Reinsurance Focus

In a published opinion issued on June 16, the Ninth Circuit reversed a district court that had vacated an arbitral award as contrary to public policy. The circumstances leading to the arbitration stemmed from a “no-match” letter sent by the Social Security Administration to the plaintiff, Aramark, indicating that information for 48 of Aramark’s employees did not match the Administration’s database. Suspecting immigration violations, Aramark gave the employees three days to prove they had begun an application for a new Social Security card, and fired 33 of the employees who did not timely comply. The defendant labor union filed a grievance on behalf of the employees, alleging violations of the governing collective bargaining agreement. The arbitrator ruled for the union, and awarded back pay and reinstatement to the employees. Thereafter, Aramark successfully moved in district court to vacate the arbitration award on public policy grounds, arguing that the “no-match” letter put it on constructive notice that it was employing illegal workers, and that the award would force it to violate immigration law. On appeal, however, the Ninth Circuit independently determined that Aramark had not established constructive knowledge of immigration law violations and that, in any event, it was obliged to defer to the arbitrator’s factual findings. It reversed the district court’s judgment and confirmed the award. Aramark Facility Services v. Service Employees International Union, Local 1877, AFL CIO CLC, No. 06-56662 (9th Cir. June 16, 2008).

This post written by Brian Perryman.