Delaware Supreme Court Clarifies Standard of Review of Labor Arbitration Awards
An arbitrator’s shared life experience with a party or party’s agent is legally insufficient to satisfy the “evident partiality” standard for disqualification of the arbitrator according to the Delaware Supreme Court in Delaware Transit Corporation v. Amalgamated Transit Union Local 842, decided November 28, 2011. This appeal arose from a labor arbitration challenging whether a grievant was terminated for cause. Grievant reported late for work five times within a few months. Grievant was put on a watch list for chronically late employees and warned he would be terminated under the CBA for an eighth late report. Grievant explained to the employer that his lateness was attributed to child care difficulties because his mother-in-law, who watched his children so that he could report to work on time, was ill with cancer and suffering from the side effects of chemotherapy treatment. The mother-in-law died shortly thereafter and grievant incurred a sixth and seventh late report within a few weeks. He sought relief from the employer in a form of a schedule change, but was denied. Grievant was late an eighth time for the year and was terminated.
Grievant pursued a labor arbitration challenging that there was not just cause to terminate his employment under the CBA. The arbitrator found that the employer’s denial of the requested schedule change was arbitrary and directed the employer to return grievant to his former position. The employer appealed the arbitrator’s ruling to the Delaware Court of Chancery. Affirming the arbitrator’s ruling, the Chancery Court reiterated Delaware’s longstanding policy favoring arbitration and deference to labor arbitration awards. Under this standard, a Delaware court will not disturb a labor arbitration award unless (1) the integrity of the arbitration has been comprised by, for example, fraud, procedural irregularity, or a specific command of law; (2) the award does not claim its essence from the CBA; or (3) the award violates a clearly defined public policy.
Focusing on a challenge to the integrity of the process, the employer argued that the arbitration was compromised because the arbitrator failed to disclose to the parties that his wife had died of cancer only a few months before the arbitration hearing. According to the employer, this eliminated the arbitrator’s neutrality because the grievant’s defense of his late arrivals was based in large part upon his mother-in-law’s battle with cancer. The Court of Chancery concluded that the rules governing arbitrator impartiality speak only to actual financial or personal relationships between the arbitrator and a party, an agent of a party, or an attorney for a party. Accordingly, an arbitrator’s “potential affinity” with one of the parties is not a fact that taints a proceeding or requires disclosure. The employer appealed that decision to the Delaware Supreme Court.
The Supreme Court confirmed Delaware’s “evident partiality” standard for arbitrator bias. Under this standard, to show an arbitrator’s bias one must identify an undisclosed relationship between an arbitrator and a party or the party’s agent that is so intimate – personally, socially, professionally, or financially – as to cast serious doubt on the arbitrator’s impartiality. The arbitrator’s conflict must be direct, definite and capable of demonstration rather than remote, uncertain or speculative. According to the Supreme Court, the fact that an arbitrator may share a personal life experience with a party or a party’s agent is legally insufficient to constitute a substantial relationship that a reasonable person would conclude is powerfully suggestive of bias. The arbitrator had no obligation to disclose that his wife had recently died from cancer and his ruling was affirmed.
As this case reflects, appellate review of labor arbitration decisions is narrowly cabined in Delaware, and is non-existent for decisions colored by nothing more than an arbitrator’s personal life experiences. While parties typically focus on an arbitrator candidate’s professional experience during the selection process, life experiences are often overlooked. Indeed, the arbitrator selection rules of many forums do not allow much opportunity to explore an arbitrator candidate’s life experiences. As much as it's permissible however, parties should explore more than an arbitrator candidate’s professional experience. This is especially pressing where the subject of the arbitration lends itself to a natural affinity, such as common experience with a loved-one’s chronic disease.
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