A federal judge has taken the unusual step of overturning an arbitrator's decision in a labor dispute, throwing out a $1.2 million award to United Steelworkers of America members at Bethlehem Steel's Sparrows Point plant.
U.S. District Judge J. Frederick Motz ruled this week that the award included improper punitive damages against the company.
The money was to compensate crane millwrights in the plant who had part of their assigned work given to another group of millwrights in violation of Bethlehem's contract with the Steelworkers.
Judge Motz ruled that about 100 crane millwrights were fully employed and were even working overtime hours during the disputed period from 1987 to 1989. Thus, the judge decided, they could not reasonably have worked the 75,000 hours of work that were transferred to the other group of workers, which is the number of hours on which Arbitrator Rolf Valtin made his compensation award.
The award "is punitive because it bears no rational relation to any loss suffered by the crane millwrights," Judge Motz wrote.
Crane millwrights laid off during the 2 1/2 -year period may be compensated, but the judge did not rule on Bethlehem Steel's claim that it owed them no more than $333,000.
Arbitration decisions are infrequently appealed to courts and even more rarely overturned. But Judge Motz said that the arbitrator ignored reality and did not follow the union's contract in fashioning the remedy.
"The appeal was very unusual, they [Bethlehem] probably did that to avoid setting a precedent," said William Nugent, a Steelworkers Union representative who helped prepare the arbitration case.
"It undermines the confidence people have in arbitration."
But he noted that the judge upheld the arbitrator's ruling that the contract was violated. The court appeal only concerned compensation.
Earle K. Shawe, a Baltimore attorney for Bethlehem Steel, said that the court decision would benefit the arbitration system by affirming the rule against damages in excess of actual losses.
Carl B. Frankel, associate general counsel of the national Steelworkers Union, said no decision had been made to appeal Judge Motz's ruling or to return to the arbitrator.
Bethlehem Steel said that it transferred machinery work on the plant floor from crane millwrights to other millwrights, despite the contract's specific assignment of work, for the sake of efficiency.
Crane millwrights would remain above the shop floor working on the large overhead cranes, instead of traveling between the floor and overhead stations.