A case out of the First District Appellate Court of Illinois (“First District”) this week breathes new life into judicial challenges to labor arbitration awards relying principally on past practice, and savvy employer- and union-side practitioners should take a second look at bringing actions to vacate such awards if the arbitrator’s primary basis for decision is a weak historical practice.
In Forest Preserve Dist. of Cook County v. Ill. Fraternal Order of Police Labor Council, 2017 IL App (1st) 161499 (February 7, 2017), the First District considered whether to vacate a labor arbitration award interpreting the legal basis for computing Forest Preserve District police sergeants’ salary adjustments following their promotion to that rank.
At the Circuit Court level, the judge held that the arbitrator failed to properly apply the promotional formula contained in the Cook County Personnel Rules when he interpreted an otherwise silent collective bargaining agreement to imply that promotional salaries should be based on the sergeants’ overall length of County service. Because the CBA was silent on how such adjustments should be made, the County based such adjustments on the Cook County Personnel Rules (“Personnel Rules”), which provide that the salary increases must be “at least two steps above the salary received at the time the promotion is made.” ⁋ 7. The arbitrator, however, concluded that the County violated the parties’ historical practice by only using this method to adjust promotional salaries. Instead, the he found the County should have been calculating newly-promoted sergeants pay by using the two-step method from the Personnel Rules and their longevity with the District, as he found the County had historically done.
The Circuit Court took issue with this finding, concluding, inter alia, that the “arbitrator’s award did not draw its essence from the parties’ collective bargaining agreement.” It reasoned that it was inconsistent for the arbitrator to find that historical practice governed such calculations while also finding that the Personnel Rules were the sole governing authority for calculating promotional adjustments. While the Court agreed with his interpretation that the two-step rule in the Personnel Rules was not a minimum, the Court disagreed that this somehow justified the arbitrator’s leap that longevity with the District must also be considered. In particular, the Court was moved by the fact that the arbitrator did not have any evidence justifying the supposed historical practice that length in service should also impact promotional wage adjustments.
Taking up the union’s appeal, the First District first emphasized that judicial review of labor arbitration awards is extremely limited. ⁋ 19 (citing AFSCME v. Dep’t of Cent. Mgmt. Servs., 173 Ill. 2d 299, 304 – 205 (1996). It recognized the old rule courts are supposed to give great deference to the parties’ decision to have disputes settled by an arbitrator, rather than a judge. However, the First District also acknowledged that courts will vacate an arbitrator’s award that fails to draw its essence from the collective bargaining agreement. ⁋ 20 (citing Amalgamated Transit Union, Local 241 v. Chicago Transit Authority, 342 Ill. App. 3d 176, 180 (2003)). Essentially, the latter rule means that while “an arbitrator may look to many sources for guidance, should the award be based on a body of thought, feeling, policy, or law outside of the collective bargaining agreement, it will be set aside as not rationally derived from the essence of the agreement.” Id. In other words, for a court to overturn an award, “it must be shown that there is no ‘interpretive route to the award, so a noncontractual basis can be inferred and the award set aside.’” ⁋ 20 (citing Griggsville-Perry Community Unit School Dist. No. 4 v. Ill. Educ. Labor Relations Bd., 2013 IL 113721 ⁋ 20).
Applying the law to the facts, the First District agreed with the Circuit Court that the arbitrator’s award did not derive from the essence of the contract. This was so because there was simply no contractual basis for the arbitrator to have concluded that historical practice required the County to make promotional salary adjustments based on longevity, rather than just the two-step rule. The First District was also moved by the fact that the arbitrator did not rely on any specific examples where longevity had been used to justify a higher promotional salary bump. But even if such evidence had been present, the Court held that “a long-standing policy outside of the CBA does not draw its essence from the CBA.” ⁋ 24.
While the Forest Preserve District sergeants are no doubt as disappointed as the average Cook County taxpayer is indifferent to this result, employer- and union-side practitioners now have a refreshingly polished sword on which to claim that the First District should vacate a labor arbitrator’s award. If the arbitrator relies on a weak historical practice to justify an outcome, it might just be worth trying an action vacate.
Read the full case here.