Houston Lighting & Power Co. v. International Brotherhood of Electrical Workers, Local Union No. 66

Citations: 71 F.3d 179; 1995 U.S. App. LEXIS 34721; 151 L.R.R.M. (BNA) 2020Docket: 94-20693

Court: Court of Appeals for the Fifth Circuit; December 11, 1995; Federal Appellate Court

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In the case before the Fifth Circuit, Houston Lighting and Power Company (HL&P) challenged an arbitration award favoring the International Brotherhood of Electrical Workers, Local Union No. 66 (the Union), regarding the discharge of Sam Thornal during a reduction in force that affected about 1,100 employees. The Union claimed HL&P violated the seniority provisions in their collective bargaining agreement by retaining less senior employees while discharging Thornal. The grievance was submitted to arbitration, where the Union argued that HL&P's evaluation process was arbitrary and unfairly applied to Thornal.

The arbitrator upheld the validity of HL&P's evaluation process as consistent with the collective bargaining agreement but found its application to Thornal unreasonable. After reviewing performance ratings and reassessing Thornal's qualifications relative to other employees, the arbitrator concluded that Thornal deserved a higher evaluation, which would have prevented his layoff under the Agreement. As a result, the arbitrator ordered HL&P to reinstate Thornal with back pay, seniority, and benefits.

HL&P appealed the arbitrator's decision in federal district court, which upheld the arbitrator’s findings, granting summary judgment in favor of the Union. HL&P subsequently filed a timely notice of appeal. The appellate court, however, reversed the district court's decision and vacated the arbitration award.

The central issue is whether the arbitrator exceeded his authority under the collective bargaining agreement by re-evaluating Thornal’s qualifications and recalculating his performance rating. The court concluded that he did exceed his authority. The review standard for summary judgment appeals in arbitration award vacatur is de novo. Judicial review of labor disputes emphasizes that an arbitrator's decision must derive from the collective bargaining agreement and not impose personal judgments. If an arbitrator exceeds the explicit limitations of the agreement, the award can be vacated. Relevant provisions of the collective bargaining agreement establish that: 1) there shall be no discrimination against employees; 2) grievances involve disputes over application or interpretation of the agreement; 3) arbitrators cannot amend or alter the agreement; 4) the Company has exclusive rights to manage its business consistent with the agreement; and 5) seniority governs layoffs when qualifications are equal, with the Company determining qualifications subject to grievance rights. The court notes that arbitral actions contrary to express contractual provisions are not respected, reinforcing that exceeding authority warrants vacating the judgment.

The arbitrator determined that Thornal was unfairly evaluated by the Company and set aside the initial appraisal rating based on violations of law, rules, regulations, and the Master Labor Agreement. The arbitrator concluded that Thornal's minimum performance ratings should have been adjusted to at least '2' for 'Job-Related Characteristics' and a minimum of +2 for 'Other job-related factors.' Furthermore, Thornal should have received credit for low absenteeism and for training others, similar to credits given to other employees. After reassessing Thornal's qualifications, the arbitrator raised his overall score, ruling that the Company was unjustified in laying him off, leading to Thornal's reinstatement with back pay and benefits.

The district court affirmed the arbitrator’s decision, stating that the arbitration issue centered on whether the Company violated the collective bargaining agreement regarding Thornal's layoff. The court emphasized that the arbitrator's role was to determine if the Company or the Union was correct concerning Thornal's qualifications compared to junior employees retained. The court noted that an arbitrator's award must derive its essence from the collective bargaining agreement and must be rationally inferable from it. Upon reviewing the agreement and the arbitrator's findings, the court found that the arbitrator's re-evaluation of Thornal’s qualifications did not align with the agreement’s stipulations, which specified that the arbitrator's role was to interpret the application of the agreement, not to independently assess qualifications.

The Union contends that Article IV, Section 7 of the Agreement allows HL&P to assess an employee's qualifications but is subject to the grievance procedure outlined in Article II. The Union believes this grants an arbitrator the power to reassess qualifications and adjust performance ratings, with such findings being binding on HL&P. However, it is determined that while employees can assert grievances regarding the evaluation process, this does not grant the arbitrator authority to re-evaluate qualifications. Employees can challenge either the evaluation methods as inconsistent with the Agreement or claim discrimination based on protected characteristics, but the Union has not raised any discrimination claims. The arbitrator found the evaluation process to be fair and within contractual boundaries, stating that the employee did not demonstrate the process was fundamentally flawed. The phrase 'subject to an employee’s right to assert a grievance' does not strip the Company of its right to determine qualifications, nor does it empower the arbitrator to make independent qualifications assessments. The definition of 'grievance' does not encompass claims of unfair evaluation for layoffs. The arbitrator's reliance on external practices is outside the Agreement's language. The Company retains the exclusive right to make qualification determinations, and if the evaluation process were found inconsistent, the arbitrator should have remanded the case to the Company for reassessment rather than conducting an independent evaluation. Thus, the district court's judgment is reversed, and the arbitration award is vacated.