Opposition Brief — Manhattan Coffee Co. v. International Brotherhood of Teamsters, Local No. 688

"Office - Supreme Court, U

FILED

APR16 1985

No. 84-1369 oagage gaa

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

MANHATTAN COFFEE COMPANY,

Petitioner,

VS.

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,

WAREHOUSEMEN AND HELPERS OF AMERICA, LOCAL No. 688,

Respondent.

BRIEF IN OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE EIGHTH CIRCUIT

CLYDE E. CRAIG

WILEY, CRAIG, ARMBRUSTER

& WILBURN

1221 Locust Street, Suite 650

St. Louis, Missouri 63103

(314) 231-1018

Counsel for Respondent

St. Louis Law Printing Co.,Inc., 411 No. Tenth Street 63101 314-231-4477

_ BEST AVAILABLE COPY §

QUESTIONS PRESENTED

1. Whether the decision of the United States Court of Ap-

peals for the Eighth Circuit below, which affirmed enforcement

of a labor arbitrator’s award holding that the award ‘‘drew its

essence’’ from the applicable collective bargaining agreement,

conflicts with the precedent of this Court to the grave detriment

of the integrity of the arbitral process.

2. Whether this Court’s principles governing judicial review

of labor arbitrators’ awards set forth 25 years ago in the

Steelworkers Trilogy and, specifically, in United Steelworkers

of America v. Enterprise Wheel & Car Corp., 363 U.S. 593

(1960), are vague enough to enable reviewing courts to escape

their mandated responsibility of ensuring that labor arbitrators’

awards are faithful to the underlying labor agreement, and

should be clarified to provide guidance to reviewing courts in

order to avoid enforcement of labor arbitration awards based

on an arbitrator’s unilateral amendment or excision of a term of

the underlying collective bargaining agreement.

Ore me

*

Questions

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TABLE OF CONTENTS

EE ES er ee ee eee

ee Raa aS a a a

a REGS

Ne ice cbadececeese

l.

Il.

Argument

li.

Oe dae

Decisions of the Arbitrator, the District Court

and the Court of Appeals .................

eae POs 2 68S 88.6 S 64SEC HOBO AEE OBOE EEO SS

The Decision of the United States Court of

Appeals for the Eighth Circuit Does Not Con-

flict With the Precedent of This Court

Because the Arbitrator’s Award Drew Its

Essence From the Collective Bargaining

Agreement and Did Not Amend the Agree-

ment or Excise a Proviso to the Subcontrac-

SIE. va cccccccccttnecocives

The Supreme Court’s Principles Governing

Judicial Review of Arbitration Awards Are

Sufficiently Clear to Enable Reviewing Courts

to Ensure That Labor Arbitrator’s Awards

Are Faithful To Labor Agreements and Do

Not Need Clarification Through a Review of

the Present Case to Avoid Enforcement of

Awerds Which Underlie Those Agreements . .

Deere err at Se sc ecokeeaecae

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A-l

— ivy —

TABLE OF AUTHORITIES

Cases:

Amanda Bent Bolt Company v. United Auto Workers,

Local 1549, 451 F.2d 1277 (6th Cir. 1971) ........

Andros Compania Maritima, S.A. v. Marc Rich & Co.,

A.G., 579 F.2d 691 (2nd Cir. 1978)..............

Bacardi Corp. v. Congreso de Uniones, 692 F.2d 210

ke ee ee

Campo Machining Co., Inc. v. Local Lodge No. 1926,

Re eee eee

Detroit Coil Co. v. International Association of Mach-

inists & Aerospace Workers, Lodge No. 82, 594

F.2d 575 (6th Cir.), cert. denied, 444 U.S. 840

eee a ee oe ee ae ie sg

Edna H. Pagel, Inc. v. Teamsters, Local 595, 667 F.2d

es MG hobs i a MR Aw kb cea beks 00

Electrical Workers, Local 53 v. Sho-Me Power Corp.,

TOD Wed Gee Gite BOO oc oc cecccacss. ‘a

Fabricut, Inc. v. Teamsters Local 523, 597 F.2d 227

ES a ene

Holly Sugar Corp. v. Distillery Workers International

Union, 4i2 F.2d 899 (9th Cir. 1969) .............

International Brotherhood of Firemen & Oilers, Local

No. 935-B v. The Nestle Company, Inc., 630 F.2d

SES ee

International Ladies’ Garment Workers’ Union v. Ash-

land Industries, Inc., 488 F.2d 641 (Sth Cir. 1974),

cert. denied, 419 U.S. 840 (1975)... 2.2... 0.6.08.

11

11

14

12

11, 12

11

6, 14

lowa Beef Processors, Inc. v. Meat Cutters, 627 F.2d

es MIs onc cccnncncsicssncetcteesss

Johns-Manville Sales Corp. v. Machinists, Local Lodge

1609, 621 F.2d 756 (Sth Cir. 1980)... .........5..

Kewanee Machinery Div. v. Teamsters, Local No. 21,

_ pe bt le B.. ree

Lackawana Leather Company v. United Food & Com-

mercial Workers International Union, 706 F.2d

als HUI s Su ss nncccnscccnnessccsacess

Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123

(3rd Cir. 1969) ....... bbe theheenvenkenbawinens

Manhattan Coffee Co. v. International Brotherhood of

Teamsters, Local No. 688, 571 F.Supp. 347 (E.D.

Manhattan Coffee Co. v. International Brotherhood of

Teamsters, Chauffeurs, Warehousemen and

Helpers of America, Local No. 688, _ F.2d

a = § Peter

Mistletoe Express Service v. Motor Expressmen’s

Union, 566 F.2d 692 (10th Cir. 1977) ............

Nolde Brothers, Inc. v. Bakery Workers, Local 358,

. k ® |. Ree reryerr sy ee

Rainbow Glass Co. v. Teamsters, Local 610, 663 F.2d

BBG Gis Cir. BGGRD. « . vwcccccceccesecnesucecces

Safeway Stores v. American Bakery and Confectionery

Workers International Union, 390 F.2d 79 (Sth

Sears, Roebuck & Co. v. Teamsters, Local Union No.

243, 683 F.2d 154 (6th Cir. 1982), cert. denied, 460

RD. TROD Kv Scecccccicncevccunssceebens

14

12

10

Teamsters, Local 878 v. Coca-Cola Bottling Company,

Sas CUES EEUU cbc cbcdcccccdccccess

Timken Co. v. Local Union No. 1123, United Steel-

workers of America, 482 F.2d 1012 (6th Cir. 1973).

Torrington Co. v. Metal Products Workers, Local 1645,

362 F.2d 677 (2nd Cir. 1966) ..............0005.

United Steelworkers of America v. American Manufac-

turing Co., 363 U.S. 564 (1960)... 2... 6... eee

United Steelworkers of America v. Enterprise Wheel

6, 11

& Car Corp., 363 U.S. 593 (1960) ..... 4,5, 7, 8,9, 10, 12

United Steelworkers of America v. Warrior & Guif

Navigation Co., 363 U.S. 574 (1960) ............

W.R. Grace & Co. v. Rubber Workers, Local No. 759,

ee eee

Western Electric Co. v. Communication Equipment

Workers, Inc., Independent, 554 F.2d 135 (4th Cir.

