Adrian Peterson, arbitration and the law of the shop

The decision of Judge David Doty in the NFLPA's challenge to the award in the Adrian Peterson case has been the subject of considerable press. Despite earlier predictions about the difficulty of overturning arbitration awards, Judge Doty has vacated the award on two distinct grounds. NFL Players Association v. NFL and NFL Management Council

Peterson had been suspended for his actions relating to what he claimed was the discipline of his child. The suspension was imposed pursuant the Commissioner's authority under the cba to discipline a player for "conduct detrimental to the integrity of, or public confidence in, the game."  Under the Standard Player Contract the Commissioner, upon a finding of such conduct, has " the right, but only after giving Player the opportunity for a hearing ... to fine Player in a reasonable amount; to suspend Player for a period certain or indefinitely; and/or to terminate this contract."

 After a dispute about the scheduling and scope of a hearing, and without hearing directly from Peterson, the Commissioner suspended him for the remainder of the season, fined him six weeks pay, inclusive of amounts forfeited during the suspension, and ordered him to participate in a counselling and treatment program.

Under the process contained in the cba, the NFLPA appealed the discipline to a hearing officer appointed by the Commissioner. The Union claimed that the Commissioner had improperly, and retroactively, imposed discipline on Peterson pursuant to a new policy issued after the adverse publicity concerning the discipline of Ray Rice. The Union maintained that under the policy in existence at the time of the incident in issue, the presumptive penalty was a two game suspension. The Union also claimed that Peterson had been deprived of a fair hearing, that the imposition of psychiatric counseling was not permissible under the cba, and that the Exempt List had improperly been used as a form of discipline. In support of its claim the Union relied, in part, on the decision of Judge Barbara Jones (here) in connection with the appeal of the discipline imposed on Ray Rice. The Union asserted that the Rice decision established that the new policy could not be applied retroactively and that this decision had become "the law of the shop."

After a hearing, the Hearing Officer rejected each of the Union's arguments. (The decision of Hearing Officer Harold Henderson can be found here). He concluded that the Commissioner had broad discretion to impose discipline under the cba and found the new policy consistent with the prior one. He acknowledged that the discipline imposed was greater than that imposed in previous cases under the prior policy but found that it involved "one of the most egregious cases of domestic violence in this Commissioner's tenure." He also rejected the claims that Peterson had been improperly denied a hearing and that the Commissioner had no authority to require counseling. Accordingly he denied the grievance and affirmed the discipline.

The NFLPA filed suit to vacate the award. The NFLPA's complaint can be found here. It maintained that the award violated "the essence of the cba," that Henderson exceeded his authority by deciding whether the discipline was permissible under the old policy, that the award was fundamentally unfair given the retroactive application of the new policy and that Henderson was an evidently partial arbitrator.

While recognizing the substantial deference ordinarily given by courts to arbitrator's awards, Judge Doty noted that "Arbitration awards ... are not inviolate, and the court need not merely rubber stamp the arbitrator's interpretations and decisions." He explained:

Although the court may not vacate an award if the arbitrator was “arguably construing or applying the CBA,” vacatur is proper when the award “fails to draw its essence from the CBA or is contrary to the plain language of the [CBA].” Bureau of Engraving, Inc. v. Graphic Commc’ns Int’l Union, Local 1B, 164 F.3d 427, 429 (8th Cir. 1999). “The essence of the CBA is derived not only from its express provisions, but also from the industrial common law.” Id. The industrial common law includes “past practices of the industry and the shop,” i.e., the law of the shop, and “the parties’ negotiating history and other extrinsic evidence of intent.” Id.; see also United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581-82 (1960) (“The labor arbitrator’s source of law is not confined to the express provisions of the contract, as the industrial common law - the practices of the industry and the shop - is equally a part of the collective bargaining agreement although not expressed in it.”) The law of the shop necessarily includes prior arbitration awards. See Warrior & Gulf, 363 U.S. at 581 (“The processing of disputes through the grievance machinery is actually a vehicle by which meaning and content are given to the collective bargaining agreement.”).

 Judge Doty agreed with the NFLPA that, in this case, Henderson's award failed to draw its essence from the cba. He found that "in the Rice decision, the hearing officer unequivocally recognized that the New Policy cannot be applied retroactively." He rejected Henderson's efforts to distinguish the Rice decision as one involving double punishment and observed that Henderson had not explained why the "well recognized bar against retroactivity" did not apply to Peterson. The Judge concluded:

Even leaving the Rice decision aside, it is not seriously contested that the Commissioner understood he was constrained to apply the New Policy prospectively.... United Transp. Union, Local Lodge No. 31, 434 F2d 220, 222 (8th Cir. 1970) (recognizing that the law of the shop includes the understanding of the parties). Henderson simply disregarded the law of the shop and in doing so failed to meet his duty under the CBA. As a result, the arbitration award fails to draw its essence from the CBA and vacatur is warranted. See Trailways Lines, Inc. v. Trailways, Inc. Joint Council, 807 F.2d 1416, 1423 (8th Cir. 1986) (finding that failure to consider the law of the shop can be the sole basis to vacate an arbitration award).

