Ever since the Supreme Court rendered its seminal decision in the Steelworker’s Trilogy, arbitration has become the preferred means by which industrial disputes are resolved. Arbitration is particularly well suited for this purpose. It is both quicker and cheaper than litigation. However, it is not without its flaws; serious ones, in fact.
There is no right to appeal an arbitration award.
In fact, finality is a key component of labor arbitration and courts have held that this is a necessary consequence of the party’s decision to arbitrate since finality promotes labor peace and the free flow of commerce.
Unfortunately, labor arbitrators, like judges, are not infallible. They sometimes (more often than we would like) render incorrect or flawed decisions.
Since a labor arbitration award is presumptively final, mistakes are extremely difficult, if not impossible to correct.
Nonetheless, on some occasions, courts have vacated improperly-decided arbitration awards even though the permissible grounds for an award are extremely limited. In this article, I’ll briefly review what these grounds are.
THE BIG THREE
Pursuant to the Federal Arbitration Act in New York, a labor arbitration award may be vacated within 90 days of its issuance provided: (1) there was corruption, fraud or some identifiable bias by the arbitrator (2) the award is so indefinite as to its result, that it cannot be considered a final award or (3) the arbitrator has exceeded his or her authority under the agreement.
The third standard is the one most often utilized by courts to void a defective arbitration award.
Arbitrators are deemed to have exceeded their authority if their award was not legitimately based upon contractual mandates, but merely evidenced their own particular brand of industrial justice.
If an arbitration award is itself in violation of a contractual provision, it is subject to annulment.
For instance if a collective bargaining agreement contains clear and unambiguous language stating that a particular penalty must be applied to an employee who has committed a disciplinary infraction, an arbitration award which did not uphold the issuance of that penalty — once it was proven that the infraction occurred — would be overturned.
There are also two non-statutory grounds which would permit a court to vacate a labor arbitration award.
TWO OTHER METHODS
First, if the award violates public policy, a court would be justified in overturning it.
One example would be, where an arbitrator reinstated a convicted sex offender to his or her position as a public school teacher.
Clearly, this decision will be overturned because there is a clear public policy in protecting the safety and welfare of children attending public schools.
The last exception is where an award is rendered in an arbitration proceeding during which the union is determined to have failed to satisfy its duty for fair representation.
In that instance the arbitration would be conducted again in the context of a lawsuit. This exception is hardly ever utilized as a basis for overturning an arbitration award because courts are loath to intrude on internal union operations. The breach would have to be a profound one for a court to even consider this option.
While it is true that vacating a labor arbitration award is an extremely difficult and arduous task, it is not insurmountable. Under the right set of circumstances courts will not hesitate to vacate an arbitration award. The question which remains is, just what are these circumstances?
This column should not be construed as formal legal advice given in the context of an attorney-client relationship.