Hoteles Condado Beach, La Concha and Convention Center v. Union De Tronquistas Local 901

• Decision Date: 31 May 1985
• Docket Number: No. 84-1692,84-1692
• Citation: 763 F.2d 34
• Parties: 119 L.R.R.M. (BNA) 2659, 103 Lab.Cas. P 11,515 HOTELES CONDADO BEACH, LA CONCHA AND CONVENTION CENTER, Plaintiff, Appellee, v. UNION DE TRONQUISTAS LOCAL 901, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 34

763 F.2d 34

119 L.R.R.M. (BNA) 2659, 103 Lab.Cas. P 11,515

HOTELES CONDADO BEACH, LA CONCHA AND CONVENTION CENTER, Plaintiff, Appellee, v. UNION DE TRONQUISTAS LOCAL 901, Defendant, Appellant.

No. 84-1692.

United States Court of Appeals, First Circuit.

Argued Feb. 8, 1985.

Decided May 31, 1985.

Pedro J. Varela, Hato Rey, P.R., for defendant, appellant.

Amelia Fortuno Ruiz, San Juan, P.R., with whom Lespier, Munoz Noya & Ramirez, Hato Rey, P.R., was on brief, for plaintiff, appellee.

Before COFFIN, Circuit Judge, WISDOM, ^* Senior Circuit Judge, and BOWNES, Circuit Judge.

WISDOM, Senior Circuit Judge.

This appeal is from a judgment of the federal district court vacating a labor arbitration award under the jurisdiction provided by section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. Sec. 185 (1982). The issue in this case is whether the district court erred in vacating the arbitration award. The district court held that the arbitrator's failure to consider evidence central to the dispute before him and his disregard of the unambiguous provisions of the collective bargaining agreement between the parties to the dispute required that the award be vacated. We affirm.

I. FACTS AND PROCEEDINGS BELOW

In June 1981, Santiago Figueroa Otero (Otero), an employee of the Hoteles Condado Beach, La Concha, and Convention Center (Company), was dismissed for an alleged violation of the disciplinary rules appended to and made part of the collective bargaining agreement between the Company and the Union De Tronquistas De Puerto Rico, Local 901 (Union). Otero was dismissed for allegedly engaging in immoral conduct: indecently exposing himself before Mrs. Kimberly Scott Flores, a guest of the Company's Hotel Condado Beach. In August 1981 Otero was convicted of indecent exposure in criminal proceedings before the Superior Court of Puerto Rico. Otero appealed. His criminal conviction was overturned in September 1982.

Following Otero's dismissal, the Union filed a grievance against the Company alleging that Otero had been dismissed without justification in violation of the collective bargaining agreement between the Union and the Company. An arbitration hearing was held on June 23, 1982 ¹--after Otero was convicted on criminal charges but before his conviction was overturned--to determine whether the Company's dismissal of Otero was justified and, if not, to provide the appropriate relief. ² Mrs. Flores, the Company's only witness to the alleged events leading to Otero's dismissal, appeared to testify at the hearing but refused to do so after the arbitrator, on the Union's motion, ³ required Mr. Flores to leave the hearing room during his wife's testimony. The Company then introduced into evidence, in substitution of Mrs. Flores's live testimony, the transcript of the criminal proceedings against Otero, which contained both Mr. and Mrs. Flores's testimony concerning the alleged indecent exposure incident.

The arbitrator admitted the trial transcript into evidence and took the case under submission. On July 2, 1982, the arbitrator rendered his award. The arbitrator found that the transcript of the criminal proceedings against Otero provided insufficient evidence to prove that the Company was justified in dismissing Otero, because the written transcript did not afford the arbitrator an opportunity to "observe and receive the impact of the appearance, gestures, voice, and attitudes" of the witnesses and to assess for himself the credibility of each witness's testimony. The arbitrator also found that the disciplinary rules under which the Company purportedly dismissed Otero were inapplicable to Otero. Accordingly, the arbitrator found that the Company had failed to show that Otero's dismissal was justified and ordered the Company to reinstate Otero with back pay.

