OCTOBER TERM, 2000
Syllabus
EASTERN ASSOCIATED COAL CORP.
v. UNITED MINE WORKERS OF
AMERICA, DISTRICT 17, ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH
CIRCUIT
No. 99-1038. Argued October 2, 2000-Decided November 28,
2000
The arbitration provisions in petitioner Eastern Associated Coal
Corp.'s collective-bargaining agreement with respondent union
specify,
inter alia, that Eastern must prove in binding
arbitration that it has "just cause" to discharge an employee, or
else the arbitrator will order the employee reinstated. James Smith
worked for Eastern as a truck driver subject to Department of
Transportation (DOT) regulations requiring random drug testing of
workers engaged in "safety-sensitive" tasks. After each of two
occasions on which Smith tested positive for marijuana, Eastern
sought to discharge him. Each time, the union went to arbitration,
and the arbitrator concluded that the drug use did not amount to
"just cause" and ordered Smith's reinstatement on certain
conditions. On the second occasion, Eastern filed suit to vacate
the arbitrator's award. The District Court ordered the award's
enforcement, holding that Smith's conditional reinstatement did not
violate the strong regulation-based public policy against drug use
by workers who perform safety-sensitive functions. The Fourth
Circuit affirmed.
Held: Public policy considerations do not require courts
to refuse to enforce an arbitration award ordering an employer to
reinstate an employee truck driver who twice tested positive for
marijuana. Pp.61-67.
(a) The Court assumes that the collective-bargaining agreement
itself calls for Smith's reinstatement, as the parties have granted
the arbitrator authority to interpret the meaning of their
contract's language, including such words as "just cause," see
Steelworkers v.
Enterprise Wheel &
Car
Corp., 363 U. S.
593, 599, and Eastern does not claim here that the arbitrator
acted outside the scope of his contractually delegated authority,
see,
e. g., Paperworkers v.
Misco, Inc., 484 U. S. 29, 38. Since
the award is not distinguishable from the contractual agreement,
the Court must decide whether a contractual reinstatement
requirement would fall within the legal exception that makes
unenforceable "a collective bargaining agreement that is contrary
to public policy."
W R. Grace &
Co. v.
Rubber
Workers, 461 U.
S. 757, 766. Any such policy must be "explicit," "well
defined," and "dominant," and it must be "as-
58
58 EASTERN ASSOCIATED COAL CORP.
v. MINE WORKERS
Syllabus
certained by reference to the laws and legal precedents, not
from general considerations of supposed public interests."
Ibid. The question is not whether Smith's drug use itself
violates public policy, but whether the agreement to reinstate him
does so. Pp. 61-63.
(b) A contractual agreement to reinstate Smith with specified
conditions does not run contrary to public policy. The District
Court correctly articulated the standard set out in
W R.
Grace and
Misco and applied that standard to reach the
right result. The public policy exception is narrow and must
satisfy the principles set forth in those cases. Moreover, where
two political branches have created a detailed regulatory regime in
a specific field, courts should approach with particular caution
pleas to divine further public policy in that area. Eastern asserts
that a public policy against reinstatement of workers who use drugs
can be discerned from an examination of the Omnibus Transportation
Employee Testing Act of 1991 and DOT's implementing regulations.
However, these expressions of positive law embody not just policies
against drug use by employees in safety-sensitive transportation
positions and in favor of drug testing, but also include a Testing
Act policy favoring rehabilitation of employees who use drugs. And
the relevant statutory and regulatory provisions must be read in
light of background labor law policy that favors determination of
disciplinary questions through arbitration when chosen as a result
of labor-management negotiation. See,
e. g.,
California
Brewers Assn. v.
Bryant, 444 U. S. 598, 608. The
award here is not contrary to these several policies, taken
together, as it does not condone Smith's conduct or ignore the risk
to public safety that drug use by truck drivers may pose, but
punishes Smith by placing conditions on his reinstatement. It
violates no specific provision of any law or regulation, but is
consistent with DOT rules requiring completion of substance-abuse
treatment before returning to work and with the Act's driving
license suspension requirements and its rehabilitative concerns.
