Coal Industry Decisions - Construction or maintenance, remedies for contracting, and "production of coal"

Several recent decisions of the District Court for the Northern District of West Virginia address issues involving coal industry arbitration awards as the parties sought to confirm or vacate them.

Maintenance or construction

Two cases turned on whether the arbitrator correctly determined whether the work that was the subject of the grievance involved construction or maintenance. Generally speaking maintenance work could not be contracted out  while, with certain exceptions, construction work could.

In The Harrison County Coal Company v. UMWA and Local 1501 the Court confirmed an award of Arbitrator Thomas Hewitt. Arbitrator Hewitt had found that construction of a belt drive in a new section of the mine was more properly categorized as Maintenance work. In doing so he relied on a prior settlement between the parties that "recognized that belt drive installation work customarily performed at the Robinson Run Mine is classified work."

The Company sought to vacate the award, claiming that the Arbitrator exceeded his authority and substituted his own brand of industrial justice for the provisions if the cba. The Court rejected this claim, concluding "by focusing on the 2002 Settlement, the Arbitrator was not ignoring contractual language or applying his own notions of industrial justice. Recognizing the Court's extremely limited  role in reviewing labor arbitrators' decisions, the Courts finds that the Arbitrator's decision draws it essence from the Agreement."

In The Monongalia County Coal Company v. UMWA and Local 1702  the Court vacated another award of Arbitrator Hewitt. Arbitrator Hewitt had concluded that the Company's use of contractors to build cribs (a "supplemental roof support") was maintenance rather than construction work and sustained the grievance. In doing so he distinguished the case from one in which the District Court had previously held (here) that installation of a "pumpable crib" was construction, not maintenance work.  He further found:

An Employer who regulates/reduces the size of the workforce and assigns work that is unable to be performed within its self-imposed time limit if it uses only its current fully employed classified employees creates an "impossibility of performance" situation. If this Employer then relies upon Article A l, subsection (1) as authority to utilize sub-contractors to perform work customarily performed by classified employees, the Employer is circumventing the intent of the contract under Article I. This use of abuse of authority cannot then be relied upon as a reason to permit the use of outside contractors even when all classified employees are fully employed working no less than five (5) days a week, Obviously, this is not the intent of the drafters of the contract and this self-imposed scheduling may not be used to circumvent the intent and purpose of the NBCWA or diminish the use of the workforce under Article I.

 On the Company's Petition to Vacate the award, the Court found:

Here, under the guiding principles in the 2017 Decision, which considered a large amount of binding precedent, the work at issue was construction work because the contractors were hired to "build" new cribs (i.e., create something new at the mine). The Court agrees with Defendants that the work is production work, but it also falls into the secondary category of construction work pursuant to binding precedent.

The Court also found unsupported by the evidence the Arbitrator's finding of a "concerted effort to abridge the rights" of employees. Notwithstanding the limited role of Courts in reviewing arbitration awards, the Court found that the Arbitrator had ignored plain language in the contract and accordingly vacated the award.

Remedies for improper contracting - Confirmed, vacated, remanded

In UMWA and Local 1702 v. The Monongalia Coal Company the Court confirmed an award of Arbitrator William A. Babiskin.  The Union claimed that the Company had improperly contracted what it claimed to be unit work. Arbitrator Babiskin denied the grievance without addressing the merits, concluding:

It is not necessary to reach or decide the issues raised by the parties as there was no financial loss to the employees in this case. As held by me in Blacksville No. 2 Mine, Case 07-31-09-040, I strongly believe in the principle of "no harm, no foul." See ex. Sterling Winthrop Research Institute, FMCS 86K/07572; Wisconsin Public Corp., 52 LA 1028. Since Grievants suffered no financial harm, there is nothing to be remedied.

The Union sought to vacate the award, arguing that the Arbitrator failed to consider the evidence, ignored the issue, and adopted a principle of "no harm, no foul" that did not appear in the cba.

The District Court confirmed the award. It concluded that while the Arbitrator's description of the principle may have been inartful, it was an effort to apply "long standing" principles that monetary awards in absence of compensatory damages are improper. The Court held that:   

The arbitration award issued here is entitled to significant deference, and the Court will not substitute its own judgment based on Plaintiffs' preference for an arbitration award with a less-casual statement of a long-standing legal principle.

