MV Transportation, Inc. v. Amalgamated Transit Union Local 1637

• Court: District Court, D. Nevada
• Decided: March 16, 2026
• Docket: 2:25-cv-01051
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 MV TRANSPORTATION, INC., Case No.2:25-CV-1051 JCM (DJA)

8 Plaintiff(s), ORDER 9 v.

10 AMALGMATED TRANSIT UNION LOCAL 1637, 11 Defendant(s). 12

13 Presently before the court is MV Transportation, Inc. (“MV”)’s petition to vacate 14 arbitration award. (ECF No. 1). Amalgamated Transit Union Local 1637 (“the Union”) answered 15 16 and brought a counter petition to confirm the arbitration award. (ECF No. 4). 17 Also before the court are MV and the Union’s cross motions for summary judgment. (ECF 18 Nos. 29, 31). The parties have responded (ECF Nos. 37, 38) and replied (ECF Nos. 39, 40) to the 19 motions for summary judgment. 20 I. Background 21 22 MV is a California corporation that operated a transportation business, providing services 23 to the Regional Transportation Commission of Southern Nevada (“the RTC”). (ECF No. 1 at 2). 24 The union is an unincorporated labor association representing MV’s drivers and mechanics at the 25 Las Vegas facility. (Id.). 26 The parties entered into three successive collective bargaining agreements (“CBAs”): the 27 28 2015 CBA (covering 2015–2018), the 2018 CBA (covering 2018–2020), and the 2021 CBA 1 (covering December 21, 2021, through June 30, 2023). (Id. at 3–4). Each agreement contained 2 vacation provisions in Section 12. (Id. at 3). The relevant portions of Section 12 are as follows: 3

4 12.3 Vacation will be accrued per pay period based upon the above table on a calendar year basis and shall not be carried over. All unused vacation time will be 5 cashed out to the employee in the first paycheck of December if not already bid in 6 December.

7 All accrued vacation in one year will become earned and available for bid and use effective January 1st of the following calendar year. 8

9 …

10 12.6 To accrue vacation, an employee must work a minimum of thirty-five (35) hours per pay period or be in a paid leave status. 11

12 12.7 Employees who are discharged for cause, or quit without one (1) week’s 13 written notice (provided employee works all scheduled shifts after providing 14 notice) shall not be entitled to receive payment for any earned and available 15 vacation and will also lose their PTO time. 16

