Opinion
Civil Action No. 03-30184-KPN
May 3, 2004
MEMORANDUM AND ORDER WITH REGARD TO THE PARTIES' CROSS MOTIONS FOR SUMMARY JUDGMENT (Document Nos. 14 and 16)
This case is brought by the Hampshire Community Action Commission ("HCAC") under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, to vacate an arbitration award issued on June 16, 2003. The defendant, United Auto Workers Local 2322 ("Union"), has filed a counterclaim requesting confirmation and enforcement of the arbitrator's award. The parties have consented to this court's jurisdiction pursuant to 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73(b).
Unfortunately, the pleadings are somewhat muddled procedurally. HCAC's complaint contains what amounts to an argument, including quotations from and citations to cases. The court's November 5, 2003 scheduling order set deadlines for the parties to file cross motions for summary judgment. Two days past its deadline, HCAC submitted a "brief," apparently to support its claim, but did not submit a motion for summary judgment. The Union then moved for summary judgment and submitted a supporting brief, which also addressed HCAC's apparent motion for summary judgment. HCAC then filed — ten days late — what appears to be a cross motion for summary judgment.
The court has treated the pleadings, though not artfully executed, as cross-motions for summary judgment. In essence, the motions address the scope of the arbitrator's authority. For the reasons which follow, the court will allow the Union's motion, which seeks to enforce the award, and deny HCAC's motion, which seeks to vacate the award. The court will also allow the Union's request for prejudgment interest.
I. STANDARD OF REVIEW
Absent unusual circumstances, parties who submit to binding arbitration are bound by the outcome of such proceedings. Posadas de Puerto Rico Assocs., Inc. v. Asociacion de Empleados de Casino de Puerto Rico, 821 F.2d 60, 61 (1st Cir. 1987) (citing United Steel workers of Am. v. Enterprise Wheel Car Corp., 363 U.S. 593, 599 (1960)). Review of an arbitral award is "extremely narrow and exceedingly deferential." Keebler Co. v. Truck Drivers, Local 170, 247 F.3d 8, 10 (1st Cir. 2001) (citations and internal quotation marks omitted). The reviewing court "ordinarily is limited to determining whether the arbitrator's construction of the collective bargaining agreement is to any extent plausible." Id. (citation and internal quotation marks omitted). See also Crafts Precision Indus., Inc. v. Lodge No. 1836 of Dist. 38 Int'l Ass'n of Machinists Aerospace Workers, 889 F.2d 1184, 1185 (1st Cir. 1989). Thus, a court must uphold an arbitration award even if the arbitrator made a serious factual or interpretive mistake. See United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 36 (1987); Air Line Pilots Ass'n Int'l v. Aviation Ass'n, 955 F.2d 90, 93 (1st Cir. 1992).
II. FACTUAL BACKGROUND
HCAC is a community service organization funded largely by the federal government and the Commonwealth of Massachusetts. It provides services to the poor through various units, such as Head Start, Day Care, Housing, and Child Care. At all relevant times, HCAC and the Union were parties to a collective bargaining agreement ("CBA"). (A copy of the CBA is attached as Exhibit 2 to the Complaint.) On June 16, 2003, an arbitrator issued an award regarding three grievances filed by the Union involving claims for additional compensation, only two of which are now being challenged. Both of the challenged grievances concern, in part, Article 6 of the CBA, entitled "Budget Monies," which, in applicable part, reads as follows:
Section 1 The employer agrees to acknowledge eight Budget Monitors . . . to be chosen by the union. . . .
Section 4: Any contemplated program, contracts or budget changes that would significantly affect Union staff as determined by the Employer will be brought to the attention of the Budget Monitors for input prior to final decisions, including but not limited to reduction in staff, layoff, program closing, or a significant change in working conditions.
(CBA Art. 6, §§ 1, 4.)
A. Grievance One: Additional Head Start Money
HCAC twice obtained additional funds from the federal Head Start program: $44,000 to provide for cost-of-living adjustments to its Head Start employees in 2001, and $108,000, deemed "quality" money, to be used for improvement of its Head Start program. Federal guidelines for "quality" money provided that 50% thereof was to go to Head Start employees. Here, none of the federal money received was given to HCAC's Head Start employees.
The employees, however, did receive their contractual 3% raises for 2001 and 2002 pursuant to Article 52 of the CBA.
