USCA1 Opinion

United States Court of Appeals

For the First Circuit
____________________

No. 95-2142

WHEELABRATOR ENVIROTECH OPERATING SERVICES INCORPORATED,

Plaintiff, Appellee,

v.

MASSACHUSETTS LABORERS DISTRICT COUNCIL LOCAL 1144

AND LABORERS INTERNATIONAL UNION OF NORTH AMERICA,

Defendants, Appellants.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Douglas P. Woodlock, U.S. District Judge]

___________________

____________________

Before

Stahl, Circuit Judge,

_____________
Aldrich, Senior Circuit Judge,
____________________
and Lynch, Circuit Judge.
_____________

____________________

Ira Sills
_________

with whom

Segal, Roitman & Coleman

_________________________

was on

brief

appellant.
Benjamin B. Culp, Jr.,
______________________

with whom

Steven M. Bernstein, Fishe

____________________ _____

Phillips, Bradford J. Smith and Goodwin, Procter & Hoar, were on br

________ _________________
_______________________

for appellee.
___________________

July 10, 1996

____________________
1

STAHL,
STAHL,

Circuit Judge.
Circuit Judge.
______________

This

district court's

grant of

challenge

to a

vacating

an

arbitration

award.

appeal involves

summary judgment

Massachusetts

Laborers

District

reinstatement

Envirotech

bargaining agreement with the Union

by failing to compel its

successor

Because we hold that the

arbitrator

agreement, we

the

10

Council,

of an

Local

1144,

("the

arbitrator's

ruling that

seeks

Wheelabrator

Operating Services, Inc., breached its collective

to assume the agreement.

plausibly

district

construed

the

collective

vacate the district court's

court

to

enter

judgment

arbitration award.

11

I.
I.
__

12

Background
Background
__________

13

Union")

A. Relevant Facts
__________________

bargaining

ruling and direct

confirming

the

14

On October 16, 1980, Envirotech Operating Services,

15

Inc., ("EOS")

entered

16

Taunton,

17

operation

of the

18

plant").1

The

19

renegotiated

20

City ultimately

21

EOS

into

Massachusetts,

contract with

("the

City")

City's waste

parties

to

this

on June

30,

over

in

again in 1989.

operational contract

1992.

As a

of

the

plant ("the

contract

it in 1985, and amended it

to expire

City

take

water treatment

amended

allowed this

the

1982,

The

with the

condition of

its

____________________

22

1.

Baker International

23

contracted

24

International

25

International.

26

years later and formed the appellee, Wheelabrator

27

Operating Systems, Inc.

with

the

owned EOS in 1980

City

subsequently

to operate
sold

EOS

the
to

when it initially
plant.
Waste

Baker

Management

Ultimately, Wheelabrator acquired EOS several

Envirotech

-33

initial

agreement with

number of the City's

plant.

exclusive

plant

agreement with the Union.

EOS

and

the

City, EOS

hired a

significant

employees who were then working

also agreed

to

recognize

the

at the

Union as

the

bargaining representative for its employees at the

to

assume

the

City's

collective

bargaining

Following the

bargaining

Union

expiration in

agreement (which

agreed

to

the

1982 of

EOS had

first

in

this initial

assumed), EOS

series

of

and the

collective

10

bargaining agreements, each lasting three years in

11

The

12

that is the subject of this appeal (the "CBA") in 1989 and it

13

expired on

14

of EOS's operational

15

three-year

16

clause" that provided:

parties negotiated

the collective

bargaining agreement

May 31, 1993, eleven months

contract with

agreements

contained

after the expiration

the City.

an

Each of

identical

17

In the event the operation of the

plant,

18

in whole

by any

19

other

20

successor organization . . .

21

to

22

Agreement unless that assumption in whole

all

or in

entity,

terms

part, is assumed
public

and

or

duration.

private,

the

shall agree

conditions

of

this

the

"successor

23

or in part would be in violation of legal

24

rights

25

employees of the successor organization.

26

In March

27

contract with

28

operate

29

bids.

and

the affected

1992 -- prior to the

the City

the plant.

