Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-04685/USCOURTS-cand-3_06-cv-04685-1/pdf.json

Nature of Suit Code: 720
Nature of Suit: Labor Management Relations Act
Cause of Action: 29:185 Labor/Mgt. Relations (Contracts)

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CALIFORNIA PACIFIC MEDICAL CENTER,

Petitioner,

 v.

SERVICE EMPLOYEES INTERNATIONAL

UNION, UNITED HEALTHCARE WORKERS--

WEST,

Respondent. 

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No. C 06 4685 SC

ORDER PARTIALLY

VACATING 

ARBITRATION AWARD

I. INTRODUCTION

On May 19, 2006, Arbitrator Gerald McKay ("Arbitrator")

issued an award ordering California Pacific Medical Center

("Employer") to pay Service Employees International Union, United

Healthcare Workers--West ("Union") damages in the sum of

$171,082.48 plus interest. See California Pacific Medical Center

and SEIU United Healthcare Worker - West, Award re: Appropriate

Remedy for Violations of Fair Representation and Code of Conduct,

McKay Case No. 04-061(A) ("May 19, 2006 Award"), Docket No. 1;

California Pacific Medical Center's Petition to Vacate Arbitration

Award ("PTV"), Ex. C. The May 19, 2006 Award followed an earlier

award by the Arbitrator issued on November 30, 2004. See

California Pacific Medical Center and SEIU United Healthcare

Worker - West, Award re: Violation of Fair Representation and Code

of Conduct, McKay Case No. 04-061 ("November 30, 2004 Award" or

"Nov. 30, 2004 Award;" together with the May 19, 2006 Award:

"Award"); PTV, at Ex. B. Before the Court is the Employer's PTV

and the Union's Motion to Confirm the Award ("MTC"), both brought

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under Section 301 of the Labor Management Relations Act ("LMRA"),

29 U.S.C. § 185. For the following reasons, the Court PARTIALLY

VACATES the Award, and REMANDS the Award to the Arbitrator to

recalculate damages to be awarded the Union, if any, in accordance

with this Order.

II. BACKGROUND

The case before the Court arises out of the Union's 2003

campaign to organize those employees of the Employer who were not

already represented by the Union or another union ("Organizing

Campaign"). Nov. 30, 2004 Award, at 6. In the course of the

campaign, a dispute arose between the Employer and the Union as to

which employees constituted an appropriate bargaining unit

pursuant to the rules of the National Labor Relations Board

("NLRB"), and thus which employees were eligible to vote in the

representation elections proposed by the Union. Id. When the

parties were unable to resolve the dispute, the Union petitioned

the NLRB for certification of the Union's proposed bargaining

unit. See California Pacific Medial Center, Case No. 20-RC-17876

(Dec. and Order of Reg. Dir. Robert H. Miller, Sep. 30, 2003),

Docket No. 13, Decl. of Christopher Scanlan in Support of PTV

("Scanlan Decl."), Ex. A ("NLRB Reg. Dir. Dec.").

On September 30, 2003, following a six-day hearing, the

NLRB's Regional Director Robert Miller ("Director") issued a

Decision and Order on the Union's petition. Id. In the Decision

and Order, the Director found that it was "plain from the

positions taken by the Employer and Petitioner that both are of

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the view that technical employees should be excluded from the

residual [bargaining] unit sought herein." Id. at 5. He further

found that "[t]he parties stipulated to the inclusion and

exclusion of a number of employee classifications, and that

"[i]ncluded among the stipulated exclusions are certain

classifications which may be considered technical." Id. However,

he also found that the parties disagreed regarding whether other

categories of employees should be considered technical. Id. 

