Recent Developments-Contract interpretation

Covenant of Good Faith and Fair Dealing

The cba between The Western Sugar Cooperative and the Teamsters creates two categories of employees. Employees who work at least 1680 hours within a twelve months period are classified as "year round employees." Employees failing to meet that threshold are categorized as "seasonal" employees. The cba provides greater employment security for year round employees. No provision of the cba explicitly limits the company's ability to lay off seasonal employees. When Western Sugar laid off two seasonal employees to prevent them from attaining the number of hours necessary for them to become year round employees the Teamsters filed a grievance. The dispute was submitted to Arbitrator Frederick Kessler for resolution. Arbitrator Kessler upheld the grievance. (His award can be found here) He concluded that the company's actions in laying off the employees specifically for the purpose of making them ineligible to become year round employees violated the implied "covenant of good faith and fair dealing." He observed:

If this practice is upheld, it makes meaningless the provisions of the Labor Agreement, which describes the process, which the parties agreed, an employee could attain year-round status. Arbitration cannot sanction an interpretation which makes a provision meaningless. Such an interpretation destroys or injures the right of the other party to receive the fruits of the contract.

Western Sugar sought to vacate the award, but the District Court refused to do so. The Court found that the Arbitrator was acting within his authority in interpreting the cba. Western Sugar Cooperative v. Teamsters Local 190. Rejecting the company's contrary claim, the Court noted:

Neither party disputes ... that the subject matter of the grievance was properly before the arbitrator, or that he had the authority to render a decision on the grievance. Instead, Western Sugar disputes the reasoning upon which the grievance was decided. This is, in essence, not a question of whether the arbitrator exceeded his boundaries but whether he correctly interpreted the CBA.

Western Sugar argues that there is no express provision in the CBA that could have supported the result found by the arbitrator and provides excerpts of testimony from the arbitration in support of its argument. But so far as the arbitrator's decision concerns construction of the contract, "the courts have no business overruling him because their interpretation of the contract is different from his." Enterprise Wheel & Car Corp.,363 U.S. at 599.

The Court concluded that the Arbitrator's reliance on implied terms was within his authority to interpret and apply the cba.



NLRB's refusal to defer to arbitrator's award overturned

The DC Circuit has refused to enforce a decision of the NLRB rejecting an arbitrator's award and finding that Verizon committed an unfair labor practice by telling employees to remove informational picket signs from their vehicles. Verizon New England v. NLRB  The cba waived employees' right to picket during the contract term. When a labor dispute arose prior to expiration of the cba, employees visibly displayed pro-union signs in cars parked on Verizon property and lined up so passers-by would see the signs. An arbitrator ultimately concluded that this activity was "picketing" prohibited by the language of the cba. Despite the arbitrator's award,  the NLRB General Counsel issued a complaint. The ALJ found that the arbitrator's decision was not "palpably wrong" and was entitled to deference. On Verizon's exceptions, the Board rejected the arbitrator's conclusion, finding it "clearly repugnant" and refused to defer.

The Board determined that the language of the cba did not constitute a clear and unmistakable waiver. Reviewing the contract language, the Board concluded that "the contractual provisions cited by the Respondent and considered by the arbitration panel neither address nor reasonably encompass employees' display of signs in their personal vehicles...."

In rejecting the Board's analysis, the Court concluded 

To state the obvious, the fact that the Board might read a contract term differently than the arbitrator read it does not suffice to make an arbitration decision "palpably wrong." Rather, as the Board has previously stated, its highly deferential standard of review "recognizes that the parties have accepted the possibility that an arbitrator might decide a particular set of facts differently than would the Board. This possibility, however, is one which the parties have voluntarily assumed through collective bargaining."

The Court found that the arbitration panel's decision was susceptible to an interpretation consistent with the Act and was not a "palpably wrong" interpretation of the cba. Accordingly it found the Board's contrary conclusion unreasonable and denied enforcement. 

The Board's decision in this case predated its newer, less deferential standard of review announced in Babcock & Wilcox Construction Co. 361 N.L.R.B No.132

Erosion of the bargaining unit

Arbitrator James Lundberg issued an award in a dispute between ExxonMobil and Steelworkers Local11-470. Following the retirement of a bargaining unit janitor at the company's Billings, Montana facility, ExxonMobil contracted the word formerly performed by the employee to an outside janitorial service. The Union grieved the decision, claiming that the company's actions violated a cba provision stating:

 "The Company will not erode the bargaining unit by job reduction through transferring work customarily performed by classifications covered by this Agreement to employees excluded from the bargaining unit in Article II of this Agreement."

