January 01, 2015

What to Look for in a Labor Arbitrator

James J. Palmer

Not all arbitrators are created equal. As in the medical profession, arbitrators have specialties and are selected because they have specialized skills and experiences that can facilitate resolution of specific problems. Arbitrators are selected to settle disputes in the commercial, construction, real estate, insurance, consumer, employment, labor, and other sectors of the business world. And, just as one probably would not select a podiatrist to complete a prefrontal lobotomy, one probably wouldn’t select an arbitrator with experience only in the construction industry to make binding decisions relative to the interpretation of a labor agreement or whether or not sufficient evidence is present to support the discharge of a union-represented employee for a violation of company rules.

Note the specificity of the last sentence was directed toward selection of an arbitrator to settle a dispute relative to the efficacy of the discharge of a “union-represented employee.” This is an important distinction because labor arbitrators decide disputes based on the language of collective bargaining agreements, facts, past practices, credibility, the law, established practice in the industry, and other understandings of the parties. Note, also, the distinction between employment and labor arbitration in the paragraph above. Some arbitrators decide both employment and labor dispute matters. But not all employment arbitrators have the specialized skills and experience needed to properly decide labor cases. And, among other things, it is that specialized knowledge, skill, and experience that the major providers of labor arbitrators—the American Arbitration Association (AAA), the Federal Mediation and Conciliation Service (FMCS), and other private and governmental providers—use as part of their selection and vetting process.

Qualifications to Be a Labor Arbitrator

Edwin E. Witte, a founding member and the first president of the Industrial Relations Research Association (IRRA) and an early member of the National Academy of Arbitrators (NAA), laid out what he considered to be the most important qualities of a labor arbitrator during a dinner address he delivered at the first annual meeting of the NAA, held in January 1948 in Chicago:

It is still widely believed that the only qualifications needed in an arbitrator are honesty and impartiality. These are prerequisites, a sine qua non. But enduring success in labor arbitration calls for very much more on the part of the arbitrator than honesty and impartiality. It demands a broad knowledge of industrial relations and a good deal of specialized information on the issues arising in labor disputes. It requires a disposition not easily ruffled and a keen appreciation of the rights and feelings of others. It calls for an understanding of human nature and a realization that the matters to be dealt with are basically human relations problems. Beyond that, it requires what might be termed an “uncanny” ability to grasp the real situation, amid pretenses and arguments, which often are made for purposes ulterior to the arbitration. And it calls for imagination and ingenuity for finding acceptable bases of settlement within the framework of reference—which, of course, may never be departed from. Arbitration is an art rather than a body of knowledge. It cannot be learned in college, nor from books and speeches. It is not something that every lawyer can do nor even learn. Nor is every judge a good arbitrator. . . . A well-rounded education and quite likely also special training in industrial relations and law are valuable. But the best teacher is probably experience.

Today, many labor arbitration cases are heard by members of the NAA, the AAA Labor Panel, and the FMCS Roster of Arbitrators. Many labor arbitrators belong to one or more of these three groups.

As will be described below, experience relative to labor matters is an important component for membership in these groups. Another important requirement for membership is related to advocacy. The NAA, for example, requires that

All applicants must acknowledge an understanding that membership will not be conferred on those who serve partisan interests as advocates or consultants for labor or management in labor-management relations or who are associated with or are members of a firm that performs such advocacy or consultancy work. Moreover, applicants must affirm that, if elected to membership, they may not undertake thereafter to serve partisan interests as advocates or consultants for labor or management in labor-management relations or become associated with or become members of a firm that performs such advocacy or consultancy work.

The AAA in its Qualification Criteria for Admittance to the AAA Labor Panel asserts among needed qualifications that applicants “Must have a minimum of ten years senior-level business or professional experience or legal practice and cannot be an active advocate for labor or management.”

The FMCS is even more explicit relative to advocacy matters: “Any person who at the time of application is an advocate . . . must agree to cease such activity before being recommended on the Roster by the Board.” The FMCS defines an advocate as “a person who represents employers, labor organizations, or individuals as an employee, attorney, or consultant, in matters of labor relations or employment relations. . . .” The FMCS’s definition of an advocate “also includes a person who is directly or indirectly associated with an advocate in a business or professional relationship as, for example, partners or employees of a law firm.”

