Peter Gibson was fired from his job after he was accused of receiving almost $200,000.00, allegedly from funds misappropriated by his ex-wife from their employer and directed to an account that he and his ex-wife shared. That termination was submitted to arbitration, and Arbitrator Mattye Gandel issued an award finding "beyond a reasonable doubt" that, while Gibson may not have participated the misappropriation of funds, he "knew about the fraudulent wire transfer, maybe not that day, but certainly in the following days and months and benefited from the fraudulent wire transfer" Accordingly he found just cause forth termination and denied the grievance.
Subsequently the company filed suit against Gibson, seeking recovery of the funds. It sought summary judgment, arguing that the arbitrator's award should be given preclusive effect. The Court granted the Motion for Summary Judgment. Sterling Equipment, Inc. v. Gibson
The Court found that while Gibson was technically not a party to the arbitration his interests were represented by the Union, that the issues were actually litigated in the arbitration and that the facts found by the arbitrator were "dispositive" of the claim that Gibson had been unjustly enriched by receipt of money belonging to the Company. The Court concluded:
In short, because the arbitration award is entitled to preclusive effect, and the Arbitrator specifically found that Gibson benefitted from his wife's fraudulent wire transfer, SEI is entitled to summary judgment on its claims of money had and received (Count I) and unjust enrichment (Count II). See Manganella v. Evanston Ins. Co., 700 F.3d 585, 591 (1st Cir. 2012) ("Generally, final arbitral awards are afforded the same preclusive effects as are prior court judgments."); Miles v. Aetna Cas. & Sur. Co., 412 Mass. 424, 427 (1992) ("An arbitration decision can have preclusive effect in a subsequent suit between the same parties or their privies."). The court will schedule a hearing to determine the amount of SEI's damages
Communications Workers of America and Southwestern Bell Telephone
Two recent decision address arbitration issues arising between CWA and Southwestern Bell Telephone Company.
The Fifth Circuit denied the appeal of CWA from the District Court's dismissal of its complaint for lack of jurisdiction. Communications Workers of America v. Southwestern Bell Telephone Company CWA had sought to litigate an alleged violation of a provision of its cba with Southwestern concerning "Responsible Union-Company Relationship" which it asserted required the parties to deal with each other "in good faith and respect." The Union alleged that layoffs announced by the Company were not based on a lack of work, and that the Company was subcontracting work the laid off employee were trained and qualified to perform. The responsible relationship provision of the agreement was not subject to arbitration, and the Union's sued to enforce its claim that the Company had violated that provision.
The Company sought dismissal of the complaint, arguing that the disputes underlying the complaint were addressed in other provisions of the cba that were subject to arbitration and that the Union had failed to exhaust the grievance and arbitration procedure. The District Court agreed and dismissed the complaint. Here and here
The Fifth Circuit affirmed, concluding:
To recap, the Union's federal complaint identifies two areas of conduct that are covered by the arbitration provision: Southwestern Bell's plan to lay off Union employees and Southwestern Bell's plan to contract out their jobs. Furthermore, the relief the Union requests is reinstatement of the laid off Union employees and a declaration that Southwestern Bell's layoffs and contracting out violated the CBA. In short, notwithstanding the Union's framing of its case, the resolution of the Union's lawsuit is impossible without resolving the merits of issues that are plainly within the CBA's agreement to arbitrate. See Nat'l Football League Players Ass'n v. Nat'l Football League, 874 F.3d 222, 227 (5th Cir. 2017) ("[W]here the contract provides grievance and arbitration procedures, those procedures must first be exhausted and courts must order resort to the private settlement mechanisms without dealing with the merits of the dispute." (quoting United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 37 (1987))). Accordingly, the magistrate was correct in finding that the Union's lawsuit is "clearly and unambiguously challenging" conduct covered by the CBA's grievance and arbitration provisions
The Company sought dismissal of the complaint, arguing that the disputes underlying the complaint were addressed in other provisions of the cba that were subject to arbitration and that the Union had failed to exhaust the grievance and arbitration procedure. The District Court agreed and dismissed the complaint. Here and here
The Fifth Circuit affirmed, concluding:
