Appeal from an order of the United States District Court for the Southern District of New York (Mukasey, J.), reversing the United States Bankruptcy Court (Blackshear, J.) and reinstating an arbitrator's award. Reversed.
Winter and Miner, Circuit Judges, Billings*fn*, District Judge.
Certified Concrete Co. Drivers Committee of Local 282 (the "Certified Drivers Committee" or "CDC") appeals from an order of the United States District Court for the Southern District of New York (Mukasey, J.), reversing an order of the United States Bankruptcy Court (Blackshear, J.) that vacated an arbitrator's award in favor of Transit Mix Concrete Corp. Drivers Committee of Local 282 (the "Transit Mix Drivers Committee" or "TMDC"). The award directed Certified Concrete Co. ("Certified") to combine its employee list with that of Transit Mix Concrete Corp. ("Transit Mix").
David Brodsky, as trustee in bankruptcy for both Certified and Transit Mix, originally commenced this action in bankruptcy court to challenge the arbitrator's award. Although named as defendant, CDC supported the trustee's position. The bankruptcy court vacated the award and TMDC appealed. The district court reversed, finding that the award was a proper exercise of the arbitrator's powers under the Certified contract. On this appeal, the Certified Drivers Committee claims that the district court erred in reinstating the arbitrator's award. CDC argues that the arbitrator's award fails to "draw its essence" from the contract, see United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960). For the reasons that follow, we agree, and we reverse the order of the district court.
Transit Mix and Certified are commonly-owned manufacturers and distributors of ready-mix concrete. Each is party to an identical collective bargaining agreement with Local 282 of the International Brotherhood of Teamsters ("Local 282" or the "union"), the collective bargaining representative of the drivers employed by Transit Mix and Certified.
Each contract (the "Certified contract" and the "Transit Mix contract") sets forth the rights and obligations of the employer with respect to its employees, and each includes a section governing seniority, Section 9, which provides in pertinent part: "When the Company is a 'buy-out' the men go to the bottom of the list. In a 'merger,' the men are to be slotted." Joint App. at 57. The contracts also provide for creation of a "Disputes Panel," empowered to resolve disputes between the parties. The panel has jurisdiction to hear
any and all complaints, grievances, controversies or disputes between the Union and the Employer in connection with or in relation to this Agreement or concerning the interpretation, application, performance or alleged breach thereof by either of the parties hereto, or by any other party signatory to this industry-wide collective bargaining Agreement.
Id. at 68. In the event that the panel cannot reach a decision, the issue may be submitted to arbitration. See id. at 69. The arbitrator is granted the same jurisdiction as the panel and has the same powers to "grant mandatory and injunctive relief, damages, and such other relief" as is appropriate. Id.
The instant dispute concerns an arbitrator's award issued in response to a grievance filed by Transit Mix's drivers claiming positions on Certified's roster, a dispute occasioned by the failing fortunes of Transit Mix. On August 7, 1987, Certified filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code, 11 U.S.C. § 1101 et seq. On or about August 12, 1987, Transit Mix suspended its operations, and, on August 21, 1987, it filed a Chapter 11 petition also. The bankruptcy court consolidated the Transit Mix and Certified petitions for procedural purposes only and appointed an operating trustee, David Brodsky, to manage the estates of both debtors.
Upon suspending its operations, Transit Mix laid off its employees. Certified, however, continued operating in Chapter 11. After Transit Mix suspended business, Certified began using Transit Mix employees to fill its needs on a daily basis, once it had exhausted its own roster.
The Transit Mix drivers complained to their union that under Section 9 of the Certified contract they should be "slotted" into the Certified roster, because a "merger" of Transit Mix and Certified had taken place. In response, the union maintained neutrality but, by letter dated August 28, 1987, demanded arbitration with Certified. In the August 28th letter, counsel for the union, Franklin Moss, stated: "I am writing with respect to a grievance that has arisen pursuant to the collective bargaining agreement between Local 282 and Certified Concrete Co." Joint App. at 84. The letter noted the opposite positions of the Transit Mix drivers and the Certified drivers and the union's belief "that the drivers are entitled to a determination by an impartial arbitrator with respect to this matter," id. Moss also expressed his understanding that Certified and the union had agreed to bypass the Disputes Panel and submit the issue directly to arbitration, id. at 84-85.
Certified agreed to the union's demand, an arbitrator was chosen and the arbitration proceeding was scheduled. The union appointed two committees -- TMDC and CDC -- to represent the interests of the employees. Brodsky, representing Certified, participated in the proceeding. After extensive hearings, the arbitrator issued an award in favor of the Transit Mix drivers. In his written opinion, the arbitrator noted that: "There are two groups of employees: (1) Members of a bargaining unit under contract between the Union and Certified Concrete Company; and (2) Members of a bargaining unit under contract between the Union and Transit-Mix." Joint App. at 86 (Arbitrator's Opinion and ...