Teamsters Local 312 v. Matlack Inc ( 1997 )

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
7-8-1997
Teamsters Local 312 v. Matlack Inc
Precedential or Non-Precedential:
Docket 96-1268
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Filed July 8, 1997
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 96-1268
TEAMSTERS LOCAL 312,
Appellant
v.
MATLACK, INC.
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 95-cv-05661)
Submitted Pursuant to Third Circuit LAR 34.1(a)
January 14, 1997
Before: SLOVITER, Chief Judge, GREENBERG and
SCIRICA, Circuit Judges
(Opinion filed July 8, 1997)
Mark P. Muller
Teamsters Local 312
Chester, PA 19013
Attorney for Appellant
Charles E. Sykes
Bruckner & Sykes
Houston, TX 77057
Attorney for Appellee
OPINION OF THE COURT
SLOVITER, Chief Judge.
This appeal presents the issue of the appropriate
procedure to be used by the district court when it
concludes that there were fundamental procedural
irregularities in the course of an arbitration hearing
between parties to a collective bargaining agreement.
I.
A.
Historical Facts
Teamsters Local 312, affiliated with the International
Brotherhood of Teamsters, AFL-CIO, ("Local 312" or "the
Union") is the certified bargaining unit for truck drivers and
haulers operating in the Bensalem, Pennsylvania waste
water transportation terminal of appellee Matlack, Inc.
("Matlack"). Local 312 and Matlack are partners to a
Collective Bargaining Agreement ("CBA") that has been
extended indefinitely by mutual agreement. As part of its
operations, Matlack arranges for non-employee owner-
operators who are under its supervision to drop off their
trailers containing shipments of waste water to Matlack's
Bensalem terminal. Those trailers arriving in Bensalem are
not certified to haul waste water to their ultimate
2
destinations in New Jersey. Local 312 employees are
responsible for obtaining the necessary health and safety
certifications from Trenton, New Jersey and then hauling
the deposited trailers to environmental treatment facilities
in either Deepwater or Logan Township, New Jersey.
According to Article 50.1 of the parties' Collective
Bargaining Agreement, which is entitled "Work
Preservation," Matlack is expressly prohibited from
diverting or subcontracting to any other plants, businesses
or non-bargaining unit employees, or to any other mode of
operation, any of the hauling work that was then performed
or to be assigned to the bargaining unit. See Art. 50.1, App.
at 38.1
Sometime in April 1994, employees of Local 312 noticed
that the number of trailer loads of waste water arriving in
the Bensalem terminal was decreasing markedly. After
making some inquiries, the employees were informed that
many of Matlack's incoming waste water loads were being
deposited at another terminal in Elkton, Maryland. Based
on this information, on June 1, 1994, Union President
Timothy Lehman filed a grievance letter with the Company
which constituted Step 1 of the grievance procedures set
_________________________________________________________________
1. The provision reads in full:
Section 50.1 -- Work Preservation
For the purpose of preserving work and job opportunities for the
employees covered by this Agreement, the Employer agrees that no
operation, work or services of the kind, nature or type covered by,
or presently performed or hereafter assigned to the collective
bargaining unit by the Employer will be subcontracted, transferred,
leased, diverted, assigned or conveyed in full or in part (hereinafter
referred to as "divert" or "subcontract"), by the Employer to any
other plant, business, person, or non-unit employees, or to any
other mode of operation, unless specifically provided and permitted
in this Agreement.
In addition, the Employer agrees that it will not, as hereinafter set
forth, subcontract or divert the work presently performed by or
hereafter assigned to, its employees to other business entities owned
and/or controlled by the Employer, or its parent, subsidiaries or
affiliates.
3
out in § 7.2 of the Collective Bargaining Agreement.2 The
letter stated:
Please consider this letter as a formal grievance
under our current collective bargaining agreement
regarding waste water loads that were previously
handled by the Bensalem, PA terminal and are now
handled by your Elkton, MD terminal utilizing a
tractor that was transferred from Swedesboro.
To the best of my knowledge, these loads originate in
Muscatine, Iowa or other parts of the Northern
Region and are relayed into New Jersey out of
Elkton, MD.
We view this as a violation of Article 50 and, as such,
request a meeting as scheduled at once to discuss.
App. at 41.
On August 9, 1994, Lehman met with Michael Lynch, the
Bensalem Terminal Manager, in accordance with Step 2 of
the grievance procedures to discuss the grievance contained
in the letter. At the meeting Lynch informed Lehman that
_________________________________________________________________
2. Section 7.2 of the Collective Bargaining Agreement describes the
Grievance Procedures in relevant part:
Step 1. All grievances must be made known in writing to the other
party within seven (7) working days after the reason for such
grievance has occurred.
...
