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        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                 Fifth Circuit

                                                                   FILED
                                                                  July 14, 2014

                                   No. 12-41119                   Lyle W. Cayce
                                                                       Clerk

UNITED STEEL, PAPER AND FORESTRY, RUBBER MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS
INTERNATIONAL UNION,

             Plaintiff–Appellant

v.

DELEK REFINING, LTD.,

             Defendant–Appellee

************************************************************************

DELEK US HOLDINGS, INC.

             Plaintiff–Appellee

v.

UNITED STEELWORKERS AFL-CIO; UNITED STEELWORKERS, LOCAL
202

             Defendants-Appellants


                Appeal from the United States District Court
                      for the Eastern District of Texas
                           USDC No. 6:11-CV-186
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                                       No. 12-41119

Before HIGGINGBOTHAM, CLEMENT, and PRADO, Circuit Judges.
PER CURIAM:*
       Appellee Delek US Holdings, Inc. (“Delek”) terminated Steve Smith
(“Smith”) for “unacceptable performance and insubordination.” Appellants
United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied
Industrial and Service Workers International Union and its Local 202, AFL-CIO
(collectively the “Union”) filed a grievance. Delek and the Union submitted the
issue to arbitration.       Arbitrator Daniel Jennings (“Arbitrator Jennings”)
determined that just cause existed to suspend—but not discharge—Smith. The
Union brought suit to enforce the arbitration award, and Delek responded with
its own suit seeking vacatur of the arbitration award. After the cases were
consolidated, both parties moved for summary judgment. Finding that the
arbitrator exceeded his authority, the district court denied the Union’s motion
for summary judgment, granted Delek’s motion for summary judgment, and
vacated the arbitration award. For the reasons stated herein, we reverse the
grant of summary judgment in favor of Delek, and render judgment in favor of
the Union.
                         I. FACTS AND PROCEEDINGS
       Delek operates an oil refinery in Tyler, Texas that produces gasoline,
diesel fuel, airplane fuel, and other petroleum products. Smith had been an
employee of Delek for approximately nineteen years.                   At the time of his
termination, he worked as a Pumper/Blender, a position he had held for
approximately twelve years. Smith’s responsibilities included transferring crude
oil and refined petroleum products through pipelines to and from the operating
units and to a variety of storage tanks. Prior to the incident that precipitated


       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.

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                                        No. 12-41119

Smith’s termination, Smith had four separate disciplinary incidents related to
mishandling of oil and petroleum products. First, on December 4, 2005, Smith
spilled 100 barrels of product on the ground. Then, on January 18, 2006, Smith
spilled another 800 barrels of oil. Frank Simmons, Operations Manager at the
time, warned Smith that future mishandling incidents would result in further
discipline up to and including discharge. On September 3, 2006, Smith spilled
120 barrels of oil onto the ground, and failed to report the spill to his supervisor.
Delek suspended Smith without pay for four days on September 8, 2006, and
warned him that “[a]ny additional performance or safety issues will result in
immediate separation of employment.” Finally, on December 12, 2006, Smith
improperly transferred product between tanks, jeopardizing the quality of
military-grade jet fuel. Although Delek initially discharged Smith, it later
rescinded the termination and issued him a warning on December 20, 2006 that
“[a]ny future performance or safety issues of any nature or severity w[ould]
result in immediate separation of employment.”
       Nearly two years later, a fifth incident led to Smith’s termination at issue
in this appeal. On October 27, 2008, Smith transferred 12,959 barrels of “slop
oil”1 from one tank to the crude oil unit. Delek alleged that the transfer was in
direct violation of a “Daily Report” instructing employees not to transfer slop oil
on that day.       As a result of Smith’s actions, Delek discharged Smith on
November 3, 2008 for “unacceptable performance and insubordination.” The
Union filed a grievance on Smith’s behalf on November 10, 2008.
       Pursuant to a collective bargaining agreement (“CBA”) between Delek and
the Union, the parties submitted the dispute over Smith’s discharge to
arbitration. According to its terms, the CBA provided the arbitrator “jurisdiction
and authority to interpret and apply the provisions in the determination of such

       1
        “Slop oil” refers to oil that is recovered after water is removed from mixtures of oil and
water that occur at different parts of the refinery.

