LABORERS' LOCAL UNION NOS. 472 & 172 et al v. TRI-STATE EROSION CONTROL, INC.

Filing 24

MEMORANDUM OPINION. Signed by Judge Jerome B. Simandle on 11/21/2017. (tf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

LABORERS’ LOCAL UNION NOS. 472
& 172, et al.,

HONORABLE JEROME B. SIMANDLE

Petitioners,

Civil Action
No. 17-1792 (JBS/AMD)

v.
MEMORANDUM OPINION

TRI-STATE EROSION CONTROL,
INC.,
Respondent.
SIMANDLE, District Judge:

This dispute comes before the Court by way of the motion of
Petitioners Laborers’ Local Union Nos. 472 & 172, Laborers’
Local Union Nos. 472 & 172 Welfare and Pension Funds and Safety,
Education and Training Funds, and Zazzali, Fagella, Nowak,
Kleinbaum & Friedman, P.A.’s (hereinafter, “Petitioners”) to
confirm an arbitration award entered on March 8, 2017 as a
result of Tri-State Erosion Control, Inc.’s (hereinafter,
“Respondent”) failure to remit fringe benefit contributions
[Docket Item 2]; and by way of Respondent’s cross-motion to
vacate the same arbitration award. [Docket Item 9.]
For the reasons that follow, Petitioners’ motion will be
granted, and Respondent’s cross-motion will be denied. The Court
finds as follows:

1.

Factual and Procedural Background. In their Verified

Petition, Petitioners generally allege that Laborers’ Local
Union Nos. 472 & 172 (hereinafter, the “Union”) and Respondent
are parties to a written collective bargaining agreement
(hereinafter, the “CBA”) that requires, in relevant part,
Respondent to remit certain fringe benefit contributions and
that it resolve any dispute regarding payment of these
contributions in arbitration. [Docket Item 1 at ¶¶ 2-3; Docket
Item 16 at 1; see also Docket Item 9, Exhibit F at 79.]
2.

Under the CBA, Respondent recognized the Union “as the

sole and exclusive collective bargaining representative for all
employees employed by [Respondent] engaged in all work of any
description whatsoever concerning the clearing, excavating,
filling, back-filling and landscaping of all sites. . . .” [Id.
at 7.] Several other duties to be performed by the Union were
also listed as “covered” by the CBA. [Id. at 7-11.] The parties
“agreed that all work described in [the CBA] or in the Manual of
the Jurisdiction shall be performed only by employees covered by
this Agreement.” [Id. at 11.]
3.

The CBA provided that Respondent would contribute to

the Unions’ Welfare Fund (Article 33), Pension Fund (Article
34), Safety, Education and Training Fund (Article 35), Annuity
Fund (Article 36), and Vacation Fund (Article 37), on behalf of
“each employee covered by [the CBA].” [Id. at 65-73.]
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4.

Of note, the CBA also included an arbitration clause,

which provided, in relevant part:
In the event that the Union, an Employer or the Fund’s
Trustees allege any dispute, violation or grievance
concerning any provision of . . . Article 32 through 38 . .
. , the dispute, grievance or violation including disputes
over delinquencies, shall be submitted to the permanent
arbitrator or arbitrators established by the Employer and
Employee Trustees.
[Id. at 79.] The arbitration clause further provided that, “Any
dispute in connection with the arbitratability of a matter shall
be resolved by the arbitrator.” [Id.]
5.

Petitioners performed an audit of Respondent’s payroll

records for the time period between September 14, 2013 and
August 31, 2015 (hereinafter, the “Audit”). [Docket Item 9,
Exhibit E at 2.] An initial audit revealed a delinquency of
$178,243.03, but, after further evidence was provided by
Respondent, the total amount owed was adjusted downward to
$172,419.47. [Id.] Notably, the Audit did not account for
$39,146.99 that Petitioners had received from General
Contractors for work performed by Respondent, but which was
maintained “on account.” [Id.]
6.

After the Audit was completed and Respondent refused

to pay the delinquent contributions, Petitioners moved for
arbitration and requested that the arbitrator issue an award
supporting the Audit findings and ordering Respondent to remit

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the delinquent contributions, plus interest, fees, costs and
damages. [Id.]
7.

