
USCA1 Opinion

	




          June 6, 1994          [NOT FOR PUBLICATION]                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                              _________________________          No. 93-2274                               JOSE HERNANDEZ, ET AL.,                               Plaintiffs, Appellants,                                          v.                       INTERNATIONAL LONGSHOREMEN ASSOCIATION,                                   LOCAL 1575, ET AL.,                                Defendants, Appellees.                              _________________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                    [Hon. Hector M. Laffitte, U.S. District Judge]                                              ___________________                              _________________________                                        Before                          Selya and Boudin, Circuit Judges,                                            ______________                             and Carter,* District Judge.                                          ______________                              _________________________               John Ward Llambias for appellants.               __________________               Nicolas   Delgado   Figueroa   for  appellee   International               ____________________________          Longshoremen Association, Local 1575.               Rafael Cuevas Kuinlam, with  whom Antonio Cuevas Delgado and               _____________________             ______________________          Cuevas Kuinlam & Bermudez were on brief, for corporate appellees.          _________________________                              _________________________                              _________________________          _______________          *Of the District of Maine, sitting by designation.                    SELYA, Circuit  Judge.  In this  proceeding, appellants                    SELYA, Circuit  Judge.                           ______________          strive  to  convince  us   that,  notwithstanding  the  deference          routinely  paid  by  courts  to  arbitral  awards,  this  is  the          exception that proves the rule.  We are not persuaded.          I.  BACKGROUND          I.  BACKGROUND                    Two decades  ago, aware of Puerto  Rico's dependency on          marine   transportation   for   future   economic   growth,   the          Commonwealth   established  the   Puerto  Rico   Marine  Shipping          Authority (PRMSA).  The agency's raison d'etre was to ensure "the                                           _____________          citizens of Puerto  Rico . . . an adequate and inexpensive supply          of basic commodities, and to foster the development and expansion          of trade  and industry. .  . ."  P.R.  Laws Ann. tit.  23,   3052          (1974).  The statute  authorized PRMSA to acquire shares  in, and          to  operate, any enterprise  that might  assist in  achieving the          stated policy goals.  See id.   3055.                                ___ ___                    In  1974, PRMSA  purchased certain  assets of  Sea Land          Services,  Inc. (Sea Land) and Sea Train Lines, Inc. (Sea Train).          It  also  bought  all  the outstanding  shares  of  Transamerican          Trailer Transport Corporation (TTT).  Both Sea Land and Sea Train          used the "Lo-Lo"  method of loading and  unloading vessels, while          TTT  used the "Ro-Ro" method.1   Local 1740  of the International                                        ____________________               1"Lo-Lo"  is  an  acronym  for  "lift  on,   lift  off,"  an          operational system  in which a crane  is used to  load and unload          cargo containers  in the course of merchant marine activity. "Ro-          Ro" is an acronym for "roll  on, roll off," an operational system          whereby  cargo containers are rolled in and out of merchant ships          by means of ramps  and other special equipment designed  for this          purpose.  For  a fuller exposition, see Trailer  Marine Transport                                              ___ _________________________          Corp. v. Rivera Vazquez, 977 F.2d 1, 3 (1st Cir. 1992).          _____    ______________                                          2          Longshoremen Association (ILA) represented Sea Train's stevedores          (all of whom  did Lo-Lo  work).  ILA  Local 1575 represented  Sea          Land and TTT stevedores (some of  whom did Lo-Lo work and some of          whom  did  Ro-Ro work).    The  two  unions  negotiated  separate          collective bargaining agreements (CBAs).                    Subsequently,    PRMSA   retained    Marine   Transport          Management  (MTM)  to manage  its  Ro-Ro  operation, and  engaged          Puerto  Rico Marine Management, Inc. (PRMMI) to operate its Lo-Lo          equipment.  To carry out the terms of its engagement, PRMMI hired          many  Sea   Train  and  Sea  Land  employees.2     Both  managers          recognized  the seniority  that the  dock workers  previously had          acquired  while  employed  by  TTT,  Sea  Train,  and  Sea  Land,          respectively.   In  time, PRMSA  severed relations  with  MTM and          placed PRMMI in charge of both Ro-Ro and  Lo-Lo operations.  When          MTM's  work  force  was   transferred  to  PRMMI's  payroll,  the          stevedores retained their seniority.                    