Matter of District No 1-PCD Mar. Engineers' Beneficial Assn. (AFL-CIO) v Apex Mar. Ship Mgt. Co. LLC

[*1] Matter of District No 1-PCD Mar. Engineers' Beneficial Assn. (AFL-CIO) v Apex Mar. Ship Mgt. Co. LLC 2004 NY Slip Op 51946(U) [21 Misc 3d 1139(A)] Decided on January 12, 2004 Supreme Court, New York County Wetzel, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 12, 2004
Supreme Court, New York County

In the Matter of the Application of District No 1-PCD, Marine Engineers' Beneficial Association (AFL-CIO), and HARRY A. KIRMON, Petitioner For an Order pursuant to Article 75 of the CPLR modifying an Arbitration Award

against

Apex Marine Ship Management Company, LLC and MORMAC MARINE TRANSPORT, INC., Respondent.



113794/03



For the Petitioner:

TABAK & MELLUSI

71 Hudson Street

New York, New York 10013

By: Jacob Shisha, Esq

Of Counsel

For the Respondent Apex Marine Ship Management Company, LLC:

SHEINBAUM, BENNETT, GIULIANO,

McDONNELL & LEVY, LLP

225 West 34th Street, Suite 402

New York, New York 10122

By: Nicholas P. Giuliano, Esq.

Of Counsel

For the Respondent Mormac Marine Transport, Inc.:

PROSKAUER ROSE, LLP

1585 Broadway

New York, NY 10036

By: Aaron J. Schindel, Esq. Of Counsel

William A. Wetzel, J.

Petitioners bring this proceeding pursuant to CPLR §7511 seeking to modify an arbitration award on the grounds that the award is in disregard of a previous decision of the Appellate Division, 1st Department and contrary to the plain language of the parties' collective bargaining agreement. Respondent cross-moves for an Order vacating the award and remanding to the arbitrator for further proceedings.

This matter has a long and tortured history, not all of which requires reiteration for purposes of this motion. It now involves the petitioners' second request for judicial review of an arbitrator's decision.

Petitioner, District No 1-PCD, Marine Engineers' Beneficial Association (AFL-CIO) (the Union), is a "labor organization" within the meaning of Section 301 of the Federal Labor Management Relations Act of 1947 (LMRA), 29 U.S.C. § 185. The Union represents licensed marine engineers who work on board U.S.-flag ocean-going merchant vessels. Petitioner Harry A. Kirmon (Kirmon) is a member of the union who was terminated as First Assistant Engineer on the M/V Cape Taylor by respondentApex Marine Ship Management Company, L.L.C. (Apex), which operated thevessel under a contract with a federal agency.

A collective bargaining agreement (the Agreement) governs the parties' labor relationship. It contemplates the eventuality of a dispute concerning discharge. Section 2 of the Agreement outlines a grievance procedure that could end in arbitration. It provides that "[a]ll disputes relating to the interpretation or performance of [the] Agreement shall be determined in accordance with the provisions of this Section", which designates "the Arbitrator" as having final "jurisdiction of the case to render a decision." Section 4(a) of the Agreement specifically provides that if arbitration is sought to settle a discharge dispute, the arbitrator "shall have authority to reach only one of two decisions. He may either uphold the discharge if he finds that it was made for just or proper cause, or he may direct the Company to reinstate the licensed engineer with full base wages, nonwatch, subsistence and room allowance for the period he was off the vessel."

Apex terminated Kirmon on May 10, 2000. Kirmon then filed a grievance alleging that the dismissal was without just cause. Apex claimed that Kirmon and the Union had failed to follow the proper grievance procedure. The dispute made its way to arbitration for the first time on December 19, 2000.

The parties submitted three questions to the first arbitrator: 1) Should the grievance be dismissed on procedural grounds? 2) "If not, did the Employer have just and sufficient cause to terminate the employment of Harry Kirmon?" 3) "If not, to what relief is Mr. Kirmon entitled under the collective bargaining agreement?" Finding for Apex on the first question, the arbitrator dismissed the grievance on March 15, 2001.

On appeal, however, the Appellate Division vacated the first arbitrator's decision. See Dist. No. 1-PCD v Apex Mar. Ship Mgt. Company, LLC, 296 AD2d 32, 745 NYS 522 [1st Dept 2002]. Noting the arbitrator's own admission the he overreached, the Court ruled that he exceeded his [*2]authority by ruling on challenges to the grievance procedure itself. Id. at 38, 745 NYS at 527 n 3 ("Paradoxically, the Arbitrator acknowledged his lack of authority to render a decision on the basis [of a procedural issue] and then proceeded to decide the grievance on that ground."). Citing section 4(a) of the Agreement, the Court found that the Agreement expressly limited the arbitrator's power to deciding the merits of the substantive discharge grievance. Id. at 38, 745 NYS at 527. With this first arbitration decision nullified, the parties pursued the dispute through the entire grievance process again.

