Opinion
CA. No. 19743-NC
Date Submitted: January 2, 2003
Date Decided: March 6, 2003
TIMOTHY J. MEADES, SR., Wilmington, Delaware; Pro Se, Plaintiff.
Barry M. Willoughby, William W. Bowser and Adria B. Martinelli, Esquires of YOUNG CONAWAY STARGATT TAYLOR, LLP, Wilmington, Delaware; Attorneys for Defendant.
OPINION
Pending is the defendant's motion for judgment on the pleadings. The plaintiff; who appears pro se, was an employee of the defendant, the Wilmington Housing Authority (the "Authority"). The Authority's management discovered that the plaintiff had allowed persons who were not Authority employees to remain unattended on a project site. Those persons were later observed stealing valuable construction materials, and removing them from the site in a manner that potentially could cause environmental contamination. After an investigation, the plaintiff was fired. His union then filed a grievance and later took the plaintiff's case to arbitration, The arbitrator found that the Authority had just and sufficient cause to fire the plaintiff; who then filed this lawsuit seeking to vacate the award and to be reinstated to his former job. For the reasons discussed below, the defendant's motion for judgment on the pleadings will be granted.
I. FACTS
The facts are derived from the allegations of the Complaint and the arbitration award, AFSCME Local Union 563 v. Wilmington Housing Auth., Am. Arbitration Ass'n Case No. 14 390 00836 01 (2002) (Tener, Arb.) (hereinafter "Arb.'s Op."), attached as Exhibit 4 thereto.
The plaintiff; Timothy Meades ("Meades"), was employed by the Authority as a District Superintendent. On May 3, 2001, the Authority fired Meades as a result of the incidents next described.
On April 26, 2001, John Triplett, a cleaning subcontractor who was doing work at an Authority site, approached Meades. Triplett asked if he could remove two doors and a vanity from one of the abandoned housing units located at the Eastlake Development in northeast Wilmington ("Hope VI"). Because Meades did not know Triplett, Meades asked his superior, David Rush, if Triplett could take the three fixtures. Rush replied that Triplett could do that. Later that day, Meades took Triplett and another person to the Hope VI site, but because dusk was approaching, they decided to return the next morning to remove the three fixtures.
The following morning at 8:30 a.m., Meades escorted Triplett and two of Triplett's friends to Hope VI. Meades opened the gate to the site, and allowed them inside. Shortly after they arrived, Meades departed the site, leaving the three men unattended. At the arbitration hearing, Meades claimed that he left because he was responding to a call about a maintenance emergency at another housing unit, and that emergency kept him busy from between 12:00 p.m. and 2:00 p.m. until about 4:15 p.m. The arbitrator found that Meades's testimony could not be reconciled with the other evidence, but even if Meades's testimony was accepted in its entirety, his conduct nonetheless merited his termination.
That same day (April 27, 2001), at about 12:30 p.m., Fred Purnell, the Authority's Executive Director, saw eight or nine men at Hope VI stripping aluminum and other materials from the housing units. Those men, who had already removed a large amount of material from 35 units, told Purnell that they worked for Triplett. Purnell was concerned that that unauthorized demolition work might cause lead contamination that could injure the young children who attended a nearby charter school and day care center. Purnell radioed Meades to ask if he was aware of the demolition work. Meades responded that Rush had authorized it. Rush later claimed (and Meades corroborated), however, that all that Rush had authorized was the removal of three fixtures. As a result, Rush and Karen Spellman, the Authority's Director of Housing Operations, recommended that Meades be fired.
The foregoing incident resulted in about $3,330 of out-of-pocket costs to the Authority. The aluminum that had been stripped from the site was worth approximately $2,000, and the lead hazard soil sampling cost $1,330. Although the Authority did not prove that the incident caused any on-site lead contamination, the Authority took the threat seriously enough to have the lead hazard tests performed.
The Authority had implemented a remediation plan. Remediation is the process or act of reducing. preventing, or minimizing the release of hazardous substances into the environment so they do not endanger public health 42 U.S.C.A. § 9601 (24) (West 2002).