Step 2. If the disposition of the matter by the Terminal Manager in
charge, or his duly authorized representative, is not satisfactory, the
matter must be taken up by the Business Agent, and the Employer's
Regional Representative, or other representatives of the Employer
with authority to act, within five (5) working days of the written
disposition set forth in Step 1.
...
Step 3. If the disposition of the matter by the Regional
Representative or other representatives of the employer with
authority to act, is not satisfactory either party has the right to file
its grievance with the Joint Committee. . . .
App. at 18.
4
the waste water loads in question were originating from
locations in addition to those in Muscatine, Iowa or other
parts of the Northern Region. Lehman then made a
handwritten amendment to the grievance letter indicating
that the grievance was meant to cover all allegedly diverted
shipments ever assigned to the Bensalem terminal, not only
those suspected to originate from Muscatine, Iowa or"other
parts of the Northern Region." App. at 41 ("Amended --
8/9/94 -- 9:31 am -- To any waste water that came into
and out of this terminal!"). Although Lynch refused to sign
the amended grievance, he did not object to it, and Lehman
noted this fact on the letter. Id.
Nothing was resolved at this grievance meeting or at a
Joint Committee meeting held on September 12, 1994, in
accordance with Step 3 of the grievance procedures. The
Company maintained at both grievance proceedings that
any shipments coming from Muscatine or elsewhere had
never been actually "assigned" to Bensalem as
contemplated by the "Work Preservation" guarantee of the
CBA, but were part of "system-wide work" which could be
dispatched to any terminal location without regard to the
jurisdictional restriction in Article 50. The Union's position
was that proof of a marked decrease in the number of
wastewater shipments from locations such as Muscatine, in
the absence of company evidence to the contrary, satisfied
the contractually required presumption that work is being
diverted to other, non-bargaining units in violation of
Article 50.
The parties agreed to arbitration and a hearing was held
on April 27, 1995 before Arbitrator Charles D. Long.
Matlack was represented by J. Carlisle Peet and Local 312
by Mark Muller. There was considerable confusion in the
course of the arbitration proceeding. At the outset of the
hearing, Matlack's counsel announced that he wanted to
raise two procedural defenses not previously mentioned in
the prior grievance proceedings: the first, a"timeliness"
objection arguing that the Union's June 1, 1994 grievance
letter was filed after the seven day filing requirement set
forth in the CBA; the second, an objection that the"scope"
of the grievance contained in the letter was limited to those
allegedly improper shipments that originated out of
5
Muscatine, Iowa alone and not those referred to by the
clause "or other parts of the Northern Region" or by the
handwritten amendment. Matlack also announced that it
was not prepared to address the substantive issue of the
grievance, namely whether there was an actual diversion of
shipments "assigned" to Bensalem bargaining unit
employees in violation of Article 50. App. at 190-92, 197.
After Union counsel objected to Matlack's attempt to
focus the hearing only on the procedural aspects of the
grievance letter, the arbitrator said to Matlack:
You'd better present your arguments as to what the
grievance was and the scope of the substance,
subject to jurisdiction hearing this, and then proceed
on to the substance. So (inaudible) -- so far as it
relates to the limited load that the company speaks
of.
App. at 199.
Soon after, Matlack reiterated that it was unprepared to
address anything beyond the scope of the grievance, to
which the arbitrator replied, "I will try and make an effort,
in order to determine how we can agree to that -- in effect,
as long as we're all here, let's go with the Muscatine part of
the substance." App at 201. He continued, "I will make . . .
a determination on the scope of the issue prior to the
holding of a second meeting, because that determination
will determine whether or not the second day of hearing is
necessary." Id.
Later, after confusion about the proper scope of a cross-
examination, the arbitrator said,
Because everybody is here, I'm going to let the union
proceed, even though the case may extend beyond
Muscatine. If, after the hearing today, I determine
that the issue is broader than just Muscatine, we'll
have to reconvene for the company to deal with these
other issues. And if it means recalling these
particular witnesses so you can reopen cross-
examination, I'll certainly permit you to do that.
App. at 216. Again, after more controversy over the scope of
the day's hearing, the arbitrator said:
6
I am more concerned that, in resolving this problem,
it is resolved on a full factual record and, therefore,
if, in fact, the issue is determined to go beyond the
scope of Muscatine, Iowa, I'll permit the company to
address it at a subsequent time.
App. at 232-33. Thus, the arbitrator appears to have
concluded that he would permit broad questioning of the
witnesses on all the issues -- procedural and substantive
-- in order to create a full factual record, but that he would
permit Matlack to address the merits of the Article 50
argument at a later date.
Again at the close of the day's hearing, the arbitrator
appeared to signal to the parties that he would only decide
the procedural issues presented that day and that Matlack
could address and brief the merits of the dispute at a later
date. The following colloquy occurred:
Mr. Peet
[counsel for Matlack]: I would like to brief the issue of the
grievance. And I think trying to
brief the other issue (inaudible) we
may want to come back, depending
upon your points on the grievance
issue. Based upon your ruling
(inaudible), I'd like to brief the case,
depending on how you rule and
how we see the grievance issue.
