Opposition Brief — Apperson v. Fleet Carrier Corp.

No. 89-1430

IN THI

Sigreme Court of the United States

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On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Sixth Circuit

RESPONDENT TEAMSTER LOCAL 614’s

BRIEF IN OPPOSITION

BEST AVAILABLE COPY

QUESTION PRESENTED

Petitioners’ statement of the question misstates the

findings and holding of the decision below. The court of

appeals did not find that the arbitrator appeared to be

biased. On the contrary, it merely recognized that federal

statutes would have required an Article III judge to

recuse himself from the case.

In the circumstances disclosed by the decision below, the

question should be restated as follows:

Would a reasonable person conclude that one of the

arbitrators on a bi-partisan grievance panel was

biased where he had been a law partner of one of the

defense counsel years ago but had not worked on this

case or even for this client before the split in the

firm, had no personal knowledge of the dispute be-

fore the hearing, and had no financial interest in the

grievance or this litigation?

(i)

TABLE OF CONTENTS

Page

QUESTION PRESENTED i

TABLE OF AUTHORITIES iv

STATEMENT OF THE CASE l

REASONS WHY THE PETITION SHOULD NOT

BE GRANTED 4

I. THE DECISION BELOW RAISES NO IMPOR-

TANT QUESTION OF FEDERAL LAW

WHICH CONFLICTS WITH APPLICABLE

DECISIONS OF THIS COURT OR SHOULD

BE SETTLED HERE BY DECISION 4

II. NO CONFLICT OF THE CIRCUITS EXISTS

WHICH SHOULD BE RESOLVED BY REA-

SON OF THE DECISION BELOW 7

CONCLUSION x

(ili)

)

I ave

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IN THE

Suprene Court of the United States

. OCTOBER TERM, 1989

No. 89-1430

BILLY RAY APPERSON and DON APPERSON,

Individually And On Behalf Of A Class,

Petitioners,

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FLEET CARRIER CORPORATION; LOCAL No. 614, INTERNA-

TIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,

WAREHOUSEMEN & HELPERS OF AMERICA; and FLEET

CARRIER DEALERS SERVICE, a Michigan corporation,

Respondents.

On Petition fora Writ of Certiorari to the

United States Court of Appeals

for the Sixth Circuit

RESPONDENT TEAMSTER LOCAL 614’s

BRIEF IN OPPOSITION

The respondent, Local 614, International Brotherhood

of Teamsters, respectfully requests that the Court deny

the petition for writ of certiorari seeking review of the

Sixth Circuit’s decision in this case. That decision is

reported at 879 F.2d 1344 (1989).

STATEMENT OF THE CASE

This is a “hybrid” § 301 and duty of fair representa- -

tion action in which petitioners have raised only one issue

2

in this Court: whether the award of an arbitration com-

mittee established by the parties’ collective bargaining

agreement should be set aside because of the alleged bias

of one of the arbitrators. The arbitrator in question was

a former law partner of one of the defense counsel in

this case. However, both the court of appeals and the

district court held that this past relationship, without

more, did not establish “evident partiality’ within the

meaning of section 10(b) of the federal arbitration act,

9 U.S.C. §$ 10(b).

The grievance in question, filed by a Local 614 business

representative, sought to set aside a prior settlement of

a pay dispute that had arisen between owner-operators

represented by defendant Loca] 614, International Broth-

erhood of Teamsters (Local 614) and their employer,

defendant Fleet Carrier Corporation (Fleet), under their

collective bargaining agreement, the National Master

Automobile Transporters Agreement (NMATA). Ap-

pendix to Petition for Certiorari at page 9a.' Under the

NMATA, grievances which were not resolved at earlier

steps can be referred io a national grievance committee

comprised of an equal number of employer and union

appointees who are authorized to resolve the dispute by

majority vote (4a). Local 614’s grievance over the pay

matter was presented to the national grievance committee

in February 1986. This lawsuit, filed against Fleet by

two of its owner-operators in February 1982, had been

filed as a result of the earlier settlement and was still

pending (7a).

