Local 2322, International Brotherhood of Electrical Workers v. Verizon New England, Inc.

          United States Court of Appeals
                        For the First Circuit

Nos. 06-1169, 06-1170

               LOCAL 2322, INTERNATIONAL BROTHERHOOD
                       OF ELECTRICAL WORKERS,

               Plaintiff, Appellant/Cross-Appellee,

                                   v.

                    VERIZON NEW ENGLAND, INC.,

               Defendant, Appellee/Cross-Appellant.


          APPEALS FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

            [Hon. Rya W. Zobel,     U.S. District Judge]


                               Before
                        Boudin, Chief Judge,
                       Lynch, Circuit Judge,
               and Schwarzer,* Senior District Judge.


     Alfred Gordon with whom Harold L. Lichten and Pyle, Rome,
Lichten, Ehrenberg & Liss-Riordan, P.C. were on brief for
plaintiff, appellant/cross-appellee.
     James W. Bucking with whom Alicia Alonso Matos and Foley Hoag
LLP were on brief for defendant, appellee/cross-appellant.


                           September 28, 2006




     *
      Of the    Northern     District   of   California,   sitting   by
designation.
            BOUDIN,     Chief      Judge.        Thomas    Ouellette,      a   Verizon

employee, took the day off on December 2, 2002, to attend the

funeral of his wife's grandfather and was disciplined.                         This in

turn led to arbitration and to the present appeal, which presents

a procedural issue of some importance.                      The events following

Ouellette's       December   2   day       away    from    work   can     be   briefly

summarized.

            Because     Verizon        considered          the    absence      to     be

unauthorized, it suspended Ouellette for three days.                      Pursuant to

the collective bargaining agreement between Verizon and Local 2322

of   the   International      Brotherhood         of    Electrical     Workers      ("the

union"),    the     union    filed     a    grievance.       Verizon      reduced    the

discipline to a one-day suspension, designating December 3 as an

unpaid day of suspension.            Still unsatisfied, the union demanded

arbitration.

            The parties submitted to the arbitrator the question,

"Was the one-day suspension given to Thomas Ouellette for just

cause?     If not, what shall be the remedy?"                On June 4, 2004, the

arbitrator issued a decision ("the June award") which attributed

some blame both to Ouellette and his supervisor and concluded:

            The one day suspension given to Thomas
            Ouellette was not for just cause.     The day
            shall be converted to leave without pay and
            the discipline removed from his file.

Verizon    then    altered   its     records      for     December   3,    2002,    from

"suspension" to "unpaid absence" and deleted any reference to

                                           -2-
discipline.   Verizon   left    unchanged   the   "unauthorized     absence"

marked on Ouellette's attendance record for December 2.

            The union interpreted the June award as ordering Verizon

both   to   pay   Ouellette    for   December     3   and   to   strike   the

"unauthorized" reference from Ouellette's attendance record for

December 2 (although the union did not claim that he should be paid

for December 2).     When Verizon disagreed, the union on June 24,

2004, wrote to the arbitrator with a copy to Verizon's counsel,

seeking clarification of the award.         Its letter said:

            It seems absolutely clear that the "day" which
            you hold should be "converted to leave without
            pay" is the day that Mr. Ouellette attended
            the funeral. The second additional day for
            which he was suspended and not paid, is
            obviously covered by that part of your award
            that says "the one day suspension . . . was
            not for just cause." As such, Mr. Ouellette
            is clearly entitled to pay for that day.

            Verizon responded by saying that the award was not

ambiguous; that "[t]he day" that the arbitrator had directed in the

second sentence of the award be converted to "leave without pay"

was self-evidently the same day ("the one day suspension") referred

to in the first sentence; and that the arbitrator had no power to

alter his earlier award.       In a conference call with the parties on

August 10, 2004, the arbitrator said that he had intended to award

Ouellette back pay for December 3.

            On August 16, 2004, the arbitrator issued a letter

purporting to clarify his award ("the August letter"):


                                     -3-
           The one day suspension give[n] to Thomas
           Ouellette was not for just cause. He shall
           be made whole for all lost wages and benefits
           arising   from   this  suspension   and   the
           discipline shall be removed from his file.

