## Facts

- W.R. Grace & Co. operated a plant whose employees were represented by Local Union 759 under a collective bargaining agreement (CBA) with layoff seniority rules and a grievance-arbitration procedure.
- After discrimination charges, Grace entered a Title VII conciliation agreement with the EEOC requiring remedial seniority-related benefits favoring certain employees, creating conflict with the CBA’s seniority provisions.
- During layoffs, Grace followed the conciliation agreement rather than the CBA, resulting in layoffs of more-senior male employees and retention of less-senior employees favored under the conciliation arrangement.
- The union and affected employees filed grievances alleging CBA violations; Grace sought to enjoin arbitration and obtain a declaration that the conciliation agreement controlled.
- The district court initially sided with Grace, but the Fifth Circuit reversed and compelled arbitration under the CBA.
- Arbitrator Barrett sustained grievances for two laid-off employees and awarded back pay, concluding (i) he was not bound by a prior inconsistent arbitration award, (ii) the earlier district court order did not eliminate contractual liability for breaching the CBA, and (iii) the CBA contained no “good faith” defense based on reliance on the EEOC agreement or the district court’s initial ruling.
- Grace sued to vacate the award; the district court set it aside on public-policy grounds favoring obedience to court orders, but the Fifth Circuit reversed and ordered enforcement.

## Issues

1. Whether a court may vacate a labor-arbitration award because it disagrees with the arbitrator’s interpretation of the CBA.
2. Whether enforcing a back-pay arbitration award violates public policy when the employer’s conduct followed an earlier federal court order and an EEOC conciliation agreement.

## Decision

- The Supreme Court affirmed the court of appeals and enforced the arbitration award.
- Courts may not overturn an arbitrator’s contract interpretation merely because a different interpretation seems more reasonable; the parties bargained for the arbitrator’s construction.
- Enforcement was not barred by public policy: even assuming the earlier district court ruling functioned as a mandatory injunction, the arbitrator’s interpretation did not require Grace to have disobeyed that order; the award imposed contractual damages for breach of the CBA.
- The arbitrator’s rejection of a “good faith reliance” defense was a matter of contract interpretation committed to arbitration, and courts could not add such a defense to the CBA.

## Legal Principles

- Judicial review of labor-arbitration awards is extremely limited; an award must be enforced if it draws its essence from the CBA and does not reflect the arbitrator’s personal brand of industrial justice.
- A court may not vacate an award simply because it prefers its own reading of the contract.
- The public-policy exception to enforcement is narrow and applies only when an award clearly conflicts with an explicit, well-defined, dominant public policy grounded in law.
- An award that imposes damages for a past contractual breach does not violate the public-policy doctrine merely because the employer acted under competing legal pressures, absent a showing that compliance with the award required disobedience to law or a court order.

## Conclusion

The Court required enforcement of the back-pay arbitration award, reaffirming strong deference to labor arbitrators’ contract interpretations and limiting the public-policy exception to cases where an award clearly compels conduct contrary to explicit law.


W.R. Grace & Co. v. Loc. Union 759, 461 U.S. 757 (1983)