Petition for Writ of Certiorari — Stead Motors v. Automotive Machinists Lodge No. 1173

Supreme Court brief1990

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89-1288 | ere |

No. — «FEB 2 wR

CLERK

ANIOL, JR,

IN THE

a tn ee -

Supreme Court of the United States

OCTOBER TERM, 1989

STEAD MOTORS OF WALNUT CREEK,

Petitioner,

AUTOMOTIVE MACHINISTS LODGE No. 1173,

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ROBERT G. HULTENG

Counsel of Record

LAWRENCE PEIKES

ERIC A. GROVER

LITTLER, MENDELSON, FASTIFF

& TICHY

A Professional Corporation

650 California Street, 20th Floor

San Francisco, California 94198

Telephone: (415) 433-1940

Attorneys for Petitioner

Stead Motors of Walnut Creek

February 2, 1990

0 \ PR

——— ee ee

QUESTIONS PRESENTED

May a federal court refuse to enforce a labor arbitration award

on public policy grounds only when the award itself violates a

statute, regulation, or other manifestation of positive law, or com-

pels conduct by an employer that would violate such a law?

Is the authority of the federal courts to vacate labor arbitration

awards reinstating discharged workers whose reckless job per-

formance constitutes a significant danger to the public health and

safety limited to those situations where the articulated public

policy specifically prohibits reinstatement?

Is the decision of a labor arbitrator to reinstate a discharged

worker a finding of fact on the issue of the worker's amenability to

discipline which is immune from review by the federal courts?

TABLE OF CONTENTS

OPINIONS BELOW oui... cccescccrssosssvesnesscsnsssenensonnnanensvnns

JURISDICTION vasccesciccsnisnesesseniasannssrenssnnavscvousavecstecsevoess

STATUTORY PROVISIONS INVOLVED ...........05

STATEMENT OF THE CASE. ....cccccccsccessnsseecsssssssnnss,

REASO™S FOR GRANTING THE WRIT ..............

EN TROUT IIN cise etree cence

THE PUBLIC POLICY EXCEPTION ...........

THE NINTH CIRCUIT'S DECISION CON-

FLICTS WITH THIS COURT'S DECISION

IN MISCO AND DECISIONS OF THE

OTHER CER UTGG sieccsespieeeepeeeeeatienss

A. The Ninth Circuit Ruling Conflicts With A

Ruling Of The Eighth Circuit .........0.....8.

The Ninth Circuit's Interpretation of Misco

Is In Direct Conflict With A Ruling Of The

Eleventh Cireuit: ciccacionneeeenne

I].

Ifl.

C. A Number Of Other Circuit Courts Have

Had Occasion To Apply Misco In Contrast-

BG WAYS acccisénnninnsnnsacanmeetniedeenpeemenenninabtes

1. A Ruling Of The Tenth Circuit,Reflects

Approval Of The Eleventh Circuit's Ap-

OGR |... sncsvicersnsiataissonneaieeaneaaniaatnneshess

2. The Third Circuit Appears To Have

Adopted A Narrow Interpretation Of

DYASCO cscrvccisnssstinoniadasanolanenamemaninses

3. The District of Columbia Circuit Has

Adopted An “Extremely Narrow” Pub-

lic Policy ERG i ocicvcciseetinnsne

4. The Seond Circuit Has Approved Of A

Broader Interpretation Of Misco .........

CONCLUSION ....c..<cscccsssstice eee

PAGE

a wn mw

TABLE OF AUTHORITIES

Cases

American Postal Workers Unionvy. United States Postal

Seer, Fee ee 6 CEE; COR, PDBG). cccnesincccsesnncssss

Communication Workers v. S. E. Elec. Co-Op., 882

eT SUE MEE WUMEED save sinscsates venimeedinedinernenvenses

Delta Air Lines v. Airline Pilots Assoc. Int'l, 861 F.2d

665 (llth Cir. 1988), cert denied, 110 S.Ct. 201

PAGE

17, 20

IE lees Liatint lah isa litho siikenchsassiescvassscandinienttaishun 14-16, 17, 20

E.I. DuPont de Nemours v. Grasselli Employees As-

soc., 790 F.2d 611 (7th Cir.). cert. denied, 479 U.S.

isc AAs Cd caihcnietshigasgesebainiedshevatasnkicaekcnes

Georgia Power Co. v. Int'l Bhd. of Electrical Workers,

Local 84, 707 F. Supp. 531 (N.D. Ga. 1989) 0.0...

lowa Electric Light & Power Co. v. Local Union 204 of

the Int'l. Bhd. of Electrical Workers, 834 F.2d 1424

is calcd seen tnssaas dinenenssivenomamdsusantins 13-14, 20

Maggio v. Local 1199, 702 F. Supp. 989 (E.D. N.Y.),

aff'd without op’n, 880 F.2d 1319 (2d Cir.), cert.

ES Be s.r

Maloney v. Rath, 69 Cal. 2d 442 (1968) wo...

Muschany v. United States, 324 U.S. 49, 65 S.Ct. 442,

I Os nsucnessaasbavsnesdanssressnnsekavns

Russell Memorial Hosp. v. United Steelworkers, 720 F.

ES GUEEM. FEUER. PDO) aivcccsesssevsssscsensessnnnssons

Stead Motors of Walnut Creek v. Automotive Machin-

ists Lodge No. 1173, 886 F.2d 1200 (9th Cir. 1989)

a cane vacenuaaniebaskna

Stead Motors of Walnut Creek v. Automotive Machin-

ists Lodge No. 1173, 843 F.2d 357 (9th Cir. 1988)

U.S. Postal Service v. National Ass'n. of Letter Carri-

ers, 810 F.2d 1239 (D.C. Cir.), cert. granted, 484

U.S. 984 (1987). cert. dismissed, 485 U.S. 680

en ced ain by oiladalans A svindeVeascenmndadleadevsavivnes

passim

4-6

PAGE

LS. Postal Service v. National Ass'n. of Letter Carri-

ers, 839 F.2d 146 (3rd Cir. 1988) «0.0... 12, 17-18, 20

LS. Postal Service v. National Ass'n. of Letter Carri-

ore, SAT Fae Tee CEU Te. DOOR ® siercertieicnceisss 22

United Paperworkers Int'l Union, AFL-CIO v. Misco,

484 U.S. 29, 108 S.Ct. 364, 98 L.Ed. 2d 286 (1987) passim

Lnited Steelworkers v. American Manufacturing Co.,

363 U.S. 564, 80 S.Ct. 1343. 4 L.Ed. 2d 1403 (1960) 7

United Steelworkers v. Enterprise Wheel & Car Corp.,

363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed. 2d 1424 (1960) 7.8

United Steelworkers v. Warrior & Gulf Navigation Co.,

363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed. 2d 1409 (1960) 7

WR. Grace & Co. v. Local Union 759, 461 U.S. 757.

103 SA. 2177, 76 Ld. 20 298 (1963) ................ passim

Statutes

eT tO An crack sna cacixccedeinesicecaadavannassedtocuass 2

EE a PIRI oi ccatieatctcecasusaareoiahaceasiaeeadccn 4

ee ee EE acs cntacassthe ce ta cache satdeecnpisesiony dacarneaas Goes 7

(Labor Management Relations Act of 1947)

Fh ae A RN ee LO ORO FORRES ROOD Nee Hate aD Z

(Lacsr Management Relations Act of 1947)

Cal. Bus. & Prof. Code § 9880, er seg. (California Au-

DUI I ED ics k discs ccc cesscscpocspeinnnceasssend 5

Cal. Bus. & Prof. Code § 9884.6 ................ eT 5, 20

Cob. Gs. & Pree. Come 6 S006. Fun. ieicc ck access 5

ee, We Sr ee anne cles escetiws escestcmnadccenccns 5

Other Authorities

Cal. Admin. Code, Title 16. §§ 3300 er seg. 0... 5

Restatement (Second) of Torts § 423 ....... ee

No.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

STEAD MOTORS OF WALNLT CREEK,

Petitioner,

Vv.

AULTOMOTIVE MACHINISTS LODGE NO. 1173,

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner prays that a writ of certiorari issue to review the

opinion and judgment of the United States Court of Appeals for

the Ninth Circuit in Stead Motors of Walnut Creek v. Automo-

tive Machinists Lodge No. 1173, International Association of

Machinists and Aerospace Workers. ;

OPINIONS BELOW

The en banc opinion of the Court of Appeals is reported at 886

F.2d 1200 (9th Cir. 1989), and is reproduced in Appendix A,

infra, A-| through A-54. The en banc opinion reverses both the

opinion of a three-judge panel and the order of the district court.

The opinion of the three-judge panel of the Court of Appeals is

reported at 843 F.2d 357 (9th Cir. 1988) and is reproduced in

Appendix B, infra, A-55 through A-60. The order of the district

court vacating a portion of the arbitrator’s award is unreported,

and is reproduced in Appendix C, infra, A-61 through A-62.

JURISDICTION

Judgment of the Court of Appeals for the Ninth Circuit was

entered on October 6. 1989. By way of an order dated Deceniber

21. 1989. the Court established February 2, 1990 as the due date

for the filing of the present petition. The jurisdiction of this

Court is invoked pursuant to 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

The relevant provision of the Labor Management Relations

Act of 1947, 29 U.S.C. § 185, provides:

Suits for violation of contracts between an employer and a

labor organization representing employees in an industry

affecting commerce as defined in this chapter, or between

any such labor organizations, may be brought in any dis-

trict court of the United States having jurisdiction of the

parties, without respect to the amount in controversy or

without regard to the citizenship of the parties.

STATEMENT OF THE CASE

The present case involves the so-called “public policy” excep-

tion to the time honored rule mandating federal court deference

to labor arbitration awards. By way of the present petition.

Stead Motors of Walnut Creek (hereinafter “Stead Motors”)

seeks review of the Ninth Circuit's en banc decision reversing a

panel opinion, and, in turn, a district court order. The three-

judge panel and the district court had vacated on public policy

grounds a labor arbitration award reinstating a reckless auto

mechanic.

The lone decision of this Court addressing the public policy

exception in the context of a challenge to an arbitral award of

reinstatement came in United Paperworkers Int'l. Union, AFL-

CIO v. Misco, 484 U.S. 29, 108 S.Ct. 364, 98 L.Ed. 2d 286

(1987) (“Misco”). The factual and procedural history of that

particular case made it unnecessary for the Court to establish

rules of general applicability to cases challenging arbitral awards

on public policy grounds. Now that six of the circuit courts have

had the opportunity to interpret and apply Misco, it has become

abundantly clear that this critical area of federal labor law

demands further clarification. The circuit court opinions that

have been spawned by Misco reflect confusion and uncertainty;

the Ninth Circuit decision at issue here offers but one of several

divergent interpretations of Misco. The factual and procedural

setting of this case provides the Court a unique opportunity to

resolve the conflict among the circuits by refining the general

principle enunciated in Misco.

Stead Motors is an automotive dealership located in Walnut

Creek, California which sells and services Mercedes Benz

automobiles. During the time period relevant to this case, Stead

Motors was a party to a collective bargaining agreement (herein

“the Agreement”) with the International Association of Machin-

ists and Aerospace Workers, Lodge No. 1173 (herein “the

Union”). Like most labor contracts, the Agreement contains a

procedure for processing grievances, culminating in binding arbi-

tration. It is a troublesome arbitration award—indeed one that

was described by Judge Noonan in his opinion for the Ninth

Circuit panel as creating a “grave risk” to public safety—that

serves as the foundation for this action.

The arbitration award at issue ordered the reinstatement of a

former Stead Motors mechanic named Gale Rocks. The circum-

stances surrounding Rocks’ discharge are not only unusual, they

are frightening. On October 14, 1985, Stead Motors received a

call from a customer who reported a “heavy vibration” in the

front of his car. A Stead Motors mechanic was dispatched to the

customer's home and, upon inspecting the car, discovered that

three lug bolts on the right front wheel and four lug bolts on the

left front wheel were loose, and that a fifth lug boli was missing

altogether. Rocks was the only mechanic who worked on this car

and thus the arbitrator found he was responsible for its being

returned to the customer in this dangerous condition. Rocks’

failure to properly tighten the lug bolts was especially reprehensi-

ble in light of the fact that he had been disciplined a vear earlier

for other negligent conduct. Furthermore, in September 1985,

Rocks had been counseled by his shop foreman regarding the

proper way to tighten lug bolts: during the course of this consulta-

tion Rocks became argumentative.

In light of the obvious safety hazards associated with Rocks’

malfeasance, Stead Motors had no trouble in deciding that his

conduct warranted discharge. The Union grieved the matter on

Rocks’ behalf, arguing that despite the inherent danger to Stead

Motors’ customers and the public at large, Rocks was entitled to

reinstatement. According to the Union, Rocks’ continued failure

to follow proper procedure with respect tc the tightening of lug

bolts did not amount to “just cause” for discharge. The matter

was ultimately presented to Arbitrator Robert LeProhn for reso-

lution. Although the arbitrator ruled that Rocks’ conduct dis-

played indifference to the consequences of his actions and was

therefore “reckless,” he ordered Rocks reinstated to his former

position subject to a suspension of 120 days.

Not surprisingly, Stead Motors was dissatisfied with Arbitra-

tor LeProhn’s decision to provide this “reckless” mechanic with

yet another opportunity to work on automobiles entrusted to

Stead Motors for maintenance and service. Accordingly, Stead

Motors filed suit in the Superior Court of Contra Costa County,

California to vacate that portion of the arbitrator's award order-

ing Rocks reinstated. The Union removed the action to federal

court under 28 U.S.C. § 1441(a).

Stead Motors raised two arguments at the district court level.

First, it was argued that under the Agreement the employer had

unfettered discretion to discharge employees guilty of reckless-

ness, and therefore the arbitrator exveeded his authority by rein-

stating Rocks. Second, Stead Motors argued that reinstatement

would violate California’s well-settled public policy regarding the

maintenance of ve'‘cles in a safe manner. The district court

agreed with Stead Motors that the arbitrator's order of reinstate-

ment was inconsistent with public policy and vacated that portion

of the arbitrator's award.

The Union appealed to the Ninth Circuit and a three-judge

panel affirmed. Stead Motors v. Automotive Machinists Lodge

No. 1173, 843 F.2d 387 (9th Cir. 1988). The panel agreed with

the district court that “[t] here exists in California a ‘well-defined

and dominant’ public policy regarding automobile safety and

maintenance.” /d.at359. In reaching this conclusion, the panel

relied in part on Cal. Vehicle Code § 24002 which makes it unlaw-

ful to operate any vehicle in an unsafe condition, a provision the

California Supreme Court has determined constitutes an

“express legislative recognition of the fact that improperly main-

tained motor vehicles threaten ‘a grave risk of serious bodily harm

or death.” Maloney v. Rath, 69 Cal. 2d 442, 448 (1968), quot-

ing Restatement (Second) of Torts § 423.

The panel found further support for the existence of a domi-

nant California public policy demanding the safe maintenance of

automobiles by looking to the state’s Automotive Repair Act.

Cal. Bus. & Prof. Code § 9880, et seg. This legislative enact-

ment created a Bureau of Automotive Repair to monitor the

industry. The Bureau has established general motor vehicle

repair standards and rules for the certification of repair facilities

and mechanics’ qualifications. Cal. Admin. Code, Title 16,

§§ 3300 er seq. All automobile repair shops in California must

be registered with the Bureau. Cal. Bus. & Prof. Code § 9884.6.

The Bureau has the authority to invalidate the registration of any

shop if it finds the dealer or any emplovee of the dealer has been

guilty of gross negligence. Jd. § 9884.7.

Based on these clear expressions of California public policy, the

panel determined that the arbitrator's award reinstating Rocks

could not be enforced. The panel concluded its opinion by

expressing “grave concern” about an arbitration award reinstat-

ing a “reckless” auto mechanic:

Discharge sometimes has severe economic consequences

for the discharged employee. Discharge is not capital

punishment. To employ or rehire a reckless auto

mechanic does risk capital punishment of the driver of the

car being serviced—and not only for the driver but for his

passengers and for other motorists or pedestrians in the

way when a front wheel falls off. Reinstatement of the

reckless mechanic creates the grave risk the legislature has

emphatically disapproved. It is directly and substantially

contrary to the express public policy of the state.

Stead Motors, supra, 843 F.2d at 359.

The Lnion responded to the panel's opinion by requesting that

the matter be reheard by the Ninth Circuiten banc. This request

was granted and the panel's decision was reversed and withdrawn.

Stead Motors v. Automotive Machinists Lodge No. 1173, 886

F.2d 1200 (9th Cir. 1989) (“Stead Motors’). Citing this

Court's decision in Misco, the Ninth Circuit majority concluded

that the provisions of the California Code identified by Stead

Motors failed to “constitute the sort of laws and legal precedents

necessary for the valid expression of an explicit. well-defined and

dominant public policy.” /d. at 1216. Again citing Misco. the

plurality went on to adopt an extremely narrow test applicable to

cases challenging labor arbitration awards on public policy

grounds: “If a court relies on public policy to vacate an arbitral

award reinstating an employee. it must be a policy that bars

reinstatement.” /d. at 1212 (footnote omitted). The plurality

concluded that since there was no express policy in California

specifically prohibiting the reinstatement of a reckless mechanic.

the district judge had improperly vacated the arbitral award.