Moreover, the fact that Smith is a recidivist is not sufficient to
tip the balance in Eastern's favor. Eastern's argument that DOT's
withdrawal of a proposed "recidivist" rule leaves open the
possibility that discharge is the appropriate penalty for repeat
offenders fails because DOT based the withdrawal, not upon a
determination that a more severe penalty was needed, but upon a
determination to leave in place other remedies. The Court cannot
find in the Act, the regulations, or any other law or legal
precedent an explicit, well defined, dominant public policy to
which the arbitrator's decision runs contrary. Pp.63-67.
188 F.3d
501, affirmed.
59
BREYER, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and STEVENS, O'CONNOR, KENNEDY, SOUTER, and
GINSBURG, JJ., joined. SCALIA, J., filed an opinion concurring in
the judgment, in which THOMAS, J., joined,
post, p. 67.
John G.
Roberts, Jr., argued the cause for
petitioner.
With him on the briefs were David G. Leitch, H. Christopher
Bartolomucci, Ronald E. Meisburg, Anna M. Dailey, and Donna C.
Kelly.
John R. Mooney argued the cause for respondents. With him on the
brief were Jonathan P. Hiatt, James B. Coppess, Judith Rivlin,
Charles F. Donnelly, and Laurence Gold.
Malcolm L. Stewart argued the cause for the United States as
amicus curiae urging affirmance. With him on the brief were
Solicitor General Waxman, Acting Assistant Attorney General Ogden,
Deputy Solicitor General Wallace, William Kanter, Mark W Pennak,
Nancy E. McFadden, Paul M. Geier, and Peter J. Plocki. *
JUSTICE BREYER delivered the opinion of the Court.
A labor arbitrator ordered an employer to reinstate an employee
truck driver who had twice tested positive for marijuana. The
question before us is whether considerations of public policy
require courts to refuse to enforce that arbitration award. We
conclude that they do not. The courts may enforce the award. And
the employer must reinstate, rather than discharge, the
employee.
*Briefs of
amici curiae urging reversal were filed for
the Air Transport Association of America et al. by
John J.
Gallagher and
Neal D. Mollen; for the Equal
Employment Advisory Council by
Robert E. Williams and
Ann
Elizabeth Reesman; for Exxon Mobile Corp. by
Walter E.
Dellinger and
John F.
Daum; and for the Institute
for a Drug-Free Workplace by
Peter A. Susser.
Theodore J.
St. Antoine, John Kagel, and
David
E. Feller filed a brief for the National Academy of Arbitrators
as
amicus curiae urging affirmance.
60
60 EASTERN ASSOCIATED COAL CORP.
v. MINE WORKERS
I
Petitioner, Eastern Associated Coal Corp., and respondent,
United Mine Workers of America, are parties to a
collective-bargaining agreement with arbitration provisions. The
agreement specifies that, in arbitration, in order to discharge an
employee, Eastern must prove it has "just cause." Otherwise the
arbitrator will order the employee reinstated. The arbitrator's
decision is final. App. 28-31.
James Smith worked for Eastern as a member of a road crew, a job
that required him to drive heavy trucklike vehicles on public
highways. As a truck driver, Smith was subject to Department of
Transportation (DOT) regulations requiring random drug testing of
workers engaged in "safety-sensitive" tasks. 49 CFR §§ 382.301,
382.305 (1999).
In March 1996, Smith tested positive for marijuana.
Eastern sought to discharge Smith. The union went to
arbitration, and the arbitrator concluded that Smith's positive
drug test did not amount to "just cause" for discharge. Instead the
arbitrator ordered Smith's reinstatement, provided that Smith (1)
accept a suspension of 30 days without pay, (2) participate in a
substance-abuse program, and (3) undergo drug tests at the
discretion of Eastern (or an approved substance-abuse professional)
for the next five years.
Between April 1996 and January 1997, Smith passed four random
drug tests. But in July 1997 he again tested positive for
marijuana. Eastern again sought to discharge Smith. The union again
went to arbitration, and the arbitrator again concluded that
Smith's use of marijuana did not amount to "just cause" for
discharge, in light of two mitigating circumstances. First, Smith
had been a good employee for 17 years. App. to Pet. for Cert.
