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6th U.S. circuit Court of Appeals Judge Jeffrey S. Sutton has drawn a line in the sand over vacating labor arbitrators’ awards-he wants it to stop. “I do not understand how we can alter the parties’ delegation of decision-making authority in this case merely because one of those parties (the employer) now thinks that the arbitrator botched the interpretation of the contract,” wrote Sutton. Michigan Family Resources Inc. v. Service Employees International Union Local 517, No. 04-2564. He said it is high time the full court reexamined its long-standing, four-part test for vacating labor arbitration awards, saying that it has fallen far from the U.S. Supreme Court’s nearly “absolute deference” to arbitrator’s decisions. The Supreme Court has not vacated a labor arbitration decision since 1960, yet the 6th Circuit has vacated 25% of all such decisions since 1986, or 19 of 75 cases, he said. For published decisions only, the rate rises to 29%, according to Sutton. “The essence of the Supreme Court’s teaching on review of arbitration awards is that courts are supposed to give great deference to arbitrators,” and that arbitrators “are not confined to the four corners of the instrument in making that determination,” said Theodore J. St. Antoine, professor emeritus at University of Michigan Law School and past president of the National Academy of Arbitrators. Sixth Circuit not alone And the 6th Circuit is not alone. The 1st and 5th circuits have been accused of failing to adhere to the standard of limited judicial review of arbitrated decisions as well in citations by Sutton. “As a broad generalization, the Supreme Court has had a heck of a time with various circuits,” said St. Antoine. He believes that the “law of the shop” is absorbed into contracts, and arbitrators may consider past practices as well. He did caution that the two new justices on the court might alter the standard. Mary Ellen Gurewitz, attorney for the union in the 6th Circuit case, welcomed the decision. She will seek full court review, saying, “We couldn’t possibly turn down” Sutton’s invitation. “I think he is absolutely right. The 6th Circuit law has developed in a way that is inconsistent with the Supreme Court,” said Gurewitz of Detroit’s Sachs Waldman. The 6th Circuit upheld the vacating of an arbitrator’s contract interpretation at a Michigan Headstart Program. The arbitrator found union employees were denied a cost-of-living wage increase that management received, despite confusing contract language. He ordered a matching 4% raise, rather than the 2.5% the company proposed. The award was overturned by a district judge and the 6th Circuit affirmed. Timothy J. Ryan, attorney for the Michigan Family Resources, said that nothing in the 6th Circuit test “is anything different from what the Supreme Court has said. “It is clearly a narrow standard of review,” he said, pointing to the slim number of appeals challenging arbitrations. But if the 6th Circuit takes the case for en banc review, “either way we still win, the arbitrator got it so wrong,” Ryan said. In one of a trio of United Steelworkers cases involving labor arbitration awards, the high court said that an award must be enforced so long as it draws its “essence” from the collective bargaining agreement. United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960). Four-part test In creating its four-part test, the 6th Circuit said that there may be a departure from the “essence” of the contract if: the award conflicts with contract terms, imposes new requirements not in the contract, is without rational support or is based on general fairness considerations rather than precise contract terms. Cement Divs., Nat’l Gypsum Co. v. United Steelworkers, Local 135, 793 F.2d 766 (1986). What started as a rule requiring courts to refuse to review the merits of an arbitration award and even tolerate “serious” legal errors, has turned into a rule that awards can be vacated if they conflict “with the express terms” of the agreement, wrote Sutton. “At some point, it seems to me, the full court should reconsider the Supreme Court’s directives in this area or at least explain how our four-part test respects them,” he said.

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