Sunday, March 9, 2014

Employer's failure to timely seek to set aside arbitrator's award precludes defense to Union's action to confirm

As noted in an earlier post, here, UFCW and King Soopers Inc were parties to a dispute about an employee's claim that a store had created a hostile work environment by failing to protect him from a disagreeable customer. An arbitrator determined that King Soopers had violated the cba and ordered it to take "all steps necessary" to provide a hostile-free work environment, including the establishment of a zero tolerance policy for violence and the exclusion of the offending customer from the store.

King Soopers did not comply with the award, but did not seek to set it aside within the 90 day period provided under Colorado law. The Union subsequently sought to confirm the award, and in its defense King Soopers asserted, inter alia, that the arbitrator had exceeded his authority by ignoring the plain language of the cba. The District Court agreed with the Union that King Soopers' failure to timely seek to set aside the award precluded it from raising affirmative defenses to the Union's enforcement efforts. However, on the Union's motion to confirm the award, the Court determined that the arbitrator had ignored the plain language of the cba and effectively altered it by ordering the store to establish a zero tolerance policy. Accordingly the Court refused to confirm the award.

The Tenth Circuit has now reversed the District Court and remanded the case with instruction to enforce the award. The Circuit Court noted:

Although King Soopers could have brought a timely action to vacate the award on the ground adopted by the district court, it did not do so. As we decided in International Brotherhood of Electrical Workers, Local Union No. 969 v. Babcock & Wilcox, 826 F.2d 962 (10th Cir. 1987), it therefore cannot raise that defense against the Union's action to enforce the award. For the same reason, we also hold that King Soopers cannot raise the defense that the arbitrator lacked authority to impose a remedy.

The Circuit noted that while there might be rare circumstances in which a court could refuse to confirm an award despite the absence of a timely challenge to it (e.g. an award whose substance is contrary to public policy or an award against a person not a party to the agreement) the lower court erred in setting aside the award on the grounds that it did not draw its essence from the cba.

The opinion of the Tenth Circuit can be found here.

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