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                                  No. 12-41119

grievances but he shall not have jurisdiction or authority to add to or alter in
any way the provisions of this Contract.” The CBA further provided: “The Union
recognizes that the right of Management is to manage the plant, to hire, fire and
discipline for just cause . . . and to perform other managerial functions.” The
parties selected Arbitrator Jennings to hear the grievance.
      Delek contended at arbitration that it had just cause to fire Smith because
the Daily Report in effect on October 27, 2008 directed Smith not to transfer slop
oil. During the arbitration hearing, Smith contested the authenticity of Delek’s
Daily Report and produced a conflicting version that directed Smith to transfer
slop oil into the crude unit. After Delek investigated the conflicting Daily
Reports at Arbitrator Jennings’s request, Arbitrator Jennings determined that
Delek had failed to establish the authenticity of its proffered version. As a
result, the arbitrator concluded that Delek lacked just cause to discharge Smith,
but found that Delek “had sufficient and reasonable cause to discipline [Smith]
for not contacting his supervisor before pumping 12,959 barrels of slop oil from
tank 162 into the crude unit.” Although Arbitrator Jennings recognized Delek’s
December 20, 2006 disciplinary warning that “any future performance or safety
issues of any nature or severity will result in immediate separation of
employment,” he “determine[d] that a suspension of two months without pay
[was] sufficient discipline.”
      After the arbitrator issued his opinion and award on March 7, 2011, Delek
notified the Union that it did not intend to abide by the award. The Union then
sued in federal court seeking enforcement of the arbitration award under 29
U.S.C. § 185, and Delek filed suit seeking vacatur of the award. The district
court consolidated the cases and both parties moved for summary judgment.
The magistrate judge determined that the arbitrator “implicitly found just cause
for discharge” and therefore “any remedial authority to determine a ‘proper
remedy,’ pursuant to the issues submitted to him by the parties for arbitration,

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                                  No. 12-41119

was not triggered.” Finding that the arbitrator “exceeded his authority,” the
magistrate judge recommended that the district court resolve the motions for
summary judgment in Delek’s favor and vacate the arbitration award. The
district court adopted the magistrate judge’s findings and conclusions, holding
that “[t]he arbitrator exceeded his authority as set by an arguable construction
and application of the CBA” and that “[t]he arbitrator made an implicit finding
of just cause for discharge and improperly fashioned an alternate remedy.” The
Union timely filed a notice of appeal.
           II. JURISDICTION AND STANDARD OF REVIEW
      The Union appeals the district court’s final decision on the parties’ cross-
motions for summary judgment.         Accordingly, this Court has jurisdiction
pursuant to 28 U.S.C. § 1291.
      This Court reviews the district court’s grant of summary judgment de
novo, applying the same standards as the district court. Albemarle Corp. v.
United Steel Workers ex rel. AOWU Local 103, 

, 824 (5th Cir. 2013)
(citations omitted). “[J]udicial review of an arbitration award arising from the
terms of a CBA is narrowly limited.” 

internal quotation marks
omitted). If the arbitrator acted within the ambit of his authority, “as set by an
arguable construction and application of the CBA,” then this Court has no
authority to reconsider the merits of the arbitral award. Weber Aircraft Inc. v.
Gen. Warehousemen & Helpers Union Local 767, 

, 824 (5th Cir.
2001) (citation omitted). Instead, the arbitrator’s construction and award must
be affirmed no matter how “good, bad, or ugly.” Oxford Health Plans LLC v.
Sutter, 

, 2071 (2013). This holds true “even if the parties argue
that the award is based on factual errors or on misinterpretation of the CBA,”
Weber 

(citation omitted), and even if “a court is
convinced [the aribtrator] committed serious error,” United Paperworkers Int’l
Union, AFL-CIO v. Misco, Inc., 

, 38 (1987).