26a-27a. And, second, Smith had made a credible and "very personal
appeal under oath ... concerning a personal/family problem which
caused this one time lapse in drug usage."
Id., at 28a.
The arbitrator ordered Smith's reinstatement provided that Smith
(1) accept a new suspension without pay, this time
61
for slightly more than three months; (2) reimburse Eastern and
the union for the costs of both arbitration proceedings; (3)
continue to participate in a substance-abuse program; (4) continue
to undergo random drug testing; and (5) provide Eastern with a
signed, undated letter of resignation, to take effect if Smith
again tested positive within the next five years.
Id., at
29a.
Eastern brought suit in federal court seeking to have the
arbitrator's award vacated, arguing that the award contravened a
public policy against the operation of dangerous machinery by
workers who test positive for drugs. 66 F. Supp. 2d 796 (SDWV
1998). The District Court, while recognizing a strong
regulation-based public policy against drug use by workers who
perform safety-sensitive functions, held that Smith's conditional
reinstatement did not violate that policy.
Id., at 804-805.
And it ordered the award's enforcement.
Id., at 805.
The Court of Appeals for the Fourth Circuit affirmed on the
reasoning of the District Court.
188 F.3d
501, 1999 WL 635632 (1999) (unpublished). We granted certiorari
in light of disagreement among the Circuits. Compare id., at **1
(holding that public policy does not prohibit "reinstatement of
employees who have used illegal drugs in the past"), with,
e.
g., Exxon Corp. v.
Esso Workers' Union, Inc., 118 F.3d
841, 852 (CA1 1997) (holding that public policy prohibits
enforcement of a similar arbitration award). We now affirm the
Fourth Circuit's determination.
II
Eastern claims that considerations of public policy make the
arbitration award unenforceable. In considering this claim, we must
assume that the collective-bargaining agreement itself calls for
Smith's reinstatement. That is because both employer and union have
granted to the arbitrator the authority to interpret the meaning of
their contract's language, including such words as "just cause."
See
Steelwork-
62
62 EASTERN ASSOCIATED COAL CORP.
v. MINE WORKERS
ers v.
Enterprise Wheel &
Car Corp.,
363 U. S. 593,
599 (1960). They have "bargained for" the "arbitrator's
construction" of their agreement.
Ibid. And courts will set
aside the arbitrator's interpretation of what their agreement means
only in rare instances.
Id., at 596. Of course, an
arbitrator's award "must draw its essence from the contract and
cannot simply reflect the arbitrator's own notions of industrial
justice."
Paperworkers v.
Misco, Inc., 484 U. S. 29, 38 (1987).
"But as long as [an honest] arbitrator is even 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."
Ibid.; see also
Enterprise Wheel, supra, at 596 (the
"proper" judicial approach to a labor arbitration award is to
"refus[e] ... to review the merits"). Eastern does not claim here
that the arbitrator acted outside the scope of his contractually
delegated authority. Hence we must treat the arbitrator's award as
if it represented an agreement between Eastern and the union as to
the proper meaning of the contract's words "just cause." See St.
Antoine, Judicial Review of Labor Arbitration Awards: A Second Look
at
Enterprise Wheel and Its Progeny, 75 Mich. L. Rev. 1137,
1155 (1977). For present purposes, the award is not distinguishable
from the contractual agreement.
We must then decide whether a contractual reinstatement
requirement would fall within the legal exception that makes
unenforceable "a collective-bargaining agreement that is contrary
to public policy."
W R. Grace &
Co. v.
Rubber
Workers, 461 U.
S. 757, 766 (1983). The Court has made clear that any such
public policy must be "explicit," "well defined," and "dominant."
Ibid. It must be "ascertained 'by reference to the laws and
legal precedents and not from general considerations of supposed
public interests.'''
Ibid. (quoting
Muschany v.