17 (ECF No. 2 at 128–29). 18 In February 2022, the RTC notified MV that its contract would not be renewed, and MV’s 19 operations would cease effective June 30, 2023. (Id. at 6). On June 30, 2023, MV terminated all 20 employees at the Las Vegas facility. (Id.). MV paid out all unused vacation hours it deemed 21 earned and available pursuant to Section 12.7 of the 2021 CBA. (Id.). MV did not pay out vacation 22 23 hours accrued between January 1, 2023, and June 30, 2023, on the grounds that those hours had 24 not yet become “earned and available” under Section 12.3. (Id.). 25 On or about June 7, 2023, the Union filed a grievance alleging that MV was required to 26 pay out the vacation time accrued by employees between January and June of 2023. (Id.). The 27 parties proceeded through the contractual grievance steps without resolution, and the Union moved 28 1 the matter to arbitration. (Id. at 7). 2 A hearing was held before the arbitrator on November 21, 2024. (Id.). On March 17, 2025, 3 the arbitrator issued his opinion and award sustaining the grievance. (Id.). The arbitrator 4 concluded that all vacation accrued in 2023 was due and payable to the involuntarily laid-off 5 6 employees as of December 2024. (Id.). In reaching this conclusion, the arbitrator determined that 7 the terminated employees were not discharged for cause under Section 12 and were therefore not 8 subject to its forfeiture provision. (Id.). 9 MV now seeks to vacate the award, arguing that the arbitrator exceeded his authority by 10 effectively modifying and adding terms to the 2021 CBA. (Id. at 8). Specifically, MV contends 11 12 the arbitrator’s decision improperly treated accrued vacation as earned and payable on January 1, 13 2024, and expanded the class of individuals eligible for unused vacation payouts under Section 14 12.3 to include former employees who would not have received a paycheck in December 2024. 15 (Id.). MV further points to Section 16.2 of the 2021 CBA, which provides that nothing in the 16 agreement shall empower an arbitrator to change, modify, or amend any of its provisions. (Id.); 17 18 (ECF No. 2 at 133). 19 II. Legal Standard 20 The grounds for vacatur of an arbitration award are governed by the FAA. HayDay Farms, 21 Inc. v. FeeDx Holdings, Inc., 55 F.4th 1232, 1240 (9th Cir. 2022). Section 10(a)(4) of the FAA 22 grants the court an “extremely limited authority to review arbitration awards.” Id. at 1239. Review 23 24 of an arbitration decision is “limited and highly deferential.” Coutee v. Barington Cap. Grp., L.P., 25 336 F.3d 1128, 1132 (9th Cir. 2003) (quoting Sheet Metal Workers’ Int’l Ass’n Loc. Union No. 26 359 v. Madison Indus., Inc. of Arizona, 84 F.3d 1186, 1190 (9th Cir. 1996)). “‘Neither erroneous 27 legal conclusions nor unsubstantiated factual findings justify federal court review’ of an arbitral 28 1 award[.]” Aspic Eng’g & Constr. v. ECC Centcom Constructors LLC, 913 F.3d 1162, 1166 (9th 2 Cir. 2019) (quoting Bosack v. Soward, 586 F.3d 1096, 1102 (9th Cir. 2009)). Section 10(a)’s 3 limited grounds are “designed to preserve due process but not to permit unnecessary public 4 intrusion into private arbitration procedures.” Kyocera Corp. v. Prudential-Bache Trade Servs., 5 6 341 F.3d 987, 998 (9th Cir. 2003). 7 Although courts generally defer to arbitration decisions, the Supreme Court has identified 8 three circumstances in which a court may set aside an arbitrator’s award: “(1) when the arbitrator’s 9 award does not ‘draw its essence from the collective bargaining agreement’ and the arbitrator is 10 dispensing ‘his own brand of industrial justice,’ (2) when the arbitrator exceeds the boundaries of 11 12 the issues submitted to him; and (3) when the award is contrary to public policy.” Federated Dep’t 13 Stores v. United Foods & Com. Workers Union, Loc. 1442., 901 F.2d 1494, 1496 (9th Cir. 1990) 14 (internal citations omitted). 15 III. Discussion 16 MV attacks the arbitrator’s decision on two main grounds. First, it claims that the arbitrator 17 18 exceeded his authority and jurisdiction when finding against MV. Second, MV asserts that the 19 arbitrator’s award does not draw its essence from the CBA and rather dispensed his own brand of 20 industrial justice. While the court addresses these issues, it refuses to entertain MV’s numerous 21 attacks on the merits of the arbitrator’s decision. 22 A. Whether the Arbitrator Exceeded His Authority and Jurisdiction 23 24 1. Plain Language 25 MV contends that the arbitrator exceeded his authority and jurisdiction because he 26 “ignored, nullified, and modified the plain language and application” of Section 12 of the CBA. 27 (ECF No. 29 at 11–13). This argument fails. 28 1 As established in Hawaii Teamsters & Allied Workers Union, Loc. 996 v. United Parcel 2 Serv., 241 F.3d 1177, 1182 (9th Cir. 2001), an arbitrator lacks the power to disregard clear terms 3 of a collective bargaining agreement that define the boundaries of his authority. Yet, arbitrators 4 must also be afforded broad discretion in crafting remedies under a CBA. Sprewell v. Golden State 5 6 Warriors, 266 F.3d 979, 987 (9th Cir.), opinion amended on denial of reh’g, 275 F.3d 1187 (9th 7 Cir. 2001) (quoting United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 596, 8 596–97 (1960)). Moreover, the Supreme Court recognized in Enterprise Wheel that the arbitrator’s 9 function is to interpret and apply the CBA, particularly where the parties themselves may not have 10 anticipated what remedy would be appropriate for a given situation. 