...
Arbitrator: I have no objection. As a matter of fact, I
was just going to say, Mr. Lehman [Local
312's president], its a little unusual to
have a proceeding and then -- and then
and my only question really -- my only
comment (inaudible) what Mr. Peet had
suggested was going to be (inaudible) need
not brief it, which is go ahead and issue a
ruling on the -- on the scope of the issue.
If there was (inaudible) the broader issue
for a second day of hearing, I would then
go ahead and address the whole shooting
7
match and then brief everything or close
orally.
I have no problem if Mr. Peet wants to
address the scope of the issue individually,
and whether you do it orally or brief form
is up to you. If you want to brief it
(inaudible) I would just ask not to take too
long because of the day of submitting
(inaudible).
Mr. Peet: I would like to brief.
Mr. Muller [counsel for Local 312]: I am going to brief
the whole thing,
the whole ball of
wax.
...
Arbitrator: You understand, Mr. Muller, you're going
to exchange briefs and you'll have the
benefit of your brief on that.
App. at 325-327.
Based upon its understanding of the arbitrator's
intentions, Matlack submitted a post-hearing brief that only
addressed the timeliness of the Union's letter of June 1,
1994 and whether the letter's scope extended beyond the
Muscatine loads. Matlack stated in its brief its
understanding that, "In the event the Arbitrator ruled that
the alleged amendment to the grievance was valid, the
Company would have the right to reopen the hearing for the
purposes of further cross-examining the witnesses the
Union presented at the April 27th Hearing, and presenting
new evidence." App. at 49. In the Union's post-hearing
brief, the Union answered all the procedural objections
made by Matlack, and argued that the merits of the dispute
rendered Matlack in violation of Article 50 and also that no
additional hearing was necessary as Matlack never provided
any evidence to rebut the established presumption of
diversion and would thus be estopped from presenting such
evidence in future proceeding. App. at 62-72.
8
On June 13, 1995, Arbitrator Long sent both parties an
award that clearly purported to render judgment in favor of
the Union on the procedural objections regarding the scope
and timeliness of the grievance letter as well as on the
merits of the grievance. See App. at 89-99 (opinion,
decision, and remedy of Arbitrator Long).3 He decided that
the grievance letter was timely filed, that the handwritten
amendment to the amendment extended the scope of the
grievance to those loads originating in areas other than
Muscatine, Iowa, and that Matlack violated Article 50 by
diverting Muscatine loads from the Bensalem terminal. He
awarded the Union back pay and remanded the matter to
the Step 2 grievance procedure for disposition of those
disputed shipments other than those from Muscatine.
On June 14, 1995 Matlack wrote to the arbitrator and
expressed "great shock" that the arbitrator had rendered a
decision on the merits of the grievance since all parties to
the hearing had understood that Matlack would have
another opportunity to present evidence on that
substantive issue. App. at 101. What followed was aflurry
of correspondence between Matlack and the Union about
the propriety of the scope of the judgment and, ultimately,
Arbitrator Long's decision to withdraw as arbitrator. On
July 17, 1995, Arbitrator Long sent the parties a letter
confirming his withdrawal. Again both parties sent letters
disputing what was actually adjudged by the arbitrator and
what remained to be decided.
_________________________________________________________________
3. In his written award, the arbitrator announced that he would be
addressing the following issues:
1. Is the grievance of June 1, 1994, timely filed pursuant to Article
7, section 7.2, of the collective bargaining agreement?
2. Is the amendment of August 9, 1994, timely and, otherwise,
valid?
3. If not, is the grievance filed on June 1, 1994, limited solely to the
loads of waste water originating in Muscatine, Iowa?
4. If it is determined that the grievance is timelyfiled, has there
been a violation of Article 50 of the collective bargaining agreement,
as alleged?
App. at 81.
9
Arbitrator Long responded on July 31, 1995 in an
attempt to clarify where he believed the case currently
stood:
My decision to withdraw from this matter concerned
a misunderstanding concerning the procedure to be
followed prior to a decision resolving the substantive
portion of the issue which is separate and unrelated to
that portion of the issue concerning the scope of the
grievance. Consistent with the record at the close of the
hearing on April 27, 1995, it was my intent to leave the
matter in the following posture:
1. a binding decision dated June 13th, 1995
extending the scope of the underlying substantive
issue to include the grievance of June 1, 1995 as
amended during the step 2 grievance meeting on
August 9, 1995.
2. no decision concerning the underlying
substantive issue of whether the Employer's conduct
violated Article 50, Subcontracting, of the collective
bargaining agreement, as alleged.
