New York Federal Court Reduces Arbitration Award in Labor Dispute by 25% Where Arbitrator Exceeds Scope of Authority

This case arose out of a labor dispute between Charter Communications Inc., successor to Time Warner Cable, and International Brotherhood of Electrical Workers, AFL-CIO, Local Union No. 3, a labor organization that represents employees in the bargaining unit employed by Charter.

On March 28, 2017, Local 3 commenced a strike against Charter. Charter thereafter served Local 3 with an arbitration demand seeking to arbitrate whether Local 3 violated the no-strike clause contained in the collective bargaining agreement (which expired on March 31, 2017) when it commenced a strike on March 28.

The U.S. District Court for the Eastern District of New York addressed whether Local 3 members were bound by a provision in the collective bargaining agreement requiring arbitration of disputes when they were allegedly on strike.

The district court found the parties were bound by the no-strike, arbitration, and grievance provisions in the collective bargaining agreement, and ordered the parties to arbitrate. In its decision, which was confirmed by the circuit court, the district court noted that it was undisputed that on March 31, 2017, the no-strike obligation was not in force, “so the contested strike period up for arbitration on claimed damages by Charter is three days.”

The arbitrator found in favor of Charter and awarded it $968,195 for the violation of the no-strike clause. However, although the arbitrator confirmed the district court’s three-day strike period in its liability decision, she added a day — March 31 — to the strike period in her damage’s decision, stating that “the time frame for purposes of assessing damages in this proceeding is March 28, 29, 30, and 31, 2017.”

Charter moved to confirm the arbitration award in the district court, and Local 3 cross-moved to vacate or modify the award, arguing that the arbitrator exceeded the scope of her authority by extending the strike period from three days to four days. Local 3 also argued that the damages formula used by the arbitrator did not account for alleged savings to Charter during the strike, and resulted in a windfall to Charter, which warranted modification of the award.

On November 4, 2021, the district court agreed with Local 3 and reduced Charter’s arbitration award by 25%, to $726,146.25, finding that the arbitrator exceeded the scope of her authority when she altered the strike period by adding an extra day to the time frame for assessing damages. However, the district court rejected Local 3’s argument as to the damages formula, finding that it did not establish that the arbitrator had shown a manifest disregard for the law when declining to offset the award by Charter’s alleged savings.

International Brotherhood of Electrical Workers, AFL-CIO, Local Union No. 3 v. Charter Communications, Inc., No. 1:17-cv-05357 (E.D.N.Y. Nov. 4, 2021).