Union Pacific v. American Railway, et al

United States Court of Appeals
for the Fifth Circuit

No. 18-50110

Union Pacific Railroad Company,

Plaintiff—Appellee,

versus

American Railway & Airway Supervisors’ Association, a
Division of The Transportation Communications
Union/IAM; Roland Beltran,

Defendants—Appellants.

Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:17-CV-270

Before Owen, Chief Judge, and King and Stewart, Circuit Judges.
Per Curiam:*
After a second positive drug test, Union Pacific permanently
terminated Roland Beltran’s employment. During arbitration, the Public
Law Board concluded the second drug test was a false-positive and ordered

*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
United States Court of Appeals
Fifth Circuit
FILED
December 16, 2020

Lyle W. Cayce
Clerk
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Beltran reinstated. Union Pacific refused to reinstate Beltran and seeks to
vacate the arbitration award. Beltran seeks to enforce the award. The district
court vacated the Public Law Board’s order on public policy grounds, and
this appeal followed. Because we conclude the Public Law Board did not
violate public policy and all other relevant arguments were waived, we
REVERSE the district court’s order of vacatur and REMAND this case for
further proceedings.
I.
Defendant-appellant Roland Beltran worked as a Car Foreman for
plaintiff-appellee Union Pacific, a railroad carrier within the meaning of the
Railway Labor Act (“RLA”). The American Railway & Airway Supervisors’
Association (“ARASA”) is a labor organization that represents employees of
Union Pacific, like Beltran. This appeal centers around a collective
bargaining agreement (“CBA”), which governs the hours of service and
working conditions of ARASA-represented employees. The CBA requires
disputes to be arbitrated in accordance with the RLA. See 45 U.S.C. § 151 et
seq.
Beltran’s position with Union Pacific required him to hold a
commercial driver’s license, making him subject to random drug testing
under Department of Transportation (“DOT”) regulations and company
policy. Beltran first tested positive for cocaine on December 23, 2010. He and
ARASA signed a last-chance agreement. Beltran was thereafter reinstated,
pursuant to Union Pacific’s Drug and Alcohol Policy for a “one-time return
to service opportunity.” According to that policy, “[a]n employee who has
been granted a one-time return to service. . . and who violates the Union
Pacific Drug and Alcohol policy again within a ten (10) year period will be
dismissed permanently.”
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Beltran tested positive for amphetamines and methamphetamine in a
follow-up test on November 20, 2014. Dr. Randy Barnett, the Medical
Review Officer (“MRO”), interviewed Beltran over the phone and asked
what medications he was taking. The MRO verified the positive result to
Union Pacific and stated that the test was conducted in accordance with 49
C.F.R. Part 40 and Part 382.
Union Pacific then conducted an investigation and hearing on the
matter, at which the parties submitted testimonial and documentary
evidence. Union Pacific, through Tracy W. Brown, laid out the charges and
the testing procedures that documented the confirmed positive result for
amphetamines and methamphetamine. Beltran testified that he had taken
prescription and over-the-counter medications that could have led to a false-
positive. Beltran also submitted a letter from Dr. Michael Zeitlin which
identified the medications that Beltran was allegedly taking that could cause
false positives. The letter from Dr. Zeitlin noted that “[a]mphetamine or
methamphetamine is the most common[ly] reported false-positive urine drug
test result.”
Dr. Barnett, the MRO, testified as a witness for Union Pacific, and his
report was made an exhibit. Dr. Barnett stated that none of the medications
listed by Dr. Zeitlin would cause a false positive for methamphetamine, and
thus there was no legitimate medical explanation for Beltran’s positive test.
On January 9, 2015, Union Pacific notified Beltran that his
employment was terminated based on the hearing. In accordance with the
procedures set forth in the RLA and the CBA, ARASA moved the matter to
arbitration before a Public Law Board (“PLB”). The parties submitted
written briefs and exhibits, including the transcript of the initial hearing. PLB
No. 5514 issued Award No. 101, which ordered Beltran to return to work,
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without back pay, but with seniority and other benefits intact. Union Pacific
did not return Beltran to service.
Instead, Union Pacific filed suit in the District Court for the Western
District of Texas seeking to set aside the award. Beltran and ARASA counter-
claimed seeking to enforce the award. The parties prepared a stipulated
record consisting of the submissions and evidence before the PLB and cross-