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                                  No. 12-41119

      “Where an arbitrator exceeds his contractual authority,” however,
“vacation or modification of the award is an appropriate remedy.” Delta Queen
Steamboat Co. v. Dist. 2 Marine Eng’rs Beneficial Ass’n, 

, 602 (5th
Cir. 1989) (citation omitted). This Court will “scrutinize the award to ensure
that the arbitrator acted in conformity with the jurisdictional prerequisites of
the collective bargaining agreement,” E.I. DuPont de Nemours & Co. v. Local
900 of Int’l Chem. Workers Union, 

, 458 (5th Cir. 1992) (per curiam)
(citation omitted), and will vacate any arbitration award that reflects the
arbitrator’s “own brand of industrial justice” and does not “draw[] its essence
from the collective bargaining agreement,” United Steelworkers of Am. v. Enter.
Wheel & Car Corp., 

, 597 (1960). “[W]here the arbitrator exceeds
the express limitations of his contractual mandate, judicial deference is at an
end.” Delta 

.
                              III. DISCUSSION
      The question before this Court is whether Arbitrator Jennings acted
within the ambit of his authority, as set forth by an arguable construction of the
CBA, when he found cause to suspend, but not discharge, Smith. To answer this
question, we must decide whether Arbitrator Jennings’s finding—that Smith
failed to contact his supervisor before pumping slop oil—left him no choice under
the CBA but to affirm Delek’s decision to terminate Smith and, thus, no
authority to fashion an alternative remedy. Relying upon our decision in
DuPont, the district court vacated the arbitration award. The district court
reasoned that the arbitrator’s language resulted in an implicit finding of just
cause to discharge such that he was not authorized to fashion a less drastic
remedy. On the facts of this case, however, we hold that DuPont does not
support vacatur of the award here. Instead, Albemarle, decided after the district
court rendered judgment, compels this Court to affirm the arbitration award.



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                                  No. 12-41119

      To better understand the DuPont decision, we must first discuss our
opinion in Delta Queen. In Delta Queen, a CBA provided that “[n]o Officer shall
be discharged except for proper cause such as, but not limited to, inefficiency,
insubordination, carelessness, or disregard of the rules of the 

. The arbitrator found that the discharged employee had been
“grossly careless,” but nevertheless ordered him reinstated because the employee
had also been the victim of disparate treatment. 

the employer
challenged the arbitration award, alleging “that the arbitrator, having found
gross carelessness, [was] foreclosed from awarding a remedy at odds with the
company-imposed discipline.” 

agreed and stated that, “[i]f a
collective bargaining agreement defines ‘proper cause’ to include a
nonexhaustive list of offenses, an arbitrator cannot ignore the natural
consequence of his finding that a listed offense was committed.” 

The
CBA clearly stated that “proper cause” for discharge included “carelessness” and
so the arbitrator, having explicitly found “gross carelessness,” impliedly found
cause to discharge under the CBA. 

therefore “proscribed the
arbitrator from reinstating the discharged employee.”             

arbitrator fails to make an express finding of proper cause, he nevertheless will
be so bound if he finds that the employee committed certain underlying acts that
constitute proper cause under the collective bargaining agreement.”).
      The DuPont opinion drew support from Delta Queen. The CBA in DuPont
provided that “no employee will be discharged . . . except for just 

. The parties had agreed that discharge was available only if DuPont
proved that its employees used marijuana while on its premises. 

Although the arbitrator found that DuPont had proven as much, the arbitrator
determined    that   discharge    was   inappropriate       and   instead   ordered
reinstatement, rehabilitative treatment, and drug testing. 