A somewhat similar issue was addressed in the Court's decision in Monongalia Coal Company v. UMWA and Local 1702. That case involved a challenge to the award  of Arbitrator Ralph Colflesh.  Arbitrator Colflesh found that the Company had improperly contracted work which should have been performed by the bargaining unit. However, he also found that no identifiable unit employee had suffered economic harm. Rejecting the Company's argument that there are some contractual violations that must go without remedy, he provided for an alternate remedy:

 Based on the foregoing, I join Arbitrator Drucker in awarding damages to the Union for the breech [sic], and concur with the principle implied in her award that  in general every sustained grievance must have some remedy. At the same time, I depart from any thinking that Union members should rewarded for not working when they had the opportunity.  Rather, remedial compensation in this case should go to the Union only for the costs of prosecuting this grievance. Such costs shall be reasonable and shall be based on the documented fees, if any, the Union's legal team billed for the preparation of the grievance as well as  the documented per hour cost of the work of Mr. Frey, who represented the Union here, that was spent preparing and presenting the case. The latter amount shall be calculated on his hourly salary as a Union staff member and based on a 40-hour work week.  The cost shall not include any costs of witnesses, nor shall it include the Union's share of the undersigned's fees and expenses, as those must contractually be divided equally by the parties. 

The Company sought vacate the award, and the District Court granted that request. Finding the ordered remedy beyond what was authorized by the cba, the Court  concluded:

Had the Arbitrator calculated Defendants' loss based on the actual breach, the award could possibly be upheld. As discussed above, compensating a Union based upon loss of Union work has been held to be permissible under the NBCWA. See Cannelton, 951 F.2d at 594. The Arbitrator did not, however, take that approach. His award contained no supporting findings of monetary loss to establish the award as compensatory, and it did not find any basis in the language of the contract. Instead, the Arbitrator chose to award Defendants their costs in preparing the grievance. The monetary award issued did not stem from the breach of the contract but, instead, stemmed from the Arbitrator's own sense of industrial justice.

Arbitrator Drucker's award, referenced by Arbitrator Colflesh, can be found here. That award was also subject to a petition to vacate, but the Court remanded the case to the Arbitrator for clarification as to how she determined the remedy. here.

In another case, The Monongalia Coal Company v. UMWA and Local 1702 , the court confirmed an award of Arbitrator Mathew Franckiewicz. Arbitrator Franckiewicz upheld the Union's grievance and ordered a make whole remedy. However he noted that the method of allocating the pay for the work performed by the contractors was not clear:

The evidence discloses the number of contractor employees and the number of hours they worked on each day in issue. There are more Grievants than there were contractor employees on any of the days involved. The easiest, but perhaps not the fairest, method for allocating damages would be to award a pro rata share to each  of the Grievants. This, however, would ignore individual considerations as to which individuals likely would have worked on particular days, or whether particular Grievants were or were not available on particular days. 

He therefore assigned to the parties the initial responsibility to allocate the damages, retaining jurisdiction in the event of a dispute. 

Rejecting the Company's Petition to vacate the award, the Court concluded:

After considering the arguments and the evidence, the Arbitrator found that it was more appropriate to categorize the work as "performing repairs, although extensive repairs," because many original components were reused. ECF No. 11-4 at 8. The Arbitrator then found, based on evidence presented, "that the repairs performed by the contractor were and are normally and customarily performed by bargaining unit employees." Id. at 9. He did so based on careful analysis of the contract and the evidence presented at the hearing.

Further, there are no grounds to overturn the Arbitrator's monetary award. The Arbitrator left the issue of damages up to the Parties to distribute, while retaining jurisdiction in case the parties cannot agree. The monetary award is clearly aimed to compensate because it left the issue of damages to the parties to decide. Further, as Defendants have noted, it "granted only the amount of time directly related to the amount of work performed by contractors." ECF No. 17 at 13. Because the NBCWA is silent as to an appropriate remedy, it is within the Arbitrator's discretion to select one, and the Court finds that this Award draws its essence from the NBCWA.

Production of coal and work jurisdiction

In The Ohio Valley Coal Company v. UMWA the Court vacated an award of Arbitrator Mollie Bowers that had found the Company in violation of its cba. The Court summarized the somewhat complicated facts as follows:

