

                        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  &amp; Coleman  was on  brief for                                                           
    appellant.
        Benjamin  B. Culp, Jr.,  with whom  Steven M.  Bernstein, Fisher &amp;                                                                              
    Phillips, Bradford J. Smith and Goodwin, Procter &amp; Hoar, were on brief                                                               
    for appellee.
                                                

                                July 10, 1996
                                                 
 1                STAHL,  Circuit  Judge.    This  appeal involves  a                      STAHL,  Circuit  Judge.                                            

 2      challenge  to a  district court's  grant of  summary judgment

 1      vacating   an  arbitration  award.    Massachusetts  Laborers

 2      District   Council,   Local   1144,   ("the   Union")   seeks

 3      reinstatement  of an  arbitrator's  ruling that  Wheelabrator

 4      Envirotech  Operating Services, Inc., breached its collective

 5      bargaining agreement with the Union  by failing to compel its

 6      successor  to assume the agreement.  Because we hold that the

 7      arbitrator  plausibly  construed  the  collective  bargaining

 8      agreement, we  vacate the district court's  ruling and direct

 9      the   district  court  to   enter  judgment   confirming  the

10      arbitration award.

11                                    I.                                          I.                                            

12                                Background                                      Background                                                

13      A.  Relevant Facts                              

14                On October 16, 1980, Envirotech Operating Services,

15      Inc., ("EOS")  entered  into  a  contract with  the  City  of

16      Taunton,  Massachusetts,  ("the  City")  to  take   over  the

17      operation  of the  City's waste  water treatment  plant ("the

18      plant").1    The  parties  amended  this  contract  in  1982,

19      renegotiated  it in 1985, and amended it  again in 1989.  The

20      City ultimately  allowed this  operational contract  with the

21      EOS  to expire  on June  30,  1992.   As a  condition of  its

                                                            

22      1.  Baker International  owned EOS in 1980  when it initially
23      contracted  with  the  City  to operate  the  plant.    Baker
24      International  subsequently  sold  EOS  to  Waste  Management
25      International.  Ultimately, Wheelabrator acquired EOS several
26      years later and formed the appellee, Wheelabrator  Envirotech
27      Operating Systems, Inc.

                                     -3-                                          3

 1      initial  agreement with  the  City, EOS  hired a  significant

 2      number of the City's  employees who were then working  at the

 3      plant.    EOS  also agreed  to  recognize  the  Union as  the

 4      exclusive  bargaining representative for its employees at the

 5      plant  and  to  assume   the  City's  collective   bargaining

 6      agreement with the Union.   

 7                Following the  expiration in  1982 of  this initial

 8      bargaining  agreement (which  EOS had  assumed), EOS  and the

 9      Union  agreed   to  the  first  in  a  series  of  collective

10      bargaining agreements, each lasting three years in  duration.

11      The  parties negotiated  the collective  bargaining agreement

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

13      expired on  May 31, 1993, eleven months  after the expiration

14      of EOS's operational  contract with  the City.   Each of  the

15      three-year  agreements  contained  an   identical  "successor

16      clause" that provided:

17                In the event the operation of the  plant,
18                in whole  or in  part, is assumed  by any
19                other  entity,  public  or  private,  the
20                successor organization . . .  shall agree
21                to  all  terms  and  conditions  of  this
22                Agreement unless that assumption in whole
23                or in part would be in violation of legal
24                rights  and  obligations of  the affected
25                employees of the successor organization.

