Court Opinion

ID: 9586268
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:08:55.393694+00
Date Added: 2024-06-11T17:27:31.070580
License: Public Domain

MATTHEWS, Chief Justice,
dissenting.
I.
May an employee who loses an arbitration against his employer and then sues his employer and his union claiming union breach of duty re-try against the employer the issue which has already been arbitrated? The majority answers “yes” because this is permitted under federal labor law. My answer is “no” because this is contrary to Alaska law, inconsistent with the adversary system, one-sided, and needlessly interferes with arbitral finality.
II.
In the superior court the union argued that because the arbitrator had found that the municipality had just cause to fire Feichtinger, the union could not have breached its duty of fair representation. The union contended that it was therefore entitled to summary judgment. The superior court properly rejected this argument, noting that the union’s breach of its duty of fair representation might have caused Feichtinger to lose the arbitration and, therefore, the arbitration decision should not have preclusive effect on Feichtinger’s claim against the union. The trial court observed:
*386If the Union’s theory of law is adopted only employees who were successful at arbitration could pursue a duty of fair representation claim. This would result in “the tail wagging the dog” and effectively neuter the duty of fair representation.
Today’s opinion affirms this aspect of the trial court’s decision. To the extent that it does so, I agree with it.
But the real effect of today’s opinion is not found in this unexceptional holding. The opinion goes on to rule that when an employee such as Feichtinger claims that the union has breached its duty of fair representation with respect to an arbitration, not only does the arbitration decision not have preclusive effect with respect to the union, it also is not binding with respect to the employee’s claim against the employer. Moreover, in its discussion concerning apportionment of damages, today’s opinion states that an employee who has lost at arbitration can never be made whole by simply proceeding against the union.1 I disagree with these rulings. Their effect will be to eliminate the finality of arbitration decisions favorable to employers and create incentives to relitigate the merits of such decisions. This means that an employer, having won at arbitration, must again defend the same claim when the employee charges that the employee was badly represented by the union.
Judge Link decided that the arbitration decision in this case would have a preclusive effect with respect to the municipality. It is this aspect of the decision below with which today’s opinion takes issue. As Feichtinger’s appeal from the final judgment dismissing his claims against the municipality has now been dismissed with prejudice by stipulation, the question of whether union breach should result in vacating an arbitration award in favor of an employer is no longer squarely before us. Rather than rule on this issue in this discretionary proceeding, it would be better, it seems to me, to wait until it comes before the court in a case in which the interests of an employer are presented for consideration. But since the court has ruled that an employer does not get the benefit of arbitral finality where a claim of union breach is made, I feel constrained to express my disagreement on the merits.
III.
I begin with Judge Link’s well-reasoned decision. Judge Link wrote:
The pivotal case in federal duty of fair representation cases is Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), in which the court held that a union has the duty to represent the interests of all the members, including those who oppose union membership. A breach of this duty occurs whenever:
[the] union’s conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith.
Id. at 190 [101 S.Ct. 1559].2
In Vaca the Court held that where a union has failed to adequately represent its members in grievances with their employer, the employer cannot be allowed to hide behind the flawed arbitration decision. In essence, in cases in which unions violate their duties of fair representation, the arbitration decisions are rendered void, and become subject to collateral attack. See also, Casey v. City of Fairbanks, 670 P.2d 1133 (Alaska 1983).
Feichtinger cites these cases for the proposition that res judicata and collateral estoppel cannot bar his civil suit against the remaining defendants because he has alleged a violation of the duty of fair representation on the Union’s part. However, Feichtinger’s case is distinguished from Vaca and Casey in a fundamental way. In Vaca and Casey the unions were the only conduits for bringing grievances against *387the employers. In this case Feichtinger could and did bring his grievance against the Department through arbitration, albeit without assistance from the Union.
In those cases in which the employers have not 'been insulated from collateral attack, the unions have either accepted responsibility for bringing the grievances and have provided inadequate assistance, or the unions have refused to bring the grievances, and the employees were unable to bring grievances without union approval. In each of these scenarios the arbitration was either flawed or did not occur. The employees had no chance to fairly litigate the issues on the merits.
In contrast here, although the Union did not provide counsel for Feichtinger, he was afforded the opportunity to bring the grievance and could have been represented by counsel.
Alaska law provides public employees with a broader scope of rights and remedies than does federal law. Casey v. City of Fairbanks, supra. Alaska law recognizes that persons employed in situations other than at will:
... have sufficient property interest in continuing their employment, absent just cause for their removal, to require that they be given notice and an opportunity to be heard under the due process clause of the Alaska Constitution.
Casey at 1138.
A public employee in Alaska has the option to either take advantage of the grievance procedure provided for in the collective bargaining agreement or to sue in superior court for wrongful discharge. Id.
In this case, plaintiffs elected to pursue arbitration and not sue directly in superior court. The general rule is that the arbitrator’s decision is binding and has a pre-clusive effect. See Borg-Warner Corp. v. Avco, 850 P.2d 628, 634 (Alaska 1993). This preclusive effect insulates the remaining defendants from further liability.3 However, Alaska law does not foreclose the opportunity to collaterally establish that a union breached its duty of fair representation. A contrary holding would be inconsistent with Alaska’s recognition of a broader scope of employee rights.
A number of public policy arguments favor denying the Union’s Second Motion for Summary Judgment and sustaining summary judgment for the remaining defendants. First, policies of judicial efficiency require enforcement of the doctrines of res judicata and collateral es-toppel. To the extent that a litigant is allowed to try his case in multiple tribunals, the court is inviting forum shopping and nuisance litigation. Such a policy would invite an employee that loses at arbitration to file suit, de novo, in superior court alleging a breach of the duty of fair representation. This would destroy the finality of binding arbitration.
