As we have previously discussed on this blog, the instances in which an arbitrator’s award will be overturned by a court come few and far between.  The grounds for overturning an award are narrow, and courts must make every reasonable presumption in favor of an arbitration award’s validity.  Very few arbitration awards in the state’s history have been overturned by a court on appeal.  Well now, there is another with the Minnesota Court of Appeals’s decision in Hennepin Healthcare Systems v. AFSCME, Council 15.

Hennepin Healthcare system subcontracted with a staffing agency to provide full-time workers to perform the same work performed by its own unionized employees.  After the hospital renewed its agreement with the staffing agency, the union grieved, claiming that the hospital violated a contract provision that limited the employment of temporary workers for longer than six months.  In arbitration, the arbitrator found that two contract provisions – the one limiting temporary employment to a six month period and another granting the employer the right to subcontract without restriction – were conflicting.  Despite finding that the subcontracted employees were not temporary employees under the contract, he found that the contract limited the duration of subcontracts to six months.  The employer appealed to district court, where the arbitrator’s decision was upheld.

At the court of appeals, the court analyzed the case based on the question of whether in issuing his decision, the arbitrator exceeded his power.  Under Minnesota’s Uniform Arbitration Act, an arbitration award must be vacated if an award “does not draw its essence from the parties’ agreement.”  And an award does not “draw its essence” from the agreement if it is “not rationally based on the contract’s language, content, and indicia of intent.”

The collective bargaining agreement in this situation featured standard “arbitrator’s authority” language, stating the arbitrator “shall not have the right to amend, modify, nullify, ignore, add to, or subtract from the provisions” of the collective bargaining agreement.

The court found that in disregarding the subcontracting language of the contract, “the arbitrator nullified the hospital’s bargained-for right to subcontract for services without temporal restriction.”  Unlike the arbitrator, the court found that the temporary employee language and the subcontractor language were not in conflict, and could coexist in the same contract.  The court also found that the CBA included additional sections that contemplated the hospital’s right to subcontract for services lasting longer than six months, including a procedure for layoffs of employees resulting from subcontracting.  With that, and without addressing numerous additional challenges to the award by the employer, the court reversed the district court’s decision and remanded to have the award vacated.

While this is an excellent decision for the employer, it remains to be seen that courts will begin to take a closer look at arbitration awards, rather than yielding to the arbitrator as the final judge of law and facts.

Appealing an arbitrator’s award is always an uphill battle.  If you, or your organization need assistance in arbitrating, or pursuing an appeal of an unfavorable arbitration award, contact Wiley Reber Law, for arbitration experience that works.