The

obligations of

City did

-- the

EOS and

expiration of EOS's

City solicited

proposals to

three other companies submitted

not require

-44

the bidders

to agree

to

assume

announced

had submitted the winning bid

of the plant effective July 1, 1992.

recognized the Union as

employees.

CBA.

the

EOS-Union

that

CBA.

On

June

Operations Management

23,

1992, the

City

International ("OMI")

and would assume the operation

Subsequently, OMI hired

substantial number of employees who had worked for EOS and

OMI,

At

the bargaining representative of its

however, refused

a city

council meeting

to reconsider

to assume

the EOS-Union

on June 30,

its decision

1992, EOS

10

implored the City

11

contract to OMI.

12

confirmed that it did not intend to assume the EOS-Union CBA.

13

B.

The City declined.

The Arbitrator's Award

to award

the

During the meeting, OMI

__________________________

14

On

June

30, 1992,

the

Union

filed a

grievance

15

against EOS under the procedure outlined in the CBA, alleging

16

that

17

assumption of the

18

obligation because, inter alia,

_____ ____

19

apply

20

between

EOS and

21

plant.

On

22

convened to resolve the dispute.

EOS had

breached the

CBA.

to a situation in

23

CBA by

EOS

failing to

responded that

February 24,

it had no

such

the successor clause did not

which, as here,

the entity

secure OMI's

assuming

1993, an

no privity existed

the operation

of the

arbitration hearing

was

Following the hearing, the arbitrator concluded (1)

24

that the language of the successor clause was

25

that the

parties

intended

the clause

to

ambiguous; (2)

require

EOS

to

-55

obligate

all

successors, even

privity, to assume the

(3) that

obligation

ordered

which it

terms and conditions of the

EOS had failed to

make any effort to

with respect to OMI.

EOS to

those with

make whole

had no

CBA; and

fulfill that

As a remedy, the arbitrator

its former

employees who

began

working for OMI in July 1992 for

benefits, and other

failure

the

conditions incurred as a result of OMI's

to assume the

parties to

all losses in wages, fringe

CBA.

The

offset against

arbitrator further ordered

the award

the value

10

relevant benefits agreed to

11

the

12

the Union's related grievance against the City.

Union or any

13

by OMI in its

negotiations with

payments resulting from

the settlement of

The Union's

grievance against the City

14

the City's

failure to obligate OMI

15

City settled the grievance

16

employees the difference between

17

and

18

EOS-Union

19

compensate the employees

the amount the

CBA.

of any

to assume the CBA.

and agreed to pay all

City,

The

former EOS

what OMI pays the employees

employees would have

The

focused on

however,

for the loss

received under the

did

not

agree

of vacation time

to

and

20

other fringe benefits.

21

C. The District Court's Order

______________________________

22

Following arbitration, EOS

court

seeking to

brought this action

23

federal district

24

award.

25

that the arbitrator had not plausibly construed the CBA.

EOS moved for summary

-66

vacate the

in

arbitrator's

judgment arguing, inter alia,

_____ ____

The

Union also moved for

In ruling on the cross-motions, the district court upheld the

arbitrator's

Although

impression, it

clause as

EOS

interpretation of the clause

of

had

the

summary judgment to confirm

interpretation

the court

admitted

likely would

applying only

privity,

CBA.

it

In so

the award.

of

the

successor

that,

as

a matter

have interpreted the

to subsequent employers

nonetheless

found

the

clause.

of

first

successor

with which

arbitrator's

plausibly based on the language

holding,

the

court

noted

that the

10

arbitrator's interpretation found some support in the Supreme

11

Court's opinion in NLRB v. Burns Int'l Sec. Servs., Inc., 406

____
_____________________________

12

U.S. 272 (1972).

13

prevailing

14

complement

15

considered a "successor employer"

16

at 277-81.

17

In Burns, the Court implicitly

_____

competitive

of

the

The court

bidder

prior

hired

employer's

nonetheless

the arbitrator

that

substantial

workers

could

for certain purposes.

vacated the

Id.
___

ruling

that

19

possibly perform

20

The court reasoned that the clause was unenforceable because,

21

due to the lack of privity,

22

to assume the

whether EOS

could

23

in

24

arbitrator

its obligations under the successor clause.

