Damages: Collective remedies, lost opportunity, unjust enrichment

In March of 2013, Arbitrator Mathew Franckiewicz determined that Southwest Airlines breached its cba with the Airline Mechanics Fraternal Association when it delayed the start of a fourth line for heavy maintenance of aircraft following its merger with AirTran. Since the arbitration was bifurcated between liability and damages, the parties then proceeded to discuss the remedy for this breach. Their initial positions differed by over 14 million dollars. While the gap was subsequently reduced, they were unable to agree and Arbitrator Franckiewicz was called upon to resolve the issue. Because of the parties' dramatically different approaches to the issue, the Arbitrator limited his opinion to resolving the proper approach to the calculation of damages, leaving it to the parties to then attempt to calculate precise amounts.

The area of greatest dispute was Southwest's potential liability for back pay for the period the start of the fourth line was delayed. Arbitrator Franckiewicz noted initially that the Union was not seeking back pay for the delayed hires, but sought instead a "collective remedy" for individuals on roll when the FAA issued a "single operating certificate". The Union maintained that there had been a collective injury to the bargaining unit and that a collective remedy was therefore appropriate. It relied in part on prior awards in cases involving claims of improper subcontracting, in which damages were paid to the Union for distribution to employees without an individual showing of proof of loss. It maintained further that such a remedy was warranted because the delay undermined job security, damaged the Union's standing and unjustly enriched Southwest, which had continued AirTran's practice of outsourcing maintenance during the period of the delay. The Union sought payment for those individuals who suffered delayed promotions and for the loss of Union dues.

Arbitrator Franckiewicz essentially rejected the Union's claim for a "collective remedy". In doing so he noted that the individuals for whom the Union was seeking relief suffered no harm from the delayed implementation of the fourth line. Observing that "[t]he goal in this case, in any labor arbitration make whole remedy case, is to restore all those affected to the economic position in which they would have been, but for the contract violation", the Arbitrator concluded:

Had the fourth line been implemented as of March 1, 2012, the additional work would not have been performed by experienced Southwest employees on an overtime bases, but by new hires. Thus the class of those injured is not the erstwhile members of the bargaining unit, but those who were outside the bargaining unit as of March 1, 2012. This is a critical distinction between the current case, and the subcontracting cases cited by the Union.

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Under the Union’s approach, some 80 percent of the total payout would be occasioned by wages in respect of additional bodies — new hires — but this money would not be paid to them but to “old” employees, whose earnings, in most cases would not have increased, and did not increase, as a result of the fourth line implementation, whether earlier or later.

He also found no evidence to support the Union's claim of "lost opportunity" for bargaining unit members, and, while employees may have felt some insecurity, no employee was laid off or suffered economic harm. Finding the Union's request for damages for lost job security or lost opportunity "comparable to damages in tort for pain and suffering or emotional distress"  the Arbitrator concluded that "these are not customarily redressed in labor arbitration." He similarly rejected the Union's claim of unjust enrichment, finding "what the Company gained is immaterial. The question is instead what did the Union or the bargaining unit lose ...."

However, the Arbitrator did find merit in the Union's claim for lost Union dues, and for back pay for individuals who would have been promoted to lead positions but for the delay in implementation of the fourth line.

AMFA Local 11 discussed the award, Membership Update: 4th Line Damages, and links to the full text here. 

Recent Developments-Teachers

Montana Supreme Court upholds arbitration award

Grievant was employed as a vocational agricultural instructor at the Lame Deer High School. Her employment was suspended and then terminated. She grieved the termination, and Arbitrator Michael D. McDowell denied the grievance, concluding that the School District had good cause to discipline her and that the termination should not be reduced to a lesser form of discipline. Grievant sought to vacate the award, but the District Court upheld the award. Grievant appealed, claiming that the court erred in failing to carefully evaluate the facts found by the arbitrator and that the School District did not have proper cause to terminate her employment. The Montana Supreme Court affirmed the lower court's decision, concluding "The District Court did not abuse its discretion in declining to revisit these issues. Requiring the District Court to conduct its own evidentiary hearing on an issue previously submitted to and determined in binding arbitration would undermine the finality and expediency provided by arbitration." The Court's decision can be found here.