           The day of the funeral shall be treated as
           [a] day of leave without pay.

           Verizon neither complied with this "make whole" directive

nor did it seek review in court.       In November 2004, the union sued

Verizon in federal district court under section 301 of the Labor

Management Relations Act, 29 U.S.C. § 185 (2000).           That statute

provides   federal   courts   with   authority   to   enforce   collective

bargaining agreements and, as construed by the Supreme Court in

Textile Workers v. Lincoln Mills, 353 U.S. 448, 451 (1957), invokes

federal substantive law to govern those agreements.

           In its motion for summary judgment, the union argued for

enforcement of the back pay directive. In its cross motion Verizon

answered that the August letter was not a proper award but an

illegitimate alteration of the original June award.             The union

replied that Verizon forfeited its "alteration" defense because it

had not brought suit to set aside either the June award or the

August letter.

           The district court granted summary judgment in favor of

the union, requiring that back pay be awarded to Ouellette for

December 3, 2002.      It did not concern itself with the union's

forfeiture argument, because it found that in any event the August

letter was merely a permissible clarification of the original

                                     -4-
award.     However,   the   court   refused   the   union's   request   for

attorneys' fees, saying that Verizon's position was not frivolous

but merely unpersuasive.

            Both sides have appealed. Verizon claims that the August

letter was an alteration of the award and beyond the arbitrator's

authority.    The union says that Verizon forfeited this defense and

that in any case the August letter is a clarification that the

arbitrator could permissibly make. Given the forfeiture, the union

says that Verizon should pay the union's attorneys' fees for the

district-court enforcement proceeding.

            We begin with the forfeiture issue.            This is not an

objection, like Article III or subject matter jurisdiction, that

has to be addressed at the threshold; the district court was free

to bypass the issue and decide the case on the merits.         But for the

sake of future litigants, the ground rules ought to be clarified as

far as possible, so that in similar circumstances the parties to

arbitrations know who is to appeal.

            To understand the forfeiture issue, one must take several

steps back.    Where a collective bargaining agreement includes an

arbitration    clause,   the   arbitration    award   is    treated   as   a

contractual obligation that can be enforced through a section 301

suit.    Lincoln Mills, 353 U.S. at 451.      But this leaves unanswered

a host of questions concerning the powers of arbitrators and the

mechanics of judicial review of labor arbitration awards.


                                    -5-
            To resolve such issues, federal courts could conceivably

borrow from the Federal Arbitration Act ("FAA"), which does not

apply of its own force, 9 U.S.C. § 1 (2000); or they could create

a common law of labor arbitration; or they could borrow from

analogous   state   law.    The   practice   has   developed   in   labor

arbitration cases of borrowing the forum state's law to fix the

limitations period for seeking judicial review of an arbitration

decision. Posadas de Puerto Rico Assoc. v. Asociacion de Empleados

de Casino de Puerto Rico, 873 F.2d 479, 483 (1st Cir. 1989).

            Consonantly, federal courts have adopted the general rule

that "[a] party who fails to initiate an action to vacate or modify

an award" within the applicable state time limit--thirty days in

Massachusetts, Mass. Gen. Laws ch. 150C § 11(b) (2004)--"is barred

from asserting those claims as defenses to a later action to

confirm." Derwin v. General Dynamics Corp., 719 F.2d 484, 489 (1st

Cir. 1983).    This rule serves "to cut off stale defenses[, ] to

encourage parties to forego merely formal judicial proceedings

aimed at obtaining confirmatory orders," and to advance "the

federal policy of according finality to labor awards." Id. at 490.

            Such a rule is easily enough administered where there is

only one pronouncement by the arbitrator and where it is clear from

the outset who has won and who has lost.       But here Verizon could

hardly be expected to seek review of the June award within 30 days

of its issuance; the award did not mention back pay, and the first


                                  -6-
clear statement that the arbitrator wanted Verizon to provide back

pay came only in August.    However, by or shortly after August 16,

2004, Verizon did have such notice in definitive form.

           Yet Verizon then failed to bring suit to challenge either

the allegedly clarified June award or the explicit August letter.

