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It's Called 'Binding Arbitration' for a Reason

By Robyn Hagan Cain on March 09, 2012 3:08 PM

The Tenth Circuit Court of Appeals ruled this week that the San Juan Coal Company in Farmington, N.M. is bound by the terms of an arbitration ruling with the International Union of Operating Engineers (IUOE), the union that represents mine workers at the company's Farmington, N.M. coal mine.

San Juan and the IUOE have a collective bargaining agreement detailing the terms of the mine workers' employment. The collective bargaining agreement stipulated that an employee who works beyond his scheduled hours for a particular day will be paid 1.5 times the normal rate, and an employee required to work for two hours after the end of his shift will be paid for an additional half-hour at 1.5 times his normal rate.

San Juan, in an effort to reduce operating costs, worked out a Memorandum of Agreement to these terms that established reorganized worker schedules. The reorganized schedules stated that a normal work shift was 10 hours, and a weekend shift was 12 hours, (10 hours, plus 2 hours of overtime pay).

One month into the new employee schedules, the union filed a grievance against San Juan because weekend shift workers weren't being paid the additional half-hour in holdover pay. The dispute went to binding arbitration. The arbitrator sided with the union.

"The union wins" wasn't the answer San Juan had hoped to receive, so it challenged the arbitrator's decision in a district court, and won. The IUOE appealed, and the Tenth Circuit Court of Appeals reversed the district court.

Judicial review of an arbitration award is one of the narrowest forms of review. An arbitral award may only be vacated if the arbitrator "strays from interpretation and application of the agreement and effectively dispenses his own brand of industrial justice." Any less deference would risk "substituting a judicial determination for the arbitrator's decision that the parties bargained for."

Here, the Tenth Circuit Court of Appeals found that the arbitration ruling had "at least some foundation in the text of the controlling agreements" and upheld the ruling.

If you're weighing a challenge to an arbitration ruling, keep in mind that the critical question is whether there was any textual basis for the arbitrator's ruling.

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