CBA.

to

to consider

award,

be

18

failing

failed

held that a

EOS had no ability to compel OMI

In short, the district

consider

manifestly

EOS's inability

ignored

the

law

court held that,

to

of

perform,

the

contracts and,

25

instead, pursued an

outcome that reflected

the arbitrator's

-77

own "personal notions of industrial justice."

appeals.

The Union now

-88

II.
II.
___

Standard of Review
Standard of Review
__________________

We review

summary

de novo
__ ____

a district court's

judgment vacating

grant

See Labor Relations Div. of Const. Indus. of Mass., Inc. v.

___ ______________________________________________________

International Bhd. of Teamsters, Local No. 379, 29

______________________________________________

745

district court's rationale but may

independently sufficient

(1st Cir. 1994).

an

decision to

In so doing, we

ground.

arbitrator's decision.

F.3d 742,

are not bound by the

affirm the ruling on

Carreiro v.
________

any

Rhodes Gill &

_____________

10

Co., 68 F.3d 1443, 1446 (1st Cir. 1995).

___

11

Review of arbitral decisions, however, is extremely

12

narrow and

exceedingly deferential.

13

Union v.
_____

14

1995)

15

Trabajadores de la Industria Gastronomica, Local 610, 959

________________________________________________________

16

F.2d

17

Brotherhood of Maintenance of Way Employees, 873

_____________________________________________

18

428 (1st Cir. 1989) ("Judicial review of an arbitration award

19

is among the narrowest

20

court

Local 1199 N.E., SEIU,

_____________________

(citing

2, 3-4

Service Employees Int'l

_______________________

70 F.3d 647,

Dorado Beach
Hotel Corp.
____________________________

(1st Cir.

1992));

v.

Union de
_________

Maine Cent. R.R. Co.

______________________

known in the law.").

reviewing an arbitral

651 (1st Cir.

F.2d 425,

In general,

decision does "not

v.

sit to hear

21

claims of factual or

legal error as an appellate

22

in reviewing decisions of lower courts."

23

Int'l Union
____________

v.

24

Essentially,

25

intervening in all but

Misco, Inc.,
____________

reviewing

484

court

court does

United Paperworkers
___________________

U.S.

should

29,

38

refrain

(1987).

from

the most limited circumstances, those

-99

in which

the challenger can establish

award

reasoning

judges, ever could

(3)

concededly

6,

Bettencourt
___________

Cir. 1977).

is "(1)

so palpably

mistakenly

8-9

10

unfounded in

fact; (2)

that no

judge,

conceivably have made

based

Cir.

reason and

faulty

on

a non-fact."

(1st

that the arbitrator's

crucial

Advest, Inc.
____________

1990)

(citations

based on

or group

of

such a ruling;

or

assumption

that

is

v. McCarthy, 914 F.2d

________

omitted);

v. Boston Edison Co., 560 F.2d

__________________

see
___

also
____

1045, 1050 (1st

Specifically, as in this case, when the arbitration

11

concerns

the

interpretation

12

agreement, a court

of

collective

should uphold the view

bargaining

of the arbitrator

13

so

long as

14

agreement, any plausible basis

15

Dorado Technical Servs.

________________________

16

Puerto Rico,
___________

17

words, an arbitrator may not ignore the plain language of the

18

agreement,

19

arbitrator's reading

20

bargaining

21

arbitrator's own

22

484

23

Enterprise Wheel & Car Corp., 363 U.S. 593, 597

____________________________

24

fine, we should refuse to set aside an

U.S.

"it can

find, within

961 F.2d

but

36

four corners

of the

for that interpretation."

El
__

Union Gen. de Trabajadores de

_______________________________

317, 319 (1st

court need

only

Cir. 1992).

be

convinced

In other

that the

"'draws its essence from the collective

agreement'"

at

v.

the

and

does

not merely

rely

notions of "`industrial justice.'"

(quoting

on

the

Misco,
_____

United Steelworkers of Am. v.

_____________________________

(1960)).

In

arbitrator's decision

25

"unless it

can be shown that

the arbitrator acted in

a way

-1010

for which

neither party

could [possibly] have

Local 1145, United Food & Commercial Workers Int'l Union v.