26                In March  1992 -- prior to the  expiration of EOS's

27      contract with  the City  -- the  City solicited  proposals to

28      operate  the plant.  EOS and  three other companies submitted

29      bids.   The  City did  not require  the bidders  to agree  to

                                     -4-                                          4

 1      assume  the  EOS-Union  CBA.   On  June  23,  1992, the  City

 2      announced  that  Operations Management  International ("OMI")

 3      had submitted the winning bid  and would assume the operation

 4      of the plant effective July 1, 1992.  Subsequently, OMI hired

 5      a  substantial number of employees who had worked for EOS and

 6      recognized the Union as  the bargaining representative of its

 7      employees.   OMI,  however, refused  to assume  the EOS-Union

 8      CBA.

 9                At  a city  council meeting  on June 30,  1992, EOS

10      implored the City  to reconsider  its decision  to award  the

11      contract to OMI.  The City declined.  During the meeting, OMI

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

13      B.  The Arbitrator's Award                                      

14                On  June  30, 1992,  the  Union  filed a  grievance

15      against EOS under the procedure outlined in the CBA, alleging

16      that  EOS had  breached the  CBA by  failing to  secure OMI's

17      assumption of the  CBA.  EOS  responded that  it had no  such

18      obligation because, inter alia,  the successor clause did not                                          

19      apply  to a situation in  which, as here,  no privity existed

20      between  EOS and  the entity  assuming  the operation  of the

21      plant.   On  February 24,  1993, an  arbitration hearing  was

22      convened to resolve the dispute.

23                Following the hearing, the arbitrator concluded (1)

24      that the language of the successor clause was  ambiguous; (2)

25      that the  parties  intended  the clause  to  require  EOS  to

                                     -5-                                          5

 1      obligate  all  successors, even  those with  which it  had no

 2      privity, to assume the  terms and conditions of the  CBA; and

 3      (3) that  EOS had failed to  make any effort to  fulfill that

 4      obligation  with respect to OMI.  As a remedy, the arbitrator                                              

 5      ordered  EOS to  make whole  its former  employees who  began

 6      working for OMI in July 1992 for  all losses in wages, fringe

 7      benefits, and other  conditions incurred as a result of OMI's

 8      failure  to assume the  CBA.  The  arbitrator further ordered

 9      the  parties to  offset against  the award  the value  of any

10      relevant benefits agreed to  by OMI in its  negotiations with

11      the  Union or any  payments resulting from  the settlement of

12      the Union's related grievance against the City.

13                The Union's  grievance against the City  focused on

14      the City's  failure to obligate OMI  to assume the CBA.   The

15      City settled the grievance  and agreed to pay all  former EOS

16      employees the difference between  what OMI pays the employees

17      and  the amount the  employees would have  received under the

18      EOS-Union  CBA.     The  City,  however,  did  not  agree  to

19      compensate the employees  for the loss  of vacation time  and

20      other fringe benefits.

21      C.  The District Court's Order                                          

22                Following arbitration, EOS  brought this action  in

23      federal district  court  seeking to  vacate the  arbitrator's

24      award.   EOS moved for summary  judgment arguing, inter alia,                                                                        

25      that the arbitrator had not plausibly construed the CBA.  The

                                     -6-                                          6

 1      Union also moved for  summary judgment to confirm  the award.

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

 3      arbitrator's   interpretation   of   the  successor   clause.

 4      Although  the court  admitted  that,  as  a matter  of  first

 5      impression, it  likely would  have interpreted the  successor

 6      clause as  applying only  to subsequent employers  with which

 7      EOS  had  privity,  it  nonetheless  found  the  arbitrator's

 8      interpretation of the clause  plausibly based on the language

 9      of  the  CBA.    In so  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).  In Burns, the Court implicitly  held that a                                      

13      prevailing   competitive  bidder  that  hired  a  substantial

14      complement  of   the  prior   employer's  workers   could  be

15      considered a "successor employer"  for certain purposes.  Id.                                                                         

16      at 277-81.

17                The court  nonetheless  vacated the  award,  ruling

18      that  the arbitrator  failed  to consider  whether EOS  could

19      possibly perform  its obligations under the successor clause.

20      The court reasoned that the clause was unenforceable because,

21      due to the lack of privity,  EOS had no ability to compel OMI

22      to assume the  CBA.  In short, the district  court held that,

23      in  failing  to  consider  EOS's inability  to  perform,  the

24      arbitrator  manifestly  ignored  the  law  of  contracts and,

25      instead, pursued an  outcome that reflected  the arbitrator's

                                     -7-                                          7

 1      own "personal notions of industrial justice."   The Union now

 2      appeals.