Local  1575 represents  the dock  workers for  both Sea          Land and  PRMMI.  It negotiated a separate CBA with each company.          The  CBAs  dovetail in  many ways,  including  the creation  of a          common pilot list  (the CPL) from which  "substitutes" are drawn.          This  list is arranged by seniority (whether acquired at Sea Land          or  PRMMI).   It  is further  subdivided  by department  and  job          classification.  The CPL is intended to broaden job opportunities                                        ____________________               2Both  Sea Train  and Sea  Land continued  their operations,          using other employees.   In 1982 Sea Train ceased  operations and          released its  work force.   It  is  not involved  in the  current          litigation.                                          3          by  giving workers the ability to gain employment with either Sea          Land  or PRMMI, as vacancies  in the permanent  work force arise.          Both companies use it as the prime resource for filling vacancies          left  by departing  employees.   When a  regular  worker retires,          quits,  or is cashiered, the highest ranked individual on the CPL          is offered the  position and,  if he accepts,  becomes a  regular          employee of either Sea Land or PRMMI, as the case may be.          II.  ORIGINS OF THE DISPUTE          II.  ORIGINS OF THE DISPUTE                    Historically,  the CPL  contained separate  rosters for          Ro-Ro  and  Lo-Lo workers.   Thus,  for  example, when  a vacancy          occurred in a  Ro-Ro position, the post  would be offered to  the          highest ranking Ro-Ro dock worker listed on the CPL, even if  the          list contained the name of a more senior Lo-Lo dock worker.                    The stevedoring  universe changed  in February of  1992          when economic considerations prompted  PRMMI to abandon the Ro-Ro          system.    PRMMI,  Sea  Land,  and  the  union,  after  initially          resorting to  arbitration, agreed  to merge the  Ro-Ro and  Lo-Lo          lists,  placing the  affected employees  on the  CPL in  order of          overall  seniority, effective April 10, 1992.  The plan meant, in          effect,   that,  within  each   occupational  classification  and          department, a Ro-Ro worker with, say, twenty years  of seniority,          would be ranked on the CPL ahead of a Lo-Lo  worker with nineteen          years of seniority,  even with respect to filling  a vacancy in a          position  performing only Lo-Lo duties.  Both the company and the          union  considered  this  strategy   to  be  a  more  satisfactory          alternative than terminating the Ro-Ro workers outright.                                          4                    On  April  23,  1992,  more  than  forty  of  the Lo-Lo          stevedores  who had  been  pushed further  down  the CPL  by  the          interleaving of  the Ro-Ro stevedores  sued PRMMI, Sea  Land, and          Local 1575 in the  United States District Court for  the District          of  Puerto Rico.   Invoking  section 301  of the  Labor Relations          Management Act,  29 U.S.C.    185,  the  displaced Lo-Lo  workers          alleged a  breach of the duty of fair representation and a breach          of  contract, both stemming  from a purported  violation of their          seniority rights.   They sought  to enjoin implementation  of the          revised CPL, pointing out  that seniority in the Ro-Ro  and Lo-Lo          systems  traditionally had been  separate, and  asseverating that          Article  VI, Clause 94  of the CBA  between Local 1575  and PRMMI          dictated   that  two   distinct  seniority   lists  were   to  be          maintained.3  III.  THE ARBITRATOR'S AWARD                        III.  THE ARBITRATOR'S AWARD                    The district court stayed court proceedings temporarily          and ordered the parties  to arbitrate the dispute as  mandated by          the  CBAs.    The  arbitrator  treated  the  submitted  claim  as          requiring him  to resolve  whether, "pursuant to  the contractual          provisions, the applicable laws  and the prevailing practice, the          claimants' seniority rights (in the  common list of alternate Lo-          Lo workers) had been violated or  not since April 10, 1992,  when          they  were displaced  in  that list  by  Ro-Ro workers."    After          analyzing the  CBAs, the arbitrator concluded  that intermingling                                        ____________________               3Clause 94 and other  relevant provisions excerpted from the          CBAs are reproduced in the appendix hereto.  In each instance, we          use unofficial  translations provided  by the parties  or by  the          arbitrator.                                          5          the Ro-Ro and Lo-Lo  employees on a  single, revised CPL did  not          abridge plaintiffs' seniority rights.                    The  arbitrator  based his  decision  on  two principal          grounds.  First,  he concluded  that Clause 94  lost its  meaning          when  the employer jettisoned  the Ro-Ro system.   