Title: PPL Montana, LLC and IBEW Local 1638
E. CAVANAUGH, J.D.
For the Union:
C. Brauer III
Buescher, Valentine, et al.
For the Employer:
& Hostetler LLP
East 17th Avenue, Suite 1100
matter concerns the use of independent contractors at the Employer’s power
generating facilities in Colstrip, Montana. The Union claims, among other
things, that employees on layoff should have been recalled to perform the
contracted work. The Employer claims that the work has historically been
performed by independent contractors and/or that the use of contractors has not
led “directly” to layoff of bargaining unit employees or reductions in
regularly scheduled hours (the touchstones contained in the collective
merits of the independent contracting issues are not before me at this time.
Rather, the issue is whether twenty-five
grievances may be consolidated for hearing on the merits, or whether these
grievances must proceed to arbitration independently or in some smaller, more
“manageable” number. These twenty-five grievances were referenced in a
settlement agreement that concluded a federal court lawsuit between the parties
in 1998 (paragraph 1(c) of Exh. J-2). In that settlement agreement, the parties
agreed that they would select an arbitrator to “initially hear only the issue
of whether to consolidate the grievances listed therein into one hearing.” Exh.
J-2, paragraph 3. Pursuant to that agreement, the parties utilized the
procedures of the FMCS and selected me as the arbitrator to decide the issues
set forth in paragraph 3 of their settlement.
a hearing held October 26, 2000 at the Radisson Northern Hotel in Billings,
Montana, the parties had full opportunity to present evidence and argument,
including the opportunity to cross-examine witnesses. The parties then filed
post-hearing briefs by mail on November 27, 2000, and the Employer filed a Reply
Brief by mail on December 11, 2000. The Union chose not to file a Reply. With
the receipt of the briefs, the record closed, and the issue of procedural
arbitrability before me is now ready for decision.
STATEMENT OF THE ISSUE
The parties were unable to agree on a joint statement of the issue, but
having heard the evidence and arguments of the parties, I find that a fair
statement of the issue is as follows:
it proper under the collective bargaining agreement for the Union to insist that
the twenty-five grievances listed in paragraph 1(c) of the parties’ October 6,
1998 settlement agreement (Exh. J-2) be consolidated for hearing on the merits?
If so, what is an appropriate remedy for the Employer’s refusal to agree to
COLLECTIVE BARGAINING AGREEMENT PROVISIONS
I have considered most closely the following provisions of the labor
ARTICLE 10. GRIEVANCE PROCEDURE
Section 1. Grievance Procedure
employee or group of employees who
feels that he or they have been aggrieved on any matter arising out of or
outside of the Agreement shall, within fifteen (15) days, proceed as follows . .
Section 2. Arbitration
is understood and agreed that in the event any question or controversy arising
under this Agreement, or any of its terms, cannot be amicably adjusted by the
parties hereto, the same shall be settled by arbitration, as follows:
later than fifteen (15) days after the Union serves the Company with written
notice of intent to appeal a grievance
to arbitration . . . .
J-1 and J-1A (emphasis supplied). In addition, I have closely considered the
following provisions of the settlement agreement between the parties:
The arbitrators selected to hear Grievance II and Grievance III
shall initially hear only the issue of whether to consolidate the grievances
listed therein into one hearing. Based upon the decision of the arbitrator
concerning the issue of consolidation, the parties shall then proceed to either
schedule a hearing on the merits of the cases or select additional arbitrators
to hear the cases within six months. The parties will attempt to present the
consolidation issue to the arbitrators by means of briefs, without a hearing,
but each reserves the right to request a hearing if it believes that a hearing
is necessary to resolve the issues.
J-2. Other pertinent provisions of the labor agreement will be discussed in the
course of this Decision and Award.
The facts necessary to decide the procedural question at issue here are
largely undisputed. There have been significant reductions in force at the
Employer’s facility in recent years.
At the same time, the Employer has utilized independent contractors to perform
certain work that the Union alleges has historically been performed by members
of the unit. In essence, the Union claims that the Employer should recall laid
off employees to perform that work. The Employer, on the other hand, argues that
Article 41 of the labor agreement does not preclude the use of independent
contractors in these situations, either because independent contractors have
historically performed the work in question and/or that the contracting has not
“directly result[ed] in a lay off or reduction of regularly scheduled work
hours of bargaining unit employees.” Exhs. J-1 and J-1A, Article 41.
