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<xTITLE>Weaponization of COVID-19: Faux Force Majeure Infects Labor Arbitration</xTITLE>

Weaponization of COVID-19: Faux Force Majeure Infects Labor Arbitration

by Benjamin Davis
October 2020 Benjamin Davis

The University of Akron devised a plan to layoff/fire 100 unionized faculty members (including tenured) which the union representative challenged.  The arbitrator found the Covid pandemic to be within the “force majeure” clause of the union contract (Discussion & link to arbitrator's opinion here https://taxprof.typepad.com/taxprof_blog/2020/09/arbitrator-sides-with-university-of-akron-in-layoff-of-100-faculty.html#more)

  1. The Collective Bargaining Agreement

Under Article 15 Retrenchment of the operable Collective Bargaining Agreement, a detailed process for how such reductions in the bargaining unit faculty (“BUF”) is presented.  However, Section 12 of that Article details a different procedure with few of the procedural and substantive guarantees of the rest of the article, to wit:

Section 12. The procedure for retrenchment set forth in this Article is designed to accommodate both the orderly change in the University and reductions that must accompany more abrupt changes in circumstances.  The parties recognize that catastrophic circumstances, such as force majeure, could develop which are beyond the control of the University and would render impossible or unfeasible the implementation of procedures set forth in this Article.  Therefore, this Section 12 shall not be used to accomplish retrenchment as set forth in this Article.  If such unforeseen, uncontrolled and catastrophic circumstances should occur, then the University agrees that, before taking any action that could be interpreted as bypassing the retrenchment procedures, representatives of the University will meet with representatives of the Akron-AAUP to discuss and show evidence of the circumstances described above and that this evidence will at least satisfy the requirements outlined in Section 3(A) of this Article and to discuss the proposed course of action.  (Emphasis Added)

https://www.uakron.edu/oaa/faculty-affairs/docs/aaup-collective-bargaining-agreement.pdf

  1. The Arbitrator’s decision

On Friday, September 18, 2020, an arbitrator sided with the University of Akron administration in its decision to eliminate the positions of nearly 100 unionized faculty as part of the university’s cost-saving measures due to the coronavirus pandemic (https://www.uakron.edu/president/docs/arbitrator-decision-sept2020.pdf).

The heart of the opinion for me is the arbitrator’s discussion of the COVID-19 pandemic and whether it amounts to a force majeure within the meaning of Section 12, to wit:

Section 12 contains a force majeure clause. According to Black’s Law Dictionary, a force majeure is an event or effect, both acts of nature or acts of people, that can neither be anticipated nor controlled. (Abridged 8th Ed., Thompson/West, 2005, p.538) To deny that the COVID pandemic is catastrophic would be to ignore the extent and spread of the disease. It is a worldwide pandemic with worldwide effects. As of September 17, 2020, 6,613,331 total cases were report in the USA with a death toll of 196,277. Ohio alone had 133,046 confirmed cases. (cdc.gov/coronavirus/2019ncov/cases-updates) The economy is still down 11.5 million jobs from pre-COVID times. Many businesses are in severe distress with large companies declaring bankruptcy and smaller businesses struggling to survive. Unpaid rent is as high as $30 billion. [The Kiplinger Letter, Forecasts for Executives and Investors, 2020. The Economy. (Vol.97, No. 36), p.1] 

The effects of the COVID pandemic are certainly unforeseen and surely out of anyone’s control. The number of cases fluctuates from day to day, week to week, and location to location sending counties in Ohio from a Level 2, Orange, to a Level 3, Red, while hopefully avoiding the Level 4 designation which signifies severe exposure and spread and could result in another state of emergency. Cases of COVID on college campuses have been cited as one of the factors that have pushed counties into the Red zone. [Bamforth, E. (2020, September 4) Plain Dealer, p. A5.] The pandemic is affecting colleges in general as cited in Kiplinger’s Personal Finance. (5 Ways College is Changing. 9/2020, p. 44) There is lower enrollment as families struggle through the recession, tighter budgets as student revenue decreases, federal and state funding cuts, and declining government budgets. In an effort to balance college budgets, smaller staffs are being seen as faculty is laid off or furloughed. Circumstances remain in flux as the state grapples with the disease and its spread. COVID is, indeed, a catastrophic event, and it’s resulting impacts are unforeseeable and beyond the University’s control.

III. My critique

The contract clause concerned refers to “catastrophic circumstances, such as force majeure”.  As drafted then the catastrophic circumstances that might be invoked are not limited to force majeure but rather force majeure is provided as an example of catastrophic circumstances.  In this sense, the arbitrator focusing only on force majeure seems to under-evaluate the range of possible situations that would fit within the definition in the contract.

Beyond that, an unlike in many other contracts, the term “force majeure” is not defined with any specificity.  So even if one goes along with arbitration and limits one view of potential catastrophic circurmstance to only those that are “force majeure”, the collective bargaining agreement gives no guidance as to what force majeure is.

The arbitrator’s solution to this problem is to look to the Black’s Law Dictionary definition of a force majeure is “an event or effect, both acts of nature or acts of people, that can neither be anticipated nor controlled.”  The arbitrator could have looked just as well to the appropriate justifications for non-performance available in the law such as Supervening Impracticability or Supervening Frustration as formulated in the Restatement of Contracts Second:

  • 261. Discharge By Supervening Impracticability

Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.

  • 265. Discharge By Supervening Frustration

Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.

Those rules also focus on an event that occurs without the fault of the party (in this case that would be the Administration), the non-occurrence of which was a basic assumption on which the contract was made excusing the Administration’s remaining duties to render performance unless the language or the circumstances indicate the contrary.

