Oakwood Healthcare, Inc. v. Oakwood Hospital Employees Local 2568, Affiliated with Michigan Council 25, AFSCME

Filing 22

OPINION and ORDER Granting Plaintiff's 15 MOTION to Vacate Arbitration Award - Signed by District Judge Judith E. Levy. (FMos)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Oakwood Healthcare, Inc.,
Plaintiff,
v.

Case No. 13-cv-14767
Hon. Judith E. Levy
Mag. Judge Michael J. Hluchaniuk

Oakwood Hospital Employees
Local 2568, Affiliated with
Michigan Council 25 of the
American Federation of State,
County and Municipal Employees,
AFL-CIO,
Defendant.
________________________________/
OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION TO VACATE ARBITRATION AWARD [15]
This is a labor union arbitration case that is before the Court on
plaintiff Oakwood Healthcare, Inc.’s motion to vacate an arbitration
award. (Dkt. 15.)
I.

Background
Plaintiff employed Shannon “Ken” Curry, and at the time of his

termination he was employed as a Dietary Assistant II. Curry’s duties
included cleaning the hospital kitchen, in which food was prepared for

patients, visitors, and employees. The employment relationship was
governed by a Collective Bargaining Agreement (“Oakwood CBA”) (Dkt.
11-2) and Employee Work Rules issued pursuant to the Oakwood CBA.
A. July 16, 2012 Incident, Termination, and Arbitration
On July 16, 2012, one of plaintiff’s cooks, Robert Ebbing, spilled
potatoes on the hospital kitchen floor and then left the area to bring
food to an event. Curry swept the potatoes up along with some other
debris from the kitchen floor and placed the waste on a sanitary food
preparation table. He did this two successive times. The incident was
captured on a video, which was later shown to Curry after he denied
putting any debris on the table.

Plaintiff suspended Curry pending

investigation on July 30, 2012. Curry was found to have violated Major
Work Rule 17 of the Employee Work Rules by failing “to fulfill the
responsibilities of the job to an extent that might reasonably or does
cause injury to a patient, visitor or another employee.” The penalty for
a Major Work Rule violation is either a three- or five-day suspension, or
termination. Plaintiff conducted an investigation of the incident and
based on the outcome of the investigation, Curry was discharged on
August 6, 2012.
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Curry was a member of a union, AFSCME Local 2568, and the
union filed a grievance on Curry’s behalf.

On July 26, 2013, an

arbitration hearing was held pursuant to the Oakwood CBA.

On

October 25, 2013, the arbitrator issued his opinion and award, in which
he agreed with plaintiff that Curry had violated a Major Work Rule.
The arbitrator set forth his reasons, stating that “what Mr. Curry did
on July 16, 2012 is just unacceptable to say the least. And then, in the
view of this Arbitrator, he aggravated the situation by accusing Mr.
Ebbing of using the N word, which did not happen, and further
aggravated [sic] by claiming that the words that were used caused him
to react when in fact his actions took place for the most part before any
statements were made to Curry.” (Dkt. 1-3, p. 27.)
Despite finding that Curry had violated Major Work Rule 17, the
arbitrator ordered Curry reinstated with full seniority and a 15-month
suspension due to “mitigating factors” which he took into consideration
based upon the Oakwood CBA’s just cause standard.

Those factors

included Curry’s ten years of seniority, a positive performance
evaluation, and two certificates of appreciation.

The arbitrator also

determined that plaintiff, at its discretion, may require Curry to attend
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an anger management program sponsored by the Hospital’s Employee
Assistance Program.
Instead of implementing the arbitrator’s award, plaintiff filed suit
in this Court on November 18, 2013, and filed this motion to vacate the
arbitrator’s award on April 25, 2014. Oral argument was held on July
14, 2014, and the case is now ready for decision.
B. Relevant Language From the Oakwood CBA and Work Rules
Section 3.2, Step 4(c) of the Oakwood CBA:
The arbitrator shall not have jurisdiction to add to, subtract
from, or modify any of the terms of this Agreement . . . or to
substitute discretion for that of any of the parties hereto or
to exercise any of their functions or responsibilities.
Section 4.1(a) of the Oakwood CBA:
The Employer has the right to employ any person who is
satisfactory to the Employer, and also to discharge or
discipline a seniority employee for just and proper cause.
The principle of progressive discipline is recognized except in
cases of serious offenses justifying immediate discharge.
Section 8.1 of the Oakwood CBA:
The Employer retains the sole right and shall have a free
hand to manage and operate its Hospital, subject only to the
condition that it shall not do so in any manner which is
inconsistent with this Agreement . . . . The Employer also
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shall have the right to make at any time and to enforce any
rules and regulations which it considers necessary or
advisable for the safe, effective, and efficient operation of the
Employer so long as such rules and regulations are not
inconsistent herewith, and any employee who violates or
fails to comply therewith may be subject to discipline, and
may have recourse to the Grievance Procedure of this
Agreement in the event the employee feels aggrieved by such
discipline.
Employee Work Rules, Procedures for Major Infractions (Dkt. 14-3, at
53; AR 000237):
Infractions of a major nature will result in corrective action
that may begin with Step 4, a 3 or 5 Day Suspension or may
result in immediate Termination, Step 5.
II.

