A recent decision of the United States District for the District of Puerto Rico examines the standard of review of an arbitration award. In Union de Periodistas de Artes Graficas y Ramas Anexas v. Telemundo de Puerto Rico, Inc.[i], Telemundo de Puerto Rico, Inc. (“Telemundo”), a Spanish language television network, centralized its Houston, San Antonio and Puerto Rico master control and editing work in Miami to take advantage of new technologies. The change made it possible for Telemundo’s Puerto Rico subsidiary to switch from a twenty-four hour manual operation to an automated system, such that personnel in Miami operate the automated system for the Puerto Rico Station, as well as the stations in San Antonio and Houston.
As a result of the automation, Telemundo laid off personnel in Puerto Rico. An arbitrator from the Puerto Rico Department of Labor and Human Resources found that Telemundo did not breach its collective bargaining agreement (“CBA”) in connection with a cutback in personnel resulting from the reorganization. The union representing the master control and programming editors who were affected by restructuring filed motion with the United States District for the District of Puerto Rico for a hearing on an arbitration award.
The District Court found that: (1) the arbitrator did not exceed the scope of the arbitral submission by taking into consideration the issue of Telemundo's alleged subcontracting of outside personnel; (2) there was no basis to disturb the arbitrator’s conclusion that Telemundo did not subcontract personnel from outside the appropriate unit to perform certain remaining functions that continued to exist after the restructuring; and (3) the layoffs did not breach the CBA.
The court also held that the arbitrator did not improperly shift burden of proof to the union in concluding that layoffs did not violate the CBA. It was the union’s burden to establish: (1) that Telemundo was prohibited from subcontracting the work under the CBA; and (2) that Telemundo did in fact subcontract the work. Only after making such a showing, would the burden of proof shift to the Telemundo to prove that the subcontracting did not violate the CBA. The court found that it was appropriate for the arbitrator to consider whether the union had presented evidence to meet its initial burden, and thus, the arbitrator’s determination that the union had not established subcontracting was not contrary to the proper legal standard.
The opinion authored by United States District Judge Francisco A. Besosa cited to several decisions from the First Circuit Court of Appeals to stress “that a federal court’s review on an arbitrator’s decision is extraordinarily deferential.” [ii] Judge Besosa then went on to lay out the narrow standard of review of an arbitration award:
A court should uphold the arbitrator's interpretation of the CBA if it is within the four corners of the agreement and there is any plausible basis for that interpretation. A court may not overrule an arbitrator's decision merely because its interpretation of the CBA is different from the arbitrator's. If the arbitrator is even arguably construing or applying the contract and acting within the scope of his or her authority, a court may not overturn the decision, even though the court may be convinced that the arbitrator committed a serious error. If a reviewing court had the final say on the merits of an arbitrator's award, the federal policy of settling labor disputes by arbitration would be undermined. . . Only in a few exceptional circumstances is a court entitled to vacate an arbitration award. A court may intervene when the party challenging the award establishes that the award was (1) unfounded in reason and fact; (2) based on reasoning so palpably faulty that no judge, or group of judges, ever could conceivably have made such a ruling; or (3) mistakenly based on a crucial assumption that is concededly a non-fact. . .
Union de Periodistas de Artes Graficas y Ramas Anexas v. Telemundo de Puerto Rico, Inc., is another example of a strong judicial preference for alternative dispute resolution. The decision is a potent reminder that arbitrators will continue to be given great deference, such that an arbitrator’s award will rarely be disturbed.