Appeal from the United States District Court for the Eastern District of Wisconsin, No. 83-C-1968, Terence T. Evans, Judge.
Cudahy and Coffey, Circuit Judges, and Fairchild, Senior Circuit Judge. Coffey, Circuit Judge, dissenting in part.
FAIRCHILD, Senior Circuit Judge.
Appellants Chrysler Marine Corporation and Chrysler Corporation ("Chrysler" or "the Company") appeal from the district court judgment enforcing an arbitrator's award and awarding attorney's fees to appellees International Union, Allied Industrial Workers of America and Local 879 ("the Union"). Jurisdiction was based on § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. For the reasons set forth below, we will AFFIRM the enforcement of the arbitrator's award, and REVERSE the grant of attorneys' fees.
In May, 1983, Chrysler and the Union began to negotiate a successor agreement to that covering the Company's Hartford and Beaver Dam, Wisconsin, plants, which was due to expire on June 30, 1983. Because of rumors that Chrysler was considering closing or selling these plants, the Union twice proposed severance pay plans, both of which Chrysler rejected. In agreeing to a new contract, the Union accepted a company letter of intent stating that "in the event the Company should close all of its Hartford and/or Beaver Dam Plants, the Company will provide the Union six (6) months advance notice of such closing and will negotiate with the Union regarding a Severance Pay Plan."
In August, 1983, Chrysler began to negotiate with Bayliner Corporation for the sale of the Hartford and Beaver Dam plants. Bayliner agreed to acquire Chrysler's assets, to operate the Hartford plant for one year, excluding a reasonable transition period, and to operate the Beaver Dam plan for at least two months. The sale was originally scheduled to become effective December 30, 1983. The agreement was reached December 8, 1983 and the sale was first made known to the Union and the employees at that time.
On December 12, 1983, the Union filed a grievance alleging that the sale was a closing which violated the June 30 agreement because six months' notice had not been given. It requested that the closing be delayed for at least six months for negotiation of a severance pay plan. Chrysler denied the grievance, contending that the sale was not a closing, and the issue was ultimately submitted to arbitration.
The Union immediately brought suit to enjoin the sale pending arbitration. The district court granted a preliminary injunction, but on January 9, 1984, this court granted a stay, finding that the risk of irreparable injury weighed most heavily against Chrysler. The preliminary injunction was reversed May 31, 1984, 735 F.2d 1367. Both orders were unpublished.
On January 11, 1984, Chrysler informed all employees at both plants that effective January 13, 1984, they would no longer be employed. Ownership of the Hartford assets was transferred to the buyer on January 13, 1984, but the Beaver Dam assets were never sold, and operations there continued without interruption. Although Bayliner did not guarantee that the Company's employees would be retained, as of February 6, 1984, 223 of 272 former Chrysler employees were employed at the Hartford plant.
The parties then proceeded with arbitration as provided by their collective bargaining agreement. On May 30, 1984, the arbitrator issued an award. The arbitrator found that the term "close" applied to the sale of the Hartford operation and that Chrysler had therefore obligated itself to give six months' notice of the sale, and to negotiate a severance pay plan. He ordered several adjustments, affecting groups of employees, consistent with the theory that the sale could not have occurred less than six months after December 8, 1983, the date the employees learned of it. These adjustments are not in issue on this appeal. He also directed the parties to attempt to agree upon a severance pay plan comparable to plans in comparable relationships. He stated his opinion "that had such negotiations occurred prior to the effectuation of the sale in question, the Union would have been in an advantageous bargaining position, since the Company would probably have sought its acquiescence to a waiver of the six months' notice requirement which would have enabled it to meet the purchaser's demands with respect to the timing of the transaction. Based upon these considerations, it is the undersigned's opinion that the Union would in all likelihood have been able to negotiate a severance pay plan which provided benefits comparable with the more generous of such plans in existence at that time in comparable employee-union relationships."
The parties were given 90 days in which to negotiate, after which the proceeding would be reconvened at the request of either party. Chrysler brought an action seeking to set aside the award. The parties did not negotiate, and the arbitrator reconvened the proceeding.
