USCA1 Opinion
June 6, 1994 [NOT FOR PUBLICATION]
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 93-2274
JOSE HERNANDEZ, ET AL.,
Plaintiffs, Appellants,
v.
INTERNATIONAL LONGSHOREMEN ASSOCIATION,
LOCAL 1575, ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Hector M. Laffitte, U.S. District Judge]
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Before
Selya and Boudin, Circuit Judges,
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and Carter,* District Judge.
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John Ward Llambias for appellants.
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Nicolas Delgado Figueroa for appellee International
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Longshoremen Association, Local 1575.
Rafael Cuevas Kuinlam, with whom Antonio Cuevas Delgado and
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Cuevas Kuinlam & Bermudez were on brief, for corporate appellees.
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*Of the District of Maine, sitting by designation.
SELYA, Circuit Judge. In this proceeding, appellants
SELYA, Circuit Judge.
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strive to convince us that, notwithstanding the deference
routinely paid by courts to arbitral awards, this is the
exception that proves the rule. We are not persuaded.
I. BACKGROUND
I. BACKGROUND
Two decades ago, aware of Puerto Rico's dependency on
marine transportation for future economic growth, the
Commonwealth established the Puerto Rico Marine Shipping
Authority (PRMSA). The agency's raison d'etre was to ensure "the
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citizens of Puerto Rico . . . an adequate and inexpensive supply
of basic commodities, and to foster the development and expansion
of trade and industry. . . ." P.R. Laws Ann. tit. 23, 3052
(1974). The statute authorized PRMSA to acquire shares in, and
to operate, any enterprise that might assist in achieving the
stated policy goals. See id. 3055.
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In 1974, PRMSA purchased certain assets of Sea Land
Services, Inc. (Sea Land) and Sea Train Lines, Inc. (Sea Train).
It also bought all the outstanding shares of Transamerican
Trailer Transport Corporation (TTT). Both Sea Land and Sea Train
used the "Lo-Lo" method of loading and unloading vessels, while
TTT used the "Ro-Ro" method.1 Local 1740 of the International
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1"Lo-Lo" is an acronym for "lift on, lift off," an
operational system in which a crane is used to load and unload
cargo containers in the course of merchant marine activity. "Ro-
Ro" is an acronym for "roll on, roll off," an operational system
whereby cargo containers are rolled in and out of merchant ships
by means of ramps and other special equipment designed for this
purpose. For a fuller exposition, see Trailer Marine Transport
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Corp. v. Rivera Vazquez, 977 F.2d 1, 3 (1st Cir. 1992).
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2
Longshoremen Association (ILA) represented Sea Train's stevedores
(all of whom did Lo-Lo work). ILA Local 1575 represented Sea
Land and TTT stevedores (some of whom did Lo-Lo work and some of
whom did Ro-Ro work). The two unions negotiated separate
collective bargaining agreements (CBAs).
Subsequently, PRMSA retained Marine Transport
Management (MTM) to manage its Ro-Ro operation, and engaged
Puerto Rico Marine Management, Inc. (PRMMI) to operate its Lo-Lo
equipment. To carry out the terms of its engagement, PRMMI hired
many Sea Train and Sea Land employees.2 Both managers
recognized the seniority that the dock workers previously had
acquired while employed by TTT, Sea Train, and Sea Land,
respectively. In time, PRMSA severed relations with MTM and
placed PRMMI in charge of both Ro-Ro and Lo-Lo operations. When
MTM's work force was transferred to PRMMI's payroll, the
stevedores retained their seniority.
Local 1575 represents the dock workers for both Sea
Land and PRMMI. It negotiated a separate CBA with each company.
The CBAs dovetail in many ways, including the creation of a
common pilot list (the CPL) from which "substitutes" are drawn.
This list is arranged by seniority (whether acquired at Sea Land
or PRMMI). It is further subdivided by department and job
classification. The CPL is intended to broaden job opportunities
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2Both Sea Train and Sea Land continued their operations,
using other employees. In 1982 Sea Train ceased operations and
released its work force. It is not involved in the current
litigation.
