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Confirming an arbitration award in a labor dispute, a New Jersey federal court held that it had subject matter jurisdiction to review a manifest disregard challenge because it required a court to immerse itself substantially in federal law.
In Louis J. Kennedy Trucking Co. v. Teamsters Local Union, No. CIV.A 05-6005JLL, 2007 WL 2705161 (D. N.J. Sept. 17, 2007), Kennedy Trucking temporarily relieved its driver Fernandes from driving duties after an alleged road rage incident. Kennedy Trucking sought to have a psychologist examine Fernandes. Fernandes refused and filed a grievance with the union.
Kennedy Trucking and the Union were parties to a collective bargaining agreement containing an arbitration clause. The union submitted a grievance to the New Jersey State Board of Mediation objecting to Kennedy Trucking’s temporary disqualification.
The arbitrator found that the dispute was arbitrable, rejecting Kennedy Trucking’s assertion that Department of Transportation (DOT) regulations rather than the collective bargaining agreement covered the dispute. Further, the arbitrator found Kennedy Trucking lacked just cause for suspending Fernandes. The arbitrator ordered Fernandes to undergo an independent examination. Once the physician cleared Fernandes for work, Kennedy Trucking had to reinstate Fernandes with full back pay, seniority, and benefits. Kennedy Trucking sought to vacate the award, alleging the arbitrator manifestly disregarded federal law.
The Court held that it had subject matter jurisdiction to review the award as an alleged manifest disregard of federal law raises a federal question. The Court found that unlike grounds of review concerning the arbitration process, a manifest disregard challenge requires a court to determine what the federal law is and whether the arbitrator manifestly disregarded it. The Court found that there was subject matter jurisdiction because “this process immerses the court in questions of federal law and their proper application.”
The Court declined to vacate the award finding the arbitrator had authority to hear the dispute, as the collective bargaining agreement specifically covered “all disputes” between the parties. Additionally, the Court found the arbitrator’s remedy comported with federal law, as the arbitrator specifically considered Kennedy Trucking’s obligations under DOT regulations. Finally, the arbitrator’s award did not violate public policy.
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