A divided 3rd U.S. Circuit Court of Appeals has overturned an arbitrator's decision regarding retirement benefits for employees of the Pennsylvania Power Co.
The court found that the arbitrator's award did not "draw its essence from the collective bargaining agreement," according to the Legal Intelligencer, a law journal.
A dissenting judge complained that the majority in Pennsylvania Power Co. v. Local Union 272 was ignoring a recent decision from the U.S. Supreme Court that severely restricted the scope of court review when arbitration awards are appealed.
The Legal Intelligencer reports that the dispute began when Local 272 of the International Brotherhood of Electrical Workers, AFL-CIO, filed a grievance on behalf of workers who were denied voluntary retirement benefits. The claimants worked at the Bruce Mansfield plant in Shippingport, Penn.
Pennsylvania Power and the union had agreed under a 1996 contract to "actively support and participate in a joint effort to improve the competitive position of the power plant."
Due to impending deregulation, the cooperative agreement provided for a "period of transformation" during which the company said it would use a voluntary retirement program if it needed to reduce the workforce.
The company had the sole power under the agreement to decide whether workforce reductions were necessary and whether the union had cooperated in attaining "production efficiency."
Pennsylvania Power struck similar agreements with the unions at its other plants in Pennsylvania and Ohio.
In 1998, the company told the Bruce Mansfield plant workers that it was not planning to reduce the workforce but that, even if it did, the workers would not be entitled to the voluntary retirement benefits because the union had failed to cooperate in the efficiency improvement efforts.
But workers at other plants were offered the benefits because the company determined that those unions had cooperated. And supervisory workers at Bruce Mansfield were also deemed entitled to the voluntary retirement package.
An arbitrator found that while the Bruce Mansfield union had failed to cooperate, the company had nonetheless violated the collective bargaining agreement by paying the voluntary retirement benefits to supervisory workers while denying them to union members.
Such disparate treatment, the arbitrator said, amounted to a violation of the anti-discrimination clause of the collective bargaining agreement in which the company promised not to "discriminate, coerce nor intimidate any employee because of membership or non-membership in the union."
The arbitrator's award required the company to provide the benefits to the Bruce Mansfield plant union workers.
Pennsylvania Power filed suit in U.S. District Court in Pittsburgh to challenge the award, but Judge Gary L. Lancaster refused to vacate it.
On appeal, Pennsylvania Power argued that the arbitrator's ruling did not "derive its essence" from the collective bargaining agreement but instead directly conflicted with it.
To read the Legal Intelligencer article at Law.com, click here.