The NAA differs from the AAA and FMCS in that it does not select and/or appoint labor arbitrators or provide listings of potential arbitrators qualified to resolve disputes to requesting organizations. The purposes of the NAA are defined by some as educational, professional, and fraternal.

All three organizations have high membership selection standards and require arbitrator neutrality.

The AAA, for example, lists among its Labor Panel qualifications:

  • Significant hands-on knowledge about labor relations;
  • A judicial temperament;
  • Strong writing skills;
  • Educational degree(s) and or professional license(s) appropriate to applicant’s field of expertise;
  • Honors, awards, and citations indicating leadership in the applicant’s field;
  • Training and experience in arbitration and or other forms of dispute resolution;
  • Membership in a professional association(s); and,
  • Other relevant experience or accomplishments (e.g., published articles, mentor program participation).

The FMCS says non-governmental “[a]pplicants for the FMCS Roster must demonstrate experience, competence, and acceptability in decision-making roles in the resolution of disputes arising from collective bargaining agreements” and “[a]pplicants will be listed on the Roster upon a determination that he or she: (1) is experienced, competent and acceptable in decision-making roles in the resolution of labor relations disputes; or (2) has extensive and recent experience in relevant positions in collective bargaining; and (3) is capable of conducting an orderly hearing, can analyze testimony and exhibits and can prepare clear and concise findings and awards within reasonable time limits. Additional requirements apply to governmental employees.”

Both the AAA and the FMCS reserve the right to remove labor arbitrators from their rosters for cause.

Persons seeking appointment to the labor arbitrator panels in the various states also typically must satisfy a residency requirement. In some states, the residency requirement can be met by having principal residency in the home state of the panel or in a contiguous state.

Appointment to some labor arbitration panels further requires the submission by the applicant of a number of arbitration awards or contested case decisions authored or signed by the applicant in the 24 months prior to application.

Depending on the state, applicants for labor arbitration panels typically can demonstrate experience vis-à-vis a combination of years of full-time advocacy, service as a mediator, experience as an instructor of labor law or industrial relations (including collective bargaining and contract administration), and membership in the NAA.

Not all states and/or arbitration panel providers such as the AAA and FMCS require that labor arbitrators be licensed attorneys.

Labor Arbitration and the Collective Bargaining Agreement

The role of the labor arbitrator is to interpret and apply the applicable collective bargaining agreement (CBA) to the facts, exhibits, and testimony central to the grievance brought to him or her for decision. The principles necessary to decide labor arbitration cases are not new. They were set out by the U.S. Supreme Court more than 50 years ago in a series of cases known as the Steelworkers Trilogy”: United Steelworkers of America v. American Manufacturing Co., 363 U.S. 564 (1960); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960); and United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960).

The Steelworkers Trilogy precepts have served the industrial relations community well and have led to continued reliance on arbitration—rather than such tactics as strikes or lockouts—as the preferred method of resolving disputes arising during the term of a CBA. One of the most significant principles gleaned from the Steelworkers Trilogy is that arbitration is a matter of contract, and a party cannot be required to submit to arbitration any dispute that he or she has not agreed to submit. This axiom recognizes the fact that arbitrators derive their authority to resolve disputes only because the parties have agreed in advance to submit such grievances to arbitration.

Any person attempting to put in perspective the difference between resolution of commercial matters using courts with established procedures rather than the more informal labor arbitration umpire system should look no farther than the second case of the Steelworkers Trilogy, Warrior & Gulf, in which the Court held:

In the commercial case, arbitration is the substitute for litigation. Here [in labor arbitration], arbitration is the substitute for industrial strife. Since arbitration of labor disputes has quite different functions from arbitration under an ordinary commercial agreement, the hostility evidenced by courts toward arbitration of commercial agreements has no place here. For arbitration of labor disputes under collective bargaining agreements is part and parcel of the collective bargaining process itself.

The Court in Warrior & Gulf further articulated that labor arbitration is actually part and parcel of the collective bargaining process: “The collective bargaining agreement states the rights and duties of the parties. It is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. . . . The collective agreement covers the whole employment relationship. It calls into being a new common law—the common law of a particular industry or of a particular plant.”