Shortly after Meades was fired, his union, Local 562 of The American Federation Of State, County And Municipal Employees (the "Union") filed a grievance under Article VI of the Collective Bargaining Agreement (the "CBA") against the Authority on Meades's behalf. Meades exhausted the grievance procedure without being rehired. Thereafter, the Union took Meades's case to arbitration under the CBA.
The Authority and the Union were the only parties to the CBA. Individual employees, including Meades, were not parties to that agreement.
CBA art. VI, §§ 6.5-6.7.
The arbitration hearing was conducted, between April 9, 2002 and May 13, 2002, under the auspices of the American Arbitration Association ("AAA"). Both parties were represented by counsel and presented evidence to the arbitrator. The arbitrator determined that the Authority had just and sufficient cause to terminate Meades, having found Meades's conduct to be "serious" and "irresponsible." That conduct, the arbitrator found, violated (i) Paragraph L of the Employee's Code of Conduct and Responsibility by reason of Meades neglecting his duties and acting in a grossly incompetent manner, and (ii) Work Rule #13, by reason of Meades's poor job performance and carelessness.
Meades brought this action pro se to vacate the arbitration award, the Union having elected not to institute further proceedings on his behalf.
II. THE PROCEDURAL STANDARD AND THE PARTIES' CONTENTIONS
Nearly all of Meades's contentions are based on the Delaware Uniform Arbitration Act, 10 Del. C. § 5714. Section 5725, however, provides that the Act does not apply to arbitration agreements in labor contracts between public or private employers and employees where (as here) a labor union or collective bargaining agent represents the employees. Meades's claims are, therefore, considered under the Delaware case law that permits a limited review of arbitration awards on the grounds articulated in New Castle County v. Fraternal Order of Police, 1996 Del. Ch. LEXIS 163, at *1 (Del.Ch. Dec. 17, 1996), and the cases cited therein.
The Authority has moved for judgment on the pleadings under Court of Chancery Rule 12(c). That Rule authorizes the Court to grant a motion for judgment on the pleadings where it appears from the pleadings that there are no material issues of fact and the movant is entitled to judgment as a matter of law. The Court takes the well-pled facts in the complaint as true, and views those facts and any inferences drawn therefrom in the light most favorable to the non-moving party (here, Meades).
In a Rule 12(c) motion, the plaintiff must allege facts sufficient to plead a cause of action. Here, Meades argues certain facts in his brief, but fails to plead them in his complaint. Because Meades is a pro se litigant, I will consider his arguments as if the underlying facts were properly pled. Even so, his claims fail.
Meades claims that the arbitrator's award must be vacated because it has no factual support and because the arbitrator changed, deleted, and added testimony to justify his result. The award was arbitrary and manifestly disregarded the law, Meades argues, because the arbitrator ignored important evidence and grounded his award on a wholly fabricated, nonexistent issue. Meades further contends that the arbitrator exceeded his powers by granting an award based on suspicion, thereby effectively voiding a contract between the Authority and a subcontractor, Weiner Associates ("WA"). Finally, Meades claims that the award (i) did not derive "its essence" from the CBA; (ii) disregarded state law, federal law and public policy; and (iii) that the Authority is collaterally estopped from claiming that there was just cause to fire him. The Authority responds that Meades lacks standing to challenge the award because he was not a party to the arbitration. In the alternative, the Authority contends that Meades has not established any basis to disturb the arbitration award, and that in reality what Meades seeks here is a de novo evidentiary hearing which this Court cannot and should not grant.
Compl. ¶ 1.
Id. at ¶¶ 1, 9.
Id. at ¶ 3. Meades argues that the Authority "created" the lead contamination issue in order to justify firing him.
Id. at ¶ 7.
