Fraternal Order of Police Lodge 10 v. State of Delaware ( 2017 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
TAMIKA R. MONTGOMERY-REEVES Leonard Williams Justice Center
VICE CHANCELLOR 500 N. King Street, Suite 11400
Wilmington, Delaware 19801-3734
Date Decided: December 7, 2017
Ronald Stoner, Esquire Ryan P. Connell, Esquire
Ronald Stoner, P.A. Deputy Attorney General
2961 Centerville Road, Suite 350 State of Delaware Department of Justice
Wilmington, DE 19808 Carvel State Building
820 North French Street, 6th Floor
Wilmington, DE 19801
RE: Fraternal Order of Police Delaware Lodge 10 v. State of Delaware
Civil Action No. 12813-VCMR
Dear Counsel:
This letter opinion addresses Defendant’s Motion for Reargument of this
Court’s October 2, 2017 Letter Opinion denying Defendant’s Motion to Dismiss (the
“Letter Opinion”). For the reasons stated herein, Defendant’s Motion for
Reargument is DENIED.
I. BACKGROUND
The Letter Opinion denied Defendant’s Motion to Dismiss Plaintiff’s Petition
to Enforce an Arbitration Award. The Motion to Dismiss sought “a declaration from
this Court that the term ‘make whole’ as used in the Arbitration Award requires an
offset of interim earnings be applied to the amount of back-pay awarded to
FOP Delaware Lodge 10 v. Delaware
C.A. No. 12813-VCMR
December 7, 2017
Page 2 of 8
Grievant.”1 I denied the Motion to Dismiss because Defendant could not meet the
requirements under the Federal Arbitration Act (the “FAA”) to allow the Court to
interpret, modify, or remand the Arbitration Award.2
In the Letter Opinion, I applied the standard from the FAA. Defendant did
not articulate a standard in its opening brief; Plaintiff argued the FAA applies to this
case in its opposition brief; and Defendant did not dispute that the FAA applies in
its reply brief or at oral argument. Furthermore, Defendant did not once reference
the collective bargaining agreement (the “CBA”) or cite to a single Delaware case
applying the standard it now claims applies.
On October 9, 2017, however, Defendant brought this Motion arguing that
the FAA does not apply in this case. Ultimately, Defendant is correct. Nonetheless,
I deny the Motion for Reargument because even under the correct standard the
outcome remains the same.
1
Letter Op. 3.
2
Id. at 4-9.
FOP Delaware Lodge 10 v. Delaware
C.A. No. 12813-VCMR
December 7, 2017
Page 3 of 8
II. ANALYSIS
Under Court of Chancery Rule 59(f), a party may move for reargument within
five days after the filing of the Court’s opinion.3 Reargument will be granted only
where the court “overlooked a decision or principle of law that would have
controlling effect or . . . misapprehended the facts or the law so the outcome of the
decision would be different.”4
Defendant argues this Court overlooked a principle of law that would have a
controlling effect on the case. That is, Defendant contends that because this dispute
involves a collective bargaining agreement, neither the FAA nor the Delaware
Uniform Arbitration Act (the “DUAA”) applies to this case under Section 5725 of
the DUAA, which reads:
Notwithstanding anything contained in this chapter by
word or inference to the contrary, this chapter shall not
apply to labor contracts with either public or private
employers where such contracts have been negotiated by,
or the employees covered thereby are represented by, any
labor organization or collective bargaining agent or
representative.5
3
Ct. Ch. R. 59(f).
4
Pontone v. Milso Indus. Corp., 2014 WL 4352341, at *1 (Del. Ch. Sept. 3, 2014).
5
10 Del. C. § 5725.
FOP Delaware Lodge 10 v. Delaware
C.A. No. 12813-VCMR
December 7, 2017
Page 4 of 8
Instead, Defendant argues that the Court should have used the following standard:
[The Court of Chancery] will not disturb a labor arbitration
award unless (a) the integrity of the arbitration has been
compromised by, for example, fraud, procedural
irregularity, or a specific command of law; (b) the award
does not claim its essence from the CBA; or (c) the award
violates a clearly defined public policy.6
Defendant makes no argument as to the integrity of the arbitration.7 Defendant does
argue that (1) the award violates a clearly defined public policy, and (2) the award
does not claim its essence from the CBA. Both arguments fail.
6
Del. Transit Corp. v. Amalgamated Transit Union Local 842, 34 A.3d 1064, 1068
(Del. 2011) (alteration in original) (citing Meades v. Wilm. Hous. Auth., 2003 WL
939863, at *4 (Del. Ch. Mar. 6, 2003)). Defendant uses the above language but fails
to cite the proper case. Def.’s Mot. for Recons. ¶ 2. The cases Defendant does cite
use stricter language: “The public policy of this state therefore favors the resolution
of labor disputes by arbitration and the award of an Arbitrator must be upheld unless
it is based on fraud, gross mistake, or is clearly outside his authority.” Del. State
Coll. v. Del. State Coll. Chapter of Am. Ass’n of Univ. Professors, 1987 WL 25370,
at *3 (Del. Ch. Nov. 24, 1987); Hartnett v. Ahern, 1988 WL 42956, at *1 (Del. Ch.
Apr. 29, 1988) (quoting id.).
7
Issues not briefed are deemed waived. Emerald P’rs v. Berlin, 726 A.2d 1215, 1224
(Del. 1999).