As bk chwen boce ce sds edesocckel Wbeeksdedes

Wire Service Guild, Local 222 v. United Press Inter-

national, Inc., 623 F.2d 257 (2nd Cir. 1980) ......

Statutory Provisiors:

PEE UE Sc cvocccccccesee easnevee dtbaesi

No. 84-1369

In THE

Supreme Court of the United States

OcToBer TERM, 1984

MANHATTAN COFFEE COMPANY,

Petitioner,

vs.

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,

WAREHOUSEMEN AND Hevpers Or AMERICA, Loca. No. 688,

Respondent.

BRIEF IN OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE EIGHTH CIRCUIT

STATEMENT OF THE CASE

1. Introduction

The original complaint in this case was filed by Manhattan

Coffee Company (hereinafter ‘“‘the Compeny*’) seeking to

vacate an arbitration opinion and award issued by Arbitrator

Richard L. Ross.' Teamsters Local Union No. 688 (hereinafter

“*the Union’’) filed a counterclaim for enforcement of the opin-

‘ A copy of the opinion and award is reproduced in the Appendix

hereto.

~~

ion and award and for attorney's fees and costs. The district

court, following cross-motions for summary judgment, entered

an order and memorandum enforcing the arbitrator's decision,

granting the Union costs, but denying, with certain express

reservations, the Union's request for attorney's fees. The Com-

pany appealed to the United States Court of Appeals for the

Eighth Circuit seeking reversal of enforcement of the

arbitrator's decision, and the Union cross-appealed seeking

reversal of the district court's denial of attorney's fees and a re-

mand. In a 2-1 panel decision the Eighth Circuit affirmed the

district court. The Company requested a rehearing en banc

which was denied by five of the nine judges.

ll. Decisions of the Arbitrator, the District Court and

the Court of Appeals

The essentia: facts in this case are set forth in the decision of

the Eighth Circuit. See Petitioner's Appendix A, pp. 2a-3a.’

The arbitrator held that the Company’s transfer of office work

violated Article 28 of the collective bargaining agreement not-

withstanding language therein allowing a discontinuance of %

““performance of service’’ which was ‘‘based on sound business

considerations.’’ His holding followed an interpretation that,

although the Company's action was based on sound business

considerations, the exclusionary language on ‘‘performance of a

service”’ related to work of the “‘service’’ department, not that

of the office staff. The arbitrator likewise found support for his

holding in a review of the history of negotiations between the

parties to the agreement.

* The decisions of both the Eighth Circuit and district court refer in

some instances to July 1, 1983 as the date by which the Company im-

plemented a plan which included transfer of certain payroll and ac-

counts payable functions previously performed by the office and

clerical unit. See Petitioner's Appendix A, pp. 2a, 2b; Petitioner's Ap-

pendix C, pp. 13a, 1Sa. It is clear from the arbitrator's decision and

its January 14, 1983 issuance date that the correct date in question was

July 1, 1982. See Respondent's Appendix, pp. A-2, A, A-8, A-9,

A-16. The error, however, is not material to the decision in the case.

~~

The district court upheld the arbitrator's decision. It found

the language of the exception in Article 28 ‘“‘ambiguous and

subject to conflicting, reasonable interpretations when applied

to the office bargaining unit,’’ and was of the opinion that ‘‘the

arbitrator's construction of the contract [was] reasonable and

supported by the facts.’ Manhattan Coffee Co. v. Interna-

tional Brotherhood of Teamsiers, Local No. 688, $71 F.Supp.

347, 351 (E.D. Mo. 1983). The district court likewise found sup-

port for sustaining the arbitrator's decision in contract terms ac-

companying the exception to Article 28 and the parties’ bargain-

ing history. /d.

The majority of the Eighth Circuit panel affirmed the lower

court's decision to enforce the award, although it found the

record wanting in support of the arbitrator's reliance on a

history of bargaining and negotiations. The panel majority

viewed the arbitrator's reading of the ‘“‘performance of service"’

language as narrow, but not impermissible, and justified in light

of other language in the exception. On this basis, it agreed with

the district court that the arbitrator's interpretation of am-

biguous language drew its essence from the collective bargaining

agreement. The dissenting panel member agreed with the ma-

jority that the record did not support the arbitrator's reliance on

bargaining and negotiating history, but disagreed that the

language of Article 28 was ambiguous or that the exception

therein applied only to a unit of employees apart from the office

unit. In the dissent’s view, the arbitrator had in effect amended

the contract, and his decision, accordingly, could not be said to

have drawn its essence fora the agreement.

acl si

ARGUMENT

I. The Decision Of The United States Court Of Appeals

For The Eighth Circuit Does Not Conflict With The

’ Precedent Of This Court Because The Arbitrator’s

Award Drew Its Essence From The Collective

Bargaining Agreement And Did Not Amend The

Agreement Or Excise A Proviso To The Subcontract-

ing Clause Therein.

Federal policy strongly favors the arbitration of labor

disputes. 29 U.S.C. § 173(d), Nolde Brothers, Inc. v. Bakery

Workers, Local 358, 430 U.S. 243, 254 (1977); Iowa Beef Pro-

cessors, Inc. v. Meat Cutters, 627 F.2d 853, 856 (8th Cir. 1980).

Consequently, the scope of judicial review of an arbitrator’s

award is extremely limited. Johns-Manville Sales Corp. v.

Machinists, Local Lodge 1609, 621 F.2d 756, 758 (Sth Cir.

1980); Western Electric Co. v. Communication Equipnient

Workers, Inc., Independent, 554 F.2d 135, 138 (4th Cir. 1976).

And all doubts are to be resolved in favor of the validity of the

award. Teamsters, Local 878 v. Coca-Cola Bottling Company,

613 F.2d 716, 717 (8th Cir. 1980); Kewanee Machinery Div: v.

Teamsters, Local 21, 593 F.2d 314, 316-317 (8th Cir. 1979). The

proper approach for courts in considering these matters is

refusal to review the merits of an arbitration award, and the

award must be deemed legitimate if it ‘‘draws its essence from

the collective bargaining agreement.’’ United Steelworkers v.

Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960).

Under these standards, the Eighth Circuit’s decision in this

case was consistent with this Court’s precedent. The substantive

issue before the arbitrator was whether the Company violated

its collective bargaining agreement with the Union when it

transferred certain work out of a grievant’s bargaining unit

while she was on layoff. In deciding this issue against the Com-

pany, the arbitrator reached his conclusions by an analysis and

interpretation of contract language in the context of the parties’

—

conduct. The Company contends that his analysis and inter-

pretation manifested an infidelity to his obligations because he

purportedly amended the parties’ agreement by excising a pro-

viso to the subcontracting clause. Whether the award drew its

essence from the agreement in this case, therefore, turns on

whether the arbitrator was engaged in legitimate interpretation

or an invalid rewriting of the agreement. Respondent submits

that the Eighth Circuit correctly viewed the arbitrator’s opinion

and award as an exercise of legitimate interpretation, and thus

correctly concluded that the award drew its essence from the

collective bargaining agreement.

