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Bayview Co., Inc. v. International Association of Heat and Frost Insulators

June 7, 2007

BAYVIEW COMPANY, INC., D/B/A BAYVIEW INSULATION COMPANY, PLAINTIFF,
v.
INTERNATIONAL ASSOCIATION OF HEAT AND FROST INSULATORS, AND ASBESTOS WORKERS, LOCAL 2, DEFENDANT.



The opinion of the court was delivered by: McLAUGHLIN, Sean, J.

MEMORANDUM OPINION AND ORDER

I. BACKGROUND

This matter is before the Court upon cross-motions for summary judgment. The primary issue presented in the summary judgment motions is whether an arbitration award drew its essence from the relevant Project Labor Agreement ("PLA") in ordering Plaintiff, Bayview Company ("Plaintiff"), to pay to Defendant, International Association of Heat and Frost Insulators, and Asbestors Workers, Local 2 ("Defendant" or "the Union"), benefits and back pay resulting from Plaintiff's contractual violation.

The PLA provision at issue required Plaintiff to use Defendant's referral system as the exclusive means of hiring non-"core" employees to perform work on a construction project. On February 1, 2007, an arbitrator rendered a written award finding that Plaintiff had improperly failed to utilize Defendant's referral system in hiring two employees:

Award

The Grievance is sustained. Bayview shall immediately cease and desist from the manner in which it is currently employing workers at the job site and comply with all of the hiring requirements of the Project Stabilization Agreement.

Bayview is ordered to pay to the Union an amount equal to all back pay and benefits it lost as a result of Bayview's failure to abide by the Union's exclusive job referral system. (See Plaintiff's Petition to Vacate, Exhibit B).

Plaintiff filed the instant lawsuit in the Court of Common Pleas of Erie County on March 2, 2007, seeking to vacate the portion of the arbitrator's award that ordered payment of back pay and benefits. Defendant removed the action this Court and subsequently filed a motion for summary judgment. Plaintiff filed a cross-motion for summary judgment. These motions are ripe for resolution.

II. DISCUSSION

It is well settled that courts must give strong deference to an arbitrator's decision so long as it "draws its essence" from the parties' agreement. United Steelworkers' of America v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1966). Courts will overturn an arbitration award only in the rarest instances, and "have no business weighing the merits of the grievance." Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509-10 (2001).

Plaintiff contends that the award of backpay in this case constitutes a penalty or punitive damages award that is not explicitely authorized by the PLA. In support of this proposition, they cite International Union of Operating Engineers, Local 450 v. Mid Valley, Inc., 347 F.Supp. 1104 (S.D. Texas 1972). However, Mid Valley does not stand for this proposition. In Mid Valley, the district court did overturn an arbitrator's award of back pay as being a punitive damage award not contemplated by the parties' agreement. However, the court expressly noted that the award was punitive, rather than compensatory, only because the Union had not alleged that any loss of wages or other money damages had been sustained as a result of the breach. The court grounded it's opinion in the contractual principle that, where no actual injury occurs, only nominal damages are appropriate. Id. at 1109.

In contrast, Defendant cites a great number of cases where courts have upheld compensatory damage awards, despite no express authorization for such an award in the relevant agreement, when the aggrieved party had sustained actual damage. See, e.g., Network Wire Cloth Co. V. United Steelworkers of America, 339 F.Supp. 1207 (D.N.J. 1972) (confirming an award of back pay relating to the employer's use of non-bargaining unit employees in violation of the collective bargaining agreement despite the CBA being silent as to remedies); Falstaff Brewing Corporation v. Local No. 153, International Brotherhood of Teamsters, 479 F.Supp. 850 (D.N.J. 1978) (enforcing an award to a union where the employer violated the CBA by contracting out bargaining unit work, despite the CBA's silence as to remedies).

Indeed, in Sverdrup/ARO, Inc. V. International Association of Machinists, 523 F.Supp. 143, 147 n. 7 (D.C. Tenn. 1980), the district court distinguished Mid Valley on precisely this basis:

[Mid Valley], relied upon by the company, appears to be readily distinguishable. There, the arbitrator awarded monetary relief to the union where it had suffered no injury. Here, however, the award of overtime-pay was made, not to the union, but ...


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