                                     -8-                                          8

 1                                   II.                                         II.                                            

 2                            Standard of Review                                  Standard of Review                                                    

 3                We review  de novo  a district court's  decision to                                        

 4      grant  summary  judgment vacating  an  arbitrator's decision.

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

 6      International Bhd. of Teamsters, Local No. 379, 29  F.3d 742,                                                          

 7      745  (1st Cir. 1994).   In so doing, we  are not bound by the

 8      district court's rationale but may  affirm the ruling on  any

 9      independently sufficient  ground.  Carreiro v.  Rhodes Gill &amp;                                                                         

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

11                Review of arbitral decisions, however, is extremely

12      narrow and  exceedingly deferential.  Service Employees Int'l                                                                         

13      Union v.  Local 1199 N.E., SEIU,  70 F.3d 647,  651 (1st Cir.                                           

14      1995)  (citing   Dorado  Beach   Hotel  Corp.  v.   Union  de                                                                         

15      Trabajadores  de  la Industria  Gastronomica, Local  610, 959                                                                    

16      F.2d  2, 3-4  (1st Cir.  1992));   Maine  Cent.  R.R. Co.  v.                                                                     

17      Brotherhood of  Maintenance of  Way Employees, 873  F.2d 425,                                                         

18      428 (1st Cir. 1989) ("Judicial review of an arbitration award

19      is among the narrowest  known in the law.").   In general,  a

20      court  reviewing an arbitral  decision does "not  sit to hear

21      claims of factual or  legal error as an appellate  court does

22      in reviewing decisions of lower courts."  United Paperworkers                                                                         

23      Int'l  Union  v.  Misco,  Inc.,   484  U.S.  29,  38  (1987).                                          

24      Essentially,   a   reviewing   court  should   refrain   from

25      intervening in all but  the most limited circumstances, those

                                     -9-                                          9

 1      in which  the challenger can establish  that the arbitrator's

 2      award  is "(1)  unfounded in  reason and  fact; (2)  based on

 3      reasoning  so palpably  faulty  that no  judge,  or group  of

 4      judges, ever could  conceivably have made  such a ruling;  or

 5      (3)  mistakenly  based  on   a  crucial  assumption  that  is

 6      concededly  a non-fact."  Advest, Inc.  v. McCarthy, 914 F.2d                                                               

 7      6,  8-9  (1st  Cir.   1990)  (citations  omitted);  see  also                                                                         

 8      Bettencourt  v. Boston Edison  Co., 560 F.2d  1045, 1050 (1st                                              

 9      Cir. 1977).

10                Specifically, as in this case, when the arbitration

11      concerns  the  interpretation  of  a   collective  bargaining

12      agreement, a court  should uphold the view  of the arbitrator

13      so  long as  "it can  find, within  the  four corners  of the

14      agreement, any plausible basis  for that interpretation."  El                                                                         

15      Dorado  Technical Servs.  v.  Union Gen.  de Trabajadores  de                                                                         

16      Puerto Rico,  961 F.2d  317, 319 (1st  Cir. 1992).   In other                       

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

18      agreement,  but  a  court need  only  be  convinced  that the

19      arbitrator's reading  "'draws its essence from the collective

20      bargaining  agreement'"  and  does  not merely  rely  on  the

21      arbitrator's own  notions of "`industrial justice.'"   Misco,                                                                        

22      484  U.S.  at  36  (quoting  United  Steelworkers  of  Am. v.                                                                      

23      Enterprise Wheel &amp; Car Corp., 363 U.S. 593, 597  (1960)).  In                                        

24      fine, we should refuse to set aside an  arbitrator's decision

25      "unless it  can be shown that  the arbitrator acted in  a way

                                     -10-                                          10

 1      for which  neither party  could [possibly] have  bargained." 

