Under the labor contract between Eastern and the union, employees may be fired only for "just cause," and discharges are subject to arbitration. Smith, a truck driver for Eastern, failed a drug test. Eastern wanted to fire Smith, but the arbitrator ordered his reinstatement. A year later, Smith failed a second drug test, and was again reinstated by the arbitrator, although Smith was suspended for three months, required to pay the arbitration costs, and informed that another failed test would result in discharge. Eastern went to court, seeking to have the second arbitral award vacated. Eastern lost in the district court, lost again in the Fourth Circuit, and lost a third time November 28, 2000 when the Supreme Court announced its ruling in this case.Because the labor contract makes arbitral decisions final, and because Eastern did not claim that the arbitrator exceeded the scope of his authority, the court held that Eastern must be deemed to have bargained for Smith's reinstatement unless the arbitral award violated public policy. The Court held that it did not. Examining the omnibus Transportation Employee Testing Act and DOT’s implementing regulations, the Court found "rehabilitative concerns" along with the obvious safety concerns, and therefore concluded that the arbitrator's decision did not run contrary to an "explicit," "well defined," "dominant" public policy. Although emphasizing that this public policy exception is "narrow", the Court stopped short of saying that public policy would be violated only "where the arbitration award itself violates positive law." Justice Scalia, joined by Justice Thomas, took the majority to task for leaving this door open, characterizing the Court's ruling as inviting "obstructive litigation."
Lower court opinion: 66 F. Supp. 2d 796 (S.D. W.Va. 1998), aff’d, 188 F.3d 501, 1999 WL; 635632 (4th Cir. Aug. 20, 1999).