United States Court of Appeals
For the First Circuit
Nos. 07-2527; 07-2528
UMASS MEMORIAL MEDICAL CENTER, INC.,
Plaintiff, Appellant, Cross-Appellee,
v.
UNITED FOOD AND COMMERCIAL WORKERS UNION, LOCAL 1445,
Defendant, Appellee, Cross-Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor IV, U.S. District Judge]
Before
Lynch, Circuit Judge,
Merritt,* Senior Circuit Judge,
and Howard, Circuit Judge.
Robert L. Kilroy with whom Corey F. Higgins, and Mirick,
O'Connell, DeMallie & Lougee, LLP, were on brief, for appellant.
Warren H. Pyle, with whom Pyle, Rome, Lichten, Ehrenberg &
Liss-Riordan, P.C., was on brief, for appellee.
May 15, 2008
*
Of the Sixth Circuit, sitting by designation.
MERRITT, Senior Circuit Judge. The plaintiff, UMass Memorial
Medical Center ("Hospital"), seeks a judgment vacating an
arbitration award that was entered in favor of the defendant,
United Food and Commercial Workers Union ("Union"). The issue is
whether the district court erred when it upheld the arbitral award
and denied the defendant’s request for attorney fees. For the
reasons stated below, we uphold the affirmance of the arbitral
award and the denial of fees.
I. Background
The Union submitted a grievance to the Hospital in October
2004, pursuant to the grievance procedure contained in the parties'
collective bargaining agreement ("CBA"). The grievance was filed
on behalf of employees classified as phlebotomists and was based on
the Hospital's failure to provide differential pay to employees for
holidays not worked. The matter was resolved in arbitration in
favor of the Union. As a result, the Hospital paid the appropriate
differential payments to the phlebotomists and one other employee.
On November 9, 2005, the Union filed a second grievance based again
on the Hospital's failure to provide differential pay for holidays
not worked because the Hospital refused to apply the earlier
arbitrator's decision to all employees. This second grievance was
brought on behalf of all Union members. When asked to clarify on
what date the grievance occurred, the Union responded that it
occurred "each holiday since November 28, 2003, when employees
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covered by the union contract who were on the day shift and were
scheduled to work beginning before 6 a.m. . . . were not paid ‘all
differentials' with their holiday pay." The Hospital denied the
grievance as untimely because it contended that the grievance had
already been heard at the earlier arbitration and since the Union
had not raised the issue at that time on behalf of all employees,
it was prohibited from doing so at a later point. As a result, the
second grievance was also submitted to arbitration.
The CBA sets forth a three step procedure for resolving
disputes. The relevant provisions read as follows:
Step One
An alleged grievance shall be presented in writing with
the date the grievance occurred by any individual
employee or group of employees together with their
steward if desired, to the manager or designee within
seven (7) calendar days after the grievant knew or should
have known of the event giving rise to the grievance. .
. .
Any grievance not presented within the specific time
frames specified in Step One, Two, or Three, shall be
forfeited and waived by the aggrieved party and the
Union. Extensions of the time frames referenced above
may be granted upon mutual written agreement between [the
Hospital] and the Union.
The arbitrator concluded that the second grievance was timely
filed and therefore, procedurally arbitrable. He reasoned that:
The dispute in the present case . . . does not have a
specific end date; it recurs every time there is a
holiday and the employees are not paid the relevant
differentials. It is analogous to a claim that an
employer is paying incorrect wages or benefits. An
alleged wrongful denial of the appropriate wage rate
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recurs every time an employee is paid the incorrect rate
of pay.
Although the arbitrator found that the alleged breach was
"continuing" and "occurring each day the grievants have not been
paid the appropriate rate," he also determined that the appropriate
remedy would not be applied retroactively to November 2003 – when
the CBA came into existence – but rather from the date of the
filing of the second grievance. Since the arbitrator found the
violation to be continuous, it was irrelevant that the filing of
the grievance did not occur within seven days of one of the
holidays listed in the CBA or within seven days of the employees
receiving payment for those holidays. After finding the grievance
procedurally arbitrable, the arbitrator upheld the grievance on the
merits based upon the earlier arbitrator's finding that the
Hospital had violated the terms of the CBA.