United States, 324 U. S. 49, 66 (1945));
accord,
Misco, supra, at 43. And, of course, the question to
be answered is not whether Smith's drug use itself violates
public
63
policy, but whether the agreement to reinstate him does so. To
put the question more specifically, does a contractual agreement to
reinstate Smith with specified conditions, see App. to Pet. for
Cert. 29a, run contrary to an explicit, welldefined, and dominant
public policy, as ascertained by reference to positive law and not
from general considerations of supposed public interests? See
Misco, supra, at 43.
III
Eastern initially argues that the District Court erred by
asking, not whether the award is "contrary to" public policy "as
ascertained by reference" to positive law, but whether the award
"violates" positive law, a standard Eastern says is too narrow. We
believe, however, that the District Court correctly articulated the
standard set out in
W R. Grace and
Misco, see 66 F.
Supp. 2d, at 803 (quoting
Misco, supra, at 43), and applied
that standard to reach the right result.
We agree, in principle, that courts' authority to invoke the
public policy exception is not limited solely to instances where
the arbitration award itself violates positive law. Nevertheless,
the public policy exception is narrow and must satisfy the
principles set forth in
W R. Grace and
Misco.
Moreover, in a case like the one before us, where two political
branches have created a detailed regulatory regime in a specific
field, courts should approach with particular caution pleas to
divine further public policy in that area.
Eastern asserts that a public policy against reinstatement of
workers who use drugs can be discerned from an examination of that
regulatory regime, which consists of the Omnibus Transportation
Employee Testing Act of 1991 and DOT's implementing regulations.
The Testing Act embodies a congressional finding that "the greatest
efforts must be expended to eliminate the ... use of illegal drugs,
whether on or off duty, by those individuals who are involved in
[certain safety-sensitive positions, including] the operation of
... trucks." Pub. L. 102-143, §2(3), 105 Stat. 953. The Act
64
64 EASTERN ASSOCIATED COAL CORP.
v. MINE WORKERS
adds that "increased testing" is the "most effective deterrent"
to "use of illegal drugs." § 2(5). It requires the Secretary of
Transportation to promulgate regulations requiring "testing of
operators of commercial motor vehicles for the use of a controlled
substance." 49 U. S. C. § 31306(b)(1)(A) (1994 ed., Supp. III). It
mandates suspension of those operators who have driven a commercial
motor vehicle while under the influence of drugs. 49 U. S. C. §
31310(b)(1)(A) (requiring suspension of at least one year for a
first offense); § 31310(c)(2) (requiring suspension of at least 10
years for a second offense). And DOT's implementing regulations set
forth sanctions applicable to those who test positive for illegal
drugs. 49 CFR § 382.605 (1999).
In Eastern's view, these provisions embody a strong public
policy against drug use by transportation workers in
safetysensitive positions and in favor of random drug testing in
order to detect that use. Eastern argues that reinstatement of a
driver who has twice failed random drug tests would undermine that
policy-to the point where a judge must set aside an employer-union
agreement requiring reinstatement.
Eastern's argument, however, loses much of its force when one
considers further provisions of the Act that make clear that the
Act's remedial aims are complex. The Act says that "rehabilitation
is a critical component of any testing program," § 2(7), 105 Stat.
953, that rehabilitation "should be made available to individuals,
as appropriate," ibid., and that DOT must promulgate regulations
for "rehabilitation programs," 49 U. S. C. § 31306(e). The DOT
regulations specifically state that a driver who has tested
positive for drugs cannot return to a safety-sensitive position
until (1) the driver has been evaluated by a "substance abuse
professional" to determine if treatment is needed, 49 CFR §
382.605(b) (1999); (2) the substance-abuse professional has
certified that the driver has followed any rehabilitation program
prescribed, § 382.605(c)(2)(i); and (3) the driver has passed a
return-to-duty drug test, § 382.605(c)(1). In addi-
65
tion, (4) the driver must be subject to at least six random drug
tests during the first year after returning to the job. §
382.605(c)(2)(ii). Neither the Act nor the regulations forbid an
employer to reinstate in a safety-sensitive position an employee
who fails a random drug test once or twice. The congressional and
regulatory directives require only that the above-stated
prerequisites to reinstatement be met.