In its defense, the Company relied on language, more recently added to the cba, that stated:

"This agreement shall not limit the right of the Company to contract out work so long as such contracting does not cause a layoff of employees covered by this agreement."

The Company maintained that the erosion of the bargaining unit language was intended to deal with the transfer of work from bargaining unit employees to salaried employees. It claimed that the later negotiated contracting language was clear and unambiguous and allowed the company to contract the work in issue since no employees was laid off as a result. The Union relied on a 1978 award under a predecessor contract which it alleged did not limit the erosion language in the manner the company claimed.

Rejecting the company's position, Arbitrator Lundberg noted that the 1978 award, as well as an award addressing the interrelationship between the two cba provisions had never been modified in negotiations. He concluded:

While the Employer clearly disagrees with the interpretation of the bargaining unit erosion language made in 1978, the parties have not bargained any change in the provision. Moreover, the negotiations have repeatedly stalled over elimination of the In-Plant Janitor position. The Company can demonstrate that the cost of maintaining the position is greater than using a contractor but either the Union is not asking for a quid pro quo or the Employer is not offering something in return. Instead, the parties continue to approach the issue indirectly. By not coming to terms with the underlying issues in negotiations the parties have repeatedly needed up in arbitration. In this situation, the work of the In-Plant Janitor should continue to be filled by a bargaining unit employee, until such time as the parties are able to resolve the dispute through negotiations. 

The Company sought to vacate the award arguing, inter alia, that the Arbitrator improperly relied on earlier arbitration awards, and had improperly modified the cba by changing the meaning of the erosion language from transfer of work to other Company employees to transfer to third party, non employee contractors.

The Court rejected this effort, concluding

... Arbitrator Lundberg looked at and at least arguably construed and applied the Agreement. That he also considered the parties' past practice, informed by and reflected in previous arbitration awards construing the same bargaining unit erosion provision as that contained in the 2012 Agreement, was not error and did not render his Award one that did not derive its essence from the Agreement. Thus, it cannot reasonably be argued that Arbitrator Lundberg simply dispensed his own brand of industrial justice.

The Court's opinion can be found here.

Post termination conduct, just cause and public policy

The saga involving a sheriff's deputy first dismissed for allegedly stealing two potted plants continues.

As discussed here (Arbitrator rejects termination of Sheriff's deputy based on allegation of theft, but finds post termination shoplifting warrants suspension) the deputy was accused of stealing the plants from a city park. Grievant claimed she believed they had been abandoned. Arbitrator Dennis McGilligan, applying a "clear and convincing" burden of proof standard, concluded that the City had failed to establish grievant intended to steal the plants. However he found that she had failed to follow the department's policy on abandoned property and deemed a thirty day suspension appropriate. Reacting to testimony concerning grievants admitted post termination conduct of retail theft (shoplifting) the arbitrator noted that while there was little information in the record concerning the incident he deemed a sixty day suspension appropriate.

The Sheriff's office sought to vacate the award, arguing that the arbitrator utilized the wrong standard of proof and improperly ruled on the shoplifting incident. The court remanded the matter back to Arbitrator McGilligan for reconsideration under a preponderance of the evidence standard, and also agreed with the Sheriff that the shoplifting incident had been improperly considered. On remand the arbitrator again found a thirty day suspension warranted for the claimed plant theft.

The Sheriff's office reinstated grievant in accord with the award but dismissed her for the shoplifting incident.

The propriety of that  termination was submitted to Arbitrator Timothy Tobin. Arbitrator Tobin found that the second termination was also without just cause. (Arbitrator: Misconduct between initial termination and reinstatement no basis for post reinstatement termination). He found that since grievant was not employed by the Sheriff at the time of the incident there was no basis for discipline. He ordered her reinstatement.

The Sheriff's Office also appealed this decision and, according to press reports, the Sangamon County court has overturned the award. (Decision upholds termination, Judge rules sheriff doesn't have to reinstate Sangamon County deputy fired after theft). According to the reports, Judge John Schmidt concluded that the arbitrator's award "is repugnant to the firm, clear and resolute public policy against retail theft" He observed that such acts "are more disturbing when committed by law enforcement officers sworn to uphold the law." Accordingly he found that required grievant's reinstatement would be contrary to public policy.

"Double hearsay" insufficient to support teacher tenure charge

Arbitrator Edmund Gerber has granted a teacher's motion to dismiss tenure charges brought against him. The teacher was alleged to have engaged in a number of inappropriate actions, including, inter alia,  brushing up against the breasts of a 12 year old student, making "cat calls" to the student when she was in the hallway, touching the exposed bra strap of another student and making "creepy comments" to her, and "constantly" staring at a student during wrestling class.