Ultimately, the Director did not choose to resolve this

disagreement. Rather, he found that the Union had proposed an

inappropriate bargaining unit and dismissed its position on that

ground. Id. at 7. In short, he found that because the Union had

organized other employees of the Employer into units that

consisted of both technical and non-technical employees, it must

similarly organize the residual employees of the Employer into a

bargaining unit which included both classifications. Id. Thus,

the proposed bargaining unit, whether constituted according to the

Union's definition of technical or according to the Employer's,

was not appropriate under the law. Id.

The Union appealed the Director's Decision and Order to the

full NLRB in Washington, D.C. ("Board"), arguing that because the

Union and the Employer had stipulated that the proposed bargaining

unit would consist of only non-technical employees, the Regional

Director's decision was erroneous. See California Pacific Medial

Center, Case No. 20-RC-17876 (Dec. of the NLRB Denying Request for

Review, Aug. 20, 2004), Scanlan Decl., Ex. C ("NLRB Dec."). The

Board's decision, issued on August 20, 2004, conceded that if the

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parties "clearly agreed to" a bargaining unit which was "contrary

to established Board principles," it was possible for the Board to

approve such a unit. Id. at 1. The Board also "recognized that

the Regional Director stated that no party disputes that technical

employees should be excluded from the petitioned-for unit." Id.

The Board found, however, that this was not the same as a

statement that "all technical employees are excluded," and that

"some employees were excluded because they were technicals and

some were excluded for other reasons." Id. Thus, the Board found

that "the parties' agreements were [not] the equivalent of a

stipulation to exclude all technical employees," and thus there

was no reason to review the decision of the Regional Director. 

Id. at 2. 

Roughly simultaneous with the Board's consideration of the

Union's appeal, an arbitration between the parties was held. See

Nov. 30, 2004 Award. The arbitration was initiated by the Union

pursuant to the collective bargaining agreement ("CBA") in effect

between the parties, alleging that the Employer had violated the

CBA "in the manner that it had conducted itself during" the

Organizing Campaign. MTC at 1. 

On November 30, 2004, the Arbitrator issued his first award

in the matter. See Nov. 30, 2004 Award. The Award found that the

Employer had violated various provisions of the CBA in the manner

it conducted itself during the Organizing Campaign. See id. 

These violations included: failing to "distribute a jointly

signed reproduction of the Fair Representation and Code of Conduct

Section" of the CBA, id. at 33; inappropriately distributing "the

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solicitation and distribution policy" to employees in the context

of the Organizing Campaign, id. at 36; etc. However, the chief

violation found by the Arbitrator was the Employer's failure to

correct the NLRB's determination, which the Arbitrator found

erroneous, that the parties had not stipulated to the residual

unit being composed only of non-technical employees. Id. at 30. 

Failing to do so, and instead taking advantage of this error, was

"an act of bad faith" by the Employer, and thus a violation of its

obligation under the CBA to act in good faith. Id. at 31.

On the basis of these findings, the November 30, 2004 Award

stated the following regarding remedy:

[T]he Arbitrator is not authorized to conduct a

representation election, or certify the employees

within the Union's proposed bargaining unit, or in any

other way to conduct and direct an election as the Union

suggested the appropriate remedy would be in its closing

brief. The Arbitrator is restricted to the contract,

and the damages, which arise as a consequence of the

Employer's breach of that contract. The Arbitrator does

not have the ability to unring the bell, which Regional

Director Miller chose for his own misguided reasons to

ring. What the Arbitrator can do is impose penalties on

the Employer that are contemplated by this contract, or

any other contract in which the parties agree to engage

in certain behavior.

Id. at 44. Accordingly, the Arbitrator found that the Union was

entitled to recover whatever expenses it incurred in the

Organizing Campaign, including attorneys' fees related to the

Union's petition to the NLRB. Id. The Arbitrator directed the

Union to provide him with "an accounting listing in detail the

expenses associated with" the Organizing Campaign, including the

NLRB petition. Id. "Once the Arbitrator has received the Union's

accounting, the Employer will have an opportunity to respond to

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that accounting and challenge any specific amounts that it

believes to be inappropriate. Once that challenge, if any, has

been submitted, the arbitrator will then issue a final

determination with respect to the amount of money the Employer

will be directed to pay." Id. at 44-45.

