Recent cases - Untimeliness of an award, public policy challenges, and neutrality of party appointed arbitrators

Untimeliness of arbitrator's award doesn't warrant vacating award

In First Student, Inc v International Brotherhood of Teamsters, Local 959, the District Court for Alaska denied a request to vacate an award of Arbitrator Elizabeth Ford. The parties had submitted to Arbitrator Ford a dispute concerning the Company's alleged failure to seek an alternate assignment for a bus driver taken off his route at the client's request. The cba called for the arbitrator's award to be issued within 30 days of the closing of the hearing or submission of  briefs. The signed award of Arbitrator Ford was not submitted until almost four weeks beyond that date. 

Rejecting the Company's argument that this delay rendered the award void, the Court relied on the Ninth Circuit's decision in McKesson Corp. v. Local 150 IBT. In McKesson the Ninth Circuit noted :

In the absence of an express agreement to the contrary, procedural questions are submitted to the arbitrator, either explicitly or implicitly, along with the merits of the dispute. ... The question of the authority of the arbitrator to issue an award after the sixty day period involves just such a procedural matter. McKesson's contention that the time limit is jurisdictional in nature and may not be submitted to the arbitrator is in error. Courts have uniformly held that limitations on the time in which an arbitrator may render an award are procedural not jurisdictional.

The District Court concluded that the Arbitrator's decision to issue an award after the thirty day period was a procedural matter that had been submitted to the arbitrator along with the merits of the dispute and that the thirty day limitation was "precatory" and did not limit the arbitrator's authority.

Courts reject public policy challenges to awards

Two recent decisions reject employer public policy challenges to arbitrators awards.

In City of Duluth v. Duluth Police Union, Local 807 the Minnesota Court of Appeals denied an appeal by the City of Duluth from the lower court's order rejecting the City's challenge to an award of Arbitrator Mario Bognanno. Arbitrator Bognanno had found that grievant had improperly used excessive force, but found termination too severe. He ordered grievant's reinstatement without backpay. The arbitrator's award and the lower court's decision are addressed in City will appeal reinstatement of police officer dismissed for improper use of force. Observing that the public policy challenge must be to the arbitrator's award, not the grievant's conduct, the Court concluded "in sum, even though [grievant's] use of force was contrary to a public policy against unreasonable use of force, the arbitrator's award of reinstatement without back pay is not."

In Steward Carney Hospital, Inc. v. Massachusetts Nurses Association the District Court in Massachusetts rejected the Hospital's public policy challenge to an award of Arbitrator Michael Stutz reinstating a nurse in the Hospital's adolescent psychiatric unit. Grievant had been dismissed for allegedly failing to review a "safety tool" (a questionnaire used to identify important patient information including what makes them feel upset or unsafe, preferred methods on intervention and how best to communicate when the patient is upset) and for allegedly failing to intervene when another nurse was observed mistreating the patient. 

Arbitrator Stutz found that grievant was properly subject to discipline, but not termination. He converted the termination to a disciplinary warning.

The Hospital sought to vacate the award, asserting that the reinstatement was contrary to applicable regulations requiring that hospital staff  "meet 'clinical competencies and operational standards,' that all personnel be 'qualified' and demonstrate 'competencies' and that provide that the Hospital could lose its license it cannot provide proper treatment to patients."

Rejecting the Hospital's challenge, the Court concluded:

... nothing in the regulations establishes a policy that a nurse who committed the grievant’s conduct be prohibited from working at a hospital. See Bos. Med. Ctr. 260 F.3d at 23  (holding that the question is whether the order to reinstate the grievant violates public policy).  The only positive law that could be discerned from the Hospital’s argument is a policy against hospitals employing unqualified personnel. Notably, while the Hospital could have reported the grievant’s conduct to the Massachusetts agency governing the registration of nurses, the Arbitrator found that the Hospital did not file a report about the grievant’s conduct with any such state agency. Award [#1-7] at 9. The Hospital offers no connection between the Arbitrator’s Award and “some explicit public policy that is well defined and dominant and is to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests.” Misco, 484 U.S. at 43 (internal quotations and citations omitted).