Finally. the plurality created a rule of construction requiring

federal courts to defer to an arbitrator's express, implied or pre-

sumed determination regarding a discharged worker's amenabil-

ity to discipline. According to the plurality. an arbitrator's

decision to reinstate a discharged worker constitutes an unreview-

able finding of fact that the worker is amenable to discipline.

regardless of whether the arbitrator expressly reaches this conclu-

sion. /d.at 1213. This curious new rule of construction serves to

insulate from judicial scrutiny any arbitral award of reinstate-

ment. thereby “confer[ing| upon the arbitrator the unreviewable

power to determine in effect whether the reinstatement violates

public policy.” Stead Motors, supra, 886 F.2d at 1227 ( Wal-

lace. J.. concurring in part. dissenting in part}. Consequently.

federal courts in the Ninth Circuit are essentially powerless to

vacate on public policy grounds any arbitration award reinstating

a discharged emplovee.

REASONS FOR GRANTING THE WRIT

I. INTRODUCTION

This Court's decision in Misco fails to offer a definitive pro-

nouncement on the parameters of the public policy exception to

the finality of labor arbitration awards. In a series of cases

challenging arbitral awards reinstating discharged workers guilty

of dubious acts, six circuit courts have expanded in markedly

different ways upon the general principles enunciated in Misco.

A variety of standards for assessing public policy challenges to

labor arbitration decisions have been adopted. No two circuit

court interpretations of Misco are alike: indeed, several circuits

are in direct conflict. Without further guidance from this Court.

similar cases in different jurisdictions will breed dissimilar rul-

ings. The need to resolve this conflict amongst the circuit courts

offers the single most compelling reason why the present writ of

certiorari should be granted.

Il. THE PUBLIC POLICY EXCEPTION

Federal labor policy encourages the utilization of binding arbi-

tration procedures as a means of resolving disputes that arise over

the application or interpretation of a collective bargaining agree-

ment. 29 U.S.C. §173(d). As a natural consequence of this

legislative objective, the courts have maintained a highly deferen-

tial standard of judicial review of labor arbitration awards. This

approach was first expressed nearly thirty years ago in the

landmark ‘Steelworkers’ Trilogy.” United Steelworkers v.

American Manufacturing Co., 363 U.S. 564, 80 S.Ct. 1343, 4

L.Ed. 2d 1424 (1960): United Steelworkers v. Warrior & Gulf

Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed. 2d 1409

(1960); United Steelworkers v. Enterprise Wheel & Car Corp..

363 U.S. 593, 80 S.Ct. 1358. 4 L.Ed. 2d 1424 (1960).

Subject to two limited exceptions. the decision of a labor arbi-

trator is not reviewable by a court. The first of these exceptions

calls for judicial intervention where the arbitrator's award fails to

“draw its essence from the collective bargaining agreement.”

Enterprise Wheel, supra, 363 U.S. at 597. A second exception is

where the award conflicts with public policy. This second excep-

tion is based on the fundamental rule of law that a court cannot

enforce any contract which violates public policy. Stead Motors,

supra, 886 F.2d at 1209 n.9.

The public policy exception was first recognized by this Court

in WR. Grace & Co. v. Local Union 759, 461 U.S. 757, 103 S.Ct.

2177. 76 L.Ed. 2d 298 (1983) (“W.R. Grace”). In W.R. Grace.

the Court was faced with a challenge to an arbitrator's finding

that the employer breached the seniority provisions of a collective

bargaining agreement by complying with a consent decree it had

entered into with the Equal Employment Opportunity Commis-

sion (“EEOC") in settlement of a sex discrimination suit. In

confirming enforcement of the arbitration award, the Court rec-

ognized that arbitral awards which violate an explicit public pol-

icy are not entitled to judicial enforcement. /d. 461 U.S. at 766.

The W.R. Grace Court declared that “the question of public

policy is ultimately one for resolution by the courts.” but cau-

tioned that. “such a public policy ... must be well-defined and

dominant, and is to be ascertained ‘by reference to the laws and

legal precedents and not from general considerations of supposed

public interest.” Jd. quoting Muschany v. United States. 324

LS. 49. 66, 65 S.Ct. 442, 89 L. Ed. 744 (1945).

More recently, this Court had occasion to address the public

policy exception in the context of an arbitration eward reinstating

a discharged employee. Misco, supra. In Misco, an employee

who was arrested in his employer's parking lot for possession of

marijuana was discharged for allegedly violating a company rule

against possession or use of drugs on company property. The

employee. Cooper, was reinstated by an arbitrator. The com-

pany successfully sought to vacate the arbitration award on pub-

lic policy grounds. The Fifth Circuit affirmed. but this Court

reversed. In so doing, the Court elaborated on its earlier holding

in WR. Grace stating that:

W_.R. Grace does not... . sanction a broad judicial power to

set aside arbitration awards as against public policy.

Although we discussed the effect of [the arbitrator's]

award on two broad areas of public policy, our decision

turns On our examination of whether the award created

any explicit conflict with other ‘laws or legal precedents’

rather than an assessment of ‘general considerations of

supposed public interests.

484 U.S. at 43. The Court thus established a two-part test for

determining whether an arbitration award should be vacated on

public policy grounds. First, it must be ascertained whether the

asserted public policy is well established and dominant. If sucha

policy is found to exist, the inquiry then turns to the question of

whether enforcement of the arbitrator's award would create any

explicit conflict with that policy. /d.

The Misco Court rejected the Fifth Circuit’s public policy

analysis because it failed to satisfy the first part of this two-part

test: that is. the Fifth Circuit “made no attempt to review existing

laws and legal precedents in order to demonstrate that they estab-

lish a ‘well-defined and dominant’ policy against the operation of

dangerous machinery while under the influence of drugs.” /d. at

44. The Court went on to note that, even if the purported public

policy against the operation of dangerous machinery while under

the influence of drugs was well-defined and dominant, the com-

pany had not clearly shown that this policy had been violated

because “the assumed connection between the marijuana glean-

ings found in Cooper's car and Cooper's actual use of drugs in the

workplace [was] tenuous at best.” Jd. Furthermore. the Court

chastised the Fifth Circuit for engaging in impermissible fact

finding by drawing the inference that Cooper, who was found with

marijuana in a car, would violate the alleged public policy against

drug use in the workplace.

Misco thus clearly serves to reaffirm the principle first enunci-

ated in W_R. Grace that there exists a limited pubic policy excep-

tion to the general rule demanding judicial deference to iabor

arbitration awards. The Court made it clear that an arbitration

award may only be denied enforcement on public policy grounds

where there is an explicit conflict with “laws and legal prece-

dents.” /d. at 43-44. Significantly, however, the Court left open

the question of whether the exception is so limited as to be appli-

cable only where “the award itself violates a statute, regulation,

or other manifestation of positive law. or compels conduct by the

emplover ee would violate such a law.” Jd. at 45 n.12.

Largely because this key question was left open, Misco has led

to confusion and disarray amongst the circuit courts. In Stead

Motors, the Ninth Circuit took the most extreme view of any

circuit. By adopting an exceptionally narrow interpretation of

Misco, the Ninth Circuit has essentially done away with the

public policy exception within its jurisdiction. Other courts have

not interpreted Misco as being nearly so restrictive. This conflict

amongst the circuits regarding the interpretation of Misco

demands resolution by this Court.

Il. THE NINTH CIRCUIT’S DECISION CONFLICTS

WITH THIS COURT’S DECISION IN MISCO AND

DECISIONS OF THE OTHER CIRCUITS.

In Misco, this Court reached the significant. but unremarkable,

conclusion that an arbitrator's award in conflict with a well-

defined and dominant public policy is not entitled to judicial

enforcement. Although the Misco Court rejected the public pol-

icy argument in that particular case, it certainly did not do away

with the public policy exception altogether. Purportedly relying

on Misco, however, the plurality opinion in Stead Motors serves

to immunize from judicial review even those arbitration awards

which do in fact conflict with public policy.

The Ninth Circuit plurality accomplished this feat by conclud-

ing that an arbitrator's decision to reinstate a discharged worker

constitutes a finding of fact regarding the worker's amenability to

discipline that is unreviewable under any circumstances. The

plurality emploved the following reasoning:

Bearing in mind what we have emphasized already about

the character of arbitrators’ written awards, it should be

clear that we do not require an express ‘finding’ that a

grievant can be rehabilitated or, to borrow from the Misco

court, is otherwise “amenabl[e] to discipline.” We apply

the same deferential review to an award’s statement con-

cerning rehabilitation that we apply to other aspects of the

award. Even if we were to view the reference to rehabili-

tation in the award as nothing more than an abstract

observation, we would be required to reach the same

result. A court cannot infer, from the mere fact that an

award orders reinstatement but is silent on the subject of a

grievant's rehabilitation or “amenability,” that the arbi-

trator did not consider the question; nor can it make an

independent judgment in such a case. Simply put, we

look to the text of the arbitral award for an expression of

an arbitrator's reasons for his decision, but we do not infer

the nonexistence of a particular reason merely from the

award’'s silence on a given issue.

Stead Motors, supra, 886 F.2d at 1213 (citation omitted).

Thus, federal courts in the Ninth Circuit are now required to

defer to an arbitral award ordering reinstatement regardless of

whether the arbitrator specifically determined that the worker

was amenable to discipline, and regardless of whether a well-

defined, dominant and explicit public policy clearly conflicted

with the arbitral award. This highly deferential rule of construc-

tion is inconsistent with Misco for two reasons. First, this Court

made it clear in Misco that, “*the question of public policy is

ultimately one for resolution by the courts.’ 484 U.S. at 43.

quoting W.R. Grace, supra, 461 U.S. at 766. The plurality’s rule

leaves the public policy question to the arbitrator, rather than the

- court. Second, as Judge Wallace points out in his separate opin-

ion in Stead Motors, this new rule of construction serves to turn

the reasoning of Misco on its head:

The Court in Misco disapproved of the court of appeals

having drawn factual inferences 2: made factual findings

not made by the arbitrator. The Court observed that

‘{i]f additional facts were to be found. the arbitrator

should find them... /d. (emphasis added). By reading

silence as reflecting a finding of amenability to discipline.

the plurality accomplishes through a rule of construction

what the dicta in Misco forbids.

Stead Motors, supra, 886 F.2d at 1227 ( Wallace, J.. concurring

in part, dissenting in part).

The plurality’s rule of construction is clearly inconsistent with

the teachings of Misco and is unique amongst the circuit courts.

Because Stead Motors is the most recent circuit court opinion in

the area. its extreme position has not yet been commented upon

by the other circuits. However, the Third Circuit had earlier

expressed a clearly different view as to the degree of deference to

be afforded arbitral awards of reinstatement. In U.S. Postal

Service v. National Ass'n. of Letter Carriers, 839 F.2d 146 (3rd

Cir. 1988), the Third Circuit indicated that only an arbitrator's

explicit factual finding of a worker's amenability to discipline is

entitled to judicial deference. Jd. at 149-50.

The Third Circuit deferred to the arbitrator in the Letter Car-

riers case based on the arbitrator's specific finding that the dis-

charged worker was amenable to discipline. No such finding was

made by the arbitrator in Stead Motors. To the contrary, the

Stead Motors arbitrator noted that mechanic Rocks had been

previously disciplined for negligence. and that his subsequent

misconduct demonstrated “indifference” on his part. The arbi-

trator observed that Rocks was “unduly argumentative” at the

arbitration hearing. and that he “attempted repeatedly to justify

and excuse his conduct.”

If anything, these factual findings by the arbitrator suggest

' strongly that Rocks was not amenable to discipline. He was a

repeat offender, indifferent to his prior negligence and stubbornly

unwilling to concede wrongdoing. How can this record possibly

support a conclusion that Rocks was amenable to discipline?

Nonetheless, the Stead Motors plurality blithely asserts that

the arbitrator here implicitly found that Rocks was amenable to

discipline. This unwarranted fact-finding by the Stead Motors

plurality not ony runs afoul of Misco, but also squarely contra-

dicts the approaches taken by other circuit courts, as discussed

below.

A. The Ninth Circuit Ruling Conflicts With A

Ruling Of The Eighth Circuit.

The Ninth Circuit's Stead Motors decision is in direct conflict

with the Eighth Circuit's decision in Jowa Electric Light & Power

Co. v. Local Union 204 of the Int'l. Bhd. of Electrical Workers,

834 F.2d 1424 (8th Cir. 1987) (“Jowa Electric’). There, the

Eighth Circuit found that an arbitral award reinstating a nuclear

power plant machinist who had been discharged for deliberately

violating important federally mandated safety regulations was in

conflict with public policy. The rules violation occurred when the

emplovee, in a rush to get to lunch early, deliberately ordered a

foreman to pull a fuse on the interlock door system so that he

could leave the secondary containment area. This area is kept

pressurized in order to prevent the possible leakage of harmful

radiation.

The employee was discharged for violating the company’s

safety rule proscribing his conduct, but an arbitrator subse-

quently reinstated him under the “just cause” provision in the

collective bargaining agreement. The employer succeeded in

having the award vacated by the district court and the Eighth

Circuit affirmed, holding that “returning [the emplovee] to work

would violate the public policy of this nation concerning strict

compliance with safety regulations in nuclear facilities.” /d. at

1426.

In framing the public policy relied upon as a basis for vacating

the arbitral award, the Eighth Circuit pointed to statutes, regula-

tions and judicial precedent which demonstrated that the

employer's safety rule was an integral part of “a strict regulatory

scheme devised by Congress for the protection of the public from

the hazards of nuclear radiation.” Jd. at 1428. It was clear to

the court that the discharged worker's conduct violated this pub-

lic policy so as to preclude enforcement of the arbitral award. In

reaching this conclusion. the Eighth Circuit drew a distinction

between Cases vacating arbitration awards directing the reinstate-

ment of employees whose deliberate acts have jeopardized public

health or safety. and those awards which order the reinstatement

of emplovees whose acts posed no such danger. /d. at 1428-29.

The court expressly rejected the union’s contention that the

award must be confirmed because “there is no ‘well-defined and

dominant’ public policy specifying that workers who violate sec-

ondary containment at nuclear power plants must be fired.” /d.

at 1427.

The Jowa Electric case stands in direct conflict with the Ninth

Circuit's opinion in Stead Motors. The Ninth Circuit has

adopted the precise test that was expressly rejected by the Eighth

Circuit: that is, the Ninth Circuit will only vacate an arbitral

award reinstating an employee on public policy grounds where

the articulated public policy bars reinstatement. Stead Motors,

supra, 886 F.2d at 1212.

Clearly then, a different result would have been reached in the

Iowa Electric case had the matter been raised in the Ninth Cir-

cuit rather than the Eighth Circuit. Since there is no specific

public policy prohibiting the reinstatement, or requiring the dis-

charge. of a nuclear power plant machinist who deliberately

defeats the plant's interlock system in the secondary containment

area, the Ninth Circuit would have refused to vacate the arbitral

award reinstating the discharged worker. '

B. The Ninth Circuit’s Interpretation of Misco Is In Direct

Conflict With A Ruling Of The Eleventh Circuit.

The Ninth Circuit’s decision in Stead Motors is also in direct

conflict with the Eleventh Circuit's decision in Delta Air Lines v.

Airline Pilots Assoc. Int’l., 861 F.2d 665 (11th Cir. 1988). cert

denied, 110 S.Ct. 201 (1989) (“Delta Air Lines”). In Delta Air

Lines, Pilot-In-Command Day flew, while drunk. a Boeing 727

filled with passengers and crew from Bangor, Maine, to Boston,

Massachusetts. A number of flight attendants were suspicious of

Day's condition. as was a passenger. Upon landing in Boston. the

flight attendants reported their concerns to the chief pilot: the

passenger simultaneously advised a Delta customer service man-

ager of his observations. A blood alcohol test was administered

to Day, resulting in a determination that he was legally intoxi-

cated at the time he flew the aircraft. Day was discharged for

violating Federal Aviation Administration (“FAA”) regulations

forbidding the operation of any aircraft while intoxicated.

An arbitration panel ruled 3-2 that Day should be reinstated

and the district court vacated the award. The Eleventh Circuit

affirmed, finding that there was a well-defined and dominant

public policy prohibiting the operation of airplanes while under

the influence of alcohol, which policy would be violated by the

reinstatement of the pilot to his former position. The Eleventh

Circuit reached this conclusion by interpreting Misco as follows:

The public policy of which the Supreme Court speaks in

Misco seems to be a public policy not addressing the disfa-

vored conduct, in the abstract, but disfavored conduct

which is integral to the performance of employment

duties. The question we are instructed, by Misco, to ask

is not, ‘Is there a public policy against the employee's

conduct?’, but, rather, ‘Does an established public policy

condemn the performance of employment activities in the

manner engaged in by the employee?’

Id. at 671 (emphasis in original).

In applying this “job-relatedness” test, the court first deter-

mined that there was a well-defined and dominant public policy

prohibiting the operation of any aircraft while impaired by alco-

hol or drugs, as evidenced by the numerous authorities, both

legislative and judicial, prohibiting such conduct. The court next

determined that the pilot’s conduct conflicted with this well-

defined public policy so as to preclude his reinstatement. The

Delta Air Lines court concluded:

Where the person performs his employment duties and, in

doing so, violates standards, restraints and restrictions on

conduct. clearly and explicitly established by the people in

their laws, a requirement that the emplover suffer that

malperformance and not discharge the offender does itself

violate the same well-established public policy. The pub-

lic policy denouncing the operation of any aircraft while

drunk addresses disfavored conduct which is inextricably

related to the performance of employment duties, and thus

fits within the limitations imposed by Misco.

