THE USE OF THE PAST PRACTICE DOCTRINE IN LABOR ARBITRATIONS

The burden of proof is on the party alleging the existence of a binding past practice to establish that one exists.  See Reynolds Packaging Group, Reynolds Consumer Products and Bellwood Printing Pressmen, 38 LAIS 134, 2010 WL 6777140 (Etelson 2010).  “A past practice may be given binding effect as an implied term of a labor agreement if the practice is unequivocal, clearly enunciated and acted upon, and reasonably ascertainable over a reasonable period of time as a fixed and established practice accepted by both parties. Grand Haven Stamped Products Co., 107 LA 131, 137 (Daniel, 1996); Arizona Aluminum Co., 78 LA 766 (Sass, 1982); Elkouri and Elkouri, How Arbitration Works, pp. 606-08 (6th Ed. 2003).”  Pueblo School District No. 70 (CO) and Association of Classified Employees, 2009 WL 8161050 (Snider, 2009).   Even when a past practice has been established, however, that does not end the inquiry.  Arbitrators are reluctant to prohibit employers from changing working conditions which are fundamental functions of management regardless of whether a contrary past practice exists.  That is particularly true when the contract contains a strong management rights clause or a specific provision authorizing changes in work rules.

Nevertheless, practices involving a benefit of peculiar personal value to employees are typically protected against unilateral management abrogation.  “The determination of what constitutes a ‘benefit,’ requires the application of an ‘objective rather than a ‘subjective’ standard.  The real question in each case is not whether the particular individual likes the condition in question, but whether an ordinary employee in the same situation would reasonably regard the condition as conferring a substantial benefit upon him in relation to his job.”  United States Steel Corp., 121 LA 1200 (Das, 2005).  Arbitrators are especially likely to find the existence of a personal benefit when employees’ pay is involved, because “there can be no greater ‘employee benefit’ than compensation.”  Saks Fifth Ave., 118 LA 1398 (Herzog, 2003).

There is an additional consideration to be taken into account in past practice cases.  In some federal circuits, courts have adopted the view that, generally speaking, labor arbitrators may rely on the past practice rationale only if they find relevant portions of the collective bargaining agreement to be ambiguous.  See e.g. CP Kelso US, Inc. v. Operating Engineers, Local 627, 2010 WL 222258 (10th Cir. 2010).  Arbitrators should consider whether this doctrine applies in a given case even though it does not derive from arbitrators so much as from courts.  There is no point, and it would be unfair to the parties, for an arbitrator to decide a case by relying on a past practice theory if the inevitable result would be that the award is vacated by a federal district court.

First of all,

 [c]ourt decisions in this area have been mixed. The reason for enforcing a past practice is the arbitrator’s conclusion that the practice constitutes part of the collective bargaining agreement, a contract in fact if not in writing. One federal appellate court reviewing an arbitration award that found such an amendment expressly held that an “award that appears contrary to the express terms of the agreement may nevertheless be valid if it is premised upon reliable evidence of the parties intent. ,” IBEW Local 199 v. United Telephone Co. of Florida, 738 F.2d 1564, 1568 (11th Cir. 1984)

Nevertheless, some other courts either refuse to believe that parties can amend their agreements through their practices, or at least that arbitrators cannot enforce the practice to the detriment of the written agreement. Thus in IUE v. Hurd Corp., 7 Fed. Appx. 329 (6th Cir. 2001), the court held that an award favoring past practice over the contract’s terms did not (in the Supreme Court’s terms) “draw its essence” from the collective bargaining agreement.  Spirit Airlines, Inc, 2008 WL 8578940 (Nolan, 2008)

Thus, the Eleventh Circuit[1] follows a rule giving arbitrators broad authority to apply the past practice doctrine, even when the union contract contains a standard “no modification” clause.[2]  See IBEW Local 199 v. United Telephone Co. of Florida, 738 F. 1564 (11th Cir. 1984).  Clearly the Eleventh Circuit disagrees with the position of other circuits exemplified by the Kelso case.  In other words, the viability of the past practice rule may depend no only on the facts of the case but also the particular circuit governing applicable law where the arbitration takes place.

Furthermore, in many cases failure to follow the alleged past practice can create ambiguity in contract language relating to the issue in question.  Even the broadest management rights provision does not permit a unilateral modification of or addition to other contract language.  See e.g. Aggregate Industries-Northeast Region, Inc. v. Teamsters Local Union No. 42, 762 F. Supp. 2d 285, 297-98 (D. Mass. 2010):

However, it is well settled that “custom and past practice may [,under certain circumstances,] be held enforceable through arbitration as being, in essence, a part of the parties’ ‘whole’ agreement.” Elkouri & Elkouri, How Arbitration Works at 606. The Supreme Court has explained that: The labor arbitrator’s source of law is not confined to the express provisions of the contract, as the industrial common law-the practices of the industry and the shop-is equally a part of the collective bargaining agreement although not expressed in it. United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 581-82, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960); Senior v. NSTAR Elec. and Gas Corp., 449 F.3d 206, 220 (1st Cir. 2006) (same); see also Providence Journal Co. v. Providence Newspaper Guild, 271 F.3d 16, 21 (1st Cir. 2001) (holding that arbitrators are allowed “to use past practice as an interpretive device or as relevant evidence”). “[T]o be binding, a trade custom or usage must be so well known, uniform, long established and generally acquiesced to in so as to induce the belief that the parties contracted with reference to it, nothing in the contract to the contrary.” Strathmore Paper Co. v. United Paperworkers Int’l Union, AFL-CIO, Local 197, 900 F.2d 423, 428 (1st Cir. 1990) (quoting Georgia Pac. Corp. v. Local 27, 864 F.2d 940, 946 (1st Cir. 1988)).

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. . . Aggregate now contends that, regardless of the Zipper Clause, the claim for past practice is “patently contrary” to the express written language of the CBA. But Aggregate does not point to any provision of the CBA that would support its argument. The Management Rights clause alone is insufficient to circumvent the application of past practice under the circumstances. . . .

In conclusion, the past practice doctrine can be a powerful tool for a party, particularly in jurisdictions such as the Eleventh Circuit that strongly favor the application of that doctrine.

 


[1] Of course, the Eleventh Circuit governs federal law in Florida to the extent not resolved by the Supreme Court.

[2] Actually, the Eleventh Circuit seems more tolerant than most arbitrators about allowing past practice to trump a contrary contract provision,; the majority of arbitrators decline to enforce a past practice that directly conflicts with specific contract language.  See e.g. Auto Workers Local 1904, 2005 WL 1807007 (Sellman, 2005);Weyerhaeuser Co., 121 LA 1192 (Baroni, 2005); Clean Coverall Supply Co., 47 LA 272, 277 (Witney, 1966).