An Analysis of Factors Present in Challenged and Vacated Labor and Employment Arbitration Awards
Jedel, Michael, Lavan, Helen, Perkovich, Robert, Dispute Resolution Journal
A random sample of court decisions in labor and employment cases is studied to identify factors present in the legal challenge and in the cases where the award was vacated.
Arbitration has become, to a large extent, more expensive, slower and less final than it once was. Party challenges to arbitration awards in court are partly responsible for this. Certainly, these challenges reduce the certainty that the arbitral decision is final and binding, as had been negotiated by the parties. The purpose of this article is to identify the characteristics of labor and employment arbitration cases in which the losing party has challenged the award, and in particular, those cases where the award was eventually vacated, usually based on an act or omission by the arbitrator. This study adds to what we already know about awards that are vacated in that it considers more variables than earlier studies did.
To obtain a random sample of cases for this study, we searched the LexisNexis database of litigated labor and employment law cases for cases decided between 2003-2007 that involved challenges to awards.1 The search yielded 573 cases, from which we randomly selected 101 cases to study.2 We extrapolated conclusions from the random sample, believing that they are representative of the 573 cases from which the sample was drawn.
We examined five variables in each case in the random sample: (1) the type of case, (2) the type of employer, (3) whether the plaintiff alleged one or more procedural defects, (4) whether the plaintiff alleged that the award violated the law or public policy, or other types of arbitrator misconduct-such as nondisclosure, refusal to postpone the hearing or to hear evidence, and (5) the court's rationale for vacating the award.
Type of Case. There are two types of cases in the sample: labor and employment cases. In labor cases, a labor union is either a plaintiff or a defendant. In employment cases, there is no union involvement; the parties to the dispute are the employee and the employer. Most of the cases in the sample were labor cases.
Type of Employer. There are two types of employers in the sample cases: private employers and employers in the public sector, for example, schools, libraries, police and fire departments. Both types of employers can be involved in labor and employment cases, although for the most part, public sector employers are involved in labor cases.
Court Differences. What we mean by court differences is whether the court involved is a state or federal court and whether the reviewing court is a trial court or an appellate court.
A challenge to an arbitration award usually can be brought in state court if the parties' arbitration agreement allows for enforcement in any court with jurisdiction and does not require the action to be filed in another court.
A new study by Michael H. LeRoy suggests that whether a federal or state court hears a challenge to an arbitration award is a significant factor in the result.3 He examined data in 426 federal and state court employment cases and concluded that federal district courts confirmed 92.7% of arbitrator awards, while state trial courts confirmed 78.8% of awards, a statistically significant difference. (He also found a statistically significant difference in the confirmation rate of awards at the appellate level: federal courts, 87.7%; state courts, 71.4 %.)4
To give an idea of the difference between trial and appellate courts, we only looked at the trial and appellate decisions in the federal courts.
Procedural Defect Alleged. This refers to cases in which there is a claim before the reviewing court that the lawsuit violated a rule of procedure, for example, the claim that the action was not timely filed, or was filed in the wrong district.
Violation of Law Alleged. This refers to cases in which the claimant in the arbitration alleged a violation of statutory law (for example, a federal civil rights law) and claimed arbitrator misconduct (i. …