United States District Court, Northern District of New York
February 27, 1990
HOTEL, MOTEL & RESTAURANT EMPLOYEES & BARTENDERS UNION, LOCAL 471, AFL-CIO, PETITIONER,
P. & J.G. ENTERPRISES, INC., D/B/A THE ALBANY THRUWAY HOUSE, RESPONDENT.
The opinion of the court was delivered by: McCURN, Chief Judge.
MEMORANDUM-DECISION AND ORDER
The Hotel, Motel & Restaurant Employees & Bartenders Union,
Local 471, AFL-CIO ("Union") petitions the court to confirm two
arbitration awards, pursuant to a section of the United States
Arbitration Act, 9 U.S.C. § 9, and Section 301 of the Labor
Management Relations Act of 1947, as amended,
29 U.S.C. § 185.*fn1 The Union also seeks attorney's fees and costs.
The Union is the collective bargaining representative for
certain employees of the respondent, P. & J.G. Enterprises, Inc.
d/b/a The Albany Thruway House. The Albany Thruway House is a
motel, bar, and dining and banquet facility located in the City
of Albany, New York.
The instant dispute arises out of respondent's discharge of two
employees who were members of the collective bargaining unit
represented by the Union. The Union claimed that the employees
were improperly discharged, and requested that they be
reinstated. The parties were unable to resolve the dispute
through the grievance procedure prescribed by the collective
bargaining agreement between the parties, so the dispute was
submitted to binding arbitration pursuant to Article 16 of the
The first of two arbitration hearings was conducted on May 24,
1988, at which the parties submitted evidence and testimony in
support of their positions. The issue framed for arbitrator
Dolores N. Whalen by the parties was as follows:
Was the discharge of Ann Russo and Mary O'Brien for
If not, what shall the remedy be?
See Amended Petition, Exhibit "B".
The arbitrator rendered a written decision dated June 15, 1988,
Based upon the substantial credible evidence of the
case as a whole, the discharge of Ann Russo and Mary
O'Brien was not for just cause. The discharge of Mary
O'Brien is hereby reduced to a one day suspension
without pay. She is to be made whole for all lost
wages from March 28, 1988 less any income from any
Ann Russo is to be made whole for all lost wages
from March 27, 1988 less any income from any other
Both grievants are to be returned to work as soon
as practicable with all other
contractual benefits intact, but not later than June
See Amended Petition, Exhibit "C".
Following the issuance of the arbitration award, the employer
returned the two discharged employees to work, but did not pay
them back wages as directed by the arbitrator. By letter dated
August 8, 1988, the Union's attorneys advised the employer that
if it did not comply with the arbitration award, they would
commence legal proceedings to enforce the award. The employer did
not comply, and the Union petitioned this court in May 1988 to
confirm the arbitration award. However, the parties agreed soon
thereafter to defer the court proceedings and resubmit the
dispute to the arbitrator to determine the amount of back wages
owed to the two employees.
After a hearing on the issue of back wages, the same arbitrator
issued a written arbitration award, dated September 14, 1989,
Based upon the substantial credible evidence of the
case as a whole, the amount of back wages due Ann
Russo and Mary O'Brien are as follows:
Mary O'Brien $1,409.59
Ann Russo $2,441.51
Such payments to be made to each of them within
thirty days of the date of this Award.
The arbitrator wrote that, since the parties could not agree on
the amount due each employee, she based her calculation of back
wages on the "persuasive arguments of the Union" that "the proper
way to project what they would have earned was to base those
figures on the salary of an individual who did work." See
Amended Petition, Exhibit "G".
Despite the issuance of the second arbitration award, the
employer has still failed to pay the back wages directed by the
arbitrator, and hence the Union has filed an amended petition
with the court requesting confirmation of both arbitration
It should be noted at the outset that since the employer
complied with that part of the first arbitration award directing
it to reinstate the two discharged employees, the court need only
consider the awards as they relate to payment of back wages.
The employer presents two arguments in opposition to the
petition. First, the employer contends that the determination of
the arbitrator was not supported by the evidence presented at the
arbitration hearings. Secondly, the employer states that, because
of financial setbacks, it does not have the money to pay the
It is well established that a federal district court's scope of
review of an arbitrator's decision is extremely limited. An
arbitrator's award which "draws its essence from the collective
bargaining agreement" must be enforced by the court. W.R. Grace
& Co. v. Rubberworkers Local 759, 461 U.S. 757, 764, 103 S.Ct.
