing,

Energy, Allied Industrial and Service Workers International

Union, AFL-CIO, CLC. The District Court granted the

Hospital’s motion for summary judgment and vacated the

award. The Union now appeals, arguing that the District Court

erred by exceeding its very limited scope of review and should

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have confirmed the award because it rationally derived from

the parties’ collective bargaining agreement (the “CBA”). We

agree with our District Court colleague, and thus we will

affirm.

I. BACKGROUND

The Hospital has approximately 1,100 employees, just

under half of whom are in a bargaining unit represented by the

Union. Working supervisors are not included in the bargaining

unit. The CBA, in effect from July 1, 2014 to June 30, 2017

(thus at all times relevant to this dispute), governed the

relationship between the Hospital and the bargaining unit

employees. It included a dispute resolution process whereby

an aggrieved employee could submit a grievance that if

unresolved through the grievance procedure, could be appealed

to arbitration.

Under § 8(F)(3) of the CBA, an arbitrator’s authority is

limited “only to interpret[ing], apply[ing] or determin[ing]

compliance with [its] provisions.” The arbitrator specifically

lacks the “authority to add to, detract from or alter in any way

the provisions of this [CBA].” Id.

The CBA provision before us—§ 13(B)(6)—concerns

the scheduling of vacation. It provides that

[v]acation will, so far as possible,

be granted at times most desired by

employees; but the final right to

allow vacation periods, and the

right to change vacation periods[,]

is exclusively reserved to the

Hospital. Any changes in vacation

schedules may be realized by

mutual consent. In the event the

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Hospital unilaterally changes a

schedule causing the employee to

suffer financial loss, the Hospital

agrees to reimburse the employee

for provable loss.

(Emphases added.)

Conflicts over vacation scheduling occurred only when

there was a limited number of bargaining and non-bargaining

unit employees that performed the same or similar functions

such that only one employee could be away at a time. There

were only three instances in the record before late 2016 when

a bargaining unit employee did not receive her desired vacation

because a supervisor (not a bargaining unit member) chose the

same days (and in one of those instances the issue went away).

To avoid vacation scheduling conflicts, the Hospital, in

apparent agreement with the Union, experimented with using

“blackout” periods for scheduling 2017 vacation whereby

certain weeks were blocked off for vacation. The Hospital,

however, found that the experiment was unsuccessful in

eliminating scheduling conflicts and discontinued it after that

year.

Our case stems from a dispute over vacation days

between bargaining unit employee Carol Konsugar and her

working supervisor, a non-bargaining unit employee. At the

end of 2016, Ms. Konsugar requested vacation for the

following year during the week of December 25, 2017. The

Hospital denied her request because her working supervisor

had requested that same week off and both could not be away

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at the same time.1 Ms. Konsugar then filed a grievance in

January 2017 alleging the denial of her requested vacation as a

CBA violation, and arbitration ensued.2

The parties selected Gerald Kobell as the arbitrator. The

Union argued before him that § 13(B)(6) of the CBA gave its

employees preference when there were conflicting vacation

requests, while the Hospital contended the “final” and

“exclusive” language in that section conferred on it ultimate

discretion over vacation scheduling. In an attempt to reconcile

the competing positions, the arbitrator framed the issue as

“whether the Hospital violated the [CBA] when it denied

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The record is not clear whether Ms. Konsugar’s requested

week of December 25, 2017, was “blacked out.” The

arbitrator, based on Union Exhibits 5 and 6, stated only that the

week of December 18, 2016, was blacked out. It appears the

“2016” was a scrivener’s error considering that the arbitrator

later refers to those same exhibits as blacking out vacation for

2017, see App. 46; 48. In any event, the Hospital represented

at oral argument, and the Union did not dispute, that Ms.

Konsugar was unaffected by the “blackout” policy, See Trans.

of Oral Arg. at 18–19, 23–24. We therefore proceed on the

assumption that Ms. Konsugar’s request for vacation during

the week of December 25, 2017, did not involve a “blackout

period.” To the extent the arbitrator ruled that the Hospital may

no longer use “blackout” periods, we need not weigh in on this

point.

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The grievance referenced specifically only Ms. Konsugar’s

violation. Two other disputes over vacation scheduling

allegedly arose during 2017, yet they were not squarely before

the arbitrator, and we do not address them here.

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employee Carol Konsugar the vacation she desired [for 2017]

in December 2016.”

In interpreting § 13(B)(6), the arbitrator stated he could

not “conclude that the subsequent reservation of exclusivity in

allocating vacations entirely to the Hospital completely

negates . . . ‘so far as possible’” because of his concern that it

could then always deny bargaining unit employees their

vacation requests. Accordingly, the arbitrator sustained the

grievance, ruling that, “notwithstanding the Hospital’s

reservation of exclusive rights contained in Section 13[B](6)

of the Agreement,” the CBA precluded the Hospital from using

“blackout” periods and prevented it from “deny[ing] senior

employees in the bargaining unit their desired vacation[] when

there is no operating need.”