363 U.S. at 597. 11 12 Applying this framework here, the arbitrator acted well within his authority. Notably, the 13 arbitrator explicitly acknowledged the scope of his authority as set forth in Section 16.2 of the 14 CBA, demonstrating that he was mindful of the contractual boundaries governing his role. (ECF 15 No. 32-7 at 6–7). Operating within those recognized boundaries, the arbitrator turned to the 16 vacation provisions the parties had negotiated under Section 12. The record makes clear, however, 17 18 that neither side contemplated how those provisions would operate in the event MV’s contract was 19 not renewed and employees were laid off mid-year. 20 Faced with this unanticipated circumstance—precisely the kind of gap the Supreme Court 21 envisioned in Enterprise Wheel—the arbitrator exercised his interpretive role and grounded his 22 decision and award in the plain text of Section 12. (See ECF No. 31 at 7). He further considered 23 24 the history of amendments to Section 12 that MV and the Union had previously negotiated. (Id. 25 at 6). 26 Far from ignoring and modifying CBA’s language, the arbitrator interpreted and applied it 27 while respecting the jurisdictional limits prescribed by Section 16.2. MV’s claim to the contrary 28 1 is without merit. 2 2. Timing of Payout 3 MV next argues that because the CBA had expired and the arbitrator’s award directed 4 payment to individuals who were by then former employees—all having been terminated in June, 5 6 prior to the arbitrator’s decision and prior to MV’s assertion that the accrued vacation time had 7 become earned and available—the award impermissibly creates new contractual benefits and 8 imposes obligations on MV beyond those contained in the CBA. This argument is equally 9 unavailing. 10 It is well established that contractual rights which accrued or vested during the life of an 11 12 agreement are not extinguished merely because the agreement has since expired. Where a post- 13 expiration action infringes upon a right that vested under the agreement, or where the standard 14 principles of contract interpretation indicate that the disputed right survives the agreement’s 15 expiration, that obligation remains enforceable. Litton Fin. Printing Div., a Div. of Litton Bus. 16 Sys., Inc. v. N.L.R.B., 501 U.S. 190, 206 (1991). 17 18 Here, the arbitrator did not fashion new benefits or impose novel obligations untethered 19 from the CBA. Rather, he concluded that the CBA’s vacation payout provision required MV to 20 compensate employees for vacation hours that had already been earned while the agreement 21 remained in full force and effect and before MV lost its contract with the RTC. (See ECF No. 32- 22 7 at 7). The employees’ entitlement to that compensation vested during the term of the CBA. 23 24 That the actual disbursement was delayed beyond the agreement’s expiration does not 25 convert these individuals into some new class of beneficiaries to whom MV owes previously 26 nonexistent obligations. The delay in payout is a matter of timing, not substance. The underlying 27 right had already crystalized under the plain terms of the agreement, and the arbitrator, consistent 28 1 with the scope of his authority discussed above, simply enforced it. 2 B. Whether the Arbitrator’s Award Draws its Essence from the CBA 3 An arbitral award warrants judicial enforcement when it draws its essence from the 4 contract—that is, when it represents a plausible interpretation of the agreement on its face. Sheet 5 6 Metal Workers’, 84 F.3d at 1190. Importantly, the Ninth Circuit has cautioned that the “draws its 7 essence” and “own brand of industrial justice” inquiry is not meant to serve as a vehicle for courts 8 to conduct substantive review of an arbitrator’s reasoning on the merits. Haw. Teamsters, 241 9 F.3d at 1183. 10 Where the arbitrator’s decision concerns the interpretation and construction of the 11 12 agreement, a court may not substitute its own reading simply because it would have reached a 13 different conclusion. Id. (quoting Enterprise Wheel., 363 U.S. at 599). Indeed, the Supreme Court 14 has made clear that courts lack authority to revisit the merits of an award even where a party 15 contends the arbitrator committed factual or interpretive error. United Paperworkers Int’l Union 16 v. Misco, Inc., 484 U.S. 29, 36 (1987). 17 18 Measured against this standard, the arbitrator’s decision readily satisfies the “draws its 19 essence” requirement. As set forth above, the arbitrator’s decision and award are rooted in his 20 interpretation of the CBA’s provisions. The court has further concluded that the timing of the 21 vacation payout does not give rise to new contractual benefits for former employees or impose 22 obligations on MV that exist outside the agreement. Because the decision and award reflect the 23 24 arbitrator’s construction of the contract—a task entrusted to him, not this court—there is no basis 25 to disturb it. Haw. Teamsters, 241 F.3d at 1183. 