CA2: Reinstatement without back pay for "first time" sexual harasser not contrary to public policy

In a Summary Order, the Second Circuit has affirmed the decision of the District Court (here) refusing to vacate an Award of Arbitrator Carmelo Gianino. Arbitrator Gianino had ordered the reinstatement, without backpay, of grievant, a security guard, who had been dismissed "for creating a hostile work environment when he made sexualized comments about a female staff member's wardrobe and appearance." Barnard College v. Transport Workers Union of America, AFL-CIO Local 264.

Grievant, who was also the Local Union President, was representing another employee in a disciplinary hearing when he claimed he was unable to question the witness because her attire made him uncomfortable. When pressed for the reason for his discomfort he replied that her blouse was cut too low. 

The Arbitrator found that Grievant's conduct warranted discipline, but that termination was too severe. He ordered grievant's reinstatement without backpay and with loss of seniority credit for the time he was off. 

The College sought to vacate the Award, asserting that it was contrary to public policy, to law, and  beyond the authority of the Arbitrator. The District Court rejected all of these claims, and confirmed the award. 

The Second Circuit affirmed. It found no violation of public policy, noting:

It is certainly the case, as we have long noted, that "[t]he public policy against sexual harassment in the work place is well-recognized." Newsday, Inc. v. Long Island Typographical Union, No. 915, CWA, AFL-CIO, 915 F.2d 840, 844 (2d Cir. 1990). But we have only found that this public policy counsels against deference to an arbitral award when an arbitrator reinstates a terminated individual who had engaged in multiple acts of sexual harassment—including acts that had already served as the basis of prior arbitral rulings against that individual. Id. at 845. In such instances, reinstatement would indeed violate public policy, and vacatur of the arbitral award would be justified.
In the present case, however, [grievant] was being punished for only a single act, and public policy does not counsel as strongly against deference to the arbitral award

The Court also observed that, as a result of the Award, grievant lost his claim for approximately $80,000.00 in back pay, and that such a punishment was "consistent" with a public policy of eradicating sexual harassment from the workplace. 

Finding no merit in any of the College's arguments, the Court affirmed the judgment of the District Court. 

Does an award of "make whole" relief, without more, imply an offset of interim earnings?

That was the question presented to the District Court in United Electrical, Radio & Machine Workers of America and Local 506 v. General Electric Company.

GE dismissed an employee for unacceptable attendance. That action was grieved and ultimately submitted to arbitration. The parties stipulated the issue as "Was the discharge of [grievant] for just cause? If not, what should be the remedy?"

Arbitrator Christopher Miles issued an award finding the termination to have been made without just cause. He sustained the grievance, and ordered that grievant be reinstated and "made whole for lost wages and benefits."

The Company reinstated grievant, and asked the Union for information on any earnings of grievant during his time off. The Union declined to produce the information, stating that they believed the award was final and binding and noting that the Company had not raised the issue of the appropriate remedy or mitigation of back pay during the hearing. 

The Company requested the Arbitrator to participate in a conference call, but the Union opposed the request. Arbitrator Miles was unwilling to participate in such a call without the agreement of both parties, stating that since he had not retained jurisdiction both parties would have to agree to his continuing involvement.

The union filed a complaint seeking to confirm the award, requesting an order compelling the Company to comply with the Award, including the "make whole" remedy.

The District Court for the Eastern District of Pennsylvania granted the union's request. The Court concluded that the decision was not ambiguous. It agreed with the Union's position that the "clear meaning" of the Award "does not provide for any offset or mitigation." The Court observed that the Award itself contained no language that the make whole remedy was subject to offset or mitigation, and that, while the absence of such language was not dispositive, "the silence of the Arbitration Award on this matter speaks volumes."

The Court also relied on the Arbitrator's failure to retain jurisdiction as suggesting that the Award was not intended to create issues that would need to be resolved after the fact, as well as the absence of any language in the cba providing for offset. The Court noted further:

Moreover, GE did not raise the issue of offset with Arbitrator Miles at all, despite the fact that the appropriate remedy was one of the issues the arbitrator was deciding. Regardless of whether GE’s decision not to raise the issue at the hearing or in its post-hearing brief constituted a “waiver” of its right to do so, it does suggest that offset and mitigation were not issues GE deemed to be relevant.

