Opinion
Civil No. 07-1816 (GAG).
June 23, 2008
OPINION AND ORDER
Plaintiff Asociación de Empleados del Estado Libre Asociado de Puerto Rico ("AEELA") filed this action seeking an order vacating an arbitration award issued on July 10, 2007. The award granted reinstatement, back pay, and attorney's fees to Annette Janet Cariño Williams ("Cariño"), a former AEELA employee terminated on March 30, 2003. Defendant Unión Internacional de Trabajadores de la Industria Automóviles, Aerospacio e Implementos Agricolas, U.A.W., Local 1850 ("Local 1850") urges the court to affirm the arbitration award. Presently before the court is AEELA's motion for judgment on the pleadings (Docket No. 64) filed pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. After a thorough review of the parties' submissions and the applicable law, the court GRANTS IN PART and DENIES IN PART AEELA's motion for judgment on the pleadings.
I. Standard of Review
II. Factual Background
12Lefebvre v. Commissioner830 F.2d 417419 See JCI Commc'ns, Inc. v. IBEW, Local 103324 F.3d 4245
A ruling denying a plaintiff's motion for judgment does not typically require entry of judgment in favor of a defendant. A cause of action to vacate an arbitration award, however, is not a typical case. Here, AEELA filed an action seeking to vacate an arbitration award and then moved for judgment on the pleadings. A denial of AEELA's motion effectively constitutes a ruling against AEELA on the merits and entitles Local 1850 to judgment in its favor. AEELA and Local 1850 both effectively seek a judgment on the arbitration record. The parties agree that the court is in a position to make such a determination.
AEELA dismissed Cariño, a Local 1850 member, on May 30, 2003. The termination arose out of a March 27, 2003 workplace dispute between Cariño and Jorge Rivera Reyes ("Rivera"). AEELA investigated the incident and prepared an investigation report. AEELA concluded that Cariño had addressed Rivera with foul language and hindered and limited work area production. Her conduct, AEELA determined, violated four rules in its Rules of Conduct and Disciplinary Measures Manual ("Rules") and justified her dismissal. AEELA also invoked its progressive discipline policy to justify Cariño's termination. AEELA's Executive Director communicated the termination decision via letter dated May 30, 2003.
The letter briefly recaps AEELA's version of the May 27, 2003 events. It then lists the rules Cariño allegedly violated and informs her of AEELA's termination decision. The letter states:
Your actions constitute a breach to the following infractions of [AEELA's Rules]:
AEELA and Local 1850 negotiated a collective bargaining agreement ("CBA"). In accordance with the CBA, Local 1850 filed a grievance regarding Cariño's termination. When the parties failed to reach an agreement, Local 1850 initiated arbitration proceedings pursuant to Article 27 of the CBA. The arbitrator held hearings on February 27, 2006 and March 20, 2006. He heard testimony from Cariño; Orlando I. Vargas Lopez, AEELA Human Resources Director; Edith Lugano, AEELA Personnel and Industrial Relations Officer; Daniel de Leon Gomez, AEELA Accounting Clerk; and Noelia Hernandez Negron, Cariñ's supervisor. Rivera did not testify.
The arbitrator issued his award on July 10, 2007. He began by addressing AEELA's Rules which impose a five prescriptive term on disciplinary measures. This prescription rule prohibits AEELA from relying upon disciplinary measures more than five years old for progressive discipline purposes. The Rules also state that all disciplinary measures shall permanently remain in an employee's personnel file as evidence of habit. The arbitrator found this habit evidence rule inconsistent with the prescriptive rule. He also found it unreasonable in light of the prescriptive rule and the purposes of progressive discipline. He further found the rule unreasonable as applied to Cariño's specific circumstances. Consequently, he determined that AEELA could not rely upon remote disciplinary measures to justify Cariño's termination.