Analysis
Plaintiff argues that under the plain language of the Oakwood

CBA, it had the sole discretion to discipline or discharge employees who
commit a major infraction, and that the Oakwood CBA did not give the
arbitrator jurisdiction to determine whether the employer’s exercise of
discretion in deciding between a suspension or termination meets the
standard for just cause.
The standard for vacating an arbitrator’s award is a very high
one. So long as “an arbitrator is even arguably construing or applying

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the contract and acting within the scope of his authority, the fact that a
court is convinced he committed serious error does not suffice to
overturn his decision.”

Totes Isotoner Corp. v. Int’l Chem. Workers

Union Council/UCFW Local 664C, 532 F.3d 405, 411 (6th Cir. 2008)
(quoting Major League Baseball Players Assoc. v. Garvey, 532 U.S. 504,
509 (2001)). The arbitrator’s award, however, “must draw its essence
from the contract and cannot simply reflect the arbitrator's own notions
of industrial justice.”

United Paperworkers Int’l Union, AFL-CIO v.

Misco, Inc., 484 U.S. 29, 38 (1987).
The Sixth Circuit uses a “procedural aberration” standard on a
motion to vacate an arbitration award to determine whether an
arbitrator acted outside the scope of his or her authority. An award
may only be overturned when the Court answers one of the following
questions in the affirmative:
1) Did the arbitrator act “outside his authority” by resolving a
dispute not committed to arbitration?
2) Did the arbitrator commit fraud, have a conflict of interest or
otherwise act dishonestly in issuing the award?

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3) In resolving any legal or factual disputes in the case, was the
arbitrator not “arguably construing or applying the contract”?
Mich. Family Res., Inc. v. Serv. Emp. Int'l Union Local 517M, 475 F.3d
746, 753 (6th Cir. 2007). “So long as the arbitrator does not offend any
of these requirements, the request for judicial intervention should be
resisted even though the arbitrator made serious, improvident or silly
errors in resolving the merits of the dispute.” Id. (internal quotation
marks omitted).
The dispute in this case is ultimately over how to read Sections
4.1(a) and 8.1 of the Oakwood CBA in harmony with Section 3.2, Step
4(c) and the Procedures for Major Infractions. Section 4.1(a) grants the
employer the right to “discharge or discipline a seniority employee for
just and proper cause.” Section 8.1 also grants the employer “the right
to make at any time and to enforce any rules and regulations which it
considers necessary or advisable for the safe, effective, and efficient
operation of the Employer so long as such rules and regulations are not
inconsistent herewith.” Section 3.2, Step 4(c) creates a jurisdictional
bar preventing the arbitrator from “substitut[ing] discretion for that of

