Expert Answer:International Union of Petroleum & Industrial Work

  

Solved by verified expert:Read the info the case in the attached files (need to upload some more once the assignment has started) and an Order, not to exceed 750 words, in which you decide the case as if you were the Judge. In conjunction therewith, please make a short ruling, based entirely upon the standards set forth in International Union of Petroleum & Industrial Workers v. Western Industrial Maintenance, Inc., 707 F.2d 425 (9th Cir. 1983), in which you grant or disallow an award of attorneys’ fees and costs in the case
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PRIOR HISTORY: [**1] Appeal from the United States District Court for the Central District of California.
Manuel L. Real, District Judge, Presiding.
CASE SUMMARY:
PROCEDURAL POSTURE: Appellant company chal- lenged the order of the United States District Court for the
Central District of California, which awarded attor- neys’ fees in favor of appellee union pursuant to appel- lant’s
petition for confirmation of an arbitration award based on a collective bargaining agreement between ap- pellant and
appellee.
OVERVIEW: Appellant company refused to comply with an arbitration award, which required it to make an
employee-grievant whole after a layoff. Appellee union petitioned the district court for confirmation of the award,
reinstatement, backpay, and reasonable attorneys’ fees pursuant to 29 U.S.C.S. § 185. Appellant opposed the petition
on the grounds the award was invalid. The district court granted the relief requested by appellee and appellant
sought review. On appeal, the court affirmed the award of attorneys’ fees and held that because the arbitrator’s
decision and award was fully supported and clearly based on the arbitrable layoff issue, the record supported the
finding that appellant’s refusal to abide by the award was without justification, and the district
court, therefore, did not abuse its discretion in awarding attorneys’ fees for the unjustified refusal to abide by arbitration. The court refused to award attorneys’ fees for the appeal, however, as it concluded that appellant’s
challenge was not devoid of merit because it did not ap- peal the merits of the confirmation order, and the challenge to the award of attorneys’ fees was one of first im- pression in the circuit.
OUTCOME: The order awarding attorneys’ fees to ap- pellee union was affirmed because the district court’s
finding was supported by the record, was not clearly er- roneous, and therefore, there was no abuse of discretion in
awarding the fees to appellee. However, as appellant company did not contest the merits of the confirmation order
and the issue was one of first impression in the circuit, no attorneys’ fees were awarded for the appeal.
LexisNexis(R) Headnotes
Civil Procedure > Remedies > Costs & Attorney Fees > General Overview
Commercial Law (UCC) > Sales (Article 2) > Form, Formation & Readjustment > General Overview
[HN1] Absent contractual or statutory authorization, a prevailing litigant ordinarily may not collect attorneys’ fees.
However, a court may assess attorneys’ fees when
the losing party has acted in bad faith, vexatiously, wan- tonly, or for oppressive reasons.
Civil Procedure > Appeals > Costs & Attorney Fees Civil Procedure > Appeals > Standards of Review > Clearly
Erroneous Review
[HN2] The circuit court reviews a district court’s finding of bad faith under the clearly erroneous standard. If bad
faith is found, an award of attorneys’ fees is within the district court’s discretion.
Civil Procedure > Remedies > Costs & Attorney Fees > Attorney Expenses & Fees > Statutory Awards
Labor & Employment Law > Collective Bargaining & Labor Relations > Arbitration > Awards
[HN3] An unjustified refusal to abide by an arbitrator’s award may equate an act taken in bad faith, vexatiously or
for oppressive reasons. Bad faith supporting an award of attorneys’ fees may be found in conduct that led to the
lawsuit or in conduct occurring during the course of the action. Moreover, bad faith may be demonstrated by
showing that a defendant’s obstinacy in granting a plain- tiff his clear legal rights necessitated resort to legal ac- tion
with all the expense and delay entailed in litigation. The award of attorneys’ fees in the latter context satisfies a dual
purpose — deterrence and compensation. The threat of an award of attorneys’ fees tends to deter frivo- lous dilatory
tactics. The award also compensates a plaintiff for the added expense of having to vindicate clearly established
rights in court.
Civil Procedure > Alternative Dispute Resolution > Arbitrations > General Overview
Civil Procedure > Remedies > Costs & Attorney Fees > General Overview
Labor & Employment Law > Collective Bargaining & Labor Relations > Arbitration > Awards
[HN4] Labor arbitration advances the goal of industrial stabilization. Engaging in frivolous dilatory tactics not only
denies the individual prompt redress, it threatens the goal of industrial peace. Therefore, the deterrence aspect of an
award of attorneys’ fees is particularly served where a party, without justification, refuses to abide by an arbitrator’s
award.
