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Last week the Tenth Circuit, reaffirmed the deference it accords arbitration agreements. Taking down plaintiff's three arguments one by one, the court upheld the arbitrator's award in favor of defendants.
The Air Methods Corporation ("AMC") is an air transportation company that provides transport of medical personnel to accident sites, and of injured people to hospitals. As an air transport company, AMC is subject to FAA requirements, and its operating manual must be approved by the FAA.
According to its manual, only qualified pilots can man the controls of an aircraft in flight; a qualified pilot is one who is qualified to fly with passengers. For training purposes, a pilot-in-training (who is not yet qualified) can man the controls during the course of training, if a trainer is present.
Jeff Stackpole was a pilot for AMC, and at the request of an AMC trainer, took an unqualified pilot-in-training with him on an assignment. While there were no paying passengers on board, Stackpole allowed the pilot-in-training to man the controls. The pilot-in-training attempted landing, and though the aircraft landed safely, it suffered damages that cost about $250,000, and took it out of service for around one month. As a result, AMC fired Mr. Stackpole for allowing a pilot-in-training to man the controls, when he was not a trainer, calling his actions "egregious" and "serious misconduct."
Under Mr. Stackpole's collective bargaining agreement, his union filed a grievance challenging his termination. After a four-day hearing before an arbitrator, the arbitrator found that Stackpole had engaged in misconduct that though warranted discipline, did not warrant termination. Instead, the arbitrator ordered that Stackpole be reinstated.
AMC filed a claim against the union, seeking to have the arbitration award vacated. The district court granted the union's motion for summary judgment, upholding the arbitration award. On appeal, the Tenth Circuit agreed, finding all of plaintiff's arguments without merit.
The final argument plaintiff raised was that the arbitrator's award violated clear public policy. Disagreeing, the court noted that if anything, the public policy argument weighed in favor of defendants. The court stated, "we run the risk of violating the explicit public policy in support of parties' ability to rely on their collective bargaining agreements."
Though arbitration awards can be appealed, companies have to make a showing that will overcome the deference that arbitration awards are given. After all, the whole point of arbitration is to stay out of court -- if you appeal an arbitration award, you better have a good reason.