arbitration is not raised by this case, however, because, as the district court found, one of the two awards Wackenhut claims is in conflict with the present award was not even called to the attention of the arbitrator. . . ." Id.
Although the Wackenhut Court framed the issue as one of stare decisis, the same principle bars the argument that St. George advances here based upon the res judicata effect of a prior arbitration award.
See Connecticut Light & Power Co. v. Local 420, Int'l Brotherhood of Electrical Workers, 718 F.2d 14, 20 (2d Cir. 1983) ("Principles of stare decisis and res judicata do not have the same doctrinal force in arbitration proceedings as they do in judicial proceedings; and, while it is the usual practice of arbitrators to find prior awards final and binding, subsequent arbitrators may set aside or modify a previous award in certain circumstances.") (citations omitted); North River Ins. Co. v. Allstate Ins. Co., 866 F. Supp. 123, 128 (S.D.N.Y. 1994) (an "arbitrator faced with a case with issues resolved in a prior arbitration has discretion as to whether to follow a previous award.") Because arbitrators possess such discretion, the res judicata effect, if any, to be accorded a prior arbitration award is a matter to be decided by the arbitrator, and not the district court on a petition to confirm.
This same conclusion was reached by Judge Haight in Enterprise Ass'n Metal Trades Branch Local Union 638, v. Empire Mechanical, Inc., 1992 U.S. Dist. LEXIS 4749, No. 91 Civ. 5014, 1992 WL 84689, at *2 (S.D.N.Y. Apr. 9, 1992). In that case, Empire opposed the union's petition to confirm an arbitration award arguing, inter alia, that prior arbitration awards between the parties fully adjudicated the union's claims that were at issue in the subsequent arbitration. Id. In granting the union's petition to confirm, Judge Haight held that Empire was prohibited from raising the issue of res judicata on the grounds that any affirmative defenses affecting the merits of the union's complaint -- including res judicata -- were "for the arbitrators at the hearing, and  not for the Court on a petition to confirm the award." Id. Judge Haight analogized the case to one in which an employer pleads the res judicata effect of a prior arbitration award in opposition to a motion to compel arbitration; an argument which the Second Circuit has repeatedly refused to consider in favor of leaving that determination to the arbitrators. See e.g. Transit Mix, 809 F.2d at 970.
In addition to the arguments set forth in Judge Haight's well-reasoned opinion, other arguments support the conclusion that a party may not oppose confirmation of an arbitration award on res judicata grounds where that argument was not presented to the arbitrator. First, as noted, permitting a party to litigate the res judicata effect of a prior arbitration award before a court -- rather than before an arbitrator -- is inconsistent with the proposition that arbitrators have broad discretion to determine the precedential or preclusive effect, if any, to be accorded an issue or claim decided in a prior arbitration. See Connecticut Light & Power, 718 F.2d at 20; Transit Mix, 809 F.2d at 969; see generally Timothy J. Heinsz, Grieve It Again: Of Stare Decisis, Res Judicata and Collateral Estoppel in Labor Arbitration, 38 B.C. L. Rev. 275, 292-300 (1997).
Second, the policy concerns which underlie the doctrine of res judicata apply far less forcefully where a party seeks to oppose confirmation of an existing arbitration award than where that party opposes being compelled to arbitrate a particular dispute in the first place. Because a court may not refuse to compel a party to submit to arbitration based on that party's claim that the res judicata effect of a prior arbitration award bars the proceedings, see Transit Mix, 809 F.2d at 970, it follows a fortiori that a court should not refuse to confirm an arbitration award on the same grounds.
"Res judicata or claim preclusion 'prevents a party from litigating any issue or defense that could have been raised or decided in a previous suit, even if the issue or defense was not actually raised or decided.'" Woods v. Dunlop Tire Corp., 972 F.2d 36, 38 (2d Cir. 1992), cert. denied, 506 U.S. 1053, 122 L. Ed. 2d 131, 113 S. Ct. 977 (1993) (quoting Clarke v. Frank, 960 F.2d 1146, 1150 (2d Cir. 1992)). A central policy concern underlying res judicata is that it protects parties from "the expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions." Milltex Indus. Corp. v. Jacquard Lace Co., 922 F.2d 164, 168 (2d Cir. 1991) (quoting Montana v. United States, 440 U.S. 147, 153-54, 59 L. Ed. 2d 210, 99 S. Ct. 970 (1979)).
To the extent that these and other policies favor permitting a party to assert res judicata based on a prior arbitration award, such concerns are most compelling when articulated in opposition to a motion to compel arbitration. At that point, were a court permitted to conclude that res judicata would indeed bar the arbitration, the expense and vexatiousness of a second arbitration could be avoided, judicial and arbitral resources conserved, and the possibility of inconsistent decisions averted. See Milltex Indus., 922 F.2d at 168. Nevertheless, a court is not permitted -- even at that stage of the dispute -- to substitute its judgment on such issues for that of the arbitrator. See Transit Mix, 809 F.2d at 969.