Civil Procedure > Alternative Dispute Resolution > Arbitrations > General Overview
Civil Procedure > Alternative Dispute Resolution > Judicial Review
Civil Procedure > Remedies > Costs & Attorney Fees > General Overview
[HN5] The federal labor policy favoring voluntary arbi- tration dictates that when a refusal to abide by an arbitration decision is without justification, and judicial en- forcement is necessary, the court should award the party
seeking enforcement reasonable costs and attorneys’ fees incurred in that effort.
Civil Procedure > Alternative Dispute Resolution > Arbitrations > General Overview
Contracts Law > Defenses > Ambiguity & Mistake > General Overview
Labor & Employment Law > Collective Bargaining & Labor Relations > Arbitration > Awards
[HN6] An arbitrator’s award must be upheld as long as it draws its essence from the agreement. However, arbitration is a matter of contract and a party is bound by an award only if he agreed to submit the issue to arbitration. But
a mere ambiguity in the opinion accompanying an award, which permits the inference that the arbitrator may have
exceeded his authority, is not a reason for re- fusing to enforce the award. Moreover, federal labor policy favors
arbitration. Therefore, in determining whether an arbitrator has exceeded his authority, the agreement must be
broadly construed with all doubts resolved in favor of the arbitrator’s authority.
Civil Procedure > Appeals > Costs & Attorney Fees Civil Procedure > Appeals > Frivolous Appeals
Legal Ethics > Professional Conduct > Frivolous Claims
[HN7] A circuit court has discretion to award attorneys’ fees as a sanction for bringing a frivolous appeal. Fed. R.
App. P. 38. An appeal is considered frivolous when the result is obvious or the arguments of error advanced are
wholly without merit. Moreover, the considerations which apply to suits to enforce an arbitration award necessitated by frivolous dilatory tactics apply with equal force with regard to frivolous appeals.
COUNSEL: Stuart Libicki, Esq., Schwartz, Steinsapir, Dohmann, Krepack, Sommers & Edelstein, Los Angeles,
California, for Appellee.
James R. Wakefield, Esq., Bodkin, McCarthy Sargent & Smith, Los Angeles, California, for Appellant.
*
* Honorable William A. Ingram, United States District Judge for the Northern District of Cali- fornia, sitting by
designation.
707 F.2d 425, *; 1983 U.S. App. LEXIS 27189, **; 113 L.R.R.M. 3010; 97 Lab. Cas. (CCH) P10,169
Page 2
OPINION BY: TANG OPINION
[*426] TANG, Circuit Judge:
Appellant, Western Industrial Maintenance, Inc. [“the company”] appeals from the district court’s award of
attorneys’ fees in favor of appellee, International Un- ion of Petroleum and Industrial Workers [“the union”]. The
union petitioned the district court, pursuant to sec- tion 301 (29 U.S.C. § 185) of the Labor-Management Relations
Act [“the Act”], for confirmation of an arbitra- tion [*427] award based on a collective bargaining agreement
between the company and the union. The district court confirmed the arbitration award and found that [**2] the
company’s refusal to comply with the award was without justification. Based on this finding, the court awarded
attorneys’ fees to the union. The company argues that the union did not make a sufficient showing of bad faith to
justify the award of attorneys’ fees. We conclude that the district court’s finding is supported by the record, is not
clearly erroneous, and therefore the award of attorneys’ fees was not an abuse of discretion.
BACKGROUND
Betty Sparks is a former employee of the company and a member of the union. In September, 1981, she filed a
grievance alleging that “the company acted in a discriminatory manner when they” laid her off.
The collective bargaining agreement between the company and the union provides for a grievance proce- dure. The
contract also provides for arbitration in the event that the grievance is not resolved. The grievance procedure
provides that grievances shall be in writing and “must describe as fully as possible each alleged vio- lation and the
related facts.”
On February 5, 1982, the grievance was arbitrated. At the commencement of the arbitration, the union posed the
following as the issues to be heard and decided:
Did the [**3] company violate the Articles of Agreement when Betty Sparks was laid off on or about September 18,
1981? [hereinafter “layoff issue”]
Has the company violated the Arti- cles of Agreement by not recalling Betty Sparks back to work after being laid off
The company agreed that the layoff issue was properly before the arbitrator. It objected to arbitrating the recall
issue, however, on the ground that the griev- ance, as processed through the steps of the grievance procedure, related
only to the issue of discriminatory layoff. It argued that consideration of the recall issue could allow the union to
lose on the actual grievance which was processed through the underlying grievance procedure but still prevail in the
arbitration. After raising its objection, the company requested a recess for “a proper opportunity to prepare” for the
recall issue if it was to be included.
The arbitrator denied the recess request. He also declared that because the parties were unable to stipulate as to the
issues to be heard and decided, he would “form the issue . . . through the process”.
