Teamsters Local Union No 355 v. Ensinger Penn Fibre Inc

NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT ________________ No. 24-1037 ________________ TEAMSTERS LOCAL UNION NO. 355,

Appellant v. ENSINGER PENN FIBRE, INC. ________________ Appeal from the United States District Court for the District of Delaware (D.C. No. 1:21-cv-01563) District Judge: Honorable Gregory B. Williams ________________ Submitted under Third Circuit L.A.R. 34.1(a) on September 10, 2024

Before: CHAGARES, Chief Judge, ROTH and RENDELL, Circuit Judges

(Opinion filed: April 14, 2025) ________________ OPINION*

ROTH, Circuit Judge

Teamsters Local Union No. 355 appeals the final judgment of the District Court granting summary judgment to Ensinger Penn Fibre, Inc. on the Union’s complaint to vacate the remedial portion of an arbitration award. We will affirm.

I.

On October 14, 2020, Ensinger terminated Chad Hall, a Union member whom Ensinger had employed as an equipment operator for twenty-nine years, for leaving his workstation without permission for the third time in less than one month. A collective bargaining agreement (CBA) governed the terms and conditions of Hall’s employment, and after his termination, he and the Union filed a grievance challenging his termination as lacking “just cause” in violation of Article 12 of the CBA.1 The Union submitted the grievance to an arbitrator after the parties were unable to resolve the grievance.

Although the arbitrator concluded that Ensinger had terminated Hall’s employment without just cause,2 the arbitrator refused to award reinstatement and backpay on the grounds that Ensinger had discovered—after Hall’s termination—that Hall had been under the influence of alcohol at work on the date of his termination.3 Per Ensinger’s employee handbook, an employee who reports to work under the influence of alcohol commits a “major violation” that “warrant[s] immediate dismissal.”4 Thus, the arbitrator determined that Hall would have been terminated for reporting to work under the influence of alcohol, and that reinstatement would be futile because his conduct was “so serious that it would warrant another discharge if [Hall] were put back to work.”5

The Union, pursuant to § 301 of the Labor-Management Relations Act (LMRA),6 subsequently filed a complaint to vacate the remedial portion of the arbitration award. Ensinger filed a timely answer to the complaint, and the parties ultimately filed cross- motions for summary judgment. On December 18, 2023, the District Court granted Ensinger’s motion and denied the Union’s motion. This appeal followed.

II.

The District Court had jurisdiction under 28 U.S.C. § 1331 and LMRA § 301, and we have jurisdiction under 28 U.S.C. § 1291. Under LMRA § 301, federal courts may entertain “a suit to set aside an arbitration award entered pursuant to a collective bargaining agreement . . . if [the suit] alleges that the award failed to draw its essence from the collective bargaining agreement or that the arbitrator exceeded his powers thereunder.”7 If “a court is satisfied that an arbitrator’s award draws its essence from a collective bargaining agreement, it is without jurisdiction to consider the award further.”8

We exercise plenary review over a district court’s decision on cross motions for summary judgment,9 but “we apply the same standard the district court should have applied in reviewing the arbitration award.”10 Our review is extraordinarily narrow: We do not review the merits of the award or correct factual or legal errors.11 Instead, given that “the parties to the collective bargaining agreement ‘bargained for’ a procedure in which an arbitrator would interpret the agreement[,]’”12 we “must defer to the arbitrator’s factual findings.”13 Even if we are “convinced [the arbitrator] committed serious error,” we may not vacate an award except in rare instances.14

We must uphold an award as “draw[ing] its essence from a collective bargaining agreement if its interpretation can in any rational way be derived from the agreement, viewed in light of its language, its context, and any other indicia of the parties’ intention.”15 We cannot vacate “an arbitration award if it was based on an arguable interpretation and/or application of the collective bargaining agreement[;]” we may do so only “if there is no support in the record for [the arbitrator’s] determination or if [the award] reflects manifest disregard of the agreement, totally unsupported by principles of contract construction.”16 We cannot vacate an “award ‘even if we find the basis for it to be ambiguous or disagree[ ] with [the arbitrator’s] conclusions under the law.’”17

III.

The Union argues that the District Court erred in granting summary judgment and that the remedial portion of the arbitration award should be vacated. We disagree.

The Union first claims the arbitrator imposed his own brand of industrial justice because, in the Union’s view, the remedial portion of the award “flowed from a finding that [Ensinger] would have discharged Hall for being under the influence of alcohol on October 12 [sic], 2020—a finding entirely unsupported by the record before him.”18 However, we find no error in the District Court’s determination that the record supported the arbitrator’s finding.19 We therefore reject the Union’s first claim.

The Union’s second claim is that the arbitrator manifestly disregarded the CBA by finding that after-acquired evidence of Hall’s inebriety barred his reinstatement and recovery of backpay.20 The Union argues Article 12 of the CBA mandated that Ensinger provide “written notice of the reason for [an employee’s] termination,”21 and that because Ensinger did not provide Hall written notice that his discharge was based on him reporting to work under the influence, he could not be terminated on that basis. Because Article 7 of the CBA precluded the arbitrator from “add[ing] to, subtract[ing] from, supplement[ing] or modify[ing] in any way any of the [CBA’s] provisions, terms or conditions[,]”22 the Union contends the arbitrator exceeded his authority under the CBA by finding that the after-acquired evidence provided an adequate, independent basis for Hall’s discharge. We disagree.

Under the arbitrator’s reading of the CBA, Article 12’s written-notice requirement relates only to whether the employee was terminated for “just cause,” not the proper remedy for an employee terminated “without just cause.”23 Regardless of whether the arbitrator’s interpretation reflects the most textually plausible reading of the CBA, the distinction between the grounds for termination and the proper remedy for an unjust termination is dispositive here.24 This is because the after-acquired evidence doctrine sounds in equity and concerns only the proper remedy for unjust termination—not whether the termination was unjustified in the first instance.25 The doctrine presumes the employee was terminated without just cause (otherwise it would not apply), and asks whether the unjustly terminated employee’s later-discovered conduct was so wrongful that, had the employer known about it at the time of discharge, the employee would have been terminated anyway based on that wrongdoing.26 For purposes of the after-acquired evidence doctrine, whether Hall received written notice of the reason for his termination, as required by Article 12, is simply irrelevant; all that matters is, as the arbitrator found, Hall’s later-discovered conduct would have furnished grounds for Ensinger to terminate his employment. Under this reading of Article 12, the arbitrator did not exceed his authority under the CBA by refusing to award reinstatement and backpay. Thus, because Ensinger obtained the after-acquired evidence on the same date as Hall’s unjust discharge,27 we must uphold the arbitration award.

IV.

For the above reasons, we will affirm the District Court’s order denying the Union’s summary judgment motion and granting Ensinger’s summary judgment motion.