OPINION AND AWARD

In the matter of Arbitration

Between 

Simkins Industries, Inc., Employer
Deerfield Specialty Papers

And

 United Steelworkers of America
PACE International Local 3-0816

Regarding

FMCS Case No. 06-02896
Date of Hearing – July 13, 2006
Date of Receipt of Briefs – August 4, 2006
Date of Award – October 3, 2006

APPEARANCES:
FOR THE COMPANY: Irvin Coughlin, Vice President H.R.    Diane Lavorgna, Corp. Manager of H.R.    Richard Posey, GM, Deerfield Specialty	FOR THE UNION: Richard Thomas, USW Staff Representative Garnett Perry, President Local IX-00816

            An arbitration hearing was conducted on July 13, 2006 at Augusta, Georgia.

At the hearing the parties jointly submitted the collective bargaining agreement and the grievance trail as joint exhibits. Even though the grievance on its face listed a violation of Article III, the Union asserts a violation of Article IX Section 2. The Union proposed the issue be stated as: “Did the company violate Article IX of the Labor Agreement?  If so, what shall the remedy be?”  After examination of the Union president Garrett Perry, management agreed to this issue.

In addition to the joint exhibits and verbal testimony, the Union submitted ten documents outlining the chronology of events giving rise to this grievance.  Both parties timely submitted post hearing briefs.  All materials were reviewed and considered by the Arbitrator in reaching this decision.

            Both parties were given full opportunity to examine and cross examine witnesses, pose arguments and present their respective cases.  Both sides did so professionally and competently.

            The parties agreed that the matter was properly before the Arbitrator for determination.  The Arbitrator requested permission to submit the award for consideration for publication and permission was granted.

RELEVANT COLLECTIVE BARGAINING PROVISIONS:

ARTICLE I

GENERAL PURPOSE OF AGREEMENT

   The general purpose of this Agreement is to promote the mutual interests of the Company and its employees and to provide for the operation of the Company's plant under methods which will further, to the fullest extent possible, the safety and welfare of the employees, economy and efficiency of operations, elimination of waste, realization of maximum quantity and quality of output, cleanliness of the plant and protection of life and property. It is recognized by this Agreement to be the duty and obligation of the Company and of its employees to cooperate fully, both individually and collectively, for the advancement of said purposes and conditions.

ARTICLE IX

WAGES

The Company reserves the right to establish new job classifications or to combine or eliminate jobs for the purpose of plant economy or efficiency. When major changes are made in the plant which creates a new job or substantially changes the duties of an existing job, the Company will carefully evaluate the situation and promptly. notify the Union of the rate for the new or changed job.

       The Union shall then have the full right and privilege of negotiating with the Company concerning such new wage rate. However, if the parties cannot agree on a satisfactory rate for the new or changed job, the Company may implement its rate and the matter may be the subject of further negotiations at the next general Contract negotiations. Any rate agreed upon between the parties for a new or changed job during the term of this Agreement shall be made retroactive to the date of the job change which occasioned the rate adjustment. The establishment of wage rates shall not be a subject of arbitration.

BACKGROUND:

On May 26, 2005[1] the company informed the Union president that it intended to reorganize and combine a number of jobs. President Perry sent a memo to the company on May 27, 2005 requesting more time to consider the issues presented.  General Manager Posey informed the Union the same day that “the implementation of the organizational changes at Deerfield will be postponed until June 13, 2005 per the Union’s request.  Meeting with the company and Union to be scheduled the week of June 6, 2005.” [2]

On June 13, 2005 International Representative Thomas requested the company provide the Union with additional information regarding the proposed changes and the rates to be paid for the new positions. [3]

The company responded on June 30, 2005 stating that the company estimated saving to be $300,000 per year.  The company noted that the estimate “is based on the cost of avoidance of hiring 6 people to fill existing vacancies.”

Regarding wage rates, the company stated: “the company has considered wages rates for the job changes and does not believe the changes warrant an adjustment at this time.” [4]

Union president Perry next filed an unfair labor practice charge with the National Labor Relations Board (NLRB) asserting “On June 13, 2005 the Company unilaterally implemented work schedules and dept. changes and job changes without bargaining with the Union.  This is unfair and breach of our Contract agreement.” [5]

Subsequent to the filing of the unfair labor practice charge, the parties entered into a settlement agreement.  In that agreement the employer agreed to negotiate with the Union on the rates to be paid to employees who perform the new and revised positions. The settlement agreement was signed by the company August 23, 2005, by the Union August 29, 2005 and by the Regional Director of the NLRB August 30, 2005.

In a memo dated November 23, 2005 Richard Posey, Deerfield General Manager notified G.H. Perry, Union president, that

“PER ARTICLE IX AGES, ITEM 2, OF THE LABOR AGREEMENT, WHEN MAJOR CHANGES ARE MADE IN THE PLANT WICH CREATES A NEW JOB OR SUBSTANTIALLY CHANGES THE DUTIES OF AN EXISTING JOB, THE COMPANY WILL CAREFULLY EVALUATE THE SITUATION AND PROMPTLY NOTIFY THE UNION OF THE RATE OF THE NEW OR CHANGED JOB.

