Opinion ID: 3160872
Heading Depth: 3
Heading Rank: 4

Heading: The Arbitration and the Return to Court

Text: The case proceeded to arbitration before Mitchell B. Goldberg, who issued his decision on January 22, 2014. Goldberg determined that the Union should have known about the facts giving rise to the grievance in December 2008 or January 2009. Nevertheless, Goldberg concluded that the failure to deduct the cost-ofliving adjustment from the health-care premiums was in the nature of a continuing 11 Case: 14-15744 Date Filed: 12/08/2015 Page: 12 of 37 violation, so the grievance was timely filed with respect to paychecks issued no more than ten days before the Union’s formal grievance was filed on October 5, 2009. Regarding the merits of the dispute, Goldberg acknowledged that both sides believed the CBA’s language was unambiguous. Because no language in the CBA either expressly carries over or expressly resets the cost-of-living allowance each year, though, Goldberg found that the CBA possessed a “latent ambiguity.” In view of the ambiguity, Goldberg looked to extrinsic evidence of the parties’ negotiations and their prior course of dealing as it related to cost-of-living provisions applied to employee wages under the previous CBA. After conducting this analysis, Goldberg determined that, in the absence of any express language changing the practice in the new CBA, the cost-of-living adjustments “should work the same way it was done in the preceding CBA” and accumulate over time. The Union notified the district court of the award on January 31, 2014. On March 5, 2014, the Company filed a motion to reopen the case and vacate the award. The Company argued the award was unenforceable because Goldberg exceeded his authority under the CBA by ignoring the zipper clause when consulting extrinsic evidence and by violating the no-modification provision that prohibits an arbitrator from changing the terms of the CBA. On March 20, 2014, 12 Case: 14-15744 Date Filed: 12/08/2015 Page: 13 of 37 the Union “joined with” the Company in seeking to reopen the case, and “to the extent necessary,” moved to amend their original complaint to state a claim for enforcing the arbitration award and for attorney’s fees. The Union argued that Goldberg’s decision fell within his authority as arbitrator and the Company’s objections were meritless. In addition, the Union sought attorney’s fees under the court’s equitable powers to punish the Company for filing a meritless challenge to the arbitration award. On December 9, 2014, the district court denied the Company’s motion to vacate and granted the Union’s motion to enforce the award. Noting that a federal court’s review of an arbitration award is exceedingly narrow and deferential, the district court upheld the arbitrator’s continuing-violation determination as a permissible construction of the CBA. The district court also determined that, as an extension of binding former Fifth Circuit precedent, if a contract contains an ambiguity, an arbitrator may look to extrinsic evidence to resolve that ambiguity despite the presence of a zipper clause. Here, again applying the same highly deferential standard of review applicable to an arbitration award, the district court agreed that the arbitrator was justified in finding within the cost-of-living provision a “yawning void” that “cried out” for construction through extrinsic evidence. Finally, the district court denied attorney’s fees to the Union because it concluded 13 Case: 14-15744 Date Filed: 12/08/2015 Page: 14 of 37 that the Company’s motion “was not baseless, frivolous, or filed for an improper purpose.” Both parties now appeal. The Company filed a notice of appeal on December 23, 2014, challenging the district court’s June 2012 order compelling arbitration and the district court’s December 2014 order confirming the arbitration award. The Union cross-appeals the denial of attorney’s fees.