moved for summary judgment. The district court granted Union Pacific’s
motion and vacated the arbitration award, concluding that the PLB violated
public policy. Beltran and ARASA timely appealed.
II.
We review de novo the district court’s order to vacate the arbitration
award. Gulf Coast Indus. Workers Union v. Exxon Co., U.S.A., 991 F.2d 244,
248 (5th Cir. 1993); see Cont’l Airlines, Inc. v. Int’l Bhd. Of Teamsters, 391
F.3d 613, 616 (5th Cir. 2004).
The CBA at issue requires arbitration in accordance with the RLA’s
mandatory procedures for the resolution of disputes, both major and minor.
See Mitchell v. Cont’l Airlines, Inc., 481 F.3d 225, 230 (5th Cir. 2007). This
dispute over a drug-testing result is classified as a “minor dispute” under the
RLA. Id. at 230-31. Minor disputes must be resolved through compulsory and
binding arbitration. Cont’l Airlines, Inc. v. Air Line Pilots Ass’n, Int’l, 555 F.3d
399, 405 (5th Cir. 2009) (citing Mitchell, 481 F.3d at 231). Judicial review of
arbitration decisions arising from the terms of a CBA is narrowly limited, and
courts should afford great deference to arbitration awards. Id. at 405 (quoting
Resolution Performance Prods., LLC v. Paper Allied Indus. Chem. and Energy
Workers Int’l, Local 4-1201, 480 F.3d 760, 764 (5th Cir. 2007)). The standard
of review is “among the narrowest known to the law” and flows from the
RLA’s “preference for the settlement of disputes in accordance with
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contractually agreed-upon arbitration procedures.” Id. (quoting Andrews v.
Louisville & Nashville R.R. Co., 406 U.S. 320, 323 (1972)).
We will defer to an arbitrator’s decision unless: (1) the arbitrator failed
to comply with the RLA; (2) there is evidence of fraud or corruption in the
arbitrator; or (3) the order by the arbitrator did not “confine itself to matters
within the scope of [its] jurisdiction.” Id. at 406 (quoting Mitchell, 481 F.3d
at 231). This court has also held that we may vacate an arbitrator’s decision
pursuant to an exceedingly narrow, judicially created exception for public
policy concerns. See id. at 415-20.
III.
The parties ask that we address whether: (1) public policy review is
available under the RLA; (2) the award violates public policy; (3) Union
Pacific forfeited the jurisdictional argument by failing to present the relevant
regulation to the arbitrator; (4 ) the jurisdictional argument fails on the merits.
We address the parties’ public policy concerns and jurisdictional arguments
below.
A. Public Policy Concerns
Union Pacific contends that the PLB violated an explicit, well-defined
public policy by failing to defer to the MRO’s finding that Beltran’s second
drug test was positive. The district court agreed and vacated the PLB’s award
accordingly. ARASA argues on appeal that public policy review is unavailable
and, in the alternative, that the argument fails on the merits.
As a threshold matter, in Continental Airlines v. Air Line Pilots, this
court recognized a narrow public policy exception in the relevant context and
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distilled three guiding principles.
1
Id. at 406. First, “public policy. . . must be
well defined and dominant, and is to be ascertained by reference to the laws
and legal precedents . . . .” Id. at 415-16 (omission in original) (quoting W.R.
Grace & Co. v. Local Union 759, Int’l Union of the United Rubber, Cork,
Linoleum & Plastic Workers of Am., 461 U.S. 757, 766 (1983)). Second, the
relevant point of inquiry is whether the ultimate arbitration award violates
public policy. See id. at 416. And third, “courts should be particularly chary
when divining public policy [where] ‘two political branches have created a
detailed regulatory regime in a specific field.’” Id. at 417-18 (quoting E.
Associated Coal Crop v. United Mine Workers of Am., 531 U.S. 57, 63 (2000)).
Against that backdrop, we analyze whether the arbitration award
contravenes public policy. “[W]e cannot embrace public policy as an end-run
around RLA deference,” id. at 420, and we consider whether the ultimate
arbitration award violated 49 C.F.R. § 40.149(c). We look, then, to see not if
the false-positive determination itself violates public policy, but whether the
PLB’s failure to defer to the MRO creates a conflict between the arbitration
award and the federal regulation. See id. at 419-20; see also United
Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 45 (1987).
Subpart 40 of Title 49 of the Code of Federal Regulations “tells all
parties who conduct drug and alcohol tests required by [DOT] agency
regulations how to conduct these tests and what procedures to use,” and
“concerns the activities of transportation employers, safety-sensitive
transportation employees . . . and service agents.” 49 C.F.R. § 40.1. These
regulations were issued pursuant to the Federal Omnibus Transportation
Employee Testing Act of 1991 (the “Testing Act”), which places certain