__________________________________________________________

Stop & Shop Cos., 776

_________________

Enterprise Wheel, 363 U.S. at 599).

F.2d 19,

21 (1st Cir.

bargained."

1985) (citing

________________

III.
III.
____

Analysis
Analysis
________

We

divide our analysis into

two parts.

First, we

consider whether the

district court erroneously vacated

arbitration award on the basis that the arbitrator improperly

compel OMI to

the

10

failed to consider

EOS's inability to

assume

11

the CBA.

Finding

the Union's argument

12

point, we

then independently

13

plausibly

interpreted the phrase "successor organization" as

14

properly applying to OMI,

15

have privity.

16

A. Impossibility of Performance
________________________________

persuasive on

review whether the

an entity with which EOS

that

arbitrator

does not

17

The

Union

challenges

that the

the

district

18

conclusion

19

law

20

under

21

that, given the court's finding that the arbitrator plausibly

of contracts"

the

arbitrator "manifestly

court's

by

failing to

doctrine of

disregarded the

excuse EOS's

impossibility.2

performance

The Union

argues

____________________

22

2.

In

Advest, 914
______

23

disregard"

24

deferential, mode of review applicable to arbitral decisions.

25

We

26

instances

27

arbitrator

28

it."

standard

F.2d at 9,
as

explained that, under

where

it

is

recognized the

an

we recognized
alternate,

the "manifest

though

equally

this formulation, review "embraces

clear

from

the

record

applicable law--and

Id.
___

-1111

that

the

then ignored

interpreted the successor clause

that

does not apply to this case.

OMI would

assume the

Essentially,

the

as obligating EOS to assure

CBA, the

impossibility doctrine

We agree.

district

court

held

contends) that

to recognize that, because EOS exercised no control

or

successor clause was impossible.

the

City,

(and

EOS

the arbitrator fundamentally erred in failing

performance

of

its

obligations

While it may be

over OMI

under

the

true that

EOS

could not possibly have compelled OMI to assume the CBA,

10

that fact, however,

11

arbitrator

should have excused EOS's nonperformance.

12

under

contract

doctrine of

impossibility

13

simply

whether

performance

has

14

impossible, but also on whether or not the parties reasonably

15

foresaw

16

circumstances

17

See,
___

18

N.E.2d 603, 606 (Mass.

19

remains whether

20

which should not fairly

21

performance vitally different from

the

on

and

is not determinative

allocated

making

the

risk

performance

e.g., Chase Precast Corp.

____ ___________________

as to whether

become

that

impossible

the

Excuse

depends not

substantially

the

event

might

or

occur.

v. John J. Panessa Co., 566

____________________

1991) ("The principal question .

an unanticipated

circumstance, the risk

be thrown on the promisor,

. .

of

has made

what was reasonably to be

22

expected."); see
___

23

at 715 (2d

24

perform,

25

impossible],

also E. Allan Farnsworth,

____

ed. 1990)

even though

("If a party

expressly undertakes

performance becomes

impracticability

[or

Contracts
_________

9.6,

to

impracticable [or

impossibility] will

not

-1212

excuse performance, and the party will

be liable for damages

for nonperformance.").

risks

able to complete

pay

when

performance so vitally different

originally contemplated, that

be

10

Parties can

of events occurring where

damages.

an

plausibly

they know they

specific performance, but

The rationale

unexpected

said effectively

or

to

assume

the

will not be

will be able

justifying excuse

non-bargained-for

to

arises only

event

makes

from that which the parties

the change in performance

have vitiated

the

consent of

can

the

parties.

11

In this case,

once it is assumed that

the parties

12

intended the successor clause to apply whether or not privity

13

existed

14

argument must fail.

between EOS

and

its

successor, any

impossibility

If, as the arbitrator found, EOS and the

15

Union

intended

and contemplated

that the

successor clause

16

would obligate EOS

17

the

18

obligation

19

include the successor clause,

20

the

21

guarantee

22

conditions of

23

bargained with the knowledge that

24

--

25

interpreted the successor clause -- the fact that performance

to assure that any successor would assume

CBA, EOS cannot

now complain

is impossible.