Moreover, when promulgating these regulations, DOT decided not
to require employers either to provide rehabilitation or to "hold a
job open for a driver" who has tested positive, on the basis that
such decisions "should be left to management/driver negotiation."
59 Fed. Reg. 7502 (1994). That determination reflects basic
background labor law principles, which caution against interference
with labormanagement agreements about appropriate employee
discipline. See,
e. g.,
California Brewers Assn. v.
Bryant, 444 U.
S. 598, 608 (1980) (noting that it is "this Nation's
longstanding labor policy" to give "employers and employees the
freedom through collective bargaining to establish conditions of
employment").
We believe that these expressions of positive law embody several
relevant policies. As Eastern points out, these policies include
Testing Act policies against drug use by employees in
safety-sensitive transportation positions and in favor of drug
testing. They also include a Testing Act policy favoring
rehabilitation of employees who use drugs. And the relevant
statutory and regulatory provisions must be read in light of
background labor law policy that favors determination of
disciplinary questions through arbitration when chosen as a result
of labor-management negotiation.
The award before us is not contrary to these several policies,
taken together. The award does not condone Smith's conduct or
ignore the risk to public safety that drug use by truck drivers may
pose. Rather, the award punishes Smith by suspending him for three
months, thereby depriving him of nearly $9,000 in lost wages,
Record Doc. 29, App. A, p. 2;
66
66 EASTERN ASSOCIATED COAL CORP.
v. MINE WORKERS
it requires him to pay the arbitration costs of both sides; it
insists upon further substance-abuse treatment and testing; and it
makes clear (by requiring Smith to provide a signed letter of
resignation) that one more failed test means discharge.
The award violates no specific provision of any law or
regulation. It is consistent with DOT rules requiring completion of
substance-abuse treatment before returning to work, see 49 CFR §
382.605(c)(2)(i) (1999), for it does not preclude Eastern from
assigning Smith to a non-safety-sensitive position until Smith
completes the prescribed treatment program. It is consistent with
the Testing Act's i-year and 10-year driving license suspension
requirements, for those requirements apply only to drivers who,
unlike Smith, actually operated vehicles under the influence of
drugs. See 49 U. S. C. §§ 31310(b), (c). The award is also
consistent with the Act's rehabilitative concerns, for it requires
substanceabuse treatment and testing before Smith can return to
work.
The fact that Smith is a recidivist-that he has failed drug
tests twice-is not sufficient to tip the balance in Eastern's
favor. The award punishes Smith more severely for his second lapse.
And that more severe punishment, which included a 90-day
suspension, would have satisfied even a "recidivist" rule that DOT
once proposed but did not adopt-a rule that would have punished two
failed drug tests, not with discharge, but with a driving
suspension of 60 days. 57 Fed. Reg. 59585 (1992). Eastern argues
that DOT's withdrawal of its proposed rule leaves open the
possibility that discharge is the appropriate penalty for repeat
offenders. That argument fails, however, because DOT based its
withdrawal, not upon a determination that a more severe penalty was
needed, but upon a determination to leave in place, as the "only
driving prohibition period for a controlled substances violation,"
the "completion of rehabilitation requirements
67
and a return-to-duty test with a negative result." 59 Fed. Reg.
7493 (1994).
Regarding drug use by persons in safety-sensitive positions,
then, Congress has enacted a detailed statute. And Congress has
delegated to the Secretary of Transportation authority to issue
further detailed regulations on that subject. Upon careful
consideration, including public notice and comment, the Secretary
has done so. Neither Congress nor the Secretary has seen fit to
mandate the discharge of a worker who twice tests positive for
drugs. We hesitate to infer a public policy in this area that goes
beyond the careful and detailed scheme Congress and the Secretary
have created.
We recognize that reasonable people can differ as to whether
reinstatement or discharge is the more appropriate remedy here. But
both employer and union have agreed to entrust this remedial
decision to an arbitrator. We cannot find in the Act, the
regulations, or any other law or legal precedent an "explicit,"
"well defined," "dominant" public policy to which the arbitrator's
decision "runs contrary."
