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National Arbitration Center

Title: Portland Hospital Service Corporation and International Union of Operating Engineers Local 701
Date: December 19, 1997 
Arbitrator: Luella E. Nelson 
Citation: 1997 NAC 124


In the Matter of a Controversy





RE:  Shift Differential Grievance, FMCS Case No. 97-17223, CSR #7







This Arbitration arises pursuant to Agreement between International Union of Operating Engineers Local 701 ("Union" or “Local 701"), and Portland Hospital Service Corporation ("Employer" or “PHSC”), under which LUELLA E. NELSON was selected to serve as Arbitrator and under which her Award shall be final and binding upon the parties.

The parties stipulated to the facts upon which this case is to be decided and submitted joint exhibits relating to the stipulated facts.  Both parties filed post-hearing briefs on or about September 20, 1997.


On behalf of the Union: 

James P. O’Connor, Esquire, General Counsel, IUOE Local 701, 555 E First Street, Gladstone, OR   97027 

On behalf of the Employer: 

Nelson D. Atkin II, Esquire, Lane Powell Spears Lubersky, 520 SW Yamhill, Suite 800, Portland, OR   97204-1383  

                                                            STIPULATED ISSUE 

Given the stipulated facts listed above and, if the grievance was timely filed, does the language in the main body of the CBA concerning shift differential apply to Local 701 members, as well as Local 107 members, or should the contract be reformed as argued by PHSC? 

                                         RELEVANT SECTIONS OF AGREEMENT

                                       ARTICLE II - DISPUTES AND GRIEVANCES


Section 2.  An employee having a grievance shall present such grievance to the Production manager and/or General manager and if unresolved, to the Union, within five (5) work days after the occurrence.  If the Union determines the matter to merit further processing, such grievance shall be filed in writing with the Employer within thirty (30) calendar days of its occurrence.


Section 5.  In the event of arbitration, the following will apply:


(C) The arbitrator will not have authority to modify, add to, alter, or detract from the provisions of this Agreement. ...

Section 6.  Should either the Employer or Union fail to initiate a grievance within the thirty (30) calendar day time limitation herein provided, such party is deemed barred from further prose­cution of such grievance.



                                                         ARTICLE V - WAGES 

Section 1.  The wage scales attached hereto as Addenda A, B and C shall constitute the minimum wages payable during the life of this Agreement.  Nothing shall prohibit the Employer from paying higher rates than those set forth.


Section 9.  If, during the term of the Agreement, the Employer establishes a regular shift which ends later than 6:30 p.m, it will pay an appropriate shift differential, and negotiate the amount of and hours qualifying for differential payment. 

                                                       ARTICLE VI - HOURS

Section 1.  Day Shift.  The day shift is from 5:30 a.m. for leads, sub-leads, soil sort, and wet wash handlers and from 6:00 a.m. for all other laundry categories until 6:30 p.m.  Any employee who is assigned work that commences after 6:00 a.m. and ends before 6:30 p.m. is on the day shift for the entire period he works. ...


Section 7.  Swing Shift.  Any shift which is scheduled to end after 6:30 p.m. is a swing shift and any employee working on a swing shift shall be paid fifty cents ($.50) additional for each hour worked on the entire shift.



                                       ADDENDUM C TO LABOR AGREEMENT


                               PORTLAND HOSPITAL SERVICE CORPORATION




Shift Schedules.  Engineers shall not be regularly scheduled for day shifts starting before 5:00 a.m.  If an engineer is required to start work before 5:00 a.m., the engineer shall receive time and one-half of the regular hourly rate for all hours worked before 5:00 a.m.



                                                        STIPULATED FACTS[1]

1.                   THE PERIOD PRIOR TO 1996 NEGOTIATIONS

1.         Local 701 has represented the engineers at PHSC for at least 25 years.

2.         Other employees of PHSC are represented either by the Textile Workers (“Local 107"), the Teamsters (“Local 305"), or are unrepresented.