In

that performance

other words, by

of that

agreeing to

EOS accepted and bargained for

risk that, if it lost the contract, it would effectively

that its

something

"successor" would

the CBA.

we must

As

assume the

long as EOS clearly

assume

if

-1313

terms and

foresaw and

it could lose the contract

the arbitrator

plausibly

might be impossible if EOS indeed lost the contract

moment.

In the

alternative, EOS argues

court correctly vacated

failure to perform

the

that EOS had

had failed to

that the

is of no

district

the arbitration award

because EOS's

under the successor clause

did not cause

Union's injuries.

EOS reasons

breached the successor

compel OMI

that the arbitrator held

clause, not because

to assume the

CBA, but,

it

instead,

because

EOS

did not

even try.

Thus, EOS

10

arbitrator interpreted

11

EOS only the duty to

12

to assume the CBA.

13

power or leverage to bind

14

do so

15

did not have control over OMI, it could not have persuaded or

16

compelled

17

have suffered injury whether or not EOS had "performed" under

18

the successor clause (i.e., tried to compel OMI to assume the

____

19

CBA).

20

clause did not cause any damage to the Union.

21

the successor clause

concludes, the

make a good faith effort to

EOS

OMI (or the City), any

OMI to assume the

Therefore, EOS

this

on

compel OMI

then reasons that, because it had no

would have been futile.

Though

as imposing

In other words,

CBA and, thus,

has

because EOS

the Union would

contends, its breach of

reasoning

attempt to

some

the successor

force,

EOS

22

constructs it (as did the district court) on a false premise.

23

Specifically,

24

the

25

That the arbitrator

EOS reads

duties imposed

by

the arbitrator's

the successor

interpretation of

clause too

recounted EOS's failure

narrowly.

even to try

to

-1414

obligate

OMI as

evidence

that EOS

breached the

successor

clause

does not necessarily mean that, had EOS attempted but

failed to obligate OMI, the

EOS

arbitrator expressly

the intent of the

predecessor to obligate the successor to assume all terms and

________

conditions

unequivocal statement calls for

had

arbitrator would have found that

satisfactorily performed.

of

faith,

stated in

To

the contrary,

the arbitration award

successor clause was an obligation

the

(Emphasis

unsuccessful,

added.)

"that

on the

This

more from EOS than simply

attempt

to

obligate

10

good

11

Indeed, the fact that the arbitrator awarded damages confirms

12

that the arbitrator

13

duty

14

simply

on

but

[CBA]."

the

read the successor clause

EOS to

succeed

a duty to

try.

in obligating

If

its

not, one would

OMI.

as imposing a

successor, not

have to conclude

15

that the arbitrator irrationally awarded damages for injuries

16

to the Union that

17

to perform, and we

18

such

19

reference to EOS's failure even to try to persuade OMI as, at

20

most, a rhetorical flourish, simply emphasizing the extent of

21

EOS's

22

assume the CBA, it did not even try).

23

a conclusion.

were not causally linked to

EOS's failure

have found no compelling reason

At bottom,

breach (i.e., not only

____

we

view the

did EOS fail

arbitrator's

to compel OMI to

In sum, the district court erroneously

vacated the

24

arbitration award on the grounds that EOS could

25

perform its obligations under the successor clause.

-1515

to reach

not possibly

B. Successor Clause
____________________

As noted, much of our analysis so far relies on the

assumption

that the

arbitrator permissibly

successor clause as

assume the CBA.

ruled favorably to the Union on this

by its holding and

requiring EOS to

interpreted the

assure that OMI

would

While we acknowledge that the district court

point, we are not bound

may independently review the arbitrator's

decision

on

this issue.

See
___

Because the issue strikes us

Carreiro,
________

consider it, using de

__

novo review.
____

11

F.3d at

doing, we

12

arbitrator's

13

language of the

14

this case,

15

the parties

16

stated,

our ultimate

17

whether

the

18

clause

"draws

19

agreement" and

20

notions of

In so

interpretation

CBA, and,

is

possibly

consider first

task

arbitrator's

its essence

"industrial

justice."

plain

of

one for which

we

have

to determining

only

interpretation

of

As

the successor

the collective

does not merely reflect

the

the facts

bargained.

is limited

from

whether the

consistent with

second whether, on

have

to

See Labor Relations, 29

___ ________________

the arbitrator's interpretation is

could

at 1446.

as quite close, we now turn

10

745.