The late Harry Shulman, a much-respected labor arbitrator and once the umpire who heard Ford–United Automobile Workers grievances, in a February 1955 lecture at Harvard Law School discussed the evolution of labor arbitration as part of the collective bargaining process thusly:

The parties recognize, when they make their collective agreement, that they may not have anticipated everything and that, in any event, there will be differences of opinion as to the proper application of its standards. Accordingly the agreement establishes a grievance procedure or machinery for the adjustment of complaints or disputes during its term. The autonomous rule of law thus established contemplates that the disputes will be adjusted by the application of reason guided by the light of the contract, rather than by force or power. . . . The method employed by almost all industry today for the resolution of stalemates in the adjustment of grievances under the private rule of law established by the collective bargaining agreement is private arbitration by a neutral person. The largest enterprises provide for a standing umpire or arbitrator to serve for a stated period of time or so long as he continues to be satisfactory to both sides. The great majority of agreements provide for separate appointment of an arbitrator in each case.

In those cases where the parties have not pre-selected an arbitrator/umpire to hear their grievances/disputes, and depending on what their collective agreement mandates, the management and union advocates attempting to resolve their disputes request a list of qualified potential arbitrators for selection from organizations (e.g., AAA, FMCS, or a state employment relations commission).

Shulman made it clear in his Harvard address that

The parties do not generally restrict their own joint powers in the grievance procedure. But it is customary for the collective bargaining agreement to limit the arbitrator’s jurisdiction with apparent strictness. Apart from the specific exclusion of certain subjects, as, for example, rates for new jobs or production standards, he is commonly confined to the resolution of grievances or disputes as to “the interpretation or application of the agreement,” or of claims of “violation or the agreement.” And quite frequently he is further enjoined not to “add to, subtract from, or modify any of the terms of the agreement.” . . . [H]e is admonished also that he has “no power to substitute his discretion for the Company’s discretion in those cases where the Company is given discretion” by the agreement. . . .

In an essay presented in 1977 at the 30th Annual Meeting of the NAA, arbitrator Theodore J. St. Antoine asserted that labor arbitration is “the product of contract—or more precisely, the product of the particular contracts of particular parties. These contracts may vary widely in the scope of the matters entrusted to final and binding arbitration.” St. Antoine suggested that

as interested bystanders, arbitrators are entitled to suggest to the parties what answers they might regard as wisest and prudent. But once we have accepted an arbitral assignment in a given case, our own views should be irrelevant. The parties’ views, as best we can discern them, should control. Put more simply, the arbitrator is the parties’ officially designated “reader” of the contract. He (or she) is their joint alter ego for the purpose of striking whatever supplementary bargain is necessary to handle the anticipated unanticipated omissions of the initial agreement.

Further, St. Antoine said the arbitrator’s mandate is plain: read and reread the contract the arbitrator is being asked to interpret and “tell the parties (and the courts) what the contract means.”

The role of the labor arbitrator then, among other things, is to interpret rather than rewrite the words and terms of the CBA. No provision of a CBA, including language defining the powers of the arbitrator, exists without specific agreement of the parties.

Finding the Right Arbitrator

It has been suggested that advocates trying to choose a labor arbitrator would be better served by investigating the potential arbitrator’s integrity, timeliness, patience, and sensitivity rather than his or her labor-management biases. Other advocates suggest that part of the screening process should include a determination of whether or not the potential arbitrator has ruled on a similar set of facts and whether that decision history might help predict his decision in the instant case. Ruling analysis, however, is not that easy because arbitration and related decisions are private and, therefore, not always released for publication.

In Warrior & Gulf, the Court noted:

The labor arbitrator is usually chosen because of the parties’ confidence in his knowledge of the common law of the shop and their trust in his personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment. The parties expect that his judgment of a particular grievance will reflect not only what the contract says but, insofar as the collective bargaining agreement permits, such factors as the effect upon productivity of a particular result, its consequence to the morale of the shop, [and] his judgment whether tensions will be heightened or diminished. . . . The ablest judge cannot be expected to bring the same experience and competence to bear upon the determination of a grievance, because he cannot be similarly informed.

It is crucial for the parties to understand that not all arbitrators are created equal, and some arbitrators, rather than others, have the demonstrated, specialized knowledge, skills, and expertise needed to assist them in the resolution of their contractual dispute.

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James J. Palmer

James J. Palmer is a mediator and arbitrator. He is senior partner at ADR Neutrals, LLC, a Michigan- and Florida-based provider of arbitration.