IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
EL PASO ELECTRIC COMPANY, §
§
Plaintiff, §
§
v. §
§ CASE NO. 3:11-cv-00080-FM
INTERNATIONAL BROTHERHOOD §
OF ELECTRICAL WORKERS, §
LOCAL NO. 960, §
§
Defendant. §
MOTION TO DISMISS COMPLAINT PURSUANT TO RULE 12(B)(6),
FED.R.CIV.P.
Defendant/Counterclaimant International Brotherhood of Electrical
Workers, Local No. 960 (“IBEW Local 960” or “the Union”), by and through
undersigned counsel, hereby moves the court to dismiss the Complaint (Doc. #1)
filed by Plaintiff/Counterdefendant El Paso Electric Company (“EPE” or “the
Company”) pursuant to Rule 12(b)(6), Fed.R.Civ.P., for failure to state a claim
upon which relief can be granted. In addition, IBEW Local 960 hereby submits
the following memorandum in support of its Motion to Dismiss.
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INTRODUCTION
EPE filed its Complaint in this case in an effort to seek to vacate an
unfavorable pair of labor arbitration awards. The awards, issued by Arbitrator
Mark R. Sherman (“Arbitrator Sherman”), consist of an arbitration award
(“Award”) dated September 2, 2010, and a final award (“Final Award”) issued on
February 16, 2011 (collectively, “Awards”).
EPE, dissatisfied with Arbitrator Sherman’s rulings, seeks to vacate the
Awards. EPE seeks to do so notwithstanding its agreement with IBEW Local 960
that “[t]he arbitrator’s decision shall be final and binding upon both Parties,” and
despite the clearly-expressed federal labor policy declaring that mutually-agreed
grievance and arbitration procedures are the preferred method for the final
adjustment of disputes over the interpretation and application of labor agreements.
In so doing, EPE attempts to obtain through the instant lawsuit what it could not
achieve through the contractually-agreed process. Under well-settled law, there is
no legally cognizable basis for vacating Arbitrator Sherman’s Awards in this case.
Thus, IBEW Local 960’s Motion to Dismiss should be granted, and the Complaint
should be dismissed.
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STANDARD FOR A RULE 12(B)(6) MOTION TO DISMISS
A motion to dismiss under Rule 12(b)(6), Fed.R.Civ.P., is, among other
things, designed to test the sufficiency of the legal theory of a complaint. Where
the legal theory of a complaint is not cognizable as a matter of law, the complaint
must be dismissed. See SmileCare Dental Group v. Delta Dental Plan of
California, Inc., 88 F.3d 780, 783 (9th Cir. 1996). The purpose of this Rule is to
permit district courts to terminate lawsuits “that are fatally flawed in their legal
premises and destined to fail, and thus to spare litigants the burdens of
unnecessary pretrial and trial activity.” Advanced Cardiovascular Systems, Inc. v.
Hess, 988 F.2d 1157, 1160 (Fed. Cir. 1993), cert. denied, 520 U.S. 1277 (1997).
Therefore, if it is clear as a matter of law that the theory of a complaint is legally
insufficient, “a claim must be dismissed, without regard to whether it is based on
an outlandish legal theory or on a close but ultimately unavailing one.” Neitzke v.
Williams, 490 U.S. 319, 327 (1989).
When a claim for relief is challenged under Rule 12(b)(6), all “well-pleaded
allegations” of the complaint are taken as true; legal conclusions and unsupported
factual inferences, on the other hand, are not entitled to the same treatment. See
Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002), cert. denied,
537 U.S. 1200 (2003); Barany-Snyder v. Weiner, 539 F.3d 327, 332 (6th Cir.
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2008). Furthermore, where, as here, a plaintiff has attached exhibits to the
complaint, such exhibits may be considered in determining whether the motion to
dismiss should be granted without converting the motion to a motion for summary
judgment. See Parks School of Business, Inc. v. Symington, 51 F.3d 1480, 1484
(9th Cir. 1995).
STATEMENT OF FACTS
EPE and IBEW Local 960 are parties to a collective bargaining agreement
(“CBA”). Article III of the CBA sets forth a four-step grievance procedure for
resolving complaints or differences of opinion between the Company and the
Union. If the Union is not satisfied with the outcome of the grievance after the
first three steps of the procedure, it may submit the matter to arbitration. (Doc. #1,
¶ 6). Section 3(E) of Article III of the CBA provides that “[t]he arbitrator’s
decision shall be final and binding upon both Parties.” (Id., Ex. A, p. 16).