In United Steelworkers v. Enterprise Wheel & Car Corp., this

Court recognized that arbitrators could exceed their powers in

going beyond legitimate interpretation and application of an

agreement, and cautioned against approval of such an abuse of

authority:

When an arbitrator is coramissioned to interpret and apply

the collective bargaining agreement he is to bring his in-

formed judgment to bear in order to reach a fair solution

of a problem...Nevertheless, an arbitrator is confined to

interpretation and application of the collective bargaining

agreement; he does not sit to dispense his own brand of in-

dustrial justice...When the arbitrator’s words manifest an

infidelity to this obligation, courts have no choice but to

refuse enforcement of the award. 363 U.S. at 597.

The appellate courts have heeded this caution in circumstances

where an arbitrator’s ‘‘interpretation’’ of an agreement was in

reality an abandonment of it. Thus, awards have been set aside

or remanded for further scrutiny where the arbitrator read into

a contract an implied provision to which the parties had not

agreed, Torrington Co. v. Metal Products Workers, Local 1645,

362 F.2d 677 (2nd Cir. 1966); where the arbitrator disregarded

express contract language authorizing a company’s actions

eo yo

because the arbitrator viewed the action as punitive, Amanda

Bent Bolt Company v. United Auto Workers, Local 1549, 451

F.2d 1277 (6th Cir. 1971); where the arbitrator substituted his

own definition of ‘‘quit’’ for the contract’s definition, Timken

Co. vy. Local Union No. 1123, United Steelworkers of America,

482 F.2d 1012 (6th Cir. 1973); where the arbitrator declared the

contract from which he derived his power legally ineffective, Jn-

ternational Ladies’ Garment Workers’ Union v. Ashland In-

dustries, Inc., 488 F.2d 641 (Sth Cir. 1974), cert. denied 419

U.S. 840 (1975); where the arbitrator added to the contract a re-

quirement of progressive discipline before recourse to a contrac-

tually authorized immediate discharge, Mistletoe Express Ser-

vice v. Motor Expressmen’s Union, 566 F.2d 692 (i0th Cir.

1977); where the arbitrator, among other excesses, expanded the

scope of the usual meaning of ‘‘notified’’ and declared that to

deny arbitrability would lead to a deterioration of the parties’

good relations, Detroit Coil Co. v. International Association of

Machinists & Aerospace Workers, Lodge No. 82, 594 F.2d 575

(6th Cir.), cert. denied, 444 U.S. 840 (1979); where the ar-

bitrator, after finding insubordination, disregarded clear con-

tract language which allowed discharge for insubordination,

and imposed an unwarranted additional burden of proof on the

company to justify its contractually authorized right to

discharge an employee for insubordination, JIJnternational

Brotherhood of Firemen & Oilers, Local No. 935-B v. The Nes-

tle Company, Inc., 630 F.2d 474 (6th Cir. 1980); where the ar-

bitrator applied a ‘‘balancing test’’ on relative economic cost to

the union and company of subcontracting, notwithstanding

specific contract language which established the only test for

subcontracting as whether the work could be more efficiently

and economically done outside the bargaining unit, Sears,

Roebuck & Co. v. Teamsters, Local Union No. 243, 683 F.2d

154 (6th Cir. 1982), cert. denied, 460 U.S. 1023 (1983); and,

where the arbitrator introduced extraneous legislative con-

siderations in support of his award, Bacardi Corp. v. Congreso

de Uniones, 692 F.2d 210 (ist Cir. 1982).

=~

In the present case, the arbitrator avoided such excesses and

confined himself to a consideration of ambiguous language on

‘‘performance of a service’’ as it applied to the subcontracting

of work performed by grievant’s bargaining unit. In so pro-

ceeding, he concluded from a consideration of the parties’ prior

discussions on contemplated transfers of work and other

language within the proviso itself that the ‘‘service’’ in question

was work performed by another bargaining unit also

represented by the Union. The Company construes the ar-

bitrator’s conclusion as a rewriting, by excision, of the contract

covering the office bargaining ur.ii on the false premise that any

language which appears in that agreement must, by virtue of its

inclusion, directly refer to the bargaining unit covered by the

agreement. It conveniently ignores the fact that language

regarding ‘‘...manufacture, packaging, or processing of a pro-

duct...’’ also appears in the same proviso; and it characterizes

the arbitrator’s interpretation that the ‘‘performance of a ser-

vice’’ language similarly refers to non-bargaining unit work as

an ‘‘amendment’’ to the contract by way of eliminating any

meaningful relevance of the disputed language to the office

unit.

Such a characterization was properly rejected by the Eighth

Circuit under the standard of review set forth by this

Court—determining whether the arbitrator reached a rational

conclusion based on the terms of the collective bargaining agree-

ment. United Steelworkers v. Enterprise Wheel & Car Corp.,

supra, at 597. The facts before the arbitrator indicated that the

parties may have had particular reasons to include language in

the office agreement which applied to another bargaining unit

comprised of production, warehouse, and service workers. The

uncontroverted evidence before the arbitrator was that the

Union and the Company were parties to two agreements cover-

ing two separate bargaining units. It is reasonable to infer that

the parties were aware that the language contained in one agree-

ment might have an impact on the meaning given to language

contained in the other agreement. Therefore, it was not unlike-

po pen

ly that they would include language in the office agreement to

specifically clarify their respective rights and obligations under

the production agreement. And the arbitrator’s conclusion that

the disputed language was so included was reasonable.

His ruling, contrary to the Company’s contention before this

Court, was not that the provision in question had no meaning or

application in the office collective bargaining agreement and

was obliterated. The issue before before him was not merely

whether there were sound business considerations justifying the

subcontracting in question, but, even given an affirmative fin-

ding on this question, whether the ‘“‘performance of a service’”’

referred to in the proviso in Article 28 was identical to the ‘‘ser-

vice presently performed, or hereafter assigned, to the bargain-

ing unit’’ mentioned above in the Article. The Eighth Circuit

correctly recognized that the arbitrator’s construction that the

two ‘“‘services’’ in question were not identical was a permissible

and justified, if marrow, construction of the contract’s

language.

Under well established standards set forth by this Court in

Enterprise Wheel, supra, at 596, and reiterated in W. R. Grace

& Co. v. Rubber Workers, Local 759, 461 U.S. 757, 764 (1983),

a federal court cannot set aside an arbitrator’s award simply

because the court believes its own interpretaion would be better

than the arbitrator’s. The Eighth Circuit has recognized this

limitation on its role in reviewing such awards. Lackawanna

Leather Company v. United Food & Commercial Workers In-

ternational Union, 706 F.2d 228, 232 (8th Cir. 1983). It sustain-

ed the award in the present case because it properly recognized

that to deny enforcement would be to substitute its interpreta-

tion of ambiguous contract language for the arbitrator’s. Its

decision was thus entirely consistent with the precedent of this

Court that an award must be enforced if it draws its essence

from the collective bargaining agreement.