In support of the charges, the School District offered a Statement of Evidence signed by the Superintendent. The Statement included attached emails and notes concerning the superintendent's conversations with the Board's attorney, the local police and prosecutor, and unsigned statements of two school administrators who interviewed the students involved. The attachments did not included any signed statements from the complaining students. The teacher claimed that the Superintendent's Statement of Evidence did not assert any personal knowledge on her part.

Granting the teacher's motion to dismiss the charges, Arbitrator Gerber concluded:

The Superintendent ... swore to a statement of evidence and signed under oath the tenure charges but nothing in the record indicated she directly participated in the investigation of the student's complaints or talked to any of those students and/or their parents. Moreover the documents which were relied upon when the tenure charges were brought before the Board consisted of emails and unsigned memorandum from the school administrators who conducted the investigation and the Superintendent's own notes. There are no signed statements from any of the complaining students or their parents. N.J.S.A 18A:6-11 requires that a "written Statement of Evidence under oath to support such charge shall be presented the Board," ...  An oath connotes swearing to the truth of the facts asserted. Here however, no signed written statement by someone with direct knowledge of the alleged events was ever presented to the Board.  The tenure charges were certified on the basis of double hearsay.

Finding this insufficient to meet the statutory requirements Arbitrator Gerber dismissed the charges without prejudice and ordered the teacher's reinstatement with no loss of salary.

Arbitrator Gerber's opinion can be found here.

The importance of testimony from someone with personal knowledge is also discussed at Importance of live witness testimony

Weapons on campus, just cause, management rights and public policy

The Superior Court in Rhode Island has set aside an arbitrator's award that had reinstated, without back pay, a housekeeper at Rhode Island College for having, and misplacing, a gun on campus.

The facts of the case were largely undisputed. Grievant, a thirty year employee, maintained that he was licensed to carry a weapon and that he unintentionally brought the gun with him when he reported to work. He testified that when he realized his error he started to return the weapon to his vehicle but didn't do so because he observed elementary school children near his car. He returned to work with the gun still in his possession. Shortly after leaving work grievant realized the gun was no longer in his possession. He called the College's Safety and Security office and reported that he believed he may have left the gun in a bathroom he was cleaning. The gun was not found in the bathroom, but in a trash can near one of the school buildings. Following an investigation grievant's employment was terminated, and that termination was grieved.

The arbitrator accepted the grievant's assertion that he brought the gun onto campus inadvertently and had no intent to cause harm. However he found grievant's conduct reckless and noted that "no employee can credibly claim to think that bringing a firearm to a college campus could be acceptable behavior." Nevertheless he concluded that termination was too severe a penalty and ordered the College to reinstate grievant without back pay.

The College sought to vacate, and the Union sought to confirm, the award. The Court granted the College's request to vacate. Relying on several cases arising in connection with disputes involving the  Department of Corrections, the Court found that the arbitrator had abused his authority and that his award was contrary to public policy. 

While recognizing that arbitrators have the authority to modify discipline, the court observed:

While the CBA states that just cause is needed to suspend or terminate an employee, it does not state that a different level of just cause is needed to suspend, rather than to terminate, an employee. See CBA, Art. 24. In one clause, the CBA says that just cause is needed to discipline employees, and in another clause, the CBA states that just cause is needed to suspend or terminate employees. Id. However, nowhere in the CBA does it state that more cause must be found to terminate an employee rather than to suspend an employee.

The court acknowledged that the arbitrator listed the management rights clause of the cba as a relevant contract provision, but concluded that he failed to mention or discuss the relevance of that provision. The court found this constituted  "an abuse of the arbitrator's power" and that the arbitrator therefore exceeded his authority.

The court also found the award contrary to public policy, relying on a "dominant, well-defined policy against violence in the workplace." It concluded:

Here, the arbitrator's decision, like the decision of the arbitrator in State v. R.I. Bhd. of Corr. Officers, 819 A.2d 1286, was irrational because it rendered RIC powerless to terminate an employee who had exposed the campus community—employees and students alike—to the security risk of a fully loaded firearm by bringing and then losing said firearm on campus. In light of the strong public policy interest that exists concerning keeping our schools, colleges, and universities safe from violence and crime, it is irrational and contrary to public policy to divest the Board and the State of the authority to terminate an employee who undisputedly violated a policy aimed at creating a safe and efficient campus and workplace.

For both of these reasons the court vacated the award.

News reports do not indicate if the Union intends to appeal. 

The court's opinion can be found here.