Pursuant to Article III of the CBA, the Company and the Union arbitrated a
grievance (FMCS Case No. 090701-58323-3) before Arbitrator Mark R. Sherman
on April 9, 2010, in El Paso, Texas. (Doc. #1, ¶ 8). Following the hearing, both
parties submitted post-hearing briefs. The issue for the Arbitrator to decide was
whether the Company had “just cause” to discharge former employee Edgar
Bustos (“Bustos”), and if not, what was the appropriate remedy. (Id.).
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On September 2, 2010, Arbitrator Sherman issued his Award, which
sustained the Union’s grievance, finding that Bustos “was discharged without just
cause.” (Doc. #1, ¶ 17, Ex. B). Arbitrator Sherman found that the Company made
“a series of perfunctory and largely unhelpful responses [to Bustos’ problem areas]
within the context of questionable human resource management processes.” (Doc.
#1, Ex. B, p. 21). Among other things, he found that the Company utilized
“punitively high accuracy standards” and evaluated “irrelevant, misinterpreted or
unobserved traits.” (Id., p. 22). Because the case involved “the capital
punishment of the employment relationship: termination,” he concluded that
“stricter scrutiny and standards apply to the assessment of Management’s
response.” (Id., p. 24). The Arbitrator identified several instances in which the
Company failed to produce key evidence concerning Bustos’ alleged wrongdoing,
producing instead “misleading” evidence in an apparent attempt “to obfuscate or
exaggerate” any damage attributable to Bustos. (Id., pp. 24-26). Finally, he noted
that if the Company were, in fact, committed to helping Bustos correct his problem
areas and retain his job, it would have undertaken two steps, to wit, “[i]t would
have conducted the promised Performance Improvement Plan and it would have
made sure [Bustos] was issued the new model of the Itron device that could be
operated with one hand.” (Id., pp. 26-27). The latter was necessary in light of
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Bustos’ “far greater difficulty in operating the old version of the Itron” due to “the
congenital birth defect that left him without one of his hands.” (Id., pp. 20, 26-
27).
Arbitrator Sherman issued his Final Award on February 16, 2011. (Doc. #1,
¶ 17). On March 2, 2011, EPE brought its Complaint to Vacate Labor Arbitration
Award. (Doc. #1).
ARGUMENT
I. THERE IS NO ACTUAL, COGNIZABLE BASIS PRESENTED FOR
VACATING OR SETTING ASIDE ARBITRATOR SHERMAN’S
AWARDS AS A MATTER OF LAW.
A. Arbitrators’ Awards Must Be Accorded Extreme Deference and May
Not Be Reviewed on the Merits or on Questions of Interpretation,
Even for Serious Error.
In Section 203(d) of the Labor-Management Relations Act (“LMRA”), 29
U.S.C. § 173(d), Congress declared that “[f]inal adjustment by a method agreed by
the parties . . . [is] the desirable method for settlement of grievance disputes
arising over the application or interpretation of an existing collective bargaining
agreement.” See also id., § 171(c) (similar). In light of this federal policy, the
U.S. Supreme Court observed over fifty years ago that “[t]he refusal of courts to
review the merits of an arbitration award is the proper approach to arbitration
under collective bargaining agreements,” reasoning that “[t]he federal policy of
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settling labor disputes by arbitration would be undermined if courts had the final