App. at 110. Based on this letter, Matlack refused to
comply with the arbitrator's June 13, 1995 decision and
sought the Union's agreement to rehear the matter before a
different arbitrator. The Union refused.
B.
District Court Procedure
On September 7, 1995, Local 312 filed a complaint in the
Eastern District of Pennsylvania pursuant to § 301(c) of the
Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(1995), seeking to enforce the original arbitration award in
its entirety including both its procedural and substantive
portions. The parties filed cross-motions for summary
judgment, submitting correspondence and deposition
testimony from Arbitrator Long. Local 312 argued that the
June 13, 1995 decision was a final award and, under well
established doctrine, was entitled to complete deference by
the court. Matlack contended that the July 31, 1995 letter
10
and the arbitrator's withdrawal clearly voided the
substantive portion of the award and entitled it to a new
arbitration proceeding. Matlack filed the deposition of
Arbitrator Long, which contained the following testimony:
BY MR. MULLER [Counsel for the Union]:
Q: Mr. Long, at any time, did you communicate to either
Mr. Peet [counsel for Matlack] or myself, either verbally
or in writing, that your opinion issued on June 13,
1995, was vacated?
A: No, sir.
See Teamsters 312 v. Matlack, Inc., 916 F. Supp. 482, 484
(E.D. Pa. 1996).
The district court found that "Long's answer at his
deposition raised questions in the court's mind about his
letter of July 31" and that it was "[f]aced with some
uncertainty as to what Arbitrator Long intended after
issuing his June 13, 1995 award," and declined to grant
summary judgment on the submissions. Id. The court
requested that Arbitrator Long testify at an evidentiary
hearing, and rejected the Union's objection to the court's
decision to call the arbitrator as a witness. Id. at 484-85.
After hearing Long's testimony, the district court found that
the arbitrator had led Matlack to believe that he would not
render a decision on the merits of the dispute and would
permit Matlack to address that issue at a later date. Id. at
484. The court concluded that the ultimate award followed
from a fundamental procedural irregularity which justified
vacating the tainted portion of the award and remanding on
the merits. The court ordered that the arbitration award of
June 13, 1995 was properly enforceable "as to the
timeliness and scope of the grievance only." Id. at 487.
II.
This case requires us to resolve two legal issues. First,
whether the doctrine of functus officio precluded the district
court from examining the arbitrator's July 31, 1995 letter
which acknowledged a procedural irregularity and clarified
the intended scope of the arbitration award. Second,
assuming the letter was properly considered, whether the
11
district court had the legal power to vacate a portion of the
award that resulted from the procedural irregularity.
A.
Functus Officio Doctrine
Local 312 contends that according to the long-standing
doctrine of functus officio an arbitrator's power is exhausted
immediately after s/he reaches a final decision, regardless
of the correctness of that decision. It argues that, therefore,
Arbitrator Long's letter purportedly clarifying his decision
was a legal nullity and the original award as submitted,
resolving both the procedural and substantive issues in the
Union's favor, must be final. We conclude, however, that
because the arbitrator's letter merely related to the
procedural status, and did not attempt to alter the
substance of his analysis, the letter was not proscribed by
the functus officio doctrine.
The doctrine of functus officio, Latin for a task performed,4
was applied strictly at common law to prevent an arbitrator
from in any way revising, re-examining, or supplementing
his award. Glass, Molders, Pottery, Plastics and Allied
Workers Int'l Union v. Excelsior Foundry Co., 56 F.3d 844,
846-47 (7th Cir. 1995); Colonial Penn Ins. Co. v. Omaha
Indem. Co., 943 F.2d 327, 331 (3d Cir. 1991). The rule
provided simply that when "arbitrators have executed their
award and declared their decision they are functus officio
and have no power or authority to proceed further."
Mercury Oil Refining Co. v. Oil Workers Int'l Union, 187 F.2d
980, 983 (10th Cir. 1951).
The policy underlying the common law doctrine derives
from a perception that arbitrators, unlike judges, are not
institutionally sheltered from "the potential evil of outside
communication" and are thus particularly susceptible to
_________________________________________________________________
4. Black's explains that the term is "[a]pplied to an officer whose term
has expired and who has consequently no further official authority; and
also to an instrument, power, agency, etc., which has fulfilled the
purpose of its creation, and is therefore of no further virtue or effect."
Black's Law Dictionary 673 (6th ed. 1990).
12
various ex parte influences that might affect a conclusion.
