International Longshoremen's Association (Local 1575) v. Horizon Lines, Inc.

Filing 20

OPINION AND ORDER granting 5 MOTION for Summary Judgment filed by Horizon Lines, Inc. Signed by Judge Salvador E Casellas on 3/16/2008.(THD)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 H o riz o n Lines, Inc. D e f en d a n t

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO

In te rn a tio n a l Longshoremen's Association (L o c a l 1575) P l a in t i f f v. Civil No. 08-1530 (SEC)

O p in io n and Order Affirming Arbitration Award Local 1575, International Longshoremen's Association AFL-CIO ("Local 1575") filed th e present action in state court seeking to vacate an arbitration award issued in favor of H o riz o n Lines of Puerto Rico, Inc. ("Horizon"). Horizon removed the suit to this Court, and f ile d a Motion for Summary Judgment (Dockets ## 5, 6 & 7). After reviewing the Arbitration A w a rd (Docket # 11-2), the parties' filings, and the applicable law, the award shall be A F F I R M E D , and summary judgment GRANTED in favor of Defendant. Procedural Background T h e fundamental disagreement between the parties regards Horizon's ability to split the f ix e d personnel into two shifts, a first beginning at 7:00 A.M. and a second beginning at 4:00 P .M . See Docket # 11-3 at 4. The arbitrator found that this policy ". . . does not violate the C o lle c tiv e Bargaining Agreement . . ." Accordingly, Local 1575 alleges that "the arbitrator a c te d with flexibility when interpreting the same, violating thus the spirit of the contractual c la u se s which left no opportunity to interpretations other than the one contained in the same as to the recruitment of the fixed personnel in the yard . . ." Docket 11-2 at 19. Local 1575 brought the present claim arguing that "[b]eing the [CBA] clauses clear, the arbitrato r erred by interpreting the same flexibly. His determination is not substantially sustained

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w ith the whole file and therefore the award is contrary to law. The Arbitrator's reasoning was 3 p a lp a b ly defective and he acted incorrectly by validating a practice of the employer clearly 4 v io l a ti n g the [CBA]." Accordingly, Local 1575 makes the following averments in favor of 5 v a c atin g the award: 1) the arbitrator ignored the clear language of the CBA Article VI(a)(1), 6 S e c tio n B(2)(1), and Section B(5) in violation of Articles 1233 and 1234 of the Puerto Rico 7 C iv il Code, and 2) that article VIII(2)(c) of the CBA clearly governs the hours to start work. 8 O n May 7, 2008, Horizon removed the complaint to this forum based on the Labor 9 M a n a g e m e n t Relations Act, 29 U.S.C. § 152(2). Soon thereafter they filed a motion for 10 s u m m a ry judgment in response to the request to vacate the arbitration award. Horizon argues 11 th a t the petition to vacate the arbitration award should be dismissed, because the arbitrator 12 re a so n a b ly construed the contract withing the parameters of the CBA. See Docket 6 at 8. 13 F u r th e rm o re , the company notes that the parties agreed that the arbitrator's award would be final 14 a n d binding on all parties. 15 Standard of Review 16 It is well a well established federal labor law principle that when , ". . . parties agree to 17 s u b m it a dispute to binding arbitration, absent unusual circumstances, they are bound by the 18 o u tc o m e of said proceedings." Asociacion De Empleados v. Union Internacional De 19 T ra b a ja d o re s De La Industria De Automoviles, Civ. No. 07-2636, slip op. at 4, 2009 U.S. App. 20 L E X IS 4571 (1st Cir. Mar. 6, 2009) (citing Posadas de Puerto Rico Assocs., Inc. v. Asociacion 21 d e Empleados de Casino de Puerto Rico, 821 F.2d 60, 61 (1st Cir. 1987)). As such, judicial 22 re v ie w of arbitration awards is exceedingly narrow. Id. In this same vein, the courts do not 23 a tte n d to claims of errors of law or of fact by arbitrators. Id. (citing Challenger Caribbean Corp. 24 v . Union General de Trabajadores de Puerto Rico, 903 F.2d 857, 860 (1st Cir. 1990)). One limit 25 to said deference is that an arbitrator's decision must be grounded in reason and fact, which 26

