N. New England Tel. Operations LLC v. Local 2327, Int'l Bhd. of Elec. Workers

Citation735 F.3d 15
Decision Date12 November 2013
Docket NumberNos. 13–1167,13–1186.,s. 13–1167
PartiesNORTHERN NEW ENGLAND TELEPHONE OPERATIONS LLC, d/b/a FairPoint Communications, Plaintiff–Appellant, Cross–Appellee, v. LOCAL 2327, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL–CIO, Defendant–Appellee, Cross–Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)


Arthur G. Telegen, with whom John E. Duke and Seyfarth Shaw LLP, were on brief for appellant/cross-appellee.

Alfred Gordon O'Connell, with whom Pyle Rome Ehrenberg PC, was on brief for appellee/cross-appellant.

Before LYNCH, Chief Judge, TORRUELLA, Circuit Judge, and STEARNS, * District Judge.

TORRUELLA, Circuit Judge.

This case asks us to review the appropriateness of an arbitral award entered against FairPoint Communications (FairPoint) in favor of Local 2327, International Brotherhood of Electrical Workers, AFL–CIO (the Union). FairPoint asserts, as it did in the court below, that the arbitral panel exceeded the scope of its authority in crafting the award, disregarding the express terms of the parties' Collective Bargaining Agreement (“CBA”) and adopting a manifestly unreasonable interpretation of this agreement's terms. The district court disagreed, finding that the panel's interpretation fell within the wide boundaries of discretion granted to arbitral decisions by our courts and granting summary judgment in favor of the Union. Although the district court affirmed the award, it denied the Union's request for costs and fees. The parties now cross-appeal, both seeking review of the aspects of this decision contrary to their interests. Agreeing with the district court's determination—albeit on different grounds as to the non-imposition of costs and fees—we affirm.

I. Background
A. FairPoint's telecommunications operation

On April 1, 2008, FairPoint purchased Verizon New England, Inc.'s (“Verizon”) telecommunications operations in Vermont, New Hampshire, and Maine. As a term of purchase, FairPoint agreed to hire all former Verizon employees, represented by the Union, in those states. FairPoint and Verizon negotiated a Transition Services Agreement under which Verizon's employees and systems remained active through February 1, 2009 (the “cutover date”) so as to ensure continuity of service during the transfer of operations and ownership to FairPoint.

This appeal concerns FairPoint's Wholesale Group, which is responsible for facilitating the purchase of access to FairPoint's operational infrastructure and services by smaller, regional telecommunication operators. These purchase orders are grouped into Access Service Requests (“ASRs”), which are complex orders requiring personal service, and Local Service Requests (“LSRs”), which are simple orders generally completed by an automated system, without human intervention.

At the time of FairPoint's purchase, 94% of Verizon's LSR orders were fully automated; only the remaining 6% of more complex LSR work was routed to employees. FairPoint intended to complete a number of system upgrades prior to the cutover date, so as to match this 94% percent “flowthrough” rate by the time it took over Verizon's operations. Consequently, FairPoint expected that only a small percentage of complex LSR work would be completed by Union employees. Its original staffing plan included no reference to subcontracting.

As the cutover date approached, however, FairPoint realized that its flowthrough rate was significantly lower than expected, only around 60%. It also became clear that the transition in ownership would require a ten-day “blackout period,” during which all orders would be handwritten, resulting in a significant backlog. These unexpected obstacles created additional staffing needs not addressed by FairPoint's original staffing plan. FairPoint approached the Union and explained that it would need to hire a “bubble workforce” until the backlog created by the blackout period had been resolved and the flowthrough rate neared 94%. FairPoint estimated this would take between sixty days and six months.

Subsequently, FairPoint hired TeleTech, a Canadian company, to staff the bubble workforce. Beginning in February 2009, TeleTech staff handled simple LSR work—the work that would have been otherwise fully automated—while Union employees handled more complex LSR work.1 Despite FairPoint's assurances that this bubble workforce was temporary, the simple LSR work was never allocated to Union employees. In September 2010, the work was indefinitely transferred from TeleTech to APAC, a subcontractor located in Utica, New York.

