June 23, 2016 Practice Points

Arbitrator's Interpretation of Collective Bargaining Agreement Stands

By Michael S. Oberman

By opinion issued June 20, 2016 in N.Y.C. & Vicinity District Council of the United Brotherhood of Carpenters v. Ass’n of Wall-Ceiling and Carpentry Industries of N.Y., Inc., the Second Circuit reversed a district court judgment that vacated an arbitration award under a collective bargaining agreement (CBA).  

At issue was whether employers had to staff two-man jobs under the two-man job provision of the CBA or instead could elect to invoke a provision in a separate agreement that the employers had entered into with the local union’s international parent. The arbitrator ruled that the employers could invoke the provisions in the international agreement, but the district court held that the arbitrator’s ruling did not draw its essence from the CBA and that it conflicted with an earlier court order that had approved the CBA. The Second Circuit reversed.  

The Second Circuit made clear that it was reviewing the arbitrator’s decision under the standard that applies to a labor case: 

a federal court’s review of labor arbitration awards is narrowly circumscribed and highly deferential – indeed, among the most deferential in the law.” Nat’l Football League Mgmt. Council v. Nat’l Football League Players Ass’n, F.3d, 2016 WL 1619883, at *1 (2d Cir. 2016) (“NFL”). A court is “not authorized to review the arbitrator’s decision on the merits”; its role is simply to determine “whether the arbitrator acted within the scope of his authority as defined by the collective bargaining agreement.” Id. at *6. Thus, as long as “the arbitrator was even arguably construing or applying the contract and acting within the scope of his authority and did not ignore the plain language of the contract,” the award should ordinarily be confirmed. Id. (internal quotation marks omitted).

The Court noted that an award should be vacated if it “contradicts an express and unambiguous term of the contract or . . . so far departs from the terms of the agreement that it is not even arguably derived from the contract,” United Bhd. of Carpenters v. Tappan Zee Constructors, LLC, 804 F.3d 270, 275 (2d Cir. 2015). In other words, an award should be vacated if it does not “draw[] its essence from the collective bargaining agreement” but reflects instead “the arbitrator’s own brand of industrial justice.” NFL, 2016 WL 1619883, at *6 (internal quotation marks omitted). 

The Second Circuit ruled that the arbitration award at issue did not violate any of these precepts and, accordingly, that it should be confirmed: 

We agree that, to the extent the district court’s judgment rests on the basis that the award did not draw its essence from the CBA, it must be vacated. Rather than dispensing his “own brand of industrial justice,” the arbitrator addressed the narrow question whether the CBA forecloses the invocation of the International Agreement’s two‐man job provision. Relying on the parties’ history of allowing invocation of the International Agreement and on the CBA’s negotiating history, he concluded that the CBA’s silence on the issue indicated that the parties did not intend to change that practice and thus supported WCC’s position. That conclusion is at least arguably derived from an interpretation of the CBA itself and contradicts none of its “express and unambiguous” terms. . . . Although it might have been equally reasonable for the arbitrator to have agreed with the District Council, a federal court is not authorized to decide whether the arbitrator’s interpretation of a collective bargaining agreement was correct on the merits. NFL, 2016 WL 1619883, at *6. The arbitrator’s decision here comfortably survives our tightly circumscribed scope of review.

Keywords: alternative dispute resolution, adr, litigation, collective bargaining agreement, essence of agreement, interpretation, scope of review 

Michael S. Oberman is with Kramer Levin Naftalis & Frankel LLP in New York, New York.

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