The Union demanded negotiations over this money, and when HCAC refused, the Union filed a grievance which led to arbitration. The arbitrator interpreted the contract as not requiring collective bargaining over new money coming into the agency. However, the arbitrator found that HCAC had nonetheless violated Article 6 of the CBA by failing to "notify the budget monitor for this unit of [HCAC's] intention not to turn over any of the federal money to employees, and give the monitor an opportunity to offer `input,' as provided in [the CBA]."
The arbitrator declined to address the Union's claim that HCAC's actions violated the National Labor Relations Act ("NLRA") as this issue was already presented to the National Labor Relations Board ("NLRB").
In reaching this conclusion, the arbitrator rejected HCAC's narrow definition of "budget changes" as provided in Article 6. However, he did agree with HCAC's argument that "input" does not necessarily mean "agreement." To that end, the arbitrator acknowledged that, even if HCAC had obtained the required input from the budget monitor, there was no guarantee or requirement that additional money would have been given to Head Start employees. As a result, the arbitrator limited the award to a cease and desist order only, citing the difficulty in calculating the probability of how much money, if any, would have gone to the employees.
B. Grievance Two: Child Care Bonuses
In May of 2001, HCAC was notified that the Massachusetts Office of Child Care Services was offering money to all Child Care programs to be distributed to employees as bonuses. The amount offered was $2,000 per employee. The parties appear to agree that eight of HCAC's employees were potentially eligible. However, HCAC's Executive Director, Alan Sax ("Sax"), decided not to apply for the money and so advised the state. Sax did not notify the budget monitor. Sax also refused to meet with the employees individually, requiring instead that they channel their complaint through the "management ladder."
In June or July of 2001, Brooks Ballinger, a Union officer, met with Sax. Sax explained that accepting the money for a small group would be unfair to the rest of HCAC's employees. Although Ballinger pointed out that a majority of these employees had signed a petition supporting the bonuses for the eight eligible employees, Sax did not change his mind. A grievance was then pursued by the Union on behalf of the eight employees and ultimately went to arbitration.
The arbitrator rejected the Union's argument, based on the "recognition clause," that HCAC had violated its contractual duty to bargain. He found that, while he could infer a duty to bargain over new money from such a general provision, a more specific clause requiring such bargaining had been removed from the contract in the most recent negotiations, thus indicating a specific intent to not require collective bargaining over new money.
The "recognition clause," in pertinent part, reads as follows: "[HCAC] recognizes the Union as the sole and exclusive bargaining agent for regular full-time and regular part-time employees under the direction of [HCAC] at its 56 Vernon Street, Northampton, Massachusetts office, excluding [managerial employees]." (CBA Art. 1, § 1.)
Again, the arbitrator declined to entertain the Union's claims that were already before the NLRB, i.e., alleged violations of an NLRA duty to bargain and of anti-union animus.
HCAC argued to the arbitrator that the additional funds offered by the state were not covered by the language of Section 4 of Article 6: "any contemplated program, contracts or budget changes." In his decision, however, the arbitrator stated that, "[i]f that clause is to be read literally, the matter does not fit within the quoted language," but determined that a narrow, literal interpretation of the clause would frustrate the "obvious" intent of Section 4, i.e., to give budget monitors the opportunity to have input on any significant program changes. Accordingly, the arbitrator found that, by failing to discuss the additional money with the budget monitor, HCAC had violated Article 6.
When fashioning a remedy for this violation, the arbitrator recognized that HCAC's compliance with Article 6 would not necessarily have led to the eight employees receiving the bonuses. In so ruling, the arbitrator relied on Article 10 of the CBA which gave HCAC the right to reject additional funds even with the required budget monitor input. Given that there were only two possible outcomes had HCAC complied with the contract language — each eligible employee would have received $2,000 or nothing at all — and finding that the employees were deemed innocent of any wrongdoing, the arbitrator awarded each half of the possible bonus, $1,000. He explained that this remedy could be distinguished from the cease and desist award in grievance one, in which no monies were awarded, because the bonus money offered by the state lent itself to a simple formula.
Article 10, entitled "Management's Rights," in applicable part, reads as follows:
"The management of the Agency and the direction of the working force, including the right to plan, direct, and control operations . . . are the recognized rights of the agency." (CBA Art. 10, § 1.)
III. DISCUSSION
The parties' cross motions raise two fundamental issues. The first issue — the "budget monitor" issue — is whether the arbitrator exceeded his authority when he interpreted the CBA to require that HCAC notify and consult with the budget monitor prior to turning down the bonuses and deciding that the Head Start funds would not be distributed to the eight eligible employees. The second issue — the "remedy" issue — is whether the arbitrator exceeded his authority when he awarded $1,000 to each of the eight eligible employees as a remedy for HCAC's CBA violation with regard to the bonuses. The Union raises a third issue in the event it is successful on the other two: whether it is entitled to prejudgment interest.