Delta Queen, this Court held that while the arbitrator did not explicitly find that

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                                   No. 12-41119

the employer had just cause to discharge the employees, the arbitrator’s
language nevertheless constituted an implicit finding of just cause to discharge.

    And having implicitly found just cause to discharge, the
arbitrator exceeded his authority by fashioning an alternative remedy. 

        Unlike under the CBAs in Delta Queen and DuPont, discharge was not the
only available sanction under the CBA at issue in Albemarle. The CBA in
Albemarle provided that “the suspending, disciplining and discharging [of]
employees for cause . . . are all rights solely of the 

.
Relying upon this provision, we distinguished the CBA from those in Delta
Queen and DuPont:
        We do not accept, as Albemarle advances, that the arbitrator in this
        case was similarly constrained by the CBA to require the Grievants’
        terminations [as in Delta Queen and DuPont]. The CBA does not
        make clear that any violation of safety rules is an offense requiring
        discharge. Article III provides that Albemarle, “for cause,” may not
        only “discharg[e],” but also “suspend[]” or “disciplin[e]” its
        employees. Thus, by its terms, the CBA contemplates situations in
        which a finding of “cause” could support lesser sanctions than
        termination.

(first alteration added) (citing Weber 

–25). In
fashioning a lesser sanction, the arbitrator “made no implicit or explicit finding
that Albemarle had entertained cause enough to discharge the Grievants; rather,
he explicitly concluded the opposite, that ‘discharge was not appropriate,’ and
that there was instead ‘cause for the Employer to issue discipline.’” 

Because “the CBA contemplate[d] situations in which a finding of
‘cause’ could support lesser sanctions than termination,” it was within the ambit
of the arbitrator’s authority to fashion this alternative remedy despite having
found that the employees violated a safety procedure. See 

). Accordingly, we rejected the employer’s argument


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                                  No. 12-41119

that the arbitrator overstepped his authority by reinstating the discharged
employees despite having found “cause” in the form of a violation of the
company’s safety procedures. 

      We likewise reject Delek’s argument, that Arbitrator Jennings exceeded
his authority by fashioning an alternative remedy, because the distinguishing
facts in Albemarle similarly distinguish the present matter from Delta Queen
and DuPont. Whereas the CBAs in Delta Queen and DuPont contemplated
discharge as the only available sanction upon a finding of cause, the CBA
here—like that in Albemarle—contemplated both discipline and discharge as
available sanctions. Compare 

, with Delta 

, and 

. Providing for the right to “fire and
discipline for just cause,” the CBA between Delek and the Union did not clearly
mandate that any performance or safety issues required discharge.             See

(holding that the availability of discharge,
suspension, and discipline “for cause” did not “make clear that any violation of
safety rules is an offense requiring discharge”). Rather, “by its terms, the CBA
[between Delek and the Union] contemplate[d] situations in which a finding of
‘cause’ could support lesser sanctions than terminations.” See 

the arbitrators in Delta Queen and DuPont were powerless
to fashion lesser alternative remedies, see 

, Arbitrator
Jennings had authority under the CBA to fashion an alternative
remedy—despite finding that Smith failed to contact his supervisor before
transferring slop oil—because “lesser alternative sanction[s]” could “be arguably
inferred from [the] CBA,” see 

). In
fashioning a remedy, Arbitrator Jennings “made no implicit or explicit finding
that [Delek] had . . . cause enough to discharge [Smith]; rather, he explicitly
concluded the opposite, that discharge was not appropriate, and that there was
instead cause for [Delek] to issue discipline.” See 

(citation omitted).