By contrast, permitting a party to assert res judicata for the first time in opposition to a petition to confirm an arbitration award would yield few, if any, potential benefits. To begin with, neither party could be spared the expense of a subsequent arbitration proceeding because it has already taken place. Nor would such a practice conserve judicial resources. Rather, permitting a party to raise this issue on a petition to confirm would waste considerable judicial time and effort because the court would have to scrutinize the merits of the second arbitration to determine if it dealt with "any issue or defense that could have been raised or decided in a previous suit, even if the issue or defense was not actually raised or decided." Woods, 972 F.2d at 38. Further, permitting a party to assert res judicata would increase the risk of producing inconsistent decisions because a court might be tempted to conclude that the arbitrator should have taken the res judicata effect of a prior arbitration award into account in reaching his decision.
Third, permitting a party to oppose confirmation of an award based on a claim that it did not raise before the arbitrator would also offend the general principle that a party "cannot remain silent, raising no objection during the course of the arbitration proceedings, and when an award adverse to him has been handed down complain of a situation of which he had knowledge from the first." York Research Corp. v. Landgarten, 927 F.2d 119, 122 (2d Cir. 1991) (quoting Cook Indus. v. C. Itoh & Co., 449 F.2d 106 (2d Cir. 1971), cert. denied, 405 U.S. 921, 30 L. Ed. 2d 792, 92 S. Ct. 957 (1972)). Here, despite full knowledge of the facts and the allegations upon which the 1993 Award was based, St. George never raised the issue of res judicata at the time the 1997 Award was issued. St. George's failure to do so is particularly striking considering that on the one occasion when the hotel did in fact appear before the Arbitrator after the 1993 Award was issued i.e. the January 25, 1995 hearing on the Union's complaint seeking enforcement of the 1993 Award -- St. George raised several other objections to the Union's complaint including the statute of limitations and the Arbitrator's lack of jurisdiction to enforce his own award. (Gringer Aff. Ex. E at 4)
Although my finding that St. George waived its right to assert res judicata by not raising it before the Arbitrator is not strictly required by cases such as Young and Cook Indus. -- both of which are primarily concerned with a party's failure to object to the arbitration itself on the grounds of partiality or bias -- the fact remains that St. George was well aware of the facts supporting its claim of res judicata over two years before the 1997 Award was issued. As a result, St. George should not be permitted to sandbag both the Arbitrator and the Union by withholding any merit-based objections it may have had to the 1997 Award until the Union petitioned the district court for confirmation. For all of these reasons, St. George is prohibited from opposing confirmation of the 1997 Award based on the ground that the arbitrator should have given res judicata effect to the 1993 Award.
However, even if St. George were permitted to assert res judicata for the first time in this court, the scope of review of the Arbitrator's decision in this regard would be extremely limited. As the Second Circuit recently reaffirmed in Saint Mary Home, Inc. v. Service Employees Int'l Union, Dist. 1199, 116 F.3d 41, 44 (2d Cir. 1997), the "principal question for the reviewing court is whether the arbitrator's award 'draws its essence from the collective bargaining agreement' since the arbitrator is not free merely to 'dispense his own brand of industrial justice.'" (citing In re Marine Pollution Serv., Inc., 857 F.2d 91, 94 (2d Cir. 1988) and quoting Enterprise Wheel, 363 U.S. at 593). In order for an arbitration award to draw its essence from the agreement, the arbitrator "need only explicate his reasoning under the contract 'in terms that offer even a barely colorable justification of the outcome reached.'" In re Marine Pollution, 857 F.2d at 94 (citing Andros Compania Maritima, S.A. v. Marc Rich & Co., 579 F.2d 691, 704 (2d Cir. 1978).
Similarly, "courts reviewing inconsistent awards have also held that neither award will be set aside where both draw their essence from the collective agreement." Connecticut Light & Power, 718 F.2d at 20 (citations omitted). In other words, the failure of an arbitrator to accord res judicata effect to a prior arbitration award is not a sufficient ground for refusing to confirm a second award as long as the second award itself draws its essence from the parties' agreement. See W. R. Grace & Co. v. Local Union 759, Int'l Union of United Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 765, 103 S. Ct. 2177, 76 L. Ed. 2d 298 (1983); Hotel Ass'n of Washington, D.C. v. Hotel & Restaurant Employees Union, Local 25, 295 U.S. App. D.C. 285, 963 F.2d 388 (D.C. Cir. 1992); Connecticut Light & Power, 718 F.2d at 20.
Here, the Arbitrator's written opinion, in which he explains his reasons for issuing the 1997 Award, provides, in pertinent part, as follows:
Evidence was submitted by the Union concerning non-union employees performing front desk agent duties, which is bargaining unit work, while the following three front desk agents were on layoff: Audrey Day, Helen Chan and Anthony Moore. Based upon the evidence submitted to me and taking into account the obligation of the grievants to mitigate their damages, I find the following employees are owed the following amounts: