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Nuclear Fuel Services, Inc. v. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy

United States District Court, E.D. Tennessee, Knoxville

April 25, 2018



         Gary Smalling worked for Nuclear Fuel Services (the Company) at its facility in Erwin, Tennessee. Smalling was terminated after he violated safety rules at the facility. The Union defendants submitted a grievance and the parties participated in arbitration pursuant to their Collective Bargaining Agreement (CBA). The arbitrator issued an award reinstating Smalling to active duty.

         The Company filed the instant action asserting that the arbitration award should be vacated because the arbitrator exceeded his authority and his award is not supported by or derived from the parties' CBA and is based on the Arbitrator's subjective considerations of fairness and equity. The Union, on the other hand, asks the court to affirm the Arbitrator's award reinstating Smalling to active duty. The parties have filed cross-motions for summary judgment. For the reasons that follow, the Union's motion for summary judgment is granted and the award of the Arbitrator is affirmed.

         I. Background

         The Company operates a nuclear fuel facility in Erwin. Tennessee that processes highly enriched uranium into nuclear fuel. The Company is the sole provider of nuclear fuel for the United States Navy's fleet of nuclear-powered aircraft carriers and submarines.

         The Union and the Company are parties to a CBA that covers all production and maintenance employees, laboratory technicians, plant clerical employees, surveillance technicians, radiation technicians, yard, and material handlers. The CBA in Article 14, provides for submission to an arbitrator of “any grievance concerning the interpretation or application of any provision” of the CBA. The parties further contracted that a “decision in writing of the arbitrator . . . shall be final and binding on the employee or employees concerned, the Union, and the Company.” Article 3 of the CBA, “Management Functions, ” provides that the Company “retains the right to reprimand, suspend, discharge or otherwise discipline employees for proper cause.”

         Smalling, a thirteen-year employee at the Company, was terminated on April 1, 2015. The Union filed a grievance challenging his termination on April 8, 2015. The parties selected Arbitrator Joe M. Harris to resolve the grievance, and a hearing was held on January 21, 2016. Both parties submitted post-hearing briefs. The Arbitrator issued an Opinion and Award on July 11, 2016. The Arbitrator framed the issue submitted to him as “whether termination of an employee with 13 years of service was too severe” for the conduct in question. The Arbitrator concluded that the Company failed to show that it acted in accordance with the CBA when it discharged Smalling, and ordered him reinstated with half back pay.

         The Arbitrator found that Smalling's discharge was based on an incident that occurred on February 27, 2015. On that day, a supervisor asked Smalling to dispose of mop heads containing highly enriched uranium. Smalling testified that he packaged eight mop heads into a five gallon liner, sealed it, put a transportation and waste sticker on it attesting that there was no visible contamination and no visible liquids in the bag, and placed it at the top of the ramp. The problem with disposing of multiple mop heads in a single plastic bag is that if the mop heads were used improperly or the user did not realize he or she had picked up enough uranium during use, the combined presence of uranium on the mop heads could set off a nuclear reaction. Smalling testified that he did not know the procedure regarding mop heads, but found out after the fact that he “messed up” and made a mistake. The Arbitrator found that Smalling had violated a written procedure that required that only one mop head be placed in a single container. The Arbitrator considered testimony that the amount of nuclear material in the container for the eight mop heads was 2 grams and that it takes a minimum of 820 grams of material to create a nuclear reaction.

         The Arbitrator also reviewed two additional incidents involving Smalling. First, the Arbitrator noted that Smalling had received a five-day suspension in October of 2014, for an alleged violation of a work rule prohibiting the movement of nuclear material during a “stop movement” order. Second, the Arbitrator considered an incident for which Smalling received a verbal warning on March 13, 2014. Because the Company “Rules on Reprimand, Suspension and Discharge” provide that when an employee worked for a period of 12 months without a reprimand, “he shall revert to Step 1, ” the Arbitrator concluded he was barred from considering the 2014 verbal warning as part of the progressive discipline leading up to the April 2015 termination.

         The Arbitrator proceeded to consider whether Smalling's discharge was for “proper cause.” The Arbitrator found: “When the Grievant's entire work record is considered as a whole, the two mistakes work out to about one mistake every six and ½ years. In that context, even conceding the obvious danger of handling fissile materials, two mistakes over an otherwise flawless 13 year career leading straight to an employee's termination is just too harsh, and therefore unjust.” The Arbitrator further found that Smalley did not “dispose of mop heads every day; in fact his testimony that he had ‘never' disposed of mops was uncontradicted . . . . When the Grievant said he wasn't familiar with the particular rule he violated, the Company's response was that he should have been.” The Arbitrator concluded “it would not be fair to characterize what the Grievant did as ‘misconduct.' He was discharged for allegedly making two mistakes over a period of about 13 years and he has never denied or tried to hide anything he did.” Thus, the Arbitrator sustained the grievance and reinstated Smalling to active duty, but only awarded him one-half of his lost wages.

         II. Standard of Review

         Under Federal Rule of Civil Procedure 56(c), summary judgment is proper if the pleadings, deposition, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         Judicial review of an arbitration decision is “very limited.” Tenn. Valley Auth. v. Tenn. Valley Trades & Labor Council, 184 F.3d, 510, 514-15 (6th Cir. 1999) (Review of an arbitration award is “one of the narrowest standards of judicial review in all of American jurisprudence”). Courts are not authorized to review an arbitrator's decision on the merits despite allegations that the decision rests on factual errors or misinterprets the parties' agreement. Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001). If an arbitrator “is evenly arguably construing or applying the contract and acting within the scope of his authority, the fact that a court is convinced he committed serious error does not suffice to overturn his decision.” Id.

         This approach reflects “a decided preference for private settlement of labor disputes without the intervention of government.” United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 37 (1987). Because the parties contracted to have disputes settled by an arbitrator chosen by them rather than by a judge, “it is the arbitrator's view of the facts and the meaning of the contract that they have agreed to accept.” Id. at 37-38. Accordingly, it is only when the arbitrator strays from interpretation and application of the agreement and effectively dispenses “his own brand of industrial justice” that his decision may be vacated. Id.

         The court's scope of review is limited to three questions: (1) did the arbitrator act outside his authority by resolving a dispute not committed to arbitration; (2) did the arbitrator commit fraud, have a conflict of interest or otherwise act dishonestly in issuing the award; and (3) in resolving any legal or factual disputes in the case, was the arbitrator “arguably construing or apply the contract?” Mich. Family Resources., Inc. v. SEIU Local 517, 475 F.3d 746, 753 (6th Cir. 2007). So long as the arbitrator does not offend any of these requirements, the request for ...

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