Way Bakery v. TRUCK DRIVERS LOCAL NO. 164 and JAMES ZENTGRAF

*The Honorable William W Schwarzer, Senior United States District
Judge for the Northern District of California, sitting by designation.
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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0099P (6th Cir.)
File Name: 04a0099p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
WAY BAKERY,
Plaintiff-Appellant,
v.
TRUCK DRIVERS LOCAL NO.
164 and JAMES ZENTGRAF,
Defendants-Appellees.
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No. 02-2051
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 01-73392—Avern Cohn, District Judge.
Argued: March 18, 2004
Decided and Filed: April 7, 2004
Before: COLE and GILMAN, Circuit Judges;
SCHWARZER, Senior District Judge.*
2 Way Bakery v. Truck
Drivers Local 164, et al.
No. 02-2051
_________________
COUNSEL
ARGUED: Daniel G. Cohen, PILCHAK, COHEN & TICE,
Farmington Hills, Michigan, for Appellant. Andrea F.
Hoeschen, PREVIANT, GOLDBERG, UELMAN, GRATZ,
MILLER & BRUEGGEMAN, Milwaukee, Wisconsin, for
Appellees. ON BRIEF: Daniel G. Cohen, Rhonda H.
Sanko, PILCHAK, COHEN & TICE, Farmington Hills,
Michigan, for Appellant. Andrea F. Hoeschen, PREVIANT,
GOLDBERG, UELMAN, GRATZ, MILLER &
BRUEGGEMAN, Milwaukee, Wisconsin, for Appellees.
_________________
OPINION
_________________
RONALD LEE GILMAN, Circuit Judge. This case arises
out of an arbitrator’s reinstatement of a white employee who
was terminated for making a racially offensive remark to a
black coworker. The employer brought suit to vacate the
arbitrator’s award. After the district court ruled in favor of
the employee and Truck Drivers Local No. 164 (the Union),
the employer appealed. For the reasons set forth below, we
AFFIRM the judgment of the district court.
I. BACKGROUND
James Zentgraf worked for Way Bakery and is a member of
the Union. In February of 2000, Zentgraf, a white employee,
told Diana Thomas, an African-American coworker, to “relax
Sambo.” Despite his repeated attempts to apologize to
Thomas shortly thereafter, Zentgraf was suspended for
making the remark. He then filed a grievance in protest of the
discipline. After denying the grievance, Way Bakery

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terminated Zentgraf because his “conduct clearly violated the
Company’s Equal Employment Opportunity policy.”
Zentgraf’s grievance against Way Bakery was subsequently
submitted to arbitration. The arbitrator found for Zentgraf,
reducing his discharge to six months unpaid suspension and
reinstating him at Way Bakery. But the arbitrator placed
Zentgraf on “probation for a period of five years during which
a repeat of this type of conduct, that is, racial harassment or
racially abusive language, would be the basis for immediate
discharge.”
Way Bakery brought suit to vacate the arbitration award
pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16, the
Labor Management Relations Act of 1947, 29 U.S.C. § 185,
and Michigan state law. The complaint alleged that the
arbitrator’s award violated public policy, exceeded the scope
of the arbitrator’s authority, and did not draw its essence from
the Collective Bargaining Agreement (CBA). Both parties
filed motions for summary judgment. Way Bakery sought,
among other things, to vacate the arbitration award. The
Union and Zentgraf, on the other hand, sought summary
judgment. After the district court heard arguments on the
respective motions, it granted the Union’s and Zentgraf’s
motion for summary judgment in July of 2002. This timely
appeal followed.
II. ANALYSIS
A. Arbitration awards
Although we review the district court’s grant of summary
judgment to the Union and Zentgraf de novo, “courts play
only a limited role when asked to review the decision of an
arbitrator.” Tennessee Valley Auth. v. Tennessee Valley
Trades & Labor Council, 184 F.3d 510, 514 (6th Cir. 1999)
(per curiam) (quotation marks and citation omitted). A
court’s review of an arbitration award “is one of the narrowest
4 Way Bakery v. Truck
Drivers Local 164, et al.
No. 02-2051
standards of judicial review in all of American
jurisprudence.” Id. at 515. (quotation marks and citation
omitted). Disagreement with an arbitrator’s factual findings
does not constitute grounds for a court’s rejection of those
findings. Id.
We must enforce the arbitrator’s agreement as long as the
award “draws its essence from the collective bargaining
agreement” and is not merely the arbitrator's “own brand of
industrial justice.” Id. (quoting United Steelworkers v.
Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960)
(quotation marks omitted)). “[I]f 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.” Major League Baseball Players Ass’n v. Garvey,
532 U.S. 504, 509 (2001) (per curiam) (quotation marks and
citation omitted).
B. Essence of the collective bargaining agreement
Way Bakery argues that the arbitration award fails to draw
its essence from the CBA because (1) the arbitrator exceeded
the authority expressly granted to him by the CBA, and
(2) the arbitrator based the award upon general considerations
of fairness. To determine whether an arbitration award fails
to draw its essence from the CBA, this court has developed a
four-pronged test: “[A]n award so fails when: (1) it conflicts
with express terms of the agreement; (2) it imposes additional
requirements not expressly provided for in the agreement;
(3) it is not rationally supported by or derived from the
agreement; or (4) it is based on general considerations of
fairness and equity instead of the exact terms of the
agreement.” Int’l Union v. Dana Corp., 278 F.3d 548, 554
(6th Cir. 2002) (quotation marks and citation omitted).
In a detailed 35-page opinion, the arbitrator thoroughly
reviewed and analyzed the CBA and Way Bakery’s Equal

