OCTOBER TERM, 2000
Syllabus
MAJOR LEAGUE BASEBALL PLAYERS ASSOCIATION
v. GARVEY
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
No. 00-1210. Decided May 14,2001
After arbitrators found that the Major League Baseball Clubs
(Clubs) colluded in the market for free-agent services after the
1985, 1986, and 1987 baseball seasons, the Clubs and petitioner
agreed that the Clubs would establish a fund to be distributed to
injured players. The "Framework" that petitioner designed to
evaluate individual claims provided,
inter alia, that
players could seek an arbitrator's review of a distribution plan,
but the arbitrator could determine only whether the Framework and
its criteria were properly applied. Respondent Garvey sought
arbitration after his damages claim was rejected. At his hearing,
he produced a letter from San Diego Padres president and CEO Smith,
stating that Smith had offered to extend Garvey's contract, but the
Padres refused to negotiate thereafter due to collusion. The
arbitrator denied the claim because the letter contradicted Smith's
testimony denying collusion in earlier arbitration proceedings. The
Federal District Court denied Garvey's motion to vacate the
arbitrator's award. In
Garvey I, the Ninth Circuit reversed.
It found that review of the award's merits was warranted because
the arbitrator's refusal to credit Smith's letter was inexplicable
and bordered on irrational since arbitrators had previously
concluded that the owners' testimony denying collusion was false,
and that there was strong support for the letter's truthfulness. On
remand, the District Court remanded the case for further
arbitration, and Garvey appealed. Finding that
Garvey I left
only one possible result, the Ninth Circuit in
Garvey II
reversed and directed the District Court to remand the case to
arbitration with instructions to enter an award for Garvey.
Held: The Ninth Circuit's decision to resolve the dispute
and bar further proceedings is at odds with governing law. Judicial
review of a laborarbitration decision pursuant to a
collective-bargaining agreement is very limited. 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.
Paperworkers v.
Misco, Inc., 484 U. S. 29, 36. Only
when the arbitrator effectively dispenses his own brand of
industrial justice may his decision be unenforceable.
Steelworkers v.
Enterprise Wheel &
Car
Corp., 363 U. S.
593, 597.
505
When the judiciary weighs a particular claim's merits, it usurps
a nmction entrusted to the arbitrator. As a rule a court must not
foreclose further proceedings by settling the merits according to
its own judgment of the appropriate result. It should simply vacate
the award, leaving open the possibility of further proceedings if
the agreement permits them. The Ninth Circuit recited these
principles but erred in applying them. In
Garvey I, it
overturned the arbitrator's decision because it disagreed with his
factual findings with respect to credibility, but even serious
error on the arbitrator's part does not justify overturning his
decision where, as here, he is construing a contract and acting
within the scope of his authority,
Misco, supra, at 38. And
in
Garvey II, the court resolved the dispute's merits based
on its assessment of the record before the arbitrator, which it
ordinarily cannot do, no matter how erroneous the arbitrator's
decision,
Misco, supra, at 40, n. 10. Even when the
arbitrator's award may properly be vacated, the appropriate remedy
is to remand the case for further arbitration proceedings.
Certiorari granted;
243 F.3d
547, reversed and remanded.
PER CURIAM.
The Court of Appeals for the Ninth Circuit here rejected an
arbitrator's factual findings and then resolved the merits of the
parties' dispute instead of remanding the case for further
arbitration proceedings. Because the court's determination
conflicts with our cases limiting review of an arbitrator's award
entered pursuant to an agreement between an employer and a labor
organization and prescribing the appropriate remedy where vacation
of the award is warranted, we grant the petition for a writ of
certiorari and reverse. The motions for leave to file briefs
amicus curiae of the National Academy of Arbitrators and the
Office of the Commissioner of Baseball are granted.
In the late 1980's, petitioner Major League Baseball Players
Association (Association) filed grievances against the Major League
Baseball Clubs (Clubs), claiming the Clubs had colluded in the
market for free-agent services after the 1985, 1986, and 1987
baseball seasons, in violation of the industry's
collective-bargaining agreement. A free agent is a player who may
contract with any Club, rather than one whose right to contract is
restricted to a particular Club. In a
506
Per Curiam
series of decisions, arbitrators found collusion by the Clubs
and damage to the players. The Association and Clubs subsequently
entered into a Global Settlement Agreement (Agreement), pursuant to
which the Clubs established a $280 million fund to be distributed
to injured players. The Association also designed a "Framework" to
evaluate the individual player's claims, and, applying that
Framework, recommended distribution plans for claims relating to a
particular season or seasons.