The Hospital filed a complaint in district court seeking to
vacate the arbitrator's award. It contended that the arbitrator
exceeded his powers and overstepped his jurisdictional authority
when he concluded that the grievance was timely filed. It relied
on the following provision in the CBA:
Arbitration
The jurisdiction and authority of the arbitrator and his
opinion and award shall be confined exclusively to the
interpretation and/or application of the specific
provisions of this Agreement.
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The arbitrator shall have no authority to add to, detract
from, alter, amend, or modify any provision of this
Agreement . . . .
The thrust of the Hospital's argument was that the arbitrator's
procedural holding violated the terms of the CBA because it ignored
the language in the contract requiring grievances to be filed
within seven days "after the grievant knew or should have known of
the event giving rise to the grievance." Relying on language in
the arbitrator's opinion that stated that "each holiday [upon
which] a violation occurs is considered a new event," the Hospital
argued that the events are episodic in nature, not continuous.
Consequently, since the grievance was not filed within seven days
of a holiday or payment relating to such holiday, it was untimely.
The Hospital rejected the characterization of the violation as
"continuous" because it argued that this characterization
improperly focuses on the effect of the violation instead of on the
violation itself. The Hospital argued that the arbitrator’s
rationale would construe even the most discrete of violations as
continuous because the effect of the violation would continue until
resolved by the arbitrator: this approach would then arguably
nullify the seven-day rule.
In response to the Hospital's complaint, the Union filed a
counterclaim to enforce the award. The Hospital then moved for
judgment on the pleadings and the Union moved for summary judgment
and for attorney's fees.
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The district court upheld the arbitral award. It properly
noted that it was constrained by "one of the narrowest standards of
judicial review in all of American jurisprudence," UMASS Mem’l Med.
Ctr., Inc. v. United Food and Commercial, Workers Union, Local
1445, No. 06-40274, 2007 U.S. Dist. LEXIS 64585, at *9 (D. Mass.
Aug. 31, 2007) (quoting Lattimer-Stevens Co. v. United Steelworkers
of Am., 913 F.2d 1166, 1169 (6th Cir. 1990)), because the parties
had contracted for the decision of an arbitrator, not a judge. In
order to overturn the award, the district court noted that the
movant (the Hospital) must show that the award was "(1) unfounded
in reason and fact; (2) based on reasoning so palpably faulty that
no judge, or group of judges, ever could conceivably have made such
a ruling; or (3) mistakenly based on a crucial assumption that is
concededly a non-fact." UMASS Mem’l Med. Ctr., 2007 U.S. Dist.
LEXIS 64585, at *13-14 (quoting Cytyc Corp. v. DEKA Prods. Ltd.
P'ship, 439 F.3d 27, 34 (1st Cir. 2006)). The district court
interpreted the arbitrator's decision as "somewhat ambiguous"
because it found that it could be construed two ways. First, it
could be read as suggesting that each holiday is the triggering
event, such that a grievance must be filed within seven days of a
holiday to be considered timely. Second, and in the converse, it
could be interpreted as finding that the triggering event is not
limited to a specific holiday, but to every day after a holiday
that an employer fails to provide the differential pay. Clearly,
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under the first interpretation, the grievance would not be timely
because it was not filed within seven days of a holiday. The
district court found that the second line of reasoning was probably
"wrong as a matter of contract interpretation" because, under this
theory, "arguably every act or omission that was not resolved to
the Union's satisfaction would constitute a ‘continuing' violation,
effectively nullifying the seven-day rule." UMASS Mem’l Med. Ctr.,
2007 U.S. Dist. LEXIS 64585, at *16-17. The district court
emphasized, however, that “[t]he fact that the arbitrator’s opinion
is subject to alternate readings is not fatal.” Id. at *17 (citing
United Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363
U.S. 593, 598 (1960) (“A mere ambiguity in the opinion accompanying
an award, which permits the inference that the arbitrator may have
exceeded his authority, is not reason for refusing to enforce the
award.”)). It concluded that the arbitrator did not exceed the
scope of his powers and that his award was not contrary to the
plain language of the collective bargaining agreement.
Accordingly, the district court denied the plaintiff's motion for
judgment on the pleadings and granted the defendant's motion for
summary judgment. The district court also denied the defendant's
motion for attorney's fees. The plaintiff now appeals the district
court's order granting the defendant's motion for summary judgment
and the defendant appeals the denial of attorney's fees.
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II. Discussion
A. Procedural Arbitrability
Issues of procedural arbitrability are for the arbitrator, not
the court, to decide. As we explained in Local 285, Service
Employees International Union v. Nonotuck Resource Associates,
Inc., 64 F.3d 735, 739 (1st Cir. 1995), "[t]hirty years of Supreme
Court and federal circuit court precedent have established that
issues concerning the timeliness of a filed grievance are ‘classic’
procedural questions to be decided by an arbitrator.”
In an action to vacate or confirm an arbitral award, we review
the district court's decision de novo, mindful "that the district
court's review of arbitral awards must be ‘extremely narrow and
exceedingly deferential.'" Bull HN Info. Sys., Inc. v. Hutson, 229
F.3d 321, 330 (1st Cir. 2000) (quoting Wheelabrator Envirotech
Operating Servs., Inc. v. Mass. Laborers Dist. Council Local 1144,
88 F.3d 40, 43 (1st Cir. 1996)). We have found arbitral awards
"nearly impervious to judicial oversight," Teamsters Local Union
No. 42 v. Supervalu, Inc., 212 F.3d 59, 61 (1st Cir. 2000), because
both parties "have contracted to have disputes settled by an
arbitrator" and therefore "it is the arbitrator's view of the facts
and of the meaning of the contract that they have agreed to
accept," United Paperworkers Int'l Union v. Misco, Inc., 484 U.S.
29, 37-38 (1987). Further, "[t]hat a reviewing court is convinced
that the arbitrators committed error – even serious error – does
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not justify setting aside the arbitral decision. This remains true
whether the arbitrator's apparent error concerns a matter of law or
a matter of fact." Cytyc Corp., 439 F.3d at 32 (citation omitted).
It is the arbitrator’s result, after all, not his reasoning,
which is subject to judicial review. Coastal Oil of New England,
Inc. v. Teamsters Local, 134 F.3d 466, 469 (1st Cir. 1998) (“[A]
court should uphold an award that depends on the arbitrator’s
interpretation of a collective bargaining agreement if it can find,
within the four corners of the agreement, any plausible basis for
that interpretation.” (quoting El Dorado Technical Servs., Inc. v.
Union General de Trabajadores de P.R., 961 F.2d 317, 319 (1st Cir.
1992)) (internal quotation marks omitted)). Even erroneous
reasoning will not necessarily lead to vacating the award. Id.
There are some exceptions where a court will overturn an
arbitral award. The first set of exceptions is codified in the
Federal Arbitration Act ("FAA") in section 10(a).1 This section
1
(a) In any of the following cases the United States court in
and for the district wherein the award was made may make an order
vacating the award upon the application of any party to the
arbitration –
(1) where the award was procured by corruption, fraud, or
undue means;
(2) where there was evident partiality or corruption in
the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient
cause shown, or in refusing to hear evidence pertinent
and material to the controversy; or of any other
misbehavior by which the rights of any party have been
prejudiced; or
(4) where the arbitrators exceeded their powers, or so
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limits a court's intervention to specific and enumerated instances.
We have found that it "authorizes vacatur of an award in cases of
specified misconduct or misbehavior on the arbitrators' part,
actions in excess of arbitral awards, or failures to consummate the
award." Advest, Inc. v. McCarthy, 914 F.2d 6, 8 (1st Cir. 1990).
The second set of exceptions derives from our inherent power to
vacate arbitral awards and is very narrow. See Cytyc Corp., 439
F.3d at 33. This second set may arise in labor arbitration when
either (1) "an award contravenes the plain language of the
applicable contract" or (2) when an arbitrator disregards
applicable law. Id. We are mindful that despite these exceptions,
"great deference remains the general mode of approach to judicial
review of arbitral awards." Id.
The Hospital's arguments on appeal are focused on the nature
of the occurrence and whether the Hospital's failure to make
payments can be considered a continuous violation. The Hospital
maintains that the arbitrator improperly focused on the effect of
the violation rather than on the violation itself. It argues that
by focusing on the Hospital's failure to pay the appropriate
differential each day after a holiday, the arbitrator’s approach
would lead to the conclusion that a grievance would remain timely
imperfectly executed them that a mutual, final,
and definite award upon the subject matter submitted was
not made.