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any of the parties hereto or … exercise[ing] any of their functions or
responsibilities.”
It is undisputed that the arbitrator had authority to determine
whether Curry committed a major infraction of the rules worthy of
discipline or discharge. Plaintiff, however, argues that the arbitrator’s
authority ended there, and that plaintiff had the sole discretion to
determine Curry’s punishment, supported by Sections 3.2, Step 4(c) and
8.1, the Employee Work Rules, and the Procedures for Major
Infractions. By determining whether just and proper cause existed for
the employer to enforce its chosen discipline for an “infraction of a
major nature”, the plaintiff argues that the arbitrator acted outside of
his authority by resolving a dispute not committed to arbitration, and
was not arguably construing or applying the contract.
Defendant argues that the phrase “just and proper cause” is
ambiguous, and that by evaluating the chosen discipline, the arbitrator
was, at the very least, arguably construing and applying the contract.
Further, the defendant argues that whenever a range of punishments is
available, the determination over which punishment is appropriate is
properly committed to the arbitrator to determine.
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The Sixth Circuit has determined that where collective bargaining
agreements commit the right to discipline and discharge solely to
employers, arbitrators overstep their authority when they substitute
their discretion for that of the employer. See Amanda Bent Bolt Co. v.
Int’l Union, United Auto., Aerospace, Agric. Implement Workers of Am.,
Local 1549, 451 F.2d 1277, 1279 (6th Cir. 1971); Morgan Servs., Inc. v.
Local 323, Chicago and Central States Joint Bd., Amalgamated
Clothing and Textile Workers Union, AFL-CIO, 724 F.2d 1217, 1219
(6th Cir.1984) (holding the same under a just cause standard); accord
Int'l B'hood of Elec. Workers, Local 429 v. Toshiba Am., Inc., 879 F.2d
208 (6th Cir.1989) (holding that once union stipulated that an employee
committed a dischargeable offense, arbitrator lacked authority under
the contract to overturn the employer’s decision to discharge employee
for just cause); see also SEIU Healthcare Michigan v. St. Mary's
Acquisition Co., Inc., 09-13215, 2010 WL 2232218 (E.D. Mich. May 27,
2010).
The Sixth Circuit has also held that authority will rest with the
arbitrator to determine whether discipline or discharge is appropriate
where the collective bargaining agreement is in any way unclear or
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ambiguous about the arbitrator’s authority to do so. In Eberhard Foods
v. Handy, the employer had the sole discretion to discharge employees,
but could only do so for just cause. Eberhard, 868 F.2d 890, 892 (6th
Cir. 1989).

The Eberhard collective bargaining agreement was

ambiguous as to whether the arbitrator could review the remedy the
employer selected once the arbitrator determined a dischargeable
offense was committed, but did provide, as here, that the arbitrator had
“no power or authority to amend, alter or modify” the collective
bargaining agreement. Id. Further, the work rules under which the
employer sought to terminate the employee were not mentioned in the
collective bargaining agreement. Id. Because “nothing . . . in the CBA
or work rules . . . expressly limit[ed] or remove[d] from the arbitrator
the authority to review the remedy in this case,” the issue of the chosen
discipline was within the arbitrator’s jurisdiction. The Sixth Circuit
upheld Eberhard in Dixie Warehouse and Cartage Co. v. Gen. Drivers,
Warehousemen and Helpers, Local Union No. 89, 898 F.2d 507, 510 (6th
Cir. 1990).
The overarching rule of these cases is that where the collective
bargaining agreement is unclear or ambiguous as to whether the
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arbitrator has the authority to determine the appropriate discipline, as
in Eberhard or Dixie, the arbitrator has unquestioned authority to act
in the ambiguous space.

However, if the collective bargaining

agreement clearly prohibits the arbitrator from considering a matter, as
in Amanda Bolt, Morgan, and International Brotherhood, the arbitrator
oversteps his or her authority if he or she alters the employer’s chosen
remedy.
This case is similar to International Brotherhood.
arbitrator

had

unquestioned

jurisdiction

to

There, the

determine

whether

employees were terminated for just cause and found that the employer
had just cause to terminate the employees, but he ordered the
employees reinstated.

Int’l B’hood, 879 F.2d at 209.

The collective

bargaining agreement stated that “[a]ny disciplinary action, including
discharge taken as a result of the violation of [the no-strike clause] . . .
shall not be altered or amended in the grievance and arbitration
procedures[.]” Id. at 210. The collective bargaining agreement clearly
stated that all disciplinary actions were removed from the arbitrator’s
jurisdiction, and the arbitrator was found to have overstepped his
authority by reconsidering the employer’s decision on discipline. Id.
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Here, Section 4.1(a) of the Oakwood CBA grants the employer the
discretion to discharge or discipline a seniority employee (which Curry
was) for just and proper cause. Section 8.1 of the Oakwood CBA grants
the employer the right to make and enforce rules and regulations giving
rise to discipline, so long as those rules are not inconsistent with the
Oakwood CBA. The Employee Work Rules were issued pursuant to
Section 8.1. Critically, Section 3.2, Step 4(c) expressly prohibits the
arbitrator from substituting his or her discretion for that of any of the
parties to the Oakwood CBA, or from exercising any of the parties’
functions or responsibilities. Finally, the applicable work rule regarding
the “Procedures for Major Infractions” gives the employer the discretion
to suspend or terminate an employee who is found to have engaged in
an “infraction of a major nature”.1

