FEDERAL MEDIATION AND CONCILIATION SERVICE In the Matter of the Arbitration between FMCS No. 00-15932 PACE LOCAL NO. 507, Grievance No. 17-00 Union, and BLUE RIDGE PAPER PRODUCTS, INC., Company. ______________________________________/

OPINION OF THE ARBITRATOR

March 10, 2001

After a Hearing Held January 17, 2001

At the Airport Holiday Inn in Asheville, North Carolina

For the Union: For the Company: Harold L. Huffman Denis E. Cole PACE International Representative Attorney at Law 3011 Eastway Drive 1305 Franklin Avenue Statesville, NC 28677 Garden City, NY 11530

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The Deal On May 14, 1999, Champion International Corporation (“Champion”)

sold its paper and converting operations in Canton, NC; Waynesville, NC;

Athens, GA; Clinton, IA; Fort Worth, TX; Morristown, NJ; and Olmstead

Falls, OH, to its employees at those locations, through the mechanism of an

Employee Stock Ownership Plan, or ESOP. The deal was financed by KPS

Special Situations Fund (“KPS”), a New York limited partnership. Hourly

employees at the various locations are represented by PACE Locals 507,

794, 761, 1706 and 673, and UAW Local 260.

The acquiring entity was named Blue Ridge Paper Products, Inc.

(“Blue Ridge”, or “Company”). The instant grievance, #17-00, arose at Blue

Ridge’s Canton mill, where hourly employees are represented by Local 507

of the Paper, Allied-Industrial, Chemical & Energy (“PACE”) Workers

International Union, AFL-CIO, CLC (“Union”, or “Canton Local”). The

relationship between the Union and the Company is governed by a Master

Contract1 and a Local Supplement2.

In a memorandum dated January 9, 1998, addressed to the individual

who was President of the Canton Local, Champion confirmed that the

1 CX 5, entitled “Labor Agreement between Sunburst Paper Company Incorporated and Paper, Allied-Industrial, Chemical and Energy Workers International Union.” Subsequent to execution of this document and prior to closing, the Blue Ridge name was adopted.

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Weigher/Stenciler job classification in the Roll Finishing Group of the

Product Services Department was being eliminated and that the job

responsibilities were being transferred to the classifications in the #19 Paper

Machine Group line of progression in the Paper and Board Manufacturing

Department (CX 1), primarily to the Seventh Hand position. The Union filed

a grievance with Champion, #40-98, which was pending at the time of the

sale (CX 2). To clear the way for closing the sale, Champion and the Canton

Local entered into an Effects of Sale Agreement, dated May 11, 1999 (CX

3), in which they agreed to settle numerous grievances, including #40-98

over elimination of the Weigher/Stenciler classification (CX 2). In

consideration, the Union received $67,000 for distribution among its

members.

In putting the deal together, KPS was not interested in the details of

labor-management relations, but simply set forth three broad conditions for

financing:

(1) A 7-year collective bargaining agreement must be in effect at closing;

(2) Employees must agree to a 15% reduction in wages and benefits;

(3) The hourly workforce must be reduced through attrition and

voluntary early retirement. 2 UX 1, entitled “Local Amendment for Hourly, Pace Local 507,” which runs from May 14, 1999, through May 14, 2006.

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These conditions were embodied in a Term Sheet Agreement between KPS and the UPIU.3 Of particular significance is the following portion of the Term Sheet

Agreement:

Consistent with the principles of employee ownership, the Acquisition business plan contemplates an increase in the productivity of the hourly workforce and a related decrease in the number of hourly employees required to staff the current level of operations. The parties will seek to capture this decrease in staffing levels through attrition and voluntary early retirement. CX 4 @ 1.

Although the Term Sheet Agreement is undated, it postdates elimination of

the Weigher/Stenciler job by Champion; i.e, the then “current level of

operations” did not include Weigher/Stencilers.

A meeting was held in Nashville, Tennessee, to put together a Master

Contract and to discuss how KPS’ conditions in the Term Sheet Agreement

would be implemented at the various locations. The results of that meeting

were summarized in a KPS memorandum dated February 8, 1999 (CX 7).

The program for the Canton mill included a 13.25% reduction in wages and

elimination of some vacations and holidays.

In April of 1999, the Master Contract was approved by the employees

involved, including the membership of the Canton Local. All parties were to

3 CX 4. The Term Sheet Agreement was with the United Paperworkers International Union (“UPIU”) and its locals representing employees involved in the transaction. Subsequently, the UPIU merged with the Oil, Chemical and Atomic Workers International Union, to form PACE.

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operate under the Master Contract during a 90-day transition period after the

closing. With respect to ratification, the Union President testified as follows:

Q: Okay. And I think you just testified a moment ago that at the time this was ratified there was no Weigher/Stenciler position. Correct? April 1999? A: No, sir. Q: There was not. A: Right. TR @ 78.

Using the Master Contract as a guide, a local supplement was to be fleshed

out at each facility. It is upon the unorthodox method of developing the local

supplements that this arbitration turns.

Strange Evolution of the Local Supplement

To understand how the Local Supplement at the Canton mill evolved,

it is enlightening to quote from the parties’ briefs. The Union describes the

process in these words:

The Contract is a one-of-a-kind and very unusual because the union drafted the Contract in its entirety with no input what so ever by anyone in management. Management did not have a clue as to what was ratified and contained in this Contract. There was no one from management in the process and the Union through its officers actually held meetings with their respective department managers to explain to them what changes had occurred in the Contract.

The company offered no witnesses to testify in this case. They

were not involved in putting together the Contract, therefore they could not testify or refute the union’s testimony. Union Brief @ 6.