A supplemental award was issued on March 15, 1985, including, among other things, a severance pay plan for all former Chrysler employees. The arbitrator reviewed severance pay plans collectively bargained in three plants neighboring Chrysler's. Based upon them, he termed the plan awarded "a fair and generally comparable severance pay plan." The arbitrator stated that because it was impossible to determine with any certainty the Union's and the employees' damages as a result of Chrysler's violation of the contract, he had attempted in the first award to provide an incentive for the Company to reach an agreement with the Union. That having failed, imposition of a severance pay plan is "the most viable way of affording the employees whose contractual rights were violated meaningful relief, and of imposing upon the Company obligations which in any way coincide with the obligations it had at the time of the contractual violation." Supplemental Award at 14. The arbitrator also observed that no lesser or more traditional remedy, such as a cease and desist order or a direction to bargain, could be effective because the parties no longer had a bargaining relationship and Chrysler had no incentive to reach an agreement with the Union. Even employees hired by Bayliner were to receive severance pay, because when Chrysler ceased operations, its employees had no rights to employment with the buyer. Moreover, while one purpose of severance pay is to provide income between jobs, it also compensates employees for their service and for termination for reasons unrelated to their conduct.
The district court ordered enforcement of both awards. It found that the arbitrator's construction of the contract did not manifestly ignore the agreement, and that the creation of the severance plan was within the scope of his remedial powers. The court also awarded attorney's fees incurred by the Union to enforce the award.
This court has repeatedly stressed that review of an arbitration award is extremely limited. See International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW and Local 449 v. Keystone Consolidated Industries, Inc., 782 F.2d 1400, 1402 (7th Cir. 1986) and cases cited therein. So long as the arbitrator interpreted the contract in making the award, even if arguably incorrectly, it must be upheld. Ethyl Corp. v. United Steelworkers of America, 768 F.2d 180, 187 (7th Cir. 1985).
An award may be overturned only if the arbitrator must have based his award on his own personal notions of right and wrong, for only then does the award fail "to draw its essence from the collective bargaining agreement" as required by the Supreme Court in United Steelworkers v. Enterprise Wheel, 363 U.S. 593, 597, 80 S. Ct. 1358, 1361, 4 L. Ed. 2d 1424, and by ourselves in Ethyl Corporation, 768 F.2d at 184-85; Jones Dairy Farm v. Local No. P-1236, United Food and Commercial Workers International Union, 760 F.2d 173, 176 (7th Cir. 1985), certiorari denied, 474 U.S. 845, 106 S. Ct. 136, 88 L. Ed. 2d 112; Miller Brewing Co. v. Brewery Workers Local Union No. 9, 739 F.2d 1159, 1162 (7th Cir. 1984), certiorari denied, 469 U.S. 1160, 105 S. Ct. 912, 83 L. Ed. 2d 926 . . . .
This low standard of review is essential to prevent a "judicialization" of the arbitration process. Ethyl Corporation, 768 F.2d at 184. Arbitration is an alternative to the judicial resolution of disputes, and an extremely low standard of review is necessary to prevent arbitration from becoming merely an added preliminary step to judicial resolution rather than a true alternative. Id. The parties have bargained ex ante for arbitration as an alternative means of dispute resolution, and ex post they must abide by this bargain. Camacho [ v. Ritz-Carlton Water Tower, 786 F.2d 242, 244 (7th Cir. 1986)].
E. I. Dupont de Nemours v. Grasselli Employees Independent Ass'n of East Chicago, Inc., 790 F.2d 611, 614 (7th Cir. 1986).
Chrysler does not challenge the arbitrator's construction of the collective bargaining agreement nor his finding of a breach by failing to give the Union six months' notice of the sale and failing to negotiate regarding a severance pay plan. Instead, it argues that the remedy awarded exceeds the authority granted to the arbitrator by the contract.
The arbitration clause provides that:
the decision of the arbitrator shall be final, and binding on all parties. The arbitrator shall have authority only to decide questions as to the meaning and application of the terms of this Agreement, and such arbitrator shall have no authority to change existing rate ranges, incentive base rates or day work rates, for any labor grade or to add, delete or modify any of the terms of this Agreement.
Chrysler contends that by creating the duty "out of whole cloth" to provide severance pay, the arbitrator modified the terms of the agreement by imposing the obligation to come to terms, where only negotiations had been bargained for. It also argues that the arbitrator's reasoning was faulty, and that the award to employees who were hired by Bayliner exceeds ...