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Employment Opportunity (EEO) policy. The arbitrator found
that although the CBA authorized Way Bakery to adopt its
EEO policy, the policy was not a part of the CBA:
Section 11 gives the Employer the right to adopt rules ‘in
addition to those’ attached to the Agreement. Thus, the
progressive discipline in the contract covers those rules
expressly spelled out, but does not by inference apply to
other rules which the Employer may promulgate.
He then considered the question of
what principles govern discipline under the Equal
Employment Opportunity policy. The policy itself says
that discipline may be ‘up to and including discharge.’
This implies a range of discipline. Section 11 permits
the adoption of ‘reasonable rules and regulations.’ We
are not without guidelines.
The arbitrator finally determined that although the EEO
policy was not subsumed by the CBA, the same disciplinary
principles should apply. He concluded that
[t]he contract rules, taken as a whole, contemplate
progressive discipline in a host of situations. The Equal
Employment Opportunity policy may be enforced by
discipline ‘up to’ discharge. Clearly, there may be
discipline less than discharge. Based on these elements,
the undersigned finds that progressive discipline should
apply.
Article 17 of the CBA prescribes the grievance procedure,
which limits an arbitrator’s authority as follows:
The power of the arbitrator shall be limited to the written
contract and/or he shall have no power to modify,
change, add to or subtract from, the terms of this
6 Way Bakery v. Truck
Drivers Local 164, et al.
No. 02-2051
Agreement. The arbitrator’s decision shall be final and
binding upon both parties.
Way Bakery argues that the arbitrator exceeded his
authority because the EEO policy allowed Way Bakery to
terminate Zentgraf for a policy violation. The plain language
of the EEO policy, however, does not preclude discipline less
severe than termination. Interpreting similar language, this
court has held that arbitrators are within their authority to
review and modify penalties imposed by employers. Bruce
Hardwood Floors v. S. Council of Indus. Workers, 8 F.3d
1104 (6th Cir. 1993). In Bruce, the employer discharged a
worker for sleeping on the job. The employee’s resulting
grievance was submitted to arbitration, and the arbitrator
modified the disciplinary action by reinstating her with back
pay. On appeal from the district court’s decision to vacate the
arbitrator’s award, this court reversed, reasoning that the
award did not conflict with the CBA. Id. at 1108-09.
The relevant sections of the CBA in Bruce provided that the
employer could discharge an employee for committing an
offense enumerated in the CBA, and allowed the company to
discipline and discharge employees for “just cause.” Id. at
1108. Nevertheless, this court held that the arbitrator’s award
was rationally derived from the terms of the CBA, did not
conflict with the CBA’s express terms, and did not add
requirements not expressly provided in the CBA. Id.; see also
Eberhard Foods, Inc. v. Handy & Local 406, 868 F.2d 890,
892 (6th Cir. 1989) (reinstating an arbitrator’s award that
modified an employer’s disciplinary action, reasoning that
“nothing . . . in the CBA or work rules . . . expressly limits or
removes from the arbitrator the authority to review the
remedy in this case”).
The arbitrator in the present case had the authority to
review Way Bakery’s termination of Zentgraf, and his award
does not conflict with the CBA or add requirements not
present in the CBA; rather, the award is, as discussed above,