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The Company adds the following:

… As it became abundantly clear at the hearing, the current Labor Agreement was not “negotiated” in the normal sense of the word. KPS gave the Union parameters, relative to costs and duration of the agreement, and allowed representatives from the various facilities to develop working conditions which would cost-effectively facilitate manufacturing and open the door to future attrition of headcount. … Company Brief @ 4.

The foregoing excerpts from the parties’ briefs conclusively establish that

the Union, and the Union alone, is responsible for the content of the Local

Supplement. That point is crucial to resolution of this dispute.

The Instant Grievance

In August of 2000, a draft of the lines of progression for the Roll

Finishing Group in the Product Services Department at Blue Ridge (CX 6)

came to the attention of the Union President, who himself had been a

Weigher/Stenciler with Champion. The chart contained no such

classification. It is the Union’s contention that, notwithstanding the

elimination of the Weigher/Stenciler classification by Champion and

settlement of the resulting grievance, the Weigher/Stenciler classification

was supposed to have been reinstated with Blue Ridge.

At the arbitration hearing, the Union President himself characterized

the omission of the Weigher/Stenciler classification as a “mistake”:

Q: … Looking at Company Exhibit No. 6, Hutch, isn’t it a fact that as of August 23rd, 2000, that the Product Services Department

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progression chart had been published without any Weigher/Stenciler job on it, as you see here? A: That’s when we caught the mistake, yes. Q: You caught the mistake then? A: Yes, sir. TR @ 55; emphasis supplied.

The Doctrine of Mistake

From the foregoing review of the briefs and transcript, it is clear that

omission of the Weigher/Stenciler classification from the governing Blue

Ridge documents is the result of a unilateral mistake by the Union. Although

the law provides relief from mistake, it is well settled that relief is available

from only mutual mistake by contracting parties; the lone party making a

mistake must bear the consequences of its own negligence. In Elkouri &

Elkouri, How Arbitration Works (BNA 5th ed 1997), the rule is explained as

follows:

An exception to [the rule that an arbitrator may not ignore clear-cut contractual language] is in the occurrence of a mutual mistake. “A mutual mistake exists when both parties sign off contract language which does not correspond with their actual agreement. In this limited circumstance, an arbitrator may reform the contract to reflect the true intent of the parties. In order to affect the clear language of the collective bargaining agreement, however, the mistake must be mutual. A unilateral mistake by one party does not provide a sufficient basis for contract reformation. Id. @ 483-484; footnotes omitted; emphasis in original.

Under this well established rule, the Union is not entitled to relief.

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Estoppel, Waiver, and Laches

The doctrines of estoppel, waiver and laches also militate against

granting relief. So many organizations and individuals have such strong

reliance interests in the deal as originally structured that clear and

convincing evidence of the correctness of the Union’s position would be

required to alter contractual relationships at this late date. See generally

Elkouri & Elkouri @ 575-579; 1999 Supp @ 81-84. KPS advanced tens of

millions of dollars. Employees at 7 locations represented by 2 international

unions and 6 locals gave up 15% of their customary compensation in an

effort to ensure that the deal succeeded. Even unrepresented salaried

employees sacrificed. By contrast, according to CX 1, a grand total of 4

employees were affected by Champion’s change in 1998. The evidence

adduced is too little, too late to turn back now.

Although the Union insists that it had an agreement with Blue Ridge

to reinstate the Weigher/Stenciler classification, the evidence presented at

arbitration was decidedly to the contrary. On cross-examination, the Union

President admitted the following:

Q: Okay. Now who from Blue Ridge or KPS did you tell that the Weigher/Stenciler’s job had been reactivated, if you will, or put into the new labor agreement in April, 1999? A: Told verbally? No one.

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Q: You didn’t tell anyone from KPS or Blue Ridge that the Weigher/Stenciler’s job, in your opinion, was back? A: Right. Q: Okay. Isn’t it true that KPS’s guidelines to you, you being the Union Committee, in putting together a labor agreement, was for you to put together working conditions that worked with no cost increases? A: Yes, sir. Q: Okay. No one from KPS gave you authority to increase head count or wages, did they? A: No, sir. Q: In fact, they told you that you were not to do that, didn’t they? A: Yes, sir. Q: Okay. And, in fact, no one from KPS gave you authority to add a classification into the contract that was not there under the Champion contract, did they? A: No, sir. Q: So, basically, KPS’s expectation was that this Union negotiating committee would put together the day-to-day working conditions in a manner that was efficient and did not increase costs. Correct? A: That’s true. TR @ 53-54.

The Union’s contention that there was some agreement or

understanding with Blue Ridge is belied by the fact that the Company never

utilized the Weigher/Stenciler classification, even though it has been in

production since May of 1999, and by the Company’s consistent opposition

to the instant grievance (JX 1), which was not filed until June of 2000, over

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a year later.4 The Union claims that it did not press the issue because it

wanted to get off on the right foot with the new Company, but the long delay

only negates a finding of any kind of agreement or understanding. In

conclusion, the evidence is overwhelming that Blue Ridge never agreed to

reinstitute the Weigher/Stenciler classification.

The Award

For all the foregoing reasons, the grievance is DENIED.

Dated March 10, 2001 _______________________________ E. Frank Cornelius, Arbitrator

4 In its brief, the Company notes that the grievance, which recites an incident date of May 14, 1999, was filed well outside the 7-day limit imposed by the collective bargaining agreements, CX 5 and UX 1. The Company concedes that it did not raise timeliness as a procedural bar to arbitration. Nevertheless, such untimeliness is a consideration under doctrines of laches, waiver and estoppel.