Party arbitrators and neutrality

Matter of Patrolmen's Benevolent Association of the City of New York, Inc. v. New York State Public Employment Relations Board involved a challenge to the City of New York's anointment of a party arbitrator to a three person panel in an interest arbitration. The Union challenge the City's appointee, claiming that his service as a consultant to the City and prior representation of it demonstrated a lack of impartiality. Rejecting the challenge, the Appellate Division found no requirement that a party appointed arbitrator be "neutral." The Court observed:

We turn next to petitioner's claim that Linn should be disqualified based upon improper partiality and hostility toward petitioner. "[S]trange as it may seem to those steeped in the proscriptions of legal and judicial ethics," New York has no requirement that a party-appointed arbitrator must be impartial (Matter of Siegel [Lewis], 40 N.Y.2d 687, 690 [1976]). It is well recognized that tripartite arbitration has a "partisan character" (Matter of Astoria Med. Group [Health Ins. Plan of Greater N.Y., 11 N.Y.2d 128, 135 [1962]). "The right to appoint one's own arbitrator, which is of the essence of tripartite arbitration ..., would be of little moment were it to comprehend solely the choice of a `neutral.' It becomes a valued right, which parties will bargain for and litigate over, only if it involves a choice of one believed to be sympathetic to [the selecting party's] position or favorably disposed to him [or her]" (id.; see 13 Weinstein-Korn-Miller, NY Civ Prac CPLR ¶ 7511.16). Notably, in tripartite arbitration, both parties are equally free to select the arbitrators they prefer. Further, party-appointed arbitrators typically have a depth of knowledge on the subject in question that "can be of assistance to the neutral member, who is not in a position to appreciate the problem and the fine points of its setting.... [T]o disqualify an arbitrator because of [partiality] ... would be to withhold from the [panel] a source of the specialized knowledge which contributes to the unique value of the arbitration process" (Matter of Astoria Med. Group [Health Ins. Plan of Greater N.Y.], 11 NY2d at 138 [internal quotation marks and citations omitted]). Consistent with these principles, CPLR article 75 provides for the vacatur of an arbitration award based upon the partiality of an arbitrator only when the challenged arbitrator was "appointed as a neutral" (CPLR 7511[b][1][ii]; see Matter of Meehan v Nassau Community Coll., 243 A.D.2d 12, 17-18 [1998], lv denied 92 N.Y.2d 814 [1998]). [footnote omitted]

The court held that the "evident partiality" of a party appointed arbitrator was not a basis for disqualification.

Recent complaints to set aside awards - outsourcing, alcohol tests and piece rates

Several recent filings involve efforts to vacate arbitration awards.

 Churchill Downs Racetrack, LLC, v. Laborers' International Union of North America, Local Union No. 576

Churchill Downs Racetrack seeks to set aside an award of Arbitrator Mark C. Travis. Arbitrator Travis sustained a grievance claiming that the Company violated the cba when it subcontracted "all" housekeeping and maintenance work at one of its locations. The Company relied on language in the cba which, it asserted, expressly allowed its actions. The cba provided:

The Company shall have the right to determine whether and to what extent the Company's business and the work required in its business shall be performed by employees covered by the Agreement.

The Union's grievance claimed that the Company's actions were inconsistent with the parties' past practice of only using contractors to supplement the bargaining unit, were inconsistent with the explanation of the language provided to the Union during negotiation of the cba, and were contrary to the recognition clause.

Upholding the grievance, Arbitrator Travis essentially agreed with the Union's position.  He concluded:

The Union's argument is correct that taken to its logical conclusion, the Company could contract out all maintenance and housekeeping jobs covered by the CBA. For example, if an award upholding the Company's decision here were sustained as precedent, the Company could ostensibly decide to create a new subsidiary for the operation Churchill Downs and subcontract all housekeeping and maintenance duties at that location as well. That is a slippery slope indeed, and one that cannot be sanctioned in this case.

The Company's complaint alleges that the Arbitrator ignored the explicit language of the Agreement, added requirements not found in the Agreement, and simply substituted his own ideas of industrial justice.  (A similar issue is addressed in Contracting and erosion of the bargaining unit)


Cleveland Brothers Equipment Co., Inc., v. The International Union of Operating Engineers, Local 66,66A,B,C,D,O &R, AFL-CIO

Cleveland Brothers Equipment Co. is seeking to vacate an award of Arbitrator James Rimmel.