3
by giving workers the ability to gain employment with either Sea
Land or PRMMI, as vacancies in the permanent work force arise.
Both companies use it as the prime resource for filling vacancies
left by departing employees. When a regular worker retires,
quits, or is cashiered, the highest ranked individual on the CPL
is offered the position and, if he accepts, becomes a regular
employee of either Sea Land or PRMMI, as the case may be.
II. ORIGINS OF THE DISPUTE
II. ORIGINS OF THE DISPUTE
Historically, the CPL contained separate rosters for
Ro-Ro and Lo-Lo workers. Thus, for example, when a vacancy
occurred in a Ro-Ro position, the post would be offered to the
highest ranking Ro-Ro dock worker listed on the CPL, even if the
list contained the name of a more senior Lo-Lo dock worker.
The stevedoring universe changed in February of 1992
when economic considerations prompted PRMMI to abandon the Ro-Ro
system. PRMMI, Sea Land, and the union, after initially
resorting to arbitration, agreed to merge the Ro-Ro and Lo-Lo
lists, placing the affected employees on the CPL in order of
overall seniority, effective April 10, 1992. The plan meant, in
effect, that, within each occupational classification and
department, a Ro-Ro worker with, say, twenty years of seniority,
would be ranked on the CPL ahead of a Lo-Lo worker with nineteen
years of seniority, even with respect to filling a vacancy in a
position performing only Lo-Lo duties. Both the company and the
union considered this strategy to be a more satisfactory
alternative than terminating the Ro-Ro workers outright.
4
On April 23, 1992, more than forty of the Lo-Lo
stevedores who had been pushed further down the CPL by the
interleaving of the Ro-Ro stevedores sued PRMMI, Sea Land, and
Local 1575 in the United States District Court for the District
of Puerto Rico. Invoking section 301 of the Labor Relations
Management Act, 29 U.S.C. 185, the displaced Lo-Lo workers
alleged a breach of the duty of fair representation and a breach
of contract, both stemming from a purported violation of their
seniority rights. They sought to enjoin implementation of the
revised CPL, pointing out that seniority in the Ro-Ro and Lo-Lo
systems traditionally had been separate, and asseverating that
Article VI, Clause 94 of the CBA between Local 1575 and PRMMI
dictated that two distinct seniority lists were to be
maintained.3 III. THE ARBITRATOR'S AWARD
III. THE ARBITRATOR'S AWARD
The district court stayed court proceedings temporarily
and ordered the parties to arbitrate the dispute as mandated by
the CBAs. The arbitrator treated the submitted claim as
requiring him to resolve whether, "pursuant to the contractual
provisions, the applicable laws and the prevailing practice, the
claimants' seniority rights (in the common list of alternate Lo-
Lo workers) had been violated or not since April 10, 1992, when
they were displaced in that list by Ro-Ro workers." After
analyzing the CBAs, the arbitrator concluded that intermingling
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3Clause 94 and other relevant provisions excerpted from the
CBAs are reproduced in the appendix hereto. In each instance, we
use unofficial translations provided by the parties or by the
arbitrator.
5
the Ro-Ro and Lo-Lo employees on a single, revised CPL did not
abridge plaintiffs' seniority rights.
The arbitrator based his decision on two principal
grounds. First, he concluded that Clause 94 lost its meaning
when the employer jettisoned the Ro-Ro system. The arbitrator
wrote:
In the present case, there is no
controversy as to whether PRMMI's Lo-Lo and
Ro-Ro employees pertained to the same
department (Marine Department) when the Ro-Ro
system was eliminated, had the same
classifications in either system, were all
members of the Union and were covered by
PRMMI's Collective Bargaining Agreement.
The evidence shows that the claimants
were and they all appear as substitutes in
the common pilot list and that regular
employees that displaced them from the Ro-Ro
system of the same department had their same
classifications.
The claimants do not claim to have
greater seniority than the Ro-Ro employees
that displaced them nor that the latter
group's classifications are different from
theirs . . . . They claim that the seniority
in both systems, always for a long period of
years, was kept separately as provided for in
clause 94 of Article VI of PRMMI's
Collective Bargaining Agreement. The facts .