On May 18, 2016, the arbitrator held a hearing, which

both parties attended. [Id. at 1.] During the hearing,
Respondent argued: (1) that it terminated the CBA on January 24,
2013 (effective February 28, 2014) and that it was, therefore,
not responsible for remitting any fringe benefits after February
28, 2014; Respondent acknowledged that it employed union workers
after February 28, 2014, withheld union dues, paid union wages,
and paid fringe benefits to the Funds on some occasions that
were required by the CBA; (2) $45,978.87 of the delinquency
amount identified in the Audit was attributable to work
performed outside the territorial jurisdiction of the Union (and
therefore not covered by the CBA); (3) that Respondent should
not be required to pay $31,515.89 in fringe benefits for “noncovered work” performed by Union employees during “winter
months;” and (4) that two missing checks totaling $10,547.79,
which were referenced in a July 2016 email exchange, should also
be credited to the amount owed to Petitioners. [Id. at 2-3, 8.]
For these reasons, Respondent argued that it only owed
$17,647.38, rather than the $172,419.47 identified by the Audit.
[Id. at 3.]
8.

On March 8, 2017, the arbitrator issued a written

decision. First, the auditor determined that, regardless of the
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effective “termination” date of the CBA, Respondent was bound
under the CBA for any “bargaining unit work” (i.e., “covered
work”), including “covered work” performed after February 28,
2014. [Id. at 5, 8.] Second, the auditor accepted Respondent’s
documentary evidence that certain work had been performed out of
state and credited Respondent $45,978.87 for the out-of-state
work. [Id. at 8.] Additionally, the auditor credited Respondent
the $39,146.99 that had been maintained by Petitioners’ “on
account.” [Id.] Together, these credited payments reduced the
delinquency amount from $172,419.47 to $87,293.61. [Id.] Third,
the arbitrator determined that affidavits provided by Respondent
asserting that Union workers had performed 1,192 hours of
mechanical maintenance work on vehicles during “winter months”
between September 2013 and December 2014 were “not credible.”
[Id.] Fourth, the arbitrator found that Respondent failed to
produce any physical evidence of the two missing checks. [Id.]
“[B]ased on a lack of credible and/or reliable evidence,” the
arbitrator refused to credit Respondent either the $31,624.33
for “non-covered work” performed during the “winter months” or
the $10,547.79 for the missing checks. [Id.]
9.

Ultimately, the arbitrator awarded Petitioners

delinquent contributions in the amount of $87,293.61; interest
in the amount of $18,622.64; attorneys’ fees in the amount of
$17,458.72; and arbitrator’s costs of $5,000.00. [Id. at 8-9.]
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In total, the arbitrator ordered Respondent to pay Petitioners
$128,374.97. [Id. at 9.]
10.

Petitioners filed a motion to confirm the arbitration

award in this Court. [Docket Item 2.] Respondent filed a brief
in opposition [Docket Item 8] and cross-motion to vacate the
arbitration award. [Docket Item 9.] Petitioners filed an
opposition to Respondent’s cross-motion [Docket Item 16] and
Respondent filed its reply brief. [Docket Item 19.] The Court
heard oral argument on November 20, 2017.
11.

Standard of Review. Review of an arbitration award is

extremely limited and conducted under a highly deferential
standard. See United Paperworkers Int'l Union v. Misco,
Inc., 484 U.S. 29, 36 (1987). Indeed, a court's “role in
reviewing the outcome of the arbitration proceedings is not to
correct factual or legal errors made by an arbitrator.” Major
League Umpires Ass'n v. Am. League of Prof'l Baseball Clubs, 357
F.3d 272, 279 (3d Cir. 2004). Rather, an arbitration award may
be vacated only in the “exceedingly narrow” circumstances
specified under the Federal Arbitration Act, 9 U.S.C. § 10(a)
(hereinafter, the “FAA”), and “courts accord arbitration
decisions exceptional deference.” Handley v. Chase Bank USA NA,
387 Fed. App’x 166, 168 (3d Cir. 2010) (citing Dluhos v.
Strasberg, 321 F.3d 365, 370 (3d Cir. 2003)).

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12.

The FAA provides, in relevant part, four exclusive

grounds upon which arbitration awards can be vacated. See 9
U.S.C. § 10(a). These limited grounds include circumstances:
(1)

“[W]here the award was procured by corruption,
fraud, or undue means;”

(2)

“[W]here there was evident partiality or
corruption in the arbitrators, or either of
them;”

(3)

“[W]here 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;”
and/or

(4)

“[W]here the arbitrators exceeded their powers,
or so imperfectly executed them that a mutual,
final, and definite award upon the subject matter
submitted was not made.”

Id.
13.