An ongoing controversy about the use of independent contractors is
reflected in the total of ninety-two grievances on file as of the date of the
procedural hearing held in late October of 2000. Twenty-five of those grievances
had been filed before the settlement agreement that ended the federal court
litigation. Exh. J-2. The Union has consistently sought to consolidate the
grievances for hearing on the merits, at least the twenty-five referenced in Exh.
J-2. The Employer has consistently opposed consolidation, arguing that
separately filed grievances must be processed separately under the labor
The parties have already arbitrated a similar issue with respect to a
group of six grievances related to utilitymen upgrades. That group of grievances
was also referenced in the settlement agreement, and the procedures of paragraph
3 (i.e., initial arbitration of the procedural question of consolidation) also
applied to that group of grievances.
In accordance with the agreed procedure, the parties presented the question of
consolidation to Arbitrator Joseph Duffy who ruled in an Award dated January 14,
2000 that the six utilitymen upgrade grievances should be combined in a single
arbitration procedure on the merits.
The Union argues strenuously that Arbitrator Duffy’s Award has
conclusively determined the question presented here. According to the Union, the
award not only arises under the collective bargaining agreement, but also under
the very settlement agreement language involved in this case. Thus, the Union
argues, this Arbitrator should defer to Duffy’s award. In any event, the Union
contends, due process requires that the Union be allowed to demonstrate the
extent of independent contracting and the effect of this alleged “pattern”
of work transference from bargaining unit employees to independent contractors.
Thus, these twenty-five grievances should be consolidated.
Employer, on the other hand, contends that the former Employer representative
neglected to introduce sufficient evidence of past practice to Arbitrator Duffy.
Had the arbitrator considered this additional evidence, the Employer argues, the
result would have been different.
In any event, the settlement agreement language clearly contemplated presenting
the consolidation issues to two separate arbitrators. See, Exh. J-2, paragraph 3. Thus, the Employer argues, it would be
inappropriate for this Arbitrator to regard the Duffy Award as conclusive
authority without examining the issues de
novo, particularly given the fact that the award concerned the consolidation
of just six grievances as opposed to
the twenty-five grievances involved
The Employer also renews its arguments based on the language of the labor
agreement that refers to appealing “a
grievance” to arbitration
as well as arguments based on the myriad of fact patterns involved in the
various independent contracting arrangements. Given these individual fact
patterns, as well as individual remedy considerations, the Employer argues the
grievances should be examined individually.
review of the documents relating to the twenty-five grievances (filed between
March 1996 and September 1997) reveals that each cites Article 41. Each
expressly asks for cancellation of the “independent contract” (except for
032296BM). Finally, each seeks reinstatement of laid off employees as well as
payment of lost wages to affected unit members. The independent contracts
involved here apparently include snow removal, capital improvements, plumbing
repairs, wiring, installation of grating, and similar kinds of work. In response
to these grievances, the Company invariably echoes the language of Article 41
that the independent contract has not “directly” resulted in “a layoff or
reduction in regularly scheduled hours for bargaining unit employees.”
While Arbitrator Duffy’s Award may not conclusively determine the
issues before me, it is a well-reasoned interpretation of the labor agreement
that should inform my decision, and I should follow its principles unless the
Employer demonstrates a clear reason for me to depart from Arbitrator Duffy’s
reasoning. In that light, I view the central issues here to be 1) whether the
Employer’s additional past practice evidence is sufficient for me to abandon
Arbitrator Duffy’s interpretation of the labor agreement, or 2) whether the
“numerosity” aspect of this case (i.e. twenty-five grievances as opposed to
six) should defeat consolidation under these particular circumstances.
1. Past Practice
With respect to the past practice evidence, I do not find Mr.
Fredericksen’s testimony sufficient to establish an agreed
principle that multiple grievances may never be consolidated. The testimony
established only that grievances had not
been consolidated prior to the Duffy Award. As the Union correctly points
out, however, there is no evidence a party has ever requested
consolidation. Thus, the absence of prior consolidations does not establish
that the parties had agreed that
consolidation would be prohibited. Put another way, past practice takes its
binding effect not simply from being the way things have always been done, but
rather from the joint recognition that the historic practice has become a
binding part of the parties’ contractual relationship. The Employer might have
attempted to establish that joint recognition here in a number of ways, e.g.
evidence that the Union had requested consolidation on several occasions and
acquiesced when the Employer refused, Union bargaining proposals that failed to
make their way into the contract, etc. But in the absence of the traditional
indicia of an accepted past practice,
evidence that grievances have never before
been consolidated is insufficient to demonstrate an agreement between the
parties that multiple grievances may not be combined for hearing.