. . so show. Nevertheless, the facts also
show that the Ro-Ro system was eliminated, .
. . and in that moment [Clause 94] lost its
meaning for in the absence of the Ro-Ro
system there was no reason to keep separate
seniority lists. [footnotes omitted].
The arbitrator also justified his decision by reference
to P.R. Laws Ann. tit. 29, 185c (1976) (Law No. 80), quoted
6
infra note 5. In this regard,4 he stated:
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We understand that the elimination of
the Ro-Ro system could not force PRMMI to
lay-off the system's regular employees . . .
with less seniority in the same
classification. Act No. 80 . . . , the
applicable law in this case, requires that
when there are situations in which the
employer must reduce its work force in the
workplace, it is obligated to do it [by]
following a seniority and classification
order.
Inasmuch as . . . the Ro-Ro employees,
regular workers of the same classification
and department as the claimants, had greater
seniority than [the claimants] had, they had
the right to displace the claimants in the
common pilot list of April 10, 1992.
[citation and footnote omitted].
The arbitral award became final on April 14, 1993. The
plaintiffs asked the district court to set it aside. The court
demurred, instead upholding the award and dismissing plaintiffs'
complaint. This appeal ensued.
IV. DISCUSSION
IV. DISCUSSION
We bifurcate our analysis, first addressing appellants'
exhortation that we should review the arbitrator's decision de
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novo. Concluding, as we must, that a more deferential standard
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of review obtains, we then address appellants' contention that
the arbitrator's reasoning was palpably faulty, thereby
invalidating the award.
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4An arbitral award may sometimes incorporate state law not
inconsistent with established principles of federal labor law.
See Dorado Beach Hotel Corp. v. Union de Trabajadores de lo
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Industria Gastronomica, 959 F.2d 2, 4 (1st Cir. 1992); Challenger
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Caribbean Corp. v. Union Gen. de Trabajadores, 903 F.2d 857, 866-
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67 (1st Cir. 1990).
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A. Standard of Review.
A. Standard of Review
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Appellants boldly assert that, since seniority is a
judicially defined term, its definition presents a question of
law and, therefore, evokes plenary appellate review. In support
of this somewhat jarring proposition, appellants rely on Mitchell
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v. Jefferson County Bd. of Educ., 936 F.2d 539 (11th Cir. 1991).
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Their reliance is misplaced.
Claiming that they were denied equal pay because of
their gender, the Mitchell plaintiffs brought an action under
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Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000 et
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seq. See id. at 542. In resolving the controversy, the Mitchell
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court classified the issue of whether the employer had in place a
bona fide seniority system as a question of law. See id. at 544.
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But Mitchell has no relevance here. It dealt with whether a
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particular system of seniority could be considered bona fide
within the meaning of a federal civil rights statute.
This case, in contrast, deals with a seniority system
of unchallenged validity, and focuses on an arbitrator's
interpretation of the contractual provisions governing how
particular kinds of seniority affect job eligibility under the
CBA. A de novo standard of review is plainly inappropriate in
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such a context because an arbitrator's award concerning
contractually conferred seniority rights must be treated with
great deference by a reviewing court. See Larocque v. R.W.F.,
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Inc., 8 F.3d 95, 96 (1st Cir. 1993); Dallas & Mavis Forwarding
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Co. v. Local 89, 972 F.2d 129, 133 (6th Cir. 1992); Armstrong
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Lodge No. 762 v. Union Pac. R. Co., 783 F.2d 131, 134 (8th Cir.
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1986).
The rationale undergirding these precedents is
impeccable. Many years ago, the Supreme Court cautioned that
"[t]he federal policy of settling labor disputes by arbitration
would be undermined if courts had the final say on the merits of
[arbitral] awards." United Steelworkers v. Enterprise Wheel &
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Car Corp., 363 U.S. 593, 596 (1960). Consequently, "[i]n labor
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arbitration, matters of contract interpretation are typically for
the arbitrator, not for a reviewing court." El Dorado Tech.
