SAN FRANCISCO -- The National Labor Review Board (NLRB) asked for an arbitration deferral and the U.S. Ninth Circuit Court of Appeals has granted the petition, setting a new standard.

In Coletta Kim Beneli v. NLRB and Babcock & Wilcox Construction, Co. the Ninth Circuit agreed the NLRB had every right to defer to an arbitration award that revealed union steward Kim Beneli was indeed legitimately fired as a utility worker.

The Ninth Circuit, according to attorney Daniel Watts, of California-based Galuppo & Blake, discussed in detail with the Northern California Record why the NLRB was granted an arbitration deferral.

“When parties agreed in advance to arbitrate their labor disputes, the general rule is the Ninth Circuit will defer to the NLRB unless the NLRB does something insane, and the NLRB will defer to the arbitration decision unless it's also insane,” Watts said. He added that if the arbitration was run unfairly, or the arbitration panel made a ridiculous decision with no legal basis, the NLRB won't defer to the arbitration decision, noting. “Likewise, if the NLRB violates the law or acts unfairly, the Ninth Circuit will overrule it.”

Watts said that was not so in this case.

“The arbitration was basically fair, and both the employer and the employee agreed to arbitration in advance when they signed a collective bargaining agreement,” he said. “The evidence showed the employee was fired after using profanity at work, which she used because she had been suspended for three days for safety violations.”

Watts discussed how Judge William Fletcher likely dissented from the majority’s use of the five factors from Montgomery Ward & Co. in the review and specifically addressed the “prospective-only application” from the NLRB v. WymanGordon.

“Judge Fletcher thought the five-factor Montgomery Ward test applied only in situations where the NLRB decided to apply a rule retroactively,” Watts said. “The five-factor test is used to determine if the NLRB made a fair decision when applying a new standard retroactively.”

The attorney said since the NLRB in this case applied its new standard to future cases, not retroactively, Fletcher thought the court shouldn't apply the five-factor Montgomery Ward test.

“Instead, he wants to use a test that's used to analyze agency rulemaking and whether an administrative agency improperly acted like a legislature by creating a new rule from thin air,” Watts said. “Fletcher apparently believes that when the NLRB creates a new standard for deciding whether to defer to an arbitrator, it's essentially rewriting the law. By citing NLRB v. Wyman-Gordon Co., a Supreme Court decision invalidating a rule enacted by the NLRB without following the state governing the creation of administrative regulations, the unstated implication of Fletcher's opinion is that the NLRB's new standard should be totally invalid.”

Watts detailed how the case has set a new NLRB standard for future arbitration deferrals.

“In the Ninth Circuit's words, ‘The new standard shifts the burden of proof for challenging the arbitration award to the party advocating deferral to the arbitral award and is less deferential to the arbitrator’s decision.’'' Watts said. "Basically, the party who likes the arbitration decision will need to justify keeping it.” 

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