At oral argument, the Court questioned plaintiff at length concerning
its post-hearing brief submitted to the arbitrator. (Dkt. 14-3, at 16076.) In that brief, plaintiff stated that “the only disputed issue in this
case is whether discharge was the appropriate penalty for the offense”
and that “no mitigating factors . . . outweigh the deadly harm that may
have resulted from Grievant’s [Curry’s] conduct.” (Id. at 161, 176.) The
Court’s concern was that these sentences improperly committed the
issues of disciplinary just cause and mitigating circumstances to the
arbitrator, undercutting plaintiff’s argument.

1

On review of the post-hearing brief, much of which mirrors plaintiff’s
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This case is distinguishable from both Eberhard and Dixie
Warehouse. In both of those cases, the collective bargaining agreements
committed to the arbitrator the issue of whether employees were
discharged for just cause, and afforded sole discretion to the employer to
discharge employees.

However, unlike the Oakwood CBA and the

collective bargaining agreement in International Brotherhood, those
agreements did not restrict the arbitrator’s jurisdiction over the
employer’s discharge decisions.
The language of the Oakwood CBA is “sufficiently clear so as to
deny the arbitrator the authority to interpret the agreement as he did.”
Eberhard, 868 F.2d at 891. The defendant is correct that the phrase

argument here, the Court is convinced that the plaintiff did not commit
the issue to the arbitrator. First, the post-hearing brief argues at
length that the arbitrator had no jurisdiction to determine whether
discharge was the appropriate penalty for the offense, and only uses
those phrases in response to the arbitrator’s invocation of mitigating
factors. Second, the Court can find no support for the proposition that a
party’s unclear statement of the arbitral issue in a post-hearing brief
can commit an issue to an arbitrator that the arbitrator otherwise lacks
jurisdiction to decide.
As a matter of policy, it makes sense that a party could not unilaterally
expand an arbitrator’s jurisdiction simply by referring to issues
otherwise outside of the arbitrator’s jurisdiction. If that were so, any
negotiated limit on jurisdiction would be rendered meaningless by a few
sentences in a brief.   
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“just and proper cause” is itself ambiguous, and that the arbitrator may
determine the meaning of that phrase under the Oakwood CBA. That,
however, is not the issue in this case. The issue in this case is whether
the arbitrator had jurisdiction over the employer’s exercise of discretion
in disciplining Curry once he determined that Curry had engaged in an
infraction of a major nature such that he could apply the “just and
proper cause” standard to the employer’s discretionary disciplinary
decisions. The Court holds that this exercise of jurisdiction was outside
of the arbitrator’s authority.
The arbitrator’s jurisdiction under the Oakwood CBA ends at the
point he determines there is just cause for the employer to exercise its
discretion, and he is barred by the plain language of the Oakwood CBA
from substituting his discretion for the employer’s to reflect his own
notion of “industrial justice.” Misco, 484 U.S. at 38. The arbitrator did
so here, and as a result, the Court is required to vacate the arbitrator’s
award of reinstatement.
Plaintiff also argues that the arbitrator’s reinstatement of Curry
violated an explicit public policy providing for sanitary food preparation
areas, and so should also be vacated on that ground. See W.R. Grace &
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Co. v. Local Union 759, 461 U.S. 757, 766 (1983); Shelby Cnty. Health
Care Corp. v. Am. Fed. of State, Cnty. & Mun. Emps. Local 1733, 967
F.2d 1091, 1095 (6th Cir. 1992). In support of this argument, plaintiff
cites a series of state and federal statutes and regulations whose
collective purpose is to prevent contamination of the food preparation
process in various facilities.

Because the Court is vacating the

arbitration award on jurisdictional grounds, it does not reach the issue
of whether Curry’s reinstatement violated public policy.
III.

Conclusion

For the reasons stated above, the Court determines that the
Oakwood CBA did not grant the arbitrator jurisdiction over disciplinary
and discharge decisions reserved solely for the employer once he
determined that Curry had violated Major Work Rule 17 and had
therefore engaged in an “infraction of a major nature.”
Accordingly, Plaintiff’s motion to vacate the arbitration award is
GRANTED; and The arbitration award is HEREBY VACATED.
IT IS SO ORDERED.
Dated: August 5, 2014
Ann Arbor, Michigan

s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
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CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on August 5, 2014.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager

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