This argument is convoluted and confused. Meades suggests that the arbitrator exceeded his authority, because the Authority had contracted with WA to do demolition work on the Hope VI and built a fence around the property. Even if true, those facts do not have anything to do with this case. Meades also suggests that only WA, not the Authority, had standing to object to Meades' conduct because the Authority had transferred all responsibility for the demolition to WA. Meades claims that because the arbitrator allowed the Authority to raise issues that should have been raised by WA, the arbitrator effectively voided the contract between the Authority and WA, thereby exceeding his authority.
The contentions generate two broad issues. The first is whether Meades has standing to challenge the award. The second is whether (assuming he has standing) Meades has established any basis on which the award can be vacated. The answer to both questions is no.
III. ANALYSIS
A. Does Meades Have Standing To Challenge The Arbitration Award?
The threshold issue on this motion is whether Meades has standing to challenge the arbitration award, even though he is not a signatory to the CBA and did not participate in the arbitration. Although the Authority contends that Meades lacks standing to appeal the arbitration award, Meades does not even acknowledge the standing issue, let alone respond in his brief to the Authority's arguments.
While other courts have addressed this question, the issue appears to be one of first impression in Delaware. Courts that have considered whether an aggrieved employee has standing to challenge an arbitration award have held that the challenger must be either a "party" to the collective bargaining agreement or the arbitration.
Stahulak v. City of Chicago, 703 N.E.2d 44, 46 (Ill. 1998) (holding that because the plaintiff was not a party to the collective bargaining agreement, he lacked standing to bring a lawsuit to vacate an arbitration award); Miller v. Rd. of Regents of Higher Educ., 541 N.E.2d 989, 992 (Mass. 1999) (holding that under a state statute regulating collective bargaining agreements, a unionized employee did not have standing to seek to set aside an arbitration award); Farmer v. H.O. Penn Mach., 375 N.Y.S.2d 17, 18 (N.Y.App.Div. 1975) (holding that the petitioner could not complain of the arbitration award because he was not a party to the collective bargaining agreement).
Kozura v. Tulpehocken Area Sch. Dist. Tulpehocken Educ. Ass'n, 791 A.2d 1169, 1174 n. 7 (Pa. 2002) (stating that where a collective bargaining agreement provides that a union and not an individual employee can request arbitration, the employer and the union are the only parties to the arbitration and only they can seek relief from an adverse award); accord Taylor v. State Bd. of Mediation Arbitration, 736 A.2d 175, 179 (Conn.App.Ct. 1999) (holding that unless the collective bargaining agreement establishes a personal right to seek arbitration, an employee is not a party to the arbitration and lacks standing to seek confirmation of the award); Hous. Auth. of the City of Hartford v. Local 1161, Council 4, AFSCME, 468 A.2d 1251, 1252 (Conn.App. Ct. 1984) (holding that unless a collective bargaining agreement provides for a personal right to seek arbitration, the employee is not a party to the arbitration and lacks standing to apply to confirm the award); Wilson v. Bd. of Educ. of the City of New York, 689 N.Y.S.2d 222, 222 (N.Y.App.Div. 1999) (holding that the petitioner could not seek to vacate the arbitration award because he was party neither to the arbitration nor to the collective bargaining agreement); Cornell v. Caren, 428 N.Y.S.2d 764, 766 (N.Y.App.Div. 1980) (holding that the petitioner lacked standing to seek vacation of the award because he was not a party to the arbitration).
Here, the only two "parties" to the CBA and to the arbitration were the Authority and the Union. The CBA is titled, "Contract Between Wilmington Housing Authority And Local 563 of The American Federation Of State County And Municipal Employees." The only signatories to that contract were the Authority and the Union. The caption and the first paragraph of the arbitrator's opinion disclose that the only the Authority and the Union were parties to the arbitration. The Union represented Meades, who is identified in the award as the "grievant."
Arb.'s Op. at 1.
Id. at 1.
Because Meades was not a party to the CBA or to the arbitration, he has no standing to challenge the arbitration award, unless an independent basis for conferring standing can be found. While Meades does not articulate his standing theory in any legally precise way in his submissions to the Court, essentially his position is that he is entitled to challenge the award as a third-party beneficiary under the CBA.
