SBC Advanced Solutions Inc. v. Communications Workers of America, Dist.

Issue Discussed: Functus Officio

Submitted by Linsey M. Routledge, Troy Shuman

Date Promulgated: April 16, 2015

SBC Advanced Solutions Inc. v. Communications Workers of America, Dist., (794 F.3d 1020)

Case Number: 14-3351

Filed: 7/28/15

Court: United States Court of Appeals for the Eighth Circuit

Issue Decided: Did an arbitrator’s jurisdiction to implement an Award violate the functus officio doctrine when her retained?

Short Answer: No.

SBC, a subsidiary of SBC Communications, Inc. and a company designed to facilitate entry into the high-speed internet market, and the Communication Workers of America (the “Union”) entered into a Collective Bargaining Agreement (“CBA”) which, among other things, described job functions and pay scales. The CBA required that there be tiered job classifications with specific work functions. A dispute arose regarding the job functions and pay of certain employees that had received special training. The issue was submitted to an arbitrator. That arbitrator decided for the Union and retained jurisdiction to resolve disputes arising out of his ruling.

SBC argued in District Court for vacatur of the Award on the grounds that (1) the arbitrator failed to follow precedent established in previous arbitrations between the parties regarding the same CBAs; and (2) the arbitrator’s retention of jurisdiction violated the functus officio doctrine. SBC further argued that by retaining jurisdiction, the arbitrator subjects the company to a “piecemeal hearing process that imposes new obligations on the parties that is foreign to what they bargained for in the CBA.”

The Court found no merit to this argument, citing to a United States Supreme Court case standing for the proposition that parties who submit to arbitration bargain for the arbitrator’s “judgment and all that it connotes.” United Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564, 568 (1960). The Court also held that the functus officio doctrine was not triggered because the Award was not final. The Court held that an award is final when the amount of the award is determined. Until then, only liability has been determined and the panel retains jurisdiction. Since the arbitrator had only found SBC liable but had left it to the parties to establish the means of redress, the award was not final and the arbitrator was not functus officio.

[1] Linsey M. Routledge is Senior Counsel and Troy Shuman is an Associate at Clyde & Co US LLP.