Las Vegas POA

Court Upholds Arbitrator’s Opinion Awarding ‘Cancellation Fees’

Written on 11/06/2020
Will Aitchison

The City of Newton, Massachusetts and the Newton Police Association are parties to a collective bargaining agreement. When a dispute broke out between them as to whether officers should receive “cancellation fees” when paid details were cancelled on a last-minute basis, the Association challenged the City’s position in arbitration. An arbitrator sided with the Association, awarding late cancellation fees to three officers for their detail work. The City challenged the Arbitrator’s decision in court.

The Massachusetts Court of Appeals upheld the Arbitrator’s opinion. The City argued that the award unlawfully imposed a double-payment fee in violation of a Massachusetts statute which provides that the City may “fix reasonable charges to be paid for any services rendered or work performed by the City or any department thereof.” The City contended that the arbitration award compensated the officers for two details when they only performed work on one, and that this was an unreasonable fee prohibited by the law.

The Court found that “to vacate the arbitration award on the basis that it was prohibited by statute, the award must be in direct or material conflict with the statute. We keep in mind that it is the Arbitrator’s expertise that the parties bargained for, and so we start with the presumption that the collective bargaining agreement compels the outcome directed by the award.

“As a preliminary matter, the Arbitrator here determined as a matter of contract interpretation that the reassignment of the officers’ details constituted a cancellation, implicating § 6.10 of the collective bargaining agreement. This determination is beyond our scope of review, as contract interpretation is within an arbitrator’s scope of authority and absent fraud, errors of law or fact are insufficient to set aside an award.

“While the state statute does not reference late cancellation fees; we cannot say awarding late cancellation fees is in direct or material conflict with the statute. Rather, the statute merely requires that charges to be paid for services or work performed must be ‘reasonable.’ However, the statute is not a measuring stick for determining reasonableness in bargained-for contract provisions. If we made such a determination, then all similar provisions would be subject to judicial review for reasonableness, which risks judicializing the arbitration process.

“Here, the agreement sent to vendors provided notice that a late cancellation fee would be imposed when a detail is cancelled within two hours of its scheduled time. As the Arbitrator noted, the City had regularly charged such fees to contractors who cancel last minute. The City’s recourse here is not to challenge the arbitration decision, but renegotiation of the collective bargaining agreement terms. There was no conflict with the statute.”

City of Newton v. Newton Police Association, 2020 WL 4200882 (Mass. App. Ct. 2020).

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