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

 3      Stop &amp;  Shop Cos., 776  F.2d 19,  21 (1st Cir.  1985) (citing                             

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

 5                                   III.                                         III.                                             

 6                                 Analysis                                       Analysis                                               

 7                We  divide our analysis into  two parts.  First, we

 8      consider whether the  district court erroneously vacated  the

 9      arbitration award on the basis that the arbitrator improperly

10      failed to consider  EOS's inability to  compel OMI to  assume

11      the CBA.   Finding  the Union's argument  persuasive on  that

12      point, we  then independently  review whether the  arbitrator

13      plausibly  interpreted the phrase "successor organization" as

14      properly applying to OMI,  an entity with which EOS  does not

15      have privity. 

16      A.  Impossibility of Performance                                            

17                The   Union   challenges   the   district   court's

18      conclusion  that the  arbitrator "manifestly  disregarded the

19      law  of contracts"  by  failing to  excuse EOS's  performance

20      under  the  doctrine of  impossibility.2    The Union  argues

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

                                                            

22      2.  In  Advest, 914  F.2d at 9,  we recognized  the "manifest                          
23      disregard"   standard  as   an   alternate,  though   equally
24      deferential, mode of review applicable to arbitral decisions.
25      We  explained that, under  this formulation, review "embraces
26      instances  where  it  is  clear  from  the  record  that  the
27      arbitrator  recognized the  applicable law--and  then ignored
28      it."  Id.                      

                                     -11-                                          11

 1      interpreted the successor clause  as obligating EOS to assure

 2      that  OMI would  assume the  CBA, the  impossibility doctrine

 3      does not apply to this case.  We agree.

 4                Essentially,  the  district  court  held  (and  EOS

 5      contends) that  the arbitrator fundamentally erred in failing

 6      to recognize that, because EOS exercised no control  over OMI

 7      or  the  City,  performance  of  its  obligations  under  the

 8      successor clause was impossible.   While it may be  true that

 9      EOS  could not possibly have compelled OMI to assume the CBA,

10      that fact, however,  is not determinative  as to whether  the

11      arbitrator  should have excused EOS's nonperformance.  Excuse

12      under  the  contract  doctrine of  impossibility  depends not

13      simply   on  whether  performance  has  become  substantially

14      impossible, but also on whether or not the parties reasonably

15      foresaw   and  allocated   the   risk  that   the  event   or

16      circumstances  making  performance  impossible  might  occur.

17      See,  e.g., Chase Precast Corp.  v. John J.  Panessa Co., 566                                                                    

18      N.E.2d 603, 606 (Mass.  1991) ("The principal question .  . .

19      remains whether  an unanticipated  circumstance, the risk  of

20      which should not fairly  be thrown on the promisor,  has made

21      performance vitally different from  what was reasonably to be

22      expected."); see  also E. Allan Farnsworth,  Contracts   9.6,                                                                  

23      at 715 (2d  ed. 1990)  ("If a party  expressly undertakes  to

24      perform,  even though  performance becomes  impracticable [or

25      impossible],  impracticability  [or  impossibility] will  not

                                     -12-                                          12

 1      excuse performance, and the party will  be liable for damages

 2      for nonperformance.").    Parties can  plausibly  assume  the

 3      risks  of events occurring where  they know they  will not be

 4      able to complete  specific performance, but  will be able  to

 5      pay  damages.   The rationale  justifying excuse  arises only

 6      when   an  unexpected   or   non-bargained-for  event   makes

 7      performance so vitally different  from that which the parties

 8      originally contemplated, that  the change in performance  can

 9      be  said effectively  to  have vitiated  the  consent of  the

10      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  between EOS  and  its  successor, any  impossibility

14      argument must fail.  If, as the arbitrator found, EOS and the

15      Union  intended  and contemplated  that the  successor clause

16      would obligate EOS  to assure that any successor would assume

17      the  CBA, EOS cannot  now complain  that performance  of that

18      obligation  is impossible.   In  other words, by  agreeing to

19      include the successor clause,  EOS accepted and bargained for

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

21      guarantee  that its  "successor" would  assume the  terms and

22      conditions of  the CBA.  As  long as EOS clearly  foresaw and

23      bargained with the knowledge that  it could lose the contract

24      --  something  we must  assume  if  the arbitrator  plausibly

25      interpreted the successor clause -- the fact that performance

                                     -13-                                          13

 1      might be impossible if EOS indeed lost the contract  is of no

 2      moment.