3.         At least for the last five Collective Bargaining Agreements (“CBAs”), PHSC negotiated a basic agreement with Local 107, which covered all employees.  The three unions then negotiated and signed Addendums to the Agreement on those terms and conditions that were different from the main body of the Agreement.  Any differences applying to Local 701 were set out in Addendum C to the CBA for the years 1984, 1987, 1990, 1993, and 1996.  Except as specifically excluded in the Addendums, all provisions in the main body of the CBAs applied to all employees of PHSC.

4.         PHSC’s practice for at least the last five contract periods has been to negotiate the main body of the CBA with Local 107, and then negotiate any changes to that document, or any unique issues, with the other two unions.

5.         For example, in 1994, PHSC negotiated a mid-term amendment to the CBA (concerning a six day workweek and a ten hour day) directly with Local 107.  When this was completed, it presented the changes to the other two unions for their signature, without offering to negotiate the changes with them.

6.         PHSC never entered into negotiations with Local 701 concerning this mid-term change, though it did present the finalized change to Local 701 for its signature (to make it part of the main CBA applicable to Local 701 employees).  However, Local 701 never ratified that change to the main body of the CBA and so it never became effective for Local 701.

7.         In 1995, PHSC changed the work schedule for the members of Local 107 from an eight hour to a ten hour work day.  Article V, Section 9 of the CBA which was then in effect provided:

If, during the term of the Agreement, the Employer establishes a regular shift which ends later than 6:30 p.m., it will pay an appropriate shift differential, and negotiate the amount of hours qualifying for differential payment.

8.         Article V, Section 9, set forth above, had been in the CBA between the parties commencing with the 1990-93 Agreement, which came into effect July 1, 1990.  During the term of the 1990-1993 CBA and the 1993-96 CBA, the engineers represented by Local 701 worked a number of different shift schedules, some of which ended after 6:30 p.m.  Engineers had worked such schedules for most, if not all, of the 25 years PHSC had been operation.  At no time during the term of either the 1990-1993 or the 1993-1996 CBAs did any of the engineers or any representatives of Local 701 claim that Article V, Section 9 required PHSC to negotiate and pay a shift differential to the engineers who worked a shift ending after 6:30 p.m.

9.         In July 1995, PHSC and Local 107 eventually reached agreement on a $.50 per hour shift differential with Local 107, along with a number of other provisions implementing a ten-hour work schedule.


10.        Negotiations between PHSC and Local 107 over the current CBA took place from July 2, 1996 through September 10, 1996.  During those negotiations, PHSC and Local 107 agreed to include in the CBA those provisions which had been agreed upon in 1995 implementing a ten hour work day, including the $.50 per hour shift differential.

11.        If called as a witness, PHSC’s General Manager, Hans Laursen (“Laursen”) would testify that by agreeing to incorporate the shift differential into the CBA, PHSC had no intention that by doing so PHSC would pay shift differential to either the engineers or the employees represented by the Teamsters.

12.        Local 701's negotiating agenda for the 1996 CBA included a request for shift differential.  PHSC and Local 701 discussed this issue.

13.        The CBA negotiations between PHSC and Local 701 commenced with a meeting on August 23, 1996.  PHSC and Local 701 agreed that there was no problem with their reaching agreement on their addendum prior to the completion of negotiations with Local 107 on the main body of the contract.

14.        PHSC refused Local 701's request for shift differential on September 9,1996.  The union representative said he was dropping the shift differential proposal.  On September 10, 1996, the parties agreed the shift differential proposal by Local 701 had been dropped from their direct negotiations.

15.        The Local 701 Addendum was viewed by the parties as “one page on the end of a contract.”  The parties shared this view of the Addendum:

George Robins:    “Essentially, our whole agreement is a side agreement.”

Hans Laursen:        “An addendum, yes.”