If, as Petitioner contends, the arbitrator had rewritten the

. parties’ agreement by deleting one of its provisions, the decision

of the Eighth Circuit in this case would indeed have been con-

—

trary to this Court’s precedent in Enterprise Wheel. The ar-

bitrator here, however, did nothing more nor less than decide

that one of several exceptions to a prohibition against subcon-

tracting bargaining unit work did not apply in the circumstances

presented for his resolution. In sustaining his award, the deci-

sion of the Eighth Circuit does not conflict with this Court’s

standards for review of arbitral awards.

Il. The Supreme Court’s Principles Governing Judicial

Review Of Arbitration Awards Are Sufficiently Clear

To Enable Reviewing Courts to Ensure That Labor

Arbitrators’ Awards Are Faithful To Labor

Agreements And Do Not Need Clarification Through

A Review Of The Present Case To Avoid Enforce-

ment Of Awards Which Undermine Those

Agreements.

Although twenty-five years have passed since this Court

enunciated standards for review of arbitration awards, the prin-

ciples set forth in the Steelworkers Trilogy remain viable as a

guide for court considerations of requests for such review. Uni-

ted Steelworkers of America v. American Manufacturing Co.,

363 U.S. 564 (1960); United Steelworkers of America v. Warrior

& Gulf Navigation Co., 363 U.S. 574 (1960); United Steel

Workers of America v. Enterprise Wheel & Car Corp., supra.

Those decisions affirmed a federal preference for binding ar-

bitration as the method for resolving disputes arising over the

interpretation and application of collective bargaining

agreements among parties who have chosen this vehicle as the

means for resolving conflicts. Because the parties in such in-

stances bargain for an arbitrator’s construction of their agree-

ment, the courts should not substitute their judgment for the ar-

bitrator’s by reviewing the merits of a dispute properly brought

before him for resolution. The effect of such plenary review

would be to eliminate the very finality of resolution which the

parties sought in choosing arbitration as the preferred method

for settling differences over the meaning and effect of their

agreement.

— po

This preference for nonjudicial dispute resolution as a means

to achieve industrial stability did not, however, divest the courts

of all supervision over the performance of arbitrators. In-

asmuch as the arbitrators’ jurisdiction and scope of authority

are rooted in the parties’ collective bargaining agreements, the

exercise of that authority in issuing arbitral decisions is subject

to court review to ensure that arbitrators have remained faithful

to their charter as interpreters of the meaning and application of

those agreements, and to protect the parties against an abuse of

power by arbitrators who set themselves above the parties and

agreements by dispensing their own brands of industrial justice.

Such a safeguard was ensured by this Court when it mandated

that reviewing courts set aside any arbitral award which does

not draw its essence from the underlying agreement, United

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

supra, at 597.

Reviewing courts have variously identified how an award can

be said to have drawn its essence from the collective bargaining

agreement. An award which ‘‘put forward a passably plausible

- even if perhaps erroneous - analysis’’ of the collective bargain-

ing agreement was enforced by the Fifth Circuit. Safeway Stores

v. America Bakery and Confectionary Workers International

Union, 390 F.2d 79, 83 (Sth Cir. 1968). The Third Circuit has

stated:

[W]e hold that a labor arbitrator’s award does ‘‘draw its

essence from from the collective bargaining agreement”’ if

the interpretation can in any rational way be derived from

the agreement, viewed in the light of its language, its con-

text, and any other indicia of the parties’ intention; only

where there is a manifest disregard of the agreement, total-

ly unsupported by principles of contract construction and

the law of the shop, may a reviewing count disturb the

award. Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d

1123, 1128 (3rd Cir. 1969).

a ee

The Ninth Circuit has stated that it will affirm an award ‘“‘if, on

its face, the award represents a plausible interpretation of the

contract in the context of the parties’ conduct.’’ Holly Sugar

Corp. v. Distillery Workers International Union, 412 F.2d 899,

903 (9th Cir. 1969). The Second Circuit has confirmed awards

*‘when arbitrators explain their conclusions... in terms that of-

fer even a barely colorable justification for the outcome reach-

ed.’’ Wire Service Guild, Local 222 v. United Press Interna-

tiona, Inc., 623 F.2d 257, 261 (2nd Cir. 1980), quoting Andros

Compania Maritima v. Mare Rich & Co., A.G., 579 F.2d 691,

704 (2nd Cir. 1978). The Tenth Circuit has required rational

support and an absence of contrariety to express contract

language as a basis for upholding an award. Fabricut, Inc. v.

Teamsters, Local 523, 597 F.2d 227 (10th Cir. 1979). And it has

approved an arbitrator’s resolution of ‘‘tension’’ between extra-

contractual shop rules and contract requirements for ‘‘good and

sufficient cause’’ for discharge as a legitimate exercise of con-

tract interpretation. Campo Machinery Co., Inc. v. Local

Lodge No. 1926, 536 F.2d 330, 333 (10th Cir. 1976).

Decisions of the Eighth Circuit, including that in the present

case, are consistent with decisions of other courts of appeal and

the standards set forth by this Court. Citing with approval deci-

sions of the Tenth and Sixth Circuits in Campo Machinery Co.

Inc., supra, and Timken Co., supra, respectively, the Eighth

Circuit affirmed enforcement of an award which resolved ten-

sions between company rules and a contract provision on

discharge, concluding that the award drew its essence from the

collective bargaining agreement because the arbitrator simply

interpreted two conflicting contract provisions. Kewanee

Machinery Div. v. Teamsters Local No. 21, supra, at 318. In

some instances, the same Circuit has held, an arbitrator’s award

must be sustained even if the arbitrator must technically go out-

side the four corners of an agreement to resolve a dispute arising

under that agreement - in this case to a prior agreement, because

the history of negotiations on the current agreement did not

shed light on a grievant’s current seniority rights, which had

se WE sens

vested under the prior agreement. Rainbow Giass Co. v.

Teamsters, Local 610, 663 F.2d 814 (8th Cir. 1982). Unless the

evidence gives a reviewing count positive assurance that a collec-

tive bargaining agreement is not susceptible to the arbitrator’s

interpretation, this Circuit will enforce the award. Electrical

Workers, Local 53 v. Sho-Me Power Corp., 715 F.2d 1322 (8th

Cir. 1983). Framed in the positive, the Eighth Circuit will, as

has the Third Circuit in Ludwig Honold Mfg. Co., supra, and

the Tenth Circuit in Fabricut, Inc., supra, uphold an award if

the arbitrator reaches a rational conclusion based on construc-

tion of the underlying collective bargaining agreement.

Lackawanna Leather Company v. United Food & Commercia!

Workers International Union, supra.

This Court has recently reiterated its ‘‘well established stan-

dards for the review of labor arbitration awards’’:

[A] federal court may not overrule an arbitrator’s decision

simply because the court believes its own interpretation of

the contract would be the better one. Steelworkers v.

Enterprise Wheel & Car Corp., 363 U.S. 593, 596 (1960).

When the parties include an arbitration clause in their col-

lective bargaining agreement, they choose to have disputes

concerning constructions of the contract resolved by an ar-

bitrator. Unless the arbitral decision does not ‘‘dra[w] its

essence from the collective bargaining agreement,’’ /d., at

597, a court is bound to enforce the award and is not entitl-

ed to review the merits of the contract dispute. This re-

mains so even when the basis for the arbitrator’s decision

may be ambiguous. /d., at 598. W.R. Grace & Co. v. Rub-

ber Workes, Local 759, supra, at 764.