 3                In the  alternative, EOS argues  that the  district

 4      court correctly vacated  the arbitration award  because EOS's

 5      failure to perform  under the successor clause  did not cause

 6      the  Union's injuries.  EOS reasons  that the arbitrator held

 7      that EOS had  breached the successor  clause, not because  it

 8      had failed to  compel OMI  to assume the  CBA, but,  instead,

 9      because  EOS  did not  even try.    Thus, EOS  concludes, the

10      arbitrator interpreted  the successor clause  as imposing  on

11      EOS only the duty to  make a good faith effort to  compel OMI

12      to assume the CBA.  EOS  then reasons that, because it had no

13      power or leverage to bind  OMI (or the City), any  attempt to

14      do so  would have been futile.   In other words,  because EOS

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

16      compelled  OMI to assume the  CBA and, thus,  the Union would

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).  Therefore, EOS  contends, its breach of  the successor

20      clause did not cause any damage to the Union.  

21                Though   this  reasoning   has   some  force,   EOS

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

23      Specifically,  EOS reads  the arbitrator's  interpretation of

24      the  duties imposed  by  the successor  clause too  narrowly.

25      That the arbitrator  recounted EOS's failure  even to try  to

                                     -14-                                          14

 1      obligate  OMI as  evidence  that EOS  breached the  successor

 2      clause  does not necessarily mean that, had EOS attempted but

 3      failed to obligate OMI, the  arbitrator would have found that

 4      EOS  had  satisfactorily performed.    To  the contrary,  the

 5      arbitrator expressly  stated in  the arbitration award  "that

 6      the intent of the  successor clause was an obligation  on the

 7      predecessor to obligate the successor to assume all terms and                                   

 8      conditions  of   the  [CBA]."     (Emphasis  added.)     This

 9      unequivocal statement calls for  more from EOS than simply  a

10      good  faith,  but  unsuccessful,  attempt  to  obligate  OMI.

11      Indeed, the fact that the arbitrator awarded damages confirms

12      that the arbitrator  read the successor clause  as imposing a

13      duty  on  EOS to  succeed  in obligating  its  successor, not

14      simply  a duty to  try.  If  not, one would  have to conclude

15      that the arbitrator irrationally awarded damages for injuries

16      to the Union that  were not causally linked to  EOS's failure

17      to perform, and we  have found no compelling reason  to reach

18      such  a conclusion.    At bottom,  we  view the  arbitrator's

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  breach (i.e., not only  did EOS fail  to compel OMI to                               

22      assume the CBA, it did not even try).   

23                In sum, the district court erroneously  vacated the

24      arbitration award on the grounds that EOS could  not possibly

25      perform its obligations under the successor clause.

                                     -15-                                          15

 1      B.  Successor Clause                                

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

 3      assumption  that the  arbitrator permissibly  interpreted the

 4      successor clause as  requiring EOS to  assure that OMI  would

 5      assume the CBA.  While we acknowledge that the district court

 6      ruled favorably to the Union on this  point, we are not bound

 7      by its holding and  may independently review the arbitrator's

 8      decision  on  this issue.   See  Carreiro,  68 F.3d  at 1446.                                                     

 9      Because the issue strikes us  as quite close, we now turn  to

10      consider it, using de  novo review.  See Labor  Relations, 29                                                                     

11      F.3d at  745.   In so  doing, we  consider first  whether the

12      arbitrator's  interpretation  is  consistent with  the  plain

13      language of the  CBA, and,  second whether, on  the facts  of

14      this case,  the arbitrator's interpretation is  one for which

15      the parties  could  possibly  have  bargained.   As  we  have

16      stated,  our ultimate  task  is limited  to determining  only

17      whether  the  arbitrator's  interpretation  of  the successor

18      clause  "draws  its essence  from  the collective  bargaining

19      agreement" and  does not merely reflect  the arbitrator's own

20      notions of  "industrial  justice."   Misco,  484 U.S.  at  36                                                      

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

22      CBA               

23                We  begin with  the text.   In  relevant part,  the

24      successor clause provides: 

25                In  the event the operation of the plant,
26                in whole  or in  part, is assumed  by any

                                     -16-                                          16

 1                other  entity,  public  or  private,  the
 2                successor organization .  . . shall agree
 3                to  all  terms  and  conditions  of  this
 4                Agreement.                               .