A. Budget Monitor
With regard to the budget monitor issue, HCAC first argues that the arbitrator ignored the CBA's plain language. In particular, HCAC points to the arbitrator's statement in regard to grievance two, quoted above, in which he acknowledged that the bonus money offered by the state did not fit into the "contemplated program" of Article 6, section 4, if "read literally," but nonetheless fell within the "obvious intent" of the clause. This analysis, HCAC contends, violates the Supreme Court's admonition that "[t]he arbitrator may not ignore the plain language of the contract." Misco, 484 U.S. at 38. In essence, HCAC finds fault with the arbitrator broadly interpreting the clause to mean any major change affecting HCAC employees.
While HCAC's argument is not without merit, its reading of Misco is somewhat selective. Thus, even though an arbitrator may not ignore the plain language of a collective bargaining agreement, a court need only be convinced that "the arbitrator's award `draws its essence from the collective bargaining agreement,' and is not merely `his own brand of justice.'" Id. (quoting United Steelworkers, 363 U.S. at 597). In other words, as long as there is some arguable basis in the contract for the arbitrator's interpretation, a court may not substitute its own judgment. See Keebler, 247 F.3d at 10 ("Even if a court strongly disagrees with the arbitrator's decision, that is not enough to vacate the arbitral award `as long as the arbitrator is even arguably construing or applying the contract.'") (quoting Misco, 484 U.S. at 38). This is a very low hurdle for an arbitrator to clear and one which the court finds has been surmounted here.
Perservering, HCAC focuses on the following language in the arbitrator's decision as further proof of exceeding his authority: "Had the draftsmen [of the CBA] foreseen the extraordinary phenomenon of a non-profit corporation turning away money earmarked for its employees, it is virtually certain that they would have included it as a change requiring advance notice to employees." HCAC argues that this is further evidence of the arbitrator applying "his own brand of industrial justice" and that the arbitrator was essentially writing a new contract for the parties.
The arbitrator's statement as to what the parties might have done is, of course, speculative. Nonetheless, as the Union argues, the arbitrator's interpretation of the CBA provision is "plausible." Keebler, 247 F.3d at 10. The arbitrator could reasonably conclude that the "contemplated program" clause could not have been effectively written to encompass every possible event worthy of discussion with budget monitors. As the arbitrator found, the language could be interpreted as simply being representative of the types of occurrences that would have a significant impact on HCAC employees. In effect, the arbitrator's interpretation properly draws its essence from the CBA, read in its entirety.
Nonetheless, HCAC argues that the arbitrator exceeded the authority granted him in Article 50, entitled "Grievance and Arbitration Procedures," which, in applicable part, reads as follows: "The arbitrator shall have jurisdiction only over disputes arising out of the grievances, as defined, and procedurally set forth (up to and including time limits) in this agreement, and shall have no power to add to, subtract from, or modify in any way the terms of this Agreement." (CBA Art. 50, § 7.) In particular, HCAC asserts that the arbitrator failed to even acknowledge the phrase in Article 6, section 4, "as determined by the Employer," which follows "any contemplated program, contracts or budgets changes that would significantly affect the Union staff." This omission, HCAC claims, was purposeful on the part of the arbitrator so as to allow him to apply his own notion of industrial justice. In essence, HCAC argues that, when reading Article 50 in conjunction with Article 6, it had complete discretion over what changes would affect its employees and, therefore, was not bound to discuss any "new" money with the budget monitor.
The court finds this particular argument unpersuasive. To be sure, the arbitrator did not specifically discuss the phrase "as determined by the Employer." He did state, however, that "[t]here is little doubt that the matter had a significant effect on these employees." As the Union argues, therefore, the arbitrator justifiably held HCAC to an objective standard in exercising its judgment as to whether the state and federal funding for employee compensation would "significantly" affect its staff.