On May 19, 2006, after the parties tried but failed to agree

on an amount of damages, the Arbitrator issued that final

determination, ordering the Employer to pay the Union "the sum of

$171,082.48 in organizing costs and attorneys' fee for its breach

of contract, plus interest of 6% from November 2004 forward." May

19, 2006 Award at 12. In reaching this number, the Arbitrator

considered the Union's accounting and the Employer's responses,

accepting most of the accounting but rejecting some on the basis

of the Employer's response. See id. at 9-11.

On August 1, 2006, the Employer filed its PTV. See Docket

No. 1. And on October 4, 2006, the Union filed its MTC in

opposition. See Docket No. 8. 

 

III. DISCUSSION

A. The Union's Procedural Arguments Fail

The Union makes two procedural arguments why the Court should

not address the merits of the Employer's Petition to Vacate. The

first is that the Petition is untimely. The Second is that the

Employer has waived the arguments it raises in its PTV by failing

to properly bring them before the Arbitrator. Both fail

1. The Employer'S PETITION TO VACATE IS TIMELY

The Union and the Employer both agree that the Employer had

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100 days to file its petition to vacate after the Arbitrator

rendered his final award. See PTV at 9; MTC at 5; San Diego

County Dist. Council of Carpenters v. Cory, 685 F.2d 1137, 1142

(9th Cir. 1982). However, the parties are in dispute as to which

of the Arbitrator's awards should be deemed final and thus to have

triggered the 100 day statute of limitations. The Union argues

that the Arbitrator's November 30, 2004 Award was final, and thus

the 100 day period is long past. See MTC at 4-7. The Employer

argues that the Arbitrator's November 30, 2004 award was not final

and that, instead, the Arbitrator's May 19, 2006 was his final

award, making the PTV, filed on August 1, 2006, timely. See PTV

at 9-13. The Court finds that the Arbitrator's May 19, 2006 Award

was the final award, and thus the PTV is timely.

The baseline and common sense rule governing a district

court's jurisdiction under Section 301 of the NLRA to confirm,

vacate or correct an arbitration award is expressed in the

negative: "a court should refrain from reviewing an arbitrator's

work until a final and binding award is issued." Kemner v. Dist.

Council of Painting and Allied Trades No. 36, 768 F.2d 1115, 1118

(9th Cir. 1985). "To be considered 'final,' an arbitration award

must be intended by the arbitrator to be a complete determination

of every issue submitted." Millmen Local 550, United Brotherhood

of Carpenters and Joiners of America, AFL-CIO v. Wells Exterior

Trim, 828 F.2d 1373, 1375 (9th Cir. 1987) (internal quotations and

modifications omitted). 

The Ninth Circuit has created an exception and a

qualification to the rule of finality as it is applied to a

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district court's jurisdiction to hear a motion to confirm a labor

arbitration award, both which apply in only "the most extreme

cases." Millmen, 828 F.2d at 1375. The exception arises in

unusual cases where it is necessary to enforce an interim award in

order to make a determination upon which a final award will be

based, such as when the interim award calls for a medical

examination which will determine the contents of the final award. 

Id. (discussing Sunshine Mining Co. v. United Steelworkers of

America, 823 F.2d 1289 (9th Cir. 1987). The qualification is that

awards not technically final will be considered final for the

purpose of confirmation where the only thing left for the

arbitrator to do is "complete the mathematical computations of the

award." Id. at 1377 (discussing United Steelworkers v. Enterprise

Wheel & Car Corp., 363 U.S. 593 (1960). For this qualification to

apply, "the issue of damages must be resolved," leaving the

arbitrator only to plug in already known or indisputable numbers. 

Id. at 1377.