 5                We  agree   with  the   district  court   that  the

 6      arbitrator's  interpretation  is  not inconsistent  with  the

 7      plain language of the successor clause.  First, following its

 8      successful  bid,  OMI clearly  became  an  "entity" that  had

 9      "assumed"  the operation of the plant.  Next, while one could

10      arguably   read  the   phrase  "successor   organization"  as

11      importing  a  further restriction  on  the  type of  entities

12      covered  by the clause (e.g., only  those entities in privity                                        

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

14      interpretation.    To  the   contrary,  we  think  one  could

15      permissibly  read  the  text  "any  other  entity"  that  has

16      "assumed" "the operation of the plant"  as defining the scope

17      of the phrase "successor organization."  Thus, because OMI is

18      an "entity"  that has "assumed"  the operation of  the plant,

19      the  arbitrator's conclusion  that  OMI is  a "successor"  is

20      consistent  with the  language  of the  clause.   Cf.  Howard                                                                         

21      Johnson Co.  v. Detroit Local  Joint Executive  Bd., Hotel  &amp;                                                                         

22      Restaurant  Employees  Int'l Union,  417  U.S.  249, 262  n.9                                              

23      (1974)  ("There  is,  and  can be,  no  single  definition of

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

25                Furthermore,  as the  district  court  noted,  this

26      reading  gathers  at  least  some support  from  the  Supreme

27      Court's decision in  Burns.  In Burns,  the Court effectively                                                 

                                     -17-                                          17

 1      held  that  an entity  like OMI  -- a  prevailing competitive

 2      bidder  that  had  hired  a  substantial  complement  of  its

 3      predecessor's employees  -- was a  "successor employer,"  see                                                                         

 4      Burns, 406  U.S. at 296 (Rehnquist,  Burger, Brennan, Powell,                 

 5      JJ.,  dissenting, describing  majority opinion  as implicitly

 6      premised on  the successorship doctrine), and  required it to

 7      recognize   and   bargain   collectively   with   the   union

 8      representing  those  employees, id.  at  277-81.   Thus,  the                                               

 9      application  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.  See also NLRB                                                                         

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

13      1991)  (subsequent  employer  who  successfully  bids  for  a

14      contract is  a "successor  employer" with  a duty  to bargain

15      with  union), cert.  denied,  502 U.S.  1090 (1992);  Systems                                                                         

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

17      cf.  Howard Johnson,  417 U.S.  at 262  n.9 ("A  new employer                               

18      . . .  may be  a  successor for  some  purposes and  not  for

19      others.").

20                Notably  in  Burns,  however,  the  Court  did  not                                        

21      require the "successor  employer" in that case  to assume the

22      obligations  of the  collective bargaining  agreement between

23      its predecessor and the union.  406 U.S. at 286.  Indeed, the

24      Court  declined to do so principally  because a complete lack

25      of  privity existed  between the  successor employer  and its

                                     -18-                                          18

 1      predecessor.   Id.   Arguably, such reasoning  supports EOS's                              

 2      position that  the successor  clause in this  case should  be

 3      read  narrowly  as  obligating  EOS  to  require  only  those

 4      "successors"  with which  it has privity  to assume  the CBA.

 5      Nevertheless, we  do not think  the reasoning compels  such a

 6      reading.   In Burns, the Court  analyzed only the obligations                               

 7      of a  successor employer arising generally  from the National

 8      Labor  Relations Act.  The  Court did not,  however, focus on

 9      the  issue   addressed  here:    whether  the  parties  to  a

10      collective  bargaining  agreement  could  agree  to  bind   a

11      predecessor employer to obligate  even a successor with which

12      it  lacks privity to assume  the terms and  conditions of the

13      agreement.  

14                In sum,  we agree that 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    our    conclusion    that    the

20      arbitrator's  interpretation  fits  within the  text  of  the

21      successor  clause, we  decline to  end our  analysis at  this

22      juncture.  Instead,  we proceed to  consider whether, in  the

23      context  of this case,  the arbitrator's  interpretation does

24      not merely reflect the arbitrator's own notions of industrial

25      justice.  In other  words, we consider whether, on  the facts

                                     -19-                                          19

 1      presented here,  the parties could possibly  have agreed that

 2      the  successor  clause  obligated  EOS to  assure  that  even

 3      "privity-less" successors,  like OMI, would  assume the  CBA.

 4      See Stop  &amp; Shop, 776 F.2d  at 21 (a court  should uphold the                            

 5      arbitrator's interpretation "unless it  can be shown that the

 6      arbitrator  acted in  a  way for  which  neither party  could

 7      [possibly] have bargained").   

 8                In so doing, we agree that it  is arguably doubtful                                                       

 9      that  EOS and  the  Union could  possibly  have intended  the

10      successor  clause to apply in  this case, if  to have done so

11      necessarily  required  the  parties  to read  the  clause  as

12      imposing  an  obligation  on  EOS  that  would  both  (1)  be

13      impossible  to  perform  and (2)  expose  EOS  to  a risk  of

14      substantial loss for nonperformance.   Therefore, we will now

15      consider    whether    acceptance    of   the    arbitrator's

16      interpretation  necessarily requires us  to conclude,  as EOS

17      contends we must conclude, that  the parties read the  clause

18      as imposing an impossible  obligation on EOS that exposed  it

19      to a risk of substantial loss.  

20                     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  have recognized that  EOS lacked  the ability  to

25      gain  leverage over the City  or any successor  with which it

                                     -20-                                          20

 1      was not  in privity.  Thus,  EOS would not be  able to compel

 2      such  a successor  (or  compel the  City  to require  such  a

 3      successor)  to assume the CBA.  While the Union concedes this

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

 5      with respect  to the  City, the  facts before  the arbitrator

 6      belie the assertion.  First, the Union notes that, as part of

 7      the  City's initial contract with  EOS, the City required EOS

 8      to assume its collective bargaining agreement with the Union.

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

10      EOS might have  perceived that  the City)  would have  viewed

11      sympathetically a  request to  impose a similar  condition on

12      any future  successors.  The  Union further points  out that,

13      when EOS amended and renegotiated its contract with the City,

14      it  could have bargained with  the City to  include in future

15      bid  solicitations a  requirement that  all bidders  agree to

16      assume any then existing bargaining agreement between EOS and

17      the Union.   The Union also argues that the fact the City has

18      agreed to  pay Union members their lost wages following OMI's

19      failure  to  assume the  CBA further  suggests that  the City

20      would have recognized that it had some obligation to consider

21      the welfare of its former employees.  

22                Though  not overly  persuasive, these  arguments do

23      indeed tend to support the Union's position.  EOS responds by

24      pointing out that,  in fact,  it was unable  to persuade  the

25      City to require  OMI to assume the CBA.   However, nothing in

                                     -21-                                          21

 1      the record suggests that  EOS ever attempted to  persuade the

 2      City to impose  such a  condition before the  June 30,  1992,

 3      council meeting,  which occurred  after the City  had awarded

 4      the contract to OMI.  EOS's inability to persuade the City to

 5      impose  the condition on OMI  in 1992 does  not foreclose the

 6      inference  that EOS may have believed  that it could convince

 7      the  City to impose the  condition when EOS originally agreed

 8      with  the Union to  include the successor  clause.  Moreover,

 9      even if EOS perceived that  it might not be able to  perusade

10      the City to  obligate its  successor to assume  the CBA,  EOS

11      could well have assumed the risk  of having to pay damages in

12      that situation. 