Although there appears to be no parallel decisions from this circuit, Banner Metals, Inc. v. United Steelworkers of Am., Civil Action No. 91-1450, 1992 WL 606755 (M.D. Pa. June 18, 1992), cited by the Union, provides some guidance. In Banner Metals, the court upheld an arbitrator's determination that, while the contract allowed for the employer to send employees home as "it deem[ed] reasonable and practical for the safety and health of employees," the decision to send two employees home early without pay for safety reasons was not reasonable and practical. Id. at *2. The court found that the quoted language established an objective standard, despite the reviews granted the employer, and that the arbitrator properly interpreted the language. See id. See also Trailmobile Trailer, LLC. v. Int'l Union of Electronic, Electrical, Salaried, Machine, Furniture Workers, 223 F.3d 744, 747 (8th Cir. 2000) (holding that contract language stating that the employer had "sole discretion" over discharge decisions did not preclude arbitrator from determining whether firing was for just cause).
Again, this court need not decide whether the arbitrator's interpretation of the contract was the correct one, only whether it was "plausible" and not reflective of the arbitrator's "own brand of industrial justice." And here, the court believes that the arbitrator's interpretation adequately meets this test. Compare Poland Spring Corp. v. UFCW, 314 F.3d 29, 34 (1st Cir. 2002) (vacating award which suspended employee who had committed a terminable offense based on "levels" of insubordination non-existent in the contract), and Georgia-Pacific Corp. v. Local 27, United Paperworkers Int'l Union, 864 F.2d 940, 945 (1st Cir. 1988) (vacating award that reinstated employee discharged for dishonesty even though contract listed dishonesty as grounds for discharge without progressive discipline). Any other reading of the CBA would render the budget monitor provision illusory.
B. Remedy
HCAC also argues that, even if a remedy were appropriate with respect to grievance two, the remedy ought to have been the same as ordered with regard to grievance one, namely, a cease and desist order, not a monetary award. The $1,000 per employee remedy, HCAC contends, was speculative and in excess of the arbitrator's powers. The Union, in response, asserts that the arbitrator was afforded wide discretion in shaping an appropriate remedy.
Again, the court finds the Union to have the better argument. See Misco, 484 U.S. at 38 ("where it is contemplated that the arbitrator will determine remedies for contract violations that he finds, courts have no authority to disagree with his honest judgment in that respect"); Georgia-Pacific Corp., 864 F.2d at 944 (court is not "authorized to reject [arbitrator's] honest judgment as to the appropriate remedy, if the contract gives him the authority to decide that question"). Cf. Challenger Caribbean Corp. v. Union General de Trabajadores de Puerto Rico, 903 F.2d 857, 860 (1st Cir. 1990) ("While [an arbitrator] may have the power to fashion a remedy where none is created by the contract, he may not impose a remedy which directly contradicts the express language of the collective bargaining agreement.") To be sure, a remedy for grievance one may have been calculable. However, the arbitrator's decision showed an "honest judgment" that a monetary award on that grievance would have been too speculative. In contrast, grievance two had only two possible outcomes. While somewhat speculative, it was well within the arbitrator's authority to make the award he did. The CBA did not include a provision specifying a remedy for violation of Article 6 and, thus, the arbitrator had the power to fashion one.
C. The Union's Request for Prejudgment Interest
The Union has requested pre-judgment interest on the arbitrator's award, accusing HCAC of taking every possible step to deny or stall the payment of any additional money to the Child Care workers, including waiting until the "last possible moment" to file an action to vacate the award. The Union asserts that the court has broad discretion in granting prejudgment interest and suggests that it is equitable and appropriate in this case.
Whether to award interest in an LMRA proceeding such as this "is an equitable question primarily up to the district court." Red Star Express Lines v. Int'l Bhd. of Teamsters, Local 170, 809 F.2d 103, 107 (1st Cir. 1987) (citing, inter alia, Blau v. Lehman, 368 U.S. 403, 414 (1962)). See also Lodges 743 1746, Int'l Ass'n of Machinists v. United Aircraft Corp., 534 F.2d 422, 447 (2nd Cir. 1975) (stating that while a vital ingredient in the interest determination is to make whole the injured party in appropriate circumstances, compensatory principles "must be tempered by an assessment of the equities") (citations and internal quotation marks omitted). And here, the court is inclined to exercise its discretion and award interest for many of the reasons asserted by the Union. To be sure, HCAC is a non-profit agency, which, having declined to apply for it, never got the bonus money. The $8,000 award, therefore, will no doubt have some impact on HCAC's budget. But it is HCAC which was found to have breached the contract, and the interest will not be so much greater than the $8,000 already awarded as to dissuade the court from ordering its payment.
IV. CONCLUSION
For the reasons stated, the court hereby DENIES HCAC's motion to vacate the arbitration award, ALLOWS the Union's motion to enforce the award and orders the clerk's office to calculate interest on the $8,000 award from the date this action was commenced.
IT IS SO ORDERED.