Labor & Employment Law Daily Wrap Up, ARBITRATION–3d Cir.: Arbitrator’s decision against award of reinstatement despite finding of ‘no just cause’ upheld, (Apr 18, 2025)

By Nadine E. Roddy, J.D.

After-acquired evidence showed that the employee would have been discharged anyway for a different reason.

Summary judgment for a plastic fabrication company was properly granted in a union’s suit to vacate the remedial portion of an arbitral award, the Third Circuit has ruled in an unpublished opinion. Although the arbitrator determined that the union employee had been discharged without just cause, the arbitrator’s refusal to award reinstatement and back pay was based on application of the after-acquired evidence doctrine (Teamsters Local Union No. 355 v. Ensinger Penn Fibre, Inc., No. 24-1037 (3d Cir. Apr. 14, 2025, unpublished).

Reinstatement, backpay denied. The union appealed a final judgment of the federal district court in Delaware granting summary judgment to the employer on the union’s complaint to vacate the remedial portion of an arbitration award.

This case arose from the dismissal of a union member, who had worked for the employer as an equipment operator for 29 years, for leaving his workstation without permission for the third time in less than one month. The employee and the union filed a grievance, asserting that the termination lacked “just cause” in violation of the governing CBA. After the parties were unable to resolve the grievance, the union submitted the matter to arbitration.

The arbitrator concluded that the employer had discharged the employee without just cause, but he declined to award reinstatement and backpay on the ground that the employer had discovered—after the employee’s termination—that he had been under the influence of alcohol at work on the date of his termination. Per the employee handbook, an employee who reports to work under the influence of alcohol commits a “major violation” that “warrant[s] immediate dismissal.” Thus, the arbitrator determined that the employee would have been terminated for reporting to work under the influence of alcohol, and that reinstatement would be futile because his conduct was so serious that it would warrant another discharge. On cross-motions for summary judgment, the district court granted the employer’s motion and denied the union’s motion. The union appealed.

Scope of review. In an unpublished opinion, the Third Circuit first noted that the scope of its review in appeals of arbitration awards is “extraordinarily narrow”—the court does not review the merits of the arbitration award or correct factual or legal errors. Even if the court is convinced that the arbitrator committed serious error, it may not vacate an award “except in rare instances.”

‘No support in record’ claim. The union argued that the district court erred in granting summary judgment for the employer and that the remedial portion of the arbitration award should be vacated. The union’s first claim was that the arbitrator had imposed his own brand of industrial justice because, in the union’s view, the remedial portion of the award flowed from a finding that the employer would have discharged the employee for being under the influence of alcohol anyway—a finding “entirely unsupported by the record.” The court held simply that “we find no error in the District Court’s determination that the record supported the arbitrator’s finding.”

‘No written notice’ claim. As to the union’s second claim that the arbitrator had disregarded the CBA by finding that the after-acquired evidence of the employee’s inebriety barred his reinstatement and recovery of backpay, the union argued that the CBA required the employer to provide written notice of the reason for an employee’s termination, and that because no such notice was provided to the employee, he could not be terminated on the basis of inebriety. The court determined, however, that under the arbitrator’s reading of the CBA, the written-notice requirement related only to whether the employee was terminated for “just cause,” and was not the proper remedy for an employee terminated “without just cause.”

Regardless of whether the arbitrator’s interpretation reflected the most textually plausible reading of the CBA, the distinction between the grounds for termination and the proper remedy for an unjust termination was dispositive of the case. This was because the after-acquired evidence doctrine sounds in equity and concerns only the proper remedy for unjust termination—not whether the termination was unjustified in the first instance. Thus, for purposes of application of the doctrine, whether the employee received written notice of the reason for his termination was simply irrelevant.

For these reasons, the court affirmed the district court’s order denying the union’s summary judgment motion and granting the employer’s summary judgment motion.

The case is No. 24-1037.

Judge: Roth, J.

Attorneys: Lance Geren (O'Donoghue & O'Donoghue) for Teamsters Local Union No 355. Laurence V. Cronin (Smith, Katzenstein & Jenkins) for Ensinger Penn Fibre Inc.

Companies: Teamsters Local Union No 355; Ensinger Penn Fibre Inc.

Cases: Arbitration Discharge Labor UnionsMembers DelawareNews NewJerseyNews PennsylvaniaNews