Employer Need Not Petition to Vacate Arbitration Award Before Seeking Damages under LMRA for Union's Allegedly Unlawful Claim: Ninth Circuit | Practical Law

Employer Need Not Petition to Vacate Arbitration Award Before Seeking Damages under LMRA for Union's Allegedly Unlawful Claim: Ninth Circuit | Practical Law

In American President Lines v. International Longshore & Warehouse Union, the US Court of Appeals for the Ninth Circuit vacated a district court decision finding an employer lacked statutory standing to seek damages under Section 303 of the Labor Management Relations Act (LMRA) from an allegedly unlawful arbitration award because the employer did not first petition to vacate the arbitration award under Section 301 of the LMRA.

Employer Need Not Petition to Vacate Arbitration Award Before Seeking Damages under LMRA for Union's Allegedly Unlawful Claim: Ninth Circuit

by Practical Law Labor & Employment
Published on 16 Jul 2013 • USA (National/Federal)
In American President Lines v. International Longshore & Warehouse Union, the US Court of Appeals for the Ninth Circuit vacated a district court decision finding an employer lacked statutory standing to seek damages under Section 303 of the Labor Management Relations Act (LMRA) from an allegedly unlawful arbitration award because the employer did not first petition to vacate the arbitration award under Section 301 of the LMRA.
On July 12, 2013, the US Court of Appeals for the Ninth Circuit issued an opinion in American President Lines v. International Longshore & Warehouse Union, vacating the district court's decision to dismiss the employer's complaint for lack of standing.
The case arose after the employer contracted with another company to perform dry-dock work at an Alaskan port where it did not have operations. The union brought a grievance against the employer alleging that the employer violated a work preservation clause in their collective bargaining agreement (CBA) because it subcontracted work from a company that hired non-union employees and therefore displaced union workers. The union demanded that the employer assign the work to union workers.
An arbitrator:
  • Found that the work historically belonged to the union.
  • Rejected the employer's claims that the union:
    • had no contractual right to the work because it had not traditionally performed it; and
    • was seeking an unlawful interpretation of the work preservation clause to acquire rather than preserve work.
  • Sustained the union's grievance and ordered the employer to assign the work to union workers.
The employer filed, and the NLRB declined to issue a complaint on an unfair labor practice charge (ULP), alleging that:
  • The arbitrator's award violated Section 8(e) of the NLRA.
  • The union violated Section 8(b)(4) when it pursued its interpretation of a work preservation clause in its CBA at arbitration (rendering it an illegal hot-cargo clause).
The employer filed an action in the US District Court for the District of Alaska under Section 303 of the Labor Management Relations Act (LMRA). It alleged that it was harmed by the same ULPs it had unsuccessfully alleged at the NLRB. The district court:
  • Sua sponte ordered the parties to brief whether the employer had standing.
  • Found that the employer's claims had been litigated and allowing the employer to proceed under Section 303 of the LMRA would undermine the national labor policy in favor of arbitration.
  • Dismissed the employer's case for lack of standing.
In an issue of first impression, the Ninth Circuit held that:
  • Regardless of whether the employer was neutral or primary under the LMRA, it sufficiently alleged damages stemming from the ULPs of being:
    • forced into a "hot cargo" agreement; and
    • forbade from conducting business with non-union employees.
  • Since the congressional intent of Section 303 of the LMRA was to permit parties to seek legal damages resulting from ULPs, the employer was not required first to petition the court to vacate the arbitration award before seeking damages based on the union's alleged ULP from advancing an improper interpretation of a contractual clause at arbitration.
The Ninth Circuit rejected the union's claim that a six-month statute of limitations that would apply to a petition to vacate an arbitration award under Section 301 of the LMRA applied and barred the employer's claims under Section 303 in this case.
Court documents: