Last chance agreement, double jeopardy and just cause - Court confirms award reinstating employee notwithstanding Last Chance Agreement

 An earlier post, Arbitrator concludes that the principle of double jeopardy prevails over a Last Chance Agreement,  noted a complaint filed by Dana Corp seeking to set aside an award of Arbitrator Daniel Kininmonth.  That award involved the termination of an individual who was subject to a last chance agreement (LCA). 

The LCA provided:

In the event that you violate the terms of this last chance agreement your employment is terminated, you will not have access to the grievance procedure unless there is a question regarding the legitimacy of the termination. 

Full compliance with the requirements of this agreement constitutes your conditions of continued employment. Failure to comply with all of the terms and conditions will result in discharge.

The Arbitrator found that grievant had engaged in the conduct he was accused of, and that this conduct was in violation of the LCA. However, observing that "An employee who signs a last chance agreement only gives up the rights him or her expressly agrees to give up" the Arbitrator found that the LCA in this case did not expressly exclude the principle of "just cause."

 Arbitrator Kininmonth found that grievant had been subjected to double jeopardy — he had  been issued a "written warning" for an offense he was subsequently terminated for.

The Arbitrator rejected the Company's claim that he was without authority to consider the question of Double Jeopardy in the presence of a Last Chance Agreement:

The Company argues that "There is No Double Jeopardy in the Context of a Last Chance Agreement." "The claim of 'double jeopardy' is not an issue within the authority of the Arbitrator when called upon to interpret the terms of the 'Last Chance Agreement.' This contention is another of those 'mitigating factors' that have been removed from the consideration of the Arbitrator via last chance agreement." Glatfelter, 126 LA 1774, 1779, 09-2 ARB ¶4694 (Allen, 2009) (Company Brief, p. 12).This arbitrator disagrees with this quotation from the Glatfelter decision. Double jeopardy is not a "mitigating factor" which cannot be considered by the Arbitrator in reducing the penalty under the last chance agreement. Double jeopardy is an "affirmative defense," not a "mitigating factor." The arbitrator can consider "affirmative defenses." ... Thus, the arbitrator can overturn discipline which subjects the employee to double jeopardy under a last chance agreement.

The District Court for the Eastern District of Kentucky has now confirmed the award, rejecting the Company's claim that the Arbitrator  acted outside the scope of his authority and did not carry out his role of interpreting the LCA  but instead utilized his own notions of "just cause." Dana Incorporated v. International Union, United Automobile, Aerospace and Agricultural Implement Workers 

The Court concludes:

Dana argues that arbitrators may not examine just cause under last-chance agreements, pursuant to the Sixth Circuit rulings in Ohio Edison Co. v. Ohio Edison Joint Council, 947 F.2d 786, 787 (6th Cir. 1991) and Bakers Union Factory No. 326 v. ITT Cont'l Baking Co., 749 F.2d 350, 351 (6th Cir. 1984). ... But the Arbitrator distinguished those cases as involving instances where the arbitrator failed to follow the terms of the last chance agreement at issue by mitigating the employee's termination (when the agreement clearly called for termination). Instead, the Arbitrator advised that, he "had not ignored the LCA," ... and that the LCA "does not exclude the principle of `just cause.'"... Although the LCA here called for termination, the Arbitrator, after finding "just cause" and related procedural protections remained, found a procedural double jeopardy violation (which he deemed an affirmative defense, not a mitigating factor) when the Company punished Akerman twice for the same conduct. ... This Court need not decide whether that distinction is too fleeting to matter. Perhaps the jump from "defense" to "affirmative defense" was a mistake. Indeed, this Court may have reached a different conclusion, but this Court's "task is not to choose the best interpretation." ...

Finally, Dana argues that the Arbitrator went outside of his authority in considering affirmative defenses because the LCA did not allow for an affirmative defense.... True, but the LCA did not expressly disallow affirmative defenses either. The Company drafted the LCA and could have easily defined the term "legitimacy" to avoid this dispute and foreclose any procedural due process arguments. See Zeon Chemicals, 949 F.3d at 985 ("Had the company clarified two features of this agreement, we do not see how the arbitrator could have plausibly contradicted them.") Given the inartful language, the Court will "leave the parties to what they bargained for." Zeon Chemicals, 949 F.3d at 982. Here, they tasked the Arbitrator with determining the legitimacy of Akerman's discharge. This is precisely what he did. He applied the terms of the LCA (including its "legitimacy" provision) to the facts of Ackerman's discharge. Whether he reached the right outcome is neither here nor there. The parties "bargained for an arbitrator's interpretation of the contract, not a federal judge's." Econ. Linen, 917 F.3d at 513. With all of Dana's arguments met, the Court finds that the Arbitrator did not act outside the scope of his authority and that he was, at a minimum, "arguably construing or applying the contract." Zeon Chemicals, 949 F.3d at 983 (quoting Misco, Inc.,484 U.S. at 38). Given the deferential standard, the Court will not disturb his decision.

Arbitrator Kininmonth's award contains a detailed review of cases discussing the impact of a LCA on an Arbitrator's authority.