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JS-6 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Case No. Title CV13-06192 RGK (RZx) Date October 8, 2013

Los Angeles Times Communications v. Graphic Communications Conference Intl Brotherhood of Teamsters

Present: The Honorable

R. GARY KLAUSNER, UNITED STATES DISTRICT JUDGE

Not Reported Court Reporter / Recorder N/A Tape No.

Sharon L. Williams (not present) Deputy Clerk Attorneys Present for Plaintiffs: Not Present

Attorneys Present for Defendants: Not Present

Proceedings:

(IN CHAMBERS) Order Re: Plaintiffs Motion to Vacate Arbitration Decision and Award (DE 6)

I.

INTRODUCTION

In January and February of 2013, the Plaintiff Los Angeles Times (Plaintiff LA Times) and the Defendant Graphic Communications Conference International Brotherhood of Teamsters, Local 140-N (Defendant Union) arbitrated Defendants grievance claiming Plaintiff had violated the parties collective bargaining agreement (the CBA). On May 30, 2013, the arbitrator found that Plaintiff had violated the CBA and accordingly decided in favor of Defendant. On August 22, 2013, Plaintiff filed a complaint with this Court seeking to vacate the arbitration award. Plaintiff filed a motion seeking such relief on August 28, 2013, arguing that the arbitrator had exceeded her authority in issuing the decision and award. For the following reasons, the Court GRANTS Plaintiffs Motion to Vacate the Arbitration Decision and Award. II. FACTUAL BACKGROUND

On December 11, 2008, Plaintiff LA Times and Defendant Union entered into the CBA. The CBA governed the terms and conditions of employment for presspersons working in
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Plaintiff LA Times Los Angeles and Costa Mesa pressrooms. Article II, Section 2.2 delineates some of Plaintiff LA Times management rights. It reads Work Assignments. Any work that can be assigned to bargaining unit employees [Defendant Union] may also be assigned or reassigned at any time to be performed by other employees, supervisors or managers or persons outside of the bargaining unit at sole discretion of the Employer [Plaintiff LA Times]. The assignment of work or functions to bargaining unit employees shall not be construed as conferring exclusive jurisdiction over the same to either the Union or members of the bargaining unit. Employer shall not use Section 2.2 for the sole purpose of replacing bargaining unit employees and Employer shall not use Section 2.2 for the sole purpose of avoiding the Recall language under section 11.6 of this contract. Section 11.6 of the CBA reads Recall. Whenever there is a need to recall, it shall be based on the employee with the most seniority as a full-time pressman provided the employee possesses the skills to perform the work needed at that time. Any and all recall rights expire (9) months after the employees last day worked. These and other provisions of the CBA formed the basis for a dispute that the parties later arbitrated. The dispute centered on the Plaintiff LA Times alleged use of supervisory employees to perform tasks traditionally performed by union presspersons. On December 28, 2009, Defendant Union filed Grievance No. LAT-122809 (the Grievance) alleging violations of Sections 2.2 and 11.6 of the CBA. The Grievance alleges The Union hereby accuses the Company of violating Section 2.2 Work Assignments, by utilizing supervisory personnel to perform bargaining unit employees duties on a regular basis. ... Our members rights under Section 11.6 Recall are also being violated by the usage of supervisory personnel to perform bargaining unit employees duties on a regular basis to avoid Recall. The Grievance also discussed the bargaining history and negotiations underlying Section 2.2. According to Defendant Union The usage of supervisory staff was discuss [sic] in length during negotiations in which it was stated by management that supervisors would be used to perform bargaining unit duties only in extreme circumstances, i.e., when bargaining unit employees are unavailable for hire or emergency situations requiring immediate manpower. Notwithstanding the language of the CBA, the Defendant Unions position was that the Plaintiff LA Times use of supervisory workers violated Sections 2.2 and 11.6 because it did not take place during extreme circumstances. On January 20, 2010, Plaintiff LA Times denied the Grievance, citing the plain language
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of the CBA. In his denial of the Grievance, Director of Operations Greg Malcolm wrote ...[T]he LA Times takes the position that no such violation took place.... The Unions position is not supported by the clear language of the contract. To the contrary, the Companys actions are in fact in compliance with the clear language under Article II, among other things, in the Contract.... The grievance is denied. After exhausting the grievance appeal process, the parties proceeded to arbitration on January 22, 2013 and February 28, 2013. The specific issue arbitrated was Did the LA Times violate the collective bargaining agreement by allowing supervisors to perform work normally performed by bargaining unit employees and, if so, what is the appropriate remedy? The CBA governed the scope of the arbitrators authority. The relevant provisions of Section 5.2 read as follows Jurisdiction of Arbitrator. The jurisdiction of the Arbitrator is limited to: (1) The determination of the issues that under the terms of this Agreement are subject to arbitration; and Interpretation of the specific term(s) of this Agreement that are applicable to the particular issue(s) presented to the arbitrator, and such jurisdiction shall not give the arbitrator authority to supplement or modify this Agreement by reference to any practice or custom or common law of the shop; and The rendition of a decision or award that in no way modifies, adds to, subtracts from, changes or amends any term or condition of this Agreement or that is in conflict with the provisions of this Agreement ...