Therefore, I cannot find that Mr. Fredericksen’s testimony, standing
alone, justifies a departure from Arbitrator Duffy’s reasoning. I agree with
the Employer, however, that the consolidation of twenty-five grievances presents
potentially very different considerations from the consolidation of six
grievances. I must therefore consider that question. The appropriate standard,
as Arbitrator Duffy noted, is whether consolidation “promotes economy and
efficiency in the present situation.” Duffy Award at 7; see
also, Elkouri and Elkouri at 326. If so, arbitrators generally approve
2. Considerations of Efficiency and
The Employer argues that consolidation would result in inefficiency,
focusing on the differences in fact patterns and the inherently different
remedial considerations in the twenty-five grievances at issue here. While I
agree (and the Union concedes) that an examination of twenty-five independent
contracts will take longer than a proceeding focused on a single instance of
contracting, that fact is only part of the equation for determining efficiency
and economy. I must also consider whether a consolidated proceeding would be
more efficient than twenty-five separate
arbitration hearings. If so, considerations of efficiency and economy could
support consolidation even though a joint hearing would be more cumbersome than
a hearing focused on only one of the grievances.
In examining these questions, I note that each of the grievances appears
to involve an identical threshold issue: does Article 41cover unit members
already on layoff, or must its limitations be judged only with reference to
those currently on the payroll? The Union’s argument, as I understand it, is
that the Employer has gradually transferred work from the bargaining unit to
independent contractors in violation of Article 41, i.e.
that Article 41 prohibits independent contracting if employees on layoff
could have done the work. The Employer’s argument appears to be (at least in
part) that Article 41 does not protect employees on layoff and that no active employee has been laid off or had hours reduced because of
the independent contracts. Obviously, this common threshold issue is potentially
dispositive, not only of the twenty-five grievances now before me, but most or
all of the remaining sixty-seven grievances as well.
I also must be sensitive to the Union’s due process argument. Whether
the Union’s Article 41 contentions are correct or not, a party is entitled to
make its best case in support of a proffered interpretation of important
contractual language. See, e.g.,
Elkouri at 407-08. Consequently, an arbitrator should be wary of technical
procedural or evidentiary rulings that could unfairly restrict a party’s
ability to present its side of the story. Here, the Union’s argument appears
to depend upon a consideration of an alleged “pattern” that the Union
contends could only be demonstrated by evidence of a series of independent
contracts over time. Thus, to be fair, it appears that an arbitrator should
consider that argument in light of at least a representative sample of the
In reaching a decision here, I find that there are common Article 41
questions inherent in each of the twenty-five grievances. In fact, these Article
41 issues might dispose of the entire dispute. It is also likely that several of
the witnesses for each party will possess testimonial knowledge of more than a
single instance of contracting. Thus, I find, as Arbitrator Duffy observed with
respect to the “Grievance II” issues, that “the . . . cases have more
similarities than differences.” Duffy Award at 8. Consequently, I hold that it
would “promote efficiency and economy” to consider these twenty-five
grievances together. That judgment is bolstered by my sense, described more
fully above, that due process to the Union supports consideration of the Article
41 issues in light of at least a representative sample of the independent
I do not suggest that a consolidated proceeding will be without
procedural challenges, but I believe those challenges can be appropriately
managed. For example, arbitrators typically reserve to the parties the initial
attempt to apply the general remedial principles announced in the arbitrator’s
decision. That is so whether the grievance involves one grievant or many. I
assume the same procedure would be applied here. Thus, only if the parties were
unable to agree on the remedies, if any, for individual grievants would further
arbitrator intervention be required. Consequently, the potential remedial
complications of a consolidated hearing here should be minimal. Moreover, with
respect to remedy, at least, that situation does not differ from the likely
outcome of twenty-five separate arbitration hearings.
any event, the parties here are represented by able counsel fully capable of
surmounting the challenges of a consolidated hearing. The parties might
stipulate, for example, to present evidence of representative situations that
illustrate the range of independent contracts, supplementing the record with
relevant statistical information to round out their presentations. Facts not
truly in dispute (particularly those that can be demonstrated by documentary
evidence), might be presented to the arbitrator by written stipulation and/or
joint exhibits, or at least exhibits exchanged in advance that can be admitted
without objection at the hearing.
are, of course, only suggestions. If the parties do not find them helpful here,
there are no doubt other creative ways of limiting the number of issues in
dispute and the amount of hearing time required. In sum, I am confident the
parties can devise an appropriate procedure, with or without the assistance of
an arbitrator, to present the information necessary to decide these twenty-five
cases, and perhaps the entire dispute, in an orderly and efficient manner.