The Judge also concluded that Henderson exceeded his authority by adjudicating the "hypothetical question" of whether Peterson's discipline could be sustained under the earlier policy. He determined that the NFLPA had not submitted that issue to the hearing officer, but only "the pure legal issue" of whether the New Policy could be applied retroactively." Finding that Henderson had "strayed" beyond the issues submitted by the NFLPA the Judge concluded that vacatur was warranted on that basis as well.

In light of these two conclusions, Judge Doty found it unnecessary to decide whether Henderson was evidently partial or whether the award violated fundamental fairness. He granted the petition to vacate the award and remanded the case "for such further proceedings consistent with this order as the CBA may permit."

The NFL has issued a statement, here, expressing its disagreement with the decision and its intent to appeal.

Update: The Eight Circuit has reversed the decision of the District Court and remanded with direction to dismiss the petition to vacate. The Court's opinion can be found here. The Court's opinion is discussed at Eighth Circuit on the law of the shop and the scope of the issue to be decided

Can an arbitrator disregard a last chance agreement?

Deciding what it describes as a case involving "unusual labor arbitration issues," the Eighth Circuit  overturns a district court and substantially confirms an arbitrator's award.

Grievant was employed by Associated Electric Cooperative, Inc. After being selected for a random drug test, grievant informed the Company that the test would show a positive result. He explained that he had smoked marijuana with family members while on leave to attend his brother's funeral. Grievant declined union representation, signed a standard form last chance agreement, and was suspended to undergo drug dependency treatment. When the test results were returned a little more than a week later, however, they were negative. Nevertheless, the Company kept grievant on the last chance agreement and continued his suspension and treatment. During his treatment grievant tested positive on two occasions and the Company terminated his employment prior to his return to work.

The Union (IBEW Local No. 53) grieved the termination and submitted the dispute to arbitration. The arbitrator upheld the grievance. He determined that the lca was "unconscionable" since the initial negative drug test established grievant had not broken any work rule, and that the continuation of the suspension after learning of the negative results was "indefensible."  He ordered the Company to reinstate grievant with back pay.

The Company sought to set side the award, and, in a decision discussed here, the district court determined that the arbitrator had exceeded his authority by disregarding the last chance agreement. The Union appealed, and the Eighth Circuit has reversed.

The Circuit court described the issue before it as:

 When an employer and employee enter into a last chance agreement ("LCA") enforcing the employer's drug policy without the union's participation, the employer subsequently invokes the LCA provision mandating discharge in the event of a violation, and the union claims this discipline was contrary to the "just cause" limitation in the grievance and arbitration provisions of the collective bargaining agreement ("CBA"), what is the appropriate standard of review (i) for the arbitrator, and (ii) for this court in reviewing the arbitrator's award?

While observing that it agreed with the district court's determination that the last chance agreement was not unconscionable when initially entered into, the Court concluded that the district court erred by reading the Court's previous decision in Coca-Cola Bottling Co. v. Teamsters Local No. 688 too broadly. In the Coca-Cola case, the court overturned an arbitrator who had disregarded a last chance agreement entered into between the company and union in resolution of a grievance. Here, however, the Union was not a party to the agreement and the lca itself was premised on the "mutual mistake" that grievant had violated the drug policy. In reviewing the instant grievance, the arbitrator "correctly focused" his decision on the just cause issue. According to the Court:

This focus did not permit the arbitrator to ignore the LCA, but it did mean he was not contractually bound to apply the LCA's mandatory termination clause if the evidence persuaded him there was not just cause to do so.

Noting the narrow scope of review, the Court concluded that the arbitrator decision on the termination was within his authority and his award should be confirmed.

The concurring opinion agreed that the award should be confirmed, but would not reach as far as it believed the majority had in determining that the absence of the union's participation in the lca rendered it unenforceable. 

The Court's opinion in Associated Electric Cooperative, Inc. v. International Brotherhood of Electrical Workers, Local No. 53, can be found here.

Supervisors doing bargaining unit work- Court overturns arbitrator's award

An earlier post,  Plain meaning, conflicting contract terms and supervisors performing bargaining unit work, discussed an award of Arbitrator Linda Klibanow finding the LA Times in violation of its cba. Arbitrator Klibanow concluded that the relevant contract language was ambiguous, and relied, in part, on bargaining history to reach her conclusion that the paper could only have supervisors perform bargaining unit work in "emergency ... or ... non-routine but limited situations...."