(2)

(3)

The Arbitrator issued an award in favor of Defendant Union on May 30, 2013, finding that Plaintiff LA Times had violated Section 2.2 of the CBA. In coming to this conclusion, the Arbitrator used the parties negotiation history to interpret the CBA. The Arbitrator rejected Plaintiff LA Times contention that Section 2.2 was clear and that evidence of bargaining history was both irrelevant and barred because Section 19.1(a) precluded consideration of any oral agreements.1 The Arbitrator found that evidence of bargaining history was relevant because Section 2.2 was not clear, but instead internally inconsistent and ambiguous. The Arbitrator observed Here there is a definite inconsistency between the provision that the employer may assign or reassign unit work to persons outside the unit, at any time, in its sole discretion and the provision that the employer shall not exercise such Section 2.2 discretion either for the sole purpose of replacing unit employees or for the

Section 19.1. Entire Agreement. (a) This Agreement represents the complete and entire agreement between the parties and there are no practices, understandings or agreements, written or oral relating to wages, hours, or other terms and conditions of employment except those set forth herein or expressly incorporated by reference.
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sole purpose of avoiding recall pursuant to Section 11.6. Although the latter clause is not expressly identified as a qualifier or proviso to the sole discretion clause, nevertheless, the only reasonable conclusion is that it operates as such. The arbitrators task, therefore, is to construe the scope of the Section 2.2 qualifiers. In construing the Section 2.2 qualifiers, the Arbitrator rejected the proposed interpretation of the Plaintiff LA Times that a violation of Section 2.2 required both an assignment of supervisors to perform pressmen work and that the assignment was for the sole purpose of replacing pressmen or avoiding recall. Instead, the Arbitrator found that Section 2.2 should be interpreted as follows Section 2.2 prohibits the performance of unit work by persons other than members of the unit except in emergency, e.g., non-reasonably foreseeable, situations or such non-routine but intrinsically limited situations as equipment cleaning, maintenance or repair or as necessitated by non-routine requirements for instructional or quality control intervention or in other circumstances strictly incidental and limited to performance of supervisory duties. Having construed Section 2.2 in this manner, the Arbitrator sustained the Greivance and issued a cease and desist order to Plaintiff LA Times. The Ruling reads in pertinent part The Company shall cease and desist from violating the Agreement by permitting pressroom supervisors to perform pressmen unit work other than in emergency (non-reasonably foreseeable) situations or such non-routine but intrinsically limited situations as equipment cleaning, maintenance or repair circumstances. Routine instruction and relief duties shall be performed by personnel holding bargaining unit position classifications. Presently before the Court is Plaintiff LA Times Motion to Vacate the Arbitration Decision and Award. III. JUDICIAL STANDARD