16.        Article V, Section 9, of the 1996 CBA provides that: [quotation omitted]

17.        Addendum C to the 1996 CBA does not exclude this shift differential language for Local 701.

18.        After the completion of the negotiations with Local 107, on September 19, 1996, PHSC’s attorney, Nelson Atkin (“Atkin”), prepared a draft contract and sent it to Laursen with a cover letter which stated that:

Enclosed for your review is a draft of the new labor agreement between Portland Hospital Service Corporation and the Laundry Workers, Engineers and Teamsters.  I have also enclosed a draft of the side letter between PHSC and the Engineers regarding the boot allowance and tool replacement policy. 

I believe the new agreement incorporates both of the mid-term contract changes negotiated with the laundry workers, as well as the changes we have agreed to with each of the three respective unions.  If you find the agreement in order I will start the process of obtaining the necessary signatures from each of the union representatives on the sufficient number of original copies.

19.        Laursen reviewed and approved the drafts provided to him by Atkin who then prepared the new CBA including each of the three Addendums.  Atkin then sent the CBA and the appropriate Addendum to Local 107 on October 1, 1996.

20.        PHSC implemented the contractual wage increase for the engineers retroactive to July 1, 1996, in the paycheck which the engineers received on October 11, 1996.

21.        Following the return of the signed CBA from Local 107, Atkin then sent the CBA, along with the appropriate Addendum, to George Robins (“Robins”) at Local 701 on October 31, 1996.  The letter included the signature pages for Local 701, page 19 to the main CBA, and page 24 (Addendum C).

22.        Robins reviewed the CBA and Addendum C and informed Atkin that he noticed that changes had been made in the PTO provisions; he also found several typographical errors.  Robins told Atkin that Local 701's members had not been aware of these changes in the PTO provisions, and he would have to discuss them and have them ratified before Local 701 could sign the Agreement.  Robins made no mention of the shift differential provision in the CBA.

23.        Robins returned the signed CBA and addendum to Atkin with a letter dated November 13, 1996.  On November 19th, Atkin sent the CBA and appropriate Addendum to Teamsters Local 305.  Following receipt of the signed CBA from the Teamsters, Atkin remailed the CBA and Addendum C to Robins on December 5, 1996.  After the CBA, Addendum and side letter were approved by vote of Local 701 members, Local 701 signed both signature pages and these were attached to the original CBA.


24.        Local 701 filed a grievance on behalf of its members, Joe Kott and Jim McCarley, on February 28, 1997.

25.        PHSC responded to the grievants by letter to Robins from Laursen on March 10, 1997.  Robins responded to Laursen by letter of March 14, 1997.

26.        The parties have been unable to resolve this good-faith dispute by agreement and so have submitted it to a mutually-chosen arbitrator.


A.         Local 701

27.        Local 701's position is that the shift differential language in the main body of the CBA now applies to its members, as well as to Local 107 members, since it was not excluded in Addendum C.

28.        Historically, whatever terms and conditions have been in the main body of the CBA have been applied to Local 701 except where they were specifically excluded in Addendum C.

29.        Historically, there have been two methods by which terms have become part of the CBA governing Local 701 members: by direct negotiation and by application of the terms of the main body of the CBA which is negotiated by PHSC and Local 107.

30.        By not excluding the shift differential from the Addendum C, PHSC made it applicable to Local 701, via the main body of the CBA.

B.         PHSC’s Position

31.        PHSC’s position is that this language was negotiated between Local 107 and PHSC to apply only to the employees represented by Local 107.  The provision does not apply to either the drivers or the engineers, notwithstanding the oversight of not including it as one of the exclusions from the main contract set forth in the appropriate Addendum.  The Addendum should be reformed to include this exclusion.

32.        Alternatively, PHSC’s position is that this grievance is untimely inasmuch as it was filed more than 30 calendar days after the event causing the grievance to have “occurred”. The grievance occurred either on the date in which the engineers received their first retroactive wage payment (October 11, 1996), or the first pay day following the union’s receipt of the fully executed Agreement in late December 1996.  The grievance was filed more than 30 days following both of these events.