1
Air Line Pilots both recognized and went to great lengths to circumscribe the
narrow exception. And, absent an intervening change in the law, this panel has no authority
to overrule binding precedent. See Mercado v. Lynch, 823 F.3d 276, 279 (5th Cir. 2016).
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restrictions on workers who test positive for using controlled substances. See
Pub. L. No, 102-143, tit. V, 105 Stat. 917 (1991). The Testing Act’s aims are
complex and primarily remedial; these state 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.” E.
Associated Coal, 531 U.S. at 64.
On close inspection, it becomes apparent that § 40.149(c), the specific
regulation at issue here, only purports to grant the MRO the “sole authority
under this part to make medical determinations.” 49 C.F.R. § 40.149(c)
(emphasis added). To that end, an arbitration award would directly
contravene § 40.149(c) if it disregarded the MRO’s medical determination
in ordering an employer to allow an employee to return to performing safety-
sensitive work without going through DOT’s rehabilitative measures. See 49
C.F.R. § 40.305 (prescribing return-to-duty requirements for employees who
failed a drug or alcohol test); cf. E. Associated Coal, 531 U.S. at 64 (discussing
the relevant legislation’s “remedial aims”).
2

In other words, an arbitrator may disagree with the MRO as long as its
remedy does not conflict with Part 40’s return-to-duty procedures. The
MRO has the sole authority to establish the validity of a drug test for