The Union bases its argument that the November 30, 2004 Award

was the final award, and thus triggered the limitations period, on

this latter qualification. See MTC. This argument fails for two

reasons. 

First, it is abundantly clear that the November 30, 2004

Award did not resolve the issue of damages and leaving the

Arbitrator with only a mathematical computation to complete. The

Award directs the Union "to provide to the Arbitrator an

accounting listing in detail the expenses associated with this

campaign within the timeframe the Arbitrator has directed above." 

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Nov. 4, 2004 Award at 44. It then provides that "the Employer

will have an opportunity to respond to that accounting and

challenge any specific amounts that it believes to be

inappropriate." Id. at 44-45. And on the basis of the Union's

and the Employer's submissions, "the arbitrator will then issue a

final determination with the respect to the amount of money the

Employer will be directed to pay." Id. at 45. 

The Union makes much of the fact that the November 30, 2004

award "directed [the Employer] to pay the union damages," MTC at 6

(quoting Nov. 30, 2004 Award at 45), and that the Award listed 

the categories of damages which the arbitrator "anticipate[d]"

would be included. Opp'n to PTV at 6. However, this does not

constitute resolution of the damages issue, but rather resolution

of the issue of liability for damages. Accordingly, the twelvepage May 19, 2006 Award does not consist of mere computations by

the Arbitrator, but rather his resolution of the competing

arguments offered by the Union and the Employer as to which

damages fit into those categories and how they should be

calculated. See, May 19, 2006 Award at 10-11. Thus, the November

30, 2004 Award does not qualify as the type of award which the

Ninth Circuit intended to be excepted from the rule of finality. 

Second, and more fundamentally, the Court does not believe

that the exception or qualification to the rule of finality which

the Ninth Circuit has found to apply in the context of an

accelerated motion to confirm an arbitration award under Section

301 of the LMRA should apply to the triggering of the statute of

limitations for a petition to vacate an award under that section.

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"The purpose of a statute of limitation is to prevent assertion of

stale claims against a defendant.” Azer v. Connell, 306 F.3d 930,

935 (9th Cir. 2002) (internal quotations omitted). It is hard, if

not impossible, to imagine how a petition to vacate filed 100 days

after an arbitrator issued his or her last award could somehow be

characterized as stale, thus necessitating a rule which would

require that a petitioner file its petition 100 days after the

issuance of some prior award. 

What's more, creating such a rule would place potential

petitioners in an impossibly uncertain position. Such petitioners

would be forced to constantly evaluate whether any award could be

deemed final and trigger the limitations period. Likely, this

would consistently send potential petitioners for vacatur to the

district court following any interim award which was not in their

favor. Such a result would be directly contrary to "the

fundamental federal labor policy of deference to contractual

dispute resolution procedures and would interfere with the purpose

of arbitration: the speedy resolution of grievances without the

time and expense of court proceedings." Millmen, 828 F.2d at

1375. 

Thus, for the purposes of triggering the statute of

limitations period for filing a petition to vacate an arbitration

award under Section 310 of the NLRA, "final" means final, without

qualification or exception: the period will not be triggered until

the arbitrator has issued his or her last, and thus final, award.

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Indeed, it seems odd that the Union would make such an

argument simultaneously with its argument that the November 30,

2004 Award was final and reviewable. The later argument is based

on the premise that the November 30, 2004 Award conclusively

resolved all the issues presented to the Arbitrator, and thus the

award was ripe for review by this Court. However, if the Employer

had the opportunity in subsequent hearings to ask the Arbitrator to

reconsider his November 30, 2004 Award, as the Union argues the

Employer did and should have taken, the November 30, 2004 Award did

not conclusively resolve all issues presented to the Arbitrator,

and thus the Award was not ripe for review by this Court. 