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Servs. v. Union Gen., 961 F.2d 317, 319 (1st Cir. 1992).
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Where, as here, parties in the work place agree in a
CBA to submit future disputes to binding arbitration, they almost
always will be bound by the outcome of a properly constituted
arbitral proceeding. See Posadas de Puerto Rico Assocs., Inc. v.
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Asociacion de Empleados de Casino, 821 F.2d 60, 61 (1st Cir.
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1987). So long as an arbitrator's award "draw[s] its essence
from the collective bargaining agreement," and the arbitrator is
"acting within the scope of his delegated authority, his decision
must be upheld." El Dorado Tech. 961 F.2d at 319; accord United
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Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987);
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Dorado Beach Hotel Corp. v. Union de Trabajadores de la Industria
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Gastronomica, 959 F.2d 2, 4 (1st Cir. 1992); Georgia-Pacific
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Corp. v. Local 27, Etc., 864 F.2d 940, 944 (1st Cir. 1988);
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Berklee Coll. of Music v. Berklee Chapter of Mass. Fed'n of
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Teachers, 858 F.2d 31, 32 (1st Cir. 1988), cert. denied, 493 U.S.
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810 (1989).
This does not mean that an arbitrator's discretion is
unlimited. The standard, however, is an unusually deferential
one and the uphill climb confronting a challenger is
correspondingly steep. Apart from cases involving fraud, lack of
jurisdiction, or procedural defects, none of which are alleged
here, a court will not vacate an arbitral award unless it "is
based on reasoning so palpably faulty that no judge or group of
judges could ever conceivably have made such a ruling, or [unless
it] is mistakenly based on a crucial assumption which is
decidedly a non-fact." Challenger Caribbean Corp. v. Union Gen.
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de Trabajadores, 903 F.2d 857, 861 (1st Cir. 1990) (citations and
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internal quotation marks omitted). Such is the standard that
must be applied to the arbitral award in this case.
B. The Merits of the Arbitral Decision.
B. The Merits of the Arbitral Decision.
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Appellants also assert that the arbitrator's decision
is based on faulty reasoning concerning the operability of Clause
94, compounded by a misreading of Puerto Rico law, and that these
defects amount to gross error warranting vacation of the award.
We disagree.
We have examined the arbitrator's conclusion that
Clause 94 became meaningless and, therefore, inoperative, after
the Ro-Ro system became obsolete. We do not find that this
conclusion is based on reasoning so vagarious that the award must
be vacated. To the contrary, perscrutation of the entire record
convinces us that the arbitrator's finding is logical and
10
constitutes a fair reading of the CBA. Of course, as appellants'
counsel eloquently urges, another reading is possible; but, when
there are two plausible ways to interpret provisions within a
collective bargaining agreement, and the arbitrator chooses one
of them, his decision cannot be regarded as palpably faulty.
We see no need to load more cargo on a full pallet.
The arbitrator's decision is closely reasoned and the district
court's memorandum and order, refusing to vacate the arbitral
award, carefully elucidates why the award must be upheld, see
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Hernandez v. ILA, Local 1575, No. 92-1536 HL, slip op. at 4-7
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(D.P.R. Oct. 6, 1993). No useful purpose would be served by
launching our own exegesis. It suffices to say that the final
award has all the earmarks of thoughtful consideration, including
unmistakable signs of a search for the fairest resolution of the
dispute within the confines of the CBA. We detect no gross error
here.
Finally, appellants allege that the arbitral award is
based, at least partially, on an incorrect reading of Law No.
80.5 As the arbitrator interpreted the statute, an employer,
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5The statute provides in pertinent part:
In any case where employees are discharged .
. . it shall be the duty of the employer to
retain those employees of greater seniority
on the job with preference, provided there
are positions vacant or filled by employees
with less seniority in the job within their
occupational classification which may be held
by them . . . .
P.R. Laws Ann. tit. 29, 185c (1986).
