Two arbitrators address the issue of the COVID pandemic as a force majuere event

By John H Curley on October 11, 2020

Two recent awards involve questions concerning the existence or impact of the Corona virus as a force majeure event, potentially excusing claimed violation of the parties’ agreements.

In American Association of University Professors – University of Akron Chapter, Arbitrator Jack Buettner concluded that the force majuere clause privileged the University’s actions when it implemented a “retrenchment.”

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.

Having established that a force majeure did, indeed, exist, the University needed to satisfy the requirements in Section 1(A) …

Arbitrator Buettner concluded further that the pandemic did not relieve the University from complying with certain other obligations of the contract “which are feasible and possible to implement since there is no immediate financial impact or time frame.”

In Alaska Airlines, Inc. and Aircraft Maintenance Fraternal Association, Local 32 a panel chaired by Arbitrator Frederic Horowitz addressed a dispute that “arose as the product of economic disruption caused by the global COVID pandemic plaguing the travel industry.” The parties disagreed about the scope of certain job security language in their agreement.

Rejecting the position of the Company, the panel concluded that the applicable provisions “confirms the plain language of the parties’ Agreement [and] supports the position of the Union.”

The parties are seeking expedited resolution from the System Board of good faith yet irreconcilable differences about the application of force majeure provisions in Paragraph 2. of LOA #9 to the job security provisions in Paragraph 4. of that LOA as well as to the impact if any of those protections on the seniority provisions in Article 9 K.2. of the Agreement. When negotiating the Transition Agreement in 2019, neither party anticipated the massive economic disruptions caused by the global pandemic in 2020. The System Board in these circumstances cannot attempt to presume or conjure what the bargaining parties would have done had the subject been raised in negotiations. Rather, the Board can only interpret and apply the existing contract provisions in a manner consistent with accepted standards of contract construction in light of the unique facts presented.

In Issue No. 1., the evidence supports a finding the job security provisions in Paragraph 4. of LOA #9 are not subject to the force majeure provisions in Paragraph 2. based on the plain language of those provisions and the absence of a mutual intent manifested otherwise during bargaining.