AAK USA Richmond Corporation v. Warehouse Union Local 6, ILWU

Background

AAK USA Richmond Corporation refines edible vegetable oils. Warehouse Union Local 6 ILWU is an unincorporated labor union and the exclusive collective-bargaining representative for certain employees at AAK’s Richmond facility, including employees classified as Working Forepersons. Their relationship was governed by a collective bargaining agreement.

AAK notified two of the three Working Forepersons that their positions had been eliminated as part of a restructuring plan and that they were being permanently laid off. The Union filed a grievance under the agreement’s dispute-resolution procedure, identifying the dispute as “manager performing union duties.” At arbitration, the Union argued that AAK violated the agreement by laying off the two Working Forepersons and assigning their duties to managers outside the bargaining unit. AAK argued that the propriety of the layoffs was outside the grievance’s scope and that its conduct did not violate the agreement.

The arbitrator’s Interim Award found that the layoffs and managers’ performance of bargaining-unit work violated sections 1.1 and 4.1 of the collective bargaining agreement. The arbitrator sent the remedy issue back to the parties and provided that the issue would return to him if they could not agree. After the parties failed to agree, the arbitrator issued a Supplemental Award ordering AAK to reinstate the two Working Forepersons to their former classifications and make them whole for lost wages and benefits.

AAK then filed this action seeking to vacate both awards. The Union filed an answer and counterclaim seeking confirmation and enforcement.

Legal standard

The court explained that labor arbitration awards receive very strong judicial deference. Under the governing standard, a court may vacate an award in limited circumstances, including when the award does not draw its essence from the collective bargaining agreement, the arbitrator exceeds the issues submitted, the award violates public policy, or the award was obtained through fraud.

Court’s analysis

The court rejected AAK’s argument that the arbitrator exceeded the submitted issues by deciding whether the layoffs were proper. The parties had disagreed about the issue’s scope but agreed that the arbitrator could frame the issue after receiving the evidence and arguments. The arbitrator determined that the grievance included both the managers’ performance of union duties and the propriety of the layoffs. The court gave substantial deference to that interpretation and found that the two issues were closely connected and that AAK had notice of the layoff issue.

The court also rejected AAK’s argument that the arbitrator added work-assignment and layoff restrictions not found in the agreement’s express terms. The court stated that it could not reject an award merely because it believed the arbitrator misread or seriously misinterpreted the contract. The arbitrator had interpreted section 1.1 as placing Working Foreperson duties within the Union’s exclusive jurisdiction and as limiting AAK’s ability to remove that work from the bargaining unit without the Union’s approval. The court concluded that the arbitrator was interpreting and applying the agreement rather than dispensing his own version of industrial justice.

The court further rejected AAK’s challenge to the arbitrator’s decision to give the parties an opportunity to agree on a remedy. The court found no indication that the agreement’s provision concerning bargaining limited the arbitrator’s authority in the dispute-resolution process. It concluded that the arbitrator had not ordered the parties to bargain away their rights, but had allowed them to reach an agreement on an appropriate remedy.

Disposition

The court DENIED AAK’s motion to vacate the arbitration awards. It GRANTED the Union’s motion to confirm and enforce the awards. The court directed the Clerk to enter judgment on the arbitrator’s Interim and Supplemental Awards.

Judge

The order was issued by Judge Maxine M. Chesney, United States District Judge.