The newspaper sought to set aside the award, on the basis that the Arbitrator had exceeded her authority in issuing the award and effectively rewrote the parties' agreement. The District Court has agreed with the Times and has vacated the award.

The dispute in large part turns on the language of the contract's management rights provision. Article II, Section 2.2 of the agreement provides:

Any work that can be assigned to bargaining unit employees may also be assigned or reassigned at any time to be performed by other employees, supervisors or managers or persons outside the bargaining unit at the sole discretion of the Employer. The assignment of work or functions to bargaining unit employees shall not be construed as conferring exclusive jurisdiction over same to either the Union or members of the bargaining unit. The Employer shall not use Section 2.2 for the sole purpose of replacing bargaining unit employees and Employer shall not use Section 2.2 for the sole purpose of avoiding the 'Recall' language under Section 11.6 of this contract.

As noted in the earlier post, Arbitrator Klibanow rejected the paper's position that the language was clear and unambiguous. The Arbitrator found an inconsistency between the employer's "sole discretion" to assign work and the contractual limitations on that discretion. The District Court has rejected that conclusion. Recognizing the limited scope of review of an arbitrator's award, and the arbitrator's authority to interpret the parties cba, the Court nevertheless concluded that, while postured as an interpretation, the award effectively rewrote the parties' agreement:

The Court begins by noting that the Arbitrator's "interpretation" conflicts with the plain language of the CBA. On its face, Section 2.2 provides that Plaintiff LA Times has "sole discretion" to assign supervisors to perform union work. Two provisions appear to narrow that discretion only slightly; Plaintiff LA Times may not assign supervisors for the "sole purpose" of replacing bargaining unit employees, nor may it do so for the "sole purpose" of avoiding recall. The Arbitrator read Section 2.2's apparent broad grant of discretion to Plaintiff LA Times to  prohibit Plaintiff LA Times from exercising any discretion to assign supervisors to perform union work. Instead, the Arbitrator found, Section 2.2 permitted the assignment of supervisors only in a very narrow set of specific circumstances. These circumstances have no basis in the text of the CBA.

The court concluded that this case represented one of those "rare instances" where an arbitrator's interpretation was so implausible that it could not be said to draw its essence from the cba and that by effectively adding "extensive restrictions" on the Times' discretion to assign work the arbitrator improperly rewrote or added to the parties' agreement.
 
The Union's website links to the court's decision in Los Angeles Times Communications v. Graphic Communications Conference Int'l Brotherhood of Teamsters here.

Three recent cases address the role of courts in reviewing arbitration awards

The 10^th Circuit, in San Juan Coal Co. v. International Union of Operating Engineers, Local 953 reversed the District Court and enforced an arbitrator’s award. The underlying dispute involved the interpretation of language in the parties’ cba addressing premium pay for work in excess of an employee’s normal shift. The arbitrator had ruled for the Union, but the District Court refused to enforce the award. The Appeals Court noted that while the District Court’s interpretation of the contract was a plausible, its opinion failed to give sufficient deference to the award of the arbitrator. The court noted:

An arbitrator’s interpretation of an agreement, even one that is flawed or based on questionable findings of fact, is due the utmost judicial deference. It matters not that a reviewing court might offer a more cogent reading of the agreement; the arbitrator’s interpretation must be upheld wholly unless it is without textual basis.

Finding the arbitrator’s award had “at least some foundation” in the text of the agreement the Court reversed and remanded with instructions to enter an order enforcing the award.  

Two cases from Ohio, involving public sector agreements, reach similar conclusions. 

 In Field Local Teachers Ass. v. Field Local School Dist. Board of Education, the Court of Appeals refused to reverse the lower court’s decision enforcing an arbitration award concerning evaluations of teachers employed under Limited contracts. The dispute involved the relationship between the contract and an Ohio statute on tenure. The arbitrator had ruled in favor of the School Board and the Union sought to set aside the award. Like the lower court, the Court of Appeals refused to do so. It noted that while “the interpretation of the CBA espoused by the Union is not unreasonable, we cannot substitute our interpretation for that of the arbitrator”

Similarly, in City of Parma v. Parma Firefighters Assn. Local 639 , the court rejected the City’s attempt to set aside an award that reinstated an employee who had tested positive for cocaine. The Court rejected the City’s public policy argument, and found the arbitrator’s interpretation of the City’s drug and alcohol policy, appended to the cba, drew its essence from the contract and was therefore entitled to deference.