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AMERADA HESS CORP. v. LOCAL 22026 FED. LABOR UNION

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY


October 31, 1974

AMERADA HESS CORPORATION, a Delaware Corporation authorized to do business in the State of Mew [New] Jersey, RESERVE TERMINAL CORPORATION, a New Jersey Corporation, and SECOND RESERVE TERMINAL, a New Jersey Corp., Plaintiffs
v.
LOCAL 22026 FEDERAL LABOR UNION, A.F.L.-C.I.O., affiliated with the OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, A.F.L.-C.I.O., Defendant

The opinion of the court was delivered by: FISHER

OPINION and ORDER

 FISHER, District Judge.

 This is a motion by plaintiffs to vacate an arbitration award and a cross-motion by defendant for summary judgment and affirmation of the arbitration award. Plaintiff places reliance on 9 U.S.C. Sec. 10(a-d) as a basis for its motion to vacate. *fn1"

 Specifically, plaintiffs urge that the arbitration award be vacated pursuant to 9 U.S.C. Sec. 10(b) which permits a United States District Court to vacate an arbitration award ". . . where there was evident partiality or corruption in the arbitrators, or either of them", and 9 U.S.C. Section 10 (d) which permits the court to vacate an arbitration award ". . . where the arbitrators exceeded their powers . . .". Additionally, plaintiffs allege that the arbitrator's decision was clearly contrary to the common law of the shop and to the weight of authority and should, therefore, be vacated.

 I

 Plaintiffs' first contention is that the arbitrator evidenced a definite partiality towards the Union within the meaning of 9 U.S.C. Section 10(b). In support of their claim of partiality, the plaintiffs allege that the arbitrator, "displayed a flagrant inattentiveness to the facts" and failed to require the Union to meet the burden of proof necessary to sustain its position.

 Courts have found "evident partiality or corruption" within the meaning of Section 10(b) in cases where there were undisclosed business dealings between the arbitrator and a party to the arbitration. A leading case on this point is Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 21 L. Ed. 2d 301, 89 S. Ct. 337 (1968), reh. den. 393 U.S. 1112, 21 L. Ed. 2d 812, 89 S. Ct. 848. Courts have also found partiality where the arbitrator had either a personal or business interest in the outcome of the proceedings, or where a relationship, other than a business relationship, existed between the arbitrator and a party to the arbitration. See Hyman v. Pottberg's Exrs., 101 F.2d 262 (2d Cir. 1939).

 In other words, when a claim of partiality is made ". . . the court must ascertain from such record as is available whether the arbitrator's conduct was so biased and prejudiced as to destroy fundamental fairness . . .", Catz American Co. v. Pearl Grange Fruit Exchange, Inc., 292 F. Supp. 549, 551-552 (S.D.N.Y. 1968); see also, Ballantine Books, Inc. v. Capital Distributing Co., 302 F.2d 17 (2d Cir. 1962); Newark Stereotypers' Union v. Newark Morning Ledger Co., 397 F.2d 594 (3d Cir. 1968), cert. denied 393 U.S. 954, 21 L. Ed. 2d 365, 89 S. Ct. 378 (1968); In re Compudyne Corp., 255 F. Supp. 1004 (E.D.Pa. 1966); Transport Workers Union v. Philadelphia Transp. Co., 283 F. Supp. 597 (E.D.Pa. 1968); Shopping Cart, Inc. v. Amalgamated Food Employees, 350 F. Supp. 1221 (E.D.Pa. 1972). Something more than "mere error in the law or failure on the part of the arbitrators to understand or apply the law" must be shown by the party alleging partiality. Saxis Steamship Co. v. Multifacs International Traders, Inc., 375 F.2d 577, 582 (2d Cir. 1967); Catz American Co. v. Pearl Grange Fruit Exchange, Inc., supra ; San Martine Compania de Navegacion, S.A. v. Saguenay Terminals, Ltd., 293 F.2d 796 (9th Cir. 1961). The record in the case here is devoid of any indicia of "evident partiality or corruption" requiring vacation of the award. Cities Service Oil Co. v. American Mineral Spirits Co., 22 F. Supp. 373 (S.D.N.Y. 1937); Stef Shipping Corp. v. Norris Grain Co., 209 F. Supp. 249 (S.D.N.Y. 1962); Fukaya Trading Co., S.A. v. Eastern Marine Corp., 322 F. Supp. 278 (E.D.La. 1971).

