Today’s issue focuses on two significant decisions from Courts of Appeal. In one, the Third Circuit sends a warning to labor practitioners about potential statute of limitations issues in vacating an award and, more generally, addresses when the time starts running for a vacatur application. In the other, the Fourth Circuit discusses the procedure for resolving res judicata claims in arbitration and the standard for judicial review of such awards.
LMRA v. FAA statutes of limitations; final “awards” and later “opinions” – The Third Circuit decided a case yesterday that is important reading for all arbitration attorneys and crucial for labor practitioners. PG Publishing, Inc. v. The Newspaper Guild of Pittsburgh, 2021 U.S. App. LEXIS 35257 (3rd Cir. November 30, 2021), addresses the different statutes of limitations which apply to an action under the Labor Management Relations Act which seeks to set aside an arbitration award and a petition under the Federal Arbitration Act to vacate such an award – a difference which can be crucial in whether the attempt is time-barred. For counsel in all arbitrations, the opinion addresses the issue of what constitutes the final “award” that starts the challenge clock. What if the arbitrator advises the parties of the tribunal’s decision and only later lays out the reasons behind that award?
PG Publishing arises out a grievance filed by the Guild regarding the publisher’s contributions to the employees’ health insurance fund. Because of issues related to the timing of contributions, the arbitrator agreed to issue an award by December 31, 2019. On December 30th, he issued an award by email “as promised, by the end of this calendar year.” The award consisted of five numbered paragraphs and set forth a specific remedy. It stated that “This Award is final and binding. . . . “ Later, he elaborated on the reasoning behind his decision. “[O]n January 21, 2020, Arbitrator Nadelbach issued a 21-page Opinion, which noted that the Award had been ‘first transmitted to [the parties] via email prior to the end of the calendar year on December 30, 2019.’ The January 2020 Opinion provided the reasoning for the Arbitrator’s rulings on the issues submitted for arbitration.” (Brackets in original).
The newspaper filed its challenge to the award on February 14, 2020. Whether that challenge was timely depends first on whether the newspaper’s attack on the arbitrator’s decision is characterized as an action under the LMRA to set aside the award or a petition to vacate under the FAA, because different statutes of limitations apply to each. Under the FAA, a losing party may file a petition to vacate a final award within ninety days thereof. However, the LMRA does not contain a statute of limitations for challenging labor arbitration awards; rather, actions to confirm or vacate an award are governed by the relevant state statute of limitations. The panel, with Chief Circuit Judge Smith writing for himself and Circuit Judges McKee and Restrepo, holds that Pennsylvania law sets the statute of limitations and creates a thirty-day window for an LMRA-based objection to an arbitral award. Since the newspaper’s challenge, while filed within ninety days from the December 30th Award, was filed more than thirty days thereafter, the question of whether the LMRA or the FAA governs the proceeding is crucial to its viability.
Chief Judge Smith opines that the newspaper’s initial filing in the District Court has the trappings of an LMRA complaint, rather than a simple petition to vacate an award under the FAA. The initial filing was titled as a “Complaint” and consists of five “counts.” While the pleading referenced the FAA in one count, the decision holds that citation does not clearly invoke the Federal Arbitration Act, as the FAA’s standards are sometimes referenced in interpreting the LMRA; the reference might simply have been invoking that comparison. In fact, the court holds, the newspaper “has never mentioned the standard applicable to FAA motions to vacate; neither has it referred to the standard of appellate review applicable to a District Court’s ruling on an FAA motion to confirm or vacate an arbitration award. . . . Even if PG had intended to move to vacate the Award under the FAA, the substance of its Complaint and its manner of litigation of the dispute were insufficient to put the Union and the District Court on notice that PG was prosecuting via FAA motion.” Therefore, the court invokes Pennsylvania’s thirty-day statute of limitations for an LMRA challenge to an award, not the FAA’s ninety-day limitation on applications to vacate.
As in all statute of limitations cases, the court must also consider when the statute begins to run. Even under the shortened LMRA standard, if the January 21, 2021 Opinion, rather than the December 30, 2020 Award were deemed to be the “final award,” the challenge would be timely. Judge Smith, however, holds that the arbitrator’s email of December 30 constitutes the award. The court finds that the January “opinion” merely elaborated on the arbitrator’s reasoning in reaching the holdings set forth in the December “award” and reiterated the relief contained in that earlier email. Thus, the arbitrator’s definitive act resolving the case took place when he sent the email. “We have not previously articulated a test for when an award is final but are persuaded by the approach taken by our sister circuits. Like them, we hold that an arbitration award is final if it ‘evidences the arbitrators’ intention to resolve all claims submitted in the demand for arbitration’ and it ‘resolve[s] them definitively enough so that the rights and obligations of the two parties, with respect to the issues submitted, do not stand in need of further adjudication.’” (Citations omitted; brackets and emphasis in original). Thus, the clock started running on December 30, 2019, more than thirty days before the newspaper filed its challenge. Accordingly, the court affirms the District Court’s dismissal of the action.
The lesson for labor practitioners from PG Publishing is clear. If you are challenging an arbitration award, first calculate the running of whatever state’s statute of limitations the LMRA would invoke, as well as the ninety-day FAA calendar; pick the one which would make your attack timely. Then, be crystal clear in every aspect of the appeal as to whether you are basing your challenge on the LMRA or the FAA. Caption your filing as either a “complaint” or “application” as applicable; reference the statute on which you are relying in your initial filing, while omitting all references to the other act; and take every opportunity to mention in filings, letters, and argument the statute on which you rely. Do not allow any confusion as to the route which you are following. To quote Dostoevsky, “Much unhappiness has come into the world because of bewilderment and things left unsaid.”