The Federal Arbitration Act provides that a district court may vacate an arbitration decision where the arbitrators exceeded their powers. 9 U.S.C. 10(a)(4). Because the parties to an arbitration agreement have mutually consented to be bound by an arbitrators decision, judicial review of such a decision is extremely limited. Major League Baseball Players Assn v. Garvey, 532 U.S. 504, 509 (2001). Courts are not authorized to review the arbitrators decision on the merits despite allegations that the decision rests on factual errors or misinterprets the parties agreement. Id. (citing Paperworkers v. Misco, Inc., 484 U.S. 29, 36 (1987)). Indeed, if an arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, the fact that a court is convinced he committed serious error does not suffice to overturn his decision. Id. (quoting Eastern Associated Coal Corp. v. Mine Workers, 531 U.S. 57, 62 (2000)) (internal quotations omitted). While courts will not second-guess an arbitrators good-faith interpretation of a contract, an arbitrators award must nonetheless draw its essence from the contract. Misco, 484 U.S. at 38. As such, an arbitrators decision may be unenforceable when the arbitrator strays from interpretation and application of the agreement
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and effectively dispense[s] his own brand of industrial justice. Garvey, 532 U.S. at 509, (quoting Steelworkers v. Enterprise Wheel & Car, 363 U.S. 593, 597 (1960)). IV. DISCUSSION

