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Lourdes Medical Center of Burlington County v. Jneso

April 4, 2007

LOURDES MEDICAL CENTER OF BURLINGTON COUNTY PETITIONER,
v.
JNESO, DISTRICT COUNCIL I, IUOE, AFL-CIO RESPONDENT.



The opinion of the court was delivered by: Lifland, District Judge

OPINION

(CLOSED)

Before the Court is a motion by Petitioner Lourdes Medical Center of Burlington County ("Petitioner" or "Lourdes") to alter this Court's Memorandum and Order of November 14, 2005, which granted the motion of Respondent JNESO to confirm an arbitration award. Also before the Court is Lourdes' petition to vacate the arbitration award. For the reasons discussed herein, Lourdes' petition to vacate will be granted, and its motion to alter will be denied as moot.

I. BACKGROUND

The factual background of this case was thoroughly detailed in the "Background" section of this Court's Memorandum and Order of November 14, 2005. The Court relies on that previous recitation of the facts and will provide only a brief summary of the relevant facts here.

Lourdes is an acute care hospital located in Willingboro, New Jersey. JNESO is a labor union that represents nurses employed at Lourdes. On or about September 23, 2003, Lourdes informed JNESO that it intended to make certain administrative and scheduling changes in the Maternity, Peri-Operative, and Intermediate Pulmonary Care units of the hospital. (Compl. ¶ 13; Ans. ¶ 13.) The anticipated changes were expected to result in the lay-off of several nurses in the affected units. (Compl. ¶ 16; Ans. ¶ 16.) On October 6, 2003, JNESO filed a grievance on behalf of the affected nurses. JNESO listed the "nature of the grievance" as the fact that "6 RNs were laid off in violation of the CBA." (Declaration of Michael G. Brennan in Support of Plaintiff's Opposition to Defendant's Motion for Corfirmation of Arbitration Award and Plaintiff's Cross-Motion to Vacate Arbitration Award (hereinafter, "Brennan Decl."), Exh. H (grievance form).) In accordance with the Collective Bargaining Agreement ("CBA") in effect at the time, the dispute was submitted to the New Jersey State Board of Mediation for final and binding arbitration.

Several important events occurred in October and November 2003, after the grievance was filed but before the arbitration hearing was held. First, on October 24, 2003, Lourdes informed JNESO that it intended to make administrative and shift changes to the Emergency Department as well. (Compl. ¶ 33; Ans. ¶ 33.) JNESO did not file another grievance specifically addressing these changes. Second, on October 26, 2003, the changes to the Maternity, Peri-Operative, and Intermediate Pulmonary Care units of the hospital went into effect. Despite Lourdes' earlier predictions, no nurses were laid off; however, several had their work hours reduced. Finally, in November, the changes to the Emergency Department went into effect resulting in the reduction of work hours for additional nurses.

Gerard Restaino ("Restaino"), the designated arbitrator, held a hearing on April 29, May 7, and June 8, 2004.*fn1 On August 16, 2004, Restaino issued his Opinion and Award. He determined that the reductions in the nurses' work hours constituted "layoffs" within the meaning of the CBA, thus implicating the layoff provisions of the CBA, which required that probationary employees be laid off before non-probationary employees and that probationary employees be laid off in order of seniority. (See Brennan Decl., Exh. I (CBA), at Art. XI.) He further concluded that Lourdes had not complied with these provisions when implementing the changes in the Maternity, Peri-Operative, and Intermediate Pulmonary Care units or in the Emergency Department. As a remedy, he ordered that the "shifts shall be changed back to those that were in effect on October 25, 2003 [and that] [a]ll affected employees shall be made whole for any lost wages and/or contractual benefits such as, but not limited to health insurance." (Compl. Ex. A at 43.)

On September 15, 2004, Lourdes filed a Complaint and Petition to vacate the arbitration award pursuant to § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Lourdes alleged: (1) that the award "was rendered in manifest and irrational disregard of the law and evidence"; (2) that Restaino was biased against Lourdes and violated Lourdes' due process rights by failing to conduct a fair hearing; and (3) that the award did not draw its essence from the CBA. On October 11, 2004 JNESO answered and filed a counter-claim, in which it denied arbitrator bias and sought confirmation of the arbitration award. Shortly thereafter, JNESO filed a motion to summarily confirm the award.

On November 19, 2004, Lourdes submitted its brief in opposition to JNESO's motion to confirm the award. Lourdes argued that it was entitled to conduct discovery to investigate the alleged arbitrator bias and due process violations, and that the Court should allow such discovery to occur prior to deciding whether the confirm or vacate the arbitration award.*fn2 Lourdes did not address the substantive merits of JNESO's motion to confirm the arbitration award in its opposition papers, but included the following footnote at the end of its brief:

Should the Court decide that Lourdes in entitled to no discovery before the Court confirms or vacates the . . . award, Lourdes respectfully requests that the Court provide Lourdes with a reasonable amount of time following the Court's decision to respond to the substantive merits of JNESO's Motion to Confirm arbitration Award.

On February 2, 2005, Magistrate Judge Falk ruled that the parties could engage in limited discovery on the issue of arbitrator bias. Despite its position that discovery was crucial to its case, Lourdes failed to proceed with discovery in a timely manner and failed to prepare proposed Orders as requested by Judge Falk. See Lourdes v. JNESO, Civ. Act. No. 04-4494, Memorandum and Order (Dec. 8, 2005).