13                In sum,  we do  not  think that,  in accepting  the

14      arbitrator's  interpretation,  we  must  conclude   that  the

15      parties   necessarily  intended   to  impose   an  impossible

16      condition on EOS.        b. Perception of risk of substantial                                                                         

17      loss                

18                Nor  do  we believe  that  the parties  necessarily

19      perceived the clause as exposing EOS to a risk of substantial

20      loss.   While the  arbitrator's interpretation of  the clause

21      does  effectively make  EOS the  guarantor of  its employees'

22      salaries  and fringe  benefits  in  the  event it  loses  its

23      contract with  the City, we  do not agree that  EOS must have

24      viewed  the  risk  associated   with  that  guarantee  as  so

25      substantial  that  it never  would  have agreed  to  bear it.

                                     -22-                                          22

 1      First,  the risk was temporally  limited.  EOS  knew that the

 2      clause posed a significant  risk only for the period  of time

 3      that the  CBA survived  EOS's contract  with the  City, i.e.,                                                                        

 4      eleven  months.  Second, EOS also knew that, under Burns, any                                                                    

 5      successor employer  that assumed  the operation of  the plant

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

 7      likely  be  required to  recognize  the Union  and  engage in

 8      collective  bargaining.    Hence,  if  that  occurred,  EOS's

 9      potential liability was limited to the extent that any future

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

11      favorable  to the Union than  the current CBA.   Arguably, if

12      EOS believed it had achieved the best deal possible under the

13      current  CBA, it  would not have  believed that  a successor,

14      required to bargain with the Union,  would be able to reach a

15      significantly better deal.  Finally, EOS would have perceived

16      the risk as substantial  only to the extent that  it believed

17      that the  City  would not  require  a successor  employer  to

18      assume  the  CBA  or that  an  arbitrator  would  enforce the

19      obligation against it.

20                In  sum, as with the argument that the parties must

21      have perceived the successor clause as imposing an impossible

22      obligation,  we   do  not   think  that,  in   accepting  the

23      arbitrator's  interpretation,  we  must  conclude   that  the

24      parties perceived the clause as exposing EOS to a significant

25      risk  of substantial  loss.   Though  as  a matter  of  first

                                     -23-                                          23

 1      impression we  might well  have decided this  case otherwise,

 2      given  our  standard  of   deference  and  the  ambiguity  of

 3      contractual language, we cannot say the arbitrator's  reading

 4      of the successor clause  merely reflects the arbitrator's own

 5      notions of  industrial justice.   It is  neither inconsistent

 6      with the text, nor  so improbable that we are  convinced that

 7      "the  arbitrator acted in a way for which neither party could

 8      [possibly] have bargained."  Stop &amp; Shop, 776 F.2d at 21.3                                                    

 9                                   IV.                                         IV.                                            

10                                Conclusion                                      Conclusion                                                

11                For the foregoing  reasons, we vacate  the district

12      court's grant  of summary  judgment, and  order the  court to

13      enter  judgment  in  favor   of  the  Union,  confirming  the

14      arbitration award.

                                                            

15      3.  We  also note that the  arbitrator found, as  a matter of
16      fact, that, in  adopting the  successor clause,  EOS and  the
17      Union  shared the understanding that the  clause bound EOS to
18      compel  all successors, even those with which it did not have
19      privity,  to assume  the CBA.   In  making this  finding, the
20      arbitrator specifically  credited and relied  on testimony to
21      that  effect   given  by  a  Union   representative  who  had
22      participated  in the  negotiations of the  initial collective
23      bargaining agreement between the  Union and EOS.  See  Misco,                                                                        
24      484  U.S. at  37-38 ("Courts  do not  sit to  hear claims  of
25      factual and legal error" because it is "the arbitrator's view
26      of  the facts and meaning  of the contract  that [the parties
27      have] agreed  to accept."); Service Employees  Int'l, 70 F.3d                                                                
28      at 653.  

                                     -24-                                          24