Verizon says that it had no obligation to sue because the original

award was in Verizon's favor, and that the August letter was

ineffective to alter the award under the doctrine of functus

officio.   It concludes that it is free now to raise this objection

as a defense in the union's suit to enforce the award.

           In   its classic form, the common law doctrine of functus

officio bars arbitrators from reconsidering or revising final

awards.    Glass Molders, Pottery, Plastics & Allied Workers Int'l

Union v. Excelsior Foundry Co., 56 F.3d 844, 845 (7th Cir. 1995).

This restriction was traditionally cast in jurisdictional terms.

As commentators have explained, "[A]n arbitrator's jurisdiction

ends when a final award is issued."        Elkouri & Elkouri, How

Arbitration Works 325 (6th ed. 2003). Arbitrators are thus said by

some (our own case law is not so clear) to be without power to

"revisit[] the merits of an award once it has issued."     Office &

Prof'l Employees Int'l Union, Local No. 471 v. Brownsville Gen.

Hosp., 186 F.3d 326, 331 (3d Cir. 1999).

           The current vitality of the doctrine is disputed by the

union, which says that it is "long dead" in labor arbitration.


                                 -7-
Judge Posner, who sums up much of what is worth saying about the

doctrine, is more circumspect: he says that "[t]oday, riddled with

exceptions, [functus officio] is hanging on by its fingernails and

whether it can even be said to exist in labor arbitration is

uncertain," Excelsior, 56 F.3d at 846.      But he did not hold it to

be dead in Excelsior, id. at 848, nor has this court done so.            Red

Star Express Lines v. Int'l Bhd. of Teamsters, Local 170, 809 F.2d

103, 106 (1st Cir. 1987).

          After an arbitrator issues an award, various questions

can arise as to his subsequent authority: notably, whether he has

power to clarify an award, to alter or undo it, to fill in details

not addressed, or to suspend it while any of these other steps are

being considered; how long these powers continue (if they exist);

and how they interact with the judicial review process.           Even if

one abolished the functus officio doctrine, such problems would

remain for the courts to resolve (absent agreement by the parties).

          In   this   circuit,   the   question   whether   and   when   an

arbitrator may reverse or substantially alter his ruling is perhaps

an open one; we have not needed to resolve the issue.             See Red

Star, 809 F.2d at 106; Courier-Citizen Co. v. Boston Electrotypers

Union No. 11, 702 F.2d 273, 279 (1st Cir. 1983).            But we have

decided that "a labor arbitrator may . . . interpret or amplify his

award, functus officio notwithstanding." Red Star, 809 F.2d at 106

(quoting Courier-Citizen, 702 F.2d at 278-80).


                                  -8-
            It might seem natural to extend the authority to clarify

(per Red Star) to allow as well an arbitrator to alter an award on

rehearing, were it not for the lack of time limits and clear

standards as to the grounds for such action.              (By contrast, in

federal courts, Fed. R. Civ. P. 59 and 60 provide a carefully

calibrated set of rules for whether a court may alter or undo a

previously    entered   judgment).       Also,    in   arbitrations,        the

uncertainty as to finality caused by clarification requests would

be magnified if outright alterations of a prior award were also

permitted.

            It is enough in this instance that, as permitted by Red

Star, the union promptly sought clarification of the June award.

In turn, the August letter was unequivocally adverse to Verizon on

the back pay issue.     In our view, Verizon was then obligated to

seek judicial review of the August letter if it wanted to argue

that the August letter was an impermissible change in the original

award rather than a reasonable clarification.          There may be limits

to   this   obligation--suppose   Verizon   was   never    a   party   to    an

arbitration agreement but finds an award entered against it--but

that is not this case.

            Verizon protests that if (as it believes) the June award

was altered in August rather than merely clarified, then--on

Verizon's premise that the arbitrator had no power to alter an

award--the original June award remained effective (favoring Verizon


                                   -9-
on the back pay issue); the August modification was a "nullity" as

beyond the arbitrator's power; and Verizon had no obligation to do

anything to preserve its right to defend against enforcement on

that ground.