The employer-side co-chair of the national committee

was lan Hunter, who is a partner of A. Read Cone, the

attorney that has represented Fleet in this action from

its inception (10a). When Local 614’s grievance came up,

Hunter voluntarily stepped aside as employer co-chair

because committee members must he unrelated to the

! Subseque nt citations to this Apper

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parties in the grievance. (Jd.) Pursuant to committee

rule, he appointed Robert Parr, his former law partner,

as employer-side co-chair for the grievance (Jd.). More

particularly, both Hunter and Cone had been partners

with Parr in the “Matheson Firm” until mid-1983 when

Cone and Hunter left that firm, in which Parr is still a

named partner (/d. at fn. 7). The court of appeals, re-

versing the district court on this point, found that plain-

tiff Billy Ray Apperson had preserved an objection to

Parr’s participation in the national committee’s proceed-

ings on yartiality grounds because until mid-1983 Parr

had been law partners with Hunter and Cone (35a).

However, both of the courts below found that plaintiffs

had not met their burden of establishing “specific facts”

showing Parr’s bias. Rather, because Parr had not per-

sonally represented Fleet and because his firm had not

represented Fleet for more than two years before the

national grievance committee hearings, the district court

found it unlikely that a “reasonable person would con-

clude” that Parr was “evidently partial” (50a-5la). The

court of appeals went even further, noting the lack of

evidence: (1) that Parr had ever worked on this case or

had any “personal interest in or knowledge of the brok-

ers’ [owner-operators] original grievance or this law-

suit” before his appointment as co-chair: (2) that “Parr

* This case was decided on summary judgment after the conclu

sion of years of discovery. According to plaintiff Billy Ray Apper-

son's fifth affidavit, he was permitted to hand out and read his pre-

pared statement challenging the company co-chair to the national

committee. Sixth Circuit Joint Appendix, vol. III] at 571A. His

affidavit also acknowledges that he was permitted to speak to the

committee on his own behalf (/d.). Thus, not even plaintiff’s affidavit

Supports opposing counsel's statement in the petition at page 11 that

Parr “refus|ed| to acknowledge Apperson at the hearing”,

‘The burden of proving facts which would establish the evident

partiality of an arbitrator “rests squarely on the party challenging

the award.” Middleser Mutual Ins. Co. ». Levine, 675 F.2d 1197.

1201 (11th Cir. 1982); Sheet Metal Workers Int. Asse vr. Kinne

A

Air Conditioning Co., 756 F.2d 742, 745 (9th Cir. 1985

4

has ever personally performed legal services for Fleet”;

and (3) that Parr had any “financial interest in the

grievance or this litigation”. The court of appeals also

cited the fact that Parr’s partnership with Cone and

Hunter had “terminated over two and one-half years”

before the national committee’s decision (31a).

REASONS WHY THE PETITION SHOULD BE DENIED

No special and important reasons for granting the pe-

tition for writ of certiorari exist in this case as required

by Rule 10.1 of this Court. The decision below comports

with applicable precedent of this Court and does not

conflict with those of other courts of appeals. As we shall

show, neither this Court nor any court of appeals has

held that an appearance of bias sufficient to cause a fed-

eral judge’s recusal constitutes “evident partiality” un-

der the federal arbitration act, and all appear to apply

the reasonable person standard or its substantial equiva-

lent adopted by the court below.

I. THE DECISION BELOW RAISES NO IMPORTANT

QUESTION OF FEDERAL LAW WHICH CON-

FLICTS WITH APPLICABLE DECISIONS OF THIS

COURT OR SHOULD BE SETTLED HERE BY

DECISION.

Section 10(b) of the United States Arbitration Act, 9

U.S.C. §10(b), provides that a court may, upon the

“application of any party to the arbitration”, vacate an

award “where there was evident partiality or corruption

in the arbitrators”. In Commonwealth Coatings Corp. v.