The arbitrator went on to hold that Cariño's termination was unjustified. He pointed out the conflicting versions of the May 27, 2003 incident in the record. He recognized contradictions in AEELA's evidence and deemed it "inconsistent and minimally credible." Docket No. 13-5, p. 10. He noted that no individual with personal knowledge of the incident testified that Cariño actually uttered the phrase used in the disciplinary letter to sustain her dismissal. He highlighted Rivera's absence from the hearings and AEELA's failure to present evidence to support its contention that he was ill, disabled, and unable to testify. The arbitrator concluded that Rivera provoked Cariño rather than the reverse; he believed that Cariño acted in self-defense when she told Rivera to go to hell. He stated that "none of the attributed rules of conduct were proven." Id. at p. 11. He concluded Cariño's termination was not justified, stating, "AEELA has not discharged its responsibility of proving just cause for the dismissal." Id. at p. 10.
The arbitrator also noted his "strong impression" that Cariño's union activities motivated her dismissal. Docket No. 13-5, p. 11. He did not, however, rely upon this impression in concluding that AEELA lacked justification for Cariño's termination.
Before granting Cariño a remedy, the arbitrator addressed Article 27(G) of the CBA. Article 27(G) states, "The Arbitrator must rule in accordance to [l]aw." Docket No. 13-6, p. 41. The arbitrator held that this language imposed no restrictions on his authority to grant a remedy. He then awarded Cariño reinstatement, back pay, and attorney's fees in the amount of 25% of the back pay award.
AEELA petitioned for review of the award in the Puerto Rico trial court. Local 1850 removed the case to federal court. AEELA moved for judgment on the pleadings. Local 1850 opposed the motion, and AEELA replied.
III. Discussion
AEELA raises three challenges to the arbitration award. First, AEELA contends that the arbitrator erred in finding that AEELA failed to establish justification for Cariño's termination. Second, AEELA faults the arbitrator's ruling that AEELA could not consider prior disciplinary measures imposed on Cariño as evidence of habit. Third, AEELA argues that the arbitrator exceeded his authority under the CBA in awarding reinstatement and back pay as remedies. In response, Local 1850 argues that the arbitrator did not err or exceed his authority in reaching his decision. Local 1850 urges the court to deny AEELA's motion and enter an order affirming the arbitrator's award.
A federal court's review of an arbitrator's decision is extremely narrow and extraordinarily deferential. United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 37-38 (1987); Ramos-Santiago v. UPS, 524 F.3d 120, 123 (1st Cir. 2008);Airline Pilots Ass'n, Int'l v. Pan Am Corp., 405 F.3d 25, 30 (1st Cir. 2005) (hereinafter ALPA); Poland Spring Corp. v. United Food Commercial Workers Int'l Union, Local 1445, 314 F.3d 29, 33 (1st Cir. 2002); Keebler Co. v. Truck Drivers, Local 170, 247 F.3d 8, 10 (1st Cir. 2001); Kraft Foods, Inc. v. Office Prof'l Employees Int'l Union, 203 F.3d 98, 100 (1st Cir. 2000); Wheelabrator Envirotech Operating Servs. Inc. v. Mass. Laborers Dist. Council Local 1144, 88 F.3d 40, 43 (1st Cir. 1996); Dorado Beach Hotel Corp. v. Unión de Trabajadores de la Industria Gastronómica, Local 610, 959 F.2d 2, 3-4 (1st Cir. 1992). In fact, judicial review of an arbitration award is among the narrowest known in the law.Ramos-Santiago, 524 F.3d at 123; Providence Journal Co. v. Providence Newspaper Guild, 271 F.3d 16, 20 (1st Cir. 2001); Me. Cent. R.R. Co. v. Bhd. of Maint. of Way Employees, 873 F.2d 425, 428 (1st Cir. 1989). Courts presume that parties who have negotiated a contract that authorizes final and binding arbitration have agreed to accept the arbitrator's view of the facts and meaning of the contract, rather than a judge's perception of the issues. Misco, 484 U.S. at 37-38; Kraft Foods, 203 F.3d at 98. "Unless the arbitrator's decision fails to `draw its essence from the collective bargaining agreement,' courts are bound to enforce the award and may not review the merits of the contract dispute." Wyman-Gordon Co. v. United Steel Workers, 337 F. Supp. 2d 241, 244 (D. Mass. 2004) (quoting W.R. Grace Co. v. Local Union 759, Int'l Union of United Rubber Workers, 461 U.S. 757, 764 (1983)). When an arbitrator even arguably construes or applies the contract and acts within the scope of her authority, a court may not overturn the decision even if the court is convinced the arbitrator committed serious error. Misco, 484 U.S. at 38; Providence Journal, 271 F.3d at 20. A court should uphold the arbitrator's interpretation of the CBA if, within the four corners of the CBA, there exists any plausible basis for that interpretation. Wheelabrator, 88 F.3d at 44