THE RATE FOR THE JOBS AFFECTED BY THE IMPLEMENTATION OF ORGANIZATIONAL CHANGES AT DEERFEILD SPECIALTY PAPER ON JUNE 13, 2005 IS AS FOLLOWS:

BEATER ENGINEER-NEW RATE-$17.885
BEATER HELPER-NEW RATE-$16.660
REWINDER HELPER-NEW RATE (WHEN ENGAGED)-$16,075
JANITOR-NO WAGE ADJUSTMENT IS OFFERED”

            Mr. Perry indicated that the Union did not accept the proposal on November 26, 2005. [6]

            On December 5, 2005 Union president Perry offered a hand written counter proposal with Beater Engineers receiving $20.00 per hour, Beater Helpers $20.00 per hour, Rewinder Helpers $18.00 per hour and Janitor $16.00 per hour.[7]

            The company countered the next day, December 6, 2005 offering Beater Engineers - $17.955, Beater Helper - $16.710, Rewinder Helper - $16.125 and Janitor $14.545.  The Union rejected the same day.

            February 21, 2006 the company notified informed the Union president “Bill: unless I hear back from you by Friday the company will implement wage rate increase.” 

            The increases were the same as those proposed by the company on December 5, 2005 with the notation that increases would be retroactive to June 13, 2005. [8]

            The grievance in this matter was actually filed June 13, 2005.  The requested remedy stated “For the implementation to be withdrawn and all employees be returned to their normal Dept. and duties as scheduled in our Contract Agreement. And furthermore stop violating our Contract Agreement.”

POSITION OF THE UNION:

            The Union asserts that the Company violated the Contract when it fair to notify the Union of the new rate for the changed jobs.

            The Union notes that even though the reorganization took place on June 13, 2005 the Company did not make an offer on wage rates until November 23, 2005. 

            When no agreement was reached on wage rates the Company implemented its last offer on February 21, 2006 and retroactive payments were not made until March 29, 2006.

            The Union requests the Arbitrator withdraw the implemented changes, return the employees to their former positions and make them whole.

POSITION OF THE COMPANY:

            The Company argues that the Union changed its position of the alleged violation from Article III – Recognition Clause as originally stated on the grievance, to Article IX Section 2.

            The Company states that both parties agree the proper issue before the Arbitrator relates to Article IX Section 2.

            The Company explains that the actions taken were in response to two successive years of increasing losses and their desire to avoid layoffs.

            General Manager Posey testified that as early as November 2004 a meeting was held with all employees outlining the financial situation of the Plant.

            It was felt the combination and elimination of some classifications might return the Company to profitability.

            The Company argues that meetings were held with the Union and the International Representative keeping the Union informed of the proposed changes and their motivation.

            The Company notes that at the arbitration hearing, Union President Perry admitted that the Company had the right under Article IX to implement the changes made to the classifications in question.

            It is the position of the Company that the clear language of Article IX gives them the right to take the actions they did and that the Union has failed to prove any violation of the Contract.

DISCUSSION:

            It is unusual for an arbitrator to consider and decide an issue that differs from that listed in the initial grievance.  In this case the initial grievance cited a violation of Article III of the Collective Bargaining Agreement, but at the hearing the parties mutually agreed that the issue before this Arbitrator is “Did the Company violate Article IX of the Collective Bargaining Agreement? If so, what shall the remedy be?”

            Arbitrators serve at the pleasure of the parties which select them and thus this award will be limited to the alleged violation of Article IX.

            It is easy to understand the positions of both parties. 

            The Company, in an effort to stem rising losses, entered into a combination and realignment of classifications.  The Company is to be commended for its desire to avoid layoffs.

            The action taken by the Company seemed unfair to the employees.  Their job duties were being changed, duties were being added to some positions and they wanted their Union to do something about the situation.

            Even though Article III is not at issue in this arbitration, I feel I must comment on the role it has played in this proceeding.  Someone apparently reviewed that section of the Agreement and concluded that the process outlined for negotiating midterm changes to the Collective Bargaining Agreement also applied to proposed changes in the organization of the work and job system.

            In light of the emotions that come to play in such situations and the shared sense of industrial justice held by many union members, it is easy to see why such a belief existed.

            The language of Article III clearly does not apply to this situation in that no request to change the language of the Collective Bargaining Agreement has been made.

            The Union, apparently with the advice and assistance of their International Representative, wisely amended their claim to deal with the section of the Collective Bargaining Agreement that does govern in this situation.  (Article IX).  The Company and the Union are to be commended for being willing to go forward with the amended issue rather than engage in procedural wrangling.  All parties will be better served by dealing with this long standing matter.

            It is apparent from the testimony and evidence that the initial desire of the Union was to reverse this very unpopular decision made by the Company.

            The task of the Arbitrator is to answer the question posed by the parties.  Usually in contract interpretation cases the parties have a substantial disagreement about the meaning of a specific clause or article.  The meaning and clarity of the language has to be examined to reach a proper decision.