Id. at 674 (emphasis in original). See also Georgia Power Co. v.

Int'l Bhd. of Electrical Workers, Local 84, 707 F. Supp. 531

(N.D. Ga. 1989) (applying Delta Airlines and vacating on public

policy grounds arbitral award reinstating employee discharged

for drug use).

The “job relatedness” test adopted by the Eleventh Circuit in

Delta Air Lines is in direct conflict with the standards enunciated

by the Ninth Circuit in Stead Motors for assessing a public policy

challenge to an arbitral award. The Eleventh Circuit’s approach

demands that an arbitral award of reinstatement be vacated

where the disfavored conduct was integral to the performance of

the employment duties and violated public policy. Thus, there is

no requirement in the Eleventh Circuit, as there now is in the

Ninth Circuit, that a specific public policy bar the discharged

employee's reinstaternent. Indeed, the Stead Motors plurality

specifically rejected the reasoning of the Delta Air Lines court:

... We must conclude that the Eleventh Circuit's opinion

in Delta is, to a large extent, simply inconsistent with the

law as expressed in Grace and Misco.... the Delta court

reasoned that, since what the pilot had done in flying

drunk was illegal, the performance of his employment

[was] the very thing which offends public policy and thus

reinstatement was impermissible. 861 F.2d at 674. As

we have explained, the critical inquiry is not whether the

underlying act for which the employee was disciplined

violates public policy, but whether there is a public policy

barring reinstatement of an individual who has committed

a wrongful act.

Stead Motors, supra, 886 F.2d at 1215 (emphasis in original).

It is clear that had the Delta Air Lines case arisen in the Ninth

Circuit, a different result would have been reached. There is no

Statute, regulation or case which specifically prohibits the rein-

statement of a pilot who flies an aircraft while under the influence

of alcohol. Consequently. the courts in the Ninth Circuit would

be compelled by Stead Motors to return Pilot-in-Command Day

to the cockpit.

C. A Number Of Other Circuit Courts Have Had Occasion To

Apply Misco In Contrasting Ways.

1. A Ruling Of The Tenth Circuit Reflects Approval Of The

Eleventh Circuit’s Approach.

In Communication Workers v. S. E. Elec. Co-Op., 882 F.2d

467 (10th Cir. 1989), the Tenth Circuit rejected an employer's

public policy challenge to an arbitral award reinstating an

employee who was accused of sexually assaulting a customer in

her home. The court reasoned that the arbitrator had taken into

account the important public policy against sexual assault of

women, as well as the grievant's work history, in concluding that a

Suspension was appropriate discipline and that his findings in this

regard should not be disturbed. /d. at 469-70. Although the

Tenth Circuit did not set forth a definitive interpretation of

Misco, the S. E. Electric court cited the Eleventh Circuit's Delta

Airlines decision with approval and applied that court’s “job

relatedness” test. Jd. at 469. Thus, the Tenth Circuit would

appear to agree with the Eleventh Circuit that, under Misco, an

arbitral award of reinstatement is to be vacated on public policy

grounds where the discharged employee makes an “employment

decision” to engage in “disfavored conduct” that is “integral to

the performance of [his] employment duties.” /d. quoting Delta

Air Lines, supra, 861 F.2d at 671. Presumably then, the Tenth

Circuit, unlike the Ninth Circuit, would have vacated the arbitra-

tion award reinstating Mr. Rocks to his position as a mechanic.

2. The Third Circuit Appears To Have Adopted A Narrow

Interpretation Of Misco.

The Third Circuit’s sole post-Misco decision regarding the

scope of the public policy exception came in U.S. Postal Service v.

National Ass'n of Letter Carriers, 839 F.2d 146 (3rd Cir. 1988).

There, the court refused to vacate an arbitral award reinstating a

letter carrier who, while off duty, fired gun shots at his postmas-

ters empty parked car. Applying dicta from Misco’s final para-

graph, the Third Circuit deferred to the arbitrator's finding that

the discharged emplovee was “amenable to discipline.” /d. at

149-50. Although the Third Circuit refused “to reach the ques-

tion of how narrow the limits of the scope of review of collective

bargaining arbitration are” (/d. at 150), the court seemingly

approves of a narrow interpretation of Misco similar to that

adopted by the Stead Motors plurality. Both opinions focus

heavily on dicta in Misco’s final paragraph to support the proposi-

tion that an arbitrator's conclusions regarding a discharged

worker's “amenability to ciscipline” is immune from judicial

scrutiny.’

3. The District Of Columbia Circuit Has Adopted An

“Extremely Narrow” Public Policy Exception.

In a case cited with approval by the Stead Motors plurality. the

Court of Appeals for the District of Columbia Circuit adopted

what it defined as an “extremely narrow” public policy exception.

U.S. Postal Service v. National Ass'n of Letter Carriers, 810

F.2d 1239 (D.C. Cir.), cert. granted, 484 U.S. 984 (1987), cert.

dismissed, 485 U.S. 680 (1988). There. the D.C. Circuit con-

firmed an arbitration award reinstating a letter carrier who had

pled guilty to unlawful delay of mail. The Court found that the

Postal Service had failed to “identify any ‘legal proscription

against the reinstatement of [the discharged worker]."° /d. at

1241, quoting American Postal Workers Union v. United States

Postal Service, 789 F.2d 1, 8 (D.C. Cir. 1986). This standard,

which was adopted without the benefit of Misco, seems consistent

with the Ninth Circuit's approach in Stead Motors—bdoth courts

1. Unlike the Stead Motors court. the Third Circuit in the Postal Service

case was reviewing an arbitral award containing a specific finding that the

discharged worker “showed no proclivity” to future misconduct. Letter Carri-

ers, supra, 839 F.2d at 149. Thus, as discussed supra at 12, the Third Circuit is

not in accord with the Ninth Circuit’s extreme rule of construction, which

automatically views every order of reinstatement as an implied arbitral finding

that the reinstated emplovee is amenable to discipline.

focus the inquiry on whether there is a public policy barring

reinstatement.

4. The Second Circuit Has Approved Of A Broader

Interpretation Of Misco.

The Second Circuit has endorsed yet another interpretation of

Misco. Maggio v. Local 1199, 702 F. Supp. 989 (E.D. N.Y.),

aff'd without op'n, 880 F.2d 1319 (2d Cir. ), cert. denied, 110S.

Cr. 329 (1989). In Maggio, the Second Circuit affirmed a dis-

trict court opinion confirming an arbitration award ordering the

reinstatement of a nurse’s aide who had been discharged for

alleged physical abuse of patients. The district court interpreted

Misco as calling for a two part test whereby “an arbitrator's

award will be vacated on public policy grounds only if: (1) the

policy relied upon is ‘well-defined’ and ‘dominant’ and (2) a clear

link exists between enforcement of the award and violation of the

policy.” /d. 702 F. Supp. at 994 (citation omitted). By enunci-

ating a standard that focuses on whether there is a “link” between

the relevant public policy and enforcement of the award, as

opposed to requiring a policy barring reinstatement, the Maggio

court offers a more flexible approach than does the Ninth

Circuit.°

Indeed, under the Second Circuit test, it is unlikely that

mechanic Rocks would be awarded his job. There is a direct link

between California statutes governing safe repair of automobiles

and the repeated negligence of Rocks. In fact, the reinstatement

of Rocks would jeopardize the ability of Stead Motors to continue

tO Operate a repair shop under the jurisdiction of the California

Bureau of Automotive Repairs. This is because the Bureau can

2. Ina case presently pending before the Sixth Circuit, a district court in

Michigan vacated an arbitration award reinstating a nurse who negligentls

failed to administer medication. Russel! Memorial Hosp. v. United Steelwork-

ers, 720 F. Supp. 583 (E.D. Mich. 1989). In vacating the award. the Russel/

Memorial Hosp. court, citing Misco, applied the same exact test approved of by

the Second Circuit in Maggio, supra. Russell Memorial Hosp.. supra, 720 F.

Supp. at 58§.

invalidate a repair shop's registration if an employee of the shop is

guilty of gross negligence. Cal. Bus. & Prof. Code § 9884.6

D. The Conflict In the Circuit Courts Demonstrates The Need

For The Supreme Court To Clarify The Public Policy

Exception.

These conflicting decisions of the lower courts reflect confusion

as to the appropriate standard to be applied in cases challenging

labor arbitration awards on public policy grounds. Much of the

confusion in this area stems from the fact that the Misco court did

not reach the central question of whether a court may vacate an

arbitral award on public policy grounds only when the award

itself violates a statute, regulation or other manifestation of posi-

tive law. or compels conduct by the emplover that would violate

suchalaw. Misco, supra, 484 U.S. at 45n.12. The only courts

to specifically address this open question have answered it in the

negative. lowa Electric, supra. 834 F.2d at 1427: E.J. DuPont de

Nemours v. Grasselli Emplovees Assoc., 790 F.2d 611.616 (7th

Cir. ). cert. denied. 479 U.S. 853 (1986).

On the other hand. although the Ninth Circuit claims to have

left this open question unresolved in Stead Motors, the court's

approach clearly suggests otherwise. By demanding that a spe-

cific policy proscribe the reinstatement of the discharged worker.

the Ninth Circuit has essentially adopted the “narrow” approach

specifically reyected by the Seventh and Eighth Circuits.

The decisions of the Eighth Circuit in Jowa Electric and the

Eleventh Circuit in Delta Air Lines. as well as the affirmation bs

the Second Circuit of the district court’s opinion in Maggio.

clearly offer a broader interpretation of Misco than did the Ninth

In Letter Carriers, supra. the Third Circuit. like the Misco Court.

expressis declined to decide whether “courts have authority to refuse to enforce

an arbitration award only when enforcement would violate positive law or

require unlawful conduct” Jd. 839 F.2d at 1S0

Circuit in Stead Motors The lowa Electric, Delta Air Lines

and Maggio courts reject the notion that an arbitral award rein-

stating a discharged worker can only be vacated on public policy

grounds where a specific manifestation of positive law prohibits

reinstatement. In none of those cases was a Statute, regulation

or case prohibiting the worker's reinstatement cited by the court.

Rather. a well-defined and dominant public policy prohibiting the

disfavored conduct was gleaned from a variety of statutory.

administrative and judicial sources. This approach has been

utilized by other courts as well. See Russell Memorial Hosp.,

supra, (general statutory provisions regulating the practice of

nursing reflect well-defined and dominant public policy in favor of

competent nursing). The Ninth Circuit's interpretation of

Misco is thus not only in conflict with the other circuits, it is

unique in its narrow scope.

The Ninth Circuit's approach stands alone for a variety of

reasons. First, and foremost. it is simply inconsistent with the

teaching of Misco. While the Misco Court iejected the

employer's challenge to the arbitral award in that case, the Court

clearly recognized that a public policy exception exists. As

Judge Trott’s dissenting opinion in Stead Motors points out.

however, the Stead Motors plurality opinion serves to “choke[ }

the ‘public policy’ exception—hic sepultus—into oblivion.”

Stead Motors, supra, 886 F.2d at 1221. This is because there

are few, if any. statutes. regulations or other manifestations of

positive law which specify that an employee who commits a cer-

tain prohibited act must be fired by his employer.

Second, the narrow approach adopted by the Ninth Circuit will

create absurd results. A prime example of the anomalous results

that the Ninth Circuit's decision will foster would be the case of a

licensed school bus driver who performs his job duties while intox-

icated and causes a fatal accident. Since there is no positive law

+ As discussed above. the Tenth Circuit has cited with approval the Elev-

enth Circuit's decision in Delta Airlines. and thus could be added to the array of

circuits which stand in opposition to the narrow approach of the Ninth Circuit

Communication Workers vy. SE. Elec Co-Op.. 882 F.2d 467. 469 (10th Cir

19RG)

prohibiting the reinstatement of such an employee, federal courts

in the Ninth Circuit would be compelled by Stead Motors to

uphold an arbitral award reinstating the driver. On the other

hand. a safe driver who forgets to renew his license on time, is

discharged for failing to have a license. and then reinstated by an

arbitrator. would find his favorable award vacated because of

laws prohibiting the operation of motor vehicles without a license.

This example simply reflects the imprudence of the Ninth Cir-

Cuit’s narrow approach. The approaches of the Second. Eighth.

Tenth and Eleventh Circuits are certainly more realistic and

functional.

Regardless of the utility of any of the forementioned

approaches, however. it is clear that Misco has created confusion

amongst the lower courts as to the proper standards to be applied

to cases challenging arbitral awards on public policy grounds.

Indeed. in one post- Misco case. the Eleventh Circuit went so far

as to sidestep the public policy issue because the state of the law in

this area was considered by the court to be “unsettled” and thor-

oughly confusing. U.S. Postal Service v. National Ass'n. of

Letter Carriers, 847 F.2d 775, 777 (llth Cir. 1988). The

Court is now offered the opportunity to clear up the confusion

created by Misco and un:te the lower courts by offering a defini-

tive anproach for asszssing public policy challenges to labor arbi-

trati. awards

——

CONCLUSION

For the reasons stated. this Court should grant the Petition for

Certiorari. summarily vacate the Ninth Circuit's decision and

remand the matter with instructions to vacate the arbitral award

at issue. Alternatively. the Court should grant the Petition and

give the case plenary consideration.

DATED: February 2. 1990.

Respectfully submitted.

LITTLER. MENDELSON, FASTIFF

& TICHY

A Professional Corporation

S ROBERT G. HULTENG

ROBERT G. HULTENG.

Counsel of Record

S LAWRENCE PEIKES

LAWRENCE PEnkES

S Eric A. GROVER

Eric A. GROVER

Attorneys for Petitioner

Stead Motors of Walnut Creek

oo be

APPENDIX A

STEAD MOTORS OF WALNUT CREEK,

Plaintiff-Appellee,

¥.

AUTOMOTIVE MACHINISTS LODGE No. 1173,

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS,

Defendant-Appellant.

No. 87-2053.

United States Court of Appeals,

Ninth Circuit.

Argued En Banc and Submitted

January 18, 1989.

Decided Oct. 6, 1989.

After arbitrator rendered decision reinstating emplovee.

employer brought suit to vacate award. The United States Dis-

trict Court for the Northern District of California, John P.

Vukasin, Jr., J.. vacated award, and appeal was taken. The

Court of Appeals, 843 F.2d 357, affirmed. On rehearing en banc

the Court of Appeals, Reinhardt, Circuit Judge, held that labor

arbitrators award reinstating, following disciplinary suspension,

auto mechanic who failed to tighten automobile’s lug nuts did not

* violate explicit, well-defined and dominant public policy of Cali-

fornia and would be upheld.

Reversed and remanded with instructions.

Trott, Circuit Judge, filed dissenting opinion in which Noonan,

Circuit Judge, concurred.

Wallace, Circuit Judge. filed opinion concurring in part and

dissenting in part in which Alarcon and O’Scannlain. Circuit

Judges, joined and in which Goodwin. Chief Judge, joined in part.

1. Labor Relations—483

What courts do when they review labor arbitration award is

more akin to review of contract than of decision of inferior tribu-

nal: award, just as contract, is expression of parties’ will and must

be enforced as expressed unless illegal or otherwise void. (Per

plurality opinion of five Judges with two Judges dissenting and

four Judges concurring in part and dissenting in part.) Labor

Management Relations Act, 1947, § 301, 29 U.S.C.A. § 185.

2. Labor Relations—454, 479

Labor arbitrators are not bound by strictures of precedent or by

record actually before them; nor are they generally subject to

reversal by superior tribunals for errors of law or fact. (Per

plurality opinion of five Judges with two Judges dissenting and

four Judges concurring in part and dissenting in part.) Labor

Management Relations Act, 1947, § 301, 29 U.S.C.A. § 185.

3. Labor Relations—458

Labor arbitrators are not required to make sorts of explicit or

exhaustive findings of fact demanded of district courts: likewise,

reasons for arbitral rulings need not be spelled out in detail. (Per

plurality opinion of five Judges with two Judges dissenting and

four Judges concurring in part and dissenting in part.) Labor

Management Relations Act, 1947, § 301, 29 U.S.C.A. § 185.

4. Labor Relations—483

Court is barred from disregarding arbitrator's factual determi-

nations, let alone supplementing them with its own, or from “cor-

recting” arbitrator's erroneous understanding of the law. (Per

plurality opinion of five Judges with two Judges dissenting and

four Judges concurring in part and dissenting in part.) Labor

Management Relations Act. 1947, § 301, 29 U.S.C.A. § 185.

5. Labor Relations—483

Courts must apply the “his own brand” or “draw its essence”

exceptions to judicial deference to labor arbitrator's award in

A-3

same way which they must apply “public policy” exception; in

both circumstances, judicial scrutiny or (sic) arbitrator's deci-

sion is extremely limited. (Per plurality opinion of five Judges

with two Judges dissenting and four Judges concurring in part

and dissenting in part.) Labor Management Relations Act,

1947, § 301, 29 U.S.C.A. § 185.

6. Labor Relations—479

Court cannot enforce labor arbitration award which violates

public policy. (Per plurality opinion of five Judges with two

Judges dissenting and four Judges concurring in part and dissent-

ingin part.) Labor Management Relations Act, 1947, § 301, 29

U.S.C.A. § 185.