The decision of the Eighth Circuit in the present case does not

conflict with these standards. Petitioner argues that the ar-

bitrator here rewrote the parties’ agreement by excising the

*‘sound business considerations’’ exception to the prohibition

against subcontracting. Respondent submits that the focus of

=

the contention is misplaced. The excepting clause identifies

several functions which can be added or discontinued, provided

the addition or discontinuance is based on sound business con-

siderations, without violating the restrictions against subcon-

tracting office bargaining unit work. Adding or discontinuing

any one of these functions, even though some or all of them in-

volve work performed by employees outside the office bargain-

ing unit, could arguably have an effect upon work performed by

bargaining unit members. It is reasonable to infer from the jux-

taposition of the prohibition clause and exception clause in Ar-

ticle 28 that the parties simply wanted to foreclose potential

disputes over the prohibition against subcontracting bargaining

unit work should the Company implement sound business deci-

sions in other areas involving non-bargaining unit employees.

When the arbitrator found that the disputed work transferred in

this case was not the ‘‘performance of a service’’ mentioned in

the exception clause, he was merely interpreting what he found

to be ambiguous language in that clause. By virtue of the rela-

tionship between the prohibition clause and the exception

clause, this meant that the transfer fell within the prohibition

clause, and that the entire exception clause was inapplicable in

this instance.

In this light, whether or not the Company’s action was pro-

mpted by ‘‘sound business considerations’’ became irrelevant.

Accordingly, the arbitrator need not have made a finding on the

Company’s motives in making the change. He had already

found that the entire exception clause was inapplicable in the

present context. The fact that he did make a finding on the

Company’s motives may have been frustrating to the Company

in light of his more crucial finding that the disputed work was

outside the scope of the exception clause. But the arbitrator did

not thereby rewrite the agreement by excising the clause, or the

proviso therein. Assuming evidence supports the conclusion, a

finding that a particular clause in a collective bargaining agree-

ment does not apply in the circumstances of a given dispute does

not delete that clause from the agreement.

on Che

In rejecting the Company's argument that the arbitrator did

excise a portion of the agreement in this case, the Eighth Circuit

was thus not embarking on a novel approach to review of ar-

bitral awards. The Ninth Circuit, for example, rejected a

similar contention in Edna H. Pagel, Inc. v. Teamsters, Local

595, when it affirmed a lower court’s confirming of an award

where the arbitrator interpreted a prohibition against discharge

to preclude permanent replacement of strikers. 667 F.2d 1275,

1279 (9th Cir. 1982). Petitioner, of course, disagrees with the

Eighth Circuit's conclusion that the arbitrator in this case inter-

preted, however narrowly, but did not rewrite the contract. But

there is no indication that the Eighth Circuit was confused by

any uncertainty as to this Court’s standards for review of ar-

bitration awards. On the contrary, the decision specifically

states that ‘“‘the arbitrator cannot amend the contract.”

Manhattan Coffee Company v. International Brotherhood of

Teamsters, Chauffeurs, Warehousemen and Helpers of

America, Local No. 688, __. F.2d ___ (8th Cir. 1984); Peti-

tioners Appendix, p. 4a. Similarly, the Ninth Circuit in Page/

recognized the same caveat against sanctioning an arbitrator's

refashioning of an agreement when it concluded:

Certainly, an interpretation, which prohibits replace-

ment ‘‘draws its essence’’ from the contractual bar against

discharge, and whether or not we agree with this inter-

pretation, we cannot say it is implausible or that it

modified the contract. Edna H. Pagel, Inc. v. Teamsters,

Local 595, supra, at 1279.

Petitioner suggests that the Sixth Circuit would have reached

a different conclusion in this case, citing by way of example

Torrington Co. v. Metal Products Workers, Local 1645, supra,

and /nternational Brotherhood of Firemen & Oilers v. The Nes-

tle Company, inc., supra. Respondent submits that the result

would have been the same. In Torrington, the arbitrator was

found to have added an implied provision to the agreement, a

far different question from whether the arbitrator disregarded,

un £8 on

to the point of excising, the exception clause in this case. In Nes-

tle, an award was vacated because the arbitrator's findings of

facts which constituted insubordination had an immediate and

direct bearing on whether a discharge was proper under an ex-

press provision justifying discharge for insubordination,

whereas here, as was discussed above, the arbitrator's finding of

‘‘sound business considerations’’ was irrelevant to the ar-

bitrator’s holding once he found that the entire exception clause

did not apply in this instance. Whatever the Sixth Circuit's con-

clusion would have been in this case, the standards set forth by

this Court in the Stee/workers Trilogy and reiterated in W.R.

Grace & Co. provide clear guidance for reviewing courts: courts

may not substitute their interpretations for the arbitrator’s; the

merits of an award are not subject to review even when the basis

for the award is ambiguous; and the award must derive its

essence from the collective bargaining agreement in order to be

sustained.

The appellate courts have found little difficulty in following

these standards in reviewing arbitral awards. And the present

case presents no novel departure from those standards which

would warrant this Court’s consideration of the case or justify

redefinition of long established standards which have served the

arbitral and review process well.

CONCLUSION

For the foregoing reasons, Respondent respectfully prays that

the petition for a writ of certiorari be denied.

Respectfully submitted,

Clyde E. Craig

Wiley, Craig, Armbruster & Wilburn

1221 Locust, Suite 650

St. Louis, Missouri 63103

(314) 231-1018

Counsel for Respondent

APPENDIX

ARBITRATION OPINION AND AWARD

In the Matter of Arbitration Between:

Manhattan Coffee Company,

Employer

and

International Brotherhood Of Teamsters, Chauffeurs,

Warehousemen & Helpers of America, Local Union No. 688,

Union.

FMCS No. 82K/28920

File No. 8251

Richard L. Ross, Esquire

Arbitrator

Date of Hearing:

December 7, 1983

Place of Hearing:

St. Louis, Missouri

Grievant: Patricia Schwenck

APPEARANCES:

For the Employer: Mr. Ira Michael Shepard

Attorney at Law

1800 Massachusetts Avenue, N.W.

Washington, D.C. 20036

For the Union: Mr. Earl B. Wilburn

Attorney at Law

Suite 717 Buder Building

Market Street at Seventh

St. Louis, Missouri 63101

en

ie aa ce

This is a matter of private arbitration between MANHAT-

TAN COFFEE COMPANY (hereinafter sometimes referred to

as ‘“‘Company”’ or ‘‘Employer’’) and INTERNATIONAL

BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,

WAREHOUSEMEN & HELPERS OF AMERICA, Local

~~Union No. 688 (hereinafter sometimes referred to as ‘‘Union’’)

in accordance with the Collective Bargaining Agreement be-

tween the parties. This arbitration arises from the filing of a

grievance by PATRICIA SCHWENCK (hereinafter sometimes

referred to as ‘‘Grievant’’) who alleges therein wrongful layoff.

Under the arbitration procedures established by the parties, an

“Arbitration Board’’ is crgated to which the Union and the

Company each select one member. The undersigned was

selected as the third member of the Arbitration Board under

established procedure. Hearing was held on December 7, 1982

in St. Louis, Missouri. All parties appeared and were afforded

full opportunity to examine and cross-examine witnesses and to

present evidence and arguments in support of their respective

positions.

