Court Overrules NLRB and Holds That Labor Arbitration Decisions Are Entitled to Deference

by Ralph F. Abbott, Jr.

For over 30 years, employers have been able to rely upon an arbitrator’s decision as final and binding under a doctrine known as the deferral doctrine.  That doctrine was threatened by a recent decision of the National Labor Relations Board, which overturned an arbitrator’s decision in a case involving Verizon.  Fortunately, the United States Court of Appeals for the D.C. Circuit has overturned that decision and ruled that, in most cases, the NLRB must defer to an arbitrator’s award and not second guess the arbitrator.

The facts in Verizon New England, Inc. v. NLRB, 2016 BL 197813, D.C. Cir., No. 15-1062 (6/21/16) are straightforward.  The collective bargaining agreement between the union and Verizon contained a waiver of the union’s right to picket:  “The union agrees that during the term of this agreement . . . it will not cause or permit its members to cause, nor will any member of the union take part in, any strike of or interference with any of the Company’s operations or picketing of any of the Company’s premises.”

In 2008, a few months before the labor agreement was set to expire, the union planned to picket three Verizon facilities.  Picket signs were prepared, but rather than engage in what is commonly understood as “picketing,” employees visually displayed the signs in the windshields of their cars while parked on Verizon property.  Verizon ordered the employees to remove the signs in their cars, and the employees complied, but the union filed an unfair labor practice with the NLRB.

The Board’s Regional Director declined to rule on the union’s ULP charge and instead directed the parties to arbitration under the labor agreement’s grievance/arbitration procedure, finding that the dispute arose “from the contract between the parties.”  The union submitted to arbitration the issue of whether Verizon’s order that employees remove the signs from their parked cars had violated the labor agreement.  The arbitration panel ruled for Verizon, relying upon the provision in the collective bargaining agreement that expressly waived the union members’ right to picket.  The panel decided that the visible display of the signs in the cars was a form of “picketing.”

Notwithstanding the arbitration panel’s award, the NLRB refused to defer to the panel’s decision and issued a complaint against Verizon, alleging that Verizon had violated Section 8 of the NLRB by ordering employees to remove the signs from the cars.  An Administrative Law Judge ruled that the arbitration award in Verizon’s favor should be deferred to because the decision was not repugnant to the NLRA.  That ruling was overturned by the NLRB on appeal. The NLRB refused to defer to the arbitration panel’s decision and ruled that the arbitration decision was indeed “repugnant” to the Act.  The NLRB found that the union’s waiver of “picketing” did not apply to the employees’ right to display pro-union signs in parked cars.

The D.C. Circuit Court rejected the Board’s refusal to defer to the arbitration panel’s decision.  The court held that the arbitration panel’s view was reasonable and “far from egregiously wrong especially where the cars were lined up in the employer’s parking lot and thus visible to passers-by in the same way as a picket line.”  The court concluded that the panel’s award was neither repugnant to the NLRA nor a “palpably wrong” interpretation of Verizon’s contract with the union and therefore the NLRB should have deferred to the arbitration award.

Lesson 

This decision reinforces the vitality of the deferral doctrine as announced by the NLRB over 30 years ago.  The standard that the Board has long used to review arbitration decisions remains highly deferential to the arbitrator.  In most instances this should result in an arbitration award being final and binding, which is the intent of the parties when negotiating their grievance/arbitration procedures.

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