7. Labor Relations—463

Labor arbitrator's award reinstating, following disciplinary

suspension, auto mechanic who failed to tighten automobile’s lug

nuts did not violate explicit, well-defined and dominant public

policy of California and would be upheld. Labor Management

Relations Act, 1947, § 301, 29 US.C.A. § 185: West's

Ann.Cal.Vehicle Code § 24002: West’s Ann.Cal.Bus. & Prof.

Code §§ 9880, 9884.7.

8. Labor Relations—479

If court relies on public policy to vacate arbitral award reinstat-

ing employee, it must be policy that bars reinstatement. (Per

plurality opinion of five Judges with two Judges dissenting and

four Judges concurring in part and dissenting in part.) Labor

- Management Relations Act, 1947, § 301, 29 U.S.C.A. § 185.

9. Labor Relations—479

If court relies on public policy to vacate arbitral award reinstat-

ing emplovee, it must both delineate overriding public policy

rooted in something more than general considerations of sup-

posed public interest and must demonstrate that policy is one that

specifically militates against relief ordered by arbitrator. (Per

A-4

plurality opinion of five Judges with two Judges dissenting and

four Judges concurring in part and dissenting in part.) Labor

Management Relations Act, 1947, § 301, 29 U.S.C.A. § 185.

10. Labor Relations—483

Arbitral judgment of employee's amenability to discipline is

factual determination which cannot be questioned or rejected by

reviewing court: judgments about how specific employee will per-

form after reinstatement if given lesser sanction are nothing more

than an exercise of arbitrator's broad authority to determine

appropriate punishments and remedies. (Per plurality opinion of

five Judges with two Judges dissenting and four Judges concur-

ring in part and dissenting in part.) Labor Management Rela-

tions Act, 1947, § 301, 29 U.S.C.A. § 185.

David Rosenfeld, Van Bourg, Weinberg, Roger and Rosenfeld.

San Francisco, Cal., for defendant-appellant.

J. Mark Montobbio, Severson, Werson, Berke, and Melchior,

San Francisco, Cal., for plaintiff-appellee.

Joseph Colton, Beeson, Tayer and Silbert, Bodine & Living-

ston, San Francisco, Cal., for amici curiae Teamsters Joint Coun-

cils 7 and 38 and California Nurses Association. |

Appeal from the United States District Court for the Northern

District of California.

Before GOODWIN, Chief Judge, BROWNING, WALLACE,

TANG, FLETCHER, ALARCON, REINHARDT, NOONAN,

O’SCANNLAIN, LEAVY and TROTT, Circuit Judges.

REINHARDT, Circuit Judge:

This case requires us to consider once again the nature and

extent of the “public policy exception” to the finality of labor

arbitrators awards. In so doing, we reemphasize both the nar-

row manner in which we have historically construed that excep-

tion and the general deference we have afforded, and must afford,

to the awards of labor arbitrators. Gale Rocks, an auto mechanic

A-5

and member of appellant Lodge 1173 of the International Associ-

ation of Machinists and Aerospace Workers (“Local” or “the

union’), was discharged for work-related conduct. The matter

was submitted to arbitration, and the arbitrator ordered Rocks

reinstated to his former employment following a 1 20-day suspen-

sion. Appellee Stead Motors of Walnut Creek (“Stead Motors,”

“the employer”), sued to vacate the award in the United States

District Court for the Northern District of California, alleging

that Rocks’ reinstatement would violate public policy by “endan-

ger(ing] the health and safety of [its] customers and the public.”

The district judge apparently accepted this argument and vacated

the portion of the award which ordered Rocks reinstated. A

three-judge panel of this court affirmed. The case was then taken

en banc. The original panel opinion, reported at 843 F.2d 357

(9th Cir. 1988), is withdrawn and we now reverse.

Stead Motors sells Mercedes Benz automobiles; Gale Rocks

services them. First employed as a mechanic by Stead Motors in

1977, Rocks performed his duties without incident until 1984.’

In that year, Rocks received a written warning notice for failing

properly to tighten the lug bolts on the wheels of a car he had

serviced. The warning referred to Rocks’ action as one of “gross

negligence” and, according to the terms of the collective bargain-

ing agreement (“the Agreement”). remained m effect for 30

days.

Approximately eleven months later, in September 1985, Rocks

had a dispute with his shop foreman about the proper manner in

which to tighten lug bolts after replacing the tires on a car. The

arbitrator found that Rocks was “advised,” although the record

does not make clear precisely by whom. that his foreman had

1. There is some discussion in the arbitrator's opinion and award about the

relationship between Rocks’ position as the union shop steward and his conflicts

with management. We do not address these issues here. for neither party now

alleges, nor did the arbitrator find, that Rocks’ union activities were the basis for

his discharge or for his emplover’s subsequent legal action to vacate the arbitra-

tors award

A-6

“absolute authority” over matters such as proper lug bolt tighten-

ing procedures. On October 14, 1985, Rocks replaced the front

brake pads on a car, a job which required him to remove the

wheels and. upon replacing them, to affix the lug bolts. As the

car's owner drove home, he noticed a “very heavy” vibration in his

car's front end. Stead Motors dispatched an employee to the

customer's home. Upon inspecting the rough-riding Mercedes,

the employee found that several lug bolts in both wheels were

loose, with one bolt missing altogether.

Stead Motors, believing that Rocks’ failure to secure the lug

nuts amounted to “just cause” under the collective bargaining

agreement, decided to terminate him.’ Ina letter to Rocks and

his union dated the day after the incident, the employer referred

to the written warning which had been issued a vear before and

claimed that Rocks’ failure to tighten the lug bolts on the second

car was “tantamount to recklessness.” a category of behavior

which entitled the employer to discharge an employee without

notice. Rocks, through the union, sought to have an arbitrator

determine whether the conduct on which Stead Motors had based

his discharge amounted to just cause under the Agreement.

Although the Agreement required such matters to be adjudicated

by a board comprised of representatives of management and labor

and a neutral member agreeable to both, the parties decided to

submit the matter to a single neutral arbitrator. (Neither party

has challenged the arbitration procedures employed. and we have

no cause to question them either. )

The matter was heard before Arbitrator Robert Le Prohn. who

subsequently issued a written opinion and award.’ At the hear-

ing Stead Motors had asserted three factors in support of its

2. Rocks, while admitting that he was the only person to service the vehicle

n question, claimed before the arbitrator that someone else could have later

oosened the lug bolts (specifically to get him in trouble with management)

The arbitrator did not believe this claim and, in our review of his award. we take

the facts as the arbitrator found them, infra at 1206-1209, and assume that

Rocks did in fact fail to affix the lug bolts properly

others nearly opaque. While it would of course make our limited review of the

arbitrator's decision simpler if his findings were closer in substance or form to

A-7

discharge decision: |) the 1984 warning for lug bolt malfeasance:

2) Rocks’ “attitude problems”: and 3) the “reckless” October

1985 failure to affix the lug bolts properly. With respect to the

1984 warning, Le Prohn found that the collective bargaining

agreement clearly established that warning letters could not

remain in effect for more than thirty days, making the year-old

letter an improper factor on which torely. As to Rocks’ “attitude

problems,” the arbitrator ruled that Stead Motors’ reliance on

that factor was unwarranted. At the same time, he noted that.

while the union had made out a prima facie case that Rocks’

union activity was a motivating factor in Stead Motor’s discharge

decision, the record established that Rocks would not have been

fred but for the October 14 lug bolt incident. (See supra n. |.)

Turning to the final factor asserted by Stead Motors. that of the

October lugs, Arbitrator Le Prohn first rejected the union’s con-

tention that Stead Motors should have been bound by its treat-

ment of the similar incident for which it issued the written

warning in 1984 as one of “gross negligence.” He then ruled that

Rocks’ repeat offense suggested indifference to the consequences

of his actions and was therefore properly deemed “reckless.”

Consequently, he reasoned, discipline was appropriate under the

collective bargaining agreement.

The “Remedy” section of the arbitrator’s award is the most

important to Our review: In some respects it is also the most

confusing. We set out the relevant passages:

Of the three bases relied upon by [Stead Motors] to sup-

port [Rocks’] removal has been established: two have not

[Stead Motors’] failure to establish that pursuant to the

contract it was justified in relying on each of the factors

leads to the conclusion that discharge is too severe a disci-

plinary action.

those we usually have when reviewing the decisions of district courts, we

acknowledge. and discuss infra at 1206-1207. that the goals of the arbitration

Process are better served when arbitrators are not constrained by technical

requirements imposed by judges or the fear that their awards will be given less

deference if they fail to meet the high standards we demand of the findings and

orders of district judges. Cf infra. at 1204 n.$

————————

A-8

[Rocks] is entitled to reinstatement to his former position.

However. his reckless conduct on October 14, 1985[ ]

warrants severe discipline. .. . Discipline is aimed at reha-

bilitation: reinstatement with a one-hundred and twenty

(120) day suspension should serve as an object lesson and

impress upon [him] that he is required to follow instruc-

tions and perform his job duties fully and carefully.

Stead Motors, dissatisfied with the outcome of the arbitration

procedure, filed suit in the Superior Court of Contra Costa

County, California to vacate the portion of the award that

ordered Rocks reinstated. It argued that the arbitrator had

exceeded his authority, that his award “d[id] not draw its essence

from the Agreement,” and that reinstatement would violate pub-

lic policy inasmuch as it would allow Rocks to “endanger the lives

and safety of the traveling public.”

The union removed the action to federal court under 28 U.S.C.

§ 1441(a), on the ground that Stead Motors’ claim was cogniza-

ble under the federal courts’ original jurisdiction pursuant to

§ 301 of the National Labor Relations Act, 29 U.S.C. § 185.4

The district judge issued an order vacating the arbitrator's award,

to the extent that it ordered reinstatement, on public policy

grounds.°

4. Section 301 provides

Suits by and against labor organizations

(a) Suits for violation of contracts between an employer and a labor organi-

zation representing emplovees in an industry affecting commerce as defined in

this chapter... may be brought in any district court of the United States having

jurisdiction of the parties, without respect to the amount in controversy or

without regard to the citizenship of the parties

S. More precisely, the district judge signed a two-page order prepared by

Stead’s counsel. The order—supposedly the centerpiece of a court of appeals

review —does not contain any analysis of the arbitrator's award, no discussion of

the legal standards which must be appiied to such awards, and does not even

specify the “public policy” violated by Rocks’ reinstatement

While we have acknowledged that the practice in which a prevailing parts

Prepares a district judge's findings and order has some value in a limited class of

cases, this court and the Supreme Court have consistently advised that the a!

too commonplace practice generally makes appellate review more difficult and

invites distortion and overstatement by the prevailing party. Compare Phot

Electronics Corp. v. England. §8\ F.2d 772. 776-77 (9th Cir. 1978) (*“Whole-

sale adoption of the prevailing partys proposed findings complicates t

A-9

The union appealed to a three-judge panel of this court which

affirmed the district court. Stead Motors v. Automotive

Machinists Lodge 1173, 843 F.2d 357 (9th Cir. 1988). The

panel's brief opinion found that reinstatement of Rocks would

violate California's public policy “regarding automobile safety

and maintenance,” 843 F.2d at 359. a policy it gleaned from two

sections of the California Code. Turning first to § 24002 of the

state Vehicle Code, the panel reasoned that California's pro-

nouncement that “[i]t is unlawful to operate any vehicle or com-

bination of vehicles which is in an unsafe condition.” amounted to

an “‘express legislative recognition’” of the danger posed by

improperly maintained vehicles. /d.. (quoting Maloney v. Rath.

69 Cal.2d 442, 448, 71 Cal.Rptr. 897, 900, 445 P.2d 513. 516

(1968)). The panel looked next to California's Automotive

Repair Act. Business and Professions Code § 9880 er seq., which

established a state Bureau of Automotive Repair and provided for

the inspection and certification of automobile repair facilities.

and concluded that the Bureau's power to revoke the certifica-

tion of a repair facility for cases of “gross negligence,”

§$ 9884.7(1)(e). meant that “Stead Motors could not have kept

Rocks and stayed in business.” 843 F.2d at 359.

We decided to rehear the matter en banc.

In reviewing the merits of Stead Motors’ challenge to the

arbitrator's award, we must acknowledge that the task is different

problems of appellate review ‘but] may be permissible in cases ‘involving

chemical Corp.. 437 F.2d 1336, 1339-40 (9th Cir. 1970)) (citations omitted )

with Anderson v. City of Bessemer City, N.C. 470 U.S. $64, $72, 105 S.Ct

$04. 1810, 84 L-Ed..d $18 (1985) (criticizing courts that adopt findings of

Orevailing party “particularly when those findings have taken the form of con-

clusory statements unsupported by citation to the record” and discussing “poten-

tial for overreaching and exaggeration on the part of attorneys preparing

findings of fact”) and Kern Oil & Refining Co.v Tenneco Oil Co. 840 F.2d 730.

34 (9th Cir.) (generally disapproving of wholesale adoption of findings pre-

pared by prevailing party). cert. denied. UL S.—. 109 S.Ct. 378. 102 L-Ed 2d

A-10

from that which judges are accustomed to perform: for. when

reviewing the award of an arbitrator chosen by the parties to a

collective bargaining agreement, we are bound—under all except

the most limited circumstances—to defer to the decision of

another. even if we believe that the decision finds the facts and

states the law erroneously. Possibly because the nature of our

review in these cases is so unusual. there may be a tendency for

judges. often with the most unobyectionable intentions, to exceed

the permissible scope of review and to reform awards in our own

image of the equities or the law. Consequently. cases like this

one. which acquire the plenary attention of our court. provide an

opportunity to repeat and reemphasize the unique character of an

arbitrator's function and the nearly unparalleled degree of

deference we afford his decisions. We also specifically reaffirm

this circuit's settled construction of the so-called “public polics

exception” to the finality of arbitrator's awards in light of recent

Supreme Court pronouncements

We turn. then. first to a brief description of the role arbitration

plays in the process of collective bargaining and the role of the

arbitrator in defining collective bargaining agreements

Subsequently. we examine the process by which arbitrators arrive

at their awards and the character of those awards themselves

Finally. we come to the role of judges in this scheme. reviewing

the historical approaches of the Supreme Court and of this circuit

to judicial review of arbitrator's awards. The digcussion provides

a necessary background to the narrow issue we must decide

here—whether the arbitrator's reinstatement of Rocks violated

“public policy.” We provide the background in detail because. as

the history of this case eloquentis shows. ultimate questions in the

‘ arbitration sphere cannot be answered properly if divorced from

an understanding of the nature of the arbitral process itself

4. Arbitration And Arbitrators In The Labor Context

Arbitration is a central! feature of the collective bargaining

process. designed to function alongside the labor contract in

maintaining equits and a balance of power in the workplace

A-1]

Indeed. the mandatory and prearranged arbitration of grievances

is a Critical aspect of the parties’ bargain. the means through

which they agree “to handle the anticipated unanticipated omis-

sions of the [collective bargaining agreement].” St. Antoine.

Judicial Review of Labor Arbitration Awards: A Second Look at

Enterprise Wheel and Its Progeny. 7§ Mich.L.Rev. 1137, 1140

(1977) (“Judicial Review”). The arbitrator under such a

scheme serves a function somewhat different from that served by

the arbitrator in the commercial context. He does not merely

provide an alternative means of resolving disputes. nor is he cho-

sen simply for his expertise in a specific field or his ability to give

definitive answers with greater efficiency and speed than the

courts. Cf eg Mitsubishi Motors Corp. v. Soler Chrvysler-

Plymouth, Inc., 473 US. 614, 628. 108 S.Ct. 2346, 3354, 87

L.Ed.2d 444 (1985) (arbitrating a commercial claim “trades the

procedures ... of the courtroom for the simplicity. informality.

and expedition of arbitration”). Unlike the commercial con-

tract. which is designed to be a comprehensive distillation of the

Parties bargain. the collective bargaining agreement is a skeletal.

interstitial document. United Steelworkers of Am.v. Warrior &

Gulf Navigation Co., 363 U.S. §74, $78, $80-81. 80 S.Ct. 1347.

1350. 135$1-S2. 4 L.Ed.2d 1409 (1960) (“Warrior & Gulf’).

The labor arbitrator is the person the parties designate to fill in

the gaps: for the vast array of circumstances they have not consid-

ered or reduced to writing. the arbitrator will State the parties’

bargain. He is “the parties’ officially designated ‘reader’ of the

contract.. their joint alter ego for the purpose of striking

whatever supplementary bargain is necessary” to handle matters

omitted from the agreement. Judicial Review. 78 Mich.L.Res

at 1140.

{1} Since the labor arbitrator is designed to function in

essence as the parties’ surrogate. he cannot “misinterpret” a col-

lective bargaining agreement. As Professor St. Antoine

observes, “(i]n the absence of fraud or an overreaching of author-

ity on the part of the arbitrator. he is speaking for the parties. and

A-|2

his award is their contract.” Jd. (emphasis in original)” Thus.

what courts do when they review an arbitrator's award is more

akin to the review of a contract than of the decision of an inferior

tribunal: the award. just as a contract, is the expression of the

parties’ will and must be enforced as expressed unless illegal or

otherwise void. Judicial “reinterpretation.” no less than judicial

-eformation of a contract against the wishes of all the parties to it,

is ordinarily an invalid exercise of our power. See, e.g. San

Francisco-Oakland Newspaper Guild v. Tribune Pub. Co., 407

F 3d 1327. 1327 (9th Cir. 1969) (per curiam) (“It is the arbitra-

tor’s construction that was bargained for: and so far as the arbi-

trator’s decision concerns construction of the contract. the courts

have no business overruling him, because their interpretation of

che contract is different than his.”): Louwisiana-Pacific Corp. v.