La Vale Plaza, Inc. v. R.S. Noonan, Inc., 378 F.2d 569, 572,
n.13 (3d Cir. 1967). As the Seventh Circuit stated in
Excelsior Foundry, functus officio conceives of arbitrators as
"ad hoc judges -- judges for a case; and when the case is
over, they cease to be judges and go back to being law
professors or businessmen or whatever else they are in
private life." 56 F.3d at 847. In the same opinion, the court
opined that the functus officio doctrine was motivated
primarily by judicial antagonism toward arbitrators and a
derogation of the arbitral process -- originating"in the bad
old days when judges were hostile to arbitration and
ingenious in hamstringing it." Id. at 846; see also Courier-
Citizen Co. v. Boston Electrotypers Union No. 11, 702 F.2d
273, 278 (1st Cir. 1983) (recognizing that limitations on
arbitrator's post award authority rested on court's hostility
toward arbitration as dispute resolution mechanism).
However, after the Supreme Court instructed federal
courts to fashion and apply a substantive body of federal
labor law in § 301 LMRA enforcement proceedings,
see Textile Workers Union v. Lincoln Mills, 353 U.S. 448,
456 (1957), the federal courts have been less strict in
applying the common law functus officio rule in reviewing
labor disputes. See, e.g., Locals 2222, 2320-2327, Int'l Bhd.
of Elec. Workers v. New England Telephone & Telegraph Co.,
628 F.2d 644, 647 (1st Cir. 1980) (considered doctrine
irrelevant in ordering resubmission of existing arbitration
award to original arbitrators for amplification); Enterprise
Wheel & Car Corp. v. United Steelworkers, 269 F.2d 327,
332 (4th Cir. 1959) (upholding resubmission of award to
arbitrator because original hostility to arbitration process
less relevant in labor disputes), aff'd in relevant part, 363
U.S. 593, 599 (1960); see generally, United Steelworkers v.
Ideal Cement Co., 762 F.2d 837, 841 n.3 (10th Cir. 1985)
(listing cases).
This court considered the continued applicability of the
functus officio doctrine in Colonial Penn, a non-labor case in
which the district court ruled that an arbitration panel in
a reinsurance dispute was permitted to reconvene in order
to correct a mistaken assumption of fact. 943 F.2d at
329-30. We acknowledged that the doctrine remains viable,
13
particularly when the arbitrator is asked to reconsider or
amend the merits of an initial award, but listed the
doctrine's recognized limitations: "(1) an arbi trator can
correct a mistake which is apparent on the face of his
award; (2) where the award does not adjudicate an issue
which has been submitted, then as to such issue the
arbitrator has not exhausted his function and it remains
open to him for subsequent determination; and (3) where
the award, although seemingly complete, leaves doubt
whether the submission has been fully executed, an
ambiguity arises which the arbitrator is entitled to clarify."
Id. (citing La Vale, 378 F.2d at 573) (internal quotations
omitted).
These exceptions from the functus officio doctrine were
narrowly drawn to prevent arbitrators from engaging in
practices that might encourage them to change their
reasoning about a decision, to redirect a distribution of an
award, or to change a party's expectations about its rights
and liabilities contained in an award. See, e.g. Colonial
Penn, 943 F.2d at 332 (emphasizing need to prevent parties
from attempting to persuade arbitrators "to overturn an
adverse award"). Therefore, whether a case falls within one
of these categories must be considered in light of the
underlying rationale for the modern application of functus
officio.
The exception under category (1) above, which allo ws an
arbitrator to correct a mistake apparent on the face of the
award, is designed for cases of clerical mistakes or obvious
errors of arithmatic computation. Id. In Colonial Penn we
concluded that this exception did not apply to alleged
mistakes where extraneous facts must be considered. Id.The rationale for the exception under category (2) above,
which authorizes an arbitrator to decide a remaining issue
which has been submitted by the parties but not resolved,
is that the arbitration agreement between the parties is still
in force and the arbitrator's power over the remainder of
the unresolved submission continues. Therefore,"the
arbitrator is not exposed to any greater risk of impropriety
than would normally exist during the pendency of the
arbitration proceedings." La Vale, 378 F.2d at 573.
14
The case before us falls within neither category (1) nor
(2). The arbitrator's July 31 letter did not purport to correct
any mistakes appearing on the face of the arbitration award
nor did the arbitrator leave undecided a particular issue
submitted by the parties. If anything, Arbitrator Long
decided more than the parties had anticipated, and the
rationale for the second exception would not appear to
accommodate the inverse factual situation.
The coverage of category (3) above, which entitles an
arbitrator to clarify an ambiguity in a "seemingly complete"
award where there is "doubt whether the submission has
been fully executed," Colonial Penn, 943 F.2d at 332, would
not undermine the policy considerations that prohibit
arbitrators from re-examining awards "for there is no
opportunity for redetermination on the merits of what has
already been decided," La Vale, 378 F.2d at 573. The La
Vale decision illustrates the situation in which
resubmission to an arbitration panel for clarification is
permissible. The award had been in favor of a contractor,
Noonan, for approximately $31,000. La Vale, 378 F.2d at
570. La Vale subsequently sued Noonan to recover
approximately $25,000 because it had delivered Noonan a
deposit of approximately $56,000 during the pendency of
the proceeding. Noonan contended that the arbitration
panel had recognized that the $56,000 represented a partial
payment on account and that the $31,000 award was thus
meant to be supplemental.