The Framework provided that players could seek an arbitrator's
review of the distribution plan. The arbitrator would determine
"'only whether the approved Framework and the criteria set forth
therein have been properly applied in the proposed Distribution
Plan.'"
Garvey v.
Roberts, 203 F. 3d 580, 583 (CA9
2000)
(Garvey I). The Framework set forth factors to be
considered in evaluating players' claims, as well as specific
requirements for lost contract-extension claims. Such claims were
cognizable "'only in those cases where evidence exists that a
specific offer of an extension was made by a club prior to
collusion only to thereafter be withdrawn when the collusion scheme
was initiated.'"
Id., at 584.
Respondent Steve Garvey, a retired, highly regarded first
baseman, submitted a claim for damages of approximately $3 million.
He alleged that his contract with the San Diego Padres was not
extended to the 1988 and 1989 seasons due to collusion. The
Association rejected Garvey's claim in February 1996, because he
presented no evidence that the Padres actually offered to extend
his contract. Garvey objected, and an arbitration hearing was held.
He testified that the Padres offered to extend his contract for the
1988 and 1989 seasons and then withdrew the offer after they began
colluding with other teams. He presented a June 1996 letter from
Ballard Smith, Padres' President and CEO from 1979 to 1987, stating
that, before the end of the 1985 season, Smith offered to extend
Garvey's contract through
507
the 1989 season, but that the Padres refused to negotiate with
Garvey thereafter due to collusion.
The arbitrator denied Garvey's claim, after seeking additional
documentation from the parties. In his award, he explained that"
'[t]here exists ... substantial doubt as to the credibility of the
statements in the Smith letter.'"
Id., at 586. He noted the
"stark contradictions" between the 1996 letter and Smith's
testimony in the earlier arbitration proceedings regarding
collusion, where Smith, like other owners, denied collusion and
stated that the Padres simply were not interested in extending
Garvey's contract.
Ibid. The arbitrator determined that, due
to these contradictions, he "'must reject [Smith's] more recent
assertion that Garvey did not receive [a contract] extension'" due
to collusion, and found that Garvey had not shown a specific offer
of extension.
Ibid. He concluded:
"'The shadow cast over the credibility of the Smith testimony
coupled with the absence of any other corroboration of the claim
submitted by Garvey compels a finding that the Padres declined to
extend his contract not because of the constraints of the collusion
effort of the clubs but rather as a baseball judgment founded upon
[Garvey's] age and recent injury history.'" Ibid.
Garvey moved in Federal District Court to vacate the
arbitrator's award, alleging that the arbitrator violated the
Framework by denying his claim. The District Court denied the
motion. The Court of Appeals for the Ninth Circuit reversed by a
divided vote. The court acknowledged that judicial review of an
arbitrator's decision in a labor dispute is extremely limited. But
it held that review of the merits of the arbitrator's award was
warranted in this case, because the arbitrator "'dispensed his own
brand of industrial justice.'"
Id., at 589. The court
recognized that Smith's prior testimony with respect to collusion
conflicted with the statements in his 1996 letter. But in the
court's view, the arbitra-
508
Per Curiam
tor's refusal to credit Smith's letter was "inexplicable" and
"border[ed] on the irrational," because a panel of arbitrators,
chaired by the arbitrator involved here, had previously concluded
that the owners' prior testimony was false.
Id., at 590. The
court rejected the arbitrator's reliance on the absence of other
corroborating evidence, attributing that fact to Smith and Garvey's
direct negotiations. The court also found that the record provided
"strong support" for the truthfulness of Smith's 1996 letter.
Id., at 591-592. The Court of Appeals reversed and remanded
with directions to vacate the award.
The District Court then remanded the case to the arbitration
panel for further hearings, and Garvey appealed. The Court of
Appeals, again by a divided vote, explained that
Garvey I
established that "the conclusion that Smith made Garvey an offer
and subsequently withdrew it because of the collusion scheme was
the only conclusion that the arbitrator could draw from the record
in the proceedings." No. 00-56080, 2000 WL 1801383, *1 (CA9, Dec.
7, 2000) (unpublished), judgt. order reported at
243 F.3d
547 (Garvey II). Noting that its prior instructions
might have been unclear, the court clarified that
Garvey I
"left only one possible result-the result our holding
contemplated-an award in Garvey's favor." 2000 WL 1801383, at *1.
The Court of Appeals reversed the District Court and directed that
it remand the case to the arbitration panel with instructions to
enter an award for Garvey in the amount he claimed.1
1 Garvey contends that, because the Association's petition was
filed more than 90 days after
Garvey I, we cannot consider a
challenge raising issues resolved in that decision. But there is no
question that the Association's petition was filed in sufficient
time for us to review
Garvey II, and we have authority to
consider questions determined in earlier stages of the litigation
where certiorari is sought from the most recent of the judgments of
the Court of Appeals.