FACTS

The Company for many years was engaged in the business of

producing and distributing coffee and coffee products. In addi-

tion, the Company leased coffee-making equipment to commer-

cial accounts and serviced said equipment. Until July 1, 1982,

the Company employed in its St. Louis production warehouse

and service facilities thirty-five members of the Union, and in its

St. Louis offices, ten who were also members of the Union. The

production workers were in one bargaining unit and the office

workers in another bargaining unit. (Hereinafter the two units

will sometimes be referred to as the ‘“‘production unit’’ and the

“office unit.’”’) Grievant was employed for anproximately

twelve years in the office and was a member of the office unit.

Grievant’s duties included taking telephone orders for service

calls and relaying the calls to the service department in the pro-

duction unit, handling the documentation of ‘“‘loan’’

a ae

agreements with customers, and backing up the receptionist

when necessary. Grievant spent approximately four hours each

day taking orders for service calls and relaying messages to the

service department.

The Collective Bargaining Agreements for ooth the office and

the production bargaining units expired June 30, 1982. In early

1982, the Company informed the Union that because of severe

economic problems, the St. Louis operation would be closed.

Sales volume had decreased by sixty-five percent even though

the number of employees remained the same. When the Union

was informed of that fact, representatives asked what could be

done to save some of the jobs. The parties thereupon entered

into discussions and the discussions developed into negotia-

tions. By April 1, 1982, an agreement was reached. The Union

agreed that production would not continue in the St. Louis

facility but that the Company would operate a distribution

warehouse, a service department, and its offices from the St.

Louis facilities. It was understood that the Company would

reduce its warehouse service employees from thirty-five to ten or

twelve people, approximately five of whom would perform

warehouse duties and five or six of whom would perform as ser-

vice representatives. With respect to the office, it was

understood that the office complement would be reduced from

ten to five employees. Although the plan for the reduction in

staff of the production and warehouse employees was specific,

there were no specific plans for the reduction in the office staff.

When the Union inquired as to how the reduction in office staff

would take place, the Company responded that its office opera-

tion would be streamlined, made more efficient, and the re-

maining employees would be expected to pitch in and work

harder.

The Union agreed generally to the plan, excepting that it was

also agreed that six weeks after the implementation of the plan,

if problems developed, the Company and Union would meet in

order to resolve such problems.

ee Te

—_ sm

During the negotiations, the parties discussed many and

varied matters including who would be laid off in the produc-

tion and warehouse and service departments. Only one seniori-

ty list was maintained and it was decided that the most senior

employees would be given an opportunity to do service work

and would be given training by the Company. With respect to

the office unit, the decision as to who would be laid off was to

be by seniority only. Grievant was number six on the seniority

list and therefore was the employee with the highest seniority

who was laid off. Those employees who were to be laid off were

given the election to receive severance pay instead of being laid

off. Grievant, believing that the office could not function with

only five employees, was the only employee who elected to take

the layoff, giving due regard to the fact that she was next in line

in seniority and would be the first to be called back. The others

chose severance pay.

Even after the basic agreement was completed, discussions

continued, and on or about May 18, 1982, the Union agreed

that ‘‘in order to complete work in an efficient manner by the

end of the day and/or adhere to customer service needs on an

immediate basis, from time to time, supervis: rs will work hand

in hand with bargaining unit employees’’, (in the office and

clerical unit).

On or about June 25, 1982, the parties entered into an agree-

ment providing that if an employee needs some time off to seek

another job, the Company and Union would work together to

see to it that the employee could have time off to seek other

work. In addition, the Company agreed in writing to recognize

the Union as a bargaining representative of its plant employees

if the production facilities would ever be returned to the St.

‘Louis facility. The agreement further provided as follows:

‘*The parties agree that any and all present or future rights

of Company employees found in the present Collective

Bargaining Agrement and any future Collective Bargaining

eee Teme

Agreements are extinguished and of no further force and

effect beyond the date the employee is permanently laid off

or finds other employment as provided for above.”’

At some time during the discussions (during negotiations

prior to April, 1982, according to a Company witness, and after

negotiations but prior to June 30, 1982, according to a Union

witness) the Company informed the Union of its plan to have

telephone calls for repair made directly to the service depart-

ment instead of going through the office clerical unit (the job

that Grievant performed). The Union made known its cbjec-

tions, but when informed that the amount of time involved per

day was less than one hour, the Union agreed that the new pro-

cedure would present no problems.

On June 30, 1982, the plan was implemented. The produc-

tion of coffee was transferred to the facilities of the Company’s

parent corporation in Oklahoma City, Oklahoma. Approx-

imately twenty-four employees in the production bargaining

unit were laid off or terminated. Only five warehousemen were

retained. Of the eight servicemen, two were laid off or ter-

minated and six were retained. With respect to the office

clerical unit, four elected to take severance pay and were ter-

minated. Grievant was placed on layoff. Telephone service

calls were thereafter routed directly into the service department.

The payroll and most of the accounts payable functions

previously performed by the office clerical unit were transferred

to the office of the parent corporation in Oklahoma City. The

payroll and payables were then put on the master computer at

the Company’s home office. On July 26, 1982, Grievant filed

her grievance, complaining that the Company took away work

from the bargaining unit while whe was on layoff. She demand-

ed full back pay and recall.

On July 27, 1982, the Grievant’s supervisor called her at

home and asked her why she filed the grievance. Grievant ex-

plained why and wanted to know when the six-week meeting

a Se

would be held. Grievant was told that to the knowledge of her

supervisor, there was no meeting scheduled. Thereafter, her

supervisor told Grievant that he would be in Oklahoma City un-

til the following Monday and requested that she ‘“‘sit tight’’ until

Monday and have the business representative call him on Mon-

_day. Also on July 27, 1982, the Company denied the grievance

in writing.

On August 5, 1982 (Thursday), the Union requested that the

Company waive the provisions of the two-man adjustment

board and go directly to arbitration. On August 9, 1982, the

Company refused to wavie the two-man adjustment board and

informed the Union that, pursuant to Article 18, Section 3, its

time to request the adjustment board had expired.

A two-man adjustment board meetii.g was held on August

25, 1982, but the board was deadlocked. Thereafter, the parties

agreed to submit the issue of arbitrability and the substantive

issues if the board found that the matter was arbitrable.

The effective date of the current Collective Bargaining Agree-

ment was July 1, 1982.

PERTINENT CONTRACT PROVISIONS

Article 22

MANAGEMENT RIGHTS

The Company retains the exclusive right to manage its business

and to direct its employees. The Company in the exercise of its

right herein shall observe the provisions of this Contract.

Without in any way limiting the generality of the foregoing, the

right to manage its business and to direct and control its

employees includes but it not limited to: \

1. The right to hire, supervise and train employees;

2. The right to suspend or discharge for cause its employees

in accordance with the provisions of this Contract;

seal MM cee

3. The right to establish, continue, discontinue, or modify

Company business practices, rules or regulations;

4. The right to determine the existence, location and equip-

ment of each company facility.