            I am limited to a consideration of Article IX, Section 2 and in this case the parties do not appear to disagreement of the meaning of the first part of that clause.

            In this case there is no disagreement among the parties that the statement: “The Company reserves the right to establish new job classifications or to combine or eliminate jobs for the purpose of plant economy or efficiency” grants the Company the right to take the action that it did even though the Union disagrees with that action.

I have to agree, the Collective Bargaining Agreement clearly gives the Company the right to “combine and eliminate jobs.”

In order for the arbitration process to have credibility the arbitrator must apply clear and unambiguous language as it is written.

Any other exercise of arbitral authority makes a mockery of the process.

The well accepted textbook on arbitration practice, “Fairweather’s Practice and Procedure in Labor Arbitration” states: “when contract language is clear and unambiguous, arbitrators will apply its plan meaning and will not look outside the four corners of the document to ascertain the intentions of the parties.” [9]

This is a well accept practice among the vast majority of arbitrators

Arbitrator Karyl Elinski, in a very recent case, wrote: “As in all contract interpretation questions, the arbitrator should look to the terms of the agreement.” [10]

In dealing with a health care issue, Arbitrator Jack Calhoun wrote: “The language in this case is plain and clear.  It was carefully drafted to clarify that the Employer would not be responsible for any amount above the cost of the health insurance premium.” [11]

I reach the same conclusion in this case.  The language of Article IX is clear and unambiguous.  The Contract gives the Company the right to do what it has done notwithstanding the view of the Union that the action appears wrong and unfair.

Let us turn then to consideration of the establishment of pay rates. 

The record would indicate that the Company first did not believe the new configuration of jobs required any pay adjustments.  The June 30, 2005 letter from Mr. Posey to Richard Thomas states “…the Company has considered wage rates for the job change and does not believe the changes warrant an adjustment at this time.”

After the filing of the Unfair Labor Practice Charge and the settlement of that matter the parties did enter into bargaining about the pay rates.  Proposals and counter proposals were exchanged and no agreement was reached.

In February 2006 the Company unilaterally imposed its final offer and payment was paid retroactive to June 13, 2005.

Article IX, Section 2 deals with the possibility of a stalemate in the negotiation of new pay rates. If agreement cannot be reached, “then the company may implement its rate and the matter may be subject of further negotiations at the next general contract negotiations.”

It appears to this arbitrator that this process has been properly followed but even if it has not the issue is clearly barred from consideration by this or any arbitrator by contract language that states: “The establishment of wage rates shall not be a subject of arbitration.”

The remaining issue relates to the contract provision that states: “When major changes are made in the plant which creates a new job or substantially changes the duties of an existing job, the Company will carefully evaluate the situation and promptly notify (emphasis added) the Union of the rate for the new or changed job.”

Arguably the Company can contend that their letter of June 30 2005 fulfills the requirements of this section of the Contract when it states “The Company has considered wages rates for the job changes and does not believe the changes warrant an adjustment at this time.”

This Arbitrator views that as a weak argument.  Apparently at some time the Company reached the same conclusion when they agreed to settle the pending ULP and enter into negotiations regarding pay rates.

Requirements like “promptly notify” are difficult to decide without further definition.  Factors considered in considering such provision include past practices of the parties or damage caused by the delay.

In this case no evidence was presented demonstrating any practice in a similar situation and any damage caused was remedied by the retroactive payment of the new pay rates.

It does appear to the reasonable observer that a long delay took place before engaging in negotiations regarding pay rates.

Mr. Posey explained that the delay was due, in part, to the pending challenges filed by the Union (ULP and grievance).

The problem is that even if the Union achieves a technical victory regarding the interpretation of the language in question, there is no effective way to remedy that alleged violation since the record indicates retroactive payment has been made.

The Union believes this perceived error should lead to a total reversal of the actions of the Company.

Remedies must flow from the collective bargaining agreement.  The Supreme Court, while giving arbitrators broad authority in fashioning remedies, still places firm restrictions on arbitral authority.

“When an arbitrator is commissioned to interpret and apply the collective bargaining agreement, he is to bring his informed judgment to bear in order to reach a fair solution of a problem.  This is especially true when it comes to formulation of remedies.  There the need is for flexibility in meeting a wide variety of situations.  The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency.  Nevertheless, an arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice.  He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement.”[12]

In this case if I were to determine the Company did not comply with the “prompt notification provision of the Contract, I would still lack the authority to reverse the actions taken by management.

Arbitrator Barry J. Baroni, in dealing with a class action case related to drug testing stated: “It is the arbitrator’s belief that the remedy request is not only unreasonable, but inappropriate.” [13]

The requested remedy in this matter does not flow from the essence of the Collective Bargaining Agreement and is unreasonable even though the Company could have been more timely in its actions to establish and attempt to negotiate pay rates with the Union.

            The Collective Bargaining Agreement permits the Union to continue the discussion of pay rates at the next general contract negotiations if it is still in disagreement.

AWARD

            For the reasons herein stated, the grievance is denied.

Issued at London, Ohio this third day of October, 2006

_____________________________ 
N. Eugene Brundige, Arbitrator

 

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