Mercer v.
Theriot, 377 U. S. 152 (1964)
(per curiam); Hamilton-Brown Shoe Co. v.
Wolf
Brothers &
Co., 240 U. S. 251, 258
(1916).
509
The parties do not dispute that this case arises under § 301 of
the Labor Management Relations Act, 1947, 61 Stat. 156, 29 U. S. C.
§ 185(a), as the controversy involves an assertion of rights under
an agreement between an employer and a labor organization. Although
Garvey's specific allegation is that the arbitrator violated the
Framework for resolving players' claims for damages, that Framework
was designed to facilitate payments to remedy the Clubs' breach of
the collective-bargaining agreement. Garvey's right to be made
whole is founded on that agreement.
Judicial review of a labor-arbitration decision pursuant to such
an agreement is very limited. Courts are not authorized to review
the arbitrator's decision on the merits despite allegations that
the decision rests on factual errors or misinterprets the parties'
agreement.
Paperworkers v.
Misco, Inc., 484 U. S. 29, 36 (1987).
We recently reiterated that if an "'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.'"
Eastern Associated Coal Corp. v.
Mine Workers,
531 U. S. 57, 62
(2000) (quoting
Misco, supra, at 38). It is only when the
arbitrator strays from interpretation and application of the
agreement and effectively "dispense[s] his own brand of industrial
justice" that his decision may be unenforceable.
Steelworkers v.
Enterprise Wheel &
Car
Corp., 363 U. S.
593, 597 (1960). When an arbitrator resolves disputes regarding
the application of a contract, and no dishonesty is alleged, the
arbitrator's "improvident, even silly, factfinding" does not
provide a basis for a reviewing court to refuse to enforce the
award.
Misco, 484 U. S., at 39.
In discussing the courts' limited role in reviewing the merits
of arbitration awards, we have stated that" 'courts ... have no
business weighing the merits of the grievance [or] considering
whether there is equity in a particular claim.'"
510
Per Curiam
Id., at 37 (quoting
Steelworkers v.
American
Mfg. Co., 363 U. S. 564, 568 (1960)). When the judiciary does
so, "it usurps a function which ... is entrusted to the arbitration
tribunal."
Id., at 569; see also
Enterprise Wheel
&
Car Corp., supra, at 599 ("It is the arbitrator's
construction [of the agreement] which was bargained for ... ").
Consistent with this limited role, we said in
Misco that
"[e]ven in the very rare instances when an arbitrator's procedural
aberrations rise to the level of affirmative misconduct, as a rule
the court must not foreclose further proceedings by settling the
merits according to its own judgment of the appropriate result."
484 U. S., at 40-41, n. 10. That step, we explained, "would
improperly substitute a judicial determination for the arbitrator's
decision that the parties bargained for" in their agreement.
Ibid. Instead, the court should "simply vacate the award,
thus leaving open the possibility of further proceedings if they
are permitted under the terms of the agreement."
Ibid.
To be sure, the Court of Appeals here recited these principles,
but its application of them is nothing short of baffling. The
substance of the court's discussion reveals that it overturned the
arbitrator's decision because it disagreed with the arbitrator's
factual findings, particularly those with respect to credibility.
The Court of Appeals, it appears, would have credited Smith's 1996
letter, and found the arbitrator's refusal to do so at worst
"irrational" and at best "bizarre."
Garvey I, 203 F. 3d, at
590-591. But even "serious error" on the arbitrator's part does not
justify overturning his decision, where, as here, he is construing
a contract and acting within the scope of his authority.
Misco,
supra, at 38.
In
Garvey II, the court clarified that
Garvey I
both rejected the arbitrator's findings and went further, resolving
the merits of the parties' dispute based on the court's assessment
of the record before the arbitrator. For that reason, the court
found further arbitration proceedings inappropri-
511
ate. But again, established law ordinarily precludes a court
from resolving the merits of the parties' dispute on the basis of
its own factual determinations, no matter how erroneous the
arbitrator's decision.
Misco, supra, at 40, n. 10; see also
American Mfg. Co., supra, at 568. Even when the arbitrator's
award may properly be vacated, the appropriate remedy is to remand
the case for further arbitration proceedings.
Misco, supra,
at 40, n. 10. The dissent suggests that the remedy described in
Misco is limited to cases where the arbitrator's errors are
procedural.
Post, at 512 (opinion of STEVENS, J.).