Under normal circumstances, a stranger to a contract acquires no rights thereunder unless the parties to the agreement intend to confer a benefit upon the third party. Delaware law permits contracts to be made for the benefit of a third party and gives the third party the right to enforce promises that were made for the third party's benefit. For a third-party beneficiary to have enforceable rights under a contract, however, a material purpose of the contract must be to convey a benefit, and the parties must intend to benefit the third party.
Guardian Constr. Co. v. Tetra Tech Richardson, 583 A.2d 1378, 1386 (Del.Super. 1990).
Insituform of N. Am., Inc. v. Chandler, 534 A.2d 257, 268 (Del. Ch. 1987).
In this case, no provision of the CBA evidences that the Authority and the Union intended to permit unionized employees to assert grievances individually, or to arbitrate or challenge the results of such proceedings on their own behalf. In Falsetti v. Local Union No. 2026, United Mine Workers, the Pennsylvania Supreme Court denied a unionized employee's right to enforce, individually, seniority benefits of a collective bargaining agreement between the employee's union and employer. The court held that although the agreement's seniority provisions were intended to benefit unionized employees (and not the union), the contract terms required the union (but not the unionized employees) to assert the aggrieved employees' rights. The court reasoned that the union and the employer intended to create a simple, inexpensive and expert way to process grievances to avoid litigation, which involved the union acting as a trustee empowered to assert the rights of the unionized employees.
161 A.2d 882 (Pa. 1960).
Id. at 893-94.
Id. at 894.
The Falsetti court's reasoning is equally applicable here, because to allow unionized employees to enforce individually their rights under the CBA's grievance and arbitration procedures, would thwart the contracting parties' intent as well as the purposes of collective bargaining. Employees such as Meades are not left without recourse, however. As the Falsetti court observed, the union, as the sole representative of the employees, had a fiduciary obligation to its beneficiaries, and in that capacity owed a "heavy duty of fair representation" to all of the employee-beneficiaries that it represented.
Article IX, § 9.1 provides that "the Authority recognizes and agrees to deal with the accredited stewards and Union President or his representatives in all matters relating to grievances. . . ." Article IX, § 9.3 A. states that the Authority "recognizes and shall deal with the accredited Union Stewards . . . and the Union President [in] [a]ctions on behalf of employees who feel provisions of this [CBA] have been violated."
Falsetti, 161 A.2d at 894.
Id. at 895.
Id.; see also Kozura, 791 A.2d at 1173 (observing that the union owes its members a duty of fair representation); accord Stahulak, 703 N.E.2d at 48 (holding that individual unionized employees lack standing to seek judicial review of an arbitration procedure unless they prove that the union breached its duty of fair representation); Farmer, 375 N.Y.S.2d at 18 (holding that the petitioner, who was not party to the collective bargaining agreement could not sue the employer, but might have recourse against the union if the union unfairly discriminated against him).
Thus, Meades might have recourse against the Union if he could establish that the Union was obligated to challenge the arbitration award on his behalf. Meades appears to acknowledge, however, that the Union adequately represented his interests. Be that as it may, Meades lacks standing to challenge the CBA either as a third party beneficiary or on any other basis.
Meades Ans. B.R. at 4.
B. Even if Meades Has Standing, Has He Established Grounds To Vacate The Arbitration Award?
1. The Legal Standard for Reviewing Labor Arbitration Awards
The role of courts in post-arbitration judicial review is limited. Delaware has long had a policy favoring arbitration, and its courts have applied a deferential legal standard when reviewing labor arbitration awards. This Court will not disturb a labor arbitration award unless (a) the integrity of the arbitration has been compromised by, for example, fraud, procedural irregularity, or a specific command of law; (b) the award does not claim its essence from the CBA; or (c) the award violates a clearly defined public policy.
