Sunday, July 9, 2017

Confirming arbitration awards - mootness, compliance, contempt

The Seventh Circuit has rejected an appeal by Hyatt Corp. from an order confirming two arbitration awards. The awards found that Hyatt supervisors had improperly performed bargaining unit work and ordered Hyatt to cease and desist from such violations of the cba. Unite Here Local 1 v. Hyatt Corp.

The Union  had sought an order confirming the two awards. Hyatt had not timely challenged the awards and argued that it had complied with the awards and that the Union was improperly seeking prospective relief. The District Court (here) found the argument unpersuasive. Distinguishing prior Seventh Circuit cases, the court found that in this case the Union had sought and received prospective relief from the arbitrators and that the Union was not seeking to bypass future arbitrations for similar future claims

The Circuit has affirmed that decision. (The oral arguments before the court can be heard here). The Court summarized the issue before it, and Hyatt's argument, as follows:

When a party asks that an award be enforced prospectively, it is typically asking the court to apply the arbitrator's holding to a later dispute that has not been submitted to arbitration. Often the specific relief requested is the entry of declaratory or injunctive relief that dictates the resolution of the new dispute in harmony with the arbitrator's prior ruling. E.g., Honeywell, supra, 522 F.2d at 1224-25. That type of relief places the court in the position of regulating the parties' conduct directly in lieu of having a second arbitrator resolve the merits of the later dispute. The prospective enforcement of arbitration awards is thus a matter that we approach with great caution, as evidenced by our decisions in Honeywell and Inland Steel Coal. See Honeywell, 522 F.2d at 1225 (noting extraordinary nature of request to prospectively enforce prior arbitration award to unarbitrated disputes); Inland Steel, 876 F.2d at 1293-94 (surveying high bars other circuits have posted to prospective enforcement); see also Consol. Coal Co. v. United Mine Workers of Am., Dist. 12, Local Union 1545, 213 F.3d 404, 406 (7th Cir. 2000) ("courts are reluctant to issue labor injunctions"); AG Commc'n Sys. Corp. v. Int'l Bhd. of Elec. Workers, Local Union No. 21, 2005 WL 731026, at *10 n.7 (N.D. Ill. Mar. 28, 2005) (noting that "AGCS has not pointed to any cases in which the Seventh Circuit has prospectively applied an arbitration award as a bar to future grievances"). Specifically, courts have expressed a concern that prospective enforcement of an arbitration award will effectively nullify the parties' agreement to resolve their disputes by way of arbitration. See Inland Steel Coal, 876 F.2d at 1296; Honeywell, 522 F.2d at 1225.
The premise of Hyatt's challenge to the district court's decision is that confirmation of the Fleischli and Kenis awards will produce that very result, in that confirmation invites the union to bring future disputes under section 56 [of the cba] directly to the court by way of a contempt petition, such that the court will be required to pass on such fact-intensive (and industry-specific) questions as whether there was an emergency justifying hotel managers in performing bargaining-unit work in particular instances—questions of the sort that normally would and should be resolved by an arbitrator. ...

The Court noted however, that the Union's request for relief in this case was "more modest." Union counsel agreed that any future claimed violations must first be submitted to an arbitrator for resolution. Only after an arbitrator had addressed the particular grievance and made necessary fact findings would the union institute contempt proceedings. In light of this concession the Court found its prior decisions distinguishable. Accordingly it found no bar to confirmation of the arbitration awards.

The Court also rejected Hyatt's claim that the dispute was moot. Hyatt asserted that it had not challenged the awards and once the applicable period to do so expired they were final and binding. The Court observed, however, that there remained a number of pending grievances between the parties concerning the interpretation and application of the cba provision restricting supervisory employees from performing bargaining unit work except in emergencies and the existence of these disputes "demonstrates that the parties remain at odds as to what section 56 means and whether Hyatt is complying with the section." The earlier awards are relevant, concluded the court, in that they address what constitutes an emergency and also explicitly require compliance with the contract by means of a cease and desist provision. Confirmation of these awards would give them "teeth" by exposing Hyatt to the possibility of contempt if it did not comply in circumstances sufficiently similar to the resolved by the two arbitrators.

Finding no error on the part of the District Court, and none of the policy concerns it had identified in earlier cases, the Circuit affirmed the lower court's decision.

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