Monday, August 6, 2012

Correcting mutual mistake is not the same as modifying the contract

 So held Florida’s Third District Court of Appeal in AFSCME Local 1184 v. Miami- Dade County Public Schools. A dispute arose between AFSCME and the School Board over the wages to be paid certain employees. The Union asserted that the School Board maintained that the salaries contained in the CBA were incorrect due to a mutual mistake by both the Union and the School Board. The Union pursued the matter to arbitration, and the arbitrator concluded that the salary schedules did not represent what the parties had actually agreed upon. He found that while the School Board was responsible for the mistake in the document, the Union knew or should have known that the schedules were far above what the parties had agreed to. Accordingly he denied the grievance.

The Union sought to vacate the award, and the lower court initially granted the motion to vacate. On the School Board’s Motion for Reconsideration, however, the court vacated its prior order and enforced the award.

 Affirming the lower court, the appellate court observed:

Where a mutual mistake results in a written document which differs from the terms the parties actually agreed upon, an arbitrator who reforms the instrument is merely acting to restore the parties’ true intent. In fact, one might cogently argue that the failure to reform the agreement in the undisputed presence of a mutual mistake would constitute a modification. If the arbitrator were to enforce the pay schedule mistakenly attached to the agreement, it would result in the School Board paying, and certain Union members receiving, nine million dollars more than the parties had indisputably agreed to. In the absence of a reformation, this mistaken pay schedule would itself constitute a modification of the parties’ true intent and agreement.

The court concluded that the arbitrator’s decision was not barred by the no-modification provision of the CBA because the decision’s revised pay schedule reflects “exactly what the parties negotiated.”

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