2177, 2182, 76 L.Ed.2d 298 (1983) (quoting United Steelworkers
of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597,
80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960)). It is also settled
law in this circuit that an arbitrator may render a lump sum
award, such as the awards in the instant action, without
disclosing his or her rationale for it, and courts will not
inquire into the basis of the award unless they believe that the
arbitrator rendered it in "manifest disregard" of the law or
unless the facts of the case fail to support it. See Kurt Orban
Co. v. Angeles Metal Systems, 573 F.2d 739 (2d Cir. 1978); see
also Koch Oil, S.A. v. Transocean Gulf Oil Co., 751 F.2d 551 (2d
Cir. 1985). "If a ground for the arbitrator's decision can be
inferred from the facts of the case, the award should be
confirmed." Sobel v. Hertz, Warner & Co., 469 F.2d 1211, 1216
(2d Cir. 1972).
In addition, a party's disagreement with an arbitrator's
decision is not a justifiable ground for refusing to comply with
an award, for the parties have agreed by contract to accept the
judgment of the arbitrator. As stated by the Second Circuit in
Advance Publications, Inc. v. Newspaper Guild of New York,
616 F.2d 614 (2d Cir. 1980):
[E]ach party . . . accepts the risk that the
arbitrator's interpretation of the contract
will disagree with its own and may, in fact, be
wrong. [citation omitted] This risk is assumed,
however, to obtain such presumed benefits of
arbitration as speed, economy and the availability of
the judgment of an expert in the field to resolve
disputes. . . .
Id. at 618.
The employer does not urge that the arbitrator's decision was
made in "manifest disregard" of the law, but argues that "the
award of back wages was in error and was not made in accordance
with the facts presented at the arbitration hearing." Affidavit
of Jagadish B. Garg, treasurer of respondent P. & J.G.
Enterprises, para. 2. Garg avers that the arbitrator refused to
admit evidence that one of the discharged employees, Mary
O'Brien, removed liquor from the employer's bar without
permission and gave it to other employees. Garg also states that
both discharged employees were rude to customers and violated
unspecified company policy. However, as previously noted, the
court need not consider the arbitrator's decision on whether the
employees were discharged for just cause, since the employer
reinstated them. Thus, these contentions by the employer are not
material to the issues before the court — whether back wages
should have been awarded and whether the arbitrator's
determination of back wages was correct.
The employer does not contest the propriety of the award of
back wages. However, respondent's treasurer Garg states that he
argued at the second arbitration hearing that back wages "should
not be determined arbitrarily on the basis of income earned by
another employees [sic], as the plaintiff had argued." Garg does
not state whether he offered an alternative method for
calculation of back wages. Garg also claims that evidence was
offered that one of the employees, Ann Russo, operated and
received income from a day care center after she was discharged.
This would presumably go toward reduction of back pay for other
income earned. Russo apparently testified, however, that she
received no income from the day care center. While a showing that
Russo received other income while she was discharged might
require a reduction in her back wages, interpretation of the
collective bargaining agreement as it applies to this issue and
judgment of the credibility of witnesses are solely within the
powers of the arbitrator, not this court.
As a corollary to this argument, Garg asserts that the
arbitrator made a determination contrary to the facts presented
because she was prejudiced against him because of his race. This
assertion can fairly be read as seeking vacation of the
arbitration awards on the ground of "evident partiality" of the
arbitrator pursuant to 9 U.S.C. § 10(b).*fn3 See Wynn v. North
American Systems, Inc., 608 F. Supp. 30, 34 (D.C. Ohio 1984)
(alleged bias because of race proper ground for action to vacate
arbitrator's award under 9 U.S.C. § 10(b)).
A showing of something more than the mere "appearance of bias"
is required to support the vacation of an arbitration award
pursuant to Section 10(b). The rule in the Second Circuit is that
"evident partiality" will be found "where a reasonable person
would have to conclude that an arbitrator was partial to one
party to the arbitration." Morelite Const. Corp. v. New York
City Dist. Council Carpenters Benefit Funds, 748 F.2d 79, 84 (2d
Cir. 1984). The burden is on the party seeking to vacate the
award to make some evidentiary showing from which such a
conclusion could be made. Hunt v. Mobil Oil Corp., 654 F. Supp. 1487,
1495 (S.D.N.Y. 1987). In addition, "the interest or bias .