Article 27

WORK ASSIGNMENTS

The Employer agrees to respect the jurisdictional rules of the

Union and shall not direct, require, or allow persons other than

the employees in the bargaining unit here involved to perform

work which is recognized as the work of the employees in said

unit.

Article 28

SUBCONTRACTING

The Employer agrees that no function or service presently

performed, or hereafter assigned, to the bargaining unit shall be

subcontracted, leased, assigned or conveyed in whole or in part

to any other person or organization, if any member of the

bargaining unit is, at the time of such action, on layoff due to

lack of work. The Employer agrees that the layoff proviso shall

not be applicable until July 1, 1983.

The above language shall not be construed or interpreted to pro-

hibit the Employer from adding or discontinuing manufacture,

packaging, or processing of a product or performance of a ser-

vice based on sound business considerations.

= ~ pn

OPINION AND AWARD

I

ARBITRABILITY

The Company contends that the arbitrator is without jurisdic-

tion or authority to hear this matter as two separate and in-

dependent time limitations contained in the grievance procedure

were violated by the Union. The first separate time limitation

appears in Section 1 of Article 18 and provides that, ‘‘The ag-

grieved employee or employees shall first take the matter up

with the shop steward who in turn will take the grievance up

with the foreman or forelady in charge of the department within

five days of the occurrence.’’ (Emphasis added) The Company

asserts that the ‘‘occurrence’’ complained of occurred on July

1, 1982, and neither the Union nor the Grievant claimed that

they were unaware of the subcontracting which occurred

thereon. As the grievance was not filed until July 26, 1982, the

Company submits that the filing thereof was untimely.

The second separate time limitation appears under Section 3

of Article 18, wherein it is provided that, ‘‘If a grievance cannot

be settled under Sections | and 2 of this Article, it shall be sub-

mitted to a two-man adjustment board within three (3) working

days.’’ The evidence established that although the Company

denied the grievance in writing thereby completing steps one

and two on July 27, 1982, the Company did not hear from the

Union until a letter dated August 5, 1982 was received by the

Company requesting the Company to waive the two-man ad-

justment board.

A grievance was filed on July 26, 1982, protesting that the

Company took away work from the bargaining unit while on

layoff. All parties are in accord that work was initially transfer-

red out of the office on July 1, 1982. The Company contends

that was the date of the ‘‘occurrence’’ which triggered the runn-

ing of the five-day time limitation in Section 1 of Article 18.

ne ci

The charge levied against the Company by the Grievant was

violation of Article 27 and Article 28 of thé Collective Bargain-

ing Agreement pertaining to work assignments and subcontrac-

ting. The transfer of work out of the bargaining unit commienc-

ed on July 1, 1982 and continued on a daily basis thereafter.

Although the initial occurrence was on July 1, 1982, there was a

continuing transfer of work up to the time of the filing of the

grievance. Thus, the occurrences were of a continuing nature.

Section 1 of Article 18 requires the filing of a grievance within

five days of the ‘‘occurrence’’. The language does not require

the filing of a grievance within five days of the “‘initial’’ occur-

rence, and, therefore, when there is a charge of a violation

which is of a continuing nature, it can well be argued that a

greivance can be filed within five days of any of the occurrences.

But even more persuasive is the fact that the parties agreed to

meet and discuss any problems which might arise within six

weeks after implementation of the reduction in working staff.

Arbitral authority is replete with rulings to the effect that a

party to a collective bargaining agreement waives its right to rely

on strict adherence to procedural niceties by discussing a

grievance on the merits. In Sperry Rand Corp., 60 L.A. 1189

(King, 1973), the arbitrator held timely a grievance that was

orally discussed by the company and the grievants on the

seventh day, in the face of a contract provision which read:

‘‘Any grievance...shall be officially presented...in

writing within seven (7) working days, [sic] after it arises,

or it shall not be considered by. ..the Employer.’’

In Associated School Bus Service, 72 L.A. 861 (Krebs, 1979),

the arbitrator held that a discussion between the parties on the

merits waived the requirement of a written grievance. Ar-

bitrator Krebs stated the general policy as follows at page 862:

‘‘Other arbitrators have held that ‘doubts as to the inter-

pretation of contractual time limits or as to whether they

have been met should be resolved against forfeiture of the

— A-10 —

tight to process the grievance.’ Elkouri and Elkouri,

“How Arbitration Works’’, (3rd Edition, 1973, page

\49).””

A thorough revies of the Associated School Bus Service opi-

nion demonstrates that the arbitrator felt that the actual notice

of a grievance is the key element. Actual knowledge of the

grievance also leads to the refusal to follow a written grievance

requirement in Walker Boudwin Construction Co., 55 L.A.

917, 922 (Kenaston, 1970).

It is sound industrial policy, and well-established in the ar-

bitral area that discussion of the merits of a grievance waives the

right of a party to rely on the technical procedural provisions of

the contract. Weirton Steel Co., 54.L.A. 1049 (Kates, 1970); Jn-

terscience Encyclopedia, Inc., 55 L.A. 210 (Roberts, 1970).

Herein, there was a specific agreement to discuss within six

weeks after implementation of the reduction in working force

any problem which may arise. It is evidence that the parties in-

tended to hold off discussing individual concerns for six weeks

and then address all of the problems which may arise. It would

thus appear that the parties agreed to waive the requirements of

Article 18 with respect to the filing of grievances pending the an-

ticipated meeting to be scheduled within the period of six weeks.

On the basis of such agreement the arbitrator finds an express

waiver of the time limitations set forth in Article 18.

As to the contention of the Company that the Union failed to

submit the dispute to a two-man adjustment board within three

working days, the finding that there was a waiver also applies.

Furthermore, there was a conversation between the Grievant

and her supervisor wherein Grievant was advised to sit tight un-

til the following Monday (August 2, 1982). On August 5, 1982,

the Union requested waiver of the two-man adjustment board.

On August 9, 1982, the Company refused the request.

«> Aell

It is evident that not only were discussions taking place, but

there was an express request made by the Company to ‘“‘sit

tight”’ or, in other words, to delay going forward with the par-

ticular grievance filed herein until August 2, 1982. On August

5, the request to waive the two-man board was made by the

Union. It was not until August 9, 1982 that the Company

responded. It was also not until August 25, 1982 that the two-

man adjustment board met, certainly more than three days after

the Company had refused the Union’s request to waive the

board. No evidence was adduced concerning the cause of the

delay (from August 9 to August 25).

Under Section 3 of Article 18, there is no indication of who is

responsible for the submission of a dispute to the two-man ad-

justment board. Instead, Section 3 of Article 18 simply pro-

vides that ‘‘it’’, meaning ‘‘the dispute’’, shall be submitted.

Thus, it is the joint responsibility of both parties, i.e., the Union

and the Company, to make a submission to the two-man adjust-

ment board within the three-day designated period. The Com-

pany may not charge the Union with failure to make a timely

submission unless it is shown that the failure to make such sub-

mission was the fault of the Union. No such showing was made

herein. For the aforesaid reasons, the arbitrator finds that the

matter is arbitrable and the arbitration board has jurisdiction.