Review of awards based on prelusive effect
Constellium Rolled Products Ravenswood, LLC v. United Steel Workers, 2021 U.S. App. 35163 (4th Cir. November 29, 2021)(Circuit Judge Rushing for herself, Chief Circuit Judge Gregory and Circuit Judge Harris), addresses both whether the preclusive effect of a prior judgment is a question for the arbitrator or the court and the standard for reviewing arbitral awards on that issue. The underlying dispute relates to healthcare benefits for retired employees. The union and company had litigated this issue under a previous collective bargaining agreement in which the company prevailed (the “Barton decision”). The same issue arose, again, under a new collective bargaining agreement, pursuant to which the question was submitted to arbitration. The arbitrator reached a different conclusion and found for the Union. In this appeal from the denial of an application to vacate that award, the Court of Appeals considers two issues related to the preclusive effect of the Barton decision. First, should the arbitrator consider whether the earlier Barton decision precludes reconsideration of the requirement for benefit payments or is that a question for judicial resolution? The court holds that res judicata is not a question of arbitral jurisdiction for the court to resolve, but, rather, a “procedural question for the arbitrator.” Relying on Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002), the court specifically rejects contrary holdings in the Fifth, Eighth, and Eleventh Circuits upon which Constellium relied for the proposition that preclusive effect is a question for the court.
The panel, then, addresses whether judicial review of the arbitrator’s award on the effect of the Barton decision should be a “plenary review” or an application of the customary “manifest disregard” standard. While it questions in dictum whether the manifest disregard test is still viable, it applies that standard, rejecting Constellium’s suggestion of a “less deferential” standard. “Under Constellium’s ‘plenary review’ standard, a court would determine the correct application of preclusion principles to the case at hand and then weigh the arbitrator’s decision accordingly.” “To do so,” the court opines, “would subject an arbitrator’s award to more searching judicial scrutiny than authorized by the FAA or our precedent, without any legal authority.” Thus, in the Fourth Circuit, the standard for the confirmation of an arbitrator’s decision on preclusion continues to allow vacatur only when the arbitrator was “aware of the law, understood it correctly, found it applicable to the case before him, and, yet, chose to ignore it in propounding his decision.” (Emphasis added. Citation omitted).
New York City COVID arbitration
The Second Circuit considered the issue of the right to terminate the employment of New York City school personnel who declined to be vaccinated on religious grounds to be important enough that it issued a decision on a Sunday. Kane v. De Blasio, 2021 U.S. App. LEXIS 35102 (2nd Cir. November 28, 2021)(Chief Circuit Judge Livingston and Circuit Judges Kearse and Lee, per curiam), is an appeal from the District Court’s denial of a preliminary injunction against enforcement of an arbitrator’s grievance award, which established a process for determining the bona fides of religious objections to COVID vaccinations. The opinion, which vacates the preliminary injunction, is worth reading for its First Amendment implications and as a commentary on the ongoing debate over vax mandates. While the arbitration implications are less important, it is a good reminder that Constitutional restrictions can govern the work of arbitrators, as well as that of courts.
California practitioners are familiar with the oft-litigated issue of whether waivers of class and “public relief” relief are enforceable in wage and hour arbitrations or are barred by the provisions of the state’s Private Attorney General Act. Another petition for certiorari has been filed raising this PAGA issue. Lyft, Inc. v. Seifu, Dkt. No. 21-742, joins Uber Technologies, Inc. v. Gregg, Dkt. No. 21-453; Postmates, LLC v. Santana, Dkt. No. 21-420; Postmates, LLC. v. Rimler, Dkt. No. 21-119; and Fast Auto Loan, Inc. v. Maldonado, Dkt. No. 21-31 on the Court’s petition docket. An indication of SCOTUS’s interest in the issue may be forthcoming soon as Fast Auto Loans is scheduled for conference on December 10th. While the resolution of the issue would primarily affect California, it might have a wider impact in demonstrating where the current Court views the edges of state power to limit arbitration.
An interesting “reverse preemption” issue is raised in the newly filed cert. application in CLMS Management Services, LP v. Amwins Brokerage of Georgia, LLC, Dkt. No. 21-708. The case raises the question of potential conflicts between the FAA’s limits on states’ circumscription of arbitration and the McCarren-Ferguson Act’s prohibition against federal interference with state insurance regulation in a case which challenges Washington State’s prohibition on mandatory arbitration of insurance claims.
SCOTUS is hearing arguments today on the status of Roe v. Wade, so the focus of the legal world is certainly not on arbitration. However, I’ll be back on Friday with more updates. Enjoy the rest of your week.
David A. Reif
 The case is a treasure trove of other issues of interest to arbitration practitioners. It holds that, in the interest of predictability, the finality of an arbitration award is to be determined as a matter of law, rather than as a question of fact. Therefore, the appellate court reviews the District Court’s decision de novo, rather than under a limited deference standard. Further, it holds that the timeliness of an application to vacate an award is procedural, not jurisdictional. While not relevant here, this opens up issues related to the waiver of timeliness challenges.