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Arbitrator exceeded his authority by interpreting CBA’s effective date as signing date, not ratification date

By Ronald Miller, J.D.

An arbitrator exceeded the scope of his authority in holding that a collective bargaining agreement between Southwest Airlines and one of its unions became effective on the date when it was signed, rather than when it was ratified, ruled the Fifth Circuit. The terms of the CBA expressly stated that it would become effective upon ratification. It did not mention “signing” or “execution,” and it did not have any language linking its effective date to the signing date. Despite this, the arbitrator ruled that the CBA became effective on the date it was signed, a decision the district court did not disturb. Reversing and remanding, the appeals court found the arbitrator ignored the unambiguous terms of the CBA (Southwest Airlines Co. v. Local 555, Transport Workers Union of America AFL-CIO, January 9, 2018, Wiener, J., Jr.).

Southwest Airlines and the union representative for Southwest’s ramp, operations, provisioning, and freight agents, agreed to a new CBA. After the parties negotiated the terms of the new agreement, the union sent a “tentative agreement” to its membership. On February 19, 2016, the union’s membership voted to ratify the agreement; on March 16, 2016, the agreement was signed by the parties. The CBA contains provisions (1) stating that it would become “effective” after Southwest accepted the agreement and the union ratified it, and (2) requiring that grievances be filed within ten working days of notice of a management decision.

Non-union vendors. On March 28, 2016—within ten working days after the CBA was signed but more than ten working days after it was ratified—the union filed a grievance against Southwest for using non-union vendors to clean the interiors of “remaining overnight” aircraft. Southwest has contracted with third parties to perform this work since 1982.

This type of grievance? The CBA’s language does not specifically address the type of large-scale grievance at issue here, but instead pertains more to employees filing grievances based on unfair discipline. The parties agreed, however, that the deadline for filing this grievance was ten working days after notice of the management decision. Based on this deadline, observed the court, there was a reasonable argument that the union’s grievance was filed more than 30 years too late because the union has known about the complained-of practice since 1982.

Timeliness of grievance. However, the arbitrator rejected that argument based on the CBA’s new “zipper clause,” which the arbitrator concluded nullified “all past practices and prior agreements between Southwest and Local 555.” Thus, the appeals court proceeded under the premise that the union’s notice period began when the new CBA became effective.

Southwest moved to dismiss the grievance on the grounds that it was (1) untimely and (2) barred by res judicata based on another arbitrator’s decision holding that a different grievance about the same issue was untimely because it was not filed within ten working days of the management decision to use non-union vendors. Thereafter, the arbitrator ruled that the grievance was not barred by res judicata and was timely because the union filed it within ten working days after the CBA was signed. The arbitrator reasoned that the signing date of the agreement was the execution date of the agreement; therefore, because the grievance was submitted to the company on March 28, 2016, it was within the ten-day filing date for grievances.

Judicial review. Southwest sought judicial review of the arbitration award, arguing that the arbitrator exceeded his jurisdiction by ignoring the CBA’s terms. The district court declined to vacate the arbitrator’s ruling, primarily based on the narrow scope of judicial review of labor-arbitration awards. On the timeliness issue, the district court concluded that the arbitrator’s decision did not exceed the scope of his jurisdiction. Southwest appealed.

“Minor dispute.” As an initial matter, the Fifth Circuit observed that this dispute about a grievance that involved application of a CBA was classified as a “minor dispute” under the Railway Labor Act. “Minor disputes must be resolved through compulsory and binding arbitration. An award may be set aside: (1) for failure of the arbitrator to comply with the requirements of the RLA, (2) for failure of the order to conform, or confine itself, to matters within the scope of the arbitrator’s jurisdiction, or (3) for fraud or corruption by the arbitrator making the order.

Exceeded arbitrator’s jurisdiction. Southwest challenged the arbitrator’s award under only the second statutory exception. An arbitrator exceeds his jurisdiction if he “issues a decision that is contrary to an unambiguous provision of the CBA . . .” Here, the employer contended that the arbitrator ignored the CBA’s terms about its effective date. It pointed to the CBA’s cover language, which stated that the agreement shall remain in full force and effect as of the date of ratification. According to the airline, because the CBA does not expressly reference the “signing date,” nothing in the CBA supported the arbitrator’s conclusion that the signing date should be treated as the effective date.

Conflicted with language of CBA. The appeals court agreed that the arbitration award conflicted with the plain language of the CBA. It was not an arguable construction of the CBA and instead amounted to the arbitrator’s own brand of industrial justice. The arbitrator’s interpretation failed to account for (1) the CBA’s title page that set February 19, 2016, through February 18, 2021, as the period for the CBA; (2) Article 29’s express language that the CBA shall remain in full force and effect as of the date of ratification through and including February 18, 2021; (3) the CBA’s one-time bonus paid to employees working under the CBA as “of the Date of Ratification”; and (4) the parties’ conduct, including Southwest’s payment of the increased rates and bonuses set out in the CBA, starting after the agreement was ratified, but before it was signed. Accordingly, the judgment of the district court was reversed.