While recognizing that there was no "binding" Third Circuit precedent on the question of whether the absence of language on offsets or mitigation unambiguously establishes that none were intended, it found "persuasive" authority from several other circuits demonstrating that "as a general matter, the absence of language regarding offsets or mitigation unsurprisingly means that none were intended."

The Court also rejected the Company's argument that "there is a universal principle, at least in labor and employment law, that a make whole remedy is not intended to make the aggrieved party more than whole, and therefore that interim outside income must be deducted from the award." It noted that the cases relied on by the Company involved employment discrimination statutes, where the courts were dealing with language specific to those statutes, finding:

The cases do not establish that offsets and mitigation are legally required in all labor and employment cases and in no way provide a basis for how to interpret the meaning of a make whole remedy that is silent as to the matter.

The Court concluded:

Requiring that backpay be offset, as GE asserts, is not uncommon, but that is not what happened here.
Accordingly, the Court will enforce the plain language of the Arbitration Award that provides simply that [grievant] be made whole for lost wages and benefits.

A similar issue is discussed in Court: Employer waived interim earnings offset of back pay award by failing to raise the issue with the arbitrator

Two recent cases on challenges to an arbitrator's supplemental award - AAA Rule 40, functus officio, and punitive damages

In Verizon Pennsylvania LLC v. Communications Workers of America, Local 1300, the District Court for the Eastern District of Pennsylvania vacated the "Supplemental Award on the Remedy" of Arbitrator Barbara Zausner.

Arbitrator Zausner, chairing a three person panel, had granted a grievance challenging the Company's implementation of a program to have certain set top boxes related to its FIOS TV service delivered to customers by common carrier. Previously the boxes were either carried to the customer location by bargaining unit technicians or picked up by the customer for self installation. In sustaining (here) the original grievance, the panel (with the Company representative dissenting) concluded:

We conclude that mailing set top boxes is different from the customer picking up the set top box from a company location because the customer is not a contractor. But employees of other employers who do the delivery work as part of their jobs, are getting the advantage of work that is protected by Section 17.01. Therefore, the Company must cease and desist from mailing the product to customers when the Company is to provide the installation or maintenance on a set top box.

The panel referred the question of what the monetary remedy should be to the parties for resolution, retaining jurisdiction should the parties be unable to agree. The parties were in fact unable to agree, and the matter was returned to the panel.

In a Supplemental Award (here) a majority of the panel determined, inter alia:

A monetary remedy in this matter is directed to compensate these employees and to deter future violations of Article 17.01. The remedy requested consists of: the number of set top box shipments and deliveries to Pennsylvania customers (other than by customers themselves, and including deliveries made by Assistant Technicians), from the date of the grievance until the Company returns the disputed work to the bargaining unit Services Technicians, at the straight time rate of two hours per delivery at the top step wage rate. ...

Verizon filed suit to vacate both the merits award and the Supplemental Award on the Remedy, and the Union filed to confirm both.

The Court confirmed the merits award, but vacated the Supplemental Award. While the court rejected several of the Company's challenges to the Supplemental Award, it found other elements conflicted with, or went beyond, the merits Award.

The Court agreed with the Company that those elements of the remedial order were barred by the doctrine of "functus officio," a doctrine the Court described as "a shorthand term for a common-law doctrine barring an arbitrator from revisiting the merits of an award once it has issued." It concluded that

A conflict exists between the decisions: the Merits Award explicitly held that customer installation did not violate the CBA while the Remedy Award barred such installation unless the customer personally transported the set top box to her home. By its terms, the Merits Award permitted delivery by a Union technician with installation by the customer, while the Remedy Award foreclosed that option. Accordingly, the injunction barring any customer self-installation can only stand if one of the exceptions to functus officio applies. [footnote omitted]

Concluding that no such exception existed, the Court determined that "the Remedy Award's order regarding customer self-installation was improper and must be vacated." The Court similarly agreed with the Company "that the functus officio doctrine barred the Panel from including installation time from all 1,373,486 installations in the remedy because, in the Merits Award, the Panel held that customer self-installation did not violate the CBA."

Unrelated to the functus officio issue, the Court also concluded that the monetary award in the Supplemental Award constituted an improper award of punitive damages, something not provided for in the CBA. It noted that none of the grievants lost income since they had all been fully employed, and that the Award explicitly provided that the award's purpose was "to deter future violations ...."