To recap, the Union's federal complaint identifies two areas of conduct that are covered by the arbitration provision: Southwestern Bell's plan to lay off Union employees and Southwestern Bell's plan to contract out their jobs. Furthermore, the relief the Union requests is reinstatement of the laid off Union employees and a declaration that Southwestern Bell's layoffs and contracting out violated the CBA. In short, notwithstanding the Union's framing of its case, the resolution of the Union's lawsuit is impossible without resolving the merits of issues that are plainly within the CBA's agreement to arbitrate. See Nat'l Football League Players Ass'n v. Nat'l Football League, 874 F.3d 222, 227 (5th Cir. 2017) ("[W]here the contract provides grievance and arbitration procedures, those procedures must first be exhausted and courts must order resort to the private settlement mechanisms without dealing with the merits of the dispute." (quoting United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 37 (1987))). Accordingly, the magistrate was correct in finding that the Union's lawsuit is "clearly and unambiguously challenging" conduct covered by the CBA's grievance and arbitration provisions
In a different case, the District Court has rejected CWA's claim the Arbitrator Samuel J. Nicholas acted in contravention of AAA Rule 40 and the final and binding language of the cba when, on the Company's Motion for Reconsideration, he revised his award to correct what he described as a technical error. Arbitrator Nicholas' original award can be found here. The corrected award here. The correction changed the award from one sustaining the grievance to one denying it. The error related to the Arbitrator's reliance on a document he initially described as limiting the scope of work of Premises Technicians. The Company's Request for Reconsideration pointed out that the document in fact related to a different bargaining unit. The Arbitrator acknowledged his error and agreed that this correction changed his analysis.
CWA filed a complaint seeking to vacate the modified award and seeking to enforce the initial one.
CWA filed a complaint seeking to vacate the modified award and seeking to enforce the initial one.
The District Court adopted the Report of Recommendation of the magistrate rejecting the Union's claim (here) and concluded (here) that the Arbitrator had not exceeded his powers in applying Rule 40 to correct a technical error and that his interpretation of that rule was supported by Fifth Circuit precedent.
Update: The Fifth Circuit affirmed the District Court, concluding that because Arbitrator Nicholas' award stemmed from a colorable interpretation of the parties' CBA, including AAA Rule 40 which was included in the Agreement, the award drew its "essence" from the parties' agreement and was not in excess of his authority.
Arbitrator rejects claim that Sheriff's Deputy was terminated prior to Loudermill hearing
Arbitrator Peter Prosper rejected a claim that the Flagler County Sheriff's Office terminated the employment of a Deputy before giving him a Loudermill hearing. Coastal Florida Police Benevolent Association and Flagler County Sheriff's Office
On April 16, 2018, the Deputy was responding to a request for assistance call when he passed a vehicle entering the wrong way on to Interstate 95. He did not take action regarding the car but continued on to his original destination. While the Deputy was there, a call came from Dispatch about a two car collision on I-95. The Deputy responded to that call. While at the scene, he informed his Commander that the had previously passed one of the vehicles involved entering the wrong way onto the highway. An investigation was conducted, and a report presented to the Undersheriff.
On July 9, 2018, a Notice of Intent to Discipline was presented to the Deputy with a recommendation for termination. The Deputy was given 10 working days (until July 23) to schedule a Loudermill hearing. The hearing was conducted on July 20, and on July 24 the Deputy was informed that his termination "stands as recommended."
The Union filed a grievance challenging the termination on the merits but also asserting that the Sheriff's Office had made the decision to terminate before the Loudermill hearing.
That argument appears to be based in part on a press release (here) issued by the Sheriff's Office on July 9. The full release is not reproduced in the award, but is headlined "FCSO Deputy Terminated After Failure to Take Action to Prevent Fatal Crash." The Union also pointed to what it described as the admissions of both the Sheriff and the Undersheriff that they had made the decision to terminate on July 9.
In rejecting the Union's argument, Arbitrator Prosper noted that the text of the release indicated that the Deputy had been served a "notice of intent to discipline with termination," and that he had been continued on payroll until July 23. He therefore concluded that the Deputy had not been terminated until the end of the Loudermill hearing.
On the merits, the Arbitrator converted the termination to a suspension without pay.
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