Employment Law Daily Seeking confirmation of arbitration awards didn’t allow union to bypass grievance procedure
Tuesday, July 11, 2017

Seeking confirmation of arbitration awards didn’t allow union to bypass grievance procedure

By Ronald Miller, J.D.

The Hyatt Regency Chicago was unable to convince the Seventh Circuit that a district court’s decision to confirm two arbitration awards undermined the parties’ agreement to resolve their disputes through arbitration. Hyatt argued that confirmation of the two awards gave the union the means to bypass the grievance procedure by enabling it to seek contempt sanctions for new violations, rather than seeking a determination from an arbitrator as to new grievances. However, the appeals court concluded that the district court’s modest action in confirming the awards placed the court’s contempt power behind the prospective relief ordered by the arbitrators (Hyatt was required to cease and desist using managerial employees to perform bargaining unit work), while reserving the merits of any pending or future grievances for arbitration. Accordingly, it affirmed the judgment of the district court (UNITE HERE Local 1 v. Hyatt Corp. dba Hyatt Regency Chicago, July 6, 2017, Rovner, I.).

The Hyatt Regency Chicago is a convention center with over 2,000 guest rooms, and between 80 to 100 meeting and event rooms. It employs approximately 1,200 employees, 800 of whom are hourly employees belonging to the union. Hyatt and the union were parties to a longstanding collective bargaining agreement. The CBA prohibits the hotel’s 140 managerial employees from performing work normally performed by bargaining unit members absent an emergency. It also contains a multi-step grievance procedure for the resolution of disputes between the parties, and provides for arbitration of any disputes over the interpretation or alleged violations of the agreement.

“Shared work” and “working supervisors.” There were a number of incidents in which managers performed bargaining unit work in circumstances the union did not regard as emergencies. The union took two sets of grievances to arbitration, both of which resulted in awards in its favor. In the first award, the arbitrator found that Hyatt violated the CBA by permitting managers to perform work normally done by housemen—employees who set up meeting rooms. The arbitrator rejected Hyatt’s contentions that there was an established practice of “shared work” between housemen and supervisors, and that individuals supervising housemen were “working supervisors” whose job responsibilities included pitching in as necessary to complete tasks. Ultimately, the arbitrator found that the union’s grievances were arbitrable and ordered Hyatt to cease and desist from further violations.

In the second award, another arbitrator likewise found that Hyatt had violated the prohibition on managerial employees performing bargaining unit work. The first of two grievances involved supervisors doing work normally performed by bell attendants, while the second involved supervisors performing cleaning services normally performed by bargaining unit employees. The second arbitrator agreed with the first arbitrator in finding insufficient evidence to support Hyatt’s contention as to a practice of “shared work” or “working supervisors.” She also agreed with the first arbitrator that the term “emergency” connotes more than just unforeseen circumstances. Thus, the arbitrator concluded that Hyatt had transgressed the CBA and the violations were not de minimis. Hyatt was ordered to cease and desist from further violations.

Awards confirmed. The union filed a petition in the district court to confirm the two awards, alleging that Hyatt had failed to comply with the awards. The parties filed cross-motions for judgment on the pleadings. Because Hyatt had not timely challenged the awards, the district court held that they were final and beyond review. At any rate, it found that the awards drew their essence from the CBA and were therefore valid.

Thereafter, Hyatt filed a motion to stay the district court’s judgment pending appeal. First, it asserted that the order did not give it notice of the duties imposed on it. Second, it argued that confirmation of the two awards gave the union the means to bypass the grievance procedure by enabling it to seek contempt sanctions for new violations, rather than seeking a determination from an arbitrator as to new grievances. Ultimately, Hyatt withdrew the motion to stay and proceeded with this appeal.

Open-ended prospective relief. This case differed from the usual proceeding seeking to confirm or vacate an arbitration award in that it involved awards ordering open-ended prospective relief, as opposed to backward-looking make-whole relief. Here, the arbitrators ordered Hyatt to cease and desist from further use of managerial employees to perform bargaining unit work. Hyatt equated confirmation of that kind of order with prospective enforcement of an award in a manner that would disrupt, and potentially supplant, the grievance procedure.

However, the Seventh Circuit resisted looking beyond the circumstances of this case and articulate a comprehensive standard as to when prospective enforcement of an arbitration award might or might not be warranted, and what types of relief might be appropriate when it is.

Live controversy. As an initial matter, Hyatt attacked the district court judgment on the ground that there was no Article III case or controversy. Because it did not challenge the awards, Hyatt reasoned that confirmation of the awards would accomplish nothing. However, the appeals court was satisfied that there was a live controversy between the parties. Confirmation rendered the awards judicially enforceable by way of contempt sanctions. In fact there was a live dispute about whether Hyatt was acting in compliance with the awards. Moreover, the existence of additional disputes demonstrated that the parties remained at odds as to what the contractual provision means and whether Hyatt was complying with the provision. The arbitration awards were relevant to those disputes because they addressed what constitutes a genuine emergency permitting managers to perform bargaining unit work. Further, absent arbitration, the union has no remedy in litigation if Hyatt chooses to ignore them, and the union would not have the option of seeking contempt sanctions.

Judicial intervention. Next, Hyatt contended that it was inappropriate for a court to intervene in an ongoing dispute by confirming the awards, and thereby laying the groundwork for contempt sanctions. However, the appeals court pointed out that in view of the limited nature of the relief obtained by the union, it was not attempting to bypass the arbitration process in order to obtain prospective relief. The union was granted forward-looking cease-and-desist orders. In resolving the particular grievances, the arbitrators necessarily had to articulate what constituted an emergency permitting a manager to perform bargaining unit work. Thus, the awards gave the parties some guidance on what was and was not permitted. Moreover, in seeking confirmation of the awards, the union did not ask for broad declaratory and injunctive relief. Accordingly, the circumstances of this case did not trigger barriers to prospective enforcement.

Further, the union was not seeking confirmation in order to gain any particular advantage with respect to the many additional disputes pending between the parties. Rather, the union was seeking a bifurcated approach to enforcement of the arbitration awards. It merely sought confirmation of the awards now, and was reserving the matter of enforcement, through a contempt proceeding, for a future date. Thus, none of the concerns cited as rendering prospective enforcement of a labor arbitration award improper were present here.

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