Monday, December 3, 2012

Arbitration award reducing pay enforced

The cba between Giant Eagle and UFCW Local 23 provided that the Company could "increase staring rates, grant bonuses, individual increases, and any other forms of incentives. The increases can be done by department and/or store." The contract obligated Giant to notify and meet with the Union prior to implementation but also provided "All of these changes can be done at the Company's sole discretion and any of these changes may be rescinded and/or modified".

Giant gave wage increases to 25 employees at one of its stores, and the Union filed a grievance claiming that it had not been properly notified. The grievance proceeded to arbitration and the arbitrator ordered Giant to stop granting raises "without first obtaining concurrence from the Union", and to rescind the increases already given. The arbitrator rejected a request to increase wages of other employees as a remedy.

Giant filed suit seeking to set aside the award, arguing that the requirement that it obtain the Union's consent prior to implementing a wage increase was contrary to the terms of the cba and that the arbitrator had exceeded his authority in finding both notice and consent required.

Noting the narrow scope of review of an arbitrator's award, the U.S. District Court in Pennsylvania rejected the Company's effort. The Court found sufficient evidence that the arbitrator's award was based on an arguable interpretation of the contract, all that was required to enforce it. The court noted that the arbitrator found certain provisions of the contract ambiguous and concluded that the "sole discretion" provision applied only to increases done on a store wide or department basis, not to individual employees.

The Court enforced the arbitrator's award, and his remedy, concluding:

 The Court understands that the net result of the Union’s dispute is that some of its members will have their raises rescinded - - in other words, the action of the Union in the arbitration will have the effect of taking away raises of certain members, thereby causing harm to its own members. However, the Court’s inquiry is not which reading of Article 14 the Court agrees with or how this Court would have determined this dispute. Arbitration Awards are given "a strong presumption of correctness" by District Courts. ... After review of the Arbitrator’s Award, the Court finds that it can be rationally derived from the issue submitted before the Arbitrator and the Labor Agreement that was in dispute. Therefore, the Award will be enforced.

The Court's opinion can be found here.

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