2
Although this issue was not briefed, there was some discussion at oral argument
as to whether the PLB ordered Beltran be returned to a safety-sensitive position. Appellants
stated that the PLB did not do as much. Union Pacific, however, indicated this might be
the consequence of the PLB award, given Beltran was reinstated with his seniority intact.
Nevertheless, Union Pacific conceded that DOT regulations would have to be followed
before Beltran resumed any safety-sensitive position pursuant to the award. We conclude,
therefore, that this hypothetical outcome—which would nevertheless not mandate the
employee be returned to performing safety-sensitive work without going through DOT’s
rehabilitative measures—proves insufficient to sustain a finding that the arbitration award
was violative of public policy.
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determining whether those procedures are necessary—not for making
personnel decisions. Indeed, DOT’s authoritative guidance interpreting
§ 40.149(c) says as much:
There may be instances in which an arbitrator makes a decision
that purports to cancel a DOT test for reasons that the DOT
regulation does not recognize as valid. . . [In such instances the]
employer may still be bound to implement the personnel policy
outcome of the arbitrator’s decision . . . .
To that end, in this case, a meaningful distinction lies in whether the drug
test is valid for purposes of “personnel policy” or a “federal safety
regulation.” Under the RLA, the arbitrator has the authority to decide the
drug test’s validity for the former purpose, while under
§ 40.149(c), the MRO has the authority to decide the drug test’s validity for
the latter purpose.
And although 49 C.F.R. § 40.149(c) falls in the category of DOT
safety regulations, these do not purport to regulate labor–management
relations. Cf. E. Associated Coal, 531 U.S. at 65 (“[W]hen 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.’” (quoting Controlled Substances & Alcohol Use and Testing,
59 Fed. Reg. 7484, 7502 (Feb. 15, 1994))).
At bottom, transportation-safety policy and labor policy are driven by
different concerns, and “basic background labor law principles, [] caution
against interference with labor-management agreements about appropriate
employee discipline.” E. Associated Coal, 531 U.S. at 65. Because § 40.149(c)
did not preclude the PLB from disagreeing with the MRO, there is no direct
conflict between the established regulation and the arbitration award. The
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award was, therefore, not in violation of public policy, and the district court
should not have set it aside.
We now tun to the parties’ dispute over the scope of the PLB’s
jurisdiction and conclude Union Pacific waived the jurisdictional argument
by failing to raise it below.
B. Jurisdictional Argument
Absent a finding that the arbitration award violated public policy,
Union Pacific argues that the award should nevertheless be vacated because
the PLB exceeded its jurisdiction by ignoring the express language of the
contract.
Unlike an objection to a federal court’s lack of subject-matter
jurisdiction, which can never be waived, an argument that an arbitrator lacked
subject-matter jurisdiction is waivable. See Lodge No. 725, Int’l Ass’n of
Machinists v. Mooney Aircraft, Inc., 410 F.2d 681, 683 (5th Cir. 1969).
It is well established that a party may not sit idle through an arbitration
procedure and then collaterally attack the procedure on grounds not raised
before the arbitrators. Brook v. Peak Int’l, Ltd., 294 F.3d 668, 674 (5th Cir.
2002). If the issue was arbitrable and was not presented to the arbitrator, it is
waived. See Lodge No. 725, 410 F.2d at 683; see also Int’l Chem. Workers Union
v. Columbian Chems. Co., 331 F.3d 491, 498-99 (5th Cir. 2003) (refusing to
consider whether an arbitration award for backpay was ambiguous because
the company did not argue for reduction before arbitrator); Brook, 294 F.3d
at 673 (refusing to vacate award granted by improperly selected arbitrator
because worker did not object to the defect during arbitration).
As Union Pacific failed to point out the regulation during arbitration,
it waived its argument that the PLB exceeded its jurisdiction by not following
49 C.F.R. § 40.149(c). Union Pacific was aware, certainly, that the validity of
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the drug test was before the PLB. And, although Union Pacific now claims
the regulation is binding, it instead argued throughout arbitration that there
was sufficient evidence for the PLB to find that the drug test was, in fact,
positive. We therefore decline to consider whether the PLB acted outside its
jurisdiction by overturning the MRO’s false-positive determination, and we
find that the PLB acted well within its jurisdiction by conditionally reinstating
Beltran to his position with Union Pacific.
IV.
For the reasons stated above, we conclude that the PLB’s arbitration
award did not violate public policy, and Union Pacific’s arguments on
jurisdictional grounds fail. The district court’s judgment vacating the PLB’s
award is REVERSED, and this case is REMANDED fo r further
proceedings consistent with this opinion.

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PRISCILLA R. OWEN, Chief Judge, dissenting:
With respect, I dissent. If Beltran can be reinstated without being
placed in a safety-sensitive position, then the award does not violate public
policy and the arbitrator had jurisdiction to disagree with the MRO for
“personnel policy” matters—namely, the arbitrator can say the drug test was
a false positive for purposes of the last-chance agreement.
However, the record does not reflect whether Beltran can be
reinstated to a position that is not safety sensitive. If Beltran can only be
placed in a safety-sensitive position, then the award violates public policy to
the extent that it declares the test a false positive. Under that circumstance,
the arbitrator exceeded its jurisdiction by reinstating Beltran in direct
violation of the last-chance agreement.
Though I believe the majority opinion’s overall framing of the case is
correct, the underlying fact issue remains, and I would remand to the district
court for its resolution.

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