Plaintiff LA Times argues that the arbitration decision and award should be vacated because the arbitrator exceeded her authority under the arbitration agreement. For the reasons that follow, the Court agrees. The Arbitrators authority was limited under the CBA. Section 5.2 of the CBA provides that [t]he jurisdiction of the Arbitrator is limited to ... [I]nterpretation of the specific term(s) of [the CBA] that are applicable to the particular issue(s) presented to the arbitrator, and such jurisdiction shall not give the arbitrator authority to supplement or modify [the CBA] by reference to any practice or custom or common law of the shop. In addition, the Arbitrator was only permitted to render a decision or award that in no way modifies, adds to, subtracts from, changes or amends any term or condition of [the CBA] or that is in conflict with the provisions of [the CBA]. Under the CBA, then, the authority of the Arbitrator extended only to interpretation, not modification, of the CBA. Because this Court may not review the merits of the Arbitrators decision, and must instead assess whether the Arbitrator acted within her authority, the Courts analysis is confined to the narrow question of whether the Arbitrator properly interpreted or modified the CBA. See, e.g., Wise v. Wachovia Sec. LLC, 450 F.3d 265, 269 (Posner, J.) (the issue for the court is not whether the contract interpretation is incorrect or even wacky but whether the arbitrator[] has failed to interpret the contract at all, ... for only then were they exceeding the authority granted to them by the contracts arbitration clause.) (internal citations omitted). If the Arbitrator merely rendered a poor interpretation, the decision must stand. If, instead, the Arbitrator exceeded her authority by modifying the CBA, the decision must be vacated, for the parties expressly agreed that the CBA was not subject to modification by arbitrators. Defendant contends that the Arbitrator did not exceed her authority under the CBA because she expressly interpreted the CBAs specific terms. It is certainly true that the Arbitrator purported to interpret the CBA. In Defendants telling, the Arbitrator found in good faith that Section 2.2 of the CBA was ambiguous, then proceeded to interpret it using evidence of the parties negotiation history. Under this view, Defendant suggests, the Arbitrator was arguably interpreting the contract, and therefore this Court cannot review the arbitrators decision. Garvey, 532 U.S. at 509. Plaintiff contends that, even if the Arbitrators decision was couched in terms of interpretation, the interpretation really amounted to a modification of the CBA. Plaintiff points to the striking divergence between the text of the CBA and the meaning the Arbitrator attributed to it. Section 2.2 provides that Any work that can be assigned to bargaining unit employees [Defendant Union] may also be assigned or reassigned at any time to be performed by other employees, supervisors or managers or persons outside of the bargaining unit at sole discretion of the Employer [Plaintiff LA Times]. The sole discretion of Plaintiff LA Times to assign work to supervisors appears to be limited only
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by two narrow qualifiers. Section 2.2 provides that Employer shall not use Section 2.2 for the sole purpose of replacing bargaining unit employees and Employer shall not use Section 2.2 for the sole purpose of avoiding the Recall language under section 11.6 of this contract. Under the Arbitrators reading of Section 2.2, Plaintiff LA Times did not have sole discretion, or even broad discretion, to assign work to supervisors. Instead, the Arbitrator read Section 2.2 to affirmatively prohibit the assignment of work to supervisors except in emergency, e.g., nonreasonably foreseeable, situations. This appears to conflict directly with the plain language of the CBA. For this reason, Plaintiff contends, the Arbitrator exceeded her authority by modifying the CBA. An initial question is whether the fact that the Arbitrator carefully couched her decision in terms of interpretation categorically insulates the decision from review. Some of the language in the Supreme Courts decisions lends support to this position. The Supreme Court has consistently stated that if an arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, the fact that a court is convinced he committed serious error does not suffice to overturn his decision. Garvey, 532 U.S. at 509 (quoting Eastern Coal, 531 U.S. at 62). It has also stated that so far as the arbitrators decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract differs from his. Enterprise Wheel, 363 U.S. at 599. On one view, an Arbitrator who purports to interpret specific terms of a contract is always arguably interpreting the contract, no matter how far she strays from any plausible reading of the agreements terms. To put this argument differently, any purported interpretation concerns construction of the contract, even if it effectively modifies the contracts clear terms. The Court finds this reading of the precedents unpersuasive. Even if an Arbitrator couches her decision in terms of interpretation, there must be rare instances in which an arbitrators interpretation is so implausible that she can no longer be said to be interpreting at all, and thereby exceeds her authority under the arbitration agreement. See Tice v. Am. Airlines, Inc., 373 F.3d 851, 854 (7th Cir. 2004) (Posner, J.) ([petitioners] only ground of appeal that the doctrine doesnt foreclose is that the arbitrators purported interpretation of the collective bargaining agreement was so wacky that it was no interpretation at all and thus exceeded the arbitrators delegated power, which is limited to interpretation.); See also Eastern Coal, 531 U.S. at 62 (2000) (courts may set aside arbitrators interpretation of what parties agreement means in rare instances). The Court is mindful of the strong policy favoring the arbitration of labor disputes. See United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596 (1960). But underlying that policy is the expectation that Courts will enforce private agreements, including arbitration agreements, according to the terms the parties bargained for. In the arbitration context, what the parties have ordinarily bargained for is a good faith interpretation of the underlying agreement. The policy favoring arbitration is not served if arbitrators instead modify the parties agreement under the banner of interpretation. For these reasons, the Court finds that the fact that the arbitrator purported to interpret the CBA does not bar this Court from inquiring into whether she exceeded her authority by modifying the CBA. Having found that a narrow review of the decision is permitted on these facts, the Court turns to the question whether the Arbitrator exceeded her authority. The Court begins by noting that the Arbitrators interpretation conflicts with the plain language of the CBA. On its face, Section 2.2 provides that Plaintiff LA Times has sole discretion to assign supervisors to perform union work. Two provisions appear to narrow that discretion only slightly: Plaintiff LA