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2. The Employer Has Not Waived its Right to Make the

Arguments Raised its Petition

The Union also argues that the Employer's PTV should be

denied "as it relates to the November 30, 2004 Award" because the

Employer failed to request the Arbitrator to reconsider his

November 30, 2004 Award prior to him rendering his May 19, 2006

Award, MTC at 7, and because the Employer "did not even raise the

issue of arbitrability during the first arbitration." Opp'n to

PTV at 7. Both legs of this argument fail.

First, there is no rule that makes submission of a request 

for reconsideration of an award to the arbitrator a precondition

of petitioning a district court to vacate that award. United

Steelworkers of America, AFL CIO.CLC, v. Smoke-Craft, Inc., 652

F.2d 1356 (9th Cir. 1981), which the Union cites in support of

such a precondition is wholly inapposite. The case stands only

for the unremarkable proposition that a party cannot raise

arguments in a petition to vacate that it never made before the

arbitrator. See id. at 1360. The case says absolutely nothing

about requiring a party to ask an arbitrator to reconsider his or

her award before submitting a petition to vacate to a district

court.1 

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Second, the Union's argument that the Employer waived its

right to petition to vacate the Award because the Employer "did

not even raise the issue of arbitrability during the first

arbitration" fails for the obvious reason that the Employer has

not raised arbitrability as grounds for vacating the award. See

Oppo'n to PTV at 7. Rather the Employer argues that the Award

should be vacated on the grounds that it violates public policy

and does not draw its essence from the CBA. See PTV. These

grounds are wholly distinct from the issue of arbitrability. See

Oil, Chemical and Atomic Workers, Intern. Union, Local No. 4-228

v. Union Oil Co. of Cal., 818 F.2d 437, 440 (5th Cir. 1987)

("Enforcement of an award should be denied only if the dispute was

not arguably arbitrable, if the arbitrable decision did not draw

its essence from the collective bargaining agreement, or if

enforcement of the award by the court would violate public

policy."); see also Sprewell v. Golden State Warriors, 266 F.3d 

979, 986 (9th Cir. 2001) (listing grounds for vacating an

arbitration award). Thus, this part of the Union's argument

regarding waiver is also without merit. 

Having determined that there are no procedural bars to it

reviewing the Employer's PTV, the Court does so.

B. The Employer's Petition to Vacate is Meritorious

1. Standard of Review

When a district court reviews an arbitration award in a labor

dispute under Section 301 of the NLRA, the scope of its review is

"extremely narrow." Federated Dept. Stores v. United Foods &

Commercial Workers Union, 901 F.2d 1494, 1496 (9th Cir. 1990). 

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2The Court construes this language to mean, and understands

the Ninth Circuit to have intended it to mean, that that each of

these four grounds provides an independent basis for vacatur. 

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Judicial scrutiny of an arbitrator's decision is

extremely limited. The arbitrator's factual

determinations and legal conclusions generally receive

deferential review as long as they derive their essence

from the contract. If, on its face, the award

represents a plausible interpretation of the contract,

judicial inquiry ceases and the award must be enforced. 

This remains so even if the basis for the arbitrator's

decision is ambiguous and notwithstanding the

erroneousness of any factual findings or legal

conclusions. 

Sheet Metal Workers Intern. Ass'n, Local No. 359, AFL-CIO v.

Arizona Mechanical & Stainless, Inc., 863 F.2d 647, 653 (9th Cir.

1988)(internal citations omitted).

Nonetheless, the Ninth Circuit has "identified four instances

in which vacatur of an arbitration award under Section 301 is

warranted: (1) when the award does not draw its essence from the

collective bargaining agreement; (2) when the arbitrator exceeds

the scope of the issues submitted; (3) when the award runs counter

to public policy; and (4) when the award is procured by fraud."

Sprewell, 266 F.3d at 986.2

The Employer argues that the Award should be vacated on the

grounds that it violates public policy and it does not draw its

essence from the CBA. See PTV. The Court finds that the Award,

in part, violates public policy and partially vacates that portion

on this ground. Because the part of the Award which the Court

vacates is the same part which the Employer claims does not draw

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its essence from the CBA, the Court does not address this

argument. 