On July 15, 1982, the arbitrator issued [**4] his decision and award in favor of the union. The arbitrator framed the
issues as posed by the union. He found that “the company did violate the Articles of Agreement with respect to the
Grievant.” Under the award, the company was required to make the Grievant whole “from the time of the companies
[sic] layoff”.
The company refused to comply with the arbitrator’s award. The union thereupon petitioned the district court
pursuant to section 301 of the Act for confirmation of the award, reinstatement and backpay for Sparks and
reasonable attorneys’ fees. The company opposed the petition on the grounds that the award was invalid be- cause of
the inclusion of the nonarbitrable recall issue and the Arbitrator’s award conferred a seniority system on the union
which it had not won through collective bargaining.
Following a hearing, the district court granted all re- lief requested by the union. Counsel for the union sub- mitted
an affidavit concerning the amount of attorneys’ fees incurred. The district court found that the company’s refusal to
abide by the arbitrator’s award was “without justification”. It awarded $2,406.25 to the union as a reasonable
attorneys’ fee. This appeal ensued.
[**5] DISCUSSION
The company appeals only from the district court’s award of attorneys’ fees. It argues that the union made an
insufficient showing of bad faith, vexatiousness, wanton or oppressive conduct to support the fee award. The union
asserts that a sufficient [*428] showing was made and the district court’s finding that the com- pany’s refusal to
abide by the arbitrator’s award was without justification is not clearly erroneous.
Under the American rule, [HN1] absent contractual or statutory authorization, a prevailing litigant ordinarily may
not collect attorneys’ fees. Miller-Wohl Co., Inc. v.
on or about September 18, 1981? inafter “recall issue”]
[here707 F.2d 425, *; 1983 U.S. App. LEXIS 27189, **; 113 L.R.R.M. 3010; 97 Lab. Cas. (CCH) P10,169
Page 3
Commissioner of Labor & Industry, 694 F.2d 203, 204 (9th Cir. 1982). However, a court may assess attorneys’ fees
“when the losing party has ‘acted in bad faith, vexa- tiously, wantonly, or for oppressive reasons’.” Alyeska Pipeline
Service Co. v. Wilderness Society, 421 U.S. 240, 258-259, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975).
[HN2] This court reviews a district court’s finding of “bad faith” under the clearly erroneous standard. Dog- herra v.
Safeway Stores, Inc., 679 F.2d 1293, 1298 (9th Cir.), cert. denied, 459 U.S. 990, 103 S. Ct. 346, 74 L. Ed. 2d 386
(1982). [**6] If bad faith is found, an award of attorneys’ fees is within the district court’s discretion. Id.
In this case the district court found that “[the com- pany] without justification refused to abide by the Award of
Arbitrator Clyde W. Yandell, dated July 15, 1982.” Based on this finding, the Court ordered the company to pay the
sum of $2,406.25 as attorneys’ fees to the union.
The company does not argue that the district court’s “without justification” finding does not equate with the criteria
set forth in Alyeska Pipeline, supra. The compa- ny’s sole argument is that the record does not support the finding
that its refusal to abide by the arbitrator’s award was without justification.
In any event, we agree with other circuits which have confronted this issue and conclude that [HN3] an unjustified
refusal to abide by an arbitrator’s award may equate an act taken in bad faith, vexatiously or for op- pressive reasons.
See, e.g., Int’l Ass’n of Machinists & Aerospace Workers Dist. 776 v. Texas Steel Co., 639 F.2d 279, 283-284 (5th
Cir. 1981); see also Lackawanna Leather Co. v. United Food and Commercial Workers, Dist. 271, 706 F .2d 228
(8th Cir . 1983) [**7] (en banc); cf. Chauffeurs Teamsters and Helpers, Local 765 v. Stroehmann Brothers Co., 625
F.2d 1092, 1094 (3d Cir. 1980). It is clear that bad faith supporting an award of attorneys’ fees may be found in
conduct that led to the lawsuit or in conduct occurring during the course of the action. Hall v. Cole, 412 U.S. 1, 15,
36 L. Ed. 2d 702, 93 S. Ct. 1943 (1973); Dogherra v. Safeway Stores, Inc., 679 F.2d at 1298. Moreover, “bad faith
may be demonstrated by showing that a defendant’s obstinancy in granting a plaintiff his clear legal rights
necessitated resort to legal action with all the expense and delay en- tailed in litigation.” Huecker v. Milburn, 538
F.2d 1241, 1245 n.9 (6th Cir. 1976). The award of attorneys’ fees in the latter context satisfies a dual purpose -deterrence and compensation. The threat of an award of attorneys’ fees tends to deter frivolous dilatory tactics. The
award also compensates a plaintiff “for the added expense of having to vindicate clearly established rights in court.”
Id.