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Times may not assign supervisors for the sole purpose of replacing bargaining unit employees, nor may it do so for the sole purpose of avoiding recall. The Arbitrator read Section 2.2s apparent broad grant of discretion to Plaintiff LA Times to instead prohibit Plaintiff LA Times from exercising any discretion to assign supervisors to perform union work. Instead, the Arbitrator found, Section 2.2 permitted the assignment of supervisors only in a very narrow set of specific circumstances. These circumstances have no basis in the text of the CBA. The case law provides guidance on whether the Arbitrators reading of the CBA is merely an implausible, but permissible, interpretation, or whether it is instead a modification that exceeded the Arbitrators authority. The Ninth Circuit declined to vacate an arbitration decision in Hawaii Teamsters v. United Parcel Service, 241 F.3d 1177, 1181 (9th Cir. 2001). The employer in Hawaii Teamsters terminated an employee without giving him prior warning. Id. at 1179-80. The employees union grieved the termination, arguing that, under the collective bargaining agreement, employees could not be terminated without prior warning unless and until the termination was sustained following the grievance process. Id. The only exception, the Union urged, was if the employee was terminated for one of seven reasons enumerated in the collective bargaining agreement. Id. The Arbitrator disagreed, finding that the employee could be terminated without notice. Id. at 1180. The District Court confirmed the award, finding that the CBA term enumerating the grounds for termination without notice was ambiguous because it did not specify whether the list of offenses was exclusive. Id. The Ninth Circuit refused to vacate the award, reasoning that [The unions] straightjacket approach to contract interpretation would not, however, take into account other cognizable sources of federal labor law, such as the law of the shop, the industrial common law, and the like, nor would it appropriately recognize the role and decision of the skilled labor arbitrator. Id. at 1182. However, the Ninth Circuit was careful to note that while [o]rdinarily an arbitrator may consider the industrial common law, an arbitrator has no authority to ignore the plain language of a collective bargaining agreement that limits the scope of his authority. Id. at 1181 (citations and internal quotations omitted). Hawaii Teamsters, while instructive, is distinguishable from the present case. The CBA in this case specifically limited the Arbitrators authority to consult practice, custom, or industrial common law. Section 5.2 states that the Arbitrator shall not have authority to supplement or modify this Agreement by reference to any practice or custom or common law of the shop. Because Section 5.2 narrowed considerably how the parties wished their agreement to be interpreted, Hawaii Teamsters, in which the arbitrator was apparently free to consult industrial common law, does not control the outcome here. See id. at 1184. The Court finds that the present dispute is more closely analogous to United Food and Commercial Workers Union v. United Markets. 784 F.2d 1413 (9th Cir. 1986). In that case, a union alleged that the employer had violated the collective bargaining agreement by having three General Clerks on duty at the same time. Id. at 1414. The agreement provided that [t]here may not be more than two (2) General Clerks on duty at any given time. Id. at 1414. The agreement also provided that after a second violation, the employer shall no longer be entitled to a General Clerk classification. Id. An arbitrator determined that two violations had taken place, and that in the event that the employer violated the agreement a third time, it would lose the General Clerk classification for the duration of the agreement. Id. The union petitioned
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the district court to vacate the award. The District Court did so, finding that the arbitrator had exceeded his authority under applicable law and violated express contractual limits on his authority. Id. at 1415. The Ninth Circuit upheld the District Courts decision to vacate on two grounds. It first observed that [u]sed in their ordinary sense, the words no longer ... entitled to a General Clerk classification connote a denial of the classification until the agreement expires. Id. at 1415-16. Because the arbitrator failed to deny the employer the use of the classification during the remainder of the agreement, the award did not draw its essence from the agreement. Id. Second, the Ninth Circuit found that this award added to the terms of the agreement by providing that no permanent loss of the General Clerk designation would ensue until the third violation, rather than upon the second violation. Id. at 1416. The main agreement specifically prohibited the arbitrator from adding to the terms of the agreement. Id. United Food thus suggests two circumstances in which an arbitrators purported interpretation may exceed her authority under the arbitration agreement. First, a court may vacate an award where the arbitrators interpretation so conflicts with the plain language of the agreement that it does not draw its essence from the agreement. Subsequent cases have clarified that the mere implausibility of an interpretation does not justify vacating an award. Garvey, 532 U.S. at 510. C.f. Hawaii Teamsters, 241 F.3d at 1183 (suggesting that plausibility standard is one formulation of rule that arbitrators may not dispense their own brand of industrial justice). However, this Court believes that United Food still stands for the proposition that, at least in some cases, an interpretation that directly conflicts with the plain text of the agreement may not draw its essence from the agreement. See also Misco, 484 U.S. at 38 (arbitrator may not ignore the plain language of the contract...). Second, United Food suggests that where an arbitration agreement prohibits adding to or modifying a collective bargaining agreement, an arbitrator may exceed her authority when her purported interpretation radically departs from the plain language of the agreement. In such a case, the arbitrators decision may be better characterized as a modification than an interpretation. Both grounds for the decision in United Food apply in this case. As to the first ground, the Court finds that the meaning the Arbitrator assigned to Section 2.2 was so at odds with the clear text of the agreement that it was effectively no interpretation at all. For this reason, the Arbitrator exceeded her limited authority to interpret the collective bargaining agreement, as her decision did not draw its essence from the contract. Misco, 484 U.S. at 38 (1987). Relatedly, the Arbitrator also exceeded her authority by rendering an award that add[ed] to or change[d] Section 2.2 of the CBA. Section 5.2 limited the jurisdiction of the Arbitrator to [t]he rendition of a decision or award that in no way modifies, adds to, subtracts from, changes or amends any term or condition of this Agreement or that is in conflict with the provisions of this Agreement. As discussed above, the Arbitrator added extensive restrictions to Plaintiff LA Times discretion to assign work. In doing so, the Arbitrator exceeded her authority under the CBA.

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In light of the above, the Court vacates the arbitration decision and award. V. CONCLUSION The Court GRANTS Plaintiffs Motion to Vacate the Arbitration Decision and Award. IT IS SO ORDERED.

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Initials of Preparer

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