917 F.3d 512
6th Cir.2019Background
- Economy Linen subcontracted drivers in Oct 2015 due to a shortage; subcontracted drivers earned higher hourly rates than Economy Linen’s full-time drivers.
- Teamsters Local Union 637 grieved, arguing the collective bargaining agreement (CBA) forbids hiring temporaries at higher pay than full-time employees (Article 6.08).
- An arbitrator found the subcontracted drivers functioned as "temporary ('on-call') employees" under Article 6.11 and ruled for the union, awarding retroactive damages.
- Economy Linen sued to vacate the arbitration award in district court; the district court affirmed the arbitrator. Economy Linen appealed.
- The Sixth Circuit reviewed whether (1) the arbitrator exceeded authority or acted dishonestly, (2) the dispute was within the scope of arbitration, and (3) the arbitrator at least arguably construed the CBA.
- The Sixth Circuit affirmed the arbitration award, concluding the arbitrator plausibly interpreted the CBA and reasonably considered the subcontract terms and company control over drivers.
Issues
| Issue | Union's Argument | Economy Linen's Argument | Held |
|---|---|---|---|
| Whether arbitrator had authority / award review standard | Arbitrator is empowered by Article 14.05 to decide interpretation disputes; deferential review applies | Arbitrator exceeded authority by misinterpreting the CBA; court should vacate | Affirmed; deferential standard applies; award stands absent fraud, exceeding authority, or manifest disregard |
| Whether Article 6.08 wage cap applies to subcontracted drivers | Subcontracted drivers are "temporary ('on-call')" under Article 6.11, so Article 6.08 limits their pay relative to full-time employees | Subcontracting clauses (Articles 3.01–.04) give management unrestricted subcontracting rights; Article 6.08 does not apply to subcontracted drivers | Arbitrator plausibly construed the CBA to apply Article 6.08 to these drivers; ruling upheld |
| Whether arbitrator improperly treated subcontracted drivers as joint employees / looked beyond CBA | Union: factual control and functional role justify treating them as temporary employees under the CBA | Economy Linen: examining the subcontract and control equates to creating a joint-employer finding beyond the arbitrator’s scope | Court found it was reasonable for arbitrator to examine how company implemented subcontracting to decide CBA status |
| Whether retroactive damages remedy was improper | Union: arbitrator has broad remedial discretion to award back pay for past violations | Economy Linen: award modifies contract going forward and improperly imposes retroactive relief | Arbitrator’s remedial choice is within his discretion; courts defer to arbitrator on remedies; award stands |
Key Cases Cited
- Mich. Family Res., Inc. v. Serv. Emps. Int’l Union Local 517M, 475 F.3d 746 (6th Cir.) (en banc) (standards for judicial review of arbitration awards)
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (1987) (courts cannot vacate awards for mere interpretive errors)
- United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593 (1960) (arbitrators have flexibility in fashioning remedies)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (courts must enforce arbitration agreements as written and may not rule on arbitrability assigned to arbitrators)