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Click here for the full text of this decision FACTS:From at least 1950 to 2000, Shell Oil Co. owned a subsidiary named Shell Epoxy Resins. During that time, Shell and the Norco Chemical Workers Union, later the Paper Allied Industrial Chemical and Energy Workers International Union, had a collective bargaining agreement (CBA) covering both production workers and maintenance workers. In 2000, Shell sold the resin subsidiary to Resolution Performance Products (RPP), now Hexion Chemical Co. In the sale agreements, RPP agreed to recognize the union and adopt the CBA with all past letters of agreement. RPP did so, adopting a CBA identical in all relevant respects to the Shell-Union CBA. After the sale, some production workers transferred to RPP, but no maintenance workers transferred. During the first year of RPP’s control of the business, all maintenance workers were subcontractors, either employees of various firms or Shell employees subcontracted to RPP under the Interim Labor Services Agreement. At the end of that year, RPP stopped using Shell’s workers who were parties to a Shell-Union CBA. Instead of hiring union workers, it used as maintenance workers, as it still does, only subcontractors from firms other than Shell, primarily KBR Inc. The union asserted in a grievance in 2001 that RPP improperly used subcontractors instead of union workers for maintenance. RPP responded that it would not recognize the grievance because: it was not timely; the CBA did not require it to employ any maintenance workers; RPP had never employed any maintenance workers and thus could not have subcontracted out the work to the Union’s detriment; and Shell maintenance employees had rejected employment with RPP, forcing the company to subcontract out the work. Arbitration followed, and in July 2004 the arbitrator concluded that the grievance was timely and that RPP violated the CBA by subcontracting out all the maintenance work. The arbitrator concluded that RPP, by assuming the obligations of the CBA and all past letters of agreement, logically accepted the past arbitral interpretations of its obligations under the CBA. Thus, she resolved the issue by analyzing the text of the CBA and prior arbitral interpretations of that text. As a remedy, the arbitrator ordered that RPP employ maintenance craft employees in numbers comparable to that of the Epoxy Resins Department when it was owned by Shell. RPP filed suit in federal district court, seeking vacatur of the award, and both parties moved for summary judgment. The district court granted RPP’s motion. Although the court deferred to the arbitrator’s conclusion that the grievance was timely, it concluded that the arbitrator erred by considering past practice where the CBA stated it was the entire agreement between the parties. The union appealed. HOLDING:Reversed and remanded. As long as the arbitrator’s decision draws its essence from a CBA, the court stated that an arbitration award cannot be set aside. But, the court stated, an arbitrator lacks authority to render a decision contrary to an unambiguous provision of the CBA. The union, the court stated, argued that the award drew its essence from the CBA, because the CBA does not unambiguously permit RPP to subcontract, especially in the face of the preamble’s recognition clause, which recognizes the union as the exclusive bargaining agent for the class of maintenance workers. RPP, the court stated, countered that Article III of the CBA unambiguously allows it not to maintain maintenance workers. It also contends that the arbitrator pointed to no specific CBA provision in finding that RPP violated the CBA. The court concluded that the CBA did not unambiguously give RPP the right to subcontract. The CBA, the court stated, is silent as to RPP’s right to subcontract. In addition, the court stated, the CBA recognizes the union as the representative of maintenance workers, suggesting that RPP cannot subcontract all maintenance work. Because the CBA was ambiguous about RPP’s right to subcontract, the court deferred to the arbitrator’s interpretation that the CBA did not permit wholesale subcontracting. RPP also contended that the arbitrator ignored the plain language of the CBA requiring the party requesting arbitration � in this case, the union � to apply for a panel of arbitrators within 30 days of requesting arbitration. But the arbitrator allowed arbitration, concluding the delay in proceeding to arbitration was a result of RPP counsel’s failure to correspond with the union in a timely fashion. The court upheld this decision, concluding that it drew its essence from the CBA. OPINION:Higginbotham, J.; Higginbotham, Dennis and Clement, J.J.

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