International Bhd. of Elec. Workers, 600 F.2d 219. 226 (9th Cir.

1979) (enforcing arbitrator's award since company. which “[a]t

several stages made choices as to collective bargaining” strat-

eg) “must now abide the consequences of those choices”). Def-

erence is premised on the simple notion that courts do not free the

individual from his obligations merely because those obligations

have turned sour on him. The labor arbitrator's award. often

termed the rendering of “industrial justice.” is simply a manifes-

tation of the parties’ obligations under their contract:

Whatever the content or import of the challenged award.

and however it may otherwise oe described. the brand of

industrial justice dispensed in that award is the precise

brand the party assessed and agreed to purchase. eyes

open. for better or for worse. for richer or for poorer.

6 Recognition of this fact is. of course. the conceptual underpinning for

udicial deference to an arbitrator's award. discussed in detail infra at 120°-

209 The exception to Professor St. Antoine's generally accurate assertion Is

the case in which the arbitrator's award “fails to draw its essence” from the

collective bargaining agreement. This term ts reserved for those egregious cases

= which a court determines that the arbitrator's award ignored the plain lan-

guage of the contract. that he “manifestly disregarded” the contours of the

bargain expressed in outline by the collective bargaining agreement In such an

nstance. the court rules that the arbitrator s award represents an invalid exer-

se of the power the parties have entrusted to him See infra at | 208-1209

A-13

Jones. “His Own Brand of Industrial Justice”: The Stalking

Horse of Judicial Review of Labor Arbitration, 39 UCLA L.Rev.

881. $93 (1983).

B. The Arbitrator’s Award

(2| Arbitrators awards are not judicial opinions. They are

ad hoc documents which express the meaning of a collective

bargaining agreement as applied to a particular set of facts. In

contrast to judges. labor arbitrators are not bound by the stric-

tures of precedent or by the record actually before them: nor are

they generally subject to reversal by “superior tribunals” for

errors of law or fact. See infra at 1207.

{3} The content of arbitral opinions and awards often reflects

the contrasts between judges and arbitrators, and between judi-

cial and arbitral proceedings. Arbitrators are generally not law-

vers. Even if an arbitrator happens to be a lawyer. it is more

likely than not that he was chosen for his knowledge of the indus-

trial “shop” rather than any general knowledge of the law that he

might possess. Cf. Warrior & Gulf, 363 US. at 581-82, 80S Ct.

at 1352-53. The proceedings the arbitrator conducts are gener-

ally informal. lacking most of the fixed rules of procedure and

evidence under which lawyers and judges customarily operate.

The opinion and award the arbitrator writes is a document

intended to answer a specific question rather than set forth any

legal principles. Accordingly. we do not require-labor arbitrators

to make the sorts of explicit or exhaustive “findings of fact™ we

demand of district courts: likewise, the reasons for arbitral rulings

need not be spelled out in detail. Indeed. “[a]rbitrators have no

obligation. . to give their reasons for an award” at all. United

Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363 US.

$93, $98. 80 S.Ct. 1358. 1361. 4 L.Ed.2d 1424 (1960) (“Enter-

prise Wheel”)

A-|4

As to the bases for an arbitrator's award, commentators and

courts have long recognized that the arbitrator is entitled, and is

even expected. to range afield of the actual text of the collective

bargaining agreement he interprets:

The labor arbitrator's source of law is not confined to the

express provisions of the contract. as the industrial com-

mon law—the practices of the industry and the shop—is

equally part of the collective bargaining agreement

although not expressed in it.

Warrioryv. Gulf, 363 U.S. at $81-82, 80S.Ct. at 1352-53. Sucha

construction of the contract and the arbitrator's function is

required by the nature of the bargaining process itself. Since

labor contracts are negotiated and “written with industrial prac-

tices and psychology in mind.” arbitrators must draw from their

personal knowledge of the workplace and the relevant industry

when they make their awards. Judicial Review, 75 Mich.L.Rev.

at 1147-48: see also Pacific Northwest Bell Tel. Co. v. Communi-

cations Workers of Am., 310 F.2d 244, 246 (9th Cir. 1962)

(“collective bargaining contracts by their very nature cannot

fairly be limited to their express provisions” ).

C. Judicial Review of Arbitrators’ Awards

[4] The implication of the preceding section for a court

reviewing the award of a labor arbitrator is clear. Unfamiliar

with “the practices of the industry and the shop.” courts are not

competent to second-guess an arbitrator's judgment. Further-

more. since there is nothing proscribed, or even imprudent. about

the taking of “arbitral notice” in the formulation of an arbitra!

‘ award and no requirement (or even a reasonable expectation)

that an arbitrator write an exhaustive “opinion,” a court often has

no principled ground upon which to question an arbitrator's ratio

decidendi. More importantly. a court is barred from disregard-

ing the arbitrator's factual determinations, let alone supplement-

ing them with its own, or from “correcting” an arbitrator's

erroneous understanding of the law. Sheet Metal Workers v

4rizona Mechanical & Stainless, Inc., 863 F.2d 647, 653 (9th

——————

A-15

Cir. 1988) ("Sheet Metal Workers”); American Postal Workers

Lniony. United States Postal Service, 682 F.2d 1280, 1284 (9th

Cir. 1982). cert. denied, 489 US. 1200, 103 S.Ct. 1183. 75

L.Ed.2d 431 (1983).

This approach to judicial review of labor arbitration awards

found its first important expression in three 1960 Supreme Court

cases. two of which have been mentioned already, which have

come to be known as the “Steelworkers Trilogy.” Accordingly.

any discussion of judicial review issues should include a descrip-

tion of Justice Douglas’ opinions for the Court in Steelworkers of

Americay. American Manufacturing Co., 363 U.S. 564, 80 S.Ct.

1343. 4 L.Ed.2d 1403 (1960) (“American Manufacturing” ):

Lnited Steelworkers of America v. Warrior & Gulf Navigation

Co., 363 US. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)

(treated in a related context, supra, at 1205-1206): and United

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

LS. §93, 80 S.Ct. 1358. 4 L-Ed.2d 1424 (1960).

In American Manufacturing, the Court expressed for the first

time the proposition that courts must refrain from “depriving” a

party toa collective bargaining agreement of its right to a hearing

before an arbitrator. The Court. emphasizing the “therapeutic

values” of arbitrating even seemingly frivolous claims, 363 U.S.

at 567-68. 80 S.Ct. at 1346-47, ruled that enjoining arbitral

proceedings would be improper even in a case in which the appro-

priate resolution of the issues would ordinarily be deemed to be

“bevond dispute.”

Warrior & Gulf explained the unique character of the collec-

tive bargaining agreement: “more than a contract.” the agree-

ment has to be seen as “a generalized code to govern a myriad of

cases which the draftsmen cannot wholly anticipate.” 363 US.

at $78, 80 S.Ct. at 1350. The opinion then proceeded at some

In one case. we affirmed a district court decision vacating an arbitral

contrary to the implicit findings of the arbitrator. World Airways, Inc v.

International Bhd of Teamsters, $78 F.2d 800, 802 (9th Cir. 1978) (per

curiam) To the extent the case validated this clearly forbidden practice. we

disapprove it

A-16

length to discuss the wide range of permissible sources of law for

the arbitrator. supra at 1206, advising courts not to be suspicious

of arbitrators awards or hesitant to enforce them merely because

an arbitrator's actions might not track those of courts faced with

analogous situations, or because the arbitrator's judgments seem

“foreign to the competence” of the federal courts. Jd. at 580-81,

80 S.Ct. at 1351-52. Finally. the Warrior & Gulf court returned

to its comparison of the relative competence of courts and arbitra-

tors in the labor field, concluding that “[t]he ablest judge cannot

be expected to bring the same experience and competence [ pos-

sessed by an arbitrator] to bear upon the determination of a

grievance. because he cannot be similarly informed [of the “com-

mon law of the shop” and the “specialized needs” of the parties] .”

Id. at $82, 80 S.Ct at 1352.

($] In terms of import for judicial review of arbitration

awards. the most significant case in the Trilogy was Enterprise

Wheel. In straightforward, almost terse. language the Court

reasoned that the “federal policy of settling labor disputes by

arbitration would be undermined if courts had the final say on the

merits of awards.” 363 U.S. at 596. 80 S.Ct. at 1360. Thus.

outright “refusal to review the merits” of arbitrators’ awards was

normally “the proper approach” for courts to follow when a dis-

gruntled party sought to challenge them. Jd. The only time in

which a court could. and indeed was obligated to, refuse to

enforce the arbitrator's award was in those cases in which the

arbitrator had “dispense[d] his own brand of industrial justice.”

issuing an award which failed to “draw[] its essence from the

collective bargaining agreement.” /d. at $97. 80 S.Ct. at 1361."

s Much has been made of these twocryptic phrases. See. e.g. Jones. supra

at 12. 30 LCLA L Rev. at 882-85 (referring to the “his own brand” test as “a

semantic slip noose around the exercise of arbitral judgment”). Indeed. the

guotation of these phrases. unaccompanied by further explanation. usually

serves as an indicator that 2 court is about to vacate an arbitrator saward. EF ¢

S D WarrenCo v. United Paperworkers Intern. Union. AFL-CIO. Local 1069

835 F 2d 3.8 (1st Cir ) (decided on “essence” grounds after the court's earlier

decision on public policy grounds. 815 F.2d 178 ( ist Cir. 1987). was vacated by

the Supreme Court. 483L S 983. 1088S Ct 497, 98 L Ed 2d 496 (1987) ). cerr

denied —LS—. 109 S$ Cr $58. 102 L.Ed.2d $82 (1988). We believe that

A-17

The Court was equally categorical in its treatment of judicial

second-guessing of the remedy formulated by an arbitrator.

stressing the arbitrators “need ... for flexibility in meeting a

wide variety of situations” and the deference to be afforded the

arbitrator's use of “his informed judgment. . .to reach a fair solu-

tion of a problem.” /d. In Enterprise Wheel, the arbitrator

tound discharge an inappropriate punishment for several employ-

ees who had left their jobs to protest the firing of a co-worker, but

had immediately returned to work when advised by their union to

do so. In the Court's words, “[i]n [the arbitrator's] view, the

facts warranted at most a suspension of the men for 10 days

each.” /d. at $95, 80S.Ct. at 1360. The Court ruled definitively

that the arbitrator's decision to reinstate the employees following

the 10-day suspensions was not subject to review, except insofar

as the court was allowed to ensure that the award had “drawn its

essence” from the arbitrator's construction of the contract. A

reviewing court, moreover, was strictly forbidden to reject the

arbitrator's choice of punishment “merely [because it] dis-

agreed” with it. 363 U.S. at 598, 80 S.Ct. at 1361.

Finally, the Enterprise Wheel court referred to two tempta-

tions to which courts might fall prey, both of which have already

been discussed briefly above. Looking first at the acknowledged

likelihood that the written renderings of some awards might be

ambiguous, the Court advised that “mere ambiguity in the opin-

1on accompanying an award, which permits the inference that the

arbitrator may have exceeded his authority, is not a reason for

refusing to enforce the award.” 363 US. at 598, 80 S.Ct. at

1361: cf. supra at 1203 n. 3 and 1207. General references to

“ambiguity” were not to serve as excuses for judicial rehearing of

‘a grievance. Second. the Court explicitly commented on the

courts must apply the “his own brand’ or “draw its essence” exceptions to

judicial deference in the same way in which we have held that they must apply

the “public policy” exception. In both circumstances. “[j]udicial scrutiny of an

arbitrator s decision 1s extremely limited.” Sheet Metal Workers, 863 F.2d at

653 (emphasis supplied )

A-18

“misinterpretation” problem discussed already (at 1205-1206).

In terms which admit of no dispute, the Court cautioned:

It is the arbitrator's construction which was bargained for:

and so far as the Arbitrator’s decision concerns construc-

tion of the contract, the courts have no business overruling

him because their interpretation of the contract is differ-

ent from his.

Id. at 599, 80 S.Ct. at 1362.

This circuit has adhered to, and elaborated on, the spirit of the

Trilogy ’s admonitions. A recent decision aptly summarizes our

approach to judicial review of arbitration awards:

Judicial scrutiny of an arbitrator's decision is extremels

limited. The arbitrator's factual determinations and legal

conclusions generally receive deferential review as long as

they derive their essence from the [collective bargaining

agreement]. If, on its face. the award represents a plausi-

bie interpretation of the contract, judicial inquiry ceases

and the award must be enforced. This remains so even if

the basis for the arbitrator's decision is ambiguous and

notwithstanding the erroneousness of any factual findings

or legal conclusions.

Sheet Metal Workers, 863 F.2d at 653 (citations omitted).

At umes, we have expressed these propositions in slightly dif-

ferent, though substantively indistinguishable, terms. See, e.g..

Pack Concrete, Inc. v. Cunningham, 866 F.2d 282, 285 (9th Cir

1989) (emphasizing the “extremely narrow” scope of review of

arbitral decisions); Local Joint Executive Bd. of Las Vegas v.

Riverboat Casino, Inc., 817 F.2d 524, $26-27 (9th Cir. 1987)

(“not the court’s role to determine whether the arbitrator has

reached the same result the court would have reached”) (cita-

tions omitted): Orange Belt Dist. Council of Painters No. 48 v.

Kashak, 774 F.2d 985, 990 (9th Cir. 1985) (“Orange Belt”)

(arbitral award must be enforced “‘even if the basis for the

decision is ambiguous, and notwithstanding the erroneousness of

any factual findings or legal conclusions”) (quoting George Day

Construction Co. v. United Bhd. of Carpenters and Joiners of

eel

A-19

Am., Local 354, 722 F.2d 1471, 1477 (9th Cir. 1984) ); Broad-

wav Cab Co-op v. Teamsters & Chauffeurs Local Union No. 281,

710 F.2d 1379. 1382 (9th Cir. 1983) (federal court “ordinarily

engages in only a very limited review of an arbitrator's decision.”

reviewing “the arbitrator's resolution of [a] question under the

Steelworkers Trilogy standard even if the question Is one that is

ordinarily for the courts to decide’) (citations omitted).

There is no orthodoxy with respect to the manner in which

courts must express their deference to arbitrators’ awards and no

problem with varving expressions so long as the scope or degrees

of deference is not diminished. What is important is that the

language recited at the beginning of our opinions not be forgotten

when it comes time to apply those principles to the facts of the

individual case. Deference is the rule: rare indeed is the

exception

D. The Public Policy Exception

[6] One of the exceptions to the requirement that courts defer

to the awards of arbitrators is the now-settled rule that a court

need not. in fact cannot. enforce an award which violates public

policy.” The contours of this exception as applied in the arbitra-

tion context were first outlined by the Supreme Court in WR.

Grace & Co. v. Local Union 759, 461 U.S. 757. 103 S.Ct. 2177.

76 L.Ed.2d 298 (1983) (“Grace”). In Grace, the Court dealt

with a conflict between a collective bargaining agreement. which

gave seniority to certain male employees. and a consent decree

between the emplover and the EEOC designed to settle a sex

discrimination suit under Title VII. When the male employees

lost the seniority guaranteed by the collective bargaining agree-

ment because of the implementation of the consent decree. they

sought arbitration. An arbitrator held that. irrespective of the

9. As many have recognized. this “exception” is actually nothing more than

2 specific application of the general rule that a court cannot enforce any contract

that contravenes public policy. Judicial Review. 7S Mich.L.Rev. 2: 1155: 6A

Corbin on Contracts § 1375 at 10 (1962)

A-20

consent decree. the emplover had breached the seniority provi-

sions of the agreement and ruled for the emplovees. 461 US. at

759-64, 103 S.Ct. at 2179-82.

In the course of confirming enforcement of the arbitration

award, the Court discussed the public policy exception. Beginning

with the proposition that, “[a]s with any contract. . .a court may

not enforce a collective-bargaining agreement that is contrary to

public policy.” the Court ruled that questions of public policy

were properly answered in the courts and that. if a court found an

arbitral award violated public policy. it would be “obliged to

retrain from enforcing it.” Jd. at 766. 103 S.Ct. at 2183.

The Court then sought to give some content to the term “public

policy.” For an asserted public policy to be sufficient to preclude

enforcement of an arbitrator's award, it had to be “explicit:”

furthermore, it had to be “well defined and dominant.” /d

Finally. such a policy could be satisfactorily demonstrated or \

‘by reference to the laws and legal precedents” and could not be

the product of the parties’ or the courts’ “*general considerations

of supposed public interests.” Jd. (quoting Muschany v. United

States, 324.U.S. 49, 66, 65 S.Ct. 442. 451, 89 L.Ed. 744 (1945) )

Although Grace's careful description of “public policy” was

intended to constrain the application of the public policy excep-

ton, the Court's explicit recognition of the exception had a coun-

tervailing impact in the lower courts. and “public policy” became

awards of labor arbitrators. This reaction prompted a more

definitive statement from the Court in United Paperworkers Int’!

Union. AFL-CIO v. Misco, Inc., 484 U.S. 29, 108 S.Ct. 364. 98

L.Ed.2d 286 (1987) (“Misco”). In Misco. an emplovee was

discharged after a marijuana cigarette was seen in a car in which

he was sitting. The employee's job duties included operating a

“slitter-rewinder.” a machine the arbitrator termed “hazardous.”

