As the Enterprise Wheel Turns: New Evidence on the Finality of Labor Arbitration Awards
Our study examines 281 federal court decisions from April 2001- May 2006 that ruled on challenges to labor arbitration awards. These award appeals are regulated by the Supreme Court’s Enterprise Wheel decision. District courts confirmed 77.6% of challenged awards, an increase of about 7 percentage points compared to our earlier studies of litigated awards from 1960 - 2001. The result was very similar for appellate cases— a confirmation rate of 76.3%, and nearly the same gain in percentage points.
These results clearly suggest that the Supreme Court’s rebuke of lower courts in Eastern Associated Coal Corp. (2000) and Garvey (2001) have changed how judges review arbitrator rulings. But this uniformly positive development masks observable differences in the federal circuits where these cases were decided.
• The Sixth Circuit routinely applies a four part essence test. This standard seems more intrusive than the simple essence test in Enterprise Wheel. The four part essence test has become so controversial among these judges that they decided en banc in May 2006 to reconsider its use. Our data shed important new light on this development: The four part essence test yields outcomes that are similar to other Enterprise Wheel tests, but it stimulates an excessive amount of federal lawsuits.
• On the opposite end of the award deference spectrum, courts in the Second Circuit enforce more than 90% of challenged awards. This trend is so clear that virtually no one there appeals a district court’s enforcement ruling. Courts in the Seventh Circuit have a similar confirmation rate, arrived at by applying Rule 11 sanctions to award challenges that are judged to be meritless.
• Data show that judges in the Fifth Circuit are in an isolationist camp. At the district and appellate levels in this study, these courts confirmed awards in only 44.4% of the cases. This is similar to findings in our earlier studies. A correction is needed for the Fifth Circuit’s long deviation from the deferential posture that the Supreme Court has commanded. These data might enable Fifth Circuit judges to see their problem and correct it by exercising more restraint.
• We found that 16 appellate decisions confirmed awards that were vacated by district courts, while 5 awards were vacated by appellate courts after these arbitrator rulings were confirmed by lower courts. This 3:1 ratio favoring award confirmation means that new precedents are reinforcing Enterprise Wheel messages of deference to district judges.
Overall, the empirical results are healthy indicators for the national policy that favors arbitration. The Supreme Court’s on-going investment in promoting judicial deference to awards is paying dividends not only for the institution of labor arbitration, but by implication, for newer ADR applications in individual employment, commercial transactions, environmental disputes and others.
Dispute Resolution and Arbitration | Judges | Labor and Employment Law
Date of this Version
Michael H. LeRoy, "As the Enterprise Wheel Turns: New Evidence on the Finality of Labor Arbitration Awards" (July 26, 2006). bepress Legal Series. bepress Legal Series.Working Paper 1472.