## Facts

- A Puerto Rico hotel employer discharged employee Santiago Figueroa Otero in June 1981 for alleged “immoral conduct” under disciplinary rules incorporated into the collective bargaining agreement (CBA), based on an incident of alleged indecent exposure to a hotel guest.
- Otero was criminally convicted of indecent exposure in August 1981; the conviction was later overturned on appeal in September 1982.
- The union filed a grievance asserting the discharge lacked just cause under the CBA and proceeded to arbitration.
- At the June 23, 1982 arbitration hearing, the guest identified as the only eyewitness appeared but refused to testify after the arbitrator required her husband to leave the hearing room.
- In place of live testimony, the employer introduced the transcript of the criminal proceedings containing testimony about the incident.
- The arbitrator issued an award for the union/Otero, finding the employer failed to justify the discharge and ordering reinstatement/relief; the arbitrator effectively did not credit or consider the employee’s criminal-trial testimony contained in the transcript.
- The employer sued under § 301 of the Labor Management Relations Act (LMRA) to vacate the award; the district court vacated it for failure to consider central evidence and for disregard of unambiguous CBA provisions.
- The union appealed.

## Issues

1. Whether a federal court may vacate a labor-arbitration award under LMRA § 301 when the arbitrator fails to consider evidence central to the dispute.
2. Whether an award fails to “draw its essence” from the CBA when the arbitrator disregards unambiguous contractual discharge provisions.
3. Whether the district court improperly substituted its judgment for the arbitrator’s by vacating the award on those grounds.

## Decision

- The First Circuit affirmed the judgment vacating the arbitration award.
- The court held the arbitrator’s refusal to consider material evidence properly in the record, combined with disregard of clear CBA language governing discharge for proven immoral conduct, took the award outside the bounds of permissible contract interpretation.
- The court concluded the district court did not reweigh facts or correct ordinary arbitral error; it enforced the limit that an arbitrator must decide the dispute by construing and applying the CBA to the evidentiary record.

## Legal Principles

- Judicial review of labor-arbitration awards under LMRA § 301 is extremely limited, but courts may vacate awards that do not “draw [their] essence” from the CBA.
- An arbitrator may not “dispense his own brand of industrial justice” by ignoring unambiguous contractual terms rather than interpreting them.
- An arbitrator exceeds permissible authority when he refuses to consider evidence central to the dispute that is properly submitted, such that the decision is not grounded in applying the agreement to the facts.
- An award may be set aside when it is unsupported by the contractual language and rests on an approach that disregards both the record and the CBA’s clear standards.

## Conclusion

The First Circuit upheld vacatur of the labor-arbitration award because the arbitrator did not meaningfully consider the only available eyewitness evidence in the record and disregarded clear CBA provisions authorizing discharge for proven immoral conduct, so the award did not draw its essence from the parties’ agreement.


Hoteles Condado Beach, La Concha & Convention Ctr. v. Unión de Tronquistas Loc. 901, 763 F.2d 34 (1st Cir. 1985)