                                                      POSITION OF THE UNION

The Employer bears the burden of proving a mutual mistake by clear and convincing evidence.  Given the stipulated record, it cannot meet its burden.  It must show any alleged mistake was not due to want of care or lack of diligence.

Reformation would be appropriate in the event of a mutual mistake.  A party should not be allowed to take advantage of benefits from an error to which it was a party.  However, in this case, there has been a unilateral, not a mutual, mistake.  Local 701 made no mistake related to the main body of the CBA.  It had no input into the language of the main body of the CBA and did not attempt to negotiate it with the Employer.  It simply received the language the Company had settled on, and read and applied it as written.  The Arbitrator should do the same.

If an alleged mistake was unilateral, and was not so gross as to indicate to the opposite party that an error has been made, no relief can be accorded the mistaken party.  Any mistake was a unilateral one, made by PHSC in failing to exclude the shift differential provision of the main body of the CBA for Local 701.  If PHSC intended to exclude Local 701's members from the shift differential language, it had the burden of doing so.  If it meant to do so but did not take sufficient care, it is stuck with the result it caused.

The Arbitrator has no authority to modify, add to, alter or detract from the provisions of the Agreement.  The request to reform the contract asks the Arbitrator to exceed her authority.  The Agreement is not ambiguous.  As a result, neither Article VI, Sec. 7, nor the Local 701 Addendum may be rewritten.  Parties are stuck with the words they caused to be placed in the Agreement.  Clear contract language cannot be ignored.  Contracts are reduced to writing and signed to avoid disputes of this kind.  Where the language is clear and unambiguous, extrinsic evidence such as bargaining history and past practice is irrelevant.  Signature on a contract evidences acceptance of it as a final integration of the negotiated agreement.  Extrinsic evidence cannot be considered to ascertain the “real” meaning of the language.  Ignoring clear language or legislating new language would usurp the parties’ roles.

It is not unfair to enforce the CBA’s terms.  An arbitrator should not save a party from the language it freely signed.  Absent fraud, deceit, or an unfair labor practice by the opposing party, an arbitrator may not re-write a contract to correct a party’s mistake.  There was no such improper behavior here.  Had PHSC wished to exclude Local 701's members from a term in the main CBA, it could have done so.  Its subjective intent is not at issue.  The Employer should be required to comply with the language or renegotiate it.

Enforcement of the Agreement will not give Local 701 a windfall or permit it to gain through arbitration provisions which it was unable to obtain through bargaining.  The main body of the CBA is 19 pages long; Local 701's addendum is only two pages long.  The Employer handed the vast majority of the total agreement to Local 701; Local 701 did not “obtain at the table” the vast majority of the CBA’s terms and conditions.  This has been the case for at least the past five contracts.

The parties should be left to their contractual methods for revisiting contract language, either by agreed-upon mid-term negotiations or in negotiations at the end of this contract.  Any inequitable or unin­tended results of the ratified language must be overcome through negotiations, not by an arbitrator’s award.

In direct negotiations with Local 701, the Employer denied shift differential.  By agreeing to shift differential for the larger Local 107 unit, and failing to exclude it in the Local 701 addendum, the Employer bound itself to grant shift differential nonetheless.  The parties’ two-step bargaining system has met their needs for many years.  It may result in an unpleasant situation for PHSC in this situation; a possible result is that one or both parties may determine to change the bargaining process in the future.  This is for the parties to resolve, not the Arbitrator.  The Arbitrator should leave the parties with the language of their contract and require them to abide by those terms unless and until they renegotiate the Agreement.  It may be difficult to leave parties with imperfect agreements, but the Arbitrator’s authority is limited.

