Background
A Chicago hotel fired an employee after he displayed a knife in the workplace, causing a co-worker to feel threatened. The employee’s union, Unite Here Local 1, filed a grievance challenging the termination under their collective bargaining agreement. The hotel initially refused to arbitrate, but the district court ordered the parties to proceed to arbitration with an arbitrator selected through the agreed-upon method: random selection from a list of nine arbitrators using the website random.org.
The hotel objected to the selected arbitrator, Peter Meyers, arguing he should be disqualified because he was already handling another dispute between the union and hotel. The hotel alternatively requested that the court appoint an arbitrator under 9 U.S.C. §5. The district court rejected this objection and ordered Meyers to hear the case.
The arbitrator reviewed closed-circuit video of the incident, which lasted approximately five seconds. The employee removed a knife from his pocket, smiled at his co-worker with what the arbitrator characterized as a “goofy” expression, and returned the knife to his pocket. The arbitrator found no actual violence or true threat, noting that management had long known the employee carried this knife and displayed it occasionally without incident. The knife, however, exceeded Chicago’s 2½-inch pocket knife limit (it was 3½ inches), and police confiscated it after management called, though no criminal charges were filed.
The Court’s Holding
The Seventh Circuit affirmed on all grounds. First, regarding arbitrator selection, the court held that the parties’ agreed-upon method for selecting arbitrators—random selection from the specified list—must be followed under the FAA. There was no “lapse” in the selection process that would justify judicial appointment. The fact that the union and hotel often deviated by mutual agreement does not invalidate or replace the contractual method. A random-selection procedure via random.org is sufficiently random, and nothing in the agreement disqualifies an arbitrator from handling multiple disputes.
Second, the court held that an arbitrator’s factual findings are not subject to judicial review. Under the Supreme Court’s standard in Major League Baseball Players Association v. Garvey, courts cannot overturn an arbitrator’s conclusions about what actually happened. The arbitrator found the knife display non-threatening; a reviewing court cannot reexamine that factual determination.
Third, and most significantly, the court rejected the hotel’s “public policy” argument. While Illinois has a public policy condemning workplace violence, that policy targets those who commit violence, not employers choosing how to respond. The court observed that if the hotel had imposed a ten-day suspension itself, it would violate no statute, regulation, or doctrine. An arbitrator, as the parties’ agent, may do what the parties themselves may lawfully do. Accordingly, an award that the parties could themselves legally implement cannot be overturned on public policy grounds. The court emphasized this principle across multiple precedents and found the hotel’s counsel had ignored established Seventh Circuit doctrine.
Key Takeaways
- Agreed-upon arbitration procedures must be followed; judicial appointment under §5 is a fallback only when there is a genuine “lapse” in the selection mechanism, not when a party simply objects to the result.
- Arbitrators’ factual findings are essentially unreviewable by courts; disputes about what happened on video are for the arbitrator to resolve.
- A “public policy” exception to arbitration awards is narrow and cannot be invoked to overturn a remedy the parties could lawfully impose themselves.
- Arbitrators, as agents of the parties, have broad authority to implement the agreement and craft remedies within its scope, limited only by prohibitions on violating law or harming third parties.
Why It Matters
This decision reinforces the strong federal policy favoring arbitration and signals that courts will give arbitrators substantial deference, particularly regarding factual findings and remedies. Employers invoking vague public policy objections face a high bar: they must identify a specific statute, regulation, or judicial doctrine violated by the award itself, not merely by the underlying conduct. Here, since a ten-day suspension of a knife-wielding employee violates no law, an arbitrator’s award of suspension and reinstatement cannot be struck down even if the employer argues termination would have been more prudent.
The decision also clarifies that sophisticated arbitration clauses with specified selection procedures will be enforced as written. Parties cannot use post-hoc objections to sidestep the procedure they agreed to, and courts will not appoint arbitrators as a workaround. For unions and employees, this means strong protection for arbitral awards that fall within the parties’ contemplated remedial range; for employers, it underscores the importance of including clear limiting language in arbitration agreements if they wish to constrain arbitrators’ authority.
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