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                                   No. 12-41119

As in Albemarle, then, the provision for sanctions less than termination and the
arbitrator’s explicit conclusion that discharge was not appropriate compels us to
affirm the arbitral award. Arbitrator Jennings did not overstep his authority
when he fashioned an alternative remedy upon finding that Smith failed to
contact his supervisor before transferring slop oil.
      Delek’s December 20, 2006 warning—that “[a]ny future performance or
safety issues of any nature or severity w[ould] result in immediate separation
of employment”—does not suggest otherwise. This Court has previously held
that “where an arbitrator fails to make an express finding of proper cause, he
nevertheless will be so bound if he finds that the employee committed certain
underlying acts that constitute proper cause under the collective bargaining
agreement.” Delta 

(emphasis added). But, the CBA here
does not define “cause” to discharge. “Had [Delek] wished to remove doubt as to
whether [performance issues like Smith’s] met the criteria for cause to
terminate, it had only to bargain for a specific list of violations that will be
considered sufficient grounds for discharge in the CBA.” See 

(citations and internal quotations marks omitted). Delek did not do
so, but simply issued a warning and now contends that its warning to Smith
constituted a binding “last chance agreement” (“LCA”) that supplements the
CBA. See, e.g., Cont’l Airlines, Inc. v. Air Line Pilots Ass’n, Int’l, 

,
406 (5th Cir. 2009) (“An LCA is a supplement to the CBA, and its terms are just
as binding on an arbitrator as those of the CBA: Unambiguous provisions of an
LCA may not be ignored.” (citation omitted)). Although the parties produced the
warning to the arbitrator, who made specific reference to it in his award, Delek
did not advance its LCA argument during arbitration. Because Delek raises this
argument for the first time in federal court, we decline to consider it and decline
to treat Delek’s warning to Smith as a binding supplement to the CBA. See
Brook v. Peak Int’l, Ltd., 

, 674 (5th Cir. 2002) (“It is well settled that

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                                        No. 12-41119

a party may not sit idle through an arbitration procedure and then collaterally
attack the procedure on grounds not raised before the arbitrators when the
result turns out to be adverse.” (citation omitted)); see also Int’l Chem. Workers
Union v. Columbian Chems. Co., 

, 499 (5th Cir. 2003) (declining to
accept a company’s argument that it did not advance during arbitration but
raised for the first time in federal court).
       Despite Delek’s warning to Smith, the CBA did not establish criteria for
determining cause to discharge. Explicating cause, then, was the arbitrator’s
charge. 

(citation omitted). In carrying out that
charge, Arbitrator Jennings found cause sufficient to suspend but not to
discharge. With either sanction available under an arguable construction of the
CBA, Arbitrator Jennings’s finding that Smith failed to contact his supervisor
before pumping slop oil did not leave discharge as the only available sanction
under the CBA. Accordingly, we cannot say that Arbitrator Jennings exceeded
his authority in finding suspension appropriate, “let alone that he was not ‘even
arguably construing or applying the contract and acting within the scope of his
authority.’” 

(quoting Misco, 

). We can go no further
in evaluating the arbitration award.2
                                   IV. CONCLUSION
       We conclude that the arbitrator did not exceed his authority when he
fashioned an alternative remedy. We REVERSE the district court’s award of
summary judgment in favor of Delek vacating the arbitration award, RENDER
judgment in favor of the Union, and AFFIRM the arbitration award.

       2
        Delek argues by reference to its district court pleadings that the arbitration award
should be vacated pursuant to the public policy exception. We decline to address this
argument as inadequately briefed. See, e.g., United States v. Hall, 

, 398 n.9 (5th
Cir. 1998) (citing Yohey v. Collins, 

, 224–25 (5th Cir. 1993)) (declining to address,
as inadequately briefed, arguments asserted by incorporating district court pleadings into
appellate brief ), abrogated on other grounds by United States v. Martinez–Salazar, 

(2000).