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derived from and based upon the CBA. As the Union and
Zentgraf note, the parties “bargained for an arbitrator’s
interpretation of the Agreement, and they received the product
of that bargain.”
C. Public policy considerations
Way Bakery next argues that the arbitrator’s award should
be vacated because Zentgraf’s reinstatement violates public
policy, which supports an employer’s efforts to comply with
Title VII and to “purge the workplace of harassment.” This
court has held that when an arbitration award is challenged on
public policy grounds, “the court must determine whether the
arbitrator’s interpretation of the contract jeopardizes a well-
defined and dominant public policy, taking the facts as found
by the arbitrator.” MidMichigan Reg’l Med. Ctr.-Clare v.
Prof’l Employees Div. of Local 79, 183 F.3d 497, 504 (6th
Cir. 1999) (quotation marks and citation omitted). The
relevant public policy is ascertained “by reference to the laws
and legal precedents and not from general considerations of
supposed public interests.” Id. (quoting W.R. Grace & Co. v.
Local Union 759, 461 U.S. 757, 766 (1983)) (quotation marks
omitted).
Courts do not possess a “broad power to set aside an
arbitration award as against public policy.” Tennessee Valley
Auth. v. Tennessee Valley Trades & Labor Council, 184 F.3d
510, 520 (6th Cir. 1999) (per curiam). The issue is “not
whether grievant’s conduct for which he was disciplined
violated some public policy or law, but rather whether the
award requiring the reinstatement of a grievance, i.e., the
contract as interpreted, violated some explicit public policy.”
Id. (quotation marks and citations omitted).
In support of its argument that the arbitrator’s award
reinstating Zentgraf violates public policy, Way Bakery
primarily relies upon Stroehmann Bakeries, Inc. v. Local 776,
Int’l Bhd. of Teamsters, 969 F.2d 1436 (3d Cir. 1992), and
8 Way Bakery v. Truck
Drivers Local 164, et al.
No. 02-2051
Newsday, Inc. v. Long Island Typographical Union, No. 915,
915 F.2d 840 (2d Cir. 1990). The employer in Stroehmann
discharged an employee for sexual harassment. An arbitrator
subsequently reinstated the employee without determining
whether the sexual harassment charge was true. 969 F.2d at
1437-38. The Third Circuit held that the district court
properly vacated the arbitrator’s award as against public
policy, reasoning that the arbitrator’s award
would allow a person who may have committed sexual
harassment to continue in the workplace without a
determination of whether sexual harassment occurred.
Certainly, it does not discourage sexual harassment.
Instead, it undermines the employer’s ability to fulfill its
obligation to prevent and sanction sexual harassment in
the workplace.
Id. at 1442.
Similarly in Newsday, the employer discharged an
employee for sexually harassing a coworker. An arbitrator’s
award reinstated the employee. 915 F.2d at 841. The Second
Circuit held that the reinstatement award “completely
disregarded the public policy against sexual harassment in the
work place,” and reasoned further that the award condoned
the employee’s misconduct, thus perpetuating a hostile work
environment. Id. at 845. Way Bakery argues that these cases
show that “reinstatement undermined the employers’ duty to
protect their employees from further harassment.”
Although we have no particular disagreement with Way
Bakery’s characterization of Stroehmann and Newsday, the
present case is clearly distiguishable. The arbitrator in
Stroehmann reinstated the offending employee without
making a determination of whether sexual harassment had
even occurred. In Newsday, the discharged employee was
reinstated despite having sexually harassed female coworkers

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on a number of occasions and having previously been
disciplined for his misconduct.
Zentgraf, in contrast, did not have a prior disciplinary
record for purposes of progressive discipline. Furthermore,
the arbitrator’s award in this case did not condone or fail to
discourage hostile behavior in the workplace. Recognizing
that “a serious offense ha[d] occurred,” the arbitrator’s award
subjected Zentgraf to a six-month loss of pay and placed him
on probation for five years “during which a repeat of this type
of conduct, that is, racial harassment or racially abusive
language, would be the basis for immediate discharge.”
Zentgraf, moreover, had to “acknowledge this in writing.”
The arbitrator concluded that Zentgraf “must demonstrate that
he understands that he can remain in the work site only if he
understands what he has done and complies with the
Employer’s policies in this area.”
As framed by the Supreme Court, “the question to be
answered is not whether the [employee’s conduct] itself
violates public policy, but whether the agreement to reinstate
him does so.” Eastern Associated Coal Corp. v. United Mine
Workers, Dist. 17, 531 U.S. 57, 62-63 (2000). In Eastern, the
Supreme Court held that public policy considerations did not
require courts to refuse to enforce an arbitrator’s award
reinstating a truck driver who twice tested positive for
marijuana use. Id. at 59. The Court reasoned that the
arbitrator’s award was not contrary to the relevant public
policies, including policies “against drug use by employees in
safety-sensitive transportation positions” and policies in favor
of drug testing, id. at 65, holding as follows:
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 nearly three
months, thereby depriving him of nearly $9,000 in lost
10 Way Bakery v. Truck
Drivers Local 164, et al.
No. 02-2051
wages; 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.
Id. at 65-66 (citation omitted).
Similarly, the arbitration award in the present case did not
condone Zentgraf’s behavior, but rather punished him by
depriving him of his salary for six months and placing him on
probation for five years. Way Bakery cites no case, nor have
we found any, that establishes a public policy of flatly
prohibiting the reinstatement of a worker who makes a
racially offensive remark. We therefore hold that the
arbitrator’s award in this case did not violate public policy.
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the
judgment of the district court.

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