Misco, 484 U. S., at 43;
W R.
Grace, 461 U. S., at 766. We conclude that the lower courts
correctly rejected Eastern's public policy claim. The judgment of
the Court of Appeals is
Affirmed.
JUSTICE SCALIA, with whom JUSTICE THOMAS joins, concurring in
the judgment.
I concur in the Court's judgment, because I agree that no public
policy prevents the reinstatement of James Smith to his position as
a truck driver, so long as he complies with the arbitrator's
decision, and with those requirements set out in the Department of
Transportation's regulations. I do not endorse, however, the
Court's statement that "[w]e agree, in principle, that courts'
authority to invoke the public policy exception is not limited
solely to instances where the arbitra-
68
68 EASTERN ASSOCIATED COAL CORP.
v. MINE WORKERS
SCALIA, J., concurring in judgment
tion award itself violates positive law."
Ante, at 63. No
case is cited to support that proposition, and none could be. There
is not a single decision, since this Court washed its hands of
general common-lawmaking authority, see
Erie R. Co. v.
Tompkins, 304
U. S. 64 (1938), in which we have refused to enforce on "public
policy" grounds an agreement that did not violate, or provide for
the violation of, some positive law. See,
e. g., Hurd v.
Hodge, 334 U.
S. 24 (1948) (refusing to enforce under the public policy
doctrine a restrictive covenant that violated Rev. Stat. § 1978, 42
U. S. C. § 1982).
After its dictum opening the door to flaccid public policy
arguments of the sort presented by petitioner here, the Court
immediately posts a giant "Do Not Enter" sign. "[T]he public policy
exception," it says, "is narrow and must satisfy the principles set
forth in
W R. Grace," ante, at 63, which require that the
applicable public policy be "explicit," "well defined," "dominant,"
and "ascertained 'by reference to the laws and legal precedents and
not from general considerations of supposed public interests,'"
W R. Grace & Co. v.
Rubber Workers, 461 U. S. 757, 766 (1983)
(quoting
Muschany v.
United States, 324 U. S. 49, 66 (1945)).
It is hard to imagine how an arbitration award could violate a
public policy, identified in this fashion, without actually
conflicting with positive law. If such an award could ever exist,
it would surely be so rare that the benefit of preserving the
courts' ability to deal with it is far outweighed by the confusion
and uncertainty, and hence the obstructive litigation, that the
Court's Delphic "agree[ment] in principle" will engender.
The problem with judicial intuition of a public policy that goes
beyond the actual prohibitions of the law is that there is no way
of knowing whether the apparent gaps in the law are intentional or
inadvertent. The final form of a statute or regulation, especially
in the regulated fields where the public policy doctrine is likely
to rear its head, is often the
69
result of compromise among various interest groups, resulting in
a decision to go so far and no farther. One can, of course, summon
up a parade of horribles, such as an arbitration award ordering an
airline to reinstate an alcoholic pilot who somehow escapes being
grounded by force of law. But it seems to me we set our face
against judicial correction of the omissions of the political
branches when we declined the power to define common-law offenses.
See
United States v.
Hudson, 7 Cranch 32 (1812).
Surely the power to invalidate a contract providing for actions
that are not contrary to law (but "ought" to be) is less important
to the public welfare than the power to prohibit harmful acts that
are not contrary to law (but "ought" to be). And it is also less
efficacious, since it depends upon the willingness of one of the
parties to the contract to
assert the public policy
interest. (If the airline is not terribly concerned about
reinstating an alcoholic pilot, the courts will have no opportunity
to prevent the reinstatement.) The horribles that can be
imagined-if they are really so horrible and ever come to pass-can
readily be corrected by Congress or the agency, with no problem of
retroactivity. Supervening law is always grounds for the
dissolution of a contractual obligation. See Restatement (Second)
of Contracts § 264 (1979).
In sum, it seems to me that the game set in play by the Court's
dictum endorsing "in principle" the power of federal courts to
enunciate public policy is not worth the candle. Agreeing with the
reasoning of the Court except insofar as this principle is
concerned, I concur only in the judgment.
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