Third Circuit affirms Rite Aid card check arbitration

In November of 1999, Rite Aid and UFCW Local 1360 entered into a cba that contained a provision that Rite Aid would recognize the Union as exclusive representative of employees in its stores in the Union's geographic jurisdiction when majority status was demonstrated by an NLRB election "or other demonstration of the Union status" acceptable to Rite Aid. CBA's executed in 2002 and 2005 contained essentially the same language.

Before entering into the 1999 agreement, the parties also entered into an oral agreement providing that Rite Aid would recognize the Union without the need for an NLRB election when the Union could present authorization cards from a majority of  a store's employees. Pursuant to this agreement the Union was recognized  based on a card check in 63 New Jersey stores.

In 2003, Rite Aid replaced its Director of Labor Relations and between 2003 and 2005 it refused to recognize the Union in five New Jersey stores based on card checks.

The Union grieved this refusal and the dispute ultimately went to arbitration. The arbitrator concluded that Rite Aid had violated the card check agreement. While noting that the language of the cba, standing alone, might support the Company's actions, the arbitrator found that the parties had "amended and modified" the agreement by their oral card check agreement. The arbitrator further noted that Rite Aid received a direct benefit from the card check agreement, including an ability to become a participating provider for the union benefit fund.

Rite Aid sought to set aside the award , but the District Court rejected this effort.
Affirming the lower court, the Third Circuit concluded:

Despite Rite Aid's arguments to the contrary, there is sufficient evidence in the record from which the arbitrator's interpretation could "in any rational way be derived from" the CBAs. Brentwood Med. Assocs., 396 F.3d at 241 (emphasis in original). At least three pieces of evidence support the arbitrator's conclusion that Rite Aid agreed to accept the card check process in return for provider status under the Fund.

First, Rite Aid accepted card checks for the unionization of approximately sixty-three Rite Aid stores from November 1999 to December 2002. ...

Second, Rite Aid continued to enjoy the economic benefit of its agreement to accept card checks when it signed the 2002 and 2005 CBAs because it continued to be a participating pharmacy services provider for the Fund. ...

Third, the record can be read to reject the premise that when Rite Aid executed the Card Check Agreement and distributed the 1999 memorandum to its non-union employees it only intended for the agreement to govern the parties' collective bargaining arrangements until the expiration of the 1999 CBA. during the pendency of the 1999 CBA. ^...

Thus, we are satisfied that the arbitrator's award "draws its essence" from the CBAs, viewed in the context of both the Card Check Agreement and the parties' course of dealing, and we are without jurisdiction to consider the award further. ...

The court's decision can be found here.

Rite Aid must comply with Card Check Agreement

A court has enforced an award of Arbitrator Richard Kasher, requiring Rite Aid to comply with the terms of a neutrality and card check agreement between Rite Aid and UFCW Local 1360. Rite Aid of New Jersey Inc. v. United Food and Commercial Workers Union, Local 1360.

Rite Aid and Local 1360 had entered into an oral card check/neutrality agreement in November of 1999. The parties subsequently entered into a series of collective bargaining agreements, all of which contained recognition language including an after acquired stores clause. The clause extended the bargaining unit to stores added via an NLRB election or “…other demonstrations of the Union status acceptable to the employer…” Rite Aid recognized the Union for approximately sixty three stores through the card check procedure, but later began insisting on an NLRB election. The union filed a grievance, claiming that the employer had improperly refused to accept the card check procedure, in contravention of the agreement and past practice. The arbitrator sustained the grievance, and Rite Aid went to court seeking to have the award vacated. Rite Aid argued, inter alia, that the arbitrator “failed to draw from the essence of the 2005 CBA and exceeded his power by amending or altering the 2005 CBA”.

The court rejected Rite Aid’s efforts and enforced the award. Noting the limited review of an arbitrator’s award, the court held that arbitrator’s award was grounded in the contract, and that the arbitrator could conclude that the language of the recognition clause was ambiguous and that the employer had agreed to accept the card check procedure. While it noted that it found Rite Aid’s interpretation of the CBA to be more persuasive, it had no basis to set aside the award.

Update: The Third Circuit's decision affirming the District Court is discussed here.