FOP Delaware Lodge 10 v. Delaware
C.A. No. 12813-VCMR
December 7, 2017
Page 5 of 8
A. Defendant Has Made No Showing that the Arbitration Award
Violates a Clearly Defined Public Policy
Defendant first argues that the Arbitration Award violates a clearly defined
public policy because “the policy of offset is well established in traditional labor
law.”8
If an arbitrator construes a collective bargaining
agreement in a way that violates public policy, an award
based on that construction may be vacated by a court. This
exception, though, does not give courts broad discretion to
vacate arbitration awards based on general considerations
of supposed public policy. Courts may only vacate
arbitration awards which explicitly conflict with well-
defined, dominant public policy. A public policy is well-
defined and dominant if it may be ascertained from law
and legal precedent.9
Further, the United States Supreme Court has articulated that “a formulation of
public policy based only on ‘general considerations of supposed public interests’ is
not the sort that permits a court to set aside an arbitration award that was entered in
accordance with a valid collective bargaining agreement.”10 Defendant does not,
and cannot, contest that favoring arbitration is a clearly defined public policy under
8
Def.’s Mot. for Recons. ¶ 4.
9
Stroehmann Bakeries, Inc. v. Local 776, Int’l Bhd. of Teamsters, 969 F.2d 1436,
1441 (3d Cir. 1992) (citations omitted).
10
United Paperworkers Int’l Union, AFL–CIO v. Misco, Inc., 484 U.S. 29, 44 (1987).
FOP Delaware Lodge 10 v. Delaware
C.A. No. 12813-VCMR
December 7, 2017
Page 6 of 8
Delaware law.11 Instead, Defendant argues that offsetting back-pay awards is also
“a well-established idea.”12 Even if I assume that the idea of offset qualifies as a
“well-defined” public policy, Defendant has failed to make any argument as to how
offset in labor arbitration awards is dominant over the public policy of favoring
arbitration. This is especially true where, as here, the Arbitration Award does not
“explicitly conflict” with the purported public policy.
The Arbitration Award is silent as to offset. This silence, however, does not
make the Arbitration Award explicitly conflict with the alleged public policy of
offset because Defendant failed to request offset from the arbitrator. As discussed
at length in the Letter Opinion, Defendant had “ample opportunity to raise the
question of an offset with the arbitrator during the arbitration,” explicitly
11
See, e.g., Kuhn Const., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396 (Del.
2010) (“The public policy of Delaware favors arbitration.”); SBC Interactive, Inc.
v. Corp. Media P’rs, 714 A.2d 758, 761 (Del. 1998) (“We begin our analysis with
the premise that the public policy of Delaware favors arbitration.”); Graham v. State
Farm Mut. Auto. Ins. Co., 565 A.2d 908, 911 (Del. 1989) (“In short, the public
policy of this state favors the resolution of disputes through arbitration.”);
McLaughlin v. McCann, 942 A.2d 616, 621 (Del. Ch. 2008) (quoting Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)) (“In
general, ‘any doubts concerning the scope of arbitrable issues should be resolved in
favor of arbitration.’”); Pettinaro Const. Co., Inc. v. Harry C. Partride, Jr., & Sons,
Inc., 408 A.2d 957, 961 (Del. Ch. 1979) (“Accordingly, the public policy of this
State is now to enforce agreements to arbitrate without regard to the justiciability of
the underlying claims.”).
12
Def.’s Mot. for Recons. ¶ 5.
FOP Delaware Lodge 10 v. Delaware
C.A. No. 12813-VCMR
December 7, 2017
Page 7 of 8
acknowledged that the remedy to be granted was at issue, and still failed to do so.13
This failure by Defendant does not transform offset into the dominant public policy.
In fact, to hold that offset is the dominant public policy, when Defendant merely
failed to request offset from the arbitrator, would vitiate the arbitration process.
Defendant has failed to show that the Arbitration Award explicitly conflicts with
well-defined, dominant public policy.
B. Defendant Has Made No Showing that the Arbitration Award Does
Not Claim Its Essence from the CBA
Defendant then argues that the Arbitration Award does not claim its essence
from the CBA. To show the award does not claim its essence from the CBA,
Defendant must show “that the award bears no reasonable relationship to the
underlying contract from which it is derived . . . [meaning] it bears no reasonable
relationship to the CBA. If there is any rational construction of the CBA that would
support the arbitrator’s award, the award must be upheld.”14
13
Letter Op. 6. (“Defendant’s Statement of the Issue in their post-hearing brief read,
‘[w]hether the employer has violated the CBA by separating the employee . . . . If
so, what shall be the remedy?’” (quoting Emp’r’s Post Hr’g Br. 4.)).
14
Meades v. Wilm. Hous. Auth., 2003 WL 939863, at *6 (Del. Ch. Mar. 6, 2003)
(citations omitted).
FOP Delaware Lodge 10 v. Delaware
C.A. No. 12813-VCMR
December 7, 2017
Page 8 of 8
Defendant argues that “[a]n award without off-set [sic] effectively amounts to
an award of punitive damages” and “[t]he idea that a case of employee misconduct
where a termination is reduced to a lengthy termination [sic] would support an award
of punitive damages is not supported by the agreement.” Other than these assertions,
absolutely nothing has been presented, nor authority cited, that supports the
conclusion that the award is punitive or “bears no reasonable relationship to the
CBA.”15 Therefore, I cannot find that the award does not claim its essence from the
CBA.
Because the Court overlooked a principle of law that does not have controlling
effect on the outcome of this case, reargument is denied.
III. CONCLUSION
For the reasons stated herein, Defendant’s Motion for Reargument is
DENIED.
IT IS SO ORDERED.
Sincerely,
/s/Tamika Montgomery-Reeves
Vice Chancellor
15
Meades, 2003 WL 939863, at *6.