When the dispute came before the second Arbitrator, Ms. Opperwall, the parties resubmitted the last two of the questions they had presented in the first arbitration: 1) "Was there just and proper cause for the discharge of Harry Kirmon?" and 2) "If not, to what relief is Mr. Kirmon entitled under the collective bargaining agreement?" By the time the matter made its way to Arbitrator Opperwall, however, the parties' relationships had changed. Apex had lost the management of the Cape Taylor on October 31, 2000 to respondent Mormac Marine Transport, Inc., (Mormac) (which has held the federal contract since). At no time have Apex and Mormac entered into any express, written contract with each other.

In addition, Kirmon found four new jobs within a few months after his discharge. He also had settled a personal injury suit against his last employer for an undisclosed sum. In that proceeding he claimed that he has not been physically able to work since May 6, 2001, less than a year after Apex fired him.

Faced with these facts, Arbitrator Opperwall reasoned that although Apex dismissed Kirmon without cause, Mormac could not be forced to reinstate him not having employed him in the first instance. She concluded that Apex is responsible for back pay from the period from May 10, 2000 through May 6, 2001 with a subtraction for any other earnings of Kirmon during that period. It is this award that is the subject of this proceeding.

Neither party contests Arbitrator Opperwall's finding that Kirmon was dismissed without just cause. Rather, both parties seek judicial review of her decision regarding the appropriate remedy. This court, however, will not disturb the arbitrator's decision.

Federal Law Applies to this Case

Although the Agreement provides that any action to modify or vacate an arbitration award shall be instituted in New York State court, federal law applies. Apex Mar. Ship Mgt. Co., 296 AD2d at 33, 745 NYS2d at 524 ("[D]ispute[s] involv[ing] a contract between a labor organization and an employer within the meaning of Section 301 of the LMRA [are governed by] Federal common law developed pursuant to the LMRA."), citing Textile Workers Union of America v. Lincoln Mills,353 US 448, 456, 77 S Ct 912, 1 L Ed 2d 972 (1957). The federal courts have outlined a two-prong test to guide judicial review of arbitration awards. This court must determine "first whether the arbitrator acted within the scope of [her] authority and second whether the award draws its essence from the Agreement." Id. at 25 (citing Misco, Inc., 484 US 29, 108 S Ct 364; United Steelworkers of Am. v Enterprise Wheel and Car Corp., 363 US 593, 596, 80 S Ct 1358, 1360, 4 L Ed 2d 1424 [1960]). [*3]

Arbitrator Opperwall Acted Within the Scope of Her Authority

When She Decided the Issue of Remedy

Arbitrator Opperwall's award enjoys prima facie immunity from judicial review " as long as [she] . . . even arguably constru[ed] or apply[ed] the contract and act[ed] within the scope of [her] authority.' " Eastern Associated Coal Corp. v United Mine Workers of Am., Dist. 17, 531 US 57, 62, 121 S Ct 462, 466 [2000] (quoting Misco, Inc., 484 US at 38, 108 S Ct at 371). "[T]he scope of [an arbitrator's] authority depends on the intention of the parties to an arbitration, and is determined by the agreement or submission.' " Synergy Gas Co. v Sasso, 853 F2d 59, 63-64 [2d Cir 1988] (quoting Ottley, 819 F2d at 376), cert denied, 488 US 994, 109 S Ct 559, 102 L Ed 2d 585 [1988](emphasis added). In the case at bar, both the parties' Agreement and their submission show that the union and employer intended to give Ms. Opperwall the authority to interpret their Agreement and fashion an appropriate remedy.

Section 2 of the Agreement shows that "[both employer and union] bargained for' [arbitrator Opperwall's] construction' of their agreement." Id. at 62, 121 S Ct at 466. (quoting Enterprise Wheel and Car Corp., 363 US at 599, 80 S Ct at 1362).Since the parties, by the language of their Agreement, explicitly authorized an arbitrator to interpret it, the first prong of the federal test is arguably met. Petitioners, however, make much of the language in Section 4(a) of the Agreement, which evinces an intent to limit an arbitrator's "authority" regarding remedy. They argue that Ms. Opperwall flouted the literal, explicit limitation Section 4(a) places on an arbitrator's authority to formulate a remedy. This court agrees that an "arbitrator may not ignore the plain language of the contract." Misco, Inc., 484 US at 38, 108 S Ct at 371. The record, however, shows that Ms. Opperwall did not ignore the language in 4(a). To the contrary, she devoted about half of her eighteen-page decision to Section 4(a)'s implications on her choice of remedy. Once the"parties hav[e] authorized the arbitrator to give meaning to the language of the agreement, a court should not reject an award on the ground that the arbitrator misread the contract." Id. Arbitrator Opperwall used the authority the parties vested in her by Section 2 of their Agreement to determine that the parties did not intend the section 4(a) limitation to apply to the situation at hand. Even if this court were " convinced [Arbitrator Opperwall] committed serious error,' " it could not " overturn' " her decision, since she " constru[ed] . . . the contract . . . within the scope of [her] authority." Eastern Associated Coal Corp. v United Mine Workers of Am., Dist. 17, 531 US 57, 62, 121 S Ct 462, 466 [2000] (quoting Misco, Inc., 484 US at 38, 108 S Ct at 371).