Court enjoins arbitration on placement of  "excessed" teacher

The cba between Board of Education of Valhalla, NY and the Valhalla Teachers Association provides that where a teacher's position has been excessed and another position becomes available the Board must appoint that teacher to the position if they are certified in the teaching area in the available position. A dispute arose after a teacher had been excessed and sought to be placed in a position for which the Union claimed she had been certified. The grievance was not resolved and the Association sought arbitration. The Board went to court seeking a permanent stay of the arbitration, arguing that the cba provision conflicted with public policy and the mandates of the Education Law. The trial court denied the Board's request, and the case was appealed. The Appellate Division has reversed the lower court and enjoined the arbitration. The court determined "Whether a prospective candidate is possessed of qualifications 'is a responsibility of the type that may not be bargained away, as it is central to the maintenance of adequate standards in the classroom'. ... The CBA, in effect, divests the Board of its discretion by mandating automatic appointment of certified teachers without inquiry into any additional qualifications the Board may have prescribed. This discretion may not be bargained away." The Court's decision can be found here.

Interest on back pay award not against public policy

Relying in part on language in the cba between the Hawaii Department of Education and the Hawaii State Teachers Association, Arbitrator Walter Ikeda awarded interest on a back pay award. The cba provided "The arbitrator may award back pay to compensate the teacher wholly or partially for any salary lost." While a lower court vacated the award of interest, the Hawaii Court of Appeals has reversed that decision and confirmed the award of interest on the back pay. Rejecting the State's claim that the arbitrator had exceeded his powers, the Court observed:

The Arbitrator was expressly authorized to award "back pay to compensate the teacher wholly ... for any salary lost." He interpreted this provision to allow interest for the time [Grievant] was without pay. Even if he incorrectly construed the agreement or misinterpreted applicable law, he acted within his power to interpret the agreement and fashion a remedy in accordance with his interpretation.

The court rejected the State's contention that the award was contrary to public policy. The Court's decision can be found here.

Recent Developments- Law Enforcement

Arbitrator upholds termination of police officer for off duty discharge of weapon and lying

Arbitrator Andrea Mitau Kircher has upheld the termination of a St. Paul MN police officer who had been accused of firing a number of shots from his weapon into a fire pit while off duty and admittedly inebriated. During the investigation of the incident he also admittedly falsely told investigators that he was shooting blanks. While the officer subsequently admitted the falsification, Arbitrator Kircher concluded that the City had established just cause for the termination despite the absence of any previous discipline. She noted "police officers are held to a high standard of conduct, even off-duty. By discharging 10 rounds of live ammunition in his backyard and lying about it to his investigating superiors, the Grievant committed a violation of criminal law, created a potentially dangerous situation, and adversely affected his reputation for honesty and the public image he was sworn to uphold". Arbitrator Kircher's award can be found here.

Court overturns arbitrator, finds reinstatement contrary to public policy

According to news reports, a Massachusetts Superior Court judge has set aside the award of Arbitrator Arnold Marrow reinstating a former Swansea, MA police officer. The officer had been dismissed for a variety of alleged infractions, including separate incidents of driving under the influence of a narcotic, leaving the scene of an accident and obstructing a criminal investigation. The Arbitrator concluded the penalty was more severe than the ninety day suspension given another officer for driving under the influence and as a result reduced the termination to a ninety day suspension. In overturning the award, the Judge concluded "It is impossible for the court to comprehend a rational basis for the arbitrator's decision to reduce [Grievant's] termination to a mere suspension" and found anything other than termination to be contrary to public policy. The Herald News and South Coast Today report on the decision here and here.