Continental Casualty Co., 393 U.S. 145, 148-150 (1968),

a majority of this Court held that an arbitrator was

biased in fact because of financial interest. A plurality

of this Court construed section 10 to require that arbi-

trators meet or exceed the ethical standards of federal

judges and avoid “even the appearance of bias”. That

statement has been treated as dictum by the courts of

appeals because the concurrence by Mr. Justice White

5

and Mr. Justice Marshall, whose votes were essential to

the decision, expressly abjured any ruling that “arbitra-

tors are to be held to the standards of judicial decorum

of Article III judges or indeed of any judges.” Jd., 393

U.S. at 150. The concurring justices reasoned that ar-

bitrators are often effective because of their connections

to the marketplace and therefore should not be disquali-

fied by a past business relationship with one of the par-

ties. Id.

There is good reason to question whether the “evident

partiality” provisions of section 10, however they be in-

terpreted, even apply to arbitrations under a collective

bargaining agreement. In United Paperworkers v. Misco,

484 U.S. 29, 40 (1987), this Court noted that

The Arbitration Act does not apply to “contracts of

employment of . . . workers engaged in foreign or

interstate commerce,” 9 U.S.C. $1, but the federal

courts have often looked to the Act for guidance in

labor arbitration cases. ...

Labor arbitrators, of course, operate under a separate

framework of federal law of which section 203(d) of

the Labor Management Relations Act, 29 U.S.C. £§ 173

(d), is the linchpin:

Final adjustment by a method agreed upon by the

parties is hereby declared to be the desirable method

for settlement of grievance disputes arising over the

application or interpretation of an existing collective-

bargaining agreement.

Under § 203(d) it is “not arbitration per se that fed-

eral law favors, but rather final adjustment of differ-

ences by a means selected by the parties’, whether it be

arbitration or ‘‘a procedure other than arbitration”. As

the district court noted, members of grievance arbitra-

tion committees under this collective bargaining agree-

4United Mine Workers v. Barnes & Tucker Co., 561 F.2d 1093.

1096-97 (3rd Cir. 1977) ; General Drivers Local 89 v. Riss & Co., 372

U.S. 517, 519 (1963).

6

ment, like members of systems boards under the Rail-

way Labor Act, 45 U.S.C. § 151 et seqg., are employer

and union representatives and the panel is bipartisan

rather than impartial and disinterested.* It is inappro-

priate to resolve an issue of construction of the federal

arbitration act in a case where its standards are utilized

only for guidance and the interplay of other more par-

ticularized statutes must also be considered.

Even were this a case where section 10 applied er

proprio vigore, the decision below does not depart from

prior decisions of this Court or raise an, important issue

for its decision. The “neutral” third arbitrator in

Commonwealth Coatings had failed to disclose that one

of the parties had been a recent and regular customer

of his consulting firm, which had received approximately

$12,000 over the past four or five years from this cus-

tomer and had performed services for it on the very

projects involved in the dispute. It was this on-going

and undisclosed business relationship which convinced the

concurring justices that there was “evident partiality”.

393 U.S. at 151-52.

Here, in contrast, the court of appeals found that the

arbitrator in question, although a law partner years be-

fore with one of the defense counsel, had had no prior

involvement with this client or this case, had no prior

personal knowledge of this dispute, and had no financial

interest in the grievance or this litigation (3la). Clearly,

in such circumstances the arbitrator’s past relationship

fell far short of showing “evident partiality” as meas-

ured by this Court’s precedent.

5 According to the district court (48a), members of system boards

under the Railway Labor Act are measured by a “lessened standard

of partiality” because members of such boards are “not in legal

contemplation” or in fact supposed to be neutral arbitrators. They

are carrier and labor organization representatives. The board is

bipartisan rather than impartial and disinterested”, citing, Arnold

v. United Airlines, Inc., 296 F.2d 191, 195 (7th Cir. 1961).

7

II. NO CONFLICT OF THE CIRCUITS EXISTS WHICH

SHOULD BE RESOLVED BY REASON OF THE

DECISION BELOW.