It would also discredit the entire arbitration system. Employers would be far less likely to submit issues to arbitration, knowing that the arbitration would simply be an additional expense to what might eventually become a case in superior court.
Placing the financial burden for failure to fairly represent its members fully on the Union will deter unions from refusing to represent their members in potentially meritorious grievance actions. Union administrators will be far less likely to allow prejudice against one of them members to enter into the equation of whether to represent the member, if they know that the union will be held liable for any monetary losses attributable to their refusal to fulfill their duties.
Judge Link’s observation that an employee who loses an arbitration will have little reason not to file suit in superior court under a ruling like today’s bears elaboration. The employee’s suit will include the union as one defendant. The employee will allege that the *388union has breached its duty of fair representation and that the breach caused the employee to lose the arbitration. But the employee will also usually name the employer as a defendant. Without the employer, the result of the arbitration as to the employer could not be set aside. Given today’s apportionment of damages ruling, the employee cannot be made whole by an award against the union alone, since the union is never required to pay lost wages up to the time that a hypothetical arbitration award should have been made.2 Since the employee’s objective will be full reimbursement for his losses, we can expect him to join the employer as a defendant.
What will the issues in the suit be? First, the employee must prove that the union breached its duty to the employee to fairly represent him. Second, the employee must show that the breach “seriously undermined the arbitral process”3 meaning, as I understand it, that the breach caused an erroneous arbitration decision.4 Thus the employer (and the union also) may defend the suit on the basis that discharge of the employee by the employer was justified, for justification would mean that any breach by the union did not cause an erroneous decision.
Judge Link’s description of what would happen if a system like the one adopted today were in effect seems apt. The employer, having convinced the arbitrator that the discharge was justified, will quickly find itself in the superior court litigating the identical issue again. As Judge Link observed, not only is the finality of binding arbitration destroyed, but the arbitration system is discredited. Arbitration simply becomes a stepping-stone to the superior court where identical issues are litigated and finally determined, without regard to how they were resolved by the arbitrator.
As noted above, under today’s ruling what an employee has to prove in order to set aside an arbitration decision is (1) a breach on the part of the union of its duty of fair representation and (2) that the breach produced an outcome in the arbitration which was different from what would have resulted had there been no breach. This is a deviation from our current case law with respect to the finality of labor arbitration decisions. Under existing law, labor arbitration can only be set aside when an arbitrator has committed “gross negligence, fraud, corruption, gross error or misbehavior” or “when the arbitrator’s mistakes are both obvious and significant.”5 The standard reflected in today’s opinion — union error affecting the result — considerably broadens existing standards.
The new standard seems unfairly one-sided. If an employer is poorly represented and its representative commits a breach of duty which affects the arbitration result, the arbitration decision nonetheless stands. Why should an employee be treated more favorably than an employer when a similar act or omission is committed by the employee’s representative?
Further, arbitration, like court litigation, is an adversary process. A mistake by a party’s representative may result in the party losing the case. If so, redress is a matter between the party and his representative. The party has a claim for damages against the representative. And he is entitled to be made whole for the full loss caused by the breach of duty of the representative. The representative’s breach is not a ground for setting aside the litigation. Until today, this is the model we have followed.6 In my view, we should continue to follow it.
*389A particularly close analogy exists where employee grievances are decided not by arbitration but by an administrative hearing.7 In such cases aggrieved employees have the right to counsel. If an employee’s attorney — who may be either privately selected or supplied by the employee’s union — in an administrative hearing breaches a duty which causes the employee to lose, the decision of the administrative tribunal is not set aside. The employee’s remedy is against the attorney and the employee may obtain a full recovery. I see no reason why the result should be different where a similar breach is made in the context of an arbitration.
IV.
What can be said for today’s opinion is that it is consistent with federal labor law. But this case is not governed by federal labor law. One of the strengths of our system of parallel federal and state sovereignties is that the states are, in some areas, free to do things differently than the federal government. Sometimes a state method is better.8
In keeping with this aspect of our federal system I do not think it is sufficient justification to say that we will function in a certain way merely because it is the federal way. In this case, I have tried to show that there are good reasons not to duplicate federal law.
Under Alaska law, labor arbitration decisions have been at least as difficult to set aside as administrative adjudications and trial court decisions. Today’s decision changes this and holds that in cases where a union is guilty of a breach of duty in representing a union member and the breach affected the arbitration result, the arbitration decision must be set aside.' This is needed, according to the majority, because the interests of deci-sional finality must give way to the interests of union members who have been victimized by their union’s breach of duty. If this were true, one would expect that union members victimized by union breaches of duty in administrative adjudications or in court litigation would also be entitled to have decisions of those forums set aside. But this is not the case, nor should it be. Representational failings in an adversary system can be redressed by an action between the victim and the representative. There is no need to disturb the finality of the decision between the original parties. This is as true in arbitration as it is in administrative adjudication and in court litigation.
Since I believe that we should continue to adhere to Alaska norms of arbitral finality, I dissent.

