Labor Arbitration Award Stands Despite Intervening Union Decertification: Eighth Circuit | Practical Law

Labor Arbitration Award Stands Despite Intervening Union Decertification: Eighth Circuit | Practical Law

The US Court of Appeals for the Eighth Circuit held in Midwest Division - LSH, LLC v. Nurses United For Improved Patient Care that an arbitrator's decision awarding a terminated nurse backpay and reinstatement was valid even though the National Labor Relations Board (NLRB) decertified the union that processed the grievance on the nurse's behalf two weeks before the arbitration hearing.

Labor Arbitration Award Stands Despite Intervening Union Decertification: Eighth Circuit

by Practical Law Labor & Employment
Published on 09 Jul 2013 • USA (National/Federal)
The US Court of Appeals for the Eighth Circuit held in Midwest Division - LSH, LLC v. Nurses United For Improved Patient Care that an arbitrator's decision awarding a terminated nurse backpay and reinstatement was valid even though the National Labor Relations Board (NLRB) decertified the union that processed the grievance on the nurse's behalf two weeks before the arbitration hearing.
On July 2, 2013, the US Court of Appeals for the Eighth Circuit issued an opinion in Midwest Division - LSH, LLC v. Nurses United For Improved Patient Care, upholding an arbitrator's award of reinstatement and backpay despite that the NLRB decertified the union that had processed the relevant grievance two weeks before the arbitration hearing.
The union filed a complaint on behalf of a terminated registered nurse under its collective bargaining agreement with the nurse's employer. The parties submitted to binding arbitration the questions of whether the employer had just cause to terminate the nurse and, if not, what the remedy should be. Two weeks before the arbitration hearing, the NLRB decertified the union. However, the arbitration hearing continued after the parties stipulated the matter was properly before the arbitrator for decision.
The arbitrator found the employer lacked just cause and ordered the nurse be reinstated with backpay from the date of her termination to the date of reinstatement. The employer filed a declaratory judgment action under the Labor Management Relations Act, seeking to vacate the award to the extent it ordered reinstatement and backpay beyond the union's decertification. The employer argued the arbitrator exceeded his authority by ordering a remedy that extended beyond the date of the union's decertification.
In affirming the district court's grant of summary judgment confirming the award, the Eighth Circuit held:
  • The collective bargaining agreement (CBA) at issue provided for post-expiration arbitration and remedies as it expressly authorized arbitration of matters arising before the CBA expired, such as the nurse's termination. Just cause for the termination was a CBA right, which survived the NLRB's decertification order.
  • The parties stipulated which issues were to be resolved, including the appropriate remedy, after the union was decertified. As such, the arbitrator was not acting outside of his authority by creating that remedy.
  • When the NLRB decertified the union, the CBA:
    • was not voided; and
    • should be treated as if it expired.
  • Precedent limiting an arbitrator's authority to award remedies only until a CBA was no longer effective (Int'l Chem. Workers Union, Local No. 227 v. BASF Wyandotte Corp. and Pioneer Natural Res. USA, Inc. v. Paper, Allied Indus. Chem. & Energy Workers Int'l Union Local 4-487) were inapposite. Those cases did not question the arbitrators' authority to make the awards, but merely limited judicial enforcement of those remedies based on post-arbitration changes in circumstances that the arbitrator had no opportunity to consider.
  • The employer's argument that it would be unfair for the nurse in question to have job protections while her colleagues became at-will employees when the union was decertified must be rejected because:
    • the argument addressed the fairness of the award rather than the arbitrator's authority to issue it; and
    • in any event, the employer presented the arbitrator with no evidence regarding the practical effect of union decertification on members of the bargaining unit or changes to employment terms and conditions the employer implemented after the decertification. Therefore, the employer set no limits on the arbitrator's authority.
This decision marks the first time a federal appellate court has considered what effect NLRB decertification of a union might have on a labor arbitration arising under a CBA that was in existence before the decertification. In light of this decision, employers should expect some courts will treat the CBA of a decertified union as expired rather than a nullity. Employers should consider revisiting the limits that arbitration clauses in their CBAs impose on:
  • Parties' rights to process grievances after a CBA expires.
  • An arbitrator's authority to hear and remedy grievances after a CBA expires.
Employers should also consider:
  • Arguing for limits on the arbitrator's authority where the CBA does not address the particular situation.
  • Challenging the arbitrator's authority in cases before the arbitrator decides the matter.
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