Even if language of the Agreement might have "serve[d] . . . to circumscribe [Arbitrator Opperwall's] authority," the subsequent "submission" of the remedy question to her manifests a shared intent to the contrary. Ottley v Schwartzberg, 819 F2d 373, 376 [2d Cir 1987]. The parties gave Arbitrator Opperwall the authority to the question: "[T]o what relief is Mr. Kirmon entitled under the collective bargaining agreement [if it is found that he was dismissed without cause]?" The submission did not state that the arbitrator had to craft a remedy solely from the literal language of the Agreement, i.e., reinstatement, as Petitioners would have this court read it. See Local 1199, 956 F2d at 25 (upholding arbitrator's authority to go beyond literal language of a contractual clause in light of the way the parties submitted the arbitration question). To the contrary, had literal application of the contract remedy been expected, petitioners' submission of the second question would have been completely unnecessary. Rather, by submitting this question for arbitration,"[b]oth employer and union" have objectively manifested an intent to [*4]"grant[] to [Ms. Opperwall] the authority to interpret the meaning of their contract's language" regarding remedy. Eastern Associated Coal Corp., at 61, 121 S Ct at 466.

Arbitrator Opperwall's Award Drew Its Essence

from the Arbitration Agreement

Of course, an arbitrator's award must "draw its essence" from the Agreement and cannot simply reflect the arbitrator's "own brand of industrial justice." Misco, Inc., 484 US at 36, 108 S Ct at 370 (quoting Enterprise Wheel and Car Corp., 363 US at 597, 80 S Ct at 1361). As to whether Arbitrator Opperwall's award "draws its essence" from the Agreement, this court readily admits that "determining the intent of the parties is the essential inquiry." Local 1199, 956 F2d at 25 (quoting Loveless v Eastern Airlines, Inc., 681 F2d 1272, 1279 (11th Cir 1982). However, "[i]t is established that an arbitrator may look for guidance from many sources.' " Id. (quoting Enterprise Wheel and Car Corp., 363 US at 597, 80 S Ct at 1361). When an arbitrator is commissioned to interpret and apply the collective bargaining agreement, [she] is to bring [her] informed judgment to bear in order to reach a fair solution of a problem. This is especially true when it comes to formulating remedies. There is a need for flexibility in meeting a wide variety of situations. The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency.

Enterprise Wheel and Car Corp., 363 US at 597, 80 S Ct at 1361. Such is the case here. Arbitrator Opperwall very thoroughly considered the issue of remedy in the context of this unusual factual situation. She used her authority to interpret the Agreement generally, determined that the parties "never . . . thought of what specific remedy should be awarded to meet [this] particular contingency" and logically concluded that reinstatement is neither appropriate nor necessary. Id.

Even if this court were not bound by federal common law, however, it would still be loath to reject Arbitrator Opperwall's well-reasoned decision. What petitioners would have this Court do is reject the sound reasoning of the arbitrator and apply a blind principle that there must be reinstatement even though there is no party in a position or with any obligation to reinstate the petitioner. This court cannot and will not grant petitioners' requests. The same goes for respondent Apex's argument that arbitrator Opperwall exceeded her authority by including benefits when the contractual provision limits damages to "full base wages." While the arbitrator acknowledged that the amount of mitigation would have to be determined, she invited the parties to resolve that on their own. This does not make the award other than final and indeed, as the arbitrator suggested, the parties can re-open the hearings if they are unable to mutually agree on that amount.

Petitioner also argues that the Appellate Division stands for the proposition that Mormac is required to reinstate Kirmon should an arbitrator find that he was dismissed for cause. To bolster this argument, petitioner points out that the Appellate Division appeared to lump together Apex and Mormac as one company in its decision. This argument is ill founded because the issue of reinstatement was not before the Appellate Division and was not addressed by the Appellate Division. See Apex Mar. Ship Mgt. Co., LLC, 296 AD2d at 38, 745 NYS2d at 527. Moreover, mere reference to Apex and Mormac as "the company" does not create some common contractual obligation for which there would have been no basis. This Court rejects completely the argument based on the decision of the Appellate Division. [*5]

For the reasons stated herein, the arbitration award is confirmed. This constitutes the

Decision and Judgment of this Court.

Dated: New York, NY

January 12, 2004

______________________________

J.S.C.