Ohio Valley formerly operated the Powhatan No. 6 Mine ("Mine") in Belmont County, Ohio. Defendant United Mine Workers of America, District 31 represented all bargaining unit employees of the Mine since it was constructed and commenced operation in 1972. The 2016 National Bituminous Coal Wage Agreement ("NBCWA") governs the terms and conditions of employment for all bargaining unit employees at the Mine.
***
The Mine was in operation through exhaustion of its coal reserves with production permanently ceasing on October 16, 2016. Ohio Valley finished processing mined coal from the Mine on December 15, 2016, and it was permanently sealed on December 31, 2016. The Mine, which once employed nearly 500, was staffed by only 16 classified employees when the underlying grievance was filed....
In 2001, an unrelated subsidiary of Murray Energy Corporation, American Energy Corporation, opened the Century Mine to mine a coal reserve contiguous with the Mine. Ohio Valley has no ownership interest in the Century Mine and the UMWA does not represent any employees at the Century Mine.
On July 15, 2002, Ohio Valley and American Energy Corporation entered into a Slurry Disposal Agreement. Ohio Valley licensed rights to dispose of coal slurry materials to American Energy Corporation in the impoundment on property formerly associated with the Mine.... Pursuant to the terms of the agreement, American Energy Corporation retains sole responsibility for the transportation of its slurry materials to the impoundment.... Ohio Valley did grant an easement and right-of-way entry onto its property for installation and maintenance of the necessary pipeline. ... American Energy continued to dispose of its slurry materials in the impoundment as of briefing in this matter.

The Court determined that the cba limited work jurisdiction to activities related to "the production of coal" and since the mine had been permanently closed, no work jurisdiction claim was viable. The Court rejected the Arbitrator's contrary conclusion as being based on a false premise.  Arbitrator Bowers had found that while production had ceased, work performed at the mine was essential to coal production and operation at an adjacent mine "which is also owned by the Company." The Court concluded that "Despite wholly inaccurate assumptions to the contrary, Ohio Valley was not engaged at any relevant time in the production of coal at the Mine as it was closed and sealed ...." The use of the property by American Energy "a separate legal entity" was insufficient to sustain a work jurisdiction claim. Finding the Arbitrator's decision based on an "inaccurate factual premise" the Court vacated the award. 

Res judicata, CWA and Southwestern Bell, and a question of timeliness of a Loudermill hearing

Arbitrator's award given res judicata effect in subsequent suit for recovery of misappropriated funds

Peter Gibson was fired from his job after he was accused of receiving almost $200,000.00, allegedly from funds misappropriated by his ex-wife from their employer and directed to an account that he and his ex-wife shared. That termination was submitted to arbitration, and Arbitrator Mattye Gandel issued an award finding "beyond a reasonable doubt" that, while Gibson may not have participated the misappropriation of funds, he "knew about the fraudulent wire transfer, maybe not that day, but certainly in the following days and months and benefited from the fraudulent wire transfer" Accordingly he found just cause forth termination and denied the grievance.

Subsequently the company filed suit against Gibson, seeking recovery of the funds. It sought summary judgment, arguing that the arbitrator's award should be given preclusive effect. The Court granted the Motion for Summary Judgment. Sterling Equipment, Inc. v. Gibson 

The Court found that while Gibson was technically not a party to the arbitration his interests were represented by the Union, that the issues were actually litigated in the arbitration  and that the facts found by the arbitrator were "dispositive" of the claim that Gibson had been unjustly enriched by receipt of money belonging to the Company. The Court concluded:

In short, because the arbitration award is entitled to preclusive effect, and the Arbitrator specifically found that Gibson benefitted from his wife's fraudulent wire transfer, SEI is entitled to summary judgment on its claims of money had and received (Count I) and unjust enrichment (Count II). See Manganella v. Evanston Ins. Co., 700 F.3d 585, 591 (1st Cir. 2012) ("Generally, final arbitral awards are afforded the same preclusive effects as are prior court judgments."); Miles v. Aetna Cas. & Sur. Co., 412 Mass. 424, 427 (1992) ("An arbitration decision can have preclusive effect in a subsequent suit between the same parties or their privies."). The court will schedule a hearing to determine the amount of SEI's damages

Communications Workers of America and Southwestern Bell Telephone

Two recent decision address arbitration issues arising between CWA and Southwestern Bell Telephone Company. 

The Fifth Circuit denied the appeal of CWA from the District Court's dismissal of its complaint for lack of jurisdiction. Communications Workers of America v. Southwestern Bell Telephone Company CWA had sought to litigate an alleged violation of a provision of its cba with Southwestern concerning "Responsible Union-Company Relationship" which it asserted required the parties to deal with each other "in good faith and respect." The Union alleged that layoffs announced by the Company were not based on a lack of work, and that the Company was subcontracting work the laid off employee were trained and qualified to perform. The responsible relationship provision of the agreement was not subject to arbitration, and the Union's sued to enforce its claim that the Company had violated that  provision.