say on the merits of the awards.” Steelworkers v. Enterprise Wheel & Car Corp.,
363 U.S. 593, 596 (1960).
Accordingly, “[j]udicial review of a labor-arbitration decision pursuant to [a
collection bargaining] agreement is very limited.” Major League Baseball Players
Ass’n v. Garvey, 532 U.S. 504, 509 (2001). Under this extremely deferential
standard,1
Courts are not authorized to review the arbitrator’s decision on the
merits despite allegations that the decision rests on factual errors or
misinterprets the parties’ agreement. . . . [I]f an arbitrator is even
arguably construing or applying the contract and acting within the
scope of his authority, the fact that a court is convinced he committed
serious error does not suffice to overturn his decision. . . . It is only
when the arbitrator strays from interpretation and application of the
agreement and effectively dispenses his own brand of industrial
1 This standard has been described variously by the federal circuits, but under any
description, an arbitrator’s decision is accorded extreme deference and is not ordinarily
reviewable by the courts. See, e.g., Bettencourt v. Boston Edison Co., 560 F.2d 1045, 1048-49
(1st Cir. 1977) (“Where parties to a collective bargaining agreement have provided for arbitration
as the final and binding method for settling grievances[,] the arbitration award is normally non-
reviewable by a court. . . . Exceptions to the rule of non-reviewability are . . . few and of a most
limited nature.”); Maine Cent. R.R. Co. v. Bhd. of Maint. Of Way Employees, 873 F.2d 425, 428
(1st Cir. 1989) (“Judicial review of an arbitration award is among the narrowest known in the
law.”); Brown v. Witco Corp., 340 F.3d 209, 216 (5th Cir. 2003) (review is “extremely limited”);
Lattimer-Stevens Co. v. Steelworkers, 913 F.2d 1166, 1169 (6th Cir. 1990) (a court’s review as
“one of the narrowest standards of judicial review in all of American jurisprudence”). Cf. Bhd. of
Locomotive Eng’rs v. Atchison, T. & S. F. R. Co., 768 F.2d 914, 921-22 (7th Cir. 1985) (stating,
in the context of a Railway Labor Act case with “maybe exactly the same” standard as a LMRA
Section 301 case, that “[p]erhaps ‘review’ is a misnomer. The district court . . . does not review
the correctness of the arbitration award, even under a highly deferential standard, such as ‘clearly
erroneous’ or ‘clear abuse of discretion.’ . . . The test is not error; it is ultra vires.”).
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justice that his decision may be unenforceable. . . . When an
arbitrator resolves disputes regarding the application of a contract,
and no dishonesty is alleged, the arbitrator’s improvident, even silly,
factfinding does not provide a basis for a reviewing court to refuse to
enforce the award. . . . [C]ourts have no business weighing the merits
of the grievance [or] considering whether there is equity in a
particular claim. . . .
Id. (internal quotation and citations omitted) (emphasis added).
In this case, the parties submitted a dispute concerning the application of the
just-cause provision to arbitration pursuant to their agreement. The CBA provides
that the decision rendered “shall be final and binding.” Thus, the Court’s review
here is to be “very limited.”
B. Arbitrator Sherman Properly Rejected, as One Basis for His Decision
Sustaining the Grievance, the Company’s Subjective and Irrelevant
Evaluation Standards Under His Construction of the “Just Cause”
Standard.
In its Complaint, EPE contends that Arbitrator Sherman “exceeded his
authority by concluding the Company’s accuracy standards for meter readers are
unreasonably high” and that the evaluations measure “irrelevant, misinterpreted or
unobserved traits” in view of the EPE’s asserted “unilateral right to ‘establish or
continue policies, practices and procedures.’” (Doc. #1, pp. 6-7). Notably missing
from EPE’s quotation of the CBA, however, are the caveat and other limiting
language also set forth in Article II, §1, which reads as follows in pertinent part:
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Except to the extent expressly abridged by a specific provision of
this Agreement, the Company reserves and retains the right to
manage the business as such rights existed prior to the execution of
this Agreement . . . . The rights of Management which are not
abridged by this Agreement shall include . . . its right to . . . establish
or continue policies, practices and procedures . . . [and to] terminate
employment or otherwise discipline employees for just cause. . . .
(Doc. #1, Ex. A, p. 3) (emphasis added).
The presence of the “just cause” contract language represents an important
constraint on the rights of the Company to discipline employees and means that, in
the event of a dispute as to the propriety of discipline, it is for the arbitrator to
decide ultimately whether the discipline was fair, considering, among other things,
the “industrial common law.” See Madison Hotel v. Hotel & Restaurant Emples.,
Local 25, 144 F.3d 855, 859 (D.C. Cir. 1998). As explained by Adolph M. Koven
and Susan L. Smith in Just Cause: The Seven Tests (3d ed. 2006),
Just cause is an amorphous term which lacks a concrete definition.
When its principles control the outcome of a dispute, an arbitrator is
invested with broad authority – much broader than in any other kind
of “rights” grievance. Rulings on just-cause cases routinely call for
application of an arbitrator’s concepts of fairness, justice, and equity.