The arbitrator determines the admissibility and relevance of evidence. Upon reviewing the parties' evidence and arguments, he determines "the truth respecting material matters in controversy, as he believes it to be. . . ." Hoteles Condado Beach, La Concha Convention Ctr. v. Unión de Tronquistas Local 901, 763 F.2d 34, 39 (1st Cir. 1985). Rarely may a court reverse an award based on the arbitrator's determination regarding persuasiveness or relevancy of the evidence. Id. at 39-40. Moreover, a court may not interfere with an award because the arbitrator erred in assessing a witness's credibility. Int'l Bhd. of Firemen v. Great N. Paper Co., 765 F.2d 295, 296 (1st Cir. 1985). In fact, "[e]ven if the arbitrator was seriously mistaken about some of the facts, his award must stand." El Dorado Technical Servs., Inc. v. Unión Gen. de Trabajadores, 961 F.2d 317, 320 (1st Cir. 1992).
The First Circuit has stated that "disputes that are committed by contract to the arbitral process almost always are won or lost before the arbitrator. Successful court challenges are few and far between." Teamsters Local Union No. 42 v. Supervalu, Inc., 212 F.3d 59, 61 (1st Cir. 2000). The law, however, does recognize extremely limited circumstances in which a court may vacate an arbitration award. A court may vacate an arbitration award when the challenging party establishes that the award was: (1) unfounded in reason and fact; (2) based on reasoning so palpably faulty that no judge, or group of judges, ever could conceivably have made such a ruling; or (3) mistakenly based on a crucial assumption that is concededly a non-fact. Id. at 66; see also ALPA, 405 F.3d at 30 ("Courts should vacate an arbitral award only in rare circumstances, such as when there was misconduct by the arbitrator, when the arbitrator exceeded the scope of her authority, or when the award was made in manifest disregard of the law.").
With this exceedingly strict standard of review in mind, the court turns to the substance of AEELA's arguments.
A. Arbitrator's Ruling that AEELA Lacked Justification to Terminate Cariño
AEELA first argues that the arbitrator erred in finding that AEELA lacked just cause to dismiss Cariño. Essentially, AEELA contends that the arbitrator should have evaluated the evidence differently. Local 1850 points out that the law prohibits courts from second-guessing the arbitrator's evaluation of the evidence. Local 1850 also argues that the arbitrator's award draws from a plausible interpretation of the evidence. The court finds Local 1850's arguments persuasive.
The arbitral submission called upon the arbitrator to determine "whether complainant's dismissal was justified or not." Docket No. 13-5, p. 20. To make his determination, the arbitrator heard evidence from both parties. He assessed the credibility, weight, and relevance of the evidence. He determined, not unreasonably, that AEELA's evidence lacked consistency and minimal credibility. He found that AEELA failed to prove that the events described in the termination letter occurred as alleged. He also found that Rivera provoked and instigated Cariño to use harsh language in the workplace. He concluded that the truth as he believed it to be did not warrant the drastic sanction of dismissal. He therefore deemed her termination without just cause.
Evidently, the arbitrator disposed of the case because of the lack of evidence regarding the imputed utterances and invoked rules, his belief that Rivera provoked Cariño, and his conclusion that the proven conduct did not justify the harsh penalty of termination. AEELA has not shown that the arbitrator exceeded his authority or failed to construe the CBA in so disposing of the case. See Misco, 484 U.S. at 38 (noting court cannot vacate award if arbitrator arguably construes CBA and acts within scope of authority).