26 C. Attorneys’ Fees 27 The court now turns to the question of attorneys’ fees. “Under the American rule, absent 28 1 contractual or statutory authorization, a prevailing litigant ordinarily may not collect attorneys’ 2 fees. However, a court may, at its discretion, assess attorneys’ fees when the losing party has acted 3 in bad faith, vexatiously, wantonly, or for oppressive reasons.” International Union of Petroleum 4 and Industrial Workers v. Western Industrial Maintenance, 707 F.2d 425, 428 (9th Cir. 1983) 5 6 (internal citations omitted). 7 The Ninth Circuit addressed the issue of attorney’s fees in the context of challenges 8 to arbitral awards at considerable length in Western Industrial Maintenance. Id. In that decision, 9 the court recognized that an unjustified refusal to comply with an arbitrator’s award may be 10 tantamount to an action taken in bad faith. Id. at 428. As the Ninth Circuit explained, “[b]ad faith 11 12 may be demonstrated by showing that a defendant's obstinancy in granting a plaintiff his clear 13 legal rights necessitated resort to legal action with all the expense and delay entailed in litigation.” 14 Id. (quoting Huecker v. Milburn, 538 F.2d 1241, 1245 n. 9 (6th Cir. 1976)). 15 It is a foundational principle of labor law that arbitration is a creature of contract, and that 16 a party is bound by an arbitral award only to the extent it has agreed to submit the underlying 17 18 dispute to arbitration. International Brotherhood of Teamsters v. Washington Employer’s, Inc., 19 557 F.2d 1345, 1347 (9th Cir. 1977). That said, mere ambiguity in the reasoning accompanying 20 an award—which may give rise to an inference that the arbitrator exceeded the scope of his 21 authority—does not, standing alone, furnish grounds for refusing to enforce the award. Enterprise 22 Wheel, 363 U.S. at 598. 23 24 The court observes that MV voluntarily agreed to submit the disputed question of whether 25 vacation pay was owed to the Union employees to arbitration. As the court has already determined, 26 the arbitrator did not exceed the bounds of his authority, and the resulting award draws its essence 27 from the CBA. Nevertheless, MV elected to initiate the present action in an effort to escape the 28 1 arbitrator’s determination that it was obligated to pay. 2 While the court does not find MV’s challenge to the arbitration award is necessarily 3 frivolous, the court does find that it was undertaken in bad faith. Arbitration awards enjoy a strong 4 presumption of validity and are vacated only in exceedingly rare circumstances. This case 5 6 presented no such extraordinary circumstance. MV was fully aware that the arbitration could yield 7 one of only two outcomes: either the arbitrator would construe the CBA provision as entitling the 8 employees to vacation pay, thereby requiring MV to compensate them, or he would interpret the 9 CBA as limiting the accrual and utilization in a manner that absolved MV of any obligation. The 10 arbitrator reached the former conclusion, and MV, dissatisfied with that result, brought this action 11 12 to vacate the award. 13 Accordingly, the court concludes that an award of reasonable attorneys’ fees to the Union 14 is warranted. 15 D. Prejudgment Interest 16 The court lastly addresses the Union’s request for an award of prejudgment interest. Upon 17 18 review of the record, the court notes that the arbitrator remanded the calculation of the amount due 19 to both MV and the Union. (ECF No. 31-7, Ex. 7 at 8). It does not appear from the submissions 20 before the court that the parties have completed that calculation. In the absence of a final 21 determination of the amount owed, the court is not in a position to rule on the question of 22 prejudgment interest at this time and accordingly defers consideration at this time. 23 24 The court therefore directs that, upon completion of the parties’ calculation of the amount 25 due under the arbitrator’s award, the Union shall be permitted to file a separate motion addressing 26 the question of prejudgment interest. Any such motion shall be filed no later than twenty-one (21) 27 days following the finalization of the award calculation. 28 1 IV. Conclusion 2 Accordingly, 3 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that the Union’s motion for 4 summary judgment and petition to confirm arbitration award (ECF Nos. 31, 4) be, and the same 5 6 hereby are, GRANTED. 7 IT IS FURTHER ORDERED that MV’s motion for summary judgement and petition to 8 vacate the arbitration award (ECF Nos. 29, 1) be, and the same hereby are, DENIED. 9 IT IS FURTHER ORDERED that within fourteen (14) days of this order, the Union shall 10 submit a fee affidavit for the court’s review of attorneys’ fees. 11 12 DATED March 16, 2026. 13 14 __________________________________________ UNITED STATES DISTRICT JUDGE 15

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