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