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when making layoff decisions, must ordinarily honor seniority
within the affected job classification. Thus, as both Ro-Ro and
Lo-Lo workers have the same classification, PRMMI would have been
risking a violation of the law if it had chosen simply to
furlough regular Ro-Ro employees while allowing Lo-Lo employees
with less seniority to retain their positions on the CPL. The
district court essentially endorsed the arbitrator's view. See
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Hernandez, supra, slip op. at 6. Appellants strive to confess
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and avoid: they do not dispute the arbitrator's vision of how
the statute functions, but, rather, they contend that the statute
does not apply to employees who work under a CBA.
Appellants misread the effect and purpose of Law No.
80. The Puerto Rico Department of Labor's interpretive
guidelines discuss the impact of the statute in the collective
bargaining context:
Act No. 80 contains provisions regarding the
right of the worker to be preferentially
retained over others when the employer is
forced to lay-off employees and on his right
to be preferentially re-employed when that
same employer has to recruit employees after
lay-off. That manifestation of public policy
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prevails over clauses contained in collective
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bargaining agreements which result in
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violation of the same.
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Mario Morales Reyes, Puerto Rico Dep't of Labor and Human
Resources: Guidelines for the Interpretation and Application Of
Act No. 80, at 58-59 (1979) (emphasis supplied). Given this
clear statement of public policy by the government of Puerto
Rico, we think that the arbitrator had a sufficient basis to rely
on Law No. 80 as part of the rationale for his decision.
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V. CONCLUSION
V. CONCLUSION
We need go no further. We agree with the district
court that, here,
the arbitrator's decision was drawn from the
collective bargaining agreement and
applicable law. The award's reasoning is not
palpably faulty nor mistakenly based on a
crucial assumption. The argument that the
elimination of the Ro-Ro system discharged
the applicability of Section 94 is supported
by . . . the record. The argument that the
inclusion of Ro-Ro employees on the common
pilot list was pursuant to Law 80 is also
valid. The arbitrator's [analysis] does not
amount to manifest error of law . . . .
Hernandez, supra, slip op. at 6-7. Hence, the judgment of the
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district court upholding the arbitral award must be
Affirmed.
Affirmed
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Appendix
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1. Article VI, Clause 94 of the collective bargaining
agreement between PRMMI and Local 1575 provides:
PRMMI will keep separate the Lo-Lo and Ro-Ro
seniorities, and in the receipt and dispatch
may use on line of Ro-Ro and Lo-Lo when the
work merits to receive or dispatch. In the
maintenance area the employer will maintain
said area separate, except that it may pass
work from one area to another if and when
said situation is merited.
The collective bargaining agreement between Sea Land
and Local 1575 does not contain this provision. With the
exception of Clause 94, the two collective bargaining agreements
contain the same provisions in relation to an employee's
seniority.
2. Article I-C(1) of both collective bargaining
agreements provides:
Seniority is defined as the continuous
service time in the Company by department
(Warehouse, Car Division, Maintenance,
Marine) from the commencement date as
employee in said company within the
contracting unit, if and when the employee is
efficient, complies with the conditions of
this Agreement and the rules of the Company
for which he works, except in the Marine
Department that seniority will be by gangs
and not by seniority of the employee within
the contracting unit and in the Maintenance
Department that seniority will be by
classification within the same department.
3. Article I-C(3)(c) of both collective bargaining
agreements provides:
The seniority lists shall be prepared in
accordance with this Agreement, maintaining
the seniority and classification orders as a
pilot list, once the necessary corrections
are made.
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4. Article I-D(6)(a) of PRMMI's collective bargaining
agreement is identical to Article I-C(8)(a) of Sea Land's
agreement. The clause provides:
A pilot seniority list by classification
shall always be kept as it has up to this
day. From said list, each Company will keep
their own regular employees by
classification. When a vacancy occurs, the
first substitute from said classification
with greatest seniority shall be used.
5. Article XV(C) of the collective bargaining
agreement between PRMMI and Local 1575 provides in pertinent
part:
Any dispute that cannot be settled through
the complaint and grievance procedure, and
any dispute with respect to the
interpretation or alleged violation of any
provision of this agreement shall be
submitted in writing to arbitration.
The collective bargaining agreement between Sea Land
and Local 1575 contains a substantially similar clause.
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