2001 NAC 106 PPL Montana, LLC and IBEW Local 1638

Title: PPL Montana, LLC and IBEW Local 1638
Date: January 5, 2001
Arbitrator: Michael E. Cavanaugh
Citation: 2001 NAC 106

This 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 agreement).

The merits of the independent contracting issues are not before me at this time. Rather, the issue is whether twenty-five[1] 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.

At 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.

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:

Was 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 consolidation?

Any 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 . . . .

It 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:

Not later than fifteen (15) days after the Union serves the Company with written notice of intent to appeal a grievance to arbitration . . . .

Exhs. J-1 and J-1A (emphasis supplied). In addition, I have closely considered the following provisions of the settlement agreement between the parties:

3. The arbitrators selected to hear Grievance II and Grievance III[2] 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.

Exh. 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.[3] 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.[4]

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 agreement.

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.[5] 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.[6]

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.

The 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.[7] 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 here.[8] The Employer also renews its arguments based on the language of the labor agreement that refers to appealing “a grievance” to arbitration[9] 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.

My 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.

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,[10] 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 consolidation. Id.

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.[11]

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 independent contracts.

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 contracting situations.

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.

In 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.

These 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.”

I 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.

Despite 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 Award:

The 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);

The parties shall promptly proceed to arbitration on the merits of the twenty-five grievances on a consolidated basis;

The 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

The parties will bear the fees and expenses of the Arbitrator in equal proportion as set forth in the collective bargaining agreement.

[1] 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.

[2] “Grievance III” refers to the twenty-five grievances at issue here as listed in paragraph 1(c) of the settlement agreement. Exh. J-2.

[3] 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.

[4] 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.

[5] See, Exh. J-2, paragraphs 1(b) and 3. This group of grievances was denominated “Grievance II” in the settlement agreement.

[6] 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.”

[7] 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.

[8] 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.

[9] 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.

[10] See, e.g., Elkouri at 648 et seq.

[11] 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.