The arbitrator ordered reinstatement with backpay. finding that

the employer had failed to prove that the emplovee had actually

Possessed or used illegal substances while on company property

A-2]

; oe aS

hat he had violated anv company rule. 108 S.Ct. at

The Fifth Circuit had affirmed a district court decision vacat-

ing the award. reasoning that reinstatement would violate the

public policy “against the Operation of dangerous machinery by

persons under the influence of drugs or alcohol.” Misco. Inc. v.

Cnited Paperworkers Intern. Union, 768 F.2d 739. 743 (Sth Cir.

1985). The Supreme Court unanimously reversed, holding that

the circuit court had failed to follow the dictates of Grace with

respect to the articulation and application of a public policy

necessitating the invalidation of the arbitrator's award.

The Court began by reaffirming the “explicit’ and “wel!

defined and dominant” requirements expressed in Grace, 108

S.Ct. at 373, saying that the result in that case had “turned on

|1ts] examination of whether the award created any explicit con-

flict with other ‘laws and legal precedents’ rather than an assess-

ment of ‘general considerations of supposed public interest.” /d

(quoting Grace, 461 US. at 766, 103 S.Ct. at 2183). “At the

very least.” Justice White continued for the Court. “an alleged

public policy must be framed under the approach set out in WR

Grace, and the violation of such a policy must be Clearly shown if

an award is not to be enforced.” Jd. 108 S.Ct. at 373-74

The Court conciuded that the Fifth Circuit's articulation of a

general “public policy” against drug use by employees violated

the strict requirements of the Grace formulation: that no violation

t the public policy it articulated had been “clearly shown” in any

icy anaivsis. improperly drawn an inference (that the

employee was in fact using drugs in the workplace) at odds with

(nat. upon reinstatement, the empiovee would return to his siitter-rewinder

Lal

"O68 F.2d at 740-4]. while the Supreme Court interpreted the award to order

reinstatement to the empiovee s @ jOD or an equivaient one for which he

ied.” 8 S.Ct. at 3% As neither opinion recites the text

ed ® umelis tn Aebaocitin eh rance nrec; te what the

2Wwarc. we are unabie t cetermine wit assurance precisely to wha ne

A-22

the findings of the arbitrator. 108 S.Ct. at 374. Explicitly dis-

approving the latter endeavor. the Court said:

The parties did not bargain for the facts to be found by a

court, but by an arbitrator chosen by them ... Nor does

the fact that it is inquiring into a possible violation of

public policy excuse a court for doing the arbitrator's task.

Finally. in words reminiscent of its discussion more than a

quarter century earlier in Enterprise Wheel (supra at 1208-

1209). the Court reaffirmed the deference to be afforded an arbi-

trator s choice of remedy:

Had the arbitrator found that [the employee] had Dos-

sessed drugs on the property. yet imposed discipline short

of discharge because he found as a factual matter that

(he} could be trusted not to use them on the job. the Court

of Appeals could not upset the award because of its own

view that public policy about plant safety was threatened

108 S.Ct. at 374.

The Misco court expressly reaffirmed Grace in rejecting the

notion that there existed any “broad judicial power to set aside

arbitration awards as against public policy.” 108 S.Ct. at 373

More important for our purposes. it explicitly contrasted the

“broader view” of court power which it implicitly rejected later in

the opinion with the “narrower view™ taken historically in this

circuit and the D.C. Circuit. 108 S.Ct. at 369 n! 7. 373 (citing

Bevles Co. v. Teamsters Local 986, 791 F.2d 1391 (9th Cir

In a footnote. the Misco court said that it was reserving the question

whether refusal to enforce an award on public policy grounds required a show-

ing that the “award itself violates a statute. regulation. or other manifestation of

Positive law. or compels conduct by the empiover that would violate such a law ”

108 S.Ct. at 374-75 n. 2 (sic). We do not read this footnote as in any way

compromising the Court's reaffirmation of Grace's “explicit. well defined and

cominant” standard. let alone detracting from the opinion’s untempered rebuke

of courts that Mnd facts or draw inferences concerning an arbitrated grievance

desond those expressed in the text of the arbitral award itself. Nor do we read it

2s calling into question the proposition that. however the public policy itself is

established. it 1s the arbitrator's award which must violate it if the pudlic Policy

EXCEPLION IS to apply

A-23

‘986). cert. denied, 484 U.S. 985, 108 S.Ct. $00. 98 L.Ed.2c 499

(1987). and Northwest Airlines, Inc. v. Air Line Pilots Ass'n

Int'l, 808 F.2d 76 (D.C. Cir. 1987) cert. denied antl Bain, 108

S.Ct. 1751. 100 L.Ed.2d 213 (1988)). Our “narrow view is one

we reemphasize today.

In Bevles, we refused to vacate an arbitrator's award on public

Policy grounds. noting both the limited nature of our review of

such awards in general and the failure of the emplover challeng-

ing the award to meet the “explicit, well defined and dominant”

pubdlic policy standard set forth in Grace. 791] F.2dat 1392-93 &

n. 2. Bevies sits squarely within a line of cases in which we have

adhered to a narrow construction of the public policy exception

See e.g. Orange Belt, 774 F.2d at 990 (quoting and citing George

Dav Construction Co.. 722 F.2d 1471. 1477 (9th Cir. 1984) )

Cf. American Postal Workers, 682 F.2d at 1286 (arbitration

award will not be enforced if it would force a Party to perform a

manifestly illegal act)

The case most critical to our decision today is Amalgamated

Transit Union. Aztec Bus Lines, 684 F.2d 642. 643-44 (9th Cir

(981) (per curiam) (“Aztec Bus Lines”). In Aztec Bus Lines.

we refused to vacate the award of an arbitrator who had ordered

reinstatement following a suspension for a bus driver who had

<nowingly driven a bus whose fau!ty brakes caused it to “dive and

rock.” In that case. the driver had even been advised by a police

officer not to continue to operate the bus “if there was any ques-

tion as to its safety.” 654 F.2d at 643. Although the case

Preceded both Misco and Grace, we recognized that Enterprise

Wheel itself forbade judicial reevaluation of the arbitrator's cho-

sen remedy and that the employer's claim that reinstatement

would violate public policy was flawed and inadequate. In words

that foreshadow our decision today, we wrote:

_N]o California statute has been called to our attention

which would make it illegal to employ bus drivers who

have previously shown bad judgment. Furthermore, the

arbitrator did not approve of [the bus driver's] behavior

He merely concluded that, under the circumstances, a two

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A-26

in arDitral judgment of an emplovee's “amenability to discipline”

s 4 factual determination which cannot be questioned or rejected

Os a reviewing court. 108 S.Ct. at 374: see also United States

Postal Ser, v. National Ass'n of Letter Carriers. 839 F.2d 146.

49 (3d Cir. 1988). Judgments about how a specific emplovee

will perform after reinstatement if given a lesser sanction are

to Getermine appropriate punishments and remedies. See Misco.

1OS S.Ct. at 372; Enterprise Wheel, 363 U.S. at $97. 80 S.Ct. at

|361 (general proposition that courts must allow an arbitrator to

use his “informed judgment. . to reach a fair solution of a prob-

lem” is “especially true when it comes to formulating remedies” ):

supra at 1208. This rule is supported by the significant societa!

interest in the rehabilitation of workers who err in the workplace

All of us benefit from employees who perform their jobs safels

and properly. All of us suffer when potentially productive work-

ers are relegated to the unemployment lines

Ours is one of the cases of which Misco spoke. Arbitrator

Le Prohn indicated that Rocks could be rehabilitated. stating

that “[d] iscipline is aimed at rehabilitation: reinstatement with a

one-hundred and twenty (120) day [sic] suspension should serve

45 an object lesson and impress upon [Rocks] that he is required

to follow instructions and perform his job duties fully and care-

fully.” In the face of this statement. we are forbidden to substi-

tute our judgment about Rocks’ susceptibility to rehabilitation or

about whether 120 days. as opposed to 90 days. 150 days. or

forever. is the length of “non-emplovment™ necessary to ensure

that he learns his “object lesson.”

Bearing in mind what we have emphasized already about the

character of arbitrators’ written awards, it should be clear that we

do not require an express “finding” that a grievant can be rehabil-

itated or. to borrow from the Misco court. is otherwise “amen-

adi(e}] to discipline.” See supra at 1210. We apply the same

Gelerential review to an award’s statements concerning rehabili-

tation that we apply to other aspects of the award. Even if we

A-27

were to view the reference to rehabilitation in the award as noth-

ing more than an abstract observation. we would be reyuired to

reach the same result. A court cannot infer. from the mere fact

that an award orders reinstatement but is silent on the subject of a

grievant's rehabilitation or “amenability.” that the arbitrator did

not consider the question: nor can it make an independent judg-

ment in such a case. Simply put. we look to the text of the

arbitral award for an expression of an arbitrator's reasons for his

decision. but we do not infer the non-existence of a Particular

reason merely from the award’s silence on a given issue. Indeed.

the Supreme Court has determined that a court Cannot set aside

an arbitrator's award. which far from merely deing silent. was

affirmatively ambiguous. and arguably supported a claim that the

arbitrator had exceeded his authority. Enterprise Wheel. 363

LS. at $98. 80 S.Ct. at 1361 (court cannot infer that arbitrator

exceeded his authority merely because his award gives ambiguous

support for the proposition ). Unquestionably. then. Arbitrator

Le Prohn’s references to rehabilitation are more than sufficient. ‘

There are two decisions by courts of appeals in other circuits

that. even while acknowledging the proscriptions of Grace and

Misco. have overturned arbitrators’ orders of reinstatement on

public policy grounds. Delta Air Lines v. Air Line Pilots Ass'n

Int'l, 861 F.2d 665. 671-74 (11th Cir. 1988). and Jlowa Elec

Light & Powery. Local Union 204. of Int'l Bhd. of Elec. Workers.

S34 F.2d 1424. 1427-29 (8th Cir. 1987). In lowa Electric. the

Eight Circuit concluded that there was “a wel] defined and domi-

nant national policy requiring strict adherewce to nuclear Safety

rules. /d. at 1427. and refused to allow reinstatement of a

nuclear power plant emplovee who had compromised a reactor

safety system in order to leave for lunch early. despite an arbitra-

tor’s finding that termination for this “deliberate violation” was

+ We need not consider here the power of the court to vacate an arbitra

aware in the case where the arbitrator has concluded that the grievant is nor

edject to rehabilitation and then orders reinstatement (on the ground. for

cXsmMpic. OF 4 Procecurai or contractura! violation bs the emplover :- the course

' the Cischarge) even though the grievant's future conduct :s lihcis LO pose a

-OMUINUINE TISK LO Nis CO-WOrkers or the puDdiic

A-25

“too severe” a sanction. 834 F.2d at 1426. In Delta, the Elev-

enth Circuit vacated an arbitrator's order reinstating a commer-

cial airline pilot who had flown his plane while drunk. finding a

public policy sufficient to vacate the order of reinstatement from

the fact that the laws of almost every state and the federal govern-

ment made operating an aircraft while intoxicated illegal. 861

F.2d at 672-74

These are “hard” cases, reflecting situations in which the lives

of many people may have been directly placed at risk by the

actions of the employees in question. Be that as it may. to the

extent that these cases apply analyses inconsistent with our read-

ing of Misco. we decline to foliow them. On the other hand. it is

possible that the Eighth and Eleventh Circuit results can be

explained by reference to theories which, though unaddressed in

Visco. are not necessarily inconsistent with it

First. with respect to the Eighth Circuit's decision, it is conceiv-

able that a court could. upon examining the regulatory scheme.

conclude that a public policy exists with respect to the nuclear

power industry barring reinstatement of anyone who has compro-

mised a safety rule. It may be reasonable to fer. from a careful!

consideration of the nature and scope of the statutes and regula-

tions themselves. a public policy both more strict and of far wider

application than that applicable to other industries. We see sup-

port for this theory in the two Eighth Circuit cases dealing with

nuclear power plants. In Jowa Electric, the court began its dis-

cussion of public policy with a detailed description of federal!

regulation of the industry. noting that the government had been

“heavily involved in the planning. construction, and operation of

nuclear plants since the enactment of the Atomic Energy Act and

creation of the Atomic Energy Commission [the forerunner of

the current Nuclear Regulatory Commission (NRC) |] in 1954.”

834 F.2d at 1428. The “strict regulatory scheme.” the court

observed. had been “devised by Congress for the protection of the

public from the hazards of nuclear radiation.” Jd. Federal

involvement was so pervasive that “[a] ny violation of any rule[ }~

had to be reported to the NRC. which. in turn, was required to

inserter niente

A-29

ssue penalties against the facility. /d. Similarly. the other

Eighth Circuit case dealing with the nuclear power industry.

Daniel Construction Co. v. Local 257, IBEW, 856 F.2d 1174 (8th

Cir. 1988). cert. denied, _U.S.—. 109 S.Ct. 1140. 103 L.Ed.2d

200 (1989). detailed the NRC's involvement in setting standards

tor nuclear plant security even to the point of issuing criteria for

the administration of mandatory psychological tests for those

who would be in “sensitive” positions within the plant. /d. at

76. We need not. and do not. determine whether the unique

satety concerns embodied in the regulations and statutes gov-

erning the nuclear power industry are sufficient to establish a

public policy barring reinstatement of employees who commit

safety violations. We merely offer one possible explanation for

the Eighth Circuit's decision in Jowa Electric.

Second, although in a similar vein, the court in Jowa Electric

was writing against a backdrop of explicit agency action with

respect to the parties and the incidents in question. The NRC

had explicitly reprimanded the employer for its employee's

Oreach of reactor safety and approved the discharge. 834 F.2d at

1428. The validation of the employer's discharge decision by the

tederal regulator might reasonably be construed as an “explicit.

well defined and dominant” expression of a public policy as

applied to the facts of the case. Viewing the NRC's actions from

this perspective, the arbitrator's reinstatement award might be

said to have violated public policy, albeit the 4d hoc one expressed

through a specific regulatory determination ‘regarding the

grievant

A similar rationa'e might also explain how, on its particular

tacts. the Eleventh Circuit’s Delta panel could have reached the

result it did and still have persuasively distinguished the appar-

ently conflicting result of a decision of the D.C. Circuit (cited in

Misco as illustrative of the narrow rule the Court ultimately

approved. 108S.Ct. at 369 n. 7) which ordered reinstatement of a

commercial airline pilot who had admitted to flying his plane

while drunk on several occasions. .Vorthwest Airlines vy. Air Line

Pilots Ass'n, Int'l, 808 F.2d 76. 78-79 (D.C. Cir. 1987). cert.

A-30

denied, _US.—. 108 S.Ct. 1751. 100 L.Ed.2d 213 (1988).

There is an important factual difference between the two cases

directly relevant to our discussion of the potential significance of

specific agency action for individual public policy determinations.

In Northwest. the Federal Aviation Administration (“FAA”)

had recertified the pilot following his completion of an alcohol

rehabilitation program. This recertification represented a spe-

cine conclusion that. in the view of the federal regulator. the pilot

was “ht and qualified to fly.” 808 F.2d at 83. (Indeed. the

arbitration board in that case had conditioned its reinstatement

award on FAA recertification. /d.) In Delta, the FAA had

suspended the grievant's license and medical certification. 861

F.2d at 668. n. 3. indicating that in its view he was neither “fit”

nor “qualified” to do so. Taken together. the Jowa Electric.

Delta, and Northwest cases would appear to support a notion that

specific action by a regulatory or other administrative agency

might provide some form of ad hoc “legal precedent” within the

meaning of Grace and Misco sufficient to justify invalidation of

an award on public policy grounds.

Notwithstanding the above. we must conclude that the Elev-

enth Circuit's opinion in Delta is. to a large extent. simply inconr-

sistent with the law as expressed in Grace and Misco. The

Eleventh Circuit did not rely on the FAA’s determination. allud-

ing to it Only in passing in a footnote. 862 F.2d at 668 n.3.

Instead. the De/ta court reasoned that. since what the pilot had

done in fiving drunk was illegal. the “performance of his emplov-

ment [was] the very thing which offends public policy” and thus

reinstatement was impermissible. 861 F.2d at 674. As we have

explained. the critical inquiry is not whether the underlying act

tor which the emplovee was disciplined violates public policy. but

S Again. we emphasize that we do not decide whether public policy can be

expressed Dy specific agency action in individual cases. The cases discussed in

(Me text raise an interesting and difficult question in this regard. None of the

ec cases provides a clear answer. let alone one binding on this circuit. The

er to tne question thes raise will have to await a case in which the issue is

7? | Arecerte

’ Dpresentec

A-3]

whether there is a public policy barring reinstatement of an indi-

vidual who has committed a wrongful act. Grace. 461 US. at

766. 103 S.Ct. at 2183: Misco. 108 U.S. at 373. supra at 1212-

1213. Besides being inconsistent with the Supreme Court's

determination that it is enforcement of the award which must be

deemed violative of public policy, we think the Eleventh Circuit's

approach would produce, at best. curious results. Ifthe perform-

ance of an illegal act while on the job is all that must be proved to

cemonstrate the violation of a public policy for purposes of Grace

and Misco, then an arbitrator would be prohibited from reinstat-

ing any teamster who receives a speeding ticket while driving the

company truck, or even an inventory clerk who commits a single

act of petty theft.” Grace and Misco do not countenance such

results.

