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Arbitration award in favor of union during appeal mooted employer’s appeal of Boys Markets injunction

By Joy P. Waltemath, J.D.

Finding moot an employer’s appeal of a preliminary injunction, which barred it from relocating some of its union operations to nonunion facilities pending mandatory arbitration under a collective bargaining agreement, the Fourth Circuit reasoned that because the arbitrator entered an award in favor of the union while the appeal was pending, and as a result, the preliminary injunction expired by its own terms, the appeals court was unable to grant the relief the employer had sought. Moreover, because the arbitrator’s award ruled on the merits that the employer was precluded from relocating its operations under the CBA, there were no damages to recover on which to hang a case or controversy. Judge Wilkinson dissented, contending the preliminary injunction should not have been granted (Teamsters, Local Union No. 639 v. Airgas, Inc., March 13, 2018, Harris, P.).

Union obtains Boys Markets injunction. Airgas, Inc., operated a facility in Hyattsville, Maryland, and employed approximately 65 workers who are represented by the Teamsters union. When Airgas announced plans to relocate some of its Hyattsville operations to two nonunionized facilities, the union objected, arguing that the move was barred by the CBA. The union initiated mandatory arbitration and also sought a Boys Markets preliminary injunction, which the district court entered, prohibiting the transfer pending arbitration to ensure that the status quo ante could be restored if the union prevailed on the merits. Airgas appealed, arguing that the district court lacked jurisdiction to enter an injunction and had abused its discretion, seeking to vacate the injunction and proceed with its planned relocation during the arbitration proceedings. But while Airgas’s appeal was pending, the arbitrator issued a final decision in favor of the union, and the preliminary injunction expired by its own terms.

Status quo ante. Although federal courts generally are without jurisdiction to issue injunctions in labor disputes, here the union invoked the Boys Markets exception, which allows for injunctions during arbitration if an arbitrator otherwise would be unable to restore the status quo ante after deciding the merits of the labor dispute. The union argued that once Airgas moved large pieces of equipment from the Hyattsville facility to new locations, converted its vacated space into designated chemical storage, and replaced 13 terminated union members with nonunion employees (it had already hired five nonunion workers), it would be too late “to unwind the transfer” should the union prevail on the merits. Airgas insisted that “it could and would undo the transfer promptly and with ease” if it lost in arbitration.

District court rationale. Boys Markets status quo injunctions have been upheld in cases that involve the planned relocation of company operations rather than more easily rectified changes in work shifts or schedules. The district court found it not feasible in this case for an arbitrator to return the parties to the status quo ante. As to likelihood of success on the merits, the court explained, because the merits of the contract dispute were reserved to the arbitrator, the relevant inquiry was whether the parties’ dispute is subject to arbitration, which Airgas conceded. All the other factors (irreparable harm, balancing the equities, the public interest) also supported issuing an injunction, the district court found.

Did arbitration award moot injunction appeal? The Fourth Circuit framed the issue as whether the end of arbitration mooted Airgas’s appeal of a preliminary injunction that had frozen the status quo while arbitration proceeded. Here, the appeals court stressed that it no longer could grant Airgas the relief it originally sought: vacating the preliminary injunction and allowing it to implement its planned relocation prior to the arbitrator’s decision, because the arbitrator had already ruled, and the preliminary injunction had expired by its own terms. The issue presented by Airgas was no longer a justiciable controversy. Airgas contended that if the district court had really lacked jurisdiction to enter the Boys Markets preliminary injunction, it would be entitled to damages for the period between that wrongful injunction and the arbitrator’s award, during which it should have been but wasn’t able to go ahead with its planned relocation.

Award established there were no damages, regardless. Airgas contended that the arbitrator’s decision on the merits of the parties’ contract dispute had no bearing on whether the district court had jurisdiction to enter the Boys Markets preliminary injunction, so the arbitrator’s decision did not establish that the union was entitled to that injunction. But the Fourth Circuit saw a problem with that approach because the arbitrator’s final decision indisputably established that, regardless of the validity of the preliminary injunction, Airgas was not entitled to damages. Based on the arbitrator’s award—and it was what the parties bargained for—there was no period of time during which Airgas should have been permitted to relocate its operations to nonunion facilities but was wrongly enjoined from doing so. The arbitrator’s final decision established that Airgas did not have the legal right to relocate its Hyattsville operations, so there were no damages to recover.

Injunction bond not enough. That didn’t change simply because the union had been ordered to post a $5,000 bond “to compensate Airgas should it successfully establish that the preliminary injunction should not have issued.” According to the bond’s terms, Airgas had no automatic entitlement to damages of $5,000 if the district court lacked jurisdiction to enter an injunction; it could recover only if it also could establish damages, which it could not, the appeals court emphasized. Without damages, the remaining interests asserted by Airgas (attorneys’ fees and costs) were not enough to create a justiciable case or controversy “where none exists on the merits of the underlying claim.” Finally, because Boys Markets appeals regularly may be resolved during the course of a still-live dispute, the court would not invoke the “capable of repetition yet evading review” mootness exception here either. As such, the appeals court dismissed the appeal as moot.

Dissent. Judge Wilkinson, dissenting, would have found that the district court lacked jurisdiction to enter the preliminary injunction, which the dissent found “wholly improper.” The dissent would have found that the injunction bond preserved the court’s jurisdiction over the appeal as “a live controversy on which the arbitral award simply has no bearing.” Further, the dissent contended that the injunction was materially broader than the arbitrator’s decision and “likely restricted perfectly lawful conduct.”