On November 14, 2005, this Court granted JNESO's motion to confirm the award. Three days later, Lourdes wrote a letter to the Court arguing that the Court had effectively-and unfairly-closed discovery and deprived Lourdes of an opportunity to address the merits of the petition by issuing a final judgment confirming the award. See Letter from Thomas M. Beck to Magistrate Judge Falk (Nov. 17, 2005) ("Our client and we simply do not understand how the Court could have issued a final judgment in this matter after the Court led us to believe that we would be permitted to complete discovery and to then address the merits of the dispute.").

Shortly thereafter, on November 29, 2005, Lourdes filed a motion to alter judgment, asking to Court to "rescind its November 14, 2005 Memorandum and Order in its entirety, to vacate the judgment that was entered, and to permit Lourdes to complete discovery before responding to JNESO's motion on the merits." (Lourdes' Memorandum in Support of its Motion to Alter Judgment at 1.)

After examining the docket and providing both parties with an opportunity to be heard, the Court determined that "the time for discovery ha[d] expired." As a result, and "in view of other developments in the case . . . and for good cause shown," the Court ordered discovery closed on December 2, 2005. See Lourdes v. JNESO, Civ. Act. No. 04-4494, Order Closing Discovery (Dec. 2, 2005). The Court agreed, however, that Lourdes should be permitted to address the merits of the issue, as per its request in the footnote cited above. Accordingly, in an Order dated December 8, 2005, this Court ruled that Lourdes could submit further briefing on the merits, and stayed its November 14 Order "pending the Court's consideration of Lourdes' brief on the 'merits.'" Lourdes v. JNESO, Civ. Act. No. 04-4494, Memorandum and Order (Dec. 8, 2005). Lourdes provided the additional briefing on January 5, 2006. Specifically, Lourdes filed a cross-motion to vacate the arbitration award as well as a brief in opposition to JNESO's motion for confirmation and in support of Lourdes' cross-motion to vacate, which addressed the merits of the underlying issue.

The Court's Orders of December 2, 2005 and December 8, 2005 effectively resolved the issues raised by Lourdes' motion to alter. Discovery has been closed for good cause; the Court's Memorandum and Opinion of November 14, 2005 has been stayed.*fn3 Accordingly, all that remains for this Court to address is the merits of the underlying issue-i.e., whether the arbitration award should be confirmed or vacated. This issue has now been fully briefed by both parties following a reasonable opportunity to conduct discovery into the issue of arbitrator bias.

II. DISCUSSION

Lourdes argues that the Court should vacate the arbitration award in its entirety because: (1) the award decides issues outside the scope of the grievance; (2) Arbitrator Restaino engaged in misconduct that prejudiced Lourdes' right to a fair hearing; (3) Arbitrator Restaino was biased against Lourdes; and (4) the award does not draw its essence from the CBA. The Court addresses each of these arguments below.

A. Standard of Review

District courts have very little authority to upset arbitrators' awards. United Transp. Union Local 1589 v. Suburban Transit Corp., 51 F.3d 376, 379 (3d Cir. 1995). Indeed, "'the test used to probe the validity of a labor arbitrator's decision is a singularly undemanding one.'" Id. (quoting News Am. Publ'ns, Inc. v. Newark Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990)). With that said, arbitration awards may be upset in limited circumstances. The Federal Arbitration Act ("FAA") states that an award may be vacated if: (1) "the award was procured by corruption, fraud, or undue means"; (2) there is "evident partiality or corruption" by the arbitrator; (3) the arbitrator was "guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy [or of] any other misbehavior by which the rights of any party have been prejudiced"; or (4) the arbitrator exceeded his powers or failed to reach a "mutual, final, and definite award." 9 U.S.C. § 10.*fn4

It is also well established that An arbitrator's award must "draw[] its essence from the collective bargaining agreement," Nat'l Ass'n of Letter Carriers v. United States Postal Serv., 272 F.3d 182, 185 (3d Cir. 2001). Accordingly, a district court may vacate an arbitration award if there is evidence that the arbitrator's decision was based on a manifest disregard of the CBA. See Local 863 Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am. v. Jersey Coast Egg Producers, Inc., 773 F.2d 530, 534 (3d Cir. 1985); Major League Umpires Ass'n v. Am. League of Prof'l Baseball Clubs, 357 F.3d 272, 280 (3d Cir. 2004) ("An award may be vacated if the arbitrator demonstrates manifest disregard for the CBA."). The manifest disregard of the law doctrine is a "strict standard" in which a "reviewing court will decline to sustain an award only in the rarest case." Newark Morning Ledger Co. v. Newark Typographical Union, 797 F.2d 162, 165 (3d Cir. 1986); see also United Transp. Union Local 1589, 51 F.3d at 380 ("Only when an arbitrator 'acted in manifest disregard of the law, or if the record before the arbitrator reveals no support whatsoever for the arbitrator's determination,' may a district court invade the province of the arbitrator.") (citation omitted).

"Effusively deferential language notwithstanding, the courts are neither entitled nor encouraged simply to 'rubber stamp' the interpretations and decisions of arbitrators. Courts still maintain a significant role in the labor arbitration process; they have not been relegated to the status of merely offering post-hoc sanction for the actions of arbitrators. Rare though they may be, there will be instances when it is appropriate for a court to vacate ...


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