Whether in the formulation of “neither be anticipated” or in the formulation of “basic assumption”,  it would seem the arbitrator could have gone another way in recognizing that a pandemic of any kind would neither be anticipated or its non-occurrence a basic assumption on which the contract was made.  We can look at SARS, MERS, or Ebola within recent memory, let alone the annual flu as examples of pandemics that would have been within the consciousness of both parties.

The next issue would be with the formulation “controlled” in the dictionary definition or “without his fault” in the legal rule.  Even if the COVID-19 pandemic is looked at as a pandemic different in degree and severity as compared to that of the other pandemics in the recent past, the arbitrator could examined the extent of the control of the pandemic by the Administration at that University.  Across the country universities and colleges have made various efforts to reduce the sickness and lethality of the COVID-19 pandemic with respect to students, faculty and staff on their campuses.  The arbitrator could have explored what mechanisms were put in place by the University of Akron to control the pandemic on its campuses as part of determining whether a force majeure had in facts occurred.  If the University was not doing enough to conform to CDC or state guidelines could be a point that would be raised.  For if we understand controlled to mean – within the control of the Administration – the evidence of what methods of control the University was putting in place and their adequacy would have been a useful and one would think essential part of such an analysis to see if that university was truly in a catastrophic circumstance.

Instead the arbitrator focuses on the effect of the COVID-19 pandemic.  But even then, as described ad nauseum nearly every night on the news or in World Health Organization and CDC websites since late January 2020, those effects for this type of respiratory virus have been foreseen by the medical field.  And its control by combating its propagation has been possible by the individual, the university, the state, or the United States.  The examples of other countries around the world that have been able to control substantially if not totally the effects of the COVID-19 pandemic within their borders abound.

The arbitrator refers to the various level designations from 2 Orange to 4 Red in Ohio and the changes that are going on around the United States to justify his opinion.  Once he moves to an analysis of the state response to the pandemic and the experience around the United States, he does not look at the criminally inept federal response that is well documented it would seem over the same period.

As a result, the arbitrator is basically saying that we are in a horrific pandemic that our state and federal institutions have gravely mismanaged to the point of criminal negligence and, as a result, there is a catastrophic circumstance that is force majeure whatever the university did or did not do to control that pandemic in its own location.  And, therefore, the bargained for protections for layoffs foreseen in the collective bargaining agreement can be disregarded and the Section 12 turbo charged separate process for layoffs could go forward.

Subsequent to this decision, Ohio passed a COVID-19 limited liability law which essentially protects entities from any liability with their response to COVID-19 within their premises.  Essentially, this law lines up with the arbitrator’s decision in making the downside consequences of the COVID-19 pandemic fall squarely on the shoulders of the faculty at that university and the individual more broadly.

In this sense, what we have is  weaponization of the COVID-19 pandemic against the workers where one does not see a focus on the response to the pandemic of those with the power to respond at the federal, state, local, and university or business site level, but rather the focus is on the COVID-19 virus’ deadliness.

By taking those with the power to do something off the hook, the result is to place the entire burden of the pandemic on the workers.  In this case, the terminated faculty at Akron.  This weaponization of COVID-19 virus should thus be seen as faulty reasoning in a faulty arbitral award by the arbitrator.

Now, given the unlikelihood of arbitral awards being overturned by the courts due to the deference to arbitration and labor arbitration, it is doubtful there is much recourse against this arbitrator’s decision.  But, I hope that this little note would suggest two points for those drafting collective bargaining agreements.

First, make much clearer the definition of extraordinary events that would relieve the Administration of its obligation to perform.  Second, choose the arbitrator carefully which of course is known already.  And third, do not confuse the COVID-19 virulence with the response to its virulence by those with the power to respond and the duty to respond meaning the federal, state, local, university and businesses in which individuals work.  This is not to diminish the important role of self-protection for any individual (wearing a mask, staying 6 foot distant, washing hands often, avoiding going out as much as possible), but it is to shine the light on what has been kept in the dark: the response of those who have the power to do something and should have done more earlier and better.

 

Biography


Professor Benjamin Davis, a faculty member at the University of Toledo School of Law since 2003 and tenured since 2008, is a graduate of Harvard College (B.A.), Harvard Law School (J.D), and Harvard Business School (M.B.A.) where he was articles editor of the Harvard International Law Journal. Professor Davis teaches in the areas of Contracts, Commercial Law, Alternative Dispute Resolution, Arbitration, Public International Law, International Business Transactions, and 3L Extended Bar Preparation.  Prior to joining the faculty, Professor Davis was an associate professor at Texas Wesleyan University School of Law (now Texas A&M University School of Law). Between 1983 and 1986, he worked in Paris, France as a development consultant in West Africa, and as a strategic business consultant with Mars & Co in Europe. In 1986, he became the American Legal Counsel at the International Court of Arbitration of the International Chamber of Commerce (ICC) where he supervised directly or indirectly over 5000 international commercial arbitration and mediation cases, made filings before courts around the world on behalf of the ICC, assisted with the drafting of arbitration laws in countries such as India and Sri Lanka, and led conferences in Eastern and Western Europe, North America, and Asia. In 1996, he was promoted to director, conference programmes and manager of the Institute of World Business Law where he organized training sessions on international contracts, dispute resolution, project finance, and electronic commerce. He is the creator of fast-track international commercial arbitration and the creator of the International Competitions for Online Dispute Resolution (ICODR) by which students from around the world competed in online negotiation, mediation, arbitration and litigation (2000-2005). He is also a former chair of the American Bar Association Section of Dispute Resolution. 



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