               The pivot point of this argument is the claim of nullity

--the implied connotation being that nothing happened of legal

significance and that Verizon therefore needed to do nothing to

preserve its position.          Lawyers like to argue from abstractions

like       "nullity"   or   "jurisdiction,"   but   they   are   rarely   self-

executing,1 and it is perilous to ignore pertinent policy and the

actual consequences of one course as compared with another.

               Here, we hold that--even assuming arguendo (as we do)

that the arbitrator could only "clarify" and not "alter" his

original award--Verizon was compelled to seek review once it became

clear that the clarification was adverse to Verizon.             There may be

exceptions--for example, if Verizon showed that court review was no

longer available or perhaps if it had never been a party to the

arbitration--but such issues can be considered if and when they

arise.       Our reasons for our holding are as follows.




       1
      "But to say that a man is a fiduciary only begins analysis;
it gives direction to further inquiry. To whom is he a fiduciary?
What obligations does he owe as a fiduciary? In what respect has
he failed to discharge these obligations?      And what are the
consequences of his deviation from duty?" SEC v. Chenery Corp.,
318 U.S. 80, 85-86 (1943)(Frankfurter, J.).

                                      -10-
                  In arbitration, and not just labor arbitration, it is

common to require the losing party to seek review or be foreclosed

from objecting to an award.2              A major reason is that policy favors

swiftness          of    resolution--one         of    the     main    attractions        of

arbitration, see Posadas de Puerto Rico, 873 F.2d at 483--and

forcing the objecting party to sue within the time allowed serves

this       interest.        The   objecting      party      would   otherwise      have    an

incentive to sit on its hands until the favored party brings a

confirmation            action,    delaying      for   as    long     as    possible      the

implementation of the award.

                  Several other circuits are generally in accord with the

approach we take, although they address a variety of different

kinds of objections.              See, e.g., Local 802, Assoc. Musicians of

Greater New York v. Parker Meridien Hotel, 145 F.3d 85, 88-89 (2d

Cir. 1998) (objection to arbitrator's jurisdiction); Teamsters

Local No. 579 v. B & M Transit, Inc., 882 F.2d 274, 276-77 (7th

Cir. 1989) (same); Prof'l Adm'rs Ltd. v. Kopper-Glo Fuel, Inc., 819

F.2d       639,    642    (6th    Cir.   1987)    (claims     should       not   have   been

submitted to arbitration); Int'l Bhd. of Elec. Workers, Local Union




       2
      The FAA, for example, provides that the court must grant
confirmation of an arbitral award unless the award is vacated,
modified or corrected on motion of one of the parties. 9 U.S.C.
§§ 9-10. See also Mass. Gen. Laws ch. 150C § 10 ("Upon application
of a party, the superior court shall confirm an award, unless
within the time limits, hereinafter imposed grounds are urged for
vacating, modifying or correcting the award . . .").

                                            -11-
No. 969 v. Babcock & Wilcox, 826 F.2d 962, 965-66 (10th Cir. 1987)

(grievance committee lacked jurisdiction to decide dispute).

             By contrast, in Domino Group, Inc. v. Charlie Parker

Mem'l Found., 985 F.2d 417 (8th Cir. 1993), the Eighth Circuit did

allow   an   arbitrator's    alleged     alteration    of   an   award   to   be

challenged in a later enforcement action even though the objecting

party had not sought direct review of the decision containing the

alteration.      It   is   not   clear   from   the   opinion    whether   this

opportunity was a holding or simply an unchallenged assumption.

             But Domino Group was complicated by a further wrinkle:

the court viewed the arbitrator's action as also precluded by an

earlier remand order from a reviewing court.                Domino Group, 985

F.2d at 420.    In all events, the court did not explain its reasons

for allowing the "alteration" claim to be raised as a defense; if

it intended to adopt a general rule favoring that course, we read

the decision with respect but decline to follow it.

             Admittedly, where an alleged clarification is sought,

whether it is denied or granted, problems may arise as to the time

period within which review must be sought, including questions of

tolling and accrual.       Because Verizon never sought review at all,

we need not address them in this case.          If (improbably) such rules

operated so as to deprive a party of a reasonable opportunity to

seek review of an adverse clarification, that would be the time to

argue that in such unusual circumstances "alteration" should be


                                     -12-
allowed as a defense to an enforcement action.       Cf. Fradella v.