Having considered the credibility of the witnesses, the weight and relevance of the evidence, and the merits of the parties' contentions, the arbitrator agreed with Cariño that AEELA unjustifiably terminated her employment. His ruling derived from a plausible interpretation of the evidence. AEELA cannot now challenge the arbitrator's credibility, relevancy, and weight determinations. The task of assessing the relevance and weight of evidence falls firmly within the arbitrator's authority. See Hoteles, 763 F.2d at 39-40. Similarly, the court may not interfere with the award even if it believes that the arbitrator erred in assessing a witness's credibility. Great N. Paper, 765 F.2d at 296 ("[C]ourts are precluded from interfering with arbitration awards for mere errors is assessing the credibility of witnesses."). Here, the arbitrator determined the truth of matters as he believed them to be. This is precisely the job the parties called upon him to perform. See Hoteles, 763 F.2d at 39. The court may not now interfere with his ruling on the basis that he erred in assessing the relevance, weight, or credibility of evidence.
A just cause determination depends on the particular facts of any given case. The court may not overrule the arbitrator's decision merely because its own interpretation of what constitutes just cause diverges from the arbitrator's. See United Steelworkers, 363 U.S. at 599; Dorado Beach Hotel, 959 F.2d at 4. Here, the arbitrator had the authority to interpret whether just cause existed based on the facts as he believed them to be. He assessed the evidence and concluded that Cariño's action did not constitute a violation of any of the invoked rules and that her termination lacked justification. In so doing, he acted within his authority. AEELA has not demonstrated that the arbitrator's award was unfounded in reason and fact, based on faulty reasoning, or mistakenly based on a crucial assumption that is a non-fact. See Wheelabrator, 88 F.3d at 43-44. Accordingly, the court may not disturb the arbitrator's ruling that AEELA terminated Cariño without just cause.
B. Arbitrator's Ruling Regarding Habit Evidence Rule
AEELA's second argument attacks the arbitrator's ruling that AEELA could not consider prior disciplinary measures imposed on Cariño as evidence of habit. Local 1850 correctly points out that the arbitrator held that AEELA failed to satisfy its burden of proving that the incident that propelled Cariño's termination occurred as alleged. He concluded that AEELA failed to demonstrate a violation of any of the invoked rules. This conclusion effectively rendered irrelevant his decision to disallow AEELA from relying on habit evidence to justify Cariño's dismissal. Moreover, the CBA arguably granted the arbitrator the authority to disregard unreasonable work rules. The CBA required the arbitrator to "rule in accordance to law." Puerto Rico law limits an employer's ability to adopt workplace rules; all such rules must be reasonable. See P.R. Laws Ann. tit. 29, § 185b ("Good cause for the discharge of an employee . . . shall be understood to be . . . the employee's repeated violations of the reasonable rules and regulations established for the operation of the establishment. . . ."); Quiron v. ITT W. Hemisphere Directories, Inc., 8 P.R. Offic. Trans. 564, 108 D.P.R. 536, 541-42, 546 (requiring workplace rules and regulations to pass reasonableness test); see also Frank Elkouri Edna A. Elkouri,How Arbitration Works 772 (6th ed. 2003) ("Plant rules must not only be reasonable in their content but also in their application."). The arbitrator found AEELA's habit evidence rule unreasonable in content and as applied to Cariño's circumstances. In so finding, he arguably construed the CBA and acted within the scope of his authority. See Providence Journal, 271 F.3d at 20-21 (explaining reversal unwarranted where arbitrator's decision derives from plausible interpretation of contract). The court therefore will not overturn the arbitrator's ruling regarding AEELA's reliance upon habit evidence.
AEELA acknowledges Puerto Rico's reasonableness rule. See Docket No. 13-2, p. 26 ("What is required is that the Employer indicate reasonable rules and regulations. . . .").