II

SUBSTANTIVE ISSUES

The Union contends that the Company violated Article 28,

headed, ‘‘Subcontracting’’, wherein it is provided that no func-

tion or service previously performed shall be subcontracted if

any member of the bargaining unit is, at the time of such action,

on layoff due to lack of work. Article 28 further provides that

its language shall not be contrued to prohibit the Company

from ‘‘adding or discontinuing manufacture, p2ckaging, or

processing of a product of performance of a service based on

sound business considerations.’’ (Emphasis added)

— A-12 —

The Union also refers to Article 27, headed, ‘‘Work Assign-

ment’’, which provides that the Company “‘... shall not direct,

require, or allow persons other than the employees in the

bargaining unit here involved to perform bargaining unit work

which is recognized as the work of the employees in said unit.”’

The Company contends that transferring the payroll and

pav»ble work to its parent headquarters and transferring the

reccvipt of customer service calls from the office unit to the ser-

vice unit is not violative of either the provisions of Article 28 or

Article 27. The Company points out thet Article 28 specifically

allows the Company to discontinue ‘‘pevs “mance of a service

based on sound business consideration.’’ The Company further

argues that Article 27 was meant to apply only to non-

subcontracted work assignment disputes such as supervisors

performing bargaining unit work.

It is uncontroverted that the rationale of the Company’s

transferring or subcontracting the payroll and payable work and

the telephone answering formerly performed in the office unit

was based upon a good faith belie7 that it would improve effi-

ciency and save the Company money. It is clear the Company’s

action was based on sound business considerations. Thus the

Company contends that the exclusionary language in Article 28

applies. Such language relied upon by the Company provides

that the prohibition against subcontracting shall not be con-

strued as to prohibit the Company from ‘‘adding or discontinu-

ing manufacture, packaging, or processing of a product or per-

formance of a service based on sound business considerations.”’

The exclusatory language of Article 28 upon which the Com-

pany relies does not refer to the type of work regularly perform-

ed by the office staff. The exclusatory language only refers to

production work performed in the plant and warehouse and ser-

vice work performed in the service department by members of

another bargaining unit. The use of the term ‘‘performance of

service’’ in the exclusionary language was clearly meant to apply

— A-13 —

to the “‘service’’ department which regularly performs service

functions for the customers of the Company. To enlarge the

scope of such language to include office functions regularly per-

formed not to service customers but to maintain records

(payroll and payables) is reaching, unreasonable, and would be

an absurd interpretation of the contract language.

It is clear that such language was meant to apply to the pro-

duction, warehousing and service classifications represented by

the same Union but in a different bargaining unit. In fact, the

Union had specifically agreed to discontinue the production in

St. Louis but had never agreed to discontinue the payroll and

payable functions regularly performed by the office unit.

Although the Union did agree to the elimination of telephone

answering duties with respect to service calls, the Union did so

in the belief that such work was negligible (one hour per day for

one employee). Therefore, it is evident that the exclusionary

language in Article 28 upon which the Company relies was never

intended to apply to the office unit. The functions of the office

were not mentioned therein, even though the functions of the

production, warehousing and service units are mentioned

specifically. Under will accepted standards for interpreting con-

tract language, to expressly include one or more of a class must

be taken as an exclusion of all others.

Thus, it appears that the parties agreed to the transfer of pro-

duction and service work but not the transfer of office work.

This conclusion is buttressed by a review of the history of the

negotiations between the parties.

After the Union was advised that the Company planned to

close its St. Louis operation, the Union announced its will-

ingness to discuss changes in order to save as many jobs as

possible. During the negotiations which followed, the parties

discussed many and varied, matters, including the closing of the

St. Louis production facility whose work was to be performed

elsewhere. Also discussed was the reduction of staff in the

~~ Mild —

warehouse and service areas and also in the office unit. When

the Union inquired as to how the reduction of office staff would

be accomplished, the Company responded that is office opera-

tion would be streamlined, made more efficient, and the re-

maining employees would be expected to pitch in and work

harder. Based thereon, it was agreed that the office staff would

be reduced from ten to five. No discussion of the transfer or

subcontracting of work out of the office took place excepting

only with respect to the transfer of the work of answering

telephone calls into the service unit. When the Union inquired

as to how much time was involved, a Company representative

responded incorrectly (although unintentionally) that the

transfer of such work involved only one hour a day, whereas,

actually such work took approximately four hours a day. The

Union had no objection to the transfer of one hour a day work,

considering that such amount of work was negligible. By

negative iriference it can be concluded that the Union did have

objection to the transfer of work which took a more substantial

amount of time.

Although it was understood that the production work

formerly performed in St. Louis would be transferred or sub-

contractec, out, there was no understanding or agreement that

any of t'< office work would be transferred or subcontracted

out, excepting only the one hour of telephone answering duties.

The Company refers the arbitrator to the newly negotiated

language in Article 22 - ‘‘Management Rights’’, which reserves

to the Company its right to ‘‘establish, continue, discontinue or

modify Company business practices, rules or regulations.’’ The

Company claims its right to transfer the payroll and payabie

and the receipt of customer service calls under such provision.

Except to the extent as modified by the specific terms of its Col-

lective Bargaining Agreement, the Company may exercise all

legitimate and residual rights including the right to subcontract

and transfer work. However, in the instant case, Articles 28

and 27 specifically restrict the Company in the exercise of its

— A-15 —

right to subcontract or assign work out of the bargaining unit.

Thus the general provisions of the management’s rights clause

do not bestrow [sic] upon the Company rights which it had

negotiated away.

Under Article 28, the restriction upon the right of the Com-

pany to subcontract applies when a member of the bargaining

unit is on layoff due to lack of work. However, the Company

also therein agreed that the layoff provision does not become ef-

fective until July 1, 1983. Thus, it appears that the parties in-

tended the prohibition against subcontracting to be absolute

and not limited in any way until July 1, 1983, when the layoff

provision takes effect. On the basis thereof and for the reasons

as aforesaid, the arbitrator finds that the transfer, assigning

and/or subcontracting of work out of the office bargaining unit

was violative of Article 28.

Under the evidence adduced, and in accordance with the

foregoing Opinion, and for the reasons stated therein, the

grievance is sustained. The Company is hereby directed to cease

and desist transferring, subcontracting or assigning work

previously performed by members of the office bargaining unit

out of the office bargaining unit. The Company is further

ordered to make Grievent whole by compensating her with full

back pay, less interim carnings and unemployment compensa-

tion she may have received, if any, from the date she filed her

grievance (July 26, 1982) to the date the Company ceases and

desists transferring, subcontracting or assigning work out of the

bargaining unit or to the date of Grievant’s recall, whichever oc-

curs first; providing that unemployment benefits shall not be

deducted from the back pay if Grievant is required to repay,

and does repay, the amount of any such benefit to the proper

governmental authority. It is further ordered that the arbitra-

tion board shall retain its jurisdiction for the sole purpose of

resolving any dispute which may arise with respect to the

monetary aspects of this award.

— A-16 —

Dated this 14th day of January, 1983.

/s/ Richard. Ross

RICHARD L. ROSS, Arbitrator

The undersigned hereby concurs in/dissents from the forego-

ing Opinion and Award.