International Brotherhood of Teamsters v. CBF Trucking, Inc. , 440 F. App'x 76 ( 2011 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
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No. 10-3044
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INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 701
v.
CBF TRUCKING, INC.,
Appellant
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On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 3-09-cv-05525)
District Judge: Honorable Anne E. Thompson
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Argued July 11, 2011
Before: SLOVITER, FUENTES, and VANASKIE, Circuit Judges
(Filed: July 28, 2011)
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Meredith R. Murphy
John A. Ridley (Argued)
Drinker, Biddle & Reath
Florham Park, NJ 07932
Attorneys for Appellant
David B. Beckett
Roosevelt Porter
Mets, Schiro & McGovern
Woodbridge, NJ 07095
Paul A. Montalbano
Matthew G. Connaughton (Argued)
Cohen, Leder, Montalbano & Grossman
Kenilworth, NJ 07033
Attorneys for Appellee
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OPINION
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SLOVITER, Circuit Judge.
CBF Trucking appeals the District Court’s decision confirming the arbitration
award entered against CBF and in favor of Michael Mickens, a CBF-employed member
of the International Brotherhood of Teamsters, Local 701 union. We will affirm. 1
CBF provides shipping services to the United States Postal Service. On
November 25, 2008, Mickens failed to perform an assigned pick-up and delivery.
Following CBF’s investigation, it called a meeting with Mickens and his union
representatives at which Mickens insisted he had completed the assigned run.
Notwithstanding his insistence, CBF concluded that Mickens failed to complete the
assignment and, on that basis, terminated Mickens. Mickens and the union grieved the
termination, leading to a second meeting. Once again, Mickens insisted that he
1
The District Court had jurisdiction under 28 U.S.C. § 1331 and we have
jurisdiction under 28 U.S.C. § 1291. We review de novo a district court’s legal
conclusions in an order confirming an arbitration award. Century Indem. Co. v.
Certain Underwriters at Lloyd’s, London, 584 F.3d 513, 521 (3d Cir. 2009).
completed the assigned run. CBF was unaware at the time of the meetings that Mickens
was tape recording the proceedings.
Pursuant to the collective bargaining agreement, the union filed a demand for
arbitration. At the arbitration hearing, Mickens, for the first time, offered an explanation
for his failure to perform the assigned trip, asserting that a security guard relayed a
message from CBF that he did not need to complete the assignment. The security guard
was called to testify and he did not contest Mickens’ explanation, testifying that it was
“possible” he had provided such an instruction to Mickens. CBF introduced the minutes
from the first meeting which reported Mickens’ initial, and ultimately false, claim that he
had completed the assignment. Despite the evidence that Mickens had changed his story
and initially lied to CBF, the arbitrator concluded that Mickens was wrongfully
terminated and ordered that he be reinstated with full back-pay.
Shortly after issuance of the arbitration award and during discovery in a separate
state lawsuit, Mickens produced to CBF the covert recordings he had made of the two
meetings between CBF, Mickens, and the union. The union does not contest that the
recordings depict Mickens’ original adamancy that he completed the assigned run. The
tapes were not produced before this late date despite the fact that CBF had repeatedly
requested that Mickens and the union produce all relevant documents.
When the union filed the action in the District Court to enforce the arbitration
award, CBF moved to vacate the award on the ground that it was procured by fraud or
undue means. The District Court denied the motion, holding that while Mickens had lied
and surreptitiously withheld the tapes, thereby committing fraud, the fraud was not
material to the outcome of the arbitration proceeding.
Given the strong presumption in favor of arbitration, federal law provides that a
district court may vacate an arbitration award “only under exceedingly narrow
circumstances.” Dluhos v. Strasberg, 321 F.3d 365, 370 (3d Cir. 2003). Those
circumstances are delineated in the Federal Arbitration Act (“FAA”) itself. Pursuant to
Section 10(a)(1) of the FAA, one such circumstance is when the award was “procured by
corruption, fraud, or undue means.” Courts have applied a three-part test to determine
whether an award was procured by fraud. Under the test, CBF must establish (1) the
existence of fraud by clear and convincing evidence, (2) that the fraud was not
discoverable with the exercise of due diligence, and (3) that the fraud materially relates to
an issue in the arbitration. See, e.g., A.G. Edwards & Sons, Inc. v. McCollough, 967 F.2d
1401, 1404 (9th Cir. 1992); Bonar v. Dean Witter Reynolds, Inc., 835 F.2d 1378, 1383
(11th Cir 1988).
Applying this test, the District Court correctly concluded that “Mickens’ failure to
provide CBF with the tape recordings until after the arbitration award had been finalized
is fraudulent or undue conduct that could be grounds for vacating the arbitration award.”
Int’l Bhd. of Teamsters, Local 701 v. CBF Trucking, Inc., No. 09-5525, 2010 U.S. Dist.
LEXIS 57386, at *6 (D.N.J. June 10, 2010). However, as the District Court noted, the
arbitrator was already aware of the essential facts contained on the tapes—that is, that
Mickens originally lied and insisted that he completed the job assignment. Accordingly,
the District Court did not err in reasoning that the recordings were not material to the
arbitrator’s decision and their nondisclosure did not deprive CBF of a fair proceeding.
See Envtl. Barrier Co., LLC v. Slurry Sys., Inc., 540 F.3d 598, 608 (7th Cir. 2008) (there
must be “a nexus between the purported fraud and the arbitrator’s final decision”). 2
For the foregoing reasons and substantially for the reasons explained in the
District Court’s opinion, we will affirm the judgment of the District Court.
2
We also reject CBF’s argument that the arbitrator manifestly disregarded
the law by not applying the “clock stops” doctrine. Assuming, without deciding,
that manifest disregard for the law remains a valid ground for vacatur, it is not
clear that the clock stops doctrine is the governing law in New Jersey. Nor do we
think the arbitrator erred by not reducing the back-pay award by the amount of
unemployment benefits Mickens received.