 The Company sought dismissal of the complaint, arguing that the disputes underlying the complaint were addressed in other provisions of the cba that were subject to arbitration and that the Union had failed to exhaust the grievance and arbitration procedure. The District Court agreed and dismissed the complaint. Here and here

The Fifth Circuit affirmed, concluding:

  To recap, the Union's federal complaint identifies two areas of conduct that are covered by the arbitration provision: Southwestern Bell's plan to lay off Union employees and Southwestern Bell's plan to contract out their jobs. Furthermore, the relief the Union requests is reinstatement of the laid off Union employees and a declaration that Southwestern Bell's layoffs and contracting out violated the CBA. In short, notwithstanding the Union's framing of its case, the resolution of the Union's lawsuit is impossible without resolving the merits of issues that are plainly within the CBA's agreement to arbitrate. See Nat'l Football League Players Ass'n v. Nat'l Football League, 874 F.3d 222, 227 (5th Cir. 2017) ("[W]here the contract provides grievance and arbitration procedures, those procedures must first be exhausted and courts must order resort to the private settlement mechanisms without dealing with the merits of the dispute." (quoting United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 37 (1987))). Accordingly, the magistrate was correct in finding that the Union's lawsuit is "clearly and unambiguously challenging" conduct covered by the CBA's grievance and arbitration provisions

In a different case,  the District Court has rejected CWA's claim the Arbitrator Samuel J. Nicholas acted in contravention of AAA Rule 40 and the final and binding language of the cba when, on the Company's Motion for Reconsideration, he revised his award to correct what he described as a technical error. Arbitrator Nicholas' original award can be found here. The corrected award here. The correction changed the award from one sustaining the grievance to one denying it. The error related to the Arbitrator's reliance on a document he initially described as limiting the scope of work of Premises Technicians. The Company's Request for Reconsideration pointed out that the document in fact related to a different bargaining unit. The Arbitrator acknowledged his error and agreed that this correction changed his analysis. 

CWA filed a complaint seeking to vacate the modified award and seeking to enforce the initial one.

 The District Court adopted the Report of Recommendation of the magistrate rejecting the Union's claim (here) and concluded (here) that the Arbitrator had not exceeded his powers in applying Rule 40 to correct a technical error and that his interpretation of that rule was supported by Fifth Circuit precedent. 

Update: The Fifth Circuit affirmed the District Court, concluding that because Arbitrator Nicholas' award stemmed from a colorable interpretation of the parties' CBA, including AAA Rule 40 which was included in the Agreement, the award drew its "essence" from the parties' agreement and was not in excess of his authority.

Arbitrator rejects claim that Sheriff's Deputy was terminated prior to Loudermill hearing 

Arbitrator Peter Prosper rejected a claim that the Flagler County Sheriff's Office terminated the employment of a Deputy before giving him a Loudermill hearing. Coastal Florida Police Benevolent Association and Flagler County Sheriff's Office 

On April 16, 2018, the Deputy was responding to a request for assistance call when he passed a vehicle entering the wrong way on to Interstate 95. He did not take action regarding the car but continued on to his original destination. While the Deputy was there, a call came from Dispatch about a two car collision on I-95. The Deputy responded to that call. While at the scene, he informed his Commander that the had previously passed one of the vehicles involved entering the wrong way onto the highway. An investigation was conducted, and a report presented to the Undersheriff. 

On July 9, 2018, a Notice of Intent to Discipline was presented to the Deputy with a recommendation for termination. The Deputy was given 10 working days (until July 23) to schedule a Loudermill hearing. The hearing was conducted on July 20, and on July 24 the Deputy was informed that his termination "stands as recommended."

The Union filed a grievance challenging the termination on the merits but also asserting that the Sheriff's Office had made the decision to terminate before the Loudermill hearing.

That argument appears to be based in part on a press release (here) issued by the Sheriff's Office on July 9. The full release is not reproduced in the award, but is headlined "FCSO Deputy Terminated After Failure to Take Action to Prevent Fatal Crash." The Union also pointed to what it described as the admissions of both the Sheriff and the Undersheriff that they had made the decision to terminate on July 9.  

In rejecting the Union's argument, Arbitrator Prosper noted that the text of the release indicated that the Deputy had been served a  "notice of intent to discipline with termination," and that he had been continued on payroll until July 23.  He therefore concluded that the Deputy had not been terminated until the end of the Loudermill hearing.

On the merits, the Arbitrator converted the termination to a suspension without pay.