Del. State Coll. v. Del. State Coll. Chapter of the Am. Assoc. of Univ. Professors, 1987 Del. Ch. LEXIS 536, at *5-*6 (Del.Ch. Nov. 24, 1987) (quoting Crumlish v. Wilmington Western R.R. Co., 5 Del. Ch. 270 (Del.Ch. 1879)).
Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908, 911 (Del. 1989); Fraternal Order of Police at * 1.
Fraternal Order of Police at *1; Stroehmann Bakeries, Inc. v. Local 776, Intel Bhd. of Teamsters, 969 F.2d 1436, 1441-43 (3d. Cir. 1992).
Where a grievance is arbitrated under a collective bargaining agreement, courts will not review the merits of the arbitration award other than on the grounds listed above. To do otherwise would give courts the final say on the merits of arbitration awards and undercut the benefits of labor arbitration — namely, speed, flexibility, informality and finality.
Exxon Corp. v. Local Union 877, Int'l Bhd. of Teamsters, 980 F. Supp. 752, 760 (D.N.J. 1997).
Id.
The issue here is whether Meades (assuming that he has standing) has pled a cognizable legal basis to invalidate the arbitration award under one or more of the grounds enumerated above. I conclude that he has not.
a. Was The Integrity of The Arbitration Compromised?
A labor arbitration award that is tainted by "fraud, procedural irregularity, or a specific command of law" is subject to being challenged and vacated. In an effort to establish that the award violates a specific command of law, Meades claims that the award violates both Delaware's Uniform Arbitration Act and a CBA provision mandating that an arbitration award cannot violate HUD regulations. These claims must be rejected because the Uniform Arbitration Act does not apply and the contention that the award violated HUD regulations is wholly conclusory.
Fraternal Order of Police at *1.
CBA art. VI, § 6.8.
See supra note 5.
Meades next claims that the award has no factual support and that the arbitrator manufactured such support by changing, deleting, and adding testimony adduced at the hearing. Although that claims has the earmarks of a request for a de novo evidentiary review, the Court will treat the argument as a claim that the award was tainted by fraud or procedural irregularity.
Meades points to several instances where, in his view, the arbitrator reached inappropriate factual conclusions by deleting portions of Meades's testimony. By way of example, the arbitrator noted in his opinion that Meades had testified that it takes approximately fifteen minutes to remove a door. Meades says, however, that he also testified that a door removal could also require many hours if Triplett and his men first had to check twenty or thirty houses in order to find a door.
Arb.'s Op. at 3 n. 3.
Even if the arbitrator did not accurately recapitulate Meades's testimony in its entirety, the "deleted" portion of that testimony was immaterial to the arbitrator's conclusion that Meades's conduct constituted neglect of duty and gross incompetence. The arbitrator found that Meades had offered no rational explanation for why he left Triplett and his men unsupervised on the property, when the appropriate course of action would have been for him either (1) to remain at Hope VI for the few extra minutes needed to remove the fixture or (2) tell the men to leave and return another day. According to the arbitrator, Meades's actions created reasonable suspicions that he had colluded to steal the construction materials.
Id. at 17.
Id. at 18.
Meades also claims that the arbitrator "added" testimony to support the arbitrator's factual findings that: (i) Triplett asked if he could take some items (including heaters) from Hope VI; (ii) Meades escorted Triplett to Hope VI; (iii) Meades admitted he was busy with a maintenance "emergency" and forgot to return to Hope VI; (iv) WA had likely considered the value of the aluminum on Hope VI when it contracted to do the demolition, and (v) the Authority was concerned about environmental contamination. But, Meades essentially concedes the first three of these findings in his brief. The fourth finding — that WA valued the aluminum— has nothing to do with the undisputed fact that Meades inappropriately left three strangers alone on the site. Meades's claim that the Authority fabricated out of whole cloth the environmental contamination issue, even if time, does not impugn the integrity of the arbitrator, and the remaining contested findings have no bearing on the arbitrator's reasons for finding just cause for Meades's termination.