. . must be direct, definite and capable of demonstration rather
than remote, uncertain, or speculative." Sidarma Societa
Italiana v. Holt Marine Indus., 515
92 F. Supp. 1302, 1307 (S.D.N.Y.), aff'd 681 F.2d 802 (2d Cir.
1981) (quoting Tamari v. Bache Halsey Stuart, Inc.,
619 F.2d 1196, 1200 (7th Cir.), cert. denied, 449 U.S. 873, 101 S.Ct.
213, 66 L.Ed.2d 93 (1980)). Mere conclusory allegations by Garg
that the arbitrator's decisions were racially motivated, or that
the fact the two employees involved were white indicates
prejudice in their favor, are insufficient to show "evident
partiality" on the part of the arbitrator.
The employer also argues that, due to recent financial losses,
it cannot afford to pay the back wages. There is little case law
on this issue, but as one district court has stated, "[a] party's
financial inability to pay has never been the basis for declining
to confirm an arbitration award." Forum Ins. Co. v. First
Horizon Ins. Co., Docket No. 87-C-2177 (N.D.Ill. June 8, 1989)
(accessible on WESTLAW 1989 WL 65041).
In consideration of the foregoing, the court will not disturb
the arbitrator's awards.
The Union also seeks attorney's fees on the basis that the
employer's refusal to comply with the arbitration awards was
without justification. Under the prevailing American rule, in a
federal action, attorney's fees cannot be recovered by the
successful party in the absence of statutory authority for the
award. Alyeska Pipeline Service Co. v. Wilderness Soc'y,
421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975).
Section 301 of the Labor Management Relations Act,
29 U.S.C. § 185, under which the Union brings this action, does not provide
for attorney's fees in actions to confirm and enforce an
arbitrator's award. See Bell Production Engineers Ass'n v. Bell
Helicopter Textron, 688 F.2d 997, 999 (5th Cir. 1982);
Children's Hosp. v. Buffalo & Western New York Hosp. & Nursing
Home Council, 582 F. Supp. 1147, 1154 (W.D.N.Y. 1984). Pursuant
to its inherent equitable powers, however, a court may award
attorney's fees when the opposing counsel acts "in bad faith,
vexatiously, wantonly, or for oppressive reasons." F.D. Rich Co.
v. United States ex rel. Industrial Lumber Co., 417 U.S. 116,
129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974).
As applied to suits for the confirmation and enforcement of
arbitration awards, "the guiding principle has been stated as
follows: `when a challenger refuses to abide by an arbitrator's
decision without justification, attorney's fees and costs may
properly be awarded.'" International Chemical Workers v. BASF
Wyandotte Corp., 774 F.2d 43 (2d Cir. 1985) (quoting Bell
Production Engineers Ass'n, 688 F.2d at 999). Thus, the question
presented is whether the employer was justified in refusing to
pay the back wages as directed by the arbitrator.
Respondent posits that the employer was justified in not paying
back wages because the award was contrary to the facts presented,
and because of the employer's inability to pay. Since it is
axiomatic that disagreement with the arbitrator's award does not
justify refusing to comply with it, the first defense is without
merit. See, e.g., Advance Publications, 616 F.2d at 618. With
respect to the employer's purported inability to pay the awards,
the employer has not provided any evidence of an inability to
pay, other than Garg's plain statement that the employer has
suffered financial losses and thus has no money to pay the
awards. Inability to pay is not a defense to a judgment.
Accordingly, the court confirms the two arbitration awards
pursuant to Section 301 of the Labor Management Relations Act,
29 U.S.C. § 185, and directs that costs and reasonable attorney's
fees be awarded to the Union, and that judgment be entered in
conformity with the awards. The amount of costs and reasonable
attorneys fees will be determined by the court upon presentation
of proper documentation in support thereof within twenty (20)
days of the date hereof. Respondent should be served with a copy
of said documentation and may respond by filing with the court
if any, to the calculation of said costs and attorneys fees.
IT IS SO ORDERED.