The Hospital filed a complaint with the United States

District Court for the Western District of Pennsylvania under

§ 301 of the Labor Management Relations Act, 29 U.S.C.

§ 185, seeking to vacate the award on the grounds that “[t]he

arbitrator’s decision and award exceeded his authority, ignored

the plain language of the CBA, and . . . failed to draw its

essence from the language of the CBA.” Both parties moved

for summary judgment. The District Court, after

acknowledging that it owed a “heavy degree of deference to

the arbitrator,” ruled nonetheless that the arbitrator’s

interpretation of § 13(B)(6) “(1) was a manifest disregard of

the plain language of the CBA[,] (2) ignored the clear

intentions of the parties[,] and (3) failed to construe such

provision to give effect to all parts of the provision.”

Accordingly, it granted the Hospital’s motion for summary

judgment and vacated the arbitration award. The Union

appeals to us.

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II. JURISDICTION & STANDARD OF REVIEW

The District Court had jurisdiction under 29 U.S.C.

§ 185, and we have appellate jurisdiction under 28 U.S.C.

§ 1291.

We exercise plenary review over the District Court’s

order granting summary judgment and apply the same standard

as that Court in reviewing an arbitration award. Exxon

Shipping Co. v. Exxon Seamen’s Union, 73 F.3d 1287, 1291

(3d Cir. 1996). No doubt courts are restricted in reviewing the

decision of an arbitrator resolving a labor dispute under a

collective bargaining agreement, as “[t]he sine qua non of

judicial review of an arbitration award is a heavy degree of

deference to the arbitrator.” Akers Nat’l Roll Co. v. United

Steel, 712 F.3d 155, 164–65 (3d Cir. 2013).

But that deference is not unlimited. If it were, court

review would be an oxymoron. Hence we will not “rubber

stamp” an arbitrator’s decision. Hamilton Park Health Care

Ctr. Ltd. v. 1199 SEIU United Healthcare Workers E., 817

F.3d 857, 861 (3d Cir. 2016) (quoting Matteson v. Ryder Sys.

Inc., 99 F.3d 108, 113 (3d Cir. 1996)). Rather, we will vacate

an award “if it is entirely unsupported by the record or if it

reflects a manifest disregard of the agreement.” Citgo Asphalt

Ref. Co. v. Paper, Allied-Indus., Chem. & Energy Workers Int'l

Union Local No. 2-991, 385 F.3d 809, 816 (3d Cir. 2004)

(citation omitted). The Supreme Court has long made clear

that an award must still “draw[] its essence” from the words of

the collective bargaining agreement and the arbitrator may not

“dispense his own brand of industrial justice.” United

Steelworkers of America v. Enterprise Wheel & Car Corp., 363

U.S. 593, 597 (1960). Further, an arbitrator must act within the

scope of authority conferred him by the CBA. See Pa. Power

Co. v. Local Union No. 272 of the Int’l Bhd. of Elec. Workers,

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276 F.3d 174, 179–80 (3d Cir. 2001) (vacating an award where

arbitrator “exceeded his powers” under the CBA).

III. DISCUSSION

The Union asks us to reverse the District Court’s order

and reinstate the arbitration award. We decline to do so

because the award in no rational way draws its essence from

the CBA, and the arbitrator, in inserting the “operating need”

restriction, exceeded his authority under the CBA by

dispensing his own brand of industrial justice.

A. The award ignores the CBA’s plain language.

We begin with the obvious: an arbitrator “may not

ignore the plain language of the contract.” United

Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S.

29, 38 (1987). Here § 13(B)(6) gives the Hospital the “final”

and “exclusive[]” right to deny employees their desired

vacation. That it has the authority “unilaterally” to change a

vacation schedule, even though schedules may also be changed

by “mutual consent,” lends further support to this clear

reservation of rights. These terms “are simply not susceptible

to more than one reasonable interpretation, and they do not

somehow render the CBA[] incomplete or ambiguous.”

U.A.W. Local No. 1697 v. Skinner Engine Company, 188 F.3d

130, 146 (3d Cir. 1999).

The arbitrator ignored this plain language, and he ruled

against the Hospital when it “elected to rely upon its

reservation of rights” in § 13(B)(6) in denying Ms. Konsugar

her requested vacation. He justified his decision by reasoning

that the “so far as possible” language must be given some

meaning lest the rights of the bargaining unit employees with

respect to vacations “could always be negated.”

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“So far as possible” cannot hold hostage what follows

here. It is a subordinate phrase clearly qualified by the

superseding “but,” and what follows grants the Hospital the

“final,” “exclusive[]” and “unilateral[]” right to schedule

vacations. “It is . . . well established that contract language

must be read in context and that ‘a subsequent specification

impliedly limits the meaning of a preceding generalization.’”

Affiliated Food Distribs., Inc. v. Local Union No. 229, 483 F.2d

418, 420 (3d Cir. 1973) (citation omitted). Put in context, “so

far as possible” means the Hospital should consider in good

faith the bargaining unit employees’ preferences when

exercising its final and exclusive right to determine vacation,

but nothing more; and there is certainly no requirement

anywhere in the CBA that the Hospital consider operating

need.

Thus the Hospital could rely on its reservation of rights

to deny a vacation request. Supporting this is that the Union

failed to introduce evidence that the Hospital did not “so far as

possible” attempt to honor Ms. Konsugar’s request. Indeed, in

reciting the Hospital’s position, the arbitrator stated that Ms.

Konsugar was granted her first three requested vacation dates,

and the Union failed to rebut that evidence.

Even this is not all that went off the rails. The arbitrator

concluded that if a claim to vacation, absent operating need or

special circumstances, cannot be resolved, the bargaining unit

member’s claim prevails. Rather than acknowledge the CBA’s

rule that the Hospital makes the ultimate determination over

vacation scheduling, this decision flips the CBA on its head

and grants the Union a near-categorical preference.

Accordingly, notwithstanding a standard of review tilted much

in favor of arbitrators, we cannot affirm this award that

manifestly disregards the plain language of the CBA.

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B. The arbitrator exceeded the scope of his

delegated authority when he injected the “operating

need” restriction into the CBA.

Manifestly disregarding the Hospital’s “final,”

“exclusive[]” and “unilateral[]” right to schedule vacations, the

arbitrator deviated far beyond the scope of his authority by

force-feeding the “operating need” requirement into the CBA.

To repeat, an arbitrator’s authority sources from the

CBA itself. Here § 8(F)(3) makes clear that the arbitrator has

no authority to “add to, detract from or alter in any way the

provisions of [the CBA].” Yet that is what the arbitrator did in

inserting the “operating need” restriction. It appears nowhere

in the CBA. Instead, the arbitrator urges what he believes

“should occur in the situation where a bargaining unit

employee and his/her working supervisor . . . both desire the

identical vacation;” the employee should prevail and “the

working supervisor should not have a superior claim to the

desired vacation week.” (Emphases added.) Thus, he

concludes, “the Hospital may not reserve unto itself and the

working supervisor the right to deny senior employees in the

bargaining unit their desired vacation, when there is no

operating need for the employee to be present during the

desired vacation week because of skills, ability, and

responsibilities that cannot also be performed by the working

supervisor.” None of these policy pronouncements, however,

can be found in the text of the CBA.

Why “operating need” is absent stems from the parties’

bargaining history. The 1974 CBA provided that “each

employee’s vacation period shall be designated by the Hospital

to meet the requirement of operating conditions” (emphasis

added), in effect the “operating need” restriction the arbitrator

added here. In 1977, however, the CBA was modified to

eliminate the operating-conditions restriction and to give the

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final say to the Hospital to schedule vacations. That is the same

language that is in the CBA governing this dispute. Moreover,

in 2009 the Union sought a specific restriction to the CBA that

“[n]on-bargaining unit employees will not be given vacation

scheduling preference over bargaining unit employees,” but

that amendment was rejected and never became a part of the

agreement. App. 99, 43.

Thus past becomes prologue in discovering the parties’

intent. Where an arbitrator injects a restriction into a contract

to which the Hospital did not agree and to which the bargaining

unit employees are not entitled, he dispenses his own brand of

industrial justice and should be overturned. See Brentwood

Medical Ass’n v. United Mine Workers, 396 F.3d 237, 241 (3d

Cir. 2005) (noting that “it is within our discretion to vacate [an

arbitration] award” when it is supported only by language the

arbitrator injected into the CBA); Poland Spring Corp. v.

United Food & Commercial Workers Int’l Union, Local 1445,

314 F.3d 29, 34–37 (1st Cir. 2002) (voiding an arbitration

award for limiting a company’s termination powers with a

made-up term: “mitigating circumstances”).

* * * * *

An arbitration award does not “draw[] its essence” from

a CBA where, as here, an arbitrator not only fails to heed the

plain language of the agreement but also exceeds his authority

by injecting language into it that was already rejected in prior

bargaining. The bar may be low to uphold an arbitration

award, but it still exists. As we are not an amen corner for

arbitrators’ rulings, we affirm the well-reasoned decision of the

District Court vacating the arbitrator’s decision and award.

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