Fraternal Order of Police Lodge 10 v. State of Delaware
12813-VCMR
| Del. Ch. | Dec 7, 2017Background
- Plaintiff (Fraternal Order of Police Delaware Lodge 10) petitioned to enforce an arbitration award ordering make-whole relief (back pay) for a grievant; defendant (State of Delaware) sought a declaratory ruling that "make whole" required offset for interim earnings.
- Chancellor denied the State’s motion to dismiss the enforcement petition in an October 2, 2017 Letter Opinion, applying the Federal Arbitration Act standard to decline court interpretation/modification of the award.
- The State moved for reargument under Court of Chancery Rule 59(f), arguing the FAA/DUAA did not apply because the dispute arises from a collective bargaining agreement and that a distinct, deferential labor-arbitration standard should control.
- The labor-arbitration standard the State urged: courts only disturb awards for fraud/procedural irregularity/specific legal command, if the award fails to claim its essence from the CBA, or if it violates a clearly defined public policy.
- The State argued offset for interim earnings is a prevailing public policy in labor law and that the award without offset is punitive and not grounded in the CBA; the Court found these arguments unpersuasive.
- Court denied reargument: even under the correct Delaware labor-arbitration standard the result is the same because (1) the award does not explicitly conflict with any dominant public policy, and (2) the award bears a reasonable relationship to the CBA (i.e., claims its essence from the CBA).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA/DUAA governs court review of the arbitration award | FAA applies; court should not interpret/modify award under FAA standards | DUAA §5725 excludes CBA disputes; apply deferential labor-arbitration standard instead of FAA | FAA issue conceded on reargument; but applying the correct labor standard yields same outcome — award enforced |
| Whether the award violates a clearly defined public policy (offset for interim earnings) | Arbitration award should be enforced; no explicit conflict with public policy favoring arbitration | Offset is a well-established labor law policy and the award conflicts with it | Rejected — offset not shown to be dominant over arbitration policy and award is silent, defendant failed to request offset before arbitrator |
| Whether the award fails to "claim its essence" from the CBA | Award is consistent with CBA and within arbitrator's remedial authority | Lack of offset makes award punitive and unrelated to the CBA | Rejected — defendant failed to show award bears no reasonable relationship to the CBA |
| Whether reargument should be granted under Ct. Ch. R. 59(f) | Plaintiff opposed reargument; original decision stands | Defendant argued court overlooked controlling law (DUAA/labor standard) | Denied — court didn’t overlook law that would change outcome; arguments fail under labor-arbitration test |
Key Cases Cited
- Del. Transit Corp. v. Amalgamated Transit Union Local 842, 34 A.3d 1064 (Del. 2011) (articulates deferential standard for reviewing labor arbitration awards)
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (1987) (courts may vacate arbitration awards only when they explicitly conflict with well-defined, dominant public policy)
- Kuhn Const., Inc. v. Diamond State Port Corp., 990 A.2d 393 (Del. 2010) (recognizes Delaware’s public policy favoring arbitration)
- Stroehmann Bakeries, Inc. v. Local 776, Int’l Bhd. of Teamsters, 969 F.2d 1436 (3d Cir. 1992) (defines limits on vacatur based on public policy)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (supports broadly pro-arbitration stance and resolving doubts in favor of arbitration)