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a llo w s for an inquiry into whether the award is a "manifest disregard of the law." McCarthy v. 3 C itig ro u p Global Mkts., Inc., 463 F.3d 87, 91 (1st Cir. 2006). However, the validity of this 4 a n a lysis is not completely clear in light of recent Supreme Court decisions. 5 The Supreme Court recently held that with regards to the Federal Arbitration Act, "that 6 § § 10 and 11 provide exclusive regimes for the review provided by the statute . . ." Hall St. 7 A s s o c s., L.L.C. v. Mattel, Inc., 128 S. Ct. 1396, 1406 (2008); 9 U.S.C. § 10 & 11.1 Neither of 8 th e s e sections includes the manifest disregard test, and as such it cannot be used when 9 interpr e tin g an arbitration award through the lens of the FAA. Id. Nevertheless, in cases where 10 th e parties have not expressly invoked the FAA, and the complaint was originally filed in state 11 co u rt, the First Circuit has not applied the Hall Street preclusion of the manifest disregard 12 in q u iry. See, e.g, Ramos-Santiago v. UPS, 524 F.3d 120, 124 n. 3 (1st Cir.2008); Asociacion 13 D e Empleados v. Union Internacional De Trabajadores De La Industria De Automoviles, Civ. 14 N o . 07-2636, slip op. at 4, 2009 U.S. App. LEXIS 4571 (1st Cir. Mar. 6, 2009). 15 As such, arbitration awards may be vacated under the "manifest disregard of the law test" 16 w h e n the appealing party shows that the award is: 17 18 19 20 21 22 23 24 25 26
In Hall Street the Supreme Court stated that "[a]ny other reading opens the door to the full-bore legal and e v i d e n t ia r y appeals that can `rende[r] informal arbitration merely a prelude to a more cumbersome and time-consuming ju d ic i a l review process,' and bring arbitration theory to grief in post-arbitration process." Id. at 1405. Under § 10(a), awards m a y be vacated "(1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident p a r tia l ity or corruption in the arbitrators, or either of them; (3) where 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; o r of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their p o w e r s , or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not m a d e ." Modifications to awards are regulated under § 11, and shall be warranted "(a) [w]here there was an evident material m is c a lc u l a t io n of figures or an evident material mistake in the description of any person, thing, or property referred to in the a w a r d [;] (b) [w]here the arbitrators have awarded upon a matter not submitted to them... . [and] (c) [w]here the award is i m p e r f e c t in matter of form not affecting the merits of the controversy."
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CIVIL NO. 08-1530 (SEC) (1 ) unfounded in reason and fact; (2) based on reasoning so palpably faulty that

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3 n o judge, or group of judges, could ever conceivably have made such a ruling; or 4 (3 ) mistakenly based on a crucial assumption that is concededly a non-fact. 5 Ramos-Santiago, 524 F.3d at 124; McCarthy, 463 F.3d at 91. Moreover, this also requires that 6 th e arbitrator knowingly disregard the law. Id. 7 Applicable Law & Analysis 8 T h e arbitrator concluded that "[a]n examination of the contractual provisions cited 9 re f le c ts that the establishment of certain fixed work shifts had the sole purpose of regulating the 10 em p loym en t and the type of pay per hour worked, and not to guarantee eight (8) hours of work 11 f o r all the personnel recruited from the yard list." See Docket # 11-3 at 20. Local 1575 argues 12 th a t this conclusion equates to a manifest disregard for the law, which merits vacating the 13 a w a rd . See Docket # 14 at 6. 14 Nevertheless, the arbitrator came to his conclusion after duly analyzing Article 1237 of 15 th e Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, § 3475, which states that the meaning of the 16 v ariou s clauses of a contract, when in question, should be interpreted as a whole. Docket # 11-3 17 a t 20. He also interpreted that Horizon, when it entered into the CBA, "retained the right to . 18 . . divide and/or fraction the personnel recruited from the yard list, calling some to work . . ." 19 o n different shifts. Id. at 19. Said reasoning was based on an academic treatise, which stated 20 th a t the scheduling of work in CBAs is not normally waived except for express provisions of 21 th e agreement, and that provisions ". . . for a regular workweek [were] designed to regularize 22 e m p lo ym e n t and furnish norms from which overtime premiums could be calculated, and not to 23 g u a ra n te e employment for all or any groups of employees for any specific number of hours per 24 d a y or days per week." Id. at 20-21 (citing Elkouri & Elkouri, How Arbitration Works 722-726 25 26

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(6 th ed. 2003))(internal quotations omitted). Accordingly, the arbitrator found that Horizon 3 re ta in e d the right to create divide the shifts in its yard, and thus, had not violated the CBA. 4 Judicial review of arbitration awards does not entail an analysis of whether a court agrees 5 w ith the decision, rather it is a question of identifying exceptional circumstances. While this 6 C o u rt might not concur with the arbitrator's conclusions, his decision does not suffer from 7 in a n itio n or "manifest errors of law." This Court finds that none of the causes for vacating an 8 a rb itra tio n award under the FAA's §§ 10 and 11 are present, or even alleged, in this action. 9 F u rth e rm o re , this Court finds that the Arbitration Award was 1) based in fact, 2) not the result 10 o f palpably faulty reasoning, 3) and free from reliance on non-facts for its crucial assumptions. 11 A c c o rd in g ly, under the circumstances present in this case, no valid grounds are present for 12 ju d ic ia l interference with the arbitration process. 13 C o n c lu s io n 14 Based on the foregoing, the Motion for Summary Judgment (Docket # 5) is GRANTED, 15 a n d the request to vacate the arbitrator's award is DENIED. Judgment shall be entered 16 a c c o r d i n g l y. 17 I T IS SO ORDERED. 18 S a n Juan, Puerto Rico, this 16th day of March, 2008. 19 20 21 22 23 24 25 26 S /S a lv a d o r E. Casellas S a lv a d o r E. Casellas U .S . District Judge