. "[0]nly the employer is responsible for back-pay following a wrongful discharge....” Op. at 415.

 In the majority of duty of fair representation cases, the alleged misconduct has been based upon allegations of racial discrimination. In the early 1900’s, discrimination within the unions based upon race and national origin were quite common. The rule requiring unions to fairly represent all members was originally established to combat this problem.

 Due process, as it applies to this case, does not require that the Union provide an aggrieved employee with an attorney. Nor does it require that the arbitrator reach the correct and just result. Rather, all due process requires, is that the terminated employee be given notice and an opportunity to present his case in front of a neutral third party. Feichtinger was provided these opportunities in the context of the arbitration hearing.

. Op. at 414-15.

. Op. at 412.

. Op. at 412.

. City of Fairbanks Mun. Util. Sys. v. Lees, 705 P.2d 457, 459-60 (Alaska 1985). In Butler v. Dunlap, 931 P.2d 1036, 1039 (Alaska 1997), we described the judicial review standard applied in labor-management arbitration as “gross error, either factual or legal.”

.See, e.g., Sauer v. Home Indem. Co., 841 P.2d 176, 184 (Alaska 1992) (holding that where the insurance company has an obligation to defend its insured and breaches it, it is liable to the insured for the cost of the judgment); Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 754 (Alaska 1992) (noting that if an attorney's malpractice causes a client to incur liability, then the attorney can be liable for that amount); Continental Ins. Co. v. Bayless & Roberts, Inc., 608 P.2d 281, 293 (Alaska 1980) (holding that an insurer who undertakes a defense and *389fails to exercise good faith and ordinary care may be held liable for the judgment).

. See, e.g., Romulus v. Anchorage Sch. Dist., 910 P.2d 610 (Alaska 1996); Pederson-Szafran v. Baily, 837 P.2d 124 (Alaska 1992).

. See for example, Reeves, Inc. v. Stake, 447 U.S. 429, 441, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980), where the United States Supreme Court expressed reluctance to impose uniformity on the states where that would risk suppression of "effective and creative programs” and quoting Justice Brandeis’s classic description of the states as laboratories of social and economic experimentation from New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S.Ct. 371, 76 L.Ed. 747 (1932) (Brandéis, J., dissenting).