Id. at 12 [quoting Northern Ohio Red Cross Blood Serv., 90 LA 393, 397
(Dworkin, 1988)].
“[T]he issue of what constitutes sufficient and reasonable cause for
discharge” is “[p]erhaps the single most significant and common issue” to which
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the “great deference to an arbitrator’s interpretation of a collective bargaining
agreement” extends. Florida Power Corp. v. Int’l Bhd. Elec. Workers, 847 F.2d
680, 681-82 (11th Cir. 1988). After all, “both employer and union have granted to
the arbitrator the authority to interpret the meaning of their contract’s language,
including such words as ‘just cause.’ . . . They have ‘bargained for’ the
‘arbitrator’s construction’ of their agreement. . . . [C]ourts will set aside the
arbitrator’s interpretation of what their agreement means only in rare instances.”
East. Assoc. Coal Corp. v. United Mine Workers of Am., 531 U.S. 57, 61-62
(2000). See also Super Tire Eng’g Co. v. Teamsters Local Union No. 676, 721
F.2d 121, 125 (3d Cir.1983) (“[O]nce it is conceded that the arbitrator had the
power to make a just cause determination, the district court is not free to review
the merits of that determination.”); E.I. DuPont de Nemours & Co. v. Grasselli
Employees Indep. Ass’n of East Chicago, Inc., 790 F.2d 611, 615 (7th Cir. 1986)
(“While this Court does not necessarily agree with the arbitrator’s conceptions of
just cause, mere disagreement does not allow an overturning of the award.”); New
Meiji Mkt. v. United Food & Commercial Workers Local Union #905, 789 F.2d
1334, 1335-36 (9th Cir. 1986) (interpretation of cause “is a question for the
arbitrator”).
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As summarized in the Award (Doc. #1, Ex. B, pp. 14-15), the Union argued
that EPE’s evaluations were subjective and utilized an improper, trait-based
approach. The Union cited a reported arbitration award for the proposition that
“in determining whether the termination . . . was for just cause[,] one must
consider whether the performance evaluations on which it was based was fairly
and objectively conducted.” See Palm Beach Co., 120 LA 405, 411 (Almenoff,
2004). Among other bases for concluding that Bustos “was discharged without
just cause,” the Arbitrator found that the Company utilized “punitively high
accuracy standards,” evaluated “irrelevant, misinterpreted or unobserved traits,”
and ignored “the best piece of evidence” regarding one dimension of Bustos’
performance. (Doc. #1, Ex. B, pp. 22-23, 28). These determinations, which are
consistent with the “industrial common law,” were based on the “just cause”
standard, and thus the Court must defer to the Arbitrator’s findings and
interpretation.
C. The Company’s Argument that Arbitrator Sherman “Ignor[ed] Key
Evidence of Bustos’ Performance and Disciplinary Problems”
Represents a Challenge to the Merits of the Case and Is Therefore Not
Properly Subject to Review.
The Company’s contention that Arbitrator Sherman “ignor[ed] key evidence
of Bustos’ performance and disciplinary problems” represents a thinly-veiled
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effort to relitigate the merits and to challenge Arbitrator Sherman’s findings of
fact. However, even where an arbitrator’s determination is “clearly erroneous” (as
EPE argues here) or represents “serious error,” or where the factfinding is
“improvident, even silly,” the decision is not to be disturbed. See Garvey, 532
U.S. at 509; Argument, Part I.A., supra. Thus, such a claim must be rejected as a
matter of law.
D. The Arbitrator Properly Indicated, as One Basis for His Decision, that
EPE Should Have Provided Bustos with the Newer, Easier-to-Use
Equipment.
EPE’s final argument is that the Arbitrator “exceeded his authority by
invoking and interpreting statutory rights,” (Complaint, pp. 7-8), viz., the
Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12101, et seq. However,
conspicuously missing from the Arbitrator’s opinion is any mention of the ADA at
all. Thus, the opinion offers no support for this claim.