68 F.3d

bargaining

the arbitrator's own

Misco,

484 U.S.

at

36

_____

21

(internal quotations omitted). 1. The Plain Language of the

______________________________

22

CBA
___

23

24

We

begin with

the text.

In

relevant part,

successor clause provides:

25

In

the event the operation of the plant,

26

in whole

or in

part, is assumed

-1616

by any

the

other

entity,

successor organization .

to

Agreement.
.

We

arbitrator's

plain language of the successor clause.

successful

"assumed"

the operation of the plant.

10

arguably

read

11

importing

12

covered

13

with

all

terms

agree

public

and

with

bid,

OMI clearly

the

phrase

private,

of

district

is

court

on

that

the

with

the

First, following its

an

"entity" that

had

Next, while one could

"successor

by the clause (e.g., only

____

this

not inconsistent

became

further restriction

the

. . shall agree

conditions

the

interpretation

or

the

organization"

type of

as

entities

those entities in privity

the predecessor), we do not think the text compels that

14

interpretation.

To

15

permissibly

the

16

"assumed" "the operation of the plant"

as defining the scope

17

of the phrase "successor organization."

Thus, because OMI is

18

an "entity"

19

the

20

consistent

21

Johnson Co.
___________

22

Restaurant Employees Int'l Union,

__________________________________

23

(1974)

24

'successor' which is applicable in every legal context.").

contrary,

text

"any

that has "assumed"

arbitrator's conclusion

25

26

read

the

with the

entity"

OMI is

of the

one

could

that

has

the plant,

a "successor"

clause.

Cf.
___

is

Howard
______

v. Detroit Local Joint Executive Bd., Hotel &

_____________________________________________

("There

is,

Furthermore,

reading

other

think

the operation of

that

language

we

gathers

at

and

can be,

as the

least

417

no

U.S.

single

district

some support

court

from

249, 262

n.9

definition of

noted,

the

this

Supreme

27

Court's decision in

Burns.
_____

In Burns,
_____

the Court effectively

-1717

held

that

bidder

predecessor's employees

Burns, 406

that

an entity

had

like OMI

hired

-- a

prevailing competitive

substantial

-- was a

U.S. at 296 (Rehnquist,

complement

of

its

"successor employer,"

see
___

Burger, Brennan, Powell,

_____

JJ.,

dissenting, describing

premised on

recognize

representing

application

majority opinion

the successorship doctrine), and

and

bargain

those

collectively

employees, id.
___

as implicitly

required it to

with

at

the

277-81.

union

Thus,

the

of the term "successor" to an entity that has no

10

direct connection or link to the

original employer, i.e., no

____

11

privity, has some precedent in labor case law.

12

v.

13

1991)

14

contract is

15

with

16

Mgmt. v. NLRB, 901 F.2d 297, 301-05 (3d Cir. 1990) (similar);

See also NLRB

___ ____ ____

Houston Bldg. Serv., Inc., 936 F.2d 178, 180-81 (5th Cir.
_________________________

(subsequent

employer

a "successor

union), cert.
_____

who

successfully

employer" with

denied,
______

502 U.S.

a duty

bids

for

to bargain

1090 (1992);

Systems
_______

_____

____

17

cf.
___

Howard Johnson,
______________

18

. . .

19

others.").

20

may be

417 U.S.

at 262

successor for

Notably

in

Burns,
_____

some

require the "successor

22

obligations

23

its predecessor and the union.

24

Court

25

of

privity existed

the

Court

employer" in that case

collective bargaining

between the

-1818

not

for

did

not

to assume the

agreement between

406 U.S. at 286.

declined to do so principally

new employer

purposes and

however,

21

of the

n.9 ("A

Indeed, the

because a complete lack

successor employer

and its

predecessor.