Petricca, 183 F.3d 17, 20-21 & n.4 (1st Cir. 1999).

          Although Verizon forfeited its functus officio defense,

a brief word about "the merits"--whether the August letter was a

reasonable clarification rather than an alteration--is warranted.

Specifically, if Verizon's position on the merits were completely

unreasonable, this might itself be an adequate basis for an award

of attorneys' fees against it. Conversely, if the union's position

made no sense whatever, we might consider whether our ruling on the

forfeiture issue should be made prospective only to avoid any

unfairness to Verizon.

          In fact, each side has possible arguments on the merits.

The June award said nothing about back pay and might have seemed to

negate back pay for December 3 by referring to that day in the

first sentence ("The one-day suspension . . . was not for just

cause.") and then saying: "The day shall be converted to leave

without pay and the discipline removed from his file."        But a

closer reading suggests that while the first sentence clearly

referred to December 3, the second could easily have referred to

December 2–-the day of the funeral.

          Specifically, for December 2 it made sense to say in the

second sentence that Ouellette should be unpaid ("leave without

pay") since he did not work but should not be regarded as seriously

at fault ("the discipline removed from his file").    And, while the


                               -13-
first sentence of the June award did not order that back pay should

be provided for December 3, this could be viewed as a natural and

intended consequence of the ruling that the suspension for that day

was "not for just cause."

              On the other hand, the union's demand for arbitration

requested both that the suspension be rescinded and that Ouellette

be made whole; the June award said nothing about the latter and,

given the arbitrator's view that both Ouellette and his supervisor

were   somewhat      at    fault,    a   compromise      remedy      could   have   been

intended:     no disciplinary black mark but also no pay for December

3.    The line between clarification and alteration can be, and here

was, a reasonably disputable issue.

              Indeed, cases will often lie somewhere along a spectrum

between patent alteration and plainly reasonable clarification,

depending not only on the facts but also the precise meanings one

could choose to give to fairly general terms like "alter" and

"clarify."      This is a further reason in support of our view that

Verizon had to appeal.              The question who ought to appeal should

depend on an easily discernable fact and not on a distinction that

can    only   be   drawn      definitively       after    the     merits     have   been

considered.

              One might ask whether our holding that Verizon has

forfeited      its        alteration     claim     should       be     applied      only

prospectively, but we think this has the question backwards. To us


                                          -14-
the baseline rule is that in arbitration the dissatisfied party

must ordinarily seek review and is barred from reserving objections

to the arbitrator's decision until enforcement is sought.   Derwin,

719 F.2d at 489.    In this case, we see no unfairness in applying

this baseline rule to Verizon.

          As for attorneys' fees, they were rightly denied by the

district court.    Under federal common law, a court may award fees

and costs to the winning party in a section 301 action if the

losing party's position was "frivolous, unreasonable, or without

foundation."3   Ordinarily, the test on review is whether a grant or

denial constitutes a "manifest abuse of discretion."   Gay Officers

Action League v. Puerto Rico, 247 F.3d 288, 292 (1st Cir. 2001).

          Verizon's main position-–that the clarification was an

alteration--was at least colorable and not frivolous (after all,

the June award did not say that back pay was ordered).   Similarly,

whether a "true" alteration by an arbitrator is impermissible may

well be a debatable issue in this circuit.   It was not unreasonable

for Verizon to urge that to this extent the functus officio

doctrine is still good law.

          The union argues at least for a remand, saying that the

district court erred as a matter of law in failing to consider its



     3
      Local 285,   Serv. Employees Int'l Union AFL-CIO v. Nonotuck
Resource Assoc.,   Inc., 64 F.3d 735, 737 (1st Cir. 1995) (quoting
Washington Hosp.    Ctr. v. Serv. Employees Int'l Union, 746 F.2d
1503, 1510 (D.C.   Cir. 1984)).

                                 -15-
main argument for legal fees, namely, that Verizon had forfeited

its defense and so should not have litigated the case at all.   But

Verizon had support from at least one circuit (the Domino Group

case) in thinking that it could reserve its alteration claim as a

defense, and it was not frivolous to urge a similar approach in

this court.

          Affirmed.




                              -16-