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As parties to a collective bargaining agreement, effective from October 1, 2007, through September 30, 2009 (“the Agreement”), the Union and the Employer submitted this matter to arbitration. The dispute involves the failure to promote the Grievant. The undersigned was selected by the parties under the auspices of the American Arbitration Association to decide the matter.

Whether the Employer violated the collective bargaining agreement by denying the bid of the Grievant for the position of Benefits Claim Processor, and if so, what shall the remedy be?

The Employer manages three employee benefits trusts (“the Funds”) established under various collective bargaining agreements. The two smaller of these funds, the Staff & Affiliates Pension Fund and the 401(k) Plan provide benefits for officers and employees of the Laborers International Union of North America (LIUNA) Local Unions, District Councils and other organizations affiliated with LIUNA. The larger of the Funds, the National (Industrial) Pension Fund provides for benefits established through collective bargaining agreements which cover employees represented by LIUNA. All of the Funds are funded by employer contributions required by collective bargaining agreements or other agreements. Each Fund’s Board of Directors has overall responsibility for the management of the Fund. The day-to-day administration of each Fund has been delegated to a common Fund Administrator and Assistant Fund Administrator. The three Funds share the employees at the Fund Office.

The Grievant is a Data Entry Clerk (pay grade 2) who has been employed by the Fund Office since June 2002. On August 3, 2009, the Fund Administrator announced a vacancy in the position of Benefits Claims Processor (pay grade 3) and invited applications from employees. The Grievant and two other employees submitted applications. The other employees were . K., a Data Entry Clerk who had been employed in the Fund Office since 1998, and K. C., who had been employed in the Fund Office since January 2008 as a Receptionist (pay grade 1).

The Administrator interviewed each of the applicants on August 19, 2009, and, according to his testimony, asked each of them the same questions from a list that he had prepared. He made contemporaneous notes of the interviews on each applicant’s resume and reviewed the resume of each applicant. Thereafter he awarded the promotion to the junior applicant, K. C. The Grievant filed a grievance on September 9, 2009. The senior applicant, N. K., did not file a grievance. The Administrator held a Step 3 grievance meeting on September 3 with the Grievant, the Shop Steward and the Union Staff Representative. On September 30 the Administrator sent a written response to the Union. In his response, he outlined the reasons for choosing K. C. Essentially, he stated his opinion that she had significantly stronger customer service experience, better communications skills, better skills dealing with complex financial transactions, a better knowledge of the Funds’ operations, a greater ability to multitask, and was more detail oriented. The Administrator thus concluded that because, in the opinion of the Employer, the two applicants were not relatively equal, seniority did not have to be a primary consideration. Thereafter the Union timely invoked arbitration.

Section 5.01. When vacancies occur in full-time positions covered by this Agreement, or when new full-time positions are created, notices of such vacancies and/or newly-created positions shall include job title, grade, salary, and a brief description of job duties, including required qualifications and skills, and shall be posted on an appropriate bulletin board, in the Pension Fund Office only, immediately for a period of three (3) working days, and a copy of such posting shall be supplied to the Shop Steward of the Union. Temporary and/or part-time positions shall not fall within the job posting requirements as stated above. The Shop Steward shall be notified of any new temporary or part-time employees when employed.

Section 5.02. When more than one employee applies for the vacancy, seniority shall be given primary consideration in the selection where qualifications, in the opinion of the Employer, are relatively equal.

The Union contends that the Grievant’s qualifications are, at the least, “relatively equal” to those of K. C., and, as the Grievant was more senior, she should have been selected. The reasons for the Employer’s determination to the contrary do not withstand scrutiny. The language that qualifications be relatively equal “in the opinion of the Employer” does not exempt the determination from review under the grievance-arbitration procedure of the Agreement. The sincerity of the Employer’s determination is not the issue; it is whether there is objective support for the determination. Here the Fund’s determination was a subjective one, not supported by the objective facts. Finally, the fact that the Grievant was only the second most senior of the three applicants is irrelevant because the most senior bidder did not invoke her seniority rights by filing a grievance.