We upheld the district court's resubmission of the issue
to the arbitration panel for clarification as to whether the
sum of $56,000 was a deposit or a payment on account. Id.
at 573. In light of the policies underlying the functus officio
doctrine, we concluded that the doctrine would not prevent
resubmission because it would "in no way reopen the
merits of the controversy." Id.The decision in La Vale is consistent with the approach
followed elsewhere. See, e.g., Courier Citizen, 702 F.2d at
279 (arbitrator allowed to explain remedy sketched out in
award, because situation unlike cases where "arbitrator
issued a second award fundamentally inconsistent with the
first award."); Hanford Atomic Metal Trades Council v.
General Elec. Co., 353 F.2d 302, 308 (9th Cir. 1965)
15
(resubmission to arbitrator permissible because "not for the
purpose of relitigating or modifying the award"); 42 Pa.
C.S.A. § 7315(a)(2) (Pennsylvania Arbitration Act
authorizing resubmission where "arbitrators awarded upon
a matter not submitted to them and the award may be
corrected without affecting the merits of the decision upon
the issues submitted.").
In this case, we need not decide whether the
circumstances would have justified resubmission to the
arbitrator because Arbitrator Long withdrew before the
matter was brought to the district court. Therefore, the
issue before us concerns the propriety of the district court's
consideration of arbitral post-award comment.
In a series of cases from various circuits, the courts have
considered supplementary information from the arbitrator
that addressed a fundamental procedural irregularity. As
the Seventh Circuit stated in Excelsior Foundry, if the
functus officio doctrine were to prevent parties from
clarifying what they perceive to be a fundamental
procedural irregularity "[t]he result would be a gap in the
system of arbitral justice that would make very little sense."
56 F.3d at 847 (post award, ex parte communications
between union and arbitrator permissible and binding
where necessary to complete or clarify an award).
The Eighth Circuit considered a somewhat similar
situation in Local P-9, United Food and Commercial Workers
Int'l Union v. Hormel & Co., 776 F.2d 1393, 1394 (8th Cir.
1985), where an arbitrator issued an award in favor of the
Union but attached a letter offering to meet with the parties
if they wished to discuss his decision. After all the parties
reconvened, the arbitrator issued an amended award in
favor of Hormel. In an action brought by the Union to
enforce the original award and vacate the "amended"
version, the Company attempted to introduce a post-award
affidavit from the arbitrator which stated that he intended
the original award to serve only as a non-binding draft. The
court of appeals held that, despite the status of the affidavit
as a "post-award comment," the district court should have
considered the paragraph of the affidavit that stated that
the arbitrator had informed the parties at the initial hearing
that the first award would be only preliminary and open for
16
reconsideration. Id. at 1395. After considering the policy
reasons behind the functus officio rule, the court concluded
that the paragraph was admissible because it "does not
impeach the initial award or explain the arbitrator's
decision-making process, but merely describes the
procedural process which the arbitrator allegedly told the
parties he would follow." Id. at 1395-96. Accordingly, the
court directed the district court to examine that portion of
the affidavit as well as "all other evidence -- including the
testimony of persons who were present at the initial hearing
as to what the arbitrator did or did not say -- to determine
whether the award was a preliminary or final one." Id. at
1396.
In Ideal Cement, an arbitrator resolving a labor dispute
about an employee's termination mailed a preliminary
award to both parties with the suggestion that the parties
could submit additional medical information for the
arbitrator's review. 762 F.2d at 839. The Union submitted
the employee's relevant medical records but provided no
copy to Ideal. The arbitrator issued a final award in favor of
the Union, but attached a cover letter explaining that he
had in fact finalized the award prior to receiving the Union's
ex parte communication, and that the information did not
influence his judgment. Nevertheless, in order to avoid even
the appearance of impropriety, the arbitrator offered Ideal
the choice to accept the award or to disqualify the
arbitrator and void the award. At Ideal's request, the
arbitrator disqualified himself and set aside the award. Id.The Tenth Circuit affirmed the district court's refusal to
enforce the award. The court of appeals described the
arbitrator's offer to void his decision as a "procedural event"
entitled to heightened deference from federal courts. Id. at
841. The court endorsed the arbitrator's actions, suggesting
that "[t]o avoid the appearance of impropriety he chose to
utilize a procedural device not unlike the remittitur/new
trial alternative offered to an overly-compensated plaintiff."
Id.In this case, Arbitrator Long issued an award that
covered matters that he had advised the parties would not
be decided without further evidence and briefing, causing a
fundamental procedural irregularity. It might have been
17
possible to determine the existence of this irregularity from
the tapes of the arbitration hearing without the July 31
letter as they evidence at least some difference between
what the parties were told at the time and what the
arbitrator did, but the parties agree that the tapes, which
were unofficial, were inaudible in parts and incomplete.
