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New Jersey Carpenters Funds v. Professional Furniture Services

February 25, 2009


The opinion of the court was delivered by: Wolfson, United States District Judge


Presently before the Court is a Motion brought by Petitioners New Jersey Carpenter Funds and New Jersey Regional Council of Carpenters (collectively "Petitioners") to vacate an arbitration award issued pursuant to the Federal Arbitration Act ("FAA") in a dispute with Respondent Professional Furniture Services ("Respondent"). For the following reasons, Petitioners' Motion is granted and the Arbitrator's Award is vacated.


Petitioner New Jersey Regional Council of Carpenters ("Carpenters Union") and Respondent are parties to a collective bargaining agreement ("CBA"), entered into on May 1, 2002. Affidavit of Ed O'Hare ("O'Hare Aff."), Exh. C, CBA. In accord with the CBA, Carpenters Union and Respondent executed a Short Form Agreement. O'Hare Aff., Exh. B, Short Form Agreement.

The Short Form Agreement required that Respondent pay contributions to Petitioner New Jersey Carpenter Funds ("Funds") on behalf of bargaining unit employees. Id. In late 2006, the Funds requested that Respondent submit to an audit of its records. After Respondent refused to comply, an arbitration hearing was held on January 4, 2007, in which the arbitrator directed Respondent to "immediately cooperate in the performance of an audit." Petitioners moved in United States District Court in the New Jersey for confirmation of the January 4th award, which the Honorable Peter G. Sheridan, U.S.D.J., granted on April 3, 2007. On September 12, 2007, the Funds sent a letter to Respondent containing a copy of the audit conducted on Respondent's payroll for the time period of January 1, 2005 through March 31, 2007. O'Hare Aff., Exh. E, Audit. The audit revealed that Respondent owed over 1,036,917.36 in outstanding contributions to the Funds pursuant to the CBA. Id.

The dispute over whether Respondent owed the entire amount specified in the audit was heard by Aribtrator J.J. Pierson ("Arbitrator"). O'Hare Aff., Exh. A, Arbitrator's Award and Order. Two hearings were held, one on November 12, 2007 and another on November 29, 2007. Id. According to Respondent, the dispute centered around whether Respondent is required to remit contributions on behalf of non-union workers. Petitioners maintained that the CBA requires Respondent to make contributions for all bargaining unit employees, meaning union and non-union, when Respondent uses the Carpenter's Union for various work projects. At the arbitration hearing, Respondent argued that the CBA required it to make contributions for only those employees that were part of the union. On April 27, 2008, the Arbitrator entered an Award and Order in favor of Respondent. Id. The Award specified that Respondent was only responsible to remit contributions for union employees. Id. Accordingly, the Arbitrator ordered that Respondent pay $30,000 in delinquent contributions, $1,000,000 less than requested by Petitioners. In addition, Respondent was ordered to pay legal fees and costs for the Funds. Id.

On July 22, 2008, Petitioners initiated this action in the United States District Court for the District of New Jersey to vacate the Arbitrator's Award and Order. For the reasons that follow, the Court grants Petitioners' Motion to Vacate the Arbitrator's Award.


A. Standard of Review

Pursuant to the Federal Arbitration Act ("FAA"), there is a strong presumption in favor of enforcing arbitration awards. Brentwood Medical Associates v. United Mine Workers of America, 396 F.3d 237, 241 (3d Cir. 2005). The Act underscores the overarching federal policy favoring arbitration to resolve labor disputes. Major League Baseball Players Association v. Garvey, 532 U.S. 504 (2001); see also Penntech Papers, Inc. v. United Paperworkers Int'l Union, 896 F.2d 51, 53 (3d Cir. 1990) (finding that the overwhelming presumption in favor of arbitration awards "protect[s] the benefits of labor arbitration, namely, speed, flexibility, informality, and finality."). Accordingly, a district court may only vacate an arbitrator's award in limited circumstances:

(1) where the award was procured by corruption, fraud or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were 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) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

9 U.S.C. §10(a); see also United Transp. Union Local 1589 v. Suburban Transit Corp., 51 F.3d 376, 379 (3d Cir 1995). "As long as the arbitrator's award 'draws its essence from the collective bargaining agreement,' and is not merely ' his own brand of industrial justice,' the award is legitimate." United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 36 (1987) (quoting Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960); Exxon Shipping Company v. Exxon Seamen's Union, 801 F. Supp. 1379, 1384 (3d Cir. 1992). Recently, the Second Circuit expounded on the rationale behind the deference to an arbitration award:

Vacatur of an arbitral award is unusual for good reason: The parties agreed to submit their dispute to arbitration, more likely than not to enhance efficiency, to reduce costs, or to maintain control over who would settle their disputes and how-or some combination thereof.

Stolt-Nielsen SA v. AnimalFeeds International Corp., 548 F.3d 85, 92 (2d Cir. 2008). A court may, however, vacate an arbitration award if the arbitrator's decision is wholly unsupported by the agreement's plain language or the arbitrator fails to adhere to basic principles of contract construction. News Am. Publications, Inc., Daily Racing Form Div. v. Newark ...

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