Sunday, September 29, 2013

Arbitrator's finding of improper subcontracting sufficient to support award of monetary damages

The United Mine Workers filed a grievance against Consolidated Coal, alleging that the Company had breached its cba by subcontracting certain work which the Union maintained should have been performed by bargaining unit employees. An arbitrator upheld the grievance and ordered Consolidated to pay damages for the violation.  He took the total amount of hours worked by the subcontractor, multiplied it by the cba's hourly rate, and ordered Consolidated to divide it equally and pay it to unit employees "who were available to work during the period of the subcontract work."

Consolidated filed a motion to vacate, arguing that since all bargaining unit employees were performing other jobs when the contracting took place no unit employee suffered any cognizable loss. Relying on the Fourth Circuit's decision in Baltimore Regional Joint Bd. v. Webster Clothes, Inc.,  Consolidated claimed that the award of damages in the absence of economic loss was an improper award of punitive damages and beyond the authority of the arbitrator. The District Court for the Northern District of West Virginia rejected this contention. Consolidated Coal Company v. United Mine Workers of America District 31, et al.. The Court observed that the Company did not claim that the work which had been subcontracted could only be done at a time  when all bargaining unit employees were performing other work. It further noted that the arbitrator had limited the remedy to those employees who were able to work when the contracted project was underway. 

Rejecting the claim that the award was an improper award of punitive damages the Court concluded:

this Court finds that the award was tied to a legally cognizable loss that is measurable in monetary terms. The bargaining unit employees lost a certain number of working hours due to the plaintiff subcontracting out work that based on the CBA, bargaining unit employees were to complete. The arbitrator fashioned an award based on those lost hours, multiplied those hours by the wage provided for in the CBA, and required the award be distributed to those employees who were able to work at the time the floor project was underway. This Court finds that it was within the scope of the arbitrator's authority to make such award. Thus, the award drew its essence from the CBA, as it was compensatory rather than punitive in nature

The Court granted the Union's cross motion for confirmation of the award, but denied its claim for attorney fees, finding that while the Company was unsuccessful its position had "an arguable basis in law."

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