Trimark Hotel Corporation v. International Union of Operating Engineers Local…

Background

Trimark Hotel Corporation owns and operates the Millennium Minneapolis Hotel. Trimark and International Union of Operating Engineers Local Union No. 70 were parties to a collective bargaining agreement covering employees at the Hotel, including Omar Naguib, a union member who worked as an engineer and became Lead Engineer in 2014.

In June 2020, Trimark eliminated the Lead Engineer position and told Naguib that he would no longer have a job. Trimark stated that it did not consider the action a layoff under the agreement, although it provided Naguib one week’s pay. The Union filed a grievance, asserting that Naguib had the highest seniority in the bargaining unit and should be able to replace a less senior Building Engineer if qualified.

The parties selected Arthur McCoy as arbitrator. After a hearing, he issued an award on January 11, 2021. The arbitrator concluded that Trimark had the right to eliminate the Lead Engineer job classification, but that this did not automatically authorize Trimark to terminate the employee who held the position. He concluded that the collective bargaining agreement required just cause for the termination, that Trimark had not shown just cause, and that Naguib was qualified to perform the Building Engineer work. The arbitrator ordered Trimark to return Naguib to work and pay full back pay, without deducting money Naguib earned during the period of his termination.

Trimark brought this action under Section 301 of the Labor Management Relations Act, a federal law allowing enforcement of collective bargaining agreements, and asked the court to vacate, or cancel, the award. The Union filed a counterclaim seeking confirmation of the award. Both sides moved for summary judgment, which is a decision without a trial when there is no genuine dispute over a material fact and one side is entitled to judgment under the law.

Court’s analysis

The court explained that judicial review of labor arbitration awards is highly deferential. A court generally must enforce an award if it draws its essence from the collective bargaining agreement and the arbitrator was at least arguably interpreting the agreement and acting within the scope of the authority granted by it. The court may not replace the arbitrator’s interpretation with its own merely because it would interpret the agreement differently.

Authority to decide the dispute

Trimark argued that the arbitrator decided an issue the parties had not submitted, particularly whether Trimark had just cause to terminate Naguib. The court rejected that argument. The parties had offered different descriptions of the issue, and neither had stipulated to a single question. Because of that disagreement, the arbitrator was permitted to determine and frame the issue, subject to remaining within the general scope of the dispute.

The court also distinguished decisions in which arbitrators exceeded their authority by deciding issues expressly excluded from arbitration or by establishing rules for future disputes. Here, the arbitrator addressed whether Trimark or the Union had failed to comply with the collective bargaining agreement. The court concluded that he did not decide a dispute that was outside the submitted matter.

Interpretation of the agreement

The court rejected Trimark’s argument that the arbitrator disregarded the agreement’s language or improperly created bumping rights. The arbitrator interpreted one provision as giving Trimark authority to eliminate job classifications and another as giving Trimark authority to direct employees, including through layoffs. He treated the authority to eliminate a position as distinct from the authority to terminate the incumbent’s employment and concluded that the agreement did not permit termination solely because the position had been eliminated.

The court stated that Trimark’s objections primarily invited the court to interpret the agreement differently from the arbitrator. That was not enough to vacate the award. The court also rejected Trimark’s argument that the grievance procedure limited the arbitrator to a narrower issue, noting that the Union’s grievance referred to Article 5 and any other applicable provisions, practices, and policies.

Alleged impartiality

Trimark argued that McCoy should have disclosed that he had previously been a plaintiff in an employment-discrimination lawsuit against a former employer. Trimark contended that it would have used its strike during the arbitrator-selection process if it had known this information.

The court applied the standard for “evident partiality,” which requires objective facts showing such a degree of bias that a reasonable person could assume the arbitrator had improper motives. It concluded that McCoy’s participation as a plaintiff in an unrelated employment lawsuit more than a decade earlier did not show a relationship with either Trimark or the Union and did not create an impression of possible bias. The court therefore found no basis to vacate the award on this ground.

Back-pay remedy

Trimark argued that the award was punitive because it did not reduce Naguib’s back pay by his interim earnings. The court acknowledged that some arbitration remedies may be vacated if they are punitive and unsupported by the agreement, but it found no such problem here. The collective bargaining agreement did not require the proposed offset, and arbitrators have significant discretion in fashioning remedies. The court concluded that the lack of an offset did not show that the arbitrator exceeded his authority or acted improperly.

Disposition

The court denied Trimark’s motion for summary judgment, granted the Union’s motion for summary judgment, and confirmed the arbitration award issued by Arbitrator A. Ray McCoy on January 11, 2021. The court directed that judgment be entered accordingly.