1. The Arbitrator's Award Violates Public Policy by

Contradicting the NLRB's Ruling on Representation

The Arbitrator's finding that the Employer and the Union

stipulated as to the composition of the appropriate bargaining

unit contradicts the NLRB's holding that the parties did not so

stipulate. See November 30, 2004 Award at 30; NLRB Dec. at 1. 

Thus, the part of the Award which is based on that finding runs

contrary to public policy and must be vacated.

In Carey v. Westinghouse Elec. Corp., the Supreme Court

articulated what has become known as the supremacy doctrine. 375

U.S. 261, 272 (1964). In the words of the Ninth Circuit, "the

supremacy doctrine announced in Carey establishes that an NLRB

decision on a representational issue overrides an arbitrator's

decision on the same issue." A. Dariano & Sons, Inc. v. District

Council of Painters No. 33, 869 F.2d 514, 517 (9th Cir. 1988). 

The NLRB's decision on a representational issue reflects its

consideration of the interests of all the parties potentially

affected by such a decision, including the general public, while

the decision of an arbitrator on this issue reflects the

arbitrator's consideration of only the interests of the parties

before it. See Cannery Warehousemen, Food Processors, Drivers and

Helpers for Teamsters Local Union #748 v. Haig Berberian, Inc.,

623 F.2d 77, 81-82 (9th Cir. 1980). Thus, to allow the latter to

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trump the former would run counter to public policy. Id. 

The Union argues that an arbitrator's award only violates the

supremacy doctrine when it "directly conflict[s] with an NLRB

decision," and further, that the Award should be upheld because it

dealt with issues which were "primarily contractual," as opposed

to those which were "primarily representational in nature." Opp'n

to PTV at 3. These arguments, however, miss the point. An

arbitrator's award need not be in direct conflict with a

representational decision of the NLRB or be primarily

representational in nature to run contrary to the supremacy

doctrine; but, rather, it need only be "logically inconsistent

[with an NLRB decision] . . . when a representational issue is at

stake." A. Dariano & Sons, 869 F.2d at 517. 

The Arbitrator found that the Union and the Employer had

stipulated as to the composition of the bargaining unit, such that

the unit consisted of only residual non-technical employees. See,

e.g., November 30, 2004 Award at 30. The NLRB, on the other hand,

found that no such stipulation existed. NLRB Dec. at 2. Whether

this finding by the NLRB was a "mistake," as the Arbitrator

claimed, is not for this Court to decide. See November 30, 2004

Award. Rather, the Court must enforce the NLRB's decision on this

representational issue and vacate that portion of the Award which

Case 3:06-cv-04685-SC Document 17 Filed 01/09/07 Page 15 of 16
United States District Court

For the Northern District of California

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 The Court notes that other findings by the Arbitrator

regarding violations of the CBA by the Employer do not conflict

with the NLRB's decision on representational issues. See, e.g., Nov. 30, 2004 Award at 36 (finding that the Employer violated the

CBA in the "context and timing" of its distribution to employees of

"the solicitation and distribution policy.") 

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is based on the Arbitrator's conflicting findings.3

V. CONCLUSION

For the foregoing reasons, the portion of the Award which is

premised on the Arbitrator's finding that the parties stipulated

as to an appropriate bargaining unit is VACATED. Accordingly, the

case is REMANDED to the Arbitrator to recalculate the award of

damages to the Union: The Arbitrator should award damages only

for injuries to the Union from violations which do not relate to

the Arbitrator's legally erroneous finding that the parties

stipulated to an appropriate bargaining unit. The Union's request

for an award of attorneys' fees is DENIED. 

IT IS SO ORDERED.

Dated: January 9, 2007

 

UNITED STATES DISTRICT JUDGE

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