The award overturned the termination of a commercial truck driver who was found, as a result of a random alcohol screening test, to have a Breath Alcohol Test result of 0.034 on the first test and 0.029 on the second. These readings placed him in violation of regulations of the Department of Transportation/Federal Motor Carrier Safety Administrationl and, according to the Company, of the Company's Drug-Free Workplace Policy.

The Arbitrator found the test results undisputed, and concluded that it was "clear that grievant was in violation" of the regulation. However, he found that the language of the Company's Policy was ambiguous. He noted that the Policy contained an Exclusion Clause. That clause allowed the moderate use of alcohol at approved functions or in conjunction with customer business meals or entertainment  provided the employee did not reach a blood alcohol level of 0.04 which it defined as being "under the influence." This exclusion appeared just under a reference to the DOT/FMCSA regulations.

Arbitrator Rimmel concluded:

Cleveland's Policy is ambiguous as to what BAC level is acceptable for which class of employee. By placing the "exclusions provision" immediately following language generally incorporating DOT/FMCSA requirements for a certain class of employees, it is unclear whether the prohibited BAC level is 0.02 or 0.04 and/or to which class of employee each separate standard may apply. The ambiguity is only further highlighted by the fact that simple clarifying language could have been added setting forth the Policy's intent and Cleveland's expectations as to its employees. Moreover, the training provided by Cleveland does not provide additional color or clarification to the issue. The training is limited to providing guidance that a BAC level between 0.00 and 0.02 does not equate to a violation of DOT/FMSCA Regulation 392.5(a)(2). No evidence was proffered showing that the training informed employees as to the consequences of a BAC reading between 0.02 and 0.04 (as required by Regulation 382.601(b)(10)), or discussed in any cogent fashion the Policy's definition of "under the influence” as exceeding a BAC of 0.04. Under these circumstances, I am left to conclude that Cleveland did not have proper cause for the meted-out discipline because the inherent ambiguity in the Policy did not adequately inform grievant as to what level of alcohol body content was deemed acceptable. Subject to varying interpretations, it is not fair to impose upon grievant the onus of reconciling the ambiguity in the Policy. Simply put, had Cleveland desired to establish two (2) separate standards, one for DOT/FMCSA regulated employees and another for non-regulated employees, then it was incumbent upon Cleveland to clearly set forth such in its Policy and/or training
Accordingly, I find that this grievance must be sustained.

In its Complaint, the Company asserts that the award is contrary to the "well-defined  and dominant public policy interest as set forth in DOT/FMCSA regulations"  and "effectively condones permitting a commercial motor vehicle driver driving while in violation of established federal regulations ...."

Browning-Ferris Industries of Oho, Inc.  v.  International Brotherhood of Teamsters, Teamsters Local Union No. 20

The dispute before Arbitrator Robert Stein involved a claim that the Company breached its cba when it unilaterally changed the piece rate paid to drivers following the introduction of  new system for waste management. The Company claimed that the cba authorized it to make such changes when there was a change in service requirements. It relied on the management rights provision as well as Article 9.04 that provides:

The Company agrees to guarantee piece work rates for the term of this Agreement as long as service requirements remain the same, such requirements including, but not limited to, the location of disposal sites, volumes generated per units and equipment utilized to perform the service. A mere increase in house count shall not establish a change in service requirements, thereby justifying a reduction in the piece work rate. The Union reserves the right to grieve the adjusted rate.

 The Union's grievance asserted that the Company had sought unsuccessfully in prior negotiations to change or modify the language of Article 9.04. It also claimed that the new rate was below that paid to employees at the Company's other locations performing the same automated waste collection services.

Arbitrator Stein sustained the grievance (here), concluding:

 ... the Union has successfully met its burden of establishing that the Employer's acted in violation the Agreement's terms in determining or establishing a lower incentive or piece work rate than that which was in effect prior to the activation of the new Agreement without establishing that that was a recognized component resulting from the parties' negotiations.

The Company's complaint alleges that the Arbitrator exceeded his authority by adding restrictions on the Company's ability to change rates not contained in the cba and his reliance on the piece rate used in other municipalities.