District Court finds Arbitrator exceeded authority by awarding attorney's fees to Union as a remedy for Employer's "frivolous" position

An earlier post noted competing efforts to vacate or confirm an arbitrator's back pay award for an individual whose employment had been terminated by Indiana and Michigan Electric Company. Recent Petitions to Vacate - Persona non grata, a dispute over back pay, and transfer of work to a non-unit employee. The Union (IBEW Local 1392) had sought an award of approximately $240,000.00. The Company calculated its liability at "negative $29,166.51.00."

The Award of Arbitrator Cynthia Stanley substantially adopted the Union's calculation, awarding a little more than $260,000.00 (which included interest on the backpay). (here) She also ordered the Company to pay the Union's attorney's fees of $2,560.00 for the Supplemental Briefing period on back pay, finding the Company's position on the back pay issue "frivolous and in bad faith." (here)

The District Court for the Northern District of Indiana has recently rejected most of the Company's challenges to the back pay award. Indiana Michigan Power Company v. International Brotherhood of Electrical Workers, Local 1392 The Court rejected the Company challenge to the Arbitrator's decision on calculation of back pay, the use of the maximum overtime and double time worked by an individual employed during the back pay period as an appropriate measure of damages, and the Arbitrator's declining to adopt the Company's position on grievant's alleged failure to mitigate his damages. It did, however, vacate the award of attorney's fees. In doing so, the Court noted that since the cba applicable to this dispute specifically provided that "each party 'shall' bear their own expenses, the Arbitrator must have based her award on some body of thought, or feeling, or policy, or law that is outside the contract." The Court recognized that the Seventh Circuit has held that an arbitrator has discretion to award attorney's fees where the contract is silent on the issue. Prairie Installations, Inc. v. Chi. Reg'l Council of Carpenters. Here, however, the cba was not silent on the issue but contained restrictive language. It also observed that the issue in this case "occup[ies] a unique category" in that the award of fees was not imposed as a remedy for a violation of the cba but "as a remedy for the Company's conduct of the presentation of arguments concerning the correct amount of back pay damages."

On the fees issue the Court concluded:

Ordering fees due to bad faith or frivolous argument would require an addition to, or modification of, the fee language. But the CBA specifically stated that the arbitrator "shall have no authority to . . . add to, detract from, or in any way modify the terms of the Agreements." Accordingly, the Court agrees that the award of attorney fees should be vacated.

The Court also found that the Arbitrator's award of payment to grievant for 8 hours of unused Personal Day Off time was duplicative of the award for back pay for the entire period grievant was off work.

The Union's request to confirm the awards remains pending, and the Court has requested the parties to identify any further issues and discuss the procedural posture of the case in light of the Court's rulings.