C. Arbitrator's Remedy
AEELA's final challenge attacks the remedy the arbitrator awarded. AEELA contends that the arbitrator lacked authority to award reinstatement and back pay. Local 1850 responds that nothing in the CBA or the arbitral submission restrained the arbitrator's authority to grant a remedy. Accordingly, Local 1850 asserts, the arbitrator properly granted the contested remedies.
An arbitrator has broad powers to determine an appropriate remedy unless constrained by the CBA or the arbitral submission.Challenger Caribbean Corp. v. Unión Gen. de Trabajadores, 903 F.2d 857, 869 (1st Cir. 1990); Advest, Inc. v. McCarthy, 914 F.2d 6, 11 (1st Cir. 1990). Here, AEELA contends that the CBA's "rule in accordance to law" language constrained the arbitrator's authority to craft a remedy. AEELA posits that the arbitrator could grant only the remedies permitted by Puerto Rico's unjust dismissal law, Law 80 of May 30, 1976, as amended, P.R. Laws Ann. tit. 29, §§ 185a-185m.
AEELA does not argue that the arbitral submission restricted the arbitrator's authority. The parties disagreed regarding the submission. AEELA proposed, "Determine whether job dismissal of complainant was justified or not. If unjustified, Arbitrator shall render a ruling in accordance to law, as established by the [CBA]." Docket No. 13-5, p. 2. Local 1850 suggested, "That Honorable Arbitrator rule if dismissal of [complainant] was justified or not." Id. Ultimately, the arbitrator adopted, "Determine whether complainant's dismissal was justified or not. If not so, then to provide the adequate remedy therein." Id.
The parties agree that the arbitrator derived his award from Law 80 which prescribes severance pay as the exclusive Puerto Rico law remedy for an unjust dismissal. Id. § 185a; see also Challenger Caribbean, 903 F.2d at 861 n. 5 (discussing Law 80's limited remedies). The arbitrator acknowledged the "rule in accordance to law" language and recognized Law 80 as the applicable substantive labor law. Cf. Challenger Caribbean at 866 (holding CBA's "according to law" language required application of Puerto Rico Law 80); see also Dorado Beach Hotel, 959 F.2d at 4 (acknowledging Challenger Caribbean holding); Corporación del Fondo del Seguro del Estado v. Unión de Médicos, 2007 TSPR 35, AC-2005-55, 2007 WL 806054, at *8 (P.R. Mar. 6, 2007) (requiring arbitrator to consider substantive labor law if CBA requires arbitrator to resolve dispute according to law). He chose to depart from Law 80 when crafting his remedy.
The Puerto Rico Supreme Court recognizes three exceptions to Law 80's limitation of remedies. See Arroyo v. Rattan Specialties, Inc., 17 P.R. Offic. Trans. 43, 117 D.P.R. 35, 65 (1986). Local 1850 does not allege that any of the three exceptions applies in this case.
Unión de Médicos states, "In effect, when a [CBA] states that the matters submitted to arbitration will be resolved according to law, the arbitrator cannot ignore the substantive law provisions in the field of labor law and should resolve the controversies pursuant to the prevailing legal doctrines." Unión de Médicos, 2007 WL 806054, at *8 (court's translation).
The parties dispute whether the CBA authorized the arbitrator to depart from Law 80 when crafting his remedy. AEELA argues the "rule in accordance to law" language restricted the arbitrator's remedial powers and limited the available remedy to the severance pay allowed by Law 80. Local 1850 contends that the "rule in accordance to law" language applied to only the arbitrator's decision on the merits of the grievance (i.e, whether AEELA terminated Cariño with just cause) and in no way constrained him in crafting a remedy.
The court agrees with AEELA that the "rule in accordance to law" language extends to the arbitrator's remedy. Local 1850's attempt to distinguish the arbitrator's "ruling" or "award" from his "remedies" does not convince the court. The court views the remedies granted as an integral part the arbitrator's ruling or award.