16 The dissent’s treatment of this observation reveals the fatal limitations

ot the approach it advocates. The dissent explicitly endorses the De/ra court's

rationale. Quoting. even underlining. that portion of the Eleventh Circuit opinion

which precludes arbitrators from reinstating those employees who engage in

“disfavored conduct which is integral to the performance of employment

Cuties.” (Dissent at 1221. quoting Delta, 861 F.2d at 671.) Nevertheless.

when confronted with two common examples of the results this approach would

require. the dissent beats a hasty retreat, asserting without explanation that the

Delta approach “would not flatly prohibit the reinstatement via arbitration of a

speeding truck driver...“ (Dissent at 1223.) The obvious Question raised bs

this assertion is why truck drivers—whose reckless driving endangers the safets

t all who drive the roads—can be reinstated. while mechanics—whose errant

actions pose indistinguishable risks to those on the highways—cannot Assum-

ing that the dissent does not really intend to lay down an auto mechanic rule but

4 truck driver exception. it appears that it envisions something far bevond Delta.

Namely 2 system in which the courts. rather than the “non lawyer arbitrators”

«ho cannot be trusted to “vindicate the public interest in health and safets™ ( see

Dissent at 1223). look to the “totality of facts and circumstances of the case” | p

'223) and themselves determine whether reinstatement is appropriate or

«nether some form of punishment is warranted. The adoption of such a totality

of the circumstances test would violate the teachings of Misco. the Steelworkers

Trilogy. and the thirty vears of cases in between. bs making judges the arbitra!

‘actnnders. indeed. the masters of a process in which (as the Supreme Court has

repeatediy emphasized over the past three decades) the judicial role must be a

strictly iimited one

We note. however, that the relationship of as alleged miscreance to the

eMp'ovee s job is an important factor for the arbitrator to consider « Men assess-

ng the propriety of the remedy

Returning to the rationales which. we suggested, might explain

the results in Jowa Electric and Delta, we note that Rocks’ case

does not ft within either one. First. while the automotive repair

industry 1s regulated by the state and while we do not minimize

the risk that an improperly maintained automobile can cause

injury to Its occupants or to others, the nuclear power industry is

unique both with respect to the magnitude of the risk that results

trom negligent or reckless employee conduct and the comprehen-

siveness of governmental! regulation. Second. there has been no

specific agency determination in Rocks’ case. Stead Motors has

never claimed that the Bureau of Automotive Repair or some

other California regulatory entity has sought to terminate Rocks’

right to work as a mechanic because of his conduct in relation to

the lug bolt incident: nor has it contended that the agency has

taken any action against it. These observations lead us to con-

clude that the Eighth and Eleventh Circuit cases. while thought

“ovoking. are of at best marginal relevance to our Inquiry.

We stand at last before the ultimate question: is there an

explicit. well defined and dominant public policy in California

that bars reinstatement of a mechanic who commits a reckless act

in the course of his employment? Simply put. we think not.

We have found nothing in the record of this case. in the argu-

ments of counsei. or in our inquiry into the “laws and legal prece-

dents” of California which supports the existence of the specific

public policy necessary to justify vacating the arbitral award in

this case. The two sections of the California Code discussed

above (at 1204) neither constitute the sort of laws and legal

precedents necessary for the valid expression of an “explicit. well

defined and dominant” public policy nor are they sufficient!

directed at the type of problem before us. They do make it

unlawful to operate a vehicle “which is in an unsafe condition”

and they do establish a state bureau to inspect and certify auto

repair facilities. Violations of the regulations promulgated by

the bureau can be sanctioned in a variety of ways, the harshest of

which 1s revocation of the facility's certification. See California

Vehicle Code § 24002: Business and Professions Code § 9880.

A-33

9884.7. These provisions may signify the legislature's perception

of a broad public interest in safe cars and trucks: as such they

would represent the state's general policy. the expression of its

“general consideration of supposed public interests.” The provi-

sions represent precisely what Misco and Grace tell us is insuffi-

cient to form an “explicit well defined and dominant” public

policy. 461 U.S. at 766. 103 S.Ct. at 2183: 108 S.Ct. at 373.

More important, there has been no showing that Rocks’ rein-

‘statement violates public policy. To borrow and modify the lan-

guage of 4zrec Bus Lines, “no California [policy] has been called

to our attention which would make it illegal to employ [an auto

mechanic] who h[as] Previously [committed a reckless act].”

654 F.2d at 644. As we explained supra at i215, we reject the

approach of the Eleventh Circuit that. simply because an

employee has committed some act which violates a law Or a public

policy in the course of his employment. his reinstatement would

also necessarily violate that public policy. This argument is fal-

‘acious, reflecting precisely the analytical error in Stead Motors’

<rgument here. for it is only if the grievant is likely to engage in

wrongful conduct which violates public policy in the future that

his reinstatement could be said to violate public nolicy. If we

assume the existence of the public Policy posited by the origina!

anel’s opinion, it may be true that Rocks’ conduct ran afoul of it

in the past. But we are not free to assume that Rocks would. if

appropriately disciplined. run afoul of it in the future. As we

have emphasized throughout, it is the function of the arbitrator.

not the courts, to make assessments with respect tO appropriate

punishments and to determine the likelihood of rehabilitation—a

judgment about whether the grievant will engage in future

wrongdoing, supra at 1208-1209. 1211. 1212-1213. With

respect to the award we consider here. we have already made

clear that Arbitrator Le Prohn conclusively determined the issue

of rehabilitation in Rocks’ favor.

There are two possible alternative explanations for the result

reached by the district court. Both are illegitimate. First. the

district court might have concluded that the arbitrator s decision

4-34

n favor of a 120 day suspension was insufficient. as a retributive

matter, to punish a once-reckless employee sufficiently and that

the general public policy it had ostensibly identified ( but did not

articulate. supra n. 5) could be served only through the ultimate

emplovee sanction, termination. To the extent that this, or simi-

ar second-guessing,. motivated the district court. we must reiter-

ate. now for the final time. that if the court so acted it acted

improperly

Second. it is possible that the court felt that the arbitrator's

belief that a suspension would teach Rocks a lesson was errone-

ous. Although from one perspective, one cannot quarrel with a

judge who honestly believes that a reinstated emplovee may be

reckless in the future, Misco explicitly advises that upsetting the

arbitrator's award on this ground is impermissible, however laud-

able the judge’s motivation. Courts are strictly barred from

engaging in fact-finding when they review labor arbitration

awards. Again, to paraphrase. this time Misco

Had the arbitrator found that Rocks had been reckless in

improperly tightening the lug bolts. vet imposed discipline

short of discharge because he found as a factual matter

that he could be trusted not to do so in the future. the

Court of Appeals could not upset the award because of its

own view that public policy about automobile safety was

threatened.

108 S.Ct. at 374

The parties did not bargain for a court's judgment They

bargained for an arbitrator to tell them what was “just cause” for

discharge and what was not. In so doing. they chose a method of

resolving their differences and definitively interpreting their bar-

gain. Each side obtained certain advantages from the arrange-

ment. Neither had the right to believe that it could refuse to

honor an arbitrator's award simply because it was disappointed

by or disagreed with the result in a particular case. We find that

the arbitrator did everything the parties requested him to do: he

did nothing more, and nothing he did was illegal or violated public

policy. Our inquiry goes no further

‘

REVERSED and REMANDED with instructions to confirm the

roc

iWa

TROTT, Circuit Judge. dissent ing. in which dissent Circuit

7 NOONAN concurs

ge Reinhardt’s scholarly opinion is impressive. It provides

an excellent review of the law governing this case. as well as the

policies at stake. But. in my respectful view. like a column of

correct numbers added 1 up improperly, the bottom line is wrong

When I first read the opinion. I could not help but be reminded

tf an incident that occurred off the coast of Hawaii a year or so

ago. Part of the skin blew off an Aloha Airliner in flight. expos-

ing the crew and passengers to the possibility of a crash landing at

sea and almost certain death. One person was sucked out of the

fuselage and killed. Incredibly. the two pilots pulled off a mira-

cle, landing the seriously crippled aircraft without further inci-

dent The two pilots shortly thereafter were Interviewed as

eroes On one of the network morni ng television shows. As |

ched them describe their brush with death. I was astounded

by their cool and professional demeanor. as well as their amazing

skill. But, as much as anyt hing else. I will always remember the

response of one of the pilots when asked at the end of the inter-

view if she had any advice for airline Passengers as a resuit of this

experience. She smiled and said. “Just remember to keep vour

seat belts fastened.”

The pilot’s remark is not only good advice for airline passen-

gers. but it is now good advice for customers of Stead Motors and

for other motorists who drive on the same Streets with them in

Contra Costa County. California Why? Because this court

today reinstates ro the same position from which he was fired an

auto mechanic who has demonstrated without a doubt by his

reckless and obstinate conduct that he has a Propensity not to affix

_ ly wheels to the cars that depend on them for safe Passage:

and, to add insult to injury, he was ordered reinstated with Partial

Jud

back pay

The facts and circumstances surrounding Gale Rocks’ activi-

tles—for which he refused to accept responsibility —are described

4-36

bs the arbitrator in his Opinion and Award dated Novemb-r 3.

1986 as follows

On October 10. 1984. Grievant received a warning for

“[failure] to use basic industry-wide safety procedures”

The warning stated in pertinent part as follows:

After installing the left rear tire, you failed to prop-

erly tighten the lug bolts which caused all but 2 of the

bolts to fall off. The 2 remaining bolts came so loose

that the wheel almost came off while this owner was

driving at highway speeds in San Francisco.

Your gross negligence was brought to our attention after

this owner returned to us so we could replace the miss-

ing lug bolts

In September of 1985, Grievant was involved in an argu-

ment with Shop Foreman Alan Banks concerning the

Proper procedure for tightening the lug bolts when tires

are put back on a vehicle. Following this dispute. Griev-

ant was advised that the Shop Foreman had absolute

authority to determine policy, that Grievant was not

authorized to disregard instructions from the shop fore-

man, and that he was required to mount and “torque” the

wheel as instructed.

The incident which precipitated the termination occurred

on October 14. 1985. On that date. Grievant performed

certain repair work, including the replacement of brake

pads which required the removal of the front wheels. on a

vehicle owned by customer Richard Diebert. The

Employer's work order reflects that Grievant was the only

employee who worked on the subject vehicle. He com-

pleted the work at about 1:00 p.m. and Diebert picked up

the car and drove to his residence. a distance of about ten

miles, at about 4:00 pm.

Shortly thereafter. Diebert called Sheehan and reported

that in the course of driving home he noted a “very heavy”

vibration in the front end of the car. Sheehan immedi-

ately dispatched emplovee Joe Lvons to the Diebert home

to inspect the vehicle. Lyons discovered that four lug

Dolts on the left front wheel were loose and the fifth was

missing: in addition. three lug bolts were loose on the right

front wheel. Lyons tightened all of the loose bolts and

replaced the missing one Shop foreman Brad Gibson

A.3

subsequently inspected the car at the Employer's facility

for possible damage to any parts but no damage was

identihed

In the course of investigating this matter. Sheehan noted

that it appeared from the work order that Grievant was

the only employee who worked on Diebert’s vehicle and he

discussed the matter with the emplovee. Grievant

asserted that he could not “accept” that he was responsible

tor the problem. Sheehan made the decision to terminate

Grievant and issued a letter dated October | 5 which stated

in pertinent part as follows:

On October 10, 1984 you were given a warning letter

for this same reason. wheels being left loose.

Due to this latest occurrence, Stead Motors can no

longer assume the liability for your actions. You were

extremel) remiss in performing vour responsibility

which is tantamount to recklessness under Paragraph

5.02 of the present Lnion Contract. Your conduct not

only compromised the reputation and liability of Stead

Motors but also jeopardized the health and welfare and

safety of Mr. Diebert. In accordance with this section

we must exercise Our option to terminate you for

recklessness.

At hearing. Sheehan explained the basis of the termina-

tion penalty as follows: |) Grievant experienced the same

problem and received a warning a year previously: 2)

Grievant had continual problems working with supervi-

sion (1.e. his attitude): and 3) Grievant's conduct was

“reckless” as defined in Webster's Dictionary and the

Employer had great liability exposure if such conduct was

repeated and someone was injured.... Sheehan further

testified that he gave “substantial” weight to the lability

exposure factor.

In the “Discussion™ section of his Opinion and Award. the

arbitrator made these additional findings and observations:

However. when a person is made aware of the serious

consequences of the mistake and nevertheless repeats it.

the repeated behavior suggests an indifference to those

consequences. Here. Grievant knew the requirements of

this particular job function. He also knew of the potential

4-38

sanger to lite and safets and the potential financial conse-

quence thereof to the Emplover. In all of the circum-

stances disclosed in this record. Grievant's failure to

tighten the lug bolts on October 14. 1985. constituted

recklessness which warranted discipline pursuant to Sec-

tion 5.02 of the Agreement

In addition. at the arbitration hearing. Grievant was

unduly ————— and he attempted repeated!, to jus-

tify and excuse his conduct. His behavior did not assist

ls Cause

No wonder the district court refused to sanction this travests

It would be one thing for the parties themselves to get together

Privateis and agree on such an unpalatable result. but it is

another altogether for a federal court to put its imprimatur on

sucn Cc saster

ludge Reinhardt’s opinion attempts unconvincingls cast this

matter 4s involving onis the “reinstatement” of an errant

employee I decline to accept this crabbed and incomplete char-

scteriZation Of whal 1s at Stake in this case We are conironted

) 4 Case of reinstatement. but with reinstatement of a

cemonstradis reckiess and obstinate mechanic to a job that

eqguires skill and care) When Mr. Rocks does not do his job

} “heels on moving vehicles loosen enough to send them

-arcening out of control. endangering life in the process. This

explains California s prohibition against the unsafe operation of

motor senhicies in its Vehicle Code: unsafe cars injure and kill

| respectfully see the reinstatement of Gale Rocks to his old job

iting a clear and dominant public policy expressed in Jaw

ne precedent ds the State of California in favor of road-worths

‘uLomoDIles and safets on the highwavs. and against dangerous!s

reckiess automotive maintenance and repair. especially bs those

usiness. and | view it thus for two reasons

4-39

First. | agree with what Judge Noonan who wrote for the

original panel in this case

There exists in California a “well defined and dominant”

Public policy regarding automobile safety and

maintenance

California Vehicle Code § 24002 provides

It is unlawful to operate ans vehicle or combination

of vehicles which is an unsafe condition

There is. the Supreme Court of California has said.

“express legislative recognition of the fact that improper!

maintained motor vehicles threaten ‘a grave risk of serious

bodily harm or death.” Maloney v. Rath, 69 Cal. 2d 442.

448. 7] Cal Rptr. 897. 900. 445 P.2d $13, 516 (1968)

( Traynor. C.J.). quoting Restatemen: (Section) [sic] of

Torts § $23

To minimize the risk of improper maintenance, the legisla-

ture established the California Bureau of Automobile

Repair in 1971. Cal. Bus. & Prof. Code § 9882. The

Bureau is authorized to “inquire into the practice and

policies of the automotive repair industries... and make

such recommendations with respect to such policies. prac-

tices and functions as may be deemed important and nec-

essary by the Bureau for the welfare of the consuming

public and the automobile repair industry” /d at

§ 9882.13. The Bureau is further authorized to establish

general motor vehicle repair standards. rules for the certi-

heation of repair facilities (including mechanics’ qualiti-

cations). and an on-site inspection program to insure

compliance with the standards of certification. /d at

§ 9589.33. § 9889.39. The Bureau's rules and regulations

are codified in Cai. Admin. Code. Title 16. §§ 3300. et

seu

No one may be an automobile repair-dealer in California

unless registered in accordance with law by the Bureau

Id at § 9884.6. The Bureau may invalidate registration if

it finds that the dealer or any emplovee of the dealer has

been guilty of gross negligence. /d § 9884.7 Stead

Motors could not have kept Rocks and stased in business

Id § 98846

S33 F Od at 349

iinet

4-40

In ‘falones v. Rath. the defendant was the driver of a car that

caused a serious accident due to defective brakes. Because she

neither knew nor had reason to know the brakes were defective

until thes failed. she attempted in court to avoid liability for the

damage by shifting the blame to her mechanic who was responsi-

dle for the faulty installation of a hydraulic hose which ruptured

In refusing to release her from liability. Chief Justice Traynor

described the law in California in very explicit terms. It is from

this passage that Judge Noonan selected his excerpt:

Section 423 of the Restatement Second of Torts provides

that “one who carries on an activity which threatens a

grave risk of serious bodily harm or death unless the

instrumentalities used are carefully * * * maintained. and

“who employs an independent contractor to * * * maintain

such instrumentalities. is subject to the same liability for

physical harm caused by the negligence of the contractor

in * * * maintaining such instrumentalities as though the

empiover had himself done the work of ** * mainte-

nance. Section 424 provides that “One who by statute or

Ds administrative regulation is under a duty to provide

specified safeguards or precautions for the safety of others

is subject to liability to the others for whose protection the

Guts is imposed for harm caused by the failure of a con-

tractor employed by him to provide such safeguards or

precautions. Both of these sections point to a nondelega-

die duty inthis case. The statutory provisions regulating

‘he maintenance and equipment of automobiles consti-

tutes express legislative recognition of the fact that

improperly maintained motor vehicles threaten “a grave

risk of serious bodily harm or death™ The responsibilits

for minimizing that risk or compensating for the failure to

Go sO properly rests with the person who owns and operates

the vehicle. He is the party primarily to be benefited bs

its use. he selects the contractor and is free to insist upon

me who is financially responsible and to demand indem-

nity from him: the cost of his liability insurance that dis-

triDutes the risk is properly attributable to his activities:

and the discharge of the duty to exercise reasonable care

in the maintenance of his vehicle is of the utn: «1 impor-

lance to the public. (See van Arsdale v. Hollinger

A-4!

supra. 68 AC 249. 257 [68 Cal. 2d 245], 66 Cal. Rptr

20. 427 P.2d $08 and authorities cited. )

In the present case. it is undisputed that the accident was

caused by a failure of defendant's brakes that resulted

irom her independent contractor's negligence in overhaul-

ing or in thereafter inspecting the brakes. Since her duty

to maintain her brakes in compliance with the provisions

of the Vehicle Code is nondelegable. the fact that the

brake failure was the result of her independent contrac-

tors negligence is no defense. (Emphasis added).

