United Bhd. of Carpenters & Joiners of Am. v. Tappan Zee Constructors, LLC

• Decision Date: 20 October 2015
• Docket Number: Docket No. 15–1002.
• Citation: 804 F.3d 270
• Parties: UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, Petitioner–Appellant, v. TAPPAN ZEE CONSTRUCTORS, LLC, Respondent–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

804 F.3d 270

UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, Petitioner–Appellant

v.TAPPAN ZEE CONSTRUCTORS, LLC, Respondent–Appellee.

Docket No. 15–1002.

United States Court of Appeals, Second Circuit.

Argued: Aug. 19, 2015.

Decided: Oct. 20, 2015.

James M. Murphy, Spivak Lipton LLP, New York, NY (Daniel M. Shanley, DeCarlo & Shanley, Los Angeles, CA and Gillian Costello, Spivak Lipton LLP, New York, NY, on the brief), for Petitioner–Appellant United Brotherhood of Carpenters and Joiners of America.

Willis J. Goldsmith (Joshua Grossman, on the brief), Jones Day, New York, N.Y., for Respondent–Appellee Tappan Zee Constructors, LLC.

Before: RAGGI and WESLEY, Circuit Judges.¹

Opinion

WESLEY, Circuit Judge:

This case arises from the disputed assignment of certain construction work on the Tappan Zee Hudson River Crossing Project (the “Project”) to replace the Tappan Zee Bridge across the Hudson River in New York. The work is governed by the New York State Thruway Authority Project Labor Agreement Covering the Tappan Zee Hudson River Crossing Project (the “Project Labor Agreement” or “PLA”).

Appellee Tappan Zee Constructors, LLC (“TZC”) was awarded the contract to design and build the Project on December 17, 2012. After winning the contract, TZC divided assignments for three different categories of formwork between two local unions, Dockbuilders Local 1556 (“Dockbuilders”) and Carpenters Local 279 (“Carpenters”), both of which are represented by the Appellant, an umbrella labor organization called the United Brotherhood of Carpenters and Joiners of America (“UBC”). The Dockbuilders were assigned the “formwork, up to and including the pile caps” (“pile formwork”). Joint App. 133. The Carpenters were assigned the “formwork from the top of the pile caps up to and including the pier caps” (“pier formwork”) and the “formwork for all columns including the main span tower forms” (“column formwork”). Id.

The Dockbuilders disputed the assignment of the pier and column formwork to the Carpenters. Pursuant to Article 10, Section 3 of the PLA, all jurisdictional disputes on the Project are resolved under the National Plan for the Settlement of Jurisdictional Disputes in the Construction Industry (the “Plan”), the purpose of which is to expeditiously resolve disputes over construction work assignments without strikes, work stoppages, or other disruptions. In accordance with the Plan, UBC submitted the dispute over the assignment of the pier and column formwork to the Plan Administrator on January 13, 2014. The following day, UBC requested and the Plan Administrator agreed to hold in abeyance any action on the dispute while the unions discussed settlement.

During settlement negotiations, the Dockbuilders and the Carpenters agreed that both the pier and column formwork should be assigned to the Dockbuilders. UBC informed TZC of this agreement on April 7, 2014, and on April 14, 2014, the Plan Administrator accordingly directed TZC to reassign the pier and column formwork from the Carpenters to the Dockbuilders.

TZC opposed the unions' settlement agreement. The Dockbuilders' hourly rate of $92.47 is considerably higher than the Carpenters' hourly rate of $70.11; reassignment of the pier and column formwork thus would cause the cost of the Project to increase by a total of nearly $7.3 million. Pursuant to the PLA, any jurisdictional dispute that remains unresolved by initial meetings “shall proceed to final and binding arbitration in accordance with the principles and procedures set forth in the rules of the Plan.” Joint App. 109 (PLA Art. 10, Sec. 3(C)). Adhering to PLA procedure, TZC informed the Plan Administrator on April 15, 2014 that it disagreed with the proposed reassignment and requested that the dispute be submitted to arbitration. J.J. Pierson was designated arbitrator of the dispute under the Plan and conducted a hearing on April 28, 2014.

Pursuant to the Plan, in resolving a jurisdictional dispute such as the one here, an arbitrator is required to address three criteria: (a) “whether a previous agreement of record or applicable agreement ... governs”; (b) “if the Arbitrator finds that the dispute is not covered by an appropriate or applicable agreement ... he shall then consider the established trade practice in the industry and prevailing practice in the locality”; and (c) “if none of the above criteria is found to exist, the Arbitrator shall then consider that because efficiency, cost or continuity and good management are essential to the well being of the industry, the interests of the consumer or the past practices of the employer shall not be ignored.” Joint App. 61 (Plan Art. 5, Sec. 8). An arbitrator must “set forth the basis for his decision and ... explain his findings regarding the applicability of” these three criteria. Joint App. at 62 (Plan Art. 5, Sec. 8). Article 10, Section 3(D) of the PLA required Pierson to “render a short-form decision within 5 days of the hearing based upon the evidence submitted at the hearing, with a written decision to follow within 30 days of the close of the hearing.” Joint App. 110 (PLA Art. 10, Sec. 3(D)).

