The U.S. Supreme Court case Textron Lycoming Reciprocating Engine Division, Avco Corp. v. United Automobile, Aerospace and Agricultural Implement Workers of America, International Union and its Local 787 in 1997 revolved around a labor dispute between the Textron Lycoming company and its workers' union over whether or not an arbitrator had exceeded his authority by interpreting a collective bargaining agreement to include subcontracting issues. The court ruled that the arbitrator did not exceed his authority because he was acting within the scope of his contractually delegated powers when he decided that the issue fell under "terms and conditions" of employment covered by their agreement. This decision upheld previous rulings stating that courts should defer to an arbitrator's interpretation unless it is completely irrational or contrary to public policy.

The dissenting opinion in the Textron Lycoming Reciprocating Engine Division, Avco Corp. v. United Automobile, Aerospace and Agricultural Implement Workers of America case argued that the National Labor Relations Board (NLRB) was correct in its decision to uphold an arbitrator's ruling that a union member could not be fired for his off-duty misconduct unless it had a direct impact on his employment or violated specific company policy. The dissenters believed this interpretation was consistent with past precedent and labor law principles which aim to protect workers from arbitrary dismissal by their employers. They also disagreed with the majority's view that such conduct should automatically lead to termination without considering other factors like the employee’s work record or whether similar behavior has been tolerated in non-union employees.