69 Cal. 2d at 448. 71 Cal. Rptr. at 900-01, 445 P.2d at 516-17.

Not only does this answer the key questions in this case about

California's policy. but it is also very bad news for customers of

ytcad Motors who will get Gale Rocks as a brake mechanic.

Second. | agree with the analysis of Judge Hill in Delta -4ir

Lines. Inc v. Air Line Pilots Assn. Int'l., 861 F.2d 66§ (11th Cir

1988). reh g denied, 867 F.2d 1431 (11th Cir. 1989):

As noted above. Misco requires the finding of a well

detined public policy and an award that conflicts with that

policy. The public policy of which the Supreme Court

speaks in Misco seems to be a public policy not addressing

the disfavored conduct, in the abstract. but disfavored

conduct which ts integral to the performance of emplov-

ment duties. The question we are instructed. by Misco. to

ask is not. “Is there a public policy against the emplovee’s

conduct’”. but. rather. “Does an established public policy

condemn the performance of employment 4ctivities in the

manner engaged in by the employee?™ Such a policy does

exist in this case: the arbitrator's finding of no just cause

explicitly conflic.s with that policy.

Id at 6 |

W here the person performs his employment duties and. in

doing so, violates standards. restraints and restrictions on

conduct. clearly and explicitly established by the people in

their laws. a requirement that the emplover suffer that

malperformance and not discharge the offender does itself

violate the same well established public policy.

A-42

Id. at 674

It 1s disheartening to see this court turn its back on Delta and

lowa Elec. Light & Power Co. v. Local Union 204 of the Int'l

Bhd. of Elec. Workers, 834 F.2d 1424 (Sth Cir. 1987). This

repudiation illustrates how narrowly this circuit now views the

Public policy exception reaffirmed by the Supreme Court in WR

Grace & Cu. ¥. Rubber Workers, 461 U.S. 757, 766. 103 S.Ct

217°, 2183. 76 L.Ed.2d 298 (1983). [use the term “narrowly”

advisedly because it would appear that the result in this case

chokes the “public policy” exception—hic sepultus—into obliv-

ion. If it survives this case. it survives in name only.

A review of the facts in Delta is enlightening. In that case. the

Pilot-in-Command flew while drunk a commercial airliner filled

with passengers on a scheduled flight. and he flew it personalls

trom take-off to landing. His misconduct was discovered. and he

“as understandably discharged five days later. The pilot grieved

unsuccessfully his discharge. The Air Line Pilots Association.

asserting that “[the pilot's] fiving while drunk was not a

sufficient cause for discharge. submitted the dispute to the System

Board.” id. at 668. which ruled 3-2 that he should be reinstated

\s in the case at hand. the district court overturned the arbitra-

rs decision as violative of public policy. and the Eleventh Cir-

cuit Court of Appeals affirmed. Make no mistake about it: in

(Mis circuit the tederal courts would most probably have seen to it

that Delta Airlines would have been forced to permit the pilot t

The application of Judge Reinhardt’s approach in this case to

e tacts of Jowa Electric yields an equally troublesome result

In that case. a nuclear power plant emplovee—in a hurry to leave

‘he area to go to lunch—ordered a foreman to disconnect a safets

device On 2 doorway designed to protect the public from harmful!

raciation. After being terminated for this misconduct. he. like

ne prot in Delta. was ordered reinstated by an arbitrator. The

istrict court. however. overturned the arbitrator's order as

7 mmo tn trRA hey tet - _—., 7.7. ae > Eighth C - ‘

~ era" *ji~ Will DUDIIC SAIC KUTICE i> and ine ig! ifCu ‘

; | , , .

Court of Appeals affirmed Nn this circuit that empiovee most

A-43

likely would have been ordered back to work. same job. same

nuclear facility

Judge Reinhardt’s opinion brushes off De/ta and Jowa Electric

as “thought provoking.” If those cases would have arisen in this

circuit, the results might have been nothing less than hair-raising

The results will be hair-raising when similar cases do arise in this

circuit and are governed by today’s opinion. The bromidic obser-

vation of the court that all of us suffer when potentially produc-

tive workers are relegated to unemployment is scarcely a response

to the threat to public safety embodied in the majority opinion

Accidents happen in the blink of an eye. Danger appears out

of nowhere. sinking ships. downing planes. and sending cars out of

control. Our best defense to these inescapable perils of life is not

air Dags and seat belts. but attentive. trustworthy human beings.

such as the pilots of the Aloha Airliner and the millions like them

who take pride in jobs well done. I do not believe that deference

to arbitration. a concept with which I wholeheartedly agree. suf-

ters at all if the judiciary retains the right to keep arbitrators

within the bounds of public policy: nor do I think that Misco

compels the excessively “hands-off policy adopted today in this

circuit

Visco’s main defect was that the Court of Appeals improperls

based its views of public policy on “general considerations of

supposed public interests.” not “laws and legal precedents” as

required by WR Grace. Misco, 108 S.Ct. at 373-74. This

mistake was not made by Judge Noonan and the three-judge

panel. Judge Reinhardt’s opinion takes the view here, however.

that the material relied on by the panel is insufficient to form an

explicit. well-defined. public policy. With respect. I find this view

unpersuasive. It ignores the clear meaning of the written word.

and it slights the unmistakable purpose of California's laws, sug-

gesting that only a precise violation of a positive law caused bv the

award itself would suffice to meet the Supreme Court's test—a

question left undecided in Misco. Id 108 S.Ct. at374n12. It

Ir Vv YT The Supreme 4 yurt took some comfort in the or “wision of the

sward that permitted the workers reinstatement to a different cyuivalent job

tating (hat it was not “clear that (|Ne) “oul pose 4a serious threa:

4-44

is Cifficult to read Judge Reinhardt’s opinion. however. without

coming to the conclusion that we have now answered this question

in this circuit. without expressly saving so: and that we have

closed our door s permanently to complaints that an arbitrator's

award violates “public policy” unless the award itself clearly

violates a statutory prohibition. The approach to this case and

the treatment of De/ra and /owa Electric are tantamount to such

2 holding. Although Judge Reinhardt’s opinion seems to hold

ut some hope that another way could be found to reach the same

result in those cases. I respectfully believe that these dicta amount

to an illusion

What Judge Reinhardt’s opinion does today in reinstating Gale

Rocks and rejecting the rationale of Delta and Jowa Electric

Provides sufficient reason to question seriously the utility of a

restrictive positive law test. A somewhat broader more rationa

ach grounded on analysis and informed judg-

ment—confined by “law and precedent —makes more sense in

that it gives life to the public policy exception rather than suffo-

cating it bevond resuscitation. The results in Delta and Jowa

Electric do not trench inappropriately upon the federal policy of

settling labor disputes by arbitration. nor would the termination

of Gale Rocks. To borrow from Jowa Electric. **He is no longer to

trusted to work in such a critical environment when he shows

no respect tor the safety implications of his actions and when he is

willing to jeopardize the safety of the public $34 F.2d at

29 (citation omitted )

The approach adopted by Delta and Jowa Electric would not

oe ohibit the reinstatement via arbitration of a speeding

k dr or a petty thief. To suppose that they do is an error

at again follows from the trap of narrowly casting this issue

yniv as one of reinstatement. All a broader approach does is to

nsure that the federal courts would not find their hands tied by

the magic word “reinstatement uttered by an arbitrator if sucha

reinstatement. based on the totality of facts and circumstances of

flatly

sfety) in esers job for which he was qualified” 1088S .Ct at374 Thereis no

m for such comfort here Mr. Rocks gets his old sob back

4-45

the case. would violate an explicit. well defined. and dominant

public health and safety policy of a state or the federal

government.

| am not moved by the suggestion that the life of a single driver

or the lives of a family in a passenger car are somehow less

significant than the lives of airplane passengers or the people who

live in the vicinity of a nuclear facility. One life is as precious as

many. and I do not believe that public policy demands otherwise.

Certainly. airplane crashes and nuclear power plant disasters

command more attention by the media than a single fatal auto-

mobile collision, but that should not define the reach of federal

aw. Moreover. it is common knowledge that more automobile

assengers die per year than airline passengers or neighbors of

nuclear power plants combined: and a single out-of-control pas-

senger car can kill an entire busload of school children.

This is not a minor problem that occurs only infrequently.

Arbitration in these kinds of cases is very common, and as I have

tried to show, the results are not always comforting. To take one

example from another area. that of medical care. and use an

actual case. Nurse S. put medicine not intended for the patient on

his over-bed table. The patient took it while the nurse's back was

turned. When she discovered the medicine was gone she told him

“| don't know if it 1s going to hurt you but we'll keep an eve on

you.” She told no one about the mistake. When she came back

trom lunch, she found the patient had serious breathing problems.

The supervisor tried to find out what medication the patient

would normally be taking and asked Nurse S. directly what medi-

cation she had given him. Nurse S. claimed at the arbitration

nearing “that in the excitement of the medical emergency she had

torgotten about the medication error.”

Less than an hour later the patient was in respiratory arrest

with convulsions and had stopped breathing. A half dozen per-

sons worked to resuscitate him including Nurse S. At no point

did she report the medication she had let him have. Only the

next day. when the patient had revived. did she respond to a

question from a doctor who had obtained the information about

A-46

the medicine from the patient himself. The hospital concluded

that “it would not be safe to keep her [Nurse S.° in the environ-

rent.” She was discharged

The arbitrator found this “an extremely difficult case.” He

went on to say that Nurse S. “committed an appalling error in

patient care.” The arbitrator also observed that Nurse S. should

“be seriously faulted for failing to formally report the incident”

and that there was a serious question as to whether the failure

‘was inadvertent or deliberate.” There was no doubt this failure

Was “a serious breach of patient care.” She had also made a

n going to lunch before the other nurse had returned

r floor. The arbitrator concluded that there was no just

C arge. In Re Ohio Valley Hospital Association, 79

L.A.929 (1982). His decision would be final now in this circuit

There mighi be just cause for the elderly and infirm to worrs

2dout the kind of nursing care they would get where federal

courts approve such reinstatement

Or. what do

employee in Georgia responsible for reading gauges and meters

SerIOUS error |

) we do with Warren Watson. the power company

Gesigned to prevent the overheating of high pressure equipment”

When he failed badly a drug test and was discovered to be a heav

chronic drug user, he was fired asa safety risk. But an accommo-

dating arbitrator ordered his reinstatement fo his former posi-

m. Shades of Gail [sic] Rocks. Fortunately for his co-

“ Orkers. the federal district court balked at this order, remarking

that. among other things. it could subject Watson's emplover t

iabilits tor damages caused by Watson's future drug use. Geor-

gia Power Co. v. IBEW. Local 84, 707 F. Supp. 531 (N.D. Ga

744

| suppose a lab technician. either intoxicated or in a hurry to

get to lunch. who recklessly introduced AIDS-contaminated

od into our supply of blood mainiained for purposes of medical

transtusion would also be bevond the reach of the law in this

circuit If a non-lawyer arbitrator. beholden to no one other than

tne parties to the contract in question, decided to cut the baby in

no rust the AR andAee } ~L ¢ | ho , ; Ta

ind pu e Offender back to work. The same is true of othe:

A-47

unrepresentative workers in our labor force. such as the occa-

sional inebriated engineer of a train, the deliberately indifferent

pilot of an ocean-going tanker that goes around and spills millions

of gallons of crude oil into our oceans and inland waterways. and

the law enforcement officer who exceeds his authority and beats

and abuses a prisoner. If an arbitrator uses the word “reinstate-

ment. the federal courts in this circuit are now next to helpless to

do anything about it. A new form of kryptonite has been

invented that renders us impotent to vindicate the public interest

in health and safety. What amounts toa general policy favoring

reinstatement—which is committed entirely to arbitrators—now

trumps the public policy exception and ousts us of our jurisdiction

to keep the players on the appropriate playing field? Although

the analogy is far from perfect, it strikes me as curious that the

pumping in a hospital by a doctor of the stomach of a drug dealer

suspected of swallowing narcotics shocks the conscience of the

federal courts,’ vet we are serenely sanguine about our complicity

in putting a dangerous pilot back into the cockpit of a commercial!

airliner, a reckless worker back into a nuclear facility. and in

returning Mr. Rocks to his responsibility for safely aitaching

wheels to passenger vehicles.

[ would affirm the district court

WALLACE, Circuit Judge. joined by Circuit Judges. ALAR-

CON and O'SCANNLAIN, and joined by Chief Judge Goopwix

in part I only, concurring in part and dissenting in part:

| agree with the plurality’s conclusion that we must reverse the

district court's order. which partially vacated the arbitral award.

As the plurality demonstrates, Stead Motors has failed to meet

the first threshold requirement identified in United Paperworkers

International Union, AFL-CIO v. Misco, Inc., 484 U.S. 29. 108

S.Ct. 364, 98 L.Ed.2d 286 (1987) (Misco). See plurality op.

at 1216. Stead Motors has not demonstrated the existence of a

well defined. dominant. and explicit public policy in California.

- Misco counsels against reliance on “general considerations of supposed

Public interests 108 S.Ct. at 373. Does this not describe the majority's

description and use of “reinstatement™”

3. Rochiny. California, 342 U.S. 168, 72 S.Ct. 208. 96 L.Ed. 183 (1981)

A-48

sufficientiv grounded in “laws and legal precedents rather than

in “general considerations of supposed public interests,” with

which this arbitral award could conflict. Misco, 108 S.Ct. at

373-74. To decide this case. we need go no further. I write

The Supreme Court first explicitly recognized the “public pol-

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A-49

I conclude. with the plurality, that because Stead Motors’s

[sic] formulation of the public policy at stake fails to meet

Misco 's first threshold requirement, we must reverse. The origi-

nal panel accepted Stead Motors’s [sic] invocation of Califor-

nias alleged “strong public policy favoring the proper

maintenance and repair of motor vehicles.” Applying the first

threshold requirement under Misco, the plurality holds that

~{w]e have found nothing in the record of this case, in the argu-

ments of counsel, or in our inquiry into the ‘laws and legal prece-

dents of California which supports the existence of the specific

public policy necessary to justify vacating the arbitral award in

this case.” Jd at 1216. The plurality reasons that the two

sections of the California Code identified by Stead Motors do not

“constitute the sort of laws and legal precedents necessary for the

valid expression of an ‘explicit, well defined and dominant’ public

policy.” /d. at 1216. In other words, such a policy cannot be

“gleaned from [the] two sections of the California Code™ cited by

Stead Motors. /d. at 1204: see also id. at 1216. As the party

seeking to have the award vacated. Stead Motors bears the bur-

den of demonstrating, at the outset, the existence of a well-

defined, dominant and explicit public policy which is sufficiently

rooted in laws and legal precedents rather than in general consid-

erations of supposed public interests. I agree with the plurality

that Stead Motors has not carried this burden. This should end

r‘“,-p . >

IO LASEC

Lntortunately, the plurality is not content to stop on the first

step of Misco's threshold. Instead, it goes off on two additional

}

rounds: (1) Stead Motors has not “clearly shown” that Rocks’

tramed public policy, and (2) at anv rate the arbitrator's factua!

determination (judged according to a newly created rule of

construction) of Rocks’s {sic] amenability to discipline cannot be

second-guessed by the court. In my view, we need not and should

}

not reach these issues to decide the case. Reaching the last

A-50

ground is especially unfortunate because the plurality’s analysis

of how courts should review an arbitrator's “finding” regarding a

discharged worker's amenability to discipline is wrong.

The plurality constructs a formidable rule of deference to an

arbitrators “determinations” regarding discharged workers

amenability to discipline. It accomplishes this in three steps.

First, it distills from the concluding paragraph of the majority

opinion in Misco the principle that an arbitrator's “factual

findings” regarding amenability to discipline are immune from

judicial review. See plurality op. at 1212-1213. Second. it

formulates a potent rule of construction: arbitrators need not

make an express finding that a discharged worker is amenable to

discipline. See id. at 1213. In fact, according to the plurality. if

an arbitral award which orders reinstatement is silent regarding

amenability to discipline, “{a] court cannot infer ... that the

arbitrator did not consider the question: nor can it make an

independent judgment in suchacase.” Jd.at1213. Instead, the

court cannot “infer the non-existence of a particular reason

merely from the award’s silence on a given issue.” /d. In other

words, unless the arbitrator expressly says that he is not making a

determination of amenability to discipline (and what arbitrator

would do so if the plurality opinion were the law?). the courts

must presume that such a determination was made. Third and

hnally, the plurality concludes: “Ordinarily, a court would be

hard-pressed to find a public policy barring reinstatement in a

case in which an arbitrator

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.