9 U.S.C. § 10 (2008).
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indefinitely because the Hospital never made any proper
differential payments for the holidays not worked. It concludes
that any discrete violation could be construed as a continuous
violation so long as it was not remedied. This approach would then
nullify the timeliness provision in the CBA. The Hospital relies
heavily on El Mundo Broadcasting Corp. v. United Steelworkers of
Am., 116 F.3d 7 (1st Cir. 1997). In El Mundo, the Union filed a
grievance based on the employer's failure to post a full-time
editor position as required under the CBA. Id. at 8. The
arbitrator found that the grievance was procedurally arbitrable
because it was of a continuous nature. Id. at 10. He analogized
the failure to post a position to a situation where an employer
changes a rate of pay and deprives employees of daily pay. Id. at
10-11. Consequently, he issued an award in the Union’s favor. Id.
The district court then issued a ruling vacating the award, which
we affirmed on appeal. The Court overturned the arbitrator's
finding because it distinguished specific occurrences – such as
the failure to post a position – from instances where an employer
changes a rate of pay which could properly be described as a
continuous violation. Id. at 11-12. The Court's concern was that
settled order could be disturbed, and employers unduly prejudiced,
if an employer that failed to post a position did not have
arguments regarding that failure settled in a timely manner. Id.
If specific occurrences, such as terminating an employee's
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employment, were construed as continuous violations, employers'
rights to have issues settled promptly would be compromised in
favor of allowing employees to file grievances at their
convenience. Id. at 12. The Court found that the appointment of
an editor is a specific occurrence that cannot properly be
construed as a continuous violation. Id. Consequently, it held
that “[b]y misstating the basic nature of the occurrence the
arbitrator read the time provisions out of the contract, ignoring
its ‘essence.'" Id.
The outcome in El Mundo is distinguishable; its reasoning in
fact supports the arbitral ward. El Mundo concerned a single
event: the naming of a person to an editorship, and not the pay
received. The untimely consideration of the claim by the
arbitrator led to a belated order that ousted an incumbent from a
position. Here, by contrast, there was no question of
retroactivity of relief or harm to settled expectations because the
arbitrator refused to award a retroactive remedy to the Union based
on holidays preceding the filing of the grievance. The policy
concerns that underlied the Court’s finding in El Mundo regarding
an employer's right to have issues settled within a fixed period of
time do not exist in this case because the Hospital did not have to
compensate the employees for the prior holidays. Certainly, this
case does not present a situation where the employer mistakenly
believes that a prior action (i.e., posting a position or firing
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an employee) has been fully resolved and cannot result in future
liability. At the time the second grievance was filed, the Union
clearly had general notice that the employees were not going to
receive differential payments from the Hospital for any holidays.
During oral argument, counsel for the Hospital conceded that if an
employee had notice before a holiday occurred that he would not be
compensated for that holiday, an anticipatory grievance could be
considered timely. There was no reason for the Hospital to believe
that the Union did not intend to pursue the same remedy for all
employees after the Union was alerted to the Hospital's
unwillingness to apply the arbitral award to every employee.
This case fails to meet the exceedingly high threshold for
judicial interference with arbitral awards. We agree with the
lower court that there is insufficient evidence to find that the
award was "unfounded in reason and fact," "mistakenly based on a
crucial assumption that is concededly a non-fact," or "based on
reasoning so palpably faulty that no judge, or group of judges,
ever could conceivably have made such a ruling." See Cytyc Corp.,
439 F.3d at 34. We hold that the award "draws its essence from the
collective bargaining agreement." United Steelworkers of Am., 363
U.S. at 597.
B. Attorney’s Fees
The Union appeals the district court's refusal to award it
attorney's fees. It contends that the Hospital sought judicial
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review of the arbitrator's decision without justification. We
review the district court's decision for abuse of discretion. See
Crafts Precision Indus., Inc. v. Lodge No. 1836 of Dist. 38, 889
F.2d 1184, 1186 (1st Cir. 1989).
In light of the issue concerning the Hospital’s timeliness
defense and the question of “continuous violation,” we find that
the district court did not abuse its discretion in its conclusion
that the Hospital’s federal claim was sufficiently justified to
avoid payment of attorney’s fees.
III. Conclusion
For the reasons stated, the decision of the district court is
AFFIRMED.
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