In addition to the four statutory bases for vacating

an arbitration award under the FAA, the Third Circuit has
recognized two common law grounds for vacatur. First, an
arbitration award may be set aside if the arbitrator
demonstrates “manifest disregard for the CBA,” which “is
established when the arbitrator’s award is totally unsupported
by principles of contract construction.” Major League Umpires
Ass’n, 357 F.3d at 280 (internal citation and quotation marks
omitted). “In order to vacate an arbitration award on such
grounds, there must be absolutely nothing in the record to

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justify the arbitrator’s decision.” Jones v. Intarome Fragrance
Corp., 2007 WL 1296656, at *3 (D.N.J. Apr. 27, 2017). Second, an
arbitration award may be set aside if the arbitral award is
“completely irrational.” Mutual Fire, Marine & Inland Ins. Co.
v. Norad Reinsurance Co. Ltd., 868 F.2d 52, 56 (3d Cir. 1989)
(internal citation and quotation marks omitted).
14.

Discussion. Here, Respondent does not argue that the

arbitration award should be vacated for any of the first three
grounds permitted under the FAA. Rather, Respondent relies
entirely upon the last FAA ground and the two common law bases
for vacatur recognized by the Third Circuit. For the following
reasons, the Court finds Respondent’s position is without merit,
and will confirm the arbitration award.
15.

In essence, Respondent contends that judgment should

not be entered on the arbitration award because the arbitrator’s
decision “is arbitrary and capricious and goes outside the four
corners of the CBA.” [Docket Item 9 at 1.] Specifically,
Respondent argues “[t]he arbitrator not only exceeded his power
in that the Award disregards the documents produced by
[Respondent] that show that the CBA Agreement was terminated,
and confirmed by counsel for [Petitioner], but also included
benefits in his Award that went beyond that termination date of
the CBA.” [Id.] By simply restating arguments previously raised

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before the arbitrator, however, Respondent fails to satisfy its
“heavy burden.” Handley, 387 Fed. App’x at 168.
16.

As discussed supra, the arbitrator considered evidence

presented by both parties during a hearing held on May 18, 2016.
That evidence included, inter alia, the CBA, various affidavits
asserting that Union workers performed certain “non-covered
work” during the “winter months,” and an email exchange
referring to the two missing checks. [Docket Item 9, Exhibit E
at 8.] Based on its interpretation of the CBA and evaluation of
all the evidence, the arbitrator determined that some of the
evidence, including the affidavits and emails about missing
checks, was either not credible or unsupported. [Id.]
Importantly, the arbitrator heard the very same arguments
Respondent now makes before this Court, including the argument
that the CBA was not enforceable after February 28, 2014 and the
argument that Respondent should be exempt from remitting fringe
benefits for “non-covered work” performed during “winter
months.” [Id. at 2-3.] The arbitrator considered and rejected
those arguments. [Id. at 5-6.]
17.

The arbitrator’s decision to award benefits for work

performed after the February 28, 2014 termination of the CBA is
not irrational. First, the parties conferred upon the arbitrator
the power to determine arbitrability – that is, the existence of
the contract containing the arbitration provision and its
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coverage of the dispute at hand. [CBA at 79, supra.] Whether the
parties continued to perform under the CBA despite its purported
termination was a question of arbitrability for the arbitrator
to determine. Second, the arbitrator was free to determine
whether the work performed and wages and benefits paid after
February 28, 2014 were pursuant to mutual continuing obligations
undertaken by the course of conduct of the parties, such as
Respondent’s continued payment of the CBA’s wages and fringe
benefits and withholding of union dues. Third, the arbitrator
was empowered to make sense of the fact that Respondent
continued to pay wages and fringe benefits consistent with the
CBA, and that the union’s members continued to perform work, as
if the CBA continued to govern their relationship after February
28, 2014. Fourth, the arbitrator was free to reject Respondent’s
argument that it paid its union workers in accordance with the
CBA scale because that was required by the Davis-Bacon Act or by
state prevailing wage statutes. In short, the parties entrusted
these determinations to be made by the arbitrator and there is
no FAA exception or other common law basis to set aside his
determination of post-February 28, 2014 benefits.
18.