Under these circumstances, it was not improper for the
arbitrator to issue the letter of July 31 clarifying his
"misunderstanding concerning the procedure to be followed
prior to a decision resolving the substantive portion of the
issue" and the basis for disqualifying himself. App. at 110.
As in Ideal Cement, this was a procedural device that was
not relevant to the merits of the controversy but which
"outlin[ed] his procedural decision." 762 F.2d at 842. As the
court concluded in that case, "[t]hat the arbitrator chose to
use such a procedure to protect the integrity of the
arbitration process should not be subject to judicial second
guessing." Id. at 841.
B.
Vacation of the Award
In the posture in which this matter was first presented to
the district court by Local 312's suit for enforcement of the
arbitration award, the arbitrator had already withdrawn,
returned Matlack's arbitration file, and written the July 31
letter which set forth the scope of the award itself. That
letter clarifies that there had been two questions presented
for arbitration -- the first being the procedural question as
to whether the Union's grievance of June 1, 1994 had been
timely filed and expanded by the amendment of
August 9, 1994 (he decided in favor of the Union's position
that it had) -- and the second being the substantive issue
as to whether Matlack had violated the collective bargaining
agreement (the letter said he had intended to make no
decision). This record provided ample basis for the court's
ultimate decision to enforce only that portion of the award
that all parties agreed had been submitted dealing with the
scope of the grievance.
Local 312 objected to the court's decision to call the
arbitrator to testify at a hearing as to the procedure the
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arbitrator had intended to follow. The district court
explained that it "simply sought to find out what the
arbitrator said at the April 27 arbitration hearing
concerning the procedure he intended to follow." Matlack,
Inc., 916 F. Supp. at 485. While at least one court has
permitted testimony from the arbitrator to clarify the status
of an award, see, e.g., Iron Workers Local No. 272 v. Bowen,
624 F.2d 1255, 1264 (5th Cir. 1980) (arbitrator permitted
to write post-award letter and testify at trial in order to
clarify decision), calling upon the arbitrator to testify as to
his or her intentions is questionable in light of the well-
established principle that it is not the province of a court to
clarify the arbitrator's award. See Colonial Penn, 943 F.3d
at 334. Under ordinary circumstances we would not
sanction calling an arbitrator to testify, as the written
record would suffice to permit the court to rule on
enforcement vel non. However, we believe we can decide
this appeal without reference to the arbitrator's testimony.
Consistent with the July 31 letter, the district court
determined that the arbitrator had indicated to the parties
that he would only reach a decision on the timeliness and
scope issues and reserve a decision on the merits of the
Union's grievance until after Matlack had an opportunity to
address that issue. Based on that determination, the court
vacated the portion of the arbitrator's award that purported
to resolve the merits of the Union's grievance.
We exercise plenary review of the district court's decision
resolving cross motions for summary judgment. United
Parcel Service, Inc. v. Int'l Bhd. of Teamsters Local No. 430,
55 F.3d 138, 140 (3d Cir. 1995). We conclude that because
the record of the arbitration proceedings as well as the
arbitrator's July 31 letter confirming the intended scope of
the arbitration award established that there was a
fundamental procedural irregularity in the arbitration
proceeding, the district court had authority to vacate the
portion of the arbitrator's award dealing with the substance
of the grievance.
Local 312 argues that the district court's decision to
vacate the arbitrator's original determination on the merits
is inconsistent with the long line of case law firmly
establishing the limitations on judicial intervention in
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arbitration decisions. See, e.g., United Paperworkers Int'l
Union v. Misco Inc., 484 U.S. 29, 38 (1987) ("as long as the
arbitrator is even arguably construing or applying the
contract" the award must be enforced, even if the court is
"convinced [that the arbitrator] committed serious error");
News America Publications, Inc. v. Newark Typographical
Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990) ("there
must be absolutely no support at all in the record justifying
the arbitrator's determinations for a court to deny
enforcement of an award").
However, the doctrine severely limiting judicial review of
arbitration awards is inapposite here because the district
court did not purport to revisit, reinterpret, or overrule the
arbitrator's legal or factual analysis. The correctness of the
arbitrator's substantive conclusion was not under scrutiny.
At common law, an arbitration award may be set aside
where there is an adequate showing of "[f]raud, partiality,
misconduct, violation of a specific command of law, or
vagueness rendering enforcement impractical, or a showing
that enforcement would be contrary to public policy." Local
863 Int'l Bhd. of Teamsters v. Jersey Coast Egg Producers,
Inc., 773 F.2d 530, 534 (3d Cir. 1985) (internal citations
omitted), cert. denied, 475 U.S. 1085 (1986). In addition,
"[p]rocedural irregularities . . . may also result in such
fundamental unfairness as to warrant the vacation of an
arbitral award." International Bhd. of Elec. Workers, Local
Union 1823 v. WGN of Colorado, Inc., 615 F.Supp. 64, 66
(D.Colo. 1985); Robert A. Gorman, Labor Law 600-602
(1976).