On May 4, 2014, Arbitrator Pierson issued his short-form award in a four-page decision titled “AWARD” (“May 4th Award”). In this decision, Arbitrator Pierson stated that he resolved the matter on the basis of Article 5, Section 8(b) of the Plan. Specifically, he found that “an established trade practice in the industry and prevailing practice in the locality” required assignment of the disputed formwork to the Dockbuilders. Joint App. 20. On May 5, 2014, the Plan Administrator forwarded the decision to the parties under a transmittal letter enclosing “a copy of Arbitrator Pierson's Award” and explaining that “Arbitration [sic] Pierson has stated that he expects to provide his full Opinion soon.” Joint App. 184.

On May 6, 2014, TZC notified the Plan Administrator of its intent to appeal the arbitrator's decision. The Plan Administrator responded acknowledging TZC's “timely appeal from the decision of Arbitrator Pierson” and granting TZC's request to “hold the appeal in abeyance pending the receipt of Arbitrator Pierson's full decision.” Joint App. 200.

On May 13, 2014, Arbitrator Pierson issued a twelve-page decision titled “OPINION and AWARD” (“May 13th Award”). In direct contradiction to the May 4th Award, Arbitrator Pierson concluded that “no established trade practice nor prevailing practice in the locality ” governed assignment of the disputed formwork. Joint App. 32 (emphasis in original). Thus, the dispute could not be resolved based on the criteria set forth in Article 5, Section 8(b) of the Plan, and Arbitrator Pierson proceeded to consider the criteria under Section 8(c). Pursuant to Section 8(c), he concluded that TZC properly assigned the disputed formwork to the Carpenters based on the potential savings of more than $7 million. Accordingly, Arbitrator Pierson assigned the disputed formwork to the Carpenters, not the Dockbuilders.

Arbitrator Pierson's later decision set out the basis for his authority to change his mind between the May 4th Award and the May 13th Award:

[A]n arbitrator is vested with confined authority under the provisions of the Plan and the controlling criteria of Article V, Section 8. The stated criteria does [sic] not conflict with the letter or spirit of Article 10, Section 3 of the present PLA. As recognized, the criteria track each other.

Likewise, as both the administrative procedures and contract language direct, once the parties proceed to a final and binding arbitration, the Arbitrator is required to render a short-form decision within five (5) days of the hearing and, thereafter, follow with a written decision, based on the evidence submitted at the hearing, within thirty (30) days.

Joint App. 28. Arbitrator Pierson explained that the May 4th Award, which resolved the dispute in favor of the Dockbuilders on the basis of an established trade practice under Article 5, Section 8(b) of the Plan, was “not fully considered at the time” and “hasty, as further review of the evidentiary record revealed.” Joint App. 28–29. In particular, in making that short-form decision he failed to consider a prior arbitration decision in which he determined that there was no established trade practice in the industry for such formwork. Id. at 30. With the absence of an established trade practice duly considered, Arbitrator Pierson concluded that the cost efficiency of assigning the work to the Carpenters supported resolving the dispute in favor of TZC.

The Plan Administrator forwarded the May 13th Award to the parties under a transmittal letter referring to the decision as “Arbitrator Pierson's full opinion and award.” Joint App. 204. UBC did not appeal, but instead brought an action on May 22, 2014 in the Southern District of New York seeking to enforce the May 4th Award and vacate the May 13th Award, arguing that the arbitrator was without authority to alter the May 4th Award.² TZC answered and cross-petitioned to confirm the May 13th Award. On March 25, 2015, the District Court issued a Memorandum and Order denying UBC's petition and granting the cross-petition. The District Court found that the dispute was governed by the PLA Article 10, Section 3 requirement that the arbitrator issue a short-form decision within 5 days of the hearing and a written decision within 30. In light of this requirement, the District Court concluded the May 4th Award “was not final” and that Arbitrator Pierson “did not exceed his authority by issuing the May 13th Award.” Joint App. 261. Judgment was entered on March 31, 2015; UBC timely appealed.

DISCUSSION ³

Arbitration is fundamentally “a matter of contract.” Am. Exp. Co. v. Italian Colors Rest., ––– U.S. ––––, 133 S.Ct. 2304, 2309, 186 L.Ed.2d 417 (2013). “The scope of an arbitrator's authority thus ‘generally depends on the intention of the parties to an arbitration, and is determined by the agreement or submission.’ ” ReliaStar...