Id.
___

position that

the successor

read

"successors"

Nevertheless, we

reading.

of a

Labor

narrowly

as

Arguably, such reasoning

clause in this

obligating

with which

EOS

to

In Burns, the Court

_____

The

only

to assume

the reasoning compels

be

those

the CBA.

such a

analyzed only the obligations

successor employer arising generally

Relations Act.

case should

require

it has privity

do not think

supports EOS's

Court did not,

from the National

however, focus on

the

issue

addressed

here:

10

collective

bargaining

11

predecessor employer to obligate

12

it

13

agreement.

agreement

lacks privity to assume

14

In sum,

whether

could

the

agree

parties

to

to

bind

even a successor with which

the terms and

we agree that the

conditions of the

arbitrator's conclusion

15

that OMI is a successor employer is not inconsistent with the

16

plain language of the CBA.

17

2.
The Arbitrator's Own Notions of Industrial
___________________________________________________

18

Justice
_______

19

Notwithstanding

20

arbitrator's

21

successor

interpretation

clause, we

our

fits

decline to

conclusion

within the

end our

that

text

the

of

analysis at

the

this

22

juncture.

Instead,

we proceed to

23

context

24

not merely reflect the arbitrator's own notions of industrial

25

justice.

of this case,

In other

consider whether, in

the arbitrator's

interpretation does

words, we consider whether, on

-1919

the

the facts

presented here,

the

"privity-less" successors,

like OMI, would

See Stop & Shop, 776 F.2d

___ ____________

at 21 (a court

arbitrator's interpretation "unless it

arbitrator

[possibly] have bargained").

successor

the parties could possibly

clause

acted in

obligated

way for

EOS to

EOS and

10

successor

11

necessarily

12

imposing

13

impossible

the

Union could

clause to apply in

required

an

the

obligation

which

to

perform

possibly

that

even

assume the

CBA.

should uphold the

neither party

EOS

and (2)

could

is arguably doubtful
__

have intended

this case, if

parties

on

assure

can be shown that the

In so doing, we agree that it

that

have agreed that

to read

that

would

expose

EOS

the

to have done so

the

clause

both

to

as

(1)

be

a risk

of

14

substantial loss for nonperformance.

15

consider

16

interpretation

17

contends we must conclude, that

18

as imposing an impossible

19

to a risk of substantial loss.

whether

20

acceptance

Therefore, we will now

of

necessarily requires us

the

arbitrator's

to conclude,

as EOS

the parties read the

clause

obligation on EOS that exposed

it

a. Perception that performance is impossible

_____________________________________________

21

If we

accept the arbitrator's

interpretation, EOS

22

contends that the parties would have understood the successor

23

clause as burdening EOS with an impossible obligation because

24

they would

25

gain

have recognized that

leverage over the City

EOS lacked

or any successor

-20-

the ability

to

with which it

20

was not

in privity.

such

successor)

is true with respect to a successor like OMI, it argues that,

with respect

belie the assertion.

a successor

(or

Thus,

EOS would not be

compel the

to assume the CBA.

to the

City, the

City

able to compel

to require

such

While the Union concedes this

facts before

the arbitrator

First, the Union notes that, as part of

the

City's initial contract with

to assume its collective bargaining agreement with the Union.

This suggests, the Union contends, that the City (or at least

perceived that

EOS, the City required EOS

10

EOS might have

11

sympathetically a

12

any future

13

when EOS amended and renegotiated its contract with the City,

14

it

15

bid

16

assume any then existing bargaining agreement between EOS and

17

the Union.

18

agreed to

19

failure

20

would have recognized that it had some obligation to consider

request to

successors.

The

could have bargained with

solicitations a

the City)

would have

impose a similar

condition on

Union further points

the City to

requirement that

viewed

out that,

include in future

all bidders

agree to

The Union also argues that the fact the City has

pay Union members their lost wages following OMI's

to

assume the

CBA further

suggests that

the City

21

22

the welfare of its former employees.

Though

not overly

persuasive, these

23

indeed tend to support the Union's position.

24

pointing out that,

25

City to require

in fact,

it was unable

OMI to assume the CBA.