What the Union argued – and, in turn, what the Arbitrator concluded – is
that “Bustos would have had an easier time with a fairly easy accommodation for
his disability, which was using the new version of the Itron [device] that did not
require the usage of both hands,” given that the old version “took [Bustos] longer
to use.” (Doc. #1, Ex. B, pp. 16, 27). The Union cited a reported award in this
connection for the proposition that in a discharge setting, it is appropriate for an
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arbitrator to consider whether the equipment provided made it difficult for the
employee to perform his or her job adequately. See McDonnell Aircraft Corp., 3
LA 158, 160 (Klamon, 1946). Arbitrator Sherman properly ruled, in accordance
with the “just cause” standard and the “industrial common law,” the Company
should have provided Bustos with suitable equipment.2
To the extent that there is any ambiguity at all as to the basis upon which
Arbitrator Sherman concluded EPE should have offered Bustos the newer version
of the Itron, the existence of such ambiguity presents no basis for vacating the
Awards. As the U.S. Supreme Court explained long ago when it was confronted
with an ambiguous opinion,
It may be read as based solely upon the arbitrator’s view of the
requirements of enacted legislation, which would mean that he
exceeded the scope of the submission. Or it may be read as
embodying a construction of the agreement itself, perhaps with the
arbitrator looking to “the law” for help in determining the sense of the
2 Contrary to EPE’s suggestion, consideration of disability-related authorities is entirely
apropos in this setting. As explained in Thermo King Corp., 102 LA 612, 615 (Dworkin, 1993):
Another obvious resource for deciding what does and does not form just cause is
basic societal values. The right of handicapped people to hold jobs they can
perform was a societal value long before Congress made it a law. Arbitrators
expressed it decades before ADA was enacted. Reasonable accommodation . . .
has long been recognized as an element of just cause by arbitrators. If anything,
arbitrators have been more permissive than ADA. . . . In making [the just-cause]
determination, it is appropriate to look to the Act for guidance.
See also Enterprise Wheel & Car Corp., 363 U.S. at 597 (noting that an arbitrator “may of course
look for guidance from many sources” beyond the CBA concerned).
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agreement. A mere ambiguity in the opinion accompanying an
award, which permits the inference that the arbitrator may have
exceeded his authority, is not a reason for refusing to enforce the
award. Arbitrators have no obligation to the court to give their
reasons for an award.
Enterprise Wheel & Car Corp., 363 U.S. at 597-98. Thus, the Awards should be
upheld.
Finally, even if an arbitrator does exceed his or her authority, an award
should still be affirmed where there are other bases for the decision. See
Brentwood Med. Assocs. v. UMW, 396 F.3d 237, 243 n. 7 (3d Cir. 2005) (“[E]ven
if we were to kick the ‘bum leg’ of the arbitrator’s award, there are still many
others upon which this award can stand.”). Here, Arbitrator Sherman offered
ample other grounds upon which the Awards may be upheld. The Company’s
objection concerning the provision of a new model of the Itron device to Bustos
does not address the propriety of the other of the arbitrator’s “modest proposals,”
namely, that the suggestion that it should “have conducted the promised
Performance Improvement Plan,” just as it does not address all of the other
justifications for the Awards, including EPE’s evidentiary shortcomings in
proving its case. See Statement of Facts, supra. Thus, the Complaint should be
dismissed.
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CONCLUSION
“The arbiter was chosen to be the Judge. That Judge has spoken. There it
ends.” Safeway Stores v. Bakery & Confect. Workers Int’l Union, 390 F.2d 79, 84
(5th Cir. 1968).
Respectfully submitted,
LUBIN & ENOCH, P.C.
By: /s/ Nicholas J. Enoch, Esq.
NICHOLAS J. ENOCH
Texas State Bar No. 24042618
[email protected]
STANLEY LUBIN
Texas State Bar No. 24049352
[email protected]
7362 Remcon Circle
El Paso, Texas 79912-1623
(915) 585-8008 (Phone)
(602) 626-3586 (Fax)
ATTORNEYS FOR DEFENDANT
IBEW LOCAL 960
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CERTIFICATE OF SERVICE
I hereby certify that on the 20th day of May, 2011, I electronically filed the
foregoing with the Clerk of Court using the CM/ECF system which will send
notification of such filing to the following:
Dan C. Dargene, Esq.
Dallan F. Flake, Esq.
Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
700 Preston Commons
8117 Preston Road
Dallas, Texas 75225
Attorneys for the Plaintiff
By: /s/ Nicholas J. Enoch, Esq.
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