These considerations are particularly apt in the con- text of labor arbitration. It is generally [**8] recog- nized that
[HN4] labor arbitration advances the goal of industrial stabilization. See United Steelworkers of America v. Warrior
& Gulf Navigation, 363 U.S. 574, 577-578, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960). En- gaging in frivolous dilatory
tactics not only denies the individual prompt redress, it threatens the goal of indus- trial peace. Therefore, the
deterrence aspect of an award of attorneys’ fees is particularly served where a party, without justification, refuses to
abide by an arbi- trator’s award. This policy has been succinctly stated by the Fifth Circuit Court of Appeals:
“We refuse to countenance frivolous and wasteful judicial challenges to con- scientious and fair arbitration
decisions.” . . . [HN5] The federal labor policy favor- ing voluntary arbitration dictates that when a refusal to abide
by an arbitration decision is without justification, and judi- cial enforcement is necessary, the court should award the
party seeking enforce- ment [*429] reasonable costs and at- torneys’ fees incurred in that effort. This sanction is
necessary lest federal labor policy be frustrated by judicial condona- tion of dilatory tactics that lead to waste- ful
and unnecessary [**9] litigation.
Int’l Ass’n of Machinists & Aerospace Workers Dist. 776 v. Texas Steel Co., 639 F.2d at 284 (citation omitted).
In this case, absent justifiable grounds for asserting invalidity, the arbitrator’s decision and award was final and
binding. The award set forth clear legal rights which the company refused to satisfy. This refusal gave rise to the
necessity to petition the district court for enforcement of that right with the attendant delay and expense.
The company maintains that it was justified in ig- noring the award because it considered the award to be invalid.
The applicable collective bargaining agreement provides that issues must first proceed through the grievance
procedure before they become arbitrable. The company argues that the recall issue was not processed through the
grievance procedure. It was raised for the first time at the arbitration hearing and therefore was not a proper subject
for arbitration. The company contends that because the arbitrator erred in considering the nonarbitrable recall issue
and because the arbitrator’s award was ambiguous — making it impossible to discern
707 F.2d 425, *; 1983 U.S. App. LEXIS 27189, **; 113 L.R.R.M. 3010; 97 Lab. Cas. (CCH) P10,169
Page 4
whether the award was premised on the nonarbitrable [**10] issue — it was not bound by the award.
The company’s argument does not withstand analy- sis. [HN6] An arbitrator’s award must be upheld as long as it
“draws its essence” from the agreement. United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S.
593, 596-97, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960). However, as we have observed, “arbi- tration is a matter of
contract and a party is bound by an award only if he agreed to submit the issue to arbitra- tion.” International
Brotherhood of Teamsters v. Wash- ington Employers, Inc., 557 F.2d 1345, 1347 (9th Cir. 1977). But “[a] mere
ambiguity in the opinion accompa- nying an award, which permits the inference that the arbitrator may have
exceeded his authority, is not a rea- son for refusing to enforce the award”. Enterprise Wheel, supra, 363 U.S. at
598. Moreover, federal labor policy favors arbitration. Therefore, in determining whether an arbitrator has exceeded
his authority, the agreement must be broadly construed with all doubts resolved in favor of the arbitrator’s authority.
Laborers Int’l Union Local 252 v. Town Concrete Pipe of Wash- ington, Inc., 680 F.2d 1284, 1285 [**11] (9th Cir.),
cert. denied, 459 U.S. 1039, 103 S. Ct. 453, 74 L. Ed. 2d 606 (1982).
In this case although the arbitrator’s opinion does not expressly analyze and reject the recall issue, the award
resolves any apparent ambiguity. The award states that:
The Grievant, Betty Sparks, shall be made whole for wages lost, vacation lost and holidays lost less the Grievant’s
earn- ings, paid holidays and paid vacations, earned from other employment, from the time of the companies [sic]
lay-off. (em- phasis added).
The award constitutes a clear indication that the arbitra- tor concluded that the company violated the collective
bargaining agreement with respect to the lay off. Thus, it was unnecessary for the arbitrator to consider the recall
1
1 Because we conclude that the arbitrator’s award was clearly based on the arbitrable layoff issue, it is unnecessary
for us to consider whether the recall issue was a proper subject for arbitration. Cf. Lackawanna Leather Co. v. United Food and Commercial Workers Dist. 271, 706 F.2d 228, supra.
[**12] There is no dispute as to the arbitrator’s authority to decide the layoff issue. Because the arbi- trator’s decision
and award was fully supported and clearly based upon the arbitrable layoff issue, the record supports the finding that
the company’s refusal to abide by the award was without justification. The district court’s finding is not clearly
erroneous. Therefore, the district court did not abuse its discretion in awarding attorneys’ fees to the union.
[*430] Finally, the union …
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