B. The FairPoint–Union CBA

When FairPoint purchased Verizon's telecommunication systems, it also succeeded to Verizon's CBA with the Union, originally signed in 2003. Under a provision titled “Limitations on Transfer of Jobs,” this 2003 agreement held that: “a Company may not permanently transfer more than 0.7% of [Union] represented jobs ... to an area outside the New England States [ ].” As interpreted in a prior grievance arbitration—filed by the Union in an attempt to arrest Verizon's sale of the company to FairPoint—this restriction applied only to transfers between Verizon entities,” not transfers to external companies. IBEW, System Council T–6 and Verizon New England, Grievance # 77–07 and 78–07 at 57–58.

Throughout February 2008, the Union negotiated with FairPoint to amend and extend this 2003 agreement. In its final version, the revised CBA deleted much of the language that had been subject to the earlier arbitration, replacing it with new terms:

During each contract year of the parties' current collective bargaining agreement[ ] (“CBA”), from August 3, 2008 to August 3, 2013, the Company may not permanently transfer [Union] represented jobs to any entity which is not a signatory to this agreement.

Also incorporated into the revised CBA, however, was an agreement letter signed by Union and FairPoint representatives that referenced certain pre-amendment elements of the Limitation on Transfer of Jobs provision. In particular, this letter announced a method for calculating the 0.7% transfer cap, despite this cap's deletion from the revised CBA.

At this same time, the parties negotiated amendments to a Memorandum of Agreement specifically focused on the sub-contracting of plant-technician jobs. This agreement, along with another, unmodified provision—detailing FairPoint's ability to contract out certain other non-sales jobs—appeared in a different section of the CBA from the Limitation on Transfer of Jobs provision.

C. The arbitration

In 2010, the Union filed a grievance based on the allegedly wrongful transfer of LSR work. A panel of three arbitrators took up this grievance on October 27 and November 17, 2010, with both parties stipulating to the question for arbitration:

Did the Company violate [the Limitation on Transfer of Jobs provision] of the April 1, 2008 collective bargaining agreement with regard to wholesale work being performed by employees of TeleTech or APAC? If so, what shall be the remedy?

FairPoint argued that no violation had occurred, citing the previous arbitration as evidence that the Limitation on Transfer of Jobs provision applied only to transfers between FairPoint owned-entities, making transfers to independent entities like TeleTech and APAC acceptable. FairPoint also claimed that, regardless of whether the panel interpreted “any entity ... not signatory to this agreement” to include non-FairPoint owned businesses, no transfer had ever occurred. Because Union employees never possessed the jobs in question—under Verizon's ownership they were completed by an automated system—FairPoint contended they could not have been “transferred” away.

The panel disagreed. As to the restriction on transfers to “any entity,” it reasoned that “any” implied “the opposite of limitation.” As such, the plain meaning of this provision restricted transfer to any business, not just those affiliated with FairPoint.” Moreover, the panel identified no evidence that the parties intended to retain the pre-amendment CBA's more limited restrictions on job transfer. It refused to hold that the other provisions of the CBA—defining the scope of acceptable subcontracting for certain non-sales jobs—were necessarily incongruous, expressing a belief that all three provisions could be interpreted in a consistent manner. Although recognizing that the agreement letter's reference to the since-deleted 0.7% transfer cap was clearly contradictory, the panel reasoned that it could not “disregard the plain language of the [Limitation on Transfer of Jobs provision] because of [this] apparent inconsistency with another provision.”

Although the issue of whether jobs were indeed “transferred” gave the panel more pause, ultimately it concluded that the facts presented constituted just such a wrongful conveyance. First, the panel noted that FairPoint's staffing plan, shared with the Union, envisioned that all necessary LSR work would eventually be completed by Union employees. Second, the panel determined that it was “not completely correct” to say that the Union never did any LSR work; testimony established some small amount of this work was completed by Union employees. On these grounds, the panel found an “unmistakable mutual understanding and expectation” that the jobs in question would be completed by Union employees. The panel concluded that this concrete, shared expectation was sufficient to make the allocation of this work to TeleTech and APAC a wrongful transfer of jobs.

The panel entered an award in favor of the Union, requiring FairPoint to return all LSR work and to rehire any Union employees wrongfully laid off during the relevant time period.

D. The district court's opinion

FairPoint filed suit in district court under section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, arguing that the arbitral panel had exceeded its authority by wrongfully adding and subtracting terms from the CBA. Specifically, FairPoint...

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