In reality, Meades appears to be arguing that the arbitrator improperly paraphrased or summarized certain testimony and came to the wrong conclusions. To that extent, Meades essentially disagrees with the arbitrator's fact findings and seeks a de novo evidentiary review — relief that this Court cannot grant. The purpose of arbitration is to resolve controversies cheaply and promptly without litigation. That purpose would be defeated if courts were allowed to become appellate tribunals empowered to review the merits of arbitration awards on the basis of legal or factual error.
Jay E. Grenig, Alternate Dispute Resolution With Forms § 6.52 (2d ed. 1997).
The arbitration in this case was conducted by the American Arbitration Association, whose arbitrators are empowered to receive evidence on the claims and to judge the evidence's relevance and materiality without being strictly bound by the legal rules of evidence. The arbitrator in this case had the authority to find the facts, and absent corruption in the process, this Court cannot re-decide them. The pleadings in this case plead no cognizable claim of corruption.
b. Did The Arbitration Award Claim Its Essence From The CBA?
A second ground for vacating a labor arbitration award is that the award does not "claim its essence" from the CBA, or, stated differently, that the award bears no reasonable relationship to the underlying contract from which it is derived. Thus, to vacate the arbitration award in this case, this Court must find that it bears no reasonable relationship to the CBA. If there is any rational construction of the CBA that would support the arbitrator's award, the award must be upheld.
Fraternal Order of Police at *8.
Id.
Id. at *8-*9.
Meades contends that the arbitrator based his decision on the letter of termination, which (he claims) contained irrelevant and false information. By doing that, Meades urges, the arbitrator violated Section 7.1 of the CBA, which requires that employees should not be discharged except for just or sufficient cause.
This argument does not state a claim that the award has no reasonable relationship to the CBA. Rather, it is basically a disagreement with the evidence and the arbitrator's factual findings based thereon. Apart from his claim that the arbitrator should not have found just or sufficient cause for his dismissal, Meades cannot point to any provision of the CBA that the arbitrator disregarded, Therefore, this basis for challenging the award must also fail.
c. Did The Award Violate A Clearly Defined Public Policy?
Finally, Meades claims the award violated public policy because during the grievance process the Authority failed to provide the Union, in advance, with the evidence upon which it would rely to support Meades's termination, as required by Section H of the Authority's Personnel Policy. That conduct (Meades argues) denied him the opportunity to respond to such evidence before he was fired — a violation that the arbitrator ignored. This argument fails, because at most it is a claim that the Authority violated an internal personnel policy, as distinguished from a public policy such as a prohibition against race or gender discrimination.
See generally Fraternal Order of Police; Stroehmann. There is no allegation from which one might conclude that this constituted a fatal procedural irregularity in the arbitration. At the arbitration hearing, the Authority presented evidence supporting Meades' termination, and Meades had sufficient opportunity to rebut it. The arbitrator found, based on all the evidence, that the Authority was justified in terminating Meades.
Meades also argues that the award violated public policy, because the arbitrator found there was just cause for his dismissal, even though the Unemployment Insurance Appeals Board had previously found that Meades was entitled to unemployment benefits because the Authority had wrongfully dismissed him. This "collateral estoppel" claim does not establish that the award violated "public policy," because the showing of "just cause" required to terminate an employee is different from the showing of just cause required to award unemployment benefits. As such, the referee's decision that Meades did not engage in "willful misconduct" that would justify a denial of employment benefits, is not dispositive of whether the Authority had "just cause" to discharge him. For this reason, no cognizable violation of public policy is stated here.
Two months after he was fired, an Appeals Referee from the Division of Unemployment Insurance Appeals found that Meades had been fired without just cause and, therefore, was entitled to unemployment benefits.
Lebanon County Bd. of Assistance v. Pennsylvania, 332 A.2d 888, 889 (Pa.Commw. 1975).
Gaines v. Wilmington Trust Co., 1991 Del Super. LEXIS 207, at *1 n. 1 (Del.Super. June 3, 1991).
IV. CONCLUSION
For the foregoing reasons, the defendant's motion for judgment on the pleadings is granted. IT IS SO ORDERED.