 II

 Plaintiffs next argue that the arbitrator exceeded his powers within the meaning of 9 U.S.C. Section 10(d). Usually, the courts, in considering the applicability of this objection to an award, have examined the arbitration agreement or other documents through which the parties agreed to arbitrate and have compared such agreement with the decision rendered. Ordinarily the complaining party must show that the arbitrator's award is contrary to the express language of the collective bargaining agreement, Amanda Bent Bolt Co. v. International U., U.A., A., A.T.W., 451 F.2d 1277, (6th Cir. 1971); Riko Enterprises, Inc. v. Seattle Supersonics Corp., 357 F. Supp. 521 (S.D.N.Y. 1973); Timken Co. v. Local U. No. 1123, United Steelworkers of America, 482 F.2d 1012 (6th Cir. 1972); or that the arbitrator's award went beyond the issues submitted to him, *fn2" Orion Shipping and Trading Co. v. Eastern States Petroleum Corp., 312 F.2d 299 (2d Cir. 1963); Western Canada S.S. Co. v. Cia De Nav. San Leonardo, 105 F. Supp. 452 (S.D.N.Y. 1952); or that the arbitrator had no power to grant a particular remedy. See, Structural Steel & Ornamental Iron Assoc. v. Shopmen's Local Union etc., 478 F.2d 848 (3d Cir. 1973); Swift Industries, Inc. v. Botany Industries, Inc., 466 F.2d 1125 (3d Cir. 1972); South East Atlantic Shipping, Ltd. v. Garnac Grain Co., 356 F.2d 189 (2d Cir. 1966).

 An analysis of the stipulated issue submitted to the arbitrator, *fn3" and the arbitrator's opinion and award reveals that the arbitrator decided the precise issue presented to him *fn4" and mandated a remedy which not only was within his power, but, in fact, had been stipulated to by the parties. Therefore, if the plaintiffs are to prevail they must demonstrate that the arbitrator's award is contrary to the express language of the collective bargaining agreement or that the arbitrator, instead of merely interpreting the collective bargaining agreement, added terms to the agreement. *fn5"

 In this regard, plaintiffs contend that the arbitrator's award added to the agreement a "guaranteed overtime clause" and a "past practice clause" contrary to the manifest intention of the parties. Plaintiffs further contend that the arbitrator's award completely nullifies the express language of Article 21 -- Rights of Management *fn6" -- by limiting the company's right to run its business in the most efficient manner possible.

  The approach courts are to follow in disputes arising under labor contracts containing arbitration clauses is outlined in the Steelworkers Triology: United Steelworkers v. American Mfg. Co., 363 U.S. 564, 4 L. Ed. 2d 1403, 80 S. Ct. 1343 (1960) (American); United Steelworkers v. Warrior and Gulf Co., 363 U.S. 574, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960) (Warrior and Gulf); and United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960) (Enterprise). *fn7" In the latter decision the Supreme Court commented on the scope and limits of judicial review of an arbitrator's award (at 596):

 

"The refusal of the courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards."

 The Court went on to note:

 

". . . the question of interpretation of the collective bargaining agreement is a question for the arbitrator. It is the arbitrator's construction which was bargained for; and so far as the arbitrator's decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his." Id. at 599.

 On the other hand:

 

". . . an arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award." Id. at 597.

 It is true that in this case the arbitrator's award is not premised simply on an interpretation of the express terms of the collective bargaining agreement. The arbitrator sought guidance from many sources in addition to the plain language of the agreement, including past history of the agreement, past practices of the company, the parties' interpretation of the agreement and the testimony of various witnesses. See, Willson H. Lee Co. v. New Haven Printing Pressmen, 248 F. Supp. 289 (D.C.Conn. 1965). After considering all these criteria, the arbitrator found that the past practice of calling in the grievants for ship tie-up at specified times was a mutually agreed upon and binding past practice which could not be unilaterally terminated by plaintiffs. Plaintiffs argue that the past practice was discretionary in nature and the employer could unilaterally dispense with it. *fn8" The arbitrator's opinion and award clearly reflects the arbitrator's awareness of the distinction between a discretionary and binding past practice. The court does not find the arbitrator's decision to be in conflict with or contrary to the express terms of the collective bargaining agreement. While the arbitrator's award is not premised solely on the express terms of the collective bargaining agreement, it does draw its essence from an interpretation of that agreement. Enterprise, supra at 597.