The Court remanded the dispute to the arbitration panel "for calculation of a remedy consistent with this opinion."

A second case, Communications Workers of America v. Southwestern Bell Telephone Company, also involves the impact of an arbitrator's supplemental award. In that case, Arbitrator Samuel J. Nicholas initially upheld a grievance that claimed the Company violated its CBA when it assigned certain work to employees in a lower paid title in the same bargaining unit. Arbitrator Nicholas concluded that

no language in the Agreement restricts or forbids Management from making said changes. Thus, on its face, the Union's assertion that Management's actions violated the provisional language of the Settlement Agreement falls short.

However, he found that Union Exhibit 4 supported the Union's position that the assignment of duties could not be made without negotiations. In light of that Exhibit he concluded:

Your Arbitrator is quite aware that he is forced to balance the given practice with Management's right to operate in a manner that supports the mission of the Company. Absent clear practice that the parties have chosen to abide by and despite the nature of the proposed changes and the additional requirement associated with the proposed changes, I would be inclined to find that no violation of the Agreement occurred. However, in light of the aforementioned practice, and the manner in which it has been observed in the past, your Arbitrator holds that Company's decision to unilaterally apply new job duties without consulting the bargaining unit marked a violation of the long-standing practice that the parties share.

Shortly after the award issued, the Company filed a Request for Reconsideration, pointing out that Union Exhibit 4, which had been admitted over the Company's objection, was the product of, and related to, a different bargaining unit. The Union opposed the request, arguing that while Rule 40 of the American Arbitration Association Voluntary Labor Arbitration Rules (incorporated into the parties' cba) allowed an arbitrator to correct "clerical, typographical, technical, or computational errors" it prohibited an arbitrator from redetermining the merits of a claim already decided.

Arbitrator Nicholas found that he had committed a "technical error" in his reliance on Union Exhibit 4 and was "obliged to correct the noted mistake." He found no violation of Rule 40 in this action. On the merits he found that, as he had referenced in his earlier award, in the absence of applicability of Union Exhibit 4 he would find no violation of the cba. Accordingly he rescinded his earlier award "in favor of a ruling that no contractual violation occurred" and denied the grievance.

The Union filed suit, challenging the second award as contrary to the finality language of the cba and the provisions of AAA Rule 40, and seeking to confirm the original award. The District Court rejected the Union's challenge in an opinion addressed in Res judicata, CWA and Southwestern Bell, and a question of timeliness of a Loudermill hearing.

The Fifth Circuit has affirmed the District Court's decision. Communications Workers of America, AFL-CIO v. Southwestern Bell Telephone Company

The Court concluded that the Arbitrator's interpretation of AAA Rule 40 was "arguable" and within his authority. In light of the deference accorded to arbitration awards, it was entitled to be confirmed.

Addressing the functus officio issue, it noted further:

CWA argues that the arbitrator's actions ignored the "finality" provision in the parties' CBA and the common law doctrine of functus officio. This argument misapprehends the purpose of Rule 40. While it is true that the doctrine of functus officio "bars [the] arbitrator from revisiting the merits of an award once the award has been issued," Brown v. Witco Corp., 340 F.3d 209, 218 (5th Cir. 2003 (citation omitted)), Rule 40 "essentially codifies the common law doctrine of functus officio," Int'l Bhd. of Elec. Workers, Local Union 824 v. Verizon Fla., LLC, 803 F.3d 1241, 1248 (11th Cir. 2015) (citation omitted). Though the CBA provided that the decision of an arbitrator "shall be final," the CBA also authorized the arbitrator to reconsider his decision as long as it complied with Rule 40. Given the interlocking nature of these provisions, CWA's argument that the arbitrator violated the doctrine is a restatement of its argument that the arbitrator violated Rule 40—not an additional basis for relief. Because the arbitrator did not ignore Rule 40 in issuing his decision, he also did not ignore the CBA's finality provision or the functus officio doctrine.

The functus officio doctrine is also addressed in these posts:


"Functus Officio" precludes arbitrator from reconsidering award

Timeliness, functus officio, mitigating circumstances, and use of force

Arbitrator concludes "functus officio" precludes reconsideration of award

Arbitrator's failure to follow prior award not a basis for setting aside award