Examples of procedural irregularities that have merited
district court suspension of arbitration awards are varied.
See Textile Workers Union of America v. American Thread
Co., 291 F.2d 894, 901 (4th Cir. 1961) (affirming denial of
union's enforcement request because arbitrator went
outside record and based decision on findings from a
different arbitration proceeding); Harvey Aluminum v.
United Steelworkers of America, 263 F.Supp. 488 (C.D.Cal.
1967) (arbitration award remanded where arbitrator refused
to admit certain evidence in rebuttal without giving parties
warning about application of evidentiary rules); Electrical
Workers, 615 F.Supp. at 67-68 (vacating arbitration board
20
award and remanding because neutral arbitrator rendered
decision without obtaining the signatures of the partisan
arbitrators, so that there was a "lack of evidence of any
significant decision-making process by the majority of the
board").
In this case the parties undertook arbitration pursuant to
their collective bargaining agreement, and the Federal
Arbitration Act, 9 U.S.C. § 10 (1995), is not binding.
Nevertheless, to the extent that the Act imposes constraints
on judicial review of arbitration awards similar to those in
the labor context, its provisions are instructive here.
Section 10(a)(3) of the Act (formerly 10(c)) allows a court to
vacate an arbitration award "[w]here the arbitrators were
guilty of . . . any . . . misbehavior by which the rights of any
party have been prejudiced." Pursuant to this provision, we
have held that a court has the power to vacate an
arbitration award where an arbitrator receives ex parte
information to the prejudice of one of the parties. Mutual
Fire, Marine & Inland Ins. Co. v. Norad Reinsurance Co.,
Ltd., 868 F.2d 52, 56-57 (3d Cir. 1989).
In interpreting another portion of § 10(c) of the Act, we
also have allowed a court to vacate an arbitration award if
the arbitrator's refusal to hear proffered testimony "so
affects the rights of a party that it may be said that he was
deprived of a fair hearing." Newark Stereotypers' Union No.
18 v. Newark Morning Ledger Co., 397 F.2d 594, 599 (3d
Cir), cert. denied, 393 U.S. 954 (1968). Moreover, it has
become axiomatic that a district court may vacate an award
if a party to an arbitration proceeding has not been given
notice and opportunity to present arguments and evidence
on the merits of the dispute. Robbins v. Day, 954 F.2d 679,
685 (11th Cir.), cert. denied, 506 U.S. 870 (1992); Konkar
Maritime Enters., S.A. v. Compagnie Belge D'Affretement,
668 F.Supp. 267, 271 (S.D.N.Y. 1987) (listing cases).
The National Labor Relations Board has itself imposed
minimum due process standards in evaluating the fairness
of arbitration proceedings resolving unfair labor practice
issues. Spielberg Manufacturing Company, 112 NLRB 1080(1955). Thus, it has refused to defer to an arbitrator's
decision where evidence was deliberately withheld from an
arbitrator, Precision Fittings, 141 NLRB 1034, 1041-43
21
(1963), where the grievant was given insufficient time to
prepare, Gateway Transp. Co., 137 NLRB 1763, 1764
(1962), or was not afforded an opportunity to cross-examine
a witness, Versi Craft Corp., 227 NLRB 877, 887 (1977).
In this case, the record establishes that the arbitrator
made a fundamental procedural error in deciding the
merits of the controversy after advising the parties that he
would not do so until after he decided the procedural issues
and until Matlack had an opportunity to present its case on
the merits. In the district court's words, the arbitrator
simply "told the parties one thing and, albeit mistakenly,
did another." Matlack, Inc., 916 F.Supp. at 486. The
arbitrator's resolution of the merits of the Union's Article 50
grievance without benefit of Matlack's evidence or argument
on the issue severely impeded Matlack's right to notice and
opportunity to be heard in such an adversarial proceeding.
See Konkar Maritime Enters., 668 F.Supp. at 271. This is
precisely the type of procedural error that "undermine[s]
the validity of the arbitration process," Gorman, Labor Law
602, permits an arbitrator to take remedial measures such
as withdrawal, and authorizes a district court to vacate and
remand an arbitration award.
III.
We conclude that the functus officio doctrine did not
proscribe the district court from examining the arbitrator's
post award letter which purported to clarify the intended
scope of the award, and that the arbitrator's award was
partially the product of a fundamental procedural
irregularity. Accordingly, we will affirm the district court's
decision to vacate the substantive portion of the award and
to remand the remainder of the proceedings to another
arbitrator.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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