 Plaintiffs' contention that the arbitrator exceeded his authority by adding terms to the collective bargaining agreement is premised on the assertion that the arbitrator's interpretation of the law and facts was erroneous. As already noted, it is well established that the arbitrator's construction of a contract and interpretation of the law and facts are not subject to judicial review. See, Burchell v. Marsh, 58 U.S. 344, 15 L. Ed. 96 (1854); Wilko v. Swan, 346 U.S. 427, 98 L. Ed. 168, 74 S. Ct. 182 (1953); Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 100 L. Ed. 199, 76 S. Ct. 273 (1956); Kirschner v. West Co., 247 F. Supp. 550 (E.D. Pa. 1965), aff'd 353 F.2d 537 (3d Cir. 1965), cert. den. 383 U.S. 945, 16 L. Ed. 2d 208, 86 S. Ct. 1202 (1966); Federal Commerce & Nav. Co. v. Kanematsu-Gosho Ltd., 457 F.2d 387 (2d Cir. 1972); see also, the Steelworkers Triology, supra. Therefore, the Court finds that the arbitrator did not exceed his authority within the meaning of 9 U.S.C. Section 10(d).

 III

 Plaintiffs' final contention is that the arbitrator's finding of a binding past practice in this case is clearly contrary to the common law of the shop and to most of the reported arbitration decisions. In addition to the grounds listed in 9 U.S.C. Section 10(a-d), courts have recognized that an award may also be vacated if it is in "manifest disregard" of the law. Possible conflict with the general principle that arbitration proceedings are not reviewable for errors of arbitrators in interpretations of the law has generally been resolved by adoption of the view that "manifest disregard" of the law means that the arbitrator correctly understood and set forth the applicable law, but proceeded to ignore it. See, San Martine Compania De Nav. v. Saguenay Term. Ltd., supra ; Sobel v. Hertz, Warner & Co., 469 F.2d 1211 (2d Cir. 1972); Saxis S.S. Co. v. Multifacs International Traders, Inc., supra. Although recognizing the possibility of an arbitration award for "manifest disregard of the law", the courts have been reluctant to vacate an award on this ground. Amicizia Societa Navegazione v. Chilean Nitrate & Iodine Sales Corp., 274 F.2d 805 (2d Cir. 1960), cert. denied 363 U.S. 843, 4 L. Ed. 2d 1727, 80 S. Ct. 1612 (1960); Metal Products Workers Union v. Torrington Co., 242 F. Supp. 813 (D.Conn. 1965); aff'd 358 F.2d 103 (2d Cir. 1966); Fukaya Trading Co. S.A. v. Eastern Marine Corp., supra.

 An analysis of the arbitrator's opinion reveals that he was well aware of the applicable law and carefully weighed the arguments advanced by both the Union and the Company. Whether or not this court agrees with the arbitrator's interpretation or application of the law is immaterial, for the arbitrator's award does not indicate and the plaintiffs have failed to demonstrate that the arbitrator understood and correctly stated the law but proceeded to ignore it. See, Bell Aerospace Co. Div. of Textron, Inc. v. Local 516, International Union, 356 F. Supp. 354 (W.D.N.Y. 1973).

 Therefore, the plaintiffs' motion to vacate the arbitration award is denied and defendant's motion for summary judgment and to enforce the arbitration award is granted.

 Defendant Union asks for interest on the arbitration award which is not allowed.

 Attorney's fees are also solicited to reimburse defendant's counsel.

 The court is aware of its authority to award attorney's fees where it determines that a party has, without justification, refused to abide by the award of the arbitrator, International Union of Dist. 50, U.M.W. v. Bowman Transp. Inc., 421 F.2d 934 (5th Cir. 1970); Local No. 149 I.U., U.A., A. & A.I.W. v. American Brake Shoe Co., 298 F.2d 212 (4 Cir., 1962). However, the court is of the opinion that the plaintiffs presented a justiciable issue and therefore no attorney's fees will be awarded.

 Costs will be assessed against the plaintiffs.

 It is so ORDERED this 31st day of October, 1974.

 CLARKSON S. FISHER, United States District Judge.


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