The arbitrator          wrote:                         In  the  present   case,  there  is   no                    controversy as  to whether PRMMI's  Lo-Lo and                    Ro-Ro   employees   pertained  to   the  same                    department (Marine Department) when the Ro-Ro                    system   was   eliminated,   had   the   same                    classifications  in  either system,  were all                    members  of  the Union  and  were  covered by                    PRMMI's Collective Bargaining Agreement.                         The  evidence  shows that  the claimants                    were and  they all appear  as substitutes  in                    the  common  pilot  list  and   that  regular                    employees  that displaced them from the Ro-Ro                    system of the same department  had their same                    classifications.                         The  claimants  do  not  claim  to  have                    greater  seniority  than the  Ro-Ro employees                    that  displaced  them  nor  that  the  latter                    group's  classifications  are different  from                    theirs . . . .  They claim that the seniority                    in both systems, always  for a long period of                    years, was kept separately as provided for in                    clause     94  of   Article  VI   of  PRMMI's                    Collective Bargaining Agreement.  The facts .                    . .  so show.   Nevertheless, the  facts also                    show  that the Ro-Ro system was eliminated, .                    . . and in  that moment [Clause 94]  lost its                    meaning  for in  the  absence  of  the  Ro-Ro                    system  there was no  reason to keep separate                    seniority lists. [footnotes omitted].                    The arbitrator also justified his decision by reference          to P.R.  Laws Ann. tit.  29,   185c  (1976) (Law No.  80), quoted                                          6          infra note 5.  In this regard,4 he stated:          _____                         We  understand  that the  elimination of                    the  Ro-Ro  system could  not force  PRMMI to                    lay-off the  system's regular employees . . .                    with    less    seniority    in   the    same                    classification.   Act  No.  80 .  .  . ,  the                    applicable  law in  this case,  requires that                    when   there  are  situations  in  which  the                    employer  must reduce  its work force  in the                    workplace,  it  is obligated  to  do  it [by]                    following  a   seniority  and  classification                    order.                         Inasmuch as  . . .  the Ro-Ro employees,                    regular  workers  of the  same classification                    and department as the claimants,  had greater                    seniority  than [the claimants] had, they had                    the right  to displace  the claimants in  the                    common   pilot  list   of  April   10,  1992.                    [citation and footnote omitted].                    The arbitral award became final on April 14, 1993.  The          plaintiffs asked the  district court to set it aside.   The court          demurred, instead upholding the award and  dismissing plaintiffs'          complaint.  This appeal ensued.          IV.  DISCUSSION          IV.  DISCUSSION                    We bifurcate our analysis, first addressing appellants'          exhortation that  we should  review the arbitrator's  decision de                                                                         __          novo.  Concluding, as  we must, that a more  deferential standard          ____          of review  obtains, we  then address appellants'  contention that          the  arbitrator's   reasoning   was  palpably   faulty,   thereby          invalidating the award.                                        ____________________               4An arbitral  award may sometimes incorporate  state law not          inconsistent with  established principles  of federal labor  law.          See  Dorado  Beach Hotel  Corp. v.  Union  de Trabajadores  de lo          ___  __________________________     _____________________________          Industria Gastronomica, 959 F.2d 2, 4 (1st Cir. 1992); Challenger          ______________________                                 __________          Caribbean Corp. v. Union Gen. de Trabajadores, 903 F.2d 857, 866-          _______________    __________________________          67 (1st Cir. 1990).                                          7                               A.  Standard of Review.                               A.  Standard of Review                                   __________________                    Appellants  boldly assert  that, since  seniority is  a          judicially defined  term, its  definition presents a  question of          law and, therefore,  evokes plenary appellate review.  In support          of this somewhat jarring proposition, appellants rely on Mitchell                                                                   ________          v. Jefferson County Bd. of Educ., 936 F.2d 539  (11th Cir. 1991).             _____________________________          Their reliance is misplaced.                    