The parties’ stipulations do not address the issue of timeliness, and Local 701 does not believe this is an issue.  However, the grievance was timely filed for a continuing violation.  Each denial of the shift  premium violated the Agreement and justified the filing of a new grievance.  Local 701 seeks no back pay for its members prior to the filing of the grievance.  It could have filed a grievance earlier based on the clear contract language, but it did not waive prospective rights under the agreement by waiting.

                                                      POSITION OF EMPLOYER

The grievance must be denied because it is untimely.  It was filed more than 30 calendar days after the event causing the grievance.  That event was either October 11, 1996, when engineers received their retroactive wage payment, or late December 1996, when the Union received the fully-executed Agreement.  The grievance was not filed until February 28, 1997.  PHSC has repeatedly raised the timeliness argument during the grievance process.

The Union has had ample opportunity to claim the shift differential language applied to its members.  That language has been in the Agreement since 1990, and employees it represents have worked shift sched­ules ending after 6:30 p.m. in that period.  The Union did not argue the Employer should negotiate and pay a shift differential.  When the Employer and Local 107 agreed on a $.50/hour shift differential in 1995, the Union did not claim that differential should be paid to its members who worked shifts ending after 6:30 p.m.  Because it failed to file a grievance within 30 days, its grievance is untimely.

The Agreement should be reformed to exclude Article V, Section 9 because of a mutual mistake.  The mistake is that Addendum C failed to state that the shift differential does not apply to Local 701.  Local 701's negotiating agenda for 1996 included a request for shift differential, and that proposal was discussed in negotiations.  The Employer refused that request, and the Union dropped that proposal.  This clearly demonstrates that neither party intended employees represented by Local 701 to receive a shift differential.  When there is no dispute about the intended result of the written language, the erroneous language will be reformed to reflect the parties’ intent.

The need to reform the Agreement is supported by the fact that Robins noted some changes in the Agreement of which he was not aware, and told the Employer’s attorney he had to have the changes ratified before signing.  He made no mention of the shift differential provision, even though this was a perfect opportunity to mention that the Union intended to ratify the shift differential provision.  The Union cannot specifically ratify some changes and sit on its rights regarding other changes.

Although the Agreement took effect on July 1, 1996, employees did not grieve the failure to pay the shift differential for nearly eight months.  The Union’s failure to object to nonpayment for eight months suggests it did not believe a shift differential had been granted.  It is taking advantage of an inadvertent error in the written form of the Agreement.  The Employer did not intend the shift differential language to apply to engineers represented by the Union or employees represented by the Teamsters.  The Union has not offered testimony that Local 701 intended the shift differential language to apply to its members.

The Union requested a shift differential, and its proposal was rejected.  The parties continued bargaining and reached an agreement that did not include payment of a shift differential.  It is not reasonable to require the Employer to pay a shift differential to engineers merely because of an error in not excluding Article V, Section 9 from the Agreement.

The fact that the error in the written form of the Agreement involves more than a few words does not prevent an arbitrator from reforming the contract.  Clerical errors can affect significant portions of an Agreement.  The Employer is not claiming it is entitled to anything different than agreed to in negotiations.  The Agreement should be reformed to exclude application of the shift differential provisions to Local 701 members.  Neither party intended for it to apply.



The applicable standards for contract interpretation are well established.  Where the language is clear and un­am­biguous, the Arbitrator must give effect to the parties' intent.  That is so even where one party finds the result unexpected or harsh.  Extrinsic evidence cannot be used to prove an interpretation at odds with clear contract language.  It can be used to demonstrate a latent ambiguity in the language, to prove that a mutual mistake occurred, or to show that the parties later agreed to modify their agreement.  However, the party asserting any of these as defenses to an alleged contract violation bears the burden of demonstrating them.  The ultimate burden of persuasion, however, remains with the moving party--in this case, the Union.