-2121

arguments do

EOS responds by

to persuade

the

However, nothing in

the record suggests that

City to impose

council meeting,

the contract to OMI.

impose

inference

the

with

even if EOS perceived that

such a

EOS ever attempted to

condition before the

which occurred

after the City

in 1992 does

that EOS may have believed

City to impose the

had awarded

obligate its

clause.

it might not be able to

11

could well have assumed the risk

12

that situation.

we do

not foreclose the

that it could convince

include the successor

the City to

In sum,

1992,

condition when EOS originally agreed

10

13

June 30,

EOS's inability to persuade the City to

the condition on OMI

the Union to

persuade the

successor to assume

not

Moreover,

perusade

the CBA,

EOS

of having to pay damages in

think that,

in accepting

the

14

arbitrator's

15

parties

16

condition on EOS.

17

loss
____

18

interpretation,

necessarily

Nor

do

we

must

intended

to

conclude

impose

that

an

the

impossible

b. Perception of risk of substantial

____________________________________

we believe

that

the parties

necessarily

19

perceived the clause as exposing EOS to a risk of substantial

20

loss.

21

does

22

salaries

23

contract with

24

viewed

the

risk

associated

25

substantial

that

it never

While the

arbitrator's interpretation of

effectively make

and fringe

EOS the

benefits

the City, we

guarantor of

in

the

would

its employees'

event it

do not agree that

with

the clause

that

loses

EOS must have

guarantee

have agreed

its

to

as

so

bear it.

-2222

First,

the risk was temporally

clause posed a significant

that the

eleven

successor employer

CBA survived

months.

limited.

EOS

knew that the

risk only for the period

EOS's contract

with the

of time

City, i.e.,
____

Second, EOS also knew that, under Burns, any

_____

that assumed

the operation of

the plant

and hired a "substantial complement" of EOS's employees would

likely

be

required to

recognize

collective

bargaining.

Hence,

potential liability was limited to the extent that any future

10

agreement between the Union and EOS's successor would be less

11

favorable

12

EOS believed it had achieved the best deal possible under the

13

current

14

required to bargain with the Union,

15

significantly better deal.

16

the risk as substantial

17

that the

18

assume

19

obligation against it.

to the Union than

CBA, it

City

the

CBA

or that

if

that

and

engage in

occurred,

the current CBA.

would not have

would not

the Union

believed that

EOS's

Arguably, if

a successor,

would be able to reach a

Finally, EOS would have perceived

only to the extent that

require

an

a successor

arbitrator

would

it believed

employer

to

enforce the

20

In

sum, as with the argument that the parties must

21

have perceived the successor clause as imposing an impossible

22

obligation,

23

arbitrator's

24

parties perceived the clause as exposing EOS to a significant

25

risk

we

do

not

think

interpretation,

of substantial

loss.

we

that,

must

Though

-2323

as

in

accepting

conclude

a matter

that

of

the

the

first

impression we

given

contractual language, we cannot say the arbitrator's

of the successor clause

notions of

with the text, nor

"the

[possibly] have bargained."

our

might well

standard

have decided this

of

deference

the

ambiguity

of

reading

merely reflects the arbitrator's own

industrial justice.

It is

neither inconsistent

so improbable that we are

convinced that

arbitrator acted in a way for which neither party could

Stop & Shop, 776 F.2d at 21.3

___________

IV.
IV.
___

10

Conclusion
Conclusion
__________

11

and

case otherwise,

For the foregoing

reasons, we vacate

the district

12

court's grant

of summary

13

enter

14

arbitration award.

judgment

in

judgment, and

favor

of

the

order the

Union,

court to

confirming

the

____________________

15

3.

We

also note that the

arbitrator found, as

16

fact, that, in

17

Union

18

compel

19

privity,

20

arbitrator specifically

21

that

effect

given

22

participated

in the

23

bargaining agreement between the

24

484

adopting the

successor clause,

shared the understanding that the

a matter of
EOS and

the

clause bound EOS to

all successors, even those with which it did not have

to assume

U.S. at

the CBA.

by

In

making this

credited and relied

a

Union

on testimony to

representative

negotiations of the

37-38 ("Courts

finding, the

had

initial collective

Union and EOS.

do not

who

sit to

See
___

Misco,
_____

hear claims

of

25

factual and legal error" because it is "the arbitrator's view

26

of

27

have] agreed

28

at 653.

the facts and meaning

of the contract

that [the parties

to accept."); Service Employees Int'l, 70 F.3d

________________________

-2424