Prevailing in arbitration and the "Laurie List"

Two recent articles discuss attempts by police officers who prevailed in arbitration to have their names removed from New Hampshire's "Laurie list", a list maintained to enable authorities to turn over to defense counsel information on police with potential credibility issues. The officers involved in the cases discussed prevailed in arbitration, with arbitrators concluding that the allegations against them were unsupported, but their names nevertheless remained on the list. Fosters.com reports Officer insists his credibility not an issue. The Union Leader reports Judge rules to keep officers on Laurie list.

Arbitrator rejects grievance on Sergeant's pay

Arbitrator Margaret Nancy Johnson has denied a grievance filed by FOP against the City of Chillicothe, OH. The grievance involved a dispute concerning the proper interpretation of a newly negotiated provision of the cba concerning compensation of police sergeants. In essence, the dispute turned on whether advancement to the next step on the pay schedule for a sergeant would be determined by their start date with the Department or the date of their promotion to sergeant. Rejecting the claim of the FOP that the language of the cba was unambiguous, the Arbitrator relied on bargaining history, interpretation of other provisions of the agreement, and "principles of contract interpretation" to conclude that the relevant date was the date of the officer's promotion to the rank of sergeant. The Chillicothe Gazette reports on the dispute here, and links to the award here.

Several recent decisions

Termination of Child Abuse hotline worker overturned.

Arbitrator Kathy Eisenmenger has overturned the termination of a child services hotline worker. The grievant had been terminated for allegedly failing to properly gather sufficient information concerning a report of child abuse. Based on the information received, grievant categorized the call as a Priority 2, calling for a response within 24 hours, rather than a category one, calling for an immediate response. Less than 24 hours later, the child who was the subject of the complaint was in a coma and subsequently died. The child's mother and stepfather now face child abuse and murder charges. Rejecting the employer's claims against grievant, Arbitrator Eisenmenger found no proof that grievant had violated the employer's policies on categorizing reports of abuse, and further found no causal connection between the grievant's actions and the child's death. In a supplemental award the Arbitrator also rejected the employer's claim that reinstatement of grievant would violated public policy.Noting that she had found no evidence of negligence on the part of grievant, she found application of the public policy defense had "no application" to this case. The Las Vegas Review- Journal reports on the award here, and links to Arbitrator Eisenmenger's award here.

No Boys Market Injunction to stop increased health care costs

The District Court in New Jersey has denied a request for an  injunction pending arbitration sought by 1199 SEIU Healthcare Workers East. The dispute involved a successorship claim that was scheduled for arbitration. The court concluded that the absence of evidence of irreparable harm warranted denial of the request. The Court noted "Although the Union raised a significant issue regarding the anticipated increase in the cost of employees' health benefits, it failed to substantiate its claim that the increased cost would force some employees to forgo health coverage altogether. ...  The Union's failure to demonstrate that any of its members would actually lose their benefits renders its claim of irreparable harm speculative." The court's decision can be found here.

Court rejects efforts to compel arbitration of claimed breach of oral agreement

The  District Court for the Central District of California has dismissed a complaint filed  by Hospital of Barstow seeking specific performance of an alleged oral agreement that disputes regarding the negotiation of a cba would be resolved by private arbitration rather than by the NLRB. The Hospital alleged that it had entered into an oral agreement with the California Nurses Association governing the Union's organizing efforts and the negotiation of an initial cba. The Hospital also alleged that the parties had engaged in private arbitration of disputes pursuant to the agreement. The Union., however, subsequently broke off negotiations and filed an unfair labor practice charge with the NLRB claiming bad faith bargaining. The Hospital maintained that this was in violation of its agreement. Rejecting this position the Court concluded that, assuming that it otherwise had jurisdiction to compel arbitration based on an oral agreement, the Hospital had failed to allege a factual basis for its claim. It further determined that any claim of waiver of the right to file charges with the NLRB was unenforceable. The Court's decision can be found here.