The court also agrees with AEELA that the "rule in accordance to law" language limited the available remedies to those authorized in Law 80. First Circuit authority supports AEELA's position. The First Circuit directly addressed the issue inChallenger Caribbean. The relevant CBA in Challenger Caribbean included "according to law" language. See Challenger Caribbean, 903 F.2d at 859 n. 1. After noting the inclusion of this language, the Challenger Caribbean court acknowledged that, if illegal termination had been the only issue before the arbitrator, then Law 80's exclusive remedies would have precluded reinstatement and back pay. Id. at 868-69.
The arbitrator in Challenger Caribbean held that the challenged terminations violated the CBA in addition to Law 80. Because the arbitrator found a CBA violation in addition to Law 80, the First Circuit held that it was within his decisional discretion to grant reinstatement and back pay. Challenger Caribbean, 903 F.2d at 869.
Magistrate Judge Camille L. Vélez-Rive recently addressed the exact issue presented in this case. See Asociación de Empleados del Estado Libre Asociado de P.R. v. Unión Internacional de Trabajadores de la Industria de Autómoviles, Local 1850, 515 F. Supp. 2d 209 (D.P.R. 2007). Judge Vélez-Rive issued an opinion and order in an unjust dismissal case involving the same employer, the same local union, and the same CBA. She concluded that the "rule in accordance to law" language constrained the arbitrator's authority to grant remedies beyond the one-time severance payment and 25% attorney's fees allowed under Law 80. Id. at 217-21. The court agrees with her ruling.
Judge Vélez-Rive presided over the case with the consent of the parties. Her decision, therefore, is final. See 28 U.S.C. § 636(c). Local 1850 appealed the final decision. The appeal is currently pending before the United States Court of Appeals for the First Circuit.
The Puerto Rico Supreme Court reached the same conclusion in an unreported September 18, 2007 judgment-AEELA v. UAW, Case No. CC-02-842. The arbitrator acknowledged this non-binding judgment and chose to disregard it. He noted that the judgment failed to convince him. See Docket No. 13-5, pp. 11-12. The court notes that the arbitrator was free to disregard the judgment. See Baralt v. Nationwide Mut. Ins. Co., 251 F.3d 10, 20 n. 12 (1st Cir. 2001) (noting Puerto Rico Supreme Court judgments carry no precedential value beyond persuasive value of rationale).
Local 1850 urges the court to disregard Judge Vélez-Rive's decision because it does not take into consideration Article X, Section 3(b) of the CBA. Article X, Section 3(b) states, "Employees shall lose their rights to seniority and employment due to . . . dismissal due to just cause [if] . . . such discharge is not revoked through the grievance procedure." Local 1850 cites Article X, Section 3(b) for the proposition that the CBA gives the arbitrator the authority to reinstate an employee where the arbitrator finds nothing more than a dismissal without cause. AEELA concedes that reinstatement may be appropriate in certain circumstances, for example if the applicable substantive labor law provision provides for reinstatement. It argues, however, that reinstatement is not appropriate where the arbitrator finds nothing more than an unjustified dismissal. The court agrees. The "rule in accordance to law" language compels the conclusion that an arbitrator who finds only a violation of Law 80 has no authority to grant remedies beyond Law 80 severance pay. Even if the CBA permits reinstatement in certain circumstances, it does not do so where the arbitrator finds only a dismissal without just cause.
In light of the foregoing, the court concludes that the arbitrator exceeded his authority under the CBA when he granted Cariño reinstatement and back pay. Accordingly, his award is unfounded in reason and fact. The court must VACATE the portion of the award granting reinstatement and back pay. Cariño is entitled to only the severance pay and attorney's fees permitted under Law 80.
IV. Conclusion
For the reasons stated above, AEELA's motion for judgment on the pleadings (Docket No. 64) is GRANTED IN PART and DENIED IN PART. The court AFFIRMS the arbitrator's award except the portion granting reinstatement, back pay, and attorney's fees based on the back pay award. The court hereby VACATES that portion of the award. The remedies for Cariño's unjust dismissal shall be limited to severance pay and a 25% attorney's fees award, the exclusive remedies under Law 80. The parties shall jointly calculate the severance pay and corresponding 25% attorney's fees award.
This opinion and order resolves all of the controversies in this action. Judgment shall enter accordingly.