Claiming  that they  were denied  equal pay  because of          their  gender, the  Mitchell plaintiffs  brought an  action under                              ________          Title VII of  the Civil Rights Act  of 1964, 42 U.S.C.    2000 et                                                                         __          seq.  See id. at 542.  In resolving the controversy, the Mitchell          ____  ___ __                                             ________          court classified the issue of whether the employer had in place a          bona fide seniority system as a question of law.  See id. at 544.                                                            ___ __          But  Mitchell has no  relevance here.   It  dealt with  whether a               ________          particular  system of  seniority  could be  considered bona  fide          within the meaning of a federal civil rights statute.                    This case,  in contrast, deals with  a seniority system          of   unchallenged  validity,  and   focuses  on  an  arbitrator's          interpretation   of  the  contractual  provisions  governing  how          particular kinds  of seniority  affect job eligibility  under the          CBA.  A  de novo standard of  review is plainly  inappropriate in                   __ ____          such  a   context  because   an  arbitrator's   award  concerning          contractually  conferred seniority  rights must  be treated  with          great  deference by a reviewing  court.  See  Larocque v. R.W.F.,                                                   ___  ________    _______          Inc.,  8 F.3d 95,  96 (1st Cir. 1993);  Dallas & Mavis Forwarding          ____                                    _________________________          Co. v.  Local 89, 972  F.2d 129, 133  (6th Cir. 1992);  Armstrong          ___     ________                                        _________                                          8          Lodge  No. 762 v. Union Pac. R.  Co., 783 F.2d 131, 134 (8th Cir.          ______________    __________________          1986).                    The   rationale   undergirding   these  precedents   is          impeccable.   Many years  ago, the  Supreme Court cautioned  that          "[t]he federal  policy of settling labor  disputes by arbitration          would be undermined if courts had  the final say on the merits of          [arbitral] awards."   United  Steelworkers v. Enterprise  Wheel &                                ____________________    ___________________          Car Corp., 363 U.S.  593, 596 (1960).  Consequently,  "[i]n labor          _________          arbitration, matters of contract interpretation are typically for          the  arbitrator, not  for a  reviewing court."   El  Dorado Tech.                                                           ________________          Servs. v. Union Gen., 961 F.2d 317, 319 (1st Cir. 1992).          ______    __________                    Where,  as here, parties in  the work place  agree in a          CBA to submit future disputes to binding arbitration, they almost          always will be  bound by  the outcome of  a properly  constituted          arbitral proceeding.  See Posadas de Puerto Rico Assocs., Inc. v.                                ___ ____________________________________          Asociacion  de Empleados  de Casino,  821 F.2d  60, 61  (1st Cir.          ___________________________________          1987).  So  long as  an arbitrator's award  "draw[s] its  essence          from the collective bargaining  agreement," and the arbitrator is          "acting within the scope of his delegated authority, his decision          must be  upheld."  El Dorado Tech. 961 F.2d at 319; accord United                             _______________                  ______ ______          Paperworkers  Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987);          _________________________    ___________          Dorado Beach Hotel Corp. v. Union de Trabajadores de la Industria          ________________________    _____________________________________          Gastronomica,  959 F.2d  2,  4 (1st  Cir. 1992);  Georgia-Pacific          ____________                                      _______________          Corp.  v. Local  27, Etc.,  864 F.2d  940, 944  (1st  Cir. 1988);          _____     _______________          Berklee  Coll.  of Music  v. Berklee  Chapter  of Mass.  Fed'n of          ________________________     ____________________________________          Teachers, 858 F.2d 31, 32 (1st Cir. 1988), cert. denied, 493 U.S.          ________                                   _____ ______                                          9          810 (1989).                    This does  not mean that an  arbitrator's discretion is          unlimited.   The standard,  however, is an  unusually deferential          one   and  the   uphill   climb  confronting   a  challenger   is          correspondingly steep.  Apart from cases involving fraud, lack of          jurisdiction, or  procedural defects,  none of which  are alleged          here,  a court  will not vacate  an arbitral award  unless it "is          based on reasoning  so palpably faulty that no judge  or group of          judges could ever conceivably have made such a ruling, or [unless          it]  is  mistakenly  based  on  a  crucial  assumption  which  is          decidedly a non-fact."  Challenger  Caribbean Corp. v. Union Gen.                                  ___________________________    __________          de Trabajadores, 903 F.2d 857, 861 (1st Cir. 1990) (citations and          _______________          internal quotation  marks omitted).   Such  is the standard  that          must be applied to the arbitral award in this case.                       B.  The Merits of the Arbitral Decision.                       B.  The Merits of the Arbitral Decision.                           ____________________________________                    Appellants also assert  that the arbitrator's  decision          is based on faulty reasoning concerning the operability of Clause          94, compounded by a misreading of Puerto Rico law, and that these          defects amount  to gross error warranting vacation  of the award.          We disagree.                    We  have  examined  the  arbitrator's  conclusion  that          Clause 94  became meaningless and, therefore,  inoperative, after          the  Ro-Ro system  became obsolete.    We do  not find  that this          conclusion is based on reasoning so vagarious that the award must          be  vacated.  To the contrary, perscrutation of the entire record          convinces  us  that  the  arbitrator's  finding  is  logical  and                                          10          constitutes a fair reading of the CBA.  Of course, as appellants'          counsel eloquently urges, another  reading is possible; but, when          there are  two plausible ways  to interpret  provisions within  a          collective  bargaining agreement, and  the arbitrator chooses one          of them, his decision cannot be regarded as palpably faulty.                    We see  no need to  load more cargo  on a  full pallet.          The arbitrator's  decision is  closely reasoned and  the district          court's  memorandum and  order, refusing  to vacate  the arbitral          award, carefully  elucidates why  the award  must be  upheld, see                                                                        ___          Hernandez v.  ILA, Local  1575, No. 92-1536  HL, slip op.  at 4-7          _________     ___  ___________          (D.P.R. Oct. 6,  1993).   No useful  purpose would  be served  by          launching our own exegesis.   It suffices  to say that the  final          award has all the earmarks of thoughtful consideration, including          unmistakable  signs of a search for the fairest resolution of the          dispute within the confines of the CBA.  We detect no gross error          here.                    Finally, appellants allege  that the arbitral award  is          based, at least  partially, on  an incorrect reading  of Law  No.          80.5   As  the arbitrator interpreted  the statute,  an employer,                                        ____________________               5The statute provides in pertinent part:                    In any case where  employees are discharged .                    . . it shall  be the duty of the  employer to                    retain those employees  of greater  seniority                    on  the job  with preference,  provided there                    are positions  vacant or filled  by employees                    with less seniority in  the job within  their                    occupational classification which may be held                    by them . . . .          P.R. Laws Ann. tit. 29,   185c (1986).                                          11          when  making layoff  decisions, must  ordinarily honor  seniority          within  the affected job classification.  Thus, as both Ro-Ro and          Lo-Lo workers have the same classification, PRMMI would have been          risking a  violation  of  the law  if  it had  chosen  simply  to          furlough regular  Ro-Ro employees while  allowing Lo-Lo employees          with less  seniority to retain  their positions on the  CPL.  The          district court  essentially endorsed the arbitrator's  view.  See                                                                        ___          Hernandez,  supra, slip op. at  6.  Appellants  strive to confess          _________   _____          and avoid:   they do not  dispute the arbitrator's vision  of how          the statute functions, but, rather, they contend that the statute          does not apply to employees who work under a CBA.                    Appellants misread  the effect  and purpose of  Law No.          80.     The  Puerto  Rico  Department   of  Labor's  interpretive          guidelines  discuss the impact  of the statute  in the collective          bargaining context:                    Act  No. 80 contains provisions regarding the                    right  of  the  worker to  be  preferentially                    retained over  others  when the  employer  is                    forced to  lay-off employees and on his right                    to  be  preferentially re-employed  when that                    same employer has to recruit  employees after                    lay-off.  That manifestation of public policy                              ___________________________________                    prevails over clauses contained in collective                    _____________________________________________                    bargaining   agreements   which   result   in                    _____________________________________________                    violation of the same.                    _____________________          Mario Morales  Reyes,  Puerto  Rico  Dep't  of  Labor  and  Human          Resources:  Guidelines for  the Interpretation and Application Of          Act  No. 80,  at 58-59  (1979) (emphasis  supplied).   Given this          clear  statement of  public policy  by the  government of  Puerto          Rico, we think that the arbitrator had a sufficient basis to rely          on Law No. 80 as part of the rationale for his decision.                                          12          V.  CONCLUSION          V.  CONCLUSION                    We  need go  no further.   We  agree with  the district          court that, here,                    the  arbitrator's decision was drawn from the                    collective    bargaining     agreement    and                    applicable law.  The award's reasoning is not                    palpably  faulty  nor mistakenly  based  on a                    crucial  assumption.   The argument  that the                    elimination  of  the Ro-Ro  system discharged                    the  applicability of Section 94 is supported                    by . . .  the record.  The argument  that the                    inclusion  of Ro-Ro  employees on  the common                    pilot  list was  pursuant to  Law 80  is also                    valid.  The  arbitrator's [analysis] does not                    amount to manifest error of law . . . .          Hernandez, supra,  slip op. at 6-7.   Hence, the judgment  of the          _________  _____          district court upholding the arbitral award must be           Affirmed.          Affirmed          ________                                          13                                       Appendix                                       ________                    1.  Article VI, Clause  94 of the collective bargaining          agreement between PRMMI and Local 1575 provides:                    PRMMI will keep separate the Lo-Lo  and Ro-Ro                    seniorities, and in  the receipt and dispatch                    may use on line of  Ro-Ro and Lo-Lo when  the                    work merits  to receive or dispatch.   In the                    maintenance area the  employer will  maintain                    said area separate,  except that it may  pass                    work  from one  area to  another if  and when                    said situation is merited.                    The  collective bargaining  agreement between  Sea Land          and  Local  1575  does not  contain  this  provision.   With  the          exception of Clause 94,  the two collective bargaining agreements          contain  the  same  provisions   in  relation  to  an  employee's          seniority.                    2.    Article  I-C(1)  of  both  collective  bargaining          agreements provides:                         Seniority is defined  as the  continuous                    service  time  in the  Company  by department                    (Warehouse,   Car    Division,   Maintenance,                    Marine)   from   the  commencement   date  as                    employee   in   said   company   within   the                    contracting unit, if and when the employee is                    efficient,  complies  with the  conditions of                    this Agreement  and the rules  of the Company                    for  which he  works,  except  in the  Marine                    Department  that seniority  will be  by gangs                    and not by  seniority of the employee  within                    the contracting  unit and in  the Maintenance                    Department   that   seniority   will  be   by                    classification within the same department.                    3.   Article  I-C(3)(c) of  both collective  bargaining          agreements provides:                         The seniority lists shall be prepared in                    accordance  with this  Agreement, maintaining                    the seniority and  classification orders as a                    pilot  list,  once the  necessary corrections                    are made.                                          14                    4.  Article I-D(6)(a)  of PRMMI's collective bargaining          agreement  is  identical  to  Article  I-C(8)(a)  of  Sea  Land's          agreement.  The clause provides:                         A pilot seniority list by classification                    shall always  be kept  as it  has up  to this                    day.  From said  list, each Company will keep                    their     own     regular    employees     by                    classification.   When a vacancy  occurs, the                    first  substitute  from  said  classification                    with greatest seniority shall be used.                    5.     Article  XV(C)  of  the   collective  bargaining          agreement  between PRMMI  and  Local 1575  provides in  pertinent          part:                    Any  dispute that  cannot be  settled through                    the  complaint  and grievance  procedure, and                    any    dispute    with    respect   to    the                    interpretation  or  alleged violation  of any                    provision   of   this   agreement  shall   be                    submitted in writing to arbitration.                    The  collective bargaining  agreement between  Sea Land          and Local 1575 contains a substantially similar clause.                                          15
