Staffing issues, contracting out bargaining unit work, and a duty to bargain

By John H Curley on September 23, 2018

Each of these topics is the subject of recent court action.

In MultiCare Health Systems v. Washington State Nurses Association, the Ninth Circuit reversed a District Court order vacating certain remedies ordered in an award of Arbitrator Douglas P. Hammond. The Union’s grievance claimed that Multicare violated the terms of a settlement agreement requiring MultiCare to provide employees with a 15 minute break periods for every four hours worked. Arbitrator Hammond sustained the grievance and ordered MultiCare to cease using a “buddy system” as a means of providing breaks and to “staff, schedule and assign a nurse to serve as a reserve or float nurse with the precise assignment of relieving other scheduled nurses for their authorized breaks.”

MultiCare sought to vacate the award, asserting that the arbitrator exceeded his authority and that the issue of increased staffing had been raised by the Union during negotiations leading to the cba and had been rejected. The District Court (here) vacated that portion of the Arbitrator’s award precluding the use of the buddy system as inconsistent with the rejection of that proposal during negotiations. On the staffing issue, the Court remanded the matter to the Arbitrator for further consideration, noting:

The Court requested additional briefing on the interpretation of the term “increased staffing” because the record “does not adequately reflect what `increased staffing’ entails.” Dkt. 33 at 6. Based on the parties’ responses, the Court concludes that interpretation of the term is a matter for the Arbitrator. It is unclear whether this issue alone is sufficient to vacate the Award, but, because the Court is vacating the Award on the previous issue, the Court simply points out that additional interpretation would assist a reviewing Court in determining whether the remedy derives its essence from the parties’ agreements. In other words, additional consideration and discussion linking the remedy to terms of the contract may be helpful for future review.

On the Union’s appeal, the Ninth Circuit reversed, noting on the “buddy system” issue:

The district court erred in the application of those principles when it determined that the essence of the Agreement did not allow the Arbitrator to exclude use of the buddy system. The Arbitrator did find that MultiCare wanted the Agreement to specifically permit use of the buddy system. However, he also found that WSNA opposed inclusion of that specific provision, and it was left out. By contrast, the Agreement did provide that whatever method was used, nurses were to have their fifteen-minute breaks and that the staffing plan could not be violated. The Arbitrator determined that, as a matter of fact, the buddy system was unable to meet those conditions in practice and was “nonviable.” Indeed, the buddy system violated the very purpose (essence) of the Agreement. The district court erred when it overruled the Arbitrator’s decision to enjoin the practice that violated the Agreement.

The Court also rejected the District Court’s decision on the staffing question, concluding:

The district court opined that “increased staffing” was itself an ambiguous phrase that should have been considered by the Arbitrator. If it is an ambiguous phrase, the Arbitrator implicitly resolved the ambiguity when he made his award. In any event, if the basis of an award is ambiguous, that does not permit a district court to vacate the award itself. … Again, we see no basis for overturning the Arbitrator’s award.

Arbitrator Skonier upheld a grievance filed by the Union claiming that PPL violated its cba by contracting out bargaining unit work. Arbitrator Skonier found that PPL “failed to live up to the promises it made to the Union” when it negotiated a Letter of Understanding that was made part of its cba. PPL maintained that it had complied with all of the obligations of the LOA and that its actions were consistent with the cba. It also denied making any guarantee of increased union membership or assurance that it would not contract work. Arbitrator Skonier ordered the Company to “cease and desist from violating” the LOA and to provide the Union “with a sum of money equivalent to what the initiation fees and dues would be as though eight employees had been hired.”

In its complaint to vacate the award, PPL alleged that the arbitrator “displayed manifest disregard for the parties agreement,” relied on erroneous cost projections, and “based the Award on his own moral judgment and notion of fairness.”

Rejecting the Company’s claim, the District Court concluded that the Arbitrator’s reliance on parol evidence was not improper:

The Arbitrator also relied on PPL’s representations in previous negotiation discussions as PPL’s “indicia of intent” to conclude PPL violated Exhibit P. Specifically, the Arbitrator found PPL represented to Local 1600 it would increase the number of bargaining unit positions and reduce contractors. … “PPL’s prior representations were offered to Local 1600 to explain PPL’s intent when making the proposal [resulting] in the [Letter of Understanding].” (Id.) PPL argues the Arbitrator’s use of prior communications not included in the final agreement violates the Parol Evidence Rule and the Arbitrator’s use of these communications was unnecessary given the CBA’s unambiguity. … But, our Court of Appeals clearly states it is appropriate to look beyond the face of a CBA given it is not an ordinary contract for the purchase of goods and services. Southeastern Pennsylvania Transp. Authority v. Brotherhood of R.R. Signalmen, 882 F.2d 778, 784 (3d Cir. 1989). Our Court of Appeals and several courts of appeals explicitly recognize that it is entirely appropriate to look to parol evidence in the context of interpreting collective bargaining agreements.

The Court also rejected the challenge to the Arbitrator’s finding that the Company had not established that its actions were consistent with the cba, observing:

In establishing the four preconditions required before subcontracting bargaining unit work (Article II, Section 5D) were interrelated with Article VI, Section 1D, and Exhibit P, the Arbitrator concluded there were limits to PPL’s subcontracting right and stated: “the parties negotiated the contracting provision to allow the Company to contract under certain conditions, while allowing the Union to protect bargaining unit work and membership.”… So, while PPL may subcontract bargaining unit work — as evidenced by its subcontracts with PPL Solutions and NCO — PPL’s right to subcontract is not unlimited. Based on PPL’s limited right, the Arbitrator was correct to balance PPL’s subcontracting rights with the rights of Local 1600 employees.

In Citgo Petroleum Corp. v. United Steelworkers Union, Local No.7-517, Citgo seeks to vacate an award by Arbitrator Alan J. Cook. The Steelworkers grievance claimed that Citgo’s use of outside contractors violated the terms of its cba. The management rights provision of the cba recognized the Company’s right to “hire contractors” but the contract also provided that the Company wouldn’t displace any unit employee due to the use of contractors.

Arbitrator Cook found that the Union had failed to show that the use of contractors in this instance violated the terms of the contract or caused harm to the bargaining unit. He noted that he was not free to ignore the language of the cba and that if he did ignore “the clear and unambiguous terms of the Contract, the Award could be set aside by a court of law.” Nevertheless, his opinion continued:

However, there is another aspect of this case that must be considered. The National Labor Relations Act places on employers a mandatory duty to bargain with authorized employee representatives on subjects that include rates of pay, wages, hours of employment and other conditions of employment (29 U.S.C. Sec. 151 et seq.).

He ordered Citgo to bargain with the union over the issue of the transfer to contractors of work performed previously by the bargaining unit performing work and retained jurisdiction “for ninety days of the date of this Award to give the parties whatever assistance they may need in implementing the terms of the Award.”

In its complaint Citgo asserts that the Arbitrator “had no authority to address this or any other statutory issue” and that his “erroneous conclusion” that Citgo violated a duty to bargain did not draw its essence from the cba.