The Employer urges that the Employer’s determination of the qualifications is conclusive and not subject to arbitral review. There are no limitations to the phrase “in the opinion of the Employer” and the word “opinion” allows for subjective determinations by the Employer. The Employer points to other language in the Agreement where the parties clearly expressed their intent to preserve seniority rights in contrast to the provisions of Article 5.02 of the Agreement. Even if the Arbitrator had the authority to review the Employer’s determination of the applicants’ relative qualifications, the Employer’s determination was reasonable and supported by the evidence. In any event, even if the Employer’s determination was overturned, the Grievant was not the most senior applicant, and thus was not entitled to the promotion.

The parties take extreme and opposite views as to the meaning of Article 5.02. The Union urges that it allows the arbitrator to make the determination as to whether the applicant’s qualifications are “relatively equal.” The problem with the Union’s argument is that it would read the phrase “in the opinion of the Employer” out of the Agreement. In interpreting the Agreement, I must give effect to all of its language, if at all possible. If I engaged in my own evaluation of the applicants’ qualifications to determine if they were relatively equal, I would thereby render the Employer’s opinion irrelevant.

The Employer’s contention that its opinion regarding the applicants’ qualifications is not subject to any scrutiny by the arbitrator is equally problematic. A basic principle of contracts, in general, and collective bargaining agreements, in particular, is that they impose an obligation of good faith on the parties to the agreement.[1] If there were no such obligation in this case, the Employer could proffer an “opinion” on qualifications that was totally irrational or without foundation and immunize itself from scrutiny. That would render the provision of Article 5.02 relating to seniority of no practical effect. That is not to say that Article 5.02 does not grant the Employer latitude in its determinations regarding qualifications. Instead it means that the Employer’s opinion must be a good faith one. In this case, the best indicia of good faith is whether the Employer made a considered and reasonable judgment.

Mindful that I must not substitute my judgment for that of the Employer, I still must scrutinize the Employer’s stated determination that the Grievant’s qualifications were not relatively equal to those of Corry. Here the Employer clearly articulated the reasons for its opinion, thus demonstrating that its opinion was considered. First, although the Employer may have had some minor concerns about the Grievant’s past performance, it did not dispute that she was a good employee and was qualified for the position. It his September 30 letter in response to the Step 3 grievance, the Administrator set forth in detail why he viewed K. C.’s qualifications as markedly superior. He explained why he thought that her resume demonstrated superior experience relative to the requirements of the Benefits Claims Processor position. The Administrator obviously placed great weight on K. C.’s extensive experience in the financial services sector. He had observed both employees and, based on his observations, he believed that K. C. demonstrated more skill in dealing with customers, greater initiative, and a greater ability to be detail-oriented. He was also impressed that K. C. took the initiative to prepare for her interview by becoming more familiar with many of the details of the Funds’ operations. He reiterated these considerations in his testimony at the hearing in this matter. His testimony was forthright and consistent with his earlier written statement and with his contemporaneous notes.

Although K. C. did not testify at the hearing, her resume reflected the experience relied upon by the Administrator. Further, I did observe the Grievant testify. Her testimony and demeanor were not at odds with the conclusions reached by the Administrator regarding her abilities.

Whether or not I would have made different judgments regarding the respective qualifications of the two applicants as they relate to the requirements of the position, I have no basis for concluding that the Employer’s judgments on these issues were unreasonable, or otherwise failed to reflect a good faith determination There is no doubt that the Administrator could have weighed the considerations differently. Equally certain is that his determination was based on reasonable considerations. Under these circumstances, I can find no violation of the Agreement..

/s/

[1] See, Restatement (Second) of Contracts § 205 (1981) ("Every contract imposes upon each party a duty of good faith and fair dealing in its performance...."); see also, Elkouri & Elkouri, How Arbitration Works, 6th ed., p 478 (“The ‘implied covenant of good faith and fair dealing’ is similar to the principle of reason and equity, and is deemed to be an inherent part of any collective bargaining agreement”.)

Appearances

David R. Levinson, Esq. James S. Ray, Esq.

OPINION AND AWARD