On September 23, 1982, the Company brought suit in federal district court under section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. Sec. 185 (1982), seeking to have the arbitration award vacated. On cross-motions for summary judgment, the district court found that the arbitrator had failed to execute his duty to evaluate the proof submitted by the parties during the arbitration hearing and to reach his own conclusions on whether the discharged employee had in fact engaged in morally offensive conduct in violation of the disciplinary rules made part of the collective bargaining agreement. The district court specifically challenged three aspects of the arbitration proceeding and award. The court held that the arbitrator incorrectly prohibited Mr. Flores from being present when Mrs. Flores was to testify, because this exclusion resulted in Mrs. Flores's refusal to testify and limited the arbitrator's ability to ascertain all of the relevant facts. The court further held that the arbitrator unreasonably refused to consider the testimony contained in the transcript of the criminal proceedings against Otero. Finally, the district court held that the arbitrator's award did not draw its essence from the collective bargaining agreement, because the arbitrator incorrectly and unreasonably based his decision on his misreading of the unambiguous language of the collective bargaining agreement. This error, the court found, materially altered the contractual language of the collective bargaining agreement. Accordingly, the court granted summary judgment in favor of the Company and vacated the arbitration award. Hoteles Condado Beach v. Union de Tronquistas de Puerto Rico, 588 F.Supp. 679 (D.P.R.1984). The Union appeals from this judgment.

We agree with the district court's conclusion that the arbitrator's refusal to give any weight to the criminal trial transcript presented into evidence by the Company coupled with his ruling that Mr. Flores could not be present during Mrs. Flores's testimony, deprived the Company of a full and fair hearing. We also agree that the arbitrator's award materially altered the clear language of the disciplinary rules appended to the collective bargaining agreement. Accordingly, we affirm the district court's vacating the arbitral award.

II. EXCLUSION OF EVIDENCE

The Company and the Union are parties to a collective bargaining agreement which provides for arbitration as the binding method for resolving disputes between the parties, provided that the arbitration award is consistent with the law and does not modify the terms of the collective bargaining agreement. ⁴ This court's review of the arbitrator's award is, therefore, limited to a determination of whether the arbitrator, in making the award, was functioning within his authority as an interpreter of the collective bargaining agreement. This court may engage in a substantive review of the award only to determine whether "the award is 'unfounded in reason and fact', ... is based on reasoning 'so palpably faulty that no judge, or group of judges, could ever conceivably have made such a ruling', ... or is mistakenly based on a crucial assumption which is 'concededly a non-fact'." Bettencourt v. Boston Edison Co., 560 F.2d 1045, 1050 (1st Cir.1977). In such cases, the award "fails to draw its essence from the collective bargaining agreement" and must be overturned. United Steelworkers of America v. Enterprise Wheel & Car Corporation, 1960, 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424.

The Federal Arbitration Act, 9 U.S.C. Secs. 10(a)-(e) (1982), sets forth the sole instances in which a United States district court may order an arbitration award vacated. The statute provides, in pertinent part, that an award may be vacated only "[w]here the arbitrators were guilty of misconduct ... in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced" or "[w]here the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made." Id. Secs. (c), (d). Here, the district court acted under the authority of this statute, as construed by the courts, in vacating the arbitration award.

A. Sequestration of Witnesses

The district court held that the arbitrator's order sequestering Mr. Flores during his wife's testimony, coupled with the arbitrator's refusal to give any weight to the trial transcript of the criminal proceedings against Otero, amounted to misconduct substantially prejudicing the rights of the Company. The court noted the deference accorded an arbitrator's conduct of arbitral proceedings and the limited role of the courts in reviewing arbitral awards. The court determined, however, that the arbitrator in the instant case neglected his duty to afford each of the parties sufficient latitude to present evidence central to the dispute and so prejudiced the Company's right to a full and fair hearing as to require that the award be vacated.

An arbitrator enjoys wide latitude in conducting an arbitration hearing. Arbitration proceedings are not constrained by formal rules of procedure or evidence; the arbitrator's role is to resolve disputes, based on his consideration of all relevant evidence, once the parties to the dispute have had a full opportunity to present their cases. See generally F. Elkouri & E. Elkouri, How Arbitration Works 254-56 (3d ed. 1973). Arbitration is, however, a private proceeding which is generally closed to the public. Id. at 202. The arbitrator has discretion to exclude or sequester witnesses during the arbitration hearing, especially when he believes sequestration to be necessary to "discourag[e] and expos[e] fabrication, inaccuracy, and collusion" among the witnesses. M. Hill & A. Sinicropi, Evidence in Arbitration 20-21 (1980).

In the instant case, the Union objected to Mr. Flores's presence in the hearing during Mrs. Flores's testimony, asserting that the Union intended to call Mr. Flores as an adverse witness and wished to preserve the...