Friday, November 30, 2012

City succeeds in setting aside award it won

The Rhode Island Laborers' District Council, Local 1033 filed a grievance, asserting that the City of Providence had violated a "stipulated award" calling for minimum staffing levels for the City's Department of Communications Police Control Center. The arbitrator concluded that while the City had in fact missed the staffing level for a period of twenty minutes, the violation was de minimis and denied the Union's grievance. Despite prevailing on the grievance, the City filed suit to set aside the award on the basis that the dispute was not subject to arbitration under the cba.

The cba provided for arbitration of disputes arising "out of the provisions of the agreement" and further provided that the contract was the "entire agreement and complete understanding" between the parties, and that the arbitrator had no authority to add to the agreement. While the parties had entered into new cba's ten times since the "stipulated award", the contract had never been modified to incorporate or reference the terms of that award. The Court described the issue to be decided as :

whether a dispute relating to a side agreement stipulated to by the parties in 1993, but never referenced by or physically incorporated into ten subsequent CBAs spanning over seventeen years, is arbitrable under the CBA in effect at the time the Union's grievance arose in 2011

In reaching its decision, the Rhode Island Superior Court in Providence first determined that the stipulated award should be most appropriately characterized as an agreement between the parties, rather than an arbitration award. It noted that the award made no reference to any contractual provision it was purporting to interpret and there had been no hearing on the merits of the underlying grievance. Nor did a subsequent court enforcement of the stipulated award convert it into an arbitration decision.

 The court then proceeded to analyze the substantive arbitrability of side or settlement agreements. After an extensive review of the case law reflecting a split in the circuits , and after noting that the issue appeared to be one of first impression in Rhode Island, the Court determined that the appropriate test was whether the agreement is "collateral" to the cba, i.e if the side agreement is collateral to the cba it is not subject to the cba's arbitration provision.

Applying this test, the Court concluded that the stipulated award was collateral, noting in particular the absence of any reference in the award to the cba, the absence of any revealing title such as "Amendment" of "Addendum" and the absence of any inclusion of the award in any subsequent cba.

The Court observed:

Whatever descriptive term is used to identify the 1993 agreement at issue— "stipulated award," or "side agreement," or "settlement agreement"—the inescapable fact remains that this understanding between the parties remained outside the lines, language, and intent expressed within the four corners of CBAs that were re-negotiated ten times, covering a seventeen-year period. The most accurate description of this agreement is that it was an outlier. There is nothing before the Court to suggest otherwise.
The Court also notes that the contract at issue is a municipal contract involving the capital city of this state and, as such, implicates the public interest as well. It is certainly not in the public interest to permit and enforce negotiated side agreements which are allowed to exist in perpetuity, which are shielded from view or examination, and remain unknown except to those who originally negotiated the settlement agreement, until a dispute arises.
Accordingly, the Court vacated the arbitrator's award.
The Court's decision can be found here.

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