Yes, Virginia, Courts Can Overturn Arbitration Awards

Yes, Virginia, courts can and will overturn arbitration awards, and the Third Circuit, in a sharply written precedential opinion by Judge Thomas Ambro for a unanimous panel, did exactly that in Monongahela Valley Hospital v. United Sates Paper and Forestry Rubber Manufacturing Allied Industrial Service Workers Int’l Union, affirming the District Court decision out of the Western District of Pennsylvania (December 30, 2019).

The dispute arose because a bargaining unit employee of the Hospital sought vacation during Christmas week, 2017.  The Hospital denied her request because her working supervisor had requested the same week off and both could not be away at the same time.  The employee filed a grievance alleging a violation of the union’s collective bargaining agreement (CBA).   The CBA expressly limits the arbitrator only to interpreting, applying, or determining compliance with the CBA’s provisions.  The arbitrator is forbidden from adding to, detracting from, or altering in any way the provisions of the CBA.

The provision in question provides that vacation will “so far as possible” follow the employee’s desire “but the final right to allow vacation periods [and change them] is exclusively reserved to the Hospital.”  Despite this language, the arbitrator decided that the CBA prevented the Hospital from denying senior employees in the bargaining unit their desired vacation when there is not operating need.

Judge Ambro had no sympathy for the usurpation by the arbitrator of the explicit limits on his powers or of his chutzpah in rewriting the CBA’s explicit language to “dispense[] his own brand of industrial justice.”  Judge Ambro twice uses the term “industrial justice” to describe the action of the arbitrator, making clear by the Judge’s disdain that an arbitrator’s view of “justice” has no place in performing his or her duties.

So what are we to take from this opinion?  First and foremost, it demonstrates that judicial review of arbitration awards is alive and well.  Recognizing that an arbitration award is to be accorded a heavy degree of deference to an arbitrator,  the Court stated: “ But that deference is not unlimited.”  Otherwise, why have judicial review?  As the Court stated: “[W]e are not an amen corner for arbitrators’ rulings . . ..”

Further to this point, the Court determined to publish the opinion as precedential.  Whatever the Court has to say should be taken seriously by litigants, arbitrators who might want to flex their muscles, and courts in the Third Circuit.  We can also hope that the Third Circuit may “remind” other courts by this fine example.

Second, language matters.  Judge Ambro, befitting his service as the Chair of the ABA Business Law Section and on the Editorial Board of Business Law Today (where I served with him), takes special care to analyze the language of the substantive provision in the CBA that governs vacation scheduling.  Expect to have a close textual analysis of contract provisions if you appear before the Third Circuit.  If you don’t know when and how to use the Oxford comma, learn it.  Nor is the care demonstrated to the English language limited to Judge Ambro.  I won a case as appellant before an entirely different panel in the Third Circuit through application of the rule of the last antecedent.  Look it up.

Third, perhaps the double slam at the dispensation of “industrial justice” is a warning that the judicial system, even down to the system of arbitration, is no place for anyone to try and achieve their own notions of justice, perhaps not even what has come to be known as “social justice.”  An arbitrator has no roving commission to do good.  Maybe not even a judge.  As Sgt. Friday might say: “Just the facts [and the law], Ma’am.”

And, finally, for all those very practical litigators among us, the precedential opinion identifies the arbitrator by name.  Caveat emptor!

Arthur F. Fergenson is a Senior Counsel in our Maryland office.