Misco did involve procedural issues, but our discussion
regarding the appropriate remedy was not so limited. If a remand is
appropriate
even when the arbitrator's award has been set
aside for "procedural aberrations" that constitute "affirmative
misconduct," it follows that a remand ordinarily will be
appropriate when the arbitrator simply made factual findings that
the reviewing court perceives as "irrational." The Court of Appeals
usurped the arbitrator's role by resolving the dispute and barring
further proceedings, a result at odds with this governing law.2
For the foregoing reasons, the Court of Appeals erred in
reversing the order of the District Court denying the motion to
vacate the arbitrator's award, and it erred further in directing
that judgment be entered in Garvey's favor. The petition for a writ
of certiorari is granted, the judgment of
2 In any event, no serious error on the arbitrator's part is
apparent in this case. The fact that an earlier panel of
arbitrators rejected the owners' testimony as a whole does not
compel the conclusion that the panel found Smith's specific
statements with respect to Garvey to be false. The arbitrator's
explanation for his decision indicates that he simply found Smith
an unreliable witness and that, in the absence of corroborating
evidence, he could only conclude that Garvey failed to show that
the Padres had offered to extend his contract. The arbitrator's
analysis may have been unpersuasive to the Court of Appeals, but
his decision hardly qualifies as serious error, let alone
irrational or inexplicable error. And, as we have said, any such
error would not justify the actions taken by the court.
512
STEVENS, J., dissenting
the Court of Appeals is reversed, and the case is remanded for
further proceedings consistent with this opinion.
It is so ordered.
JUSTICE GINSBURG, concurring in part and concurring in the
judgment.
I agree with the Court that in
Garvey v.
Roberts,
203 F. 3d
580 (CA9 2000), the Ninth Circuit should not have
disturbed the arbitrator's award. Correction of that error sets
this case straight. I see no need to say more.
JUSTICE STEVENS, dissenting.
It is well settled that an arbitrator "does not sit to dispense
his own brand of industrial justice."
Steelworkers v.
Enterprise Wheel &
Car Corp., 363 U. S. 593, 597
(1960). We have also said fairly definitively, albeit in dicta,
that a court should remedy an arbitrator's "procedural aberrations"
by vacating the award and remanding for further proceedings.
Paperworkers v.
Misco, Inc., 484 U. S. 29, 40-41, n. 10
(1987). Our cases, however, do not provide significant guidance as
to what standards a federal court should use in assessing whether
an arbitrator's behavior is so untethered to either the agreement
of the parties or the factual record so as to constitute an attempt
to "dispense his own brand of industrial justice." Nor, more
importantly, do they tell us how, having made such a finding,
courts should deal with "the extraordinary circumstance in which
the arbitrator's own rulings make clear that, more than being
simply erroneous, his finding is completely inexplicable and
borders on the irrational."
Garvey v.
Roberts,
203 F.3d
580, 590
(CA9 2000) (case below). Because our case law
is not sufficiently clear to allow me to conclude that the case
below was wrongly decided-let alone to conclude that the decision
was so wrong as to require the extraordinary remedy of a sum-
513
mary reversal-I dissent from the Court's disposition of this
petition.
Without the benefit of briefing or argument, today the Court
resolves two difficult questions. First, it decides that even if
the Court of Appeals' appraisal of the merits is correct-that is to
say, even if the arbitrator did dispense his own brand of justice
untethered to the agreement of the parties, and even if the correct
disposition of the matter is perfectly clear-the only course open
to a reviewing court is to remand the matter for another
arbitration. That conclusion is not compelled by any of our cases,
nor by any analysis offered by the Court. As the issue is subject
to serious arguments on both sides, the Court should have set this
case for argument if it wanted to answer this remedial
question.
Second, without reviewing the record or soliciting briefing, the
Court concludes that, in any event, "no serious error on the
arbitrator's part is apparent in this case."
Ante, at 511,
n. 2. At this stage in the proceedings, I simply cannot endorse
that conclusion. After examining the record, obtaining briefing,
and hearing oral argument, the Court of Appeals offered a reasoned
explanation of its conclusion. See 203 F. 3d, at 589-592; see also
id., at 593-594 (Hawkins, J., concurring). Whether or not I would
ultimately agree with the Ninth Circuit's analysis, I find the
Court's willingness to reverse a factbound determination of the
Court of Appeals without engaging that court's reasoning a
troubling departure from our normal practice. *
Accordingly, I respectfully dissent.
*The Court's opinion is somewhat ambiguous as to its reasons for
overturning the portion of the Court of Appeals' decision setting
aside the arbitration. It is unclear whether the majority is saying
that a court may never set aside an arbitration because of a
factual error, no matter how perverse, or whether the Court merely
holds that the error in this case was not sufficiently severe to
allow a court to take that step. If it is the latter, the Court
offers no explanation of what standards it is using or of its
reasons for reaching that conclusion.
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