For more than half a century, federal courts have done their utmost to encourage arbitration to resolve disputes. The preference is particularly strong in labor-management contracts, such as the one between Major League Baseball (“MLB”) and the players’ union that resulted in the recent Alex Rodriguez award suspending the famous third baseman from major league baseball for the entire 2014 season. This preference will now be tested in Rodriguez’s lawsuit to overturn the arbitration decision under Section 301 of the Labor Management Relations Act (“LMRA”).
In that suit, Rodriguez alleges the arbitrator did not review all of the evidence, ignored the fact that Rodriguez never tested positive for banned substances and credited the testimony of a convicted felon. These actions, he claims, demonstrate the need to overturn the arbitrator’s decision. However, the legal hurdles for Rodriguez and his attorneys can be daunting.
Arbitration is relatively quick and cheap compared to federal court litigation and significantly reduces the workload of the federal judiciary. As a result, federal law has severely limited the grounds for overturning an arbitrator’s decision and federal courts take a dim view of lawsuits that ignore the limited judicial review that is available.
Under Section 301 of the LMRA, bias and misconduct by the arbitrator are bases for refusing to confirm awards, but these grounds are seldom invoked successfully. Another ground recognized by the courts is that the award is contrary to public policy. This requires a court to find an explicit, well-defined and dominant public policy specifically militating against the award. This is unusual in most arbitration cases.
The most common ground for overturning an award is that the arbitrator exceeded his authority under the parties’ collective bargaining agreement. This generally has been interpreted to require that: (1) the arbitrator rendered a decision on an issue the parties explicitly agreed not to take to arbitration; or (2) the arbitrator’s decision is contrary to the explicit language of the agreement the parties entered into and from which the arbitrator derives his authority to determine the dispute. No arbitration decision may run contrary to the explicit language of the parties’ agreement inasmuch as the arbitrator is bound to decide within the terms of that agreement and is not free to make his own terms. For example, if an agreement provided that an arbitrator could only reinstate a discharged employee with full back pay or uphold the discharge, an award reinstating the employee without back pay would be contrary to the express language of the agreement and subject to court reversal.
With these limited grounds, arbitration awards are seldom overturned. Arbitrators are free to credit some witnesses and discredit others, based on their observations at the hearing. They can accept or disregard evidence, accept or ignore arbitration and judicial precedent, or even misconstrue precedent. None of these actions usually are grounds for overturning the arbitrator’s award. The courts reason that the parties chose this forum for settling their disputes and must therefore live with the arbitrator’s decision: good, bad or indifferent.
MLB has responded to Rodriguez’s lawsuit, arguing in a letter to the judge that the allegations do not satisfy the “exacting requirements” to overturn an arbitration award. It maintains that the arbitrator carefully analyzed the contract and adopted a justifiable interpretation of its language. The letter also attacks Rodriguez’s assertions that the arbitrator was biased. MLB rejects as insubstantial and speculative Rodriguez’s contention that the award should be thrown out because the arbitrator is a baseball fan who feared losing his position as contract arbitrator if he backed the third baseman in his award. A court conference is scheduled for February 14th.
Rodriguez may find the law affording him a chilly reception in court.