A contract may be reformed only in the rare instance where either a mutual mistake prevented the contract from expressing the parties’ real agreement, or one party knew and took advantage of the other party’s unilateral error.  Its rarity arises from the need for finality and predictability.  It would disrupt the collective bargaining relationship if, after reaching a compromise on each issue in dispute and reducing their agreement to writing, parties were subject to the risk of having an arbitrator re-write their agreement.  However, an arbitrator ought not enforce the obvious intent of clear, but patently erroneous, language if the record establishes the language is contrary to the parties’ reasonable mutual expectations.  Extrinsic evidence of the parties’ intent, such as bargaining history, is relevant to this issue even where the contract language itself is clear and unambiguous.  Extrinsic evi­dence of the parties' intent is also relevant where the contract language is unclear or ambiguous.


The burden of proof regarding arbitrability is on the party arguing a grievance is not arbitrable.  Procedural provisions are as enforceable as any other contract term.  However, the parties include grievance and arbitration procedures as a means of resolving disputes.  Doubts regarding such pro­cedural defenses are to be resolved against forfeiture.

Contractual time limits are meant to be kept.  Parties incorporate such provisions in contracts in recognition that stale cases are hard-to-resolve cases.  Here, the parties agreed on the standard by which to judge whether cases were stale. They agreed that employee grievances must be filed within 30 days after the occurrence--in this case, the failure to pay shift differential compensation allegedly due.

A claim that employees have been under-compensated asserts a continuing violation which occurs anew each time allegedly improper compensation is paid.  Absent specific contract language requiring a contrary result, the failure to file a grievance or protest a violation of a clear contract provision of this nature does not bar insistence upon compliance with the contractual require­ments in the future; it does preclude a remedy for the period before the filing of the grievance.  It is unnecessary in this case to determine the precise date of the first occurrence of the alleged contract violation.  The alleged contract violation is of a continuing nature.  It is therefore concluded that the grievance was timely filed.


The Agreement is clear and unambiguous.  The main body of the Agreement defines day shifts and swing shifts, and specifies the shift differential pay for employees who work a swing shift.  Addendum C establishes a different shift schedule for engineers and provides for overtime pay for hours worked before 5:00 a.m.  By defining both the work hours and the premium pay for engineers, the parties overrode the comparable provisions in the main Agreement which apply to Local 107 members.

The effect of the “shift schedules” provision of Addendum C is demonstrated by the parties’ treat­ment of other issues regarding hours of work and premium pay.  The 1996 changes to Article VI of the main Agreement incorporated at least two new sections resulting from mid-term bargaining with Local 107 during the prior contract--(1) the swing shift differential provision at issue here, and (2) provisions implementing a ten-hour day and regulating the compensation for such a schedule.  It is undisputed that the latter provisions were not ratified by Local 701 and did not become applicable to its members when they were negotiated with Local 107 mid-term.  Nonetheless, in 1996 negotiations, Local 701 took no steps to expressly exclude those provisions by proposing a change in Addendum C.  This inaction is consistent with the conclusion that the “shift schedule” provision of Addendum C overrides comparable provisions of Article VI.

Finally, the bargaining history is consistent with the clear contract language, in that the Union dropped its proposal for shift differential.  The reformation the Employer urges is unnecessary given the clear contract language consistent with the parties’ intent.  Accordingly, it is concluded that shift differential does not apply to Local 701 members, but that the contract need not be reformed in order to effectuate the parties’ real agreement.



Given the stipulated facts listed above and the timely filing of the grievance, the language in the main body of the CBA concerning shift differential does not apply to Local 701 members, as well as Local 107 members; however, the contract need not be reformed as argued by PHSC.


DATED:  December 19, 1997




      LUELLA E. NELSON - Arbitrator[COMMENT1] 

[1]           The following omits references to exhibits contained in the parties’ stipulation of facts.


COMMENT:      Make sure the first address on page 1 is the right address for these parties--Oregon address for Pacific Northwest clients, California address for Californians.

Do Date Text on the date case is actually completed, to replace the Date Code.


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