Moreover, it seems to me that the challenges of a consolidated proceeding are
far preferable to the inherent duplication and inefficiency of twenty-five
separate hearings, particularly when a fair consideration of the Union’s
argument appears to require examination of independent contracts on a broader
basis than “one contract at a time.”
therefore find that the Employer improperly refused to consolidate these
twenty-five grievances into a single hearing on the merits. The parties should
promptly schedule a combined proceeding to resolve these grievances.
finding for the Union here on the procedural issue, I cannot accept the argument
that the record reflects the “bad faith” necessary to support an award of
attorneys’ fees against the Employer. Although I did not accept the
Company’s argument based on additional evidence of past practice, nor the
argument that it would be improper to consolidate these twenty-five grievances
despite Arbitrator Duffy’s holding that the six “Grievance II” matters
should be combined for hearing, I do not find these arguments “frivolous.”
In addition, I note that the settlement agreement reserved to each party the
right to request a hearing on consolidation if a party “believes that a hearing is necessary to resolve the issues.” Exh.
J-2, paragraph 3 (emphasis supplied). Thus, it would be improper to punish the
Employer for exercising that right in the absence of evidence of subjective bad
faith. I do not find such evidence here. The Union’s request for an award of
fees will thus be denied.
Having carefully considered the evidence and the arguments of the
parties, and for the reasons set forth above, I hereby issue the following
Employer improperly refused to consolidate for hearing on the merits the
twenty-five grievances listed in paragraph 1(c) of the settlement agreement
between the parties dated October 6, 1998 (Exh. J-2);
parties shall promptly proceed to arbitration on the merits of the twenty-five
grievances on a consolidated basis;
Union’s request for an award of attorneys’ fees is denied;
Arbitrator will reserve jurisdiction to decide any dispute related to
implementation of the remedy awarded for sixty (60) days from the date of this
Decision and Award and for such reasonable extensions as the parties may
mutually agree (either party may invoke the arbitrator’s continuing
jurisdiction by giving notice to the Arbitrator and the other party via fax sent
or letter postmarked prior to the expiration of reserved jurisdiction); and
parties will bear the fees and expenses of the Arbitrator in equal proportion as
set forth in the collective bargaining agreement.
this 5th day of January, 2001
Michael E. Cavanaugh, J.D.
 Although, at the time of the hearing, some ninety-two independent contracting grievances had been filed, only twenty-five of these grievances are technically at issue here.
 “Grievance III” refers to the twenty-five grievances at issue here as listed in paragraph 1(c) of the settlement agreement. Exh. J-2.
 The record reflects that the issue of standards used to select unit members for layoff was the subject of an arbitration before Arbitrator Howell Lankford, a matter which has now been concluded.
 This description of the parties’ positions reflects my current understanding of their central arguments, set forth here only as background for discussion of the procedural issues presented. In describing my understanding of the parties’ positions, it is not my intention to circumscribe or limit in any way arguments the parties might wish to make at a hearing on the merits of these or any other grievances.
 See, Exh. J-2, paragraphs 1(b) and 3. This group of grievances was denominated “Grievance II” in the settlement agreement.
 The Award of Arbitrator Duffy was offered in evidence by the Union (along with Arbitrator Lankford’s “RIF” award referenced earlier), and the two awards were marked collectively as Exh. U-1. The parties disputed whether these awards were properly “evidence” or merely “authorities” to be considered for whatever light they might shed on the issues in this proceeding. I do not find it necessary to resolve this somewhat academic question. I have considered the Duffy Award in the manner and for the purposes set forth in this Decision. That consideration would not be altered whether I viewed the Award as “evidence” or “merely authority.”
 The Employer presented that evidence in the hearing in this matter. It consisted of the unrebutted testimony of Employer labor relations representative Richard Fredericksen that his search of the records disclosed no case, prior to the Duffy Award, in which the parties had consolidated grievances for hearing on the merits.
 The Employer also notes that there are at least sixty-seven more grievances waiting in the wings. If twenty-five grievances may be consolidated, the Employer argues, why not sixty-seven? While I understand this “parade of horribles” argument, it seems to me that a resolution of these grievances on the merits would likely dictate the result in the remaining sixty-seven.
 This argument was presented to, and rejected by, Arbitrator Duffy. Duffy Award at 5. I do not find in this record sufficient reason to revisit that issue.
 See, e.g., Elkouri at 648 et seq.
 For example, if an arbitrator held that the Article 41 standards do not apply to employees on layoff, that decision would appear to deal a fatal blow not only to these grievances, but also to the other sixty-seven.