The decision below neither creates nor reflects a con-

flict in circuits. Virtually all circuits that have faced the

issue have rejected petitioners’ contention that an appear-

ance of bias sufficient to cause the recusal of a federal

judge constitutes evident partiality under section 10. The

Second,® Seventh’ and Ninth * circuits have all held that

the concurring opinion by Mr. Justice White and Mr.

Justice Marshall in Commonwealth Coatings states the

law in this regard.® These circuits, and now the Sixth

® International Produce, Inc. v. A/S Rosshavet, 638 F.2d 548, 551

(2d Cir.), cert. den., 451 U.S. 1017 (1981) [$10 standard does

not include “appearance of bias”]; Morelite Constr. Corp. v. N.Y.C.

District Council of Carpenters, 748 F.2d 79, 83 (2d Cir. 1984) [$ 10

standard “less stringent than those for federal judges”]; Florasynth,

Inc. v. Pickholz, 750 F.2d 171, 173-174 (2d Cir. 1984) [“mere appear-

ance of bias that might disqualify a judge will not disqualify an

arbitrator”]; Pitta v. Hotel Assoc. of New York City, 806 F.2d 419,

423 (2d Cir. 1986) [same].

7 Merit Insurance v. Leatherby Insurance Co., 714 F.2d 673, 682

(7th Cir.), cert. den., 464 U.S. 1009 (1983) [$10 standard “less

exacting than the one governing judges”]; Tamari v. Bache Halsey

Stuart Inc., 619 F.2d 1196, 1200 (7th Cir.), cert. den., 449 U.S.

873 (1980) [showing too speculative whether actual or merely

appearance of bias is the standard].

8 Sheet Metal Workers Int. Ass’n v. Kinney Air Conditioning Co.,

756 F.2d 742, 746 (9th Cir. 1985) [“appearance of bias, standing

alone, is insufficient” ]; Toyota of Berkeley v. Automobile Salesmens’

Union, Local 1095, 834 F.2d 751, 755 (9th Cir. 1987), cert. den.,

US. , 108 S. Ct. 2036 (1988) [facts must “create a rea-

sonable impression of partiality’; district court reversed for holding

arbitrator to standard of Article III judges}.

® Applying Commonwealth Coatings in a manner consistent with

its sister circuits, the Tenth Circuit in Ormsbee Development Co. v.

Grace, 668 F.2d 1140, 1147 (10th Cir.), cert. den., 459 U.S. 838

(1982), held that “it is only clear evidence of impropriety which

justifies the denial of summary confirmation of an arbitration

award, [Citation omitted]. For an award to be set aside, the

existence of bias or interest of an arbitrator must be direct, definite

8

Circuit as well, all apply the Second Circuit’s “reasonable

person” standard '’ or something very close to it.'' Thus,

there is no conflict in the circuits warranting review by

this Court of the decision below.

CONCLUSION

The petition for writ,of certiorari should be denied.

Respectfully submitted,

GERRY M. MILLER

PREVIANT, GOLDBERG, UELMEN,

GRATZ, MILLER & BRUEGGEMAN

788 N. Jefferson Street

P.O. Box 92099

Milwaukee, Wisconsin 53202

(414) 271-4500

Counsel of Record for Respondent

Local 614, International

Brotherhood of Teamsters

Of Counsel:

FRANCIS J. KORTSCH

788 N. Jefferson Street

P.O. Box 92099

Milwaukee, Wisconsin 53202

(414) 271-4500

and capable of demonstration rather than remote, uncertain or

speculative.”

10 Morelite, 748 F.2d at 84: “evident partiality” is “where a rea-

sonable person would have to conclude that an arbitrator was par-

tial to one party to the arbitration.”

1! Merit Ins., 714 F.2d at 681, 682: circumstances must be “such

that a man of average probity might reasonably be suspected of

partiality’ and “powerfully suggestive of bias’’; also, the standard

is “objective”; Toyota of Berkeley, 834 F.2d at 756: facts must

oo

“create ‘reasonable impression of partiality’.

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