Likewise, this Court’s limited authority to review an

arbitration award is not properly invoked on the determination
of “non-covered work” during “winter months.” In finding certain
affidavits of the workers to be incredible, and thus undermining
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Respondent’s position about winter works, the arbitrator did not
owe more of an explanation. Respondent has cited to no case
rejecting an arbitrator’s credibility determination. Similarly,
whether the winter work was “covered” required interpretation of
the contract, a matter solely within the arbitrator’s domain by
agreement of the parties. Again, it is not irrational for the
arbitrator to reject Respondent’s argument that the sort of
motor vehicle maintenance being performed in winter was beyond
the scope of work covered by the CBA.
19.

Here, two sophisticated parties negotiated a 95-page

CBA, which included, among other things, a clear and unambiguous
arbitration clause. As the Supreme Court has made plain, when
there is a clear and unambiguous arbitration clause contained in
a collective bargaining agreement:
[T]he question of interpretation of the collective
bargaining agreement is a question for the arbitrator. It
is the arbitrator’s construction which was bargained for;
and so far as the arbitrator’s decision concerns
construction of the contract, the courts have no business
overruling him because their interpretation of the
contract is different from his.
United Steelworkers of America v. Enterprise Wheel & Car Corp.,
363 U.S. 593, 599 (1960). Simply, it is not the province of a
district court to second-guess the findings of an arbitrator in
the circumstances presented here.
20.

Overall, Respondent has asserted that the arbitrator’s

9-page award, including findings, was too terse; it fails to
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explain the arbitrator’s logic and findings in sufficient detail
and leaves the reader to speculate why the arbitrator ruled as
he did regarding post-February 28, 2014 fringe benefits and the
“winter months” work. Respondent, however, cites to no precedent
for raising the bar for an arbitrator’s award – no provision of
the CBA specifies the form or level of detail required of an
arbitrator’s opinion and award. No precedent elevates an
arbitrator’s writing requirement to resemble a court opinion;
indeed, the informality of arbitration, including its lack of
requirement for specific findings of fact and conclusions of
law, would be harmed by requiring a more detailed statement of
reasons and findings.
21.

Precedent is clear that the FAA contains no

requirement that an arbitrator explain his or her reasoning for
an award. Sobel v. Hertz, Warner & Co., 469 F.2d 1211, 1215 (2d
Cir. 1972) (citing Wilko v. Swan, 346 U.S. 427, 436 (1953), and
Bernhardt v. Polygraphic Co., 350 U.S. 198, 203 (1956)); see
also Sargent v. Paine Webber Jackson & Curtis, Inc. 882 F.2d
529, 532 (D.C. Cir. 1989); O.R. Sec. Inc. v. Prof’l Planning
Assoc., 857 F.2d 742, 747 (11th Cir. 1988); Owen-Williams v.
BB&T Inv. Servs., 717 F. Supp. 2d 1, 19 (D.D.C. 2010); Reichman
v. Creative Real Estate Consultants, Inc., 476 F. Supp. 1276,
1282 (S.D.N.Y. 1979). In this regard, an arbitrator’s award may
be vacated if it is shown that the arbitrator “so imperfectly
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executed [their powers] that a mutual, final, and definite award
upon the subject matter submitted was not made.” 9 U.S.C. §
10(a)(4). In the present case, each matter presented to the
arbitrator was heard and considered and decided in a “mutual,
final, and definitive award,” even if only minimal reasoning was
articulated.
22.

Likewise, Respondent suggests that the Court should

take a harder look at the award of a “permanent” arbitrator, as
in this case. To that end, at oral argument Respondent argued
for broader review and less deference to a permanently-assigned
arbitrator who handles disputes under this CBA. Again, there is
no support in case law for prescribing a more searching review.
Respondent has not argued that this arbitrator has exhibited
pro-union bias, nor that there is some sort of questionable
relationship between him and Petitioners. Absent allegations
that there is some sort of fraud, bias, or misconduct by the
arbitrator, this Court applies the well-settled principles of
narrow judicial review of an arbitrator’s award. There is
nothing inherently troublesome in utilizing services of an
arbitrator who is familiar with the CBA and handles such
disputes, and who is not alleged to have exhibited “evident
partiality or corruption” performing duties under the
arbitration agreement. 9 U.S.C. § 10(a)(2).

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23.

Based on the record before the Court, the undersigned

does not find that the arbitrator “exceeded [his] powers” or
demonstrated “manifest disregard for the CBA,” or that the
arbitral award was “completely irrational.” Accordingly, the
Court will uphold the arbitrator’s award.
24.

Conclusion. For the foregoing reasons, the

Petitioners’ motion will be granted and the Respondent’s crossmotion will be denied. An accompanying Order shall be entered.

November 21, 2017
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

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