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                                  No. 12-41119

EDITH BROWN CLEMENT, Circuit Judge, dissenting.
      For decades, this court has recognized district courts’ ability to find just
cause even when the arbitrator does not expressly state that it exists. E.I.
DuPont de Nemours & Co. v. Local 900 of Int’l Chem. Workers Union, AFL-CIO

, 458 (5th Cir. 1992) (“[W]here an arbitrator implicitly finds that
just cause exists, he need not recite the operative phrase ‘just cause.’”); Delta
Queen Steamboat Co. v. Dist. 2 Marine Eng’rs Beneficial Ass’n, 

, 604
(5th Cir. 1989) (holding that “where an arbitrator fails to make an express
finding of proper cause, he nevertheless will be so bound if he finds that the
employee committed certain underlying acts that constitute proper cause”).
Because the majority’s analysis unnecessarily extends this court’s recent
decision in Albemarle Corp. v. United Steel Workers ex rel. AOWU Local 103, 

(5th Cir. 2013), to effectively abrogate our prior holdings on implicit
findings of just cause, I respectfully dissent.
      The arbitrator’s opinion stated that, after numerous prior infractions,
Delek issued Smith a final warning that “[a]ny future performance or safety
issues of any nature or severity will result in immediate separation of
employment.” It later noted that, after his latest infraction, “the Company had
sufficient and reasonable cause to discipline [Smith] for not contacting his
supervisor before pumping the 12,959 barrels of slop oil from tank 162 into the
crude unit.”   Nothing more is required for us to hold that the arbitrator
implicitly found just cause for termination.
      The majority’s reliance on Albemarle is misplaced.           The chemicals
manufacturer in Albemarle terminated two employees for violating safety
protocols. 

As the employees were leaving work after completing their
shift, they noticed liquid leaking from a building. They attempted to reach their
foreman by phone for five minutes, and then reported the leak to the security
guard on duty, who was able to reach their foreman by radio. But because

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                                  No. 12-41119

company protocol required employees to immediately report chemical spills to
supervision or security, the company terminated the employees a week later. 

court noted that “[t]he arbitrator reasoned . . . ‘that discharge
was not appropriate’ because the Grievants had no prior safety violations, were
exiting the facility after completing their day’s work, and succeeded in notifying
the proper persons of the spill.” 

The court also noted that “[t]he
arbitrator determined the five minute delay [in reporting the spill] did not
measurably increase the leak’s costs to the Company.” 

      A comparison with our facts reveals why Albemarle is inapposite. As
noted above, Smith’s conduct affirmatively caused the erroneous slop oil
transfer, which affected Delek’s profits and costs. And unlike the workers in
Albemarle, the October 27, 2008 transfer was not Smith’s first transgression, but
instead came after several prior incidents that resulted in two final warnings
and a suspension. Unlike in Albemarle, Smith’s accident-prone history and
Delek’s repeated attempts to discipline and warn him provide the requisite
backdrop for holding that the arbitrator’s finding of just cause to discipline was
also an implicit finding of just cause to terminate. Instead, this case’s facts are
closer to those in DuPont, Delta Queen, and other cases where this court found
the arbitrator to have exceeded his authority by fashioning an alternative
remedy after implicitly finding just cause to terminate.
      This court has rejected previous attempts to narrowly construe, as the
majority does here, DuPont’s and Delta Queen’s holdings.          See Am. Eagle
AirLine, Inc. v. Airline Pilots Assoc., Int’l, 

, 410 (5th Cir. 2003)
(“[T]here is simply nothing in the language of DuPont or Delta Queen to suggest
that these holdings were unique to their respective facts.”). And for good reason:
adopting such a narrow reading of DuPont and Delta Queen effectively limits
those cases’ holdings to their facts, and effectively abrogates circuit precedent



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                                  No. 12-41119

while encroaching on any meaningful judicial review that remains over arbitral
awards.
      As did the magistrate judge and district court below, I believe that the
arbitrator’s decision here contained an implicit